Conversions, Student Rentals, Garden Suite Update With Ken Bekendam

Happy New Year, my fellow truth seekers!! 

Welcome to the Truth About Real Estate Investing, where we continuously look to learn the best practices from doers, not talkers, to extract from them repeatable investment strategies, and break them down into actionable items for both novice and seasoned investors alike.

 
 
 
 
 
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A word on seasoned investors…

I was talking to a client about the coach she was assigned from one of those large real estate education companies, and she told me her coach was very experienced.  

I asked her to tell me more, as experienced means different things to different people.  

For example, if I were to hire a coach, I would want someone highly successful with more skill and experience than me. 

The funny thing is, the person I would hire costs very similar to these new coaches who hit the scene in the last 3-5 years, some of them with less than five years or worse dubious track records of investment themselves.

The market during this downturn and higher interest rates have let me know who the real investors and coaches are, and no, I’m not going to out them as I don’t want to be sued.  

I’m hearing on the streets about struggling investors and coaches, mainly folks with multiple flips and BRRRs who can’t exit or make cash flow.  

Times like these are the ultimate stress test. 

Doing one’s own due diligence with the internet and social media has never been easier than ever, and the fun fact of the day, many podcasters don’t background check their guests. 

I can tell.

Quick update on the Clydesdale Capital bankruptcy…

The owners Fayaz aka Mark Smith and Alex Solga, have turned down an invite to this show. 

Alex was advised by his lawyers not to come on, so I don’t blame him at all. Nevertheless, Alex and I chatted, and he confirmed my understanding.  

If you’ve been following me and my iWIN Meetings, I have mentioned before how these times are part of the market cycle causing to greed and new entrants to the market, lack of experience, skill and capital leads to poor execution…

One has to wonder if tens of thousands are spent on coaching each year to arrive at bankruptcy at the business and personal levels.

So many have gotten burnt with excessive leverage, poor business models, and a lack of cash flow management when the market was greedy. 

I’m not guilt-free either; the duplexes I bought in 2021 are cheaper today, but thankfully they’re fully tenanted at high rents, so Cherry and I will manage just fine. We’re in this for the long term.

But don’t look at my crypto and growth stocks, lol. 

Thankfully, by design, those positions were a small percentage of our overall portfolio since real estate is so safe, and when done right, one can outperform the market.  

That said, I’ll be taking advantage of both real estate and stock markets.  

If you haven’t been around a correction before, I strongly recommend you study what happens in recessions and how many get rich exiting the crashes.  

All my friends with grey hair who’ve been actively investing since before 2008 all regret not buying more then.  

Now is the time we right that regret!

As usual, we will cover how-tos in real estate investing via virtual webinars, in-person monthly iWIN Networking Meetings, and practical Street Smart Tours, where we tour target neighbourhoods and income properties, followed by MasterMind lunch.  

The next 18-24 months will be a wonderful time to be greedy while the masses are fearful with above-market returns available to those who invest smart with minimal risk. 

That’s how we’ve been investing around here since 2010, and our track record of over $400 million in investor transactions and very wealthy clients speaks for itself.

If you’re looking to make 2023 your best year and make the best decisions for your financial peace, then you’ll want a copy of my book; the electronic version is free from my website, www.truthaboutrealestateinvesitng.ca

Enter your name and email, and you’ll also be notified when we offer our educational events at nominal costs.

In my experience, we have numerous millionaire and multimillionaire clients who have never paid for a five-figure coach or networking group.  

Just recently, at a clients-only event, I had several clients say the best part of being a member of a certain group I used to belong to was meeting me.  

I’m humbled and honoured and can’t wait to make a difference in more people’s lives.

Conversions, Student Rentals, Garden Suite Update With Ken Bekendam

On to this week’s show!

We have Ken Bekendam, who is up to many things to generate cash flow and build wealth in real estate.  

The best part is Ken is available for hire! One can hire Ken’s company https://legalsecondsuites.com for major renos to your home or investment property, including basement apartments and garden suites.

Ken and Legal Second Suites have even been in the news representing one of his clients. 

A mutual friend of ours, Alex, who happens to be Ukrainian and wants to convert his garage into a garden suite to rent to Ukrainian immigrants, but the rich neighbours think the added density of tenants living in a garage will damage the neighbourhood and increase traffic.  

Thankfully, with municipalities trending in the right direction to allow us private investors to create more housing… 

I won’t spoil it and let Ken explain how the story ends. Rich homeowners vs. rental housing for Ukrainian immigrants….

In today’s show, Ken details what strategy makes up the majority of his portfolio and provides him with massive cash flows. 

It’s not what you expect, as none of the influencers out there are promoting or offering courses on this strategy.  

Ken shares how to invest in garden suites, including build costs and rents, plus some big and small conversion projects.  

This is a great episode for education purposes, so have those pens and pencils ready.

I give you my friend Ken Bekendam

Please enjoy the show!

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

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

 

This episode is also brought to you by www.stockhackeracademy.ca, where everyday real estate investors learn the best practices in stock investing to earn cash flow in about 15-30 mins per day from their mobile phones. After real estate, Stock Hacking is the next best hustle, as you’ve heard from many past guests on this show. Among our students last year, 31 trades were shared with them. 30 were profitable for an over 96% success rate and 12% return on capital. I will be giving free demonstrations online, very similar to the one I gave my kid cousin, a full-time musician who just made a 50% return in 2021.  Past, of course, does not predict the future, but if you’d like a free demonstration, go to www.stockhackeracademy.ca in the top right and click FREE Demo.  At the demonstration, I’ll have special bonuses. We do not advertise publicly for all my favourite listeners, and I only have two more demos to give in the next few weeks.

Don’t delay www.stockhackeracademy.ca, what I consider the future of side hustles with real estate so unaffordable for many.

To Listen:

Audio Transcript

**Transcripts are auto-generated.

Erwin  

Happy New Year, fellow hackers, true seekers. Welcome to the truth about real estate investing show where we continuously look to learn best practices from doers, not just talkers, to extract them repeatable investment strategies, and break them down into actionable items for both novice and seasoned investors like a word on seasoned investors. I was talking to a client about her coach, she was assigned from one of those large real estate education companies and she told me her coach was very experienced, I asked her to tell me more as experienced means different things to different people. For example, if I were to hire a coach, I would want someone who is highly successful with more skill and experience. The funny thing is the person I would hire cost very similar to these new coaches who at the scene in the last three to five years who haven’t really been investing for maybe four to six years, some of them have investing less than that, and have even worse or even worse, have dubious track records of investments themselves. This market downturn and higher interest rates have let me know what the real investors and coaches are. And no, I’m not going to get them here. I don’t want to be sued. But I’m hearing in the streets there are a number of investors and coaches struggling mainly folks with multiple flips and burrs, they cannot exit. Normally cash flow times like these is the ultimate stress test. Doing one’s own due diligence with the internet and social media has never been easier. It’s never been easier and fun fact of the day, many podcasters do not background check their guests, I can tell a quick update on Clydesdale capital bankruptcy. The owners Fiats Mark Smith and ox saga have turned down my invite on the show, Alex has been advised by his lawyers not to come on. So I don’t blame him went bit, Alex and I did chat and he confirmed my understanding. If you’ve been following me and my I went to networking meetings, I’ve mentioned before how these times are just part of the market cycle causing greed and hence new entrants into the market, both investors and coaches and influencers when you have lack of experience, skill and capital that leads to poor execution. And one has to wonder about the 10s of 1000s spent on coaching each year to arrive at bankruptcy at the business and personal level. If that was money well spent or not. So many have gotten burned with excessive leverage poor business models, lack of cash flow management, in times where the market was already very greedy. I’m not getting for either. The duplexes that Jerry and I bought in 2021 are cheaper today than then when we pay for them. But thankfully, they’re fully tenanted at really high rents, we got them rented out pretty quickly, and we will manage just fine. We are in this for the long term. So well beyond the next three to five years. We’re into this for like 10 years or more. But don’t look at my crypto grow stocks portfolio. Thankfully, by design, these positions were a very small percentage of our overall portfolio. Since we’ve, as I’ve shared before, over 9% of our investment allocation is towards real estate that we control. Because it’s so to me if I consider it really safe when it’s done right, and when done right can outperform the market. That said I’ll be taking advantage of both real estate and stock market going forward in this market correction. If you haven’t been around a correction before, I strongly recommend you study what happens in recessions and how many people get rich while exiting crashes all my friends with some with more grey hair than I do, who’ve been actively investing since prior to 2008. We all regret not buying more than and now is the time to write that regret. As usual, we will be covering the how tos and real estate investing via virtual webinars that are not in person. Monthly, I will networking meetings and our practical street smart tours, where we tour target neighbourhoods for income properties. Both the neighbourhood and the properties themselves, followed by a mastermind lunch, the next 18 to 24 months will be a wonderful time to be greedy, while the masses are extremely cheerful. So yeah, above market returns are available to those who invest smart with a minimal wrist. They just need to know how to do it. That’s how we’ve been doing it. Since I’ve been investing since 2005. I own real estate. It’s been here since 2010. And we have a track record of over working with investor clients, over 400 million in transactions and we have very, very wealthy clients and that track record speaks for itself. If you’re looking at me 2023 Your Best Year and to make the best decisions for your financial peace. Then you’ll want a copy of my book. The electronic version is free from my website, www dot truth about real estate investing.ca Enter your name and email and you’ll also be notified when we offer our educational events at nominal costs. In my experience we have numerous millionaire multimillionaire millionaire clients who have never paid for a five figure coach nor networking group. Just recently at at a client’s only event. I have several clients say to me that being part of a certain networking group where they met me they’re saying these are the words not mine, but meeting you is the best thing to come from that investment. I’m humbled and honoured and can’t wait to make a difference in more people. Lise onto this week’s show. We have Ken between them who is up to many great things to generate cash flow and build wealth in his real estate for him and his son. The best part is Ken is available for hire. One can hire Ken’s company legal second suites.com. For major rental renovations to your home or investment property, including basement suites and garden suites, Kenyan legal second suites has been in the news for quite some time, representing a one of his clients. A mutual friend of ours, Alex, who happens to be Ukrainian who wants to number his garage into a garden suite to rent to Ukrainian immigrants. But the rich neighbours think that added density of tenants living in a garage will damage the neighbourhood increase overall traffic and parking issues. Right. Thankfully, the municipalities are trending in the right direction to allow us private investors create more housing. Well, I won’t spoil it for you. I can explain it to you on a story yems REITs homeowners versus rental housing for Ukrainian immigrants. And today’s show can details what strategy makes up the majority of his portfolio, including cash flow source that provides some very significant cash flow. Kenza Pascaline of mine, so I know some of this portfolio quite well. It’s not what you expect, as none of the influencers out there are promoting or offering courses on this strategy. Ken shares how to invest in garden suites, including build costs plus brands. Are you seeing plussing conversion projects he’s working on both big and small 10s working on a former commercial building 10s of 1000s of square feet and converting into an apartment. He’s working on a new triplex build. So this is really a great episode for educational purposes for both big and small investors. So do have those pencils, pens and pads of paper ready? I give you my friend can be Yeah, what’s keeping you busy these days?

 

Ken  

All sorts of different stuff. Like I know I’m involved in lots of different types of projects these days, you know, anything from you know, the basement apartments and the duplexes and triplex conversions, but also involved in some, like larger building conversions, like commercial residential stuff, church conversions, triplex build, like a new build, you know, I got a land development project to that I’m working away on. And all sorts of all sorts of different stuff. I got some land severances down there, I’m also actively involved into, and kind of all shapes and sizes of different types of conversion projects. But basically, it’s all about increasing density, finding the highest and best use for for land and, and, and what that looks like, you know, so there’s, like, you know, the last couple years here, and even like, actively as of today, with the, you know, the latest provincial announcements about Bill 23, like stuff is changing, like, by the month, by the day, by the day, right. So it’s really exciting time, it’s really exciting time to be in this industry. And because opportunity is opening up everywhere, you know, which is amazing. This is one of the best time to invest in I don’t know how long, no, especially like, especially for us, you know, younger guys coming up young developers, you know, young, no investors coming into this space, like it is much easier now.

 

Erwin  

And you want to grow stage, you want to grow stages, this is beneficial. It’s terrible for anyone to try and divest. Yeah.

 

Ken  

But it’s much easier now for us than it was for the guys before us. You know, like the developers up till now have had a really hard time trying to get stuff done. Right. So for me, it’s like super exciting, because now it’s like, great, like, you guys, you guys didn’t know paved the way. And now the province is changing all this stuff. So it’s like really getting easier for us guys. So,

 

Erwin  

again, depends on the municipality, but for the big investors, they always had pretty good for us that were like, you know, below 10 units. Like it’s been a tough go like for

 

Ken  

forever. Well, yeah, up until like, you know, they started coming out with Bill 108. And that’s what kind of really spurred the changes, right? No, for sure. It was, you know, like when I was first getting in this industry, like, they didn’t have an SDU bylaw. You know, they have secondary dwelling

 

Erwin  

units, like basement apartments. Exactly. Now, more now, we’re starting to some garden suites yet. Like, you know,

 

Ken  

we were doing basement apartments for many, many years, like, you know, 1520 years, like my dad was doing basement apartments when he was a young guy in real estate. So it’s not like it’s a new concept. It’s been around for a long, long time. But we didn’t have the zoning bylaws in place.

 

Erwin  

There was no proper permitting process to allow for this. Yeah, exactly. And then let alone inspect. So then, therefore, inspectors were not trained on how to inspect for it. It basically wasn’t allowed and pretty much every municipality we know.

 

Ken  

So it’s gotten very, very, I wouldn’t say easy is not the right word, but it’s gotten much easier like less there is less rotate and there there used to be even myself to like I’m finding myself less at committee of adjustment for minor variances because they’ve cleaned up their violence and they got the right bylaws in place. Now it’s not perfect. Don’t get me wrong. There’s still a lot of like outdated bylaws or we’re up against you know when it comes to adding adding units, but you know, I do give the province and municipalities a lot of kudos to for me Any changes that you have?

 

Erwin  

Some are better than

 

Ken  

others. 100%,

 

Erwin  

you know are right next to Burlington. So it’s not we’re not we’re not given an infant that many kudos. Nor St. Catharines

 

Ken  

St. Catharines. In Burlington, like, we do work in both 40 plus different municipalities and townships. And those two in particular, are like brutal. It’s like they’re completely backwards. They don’t want it the tiny home show back in August. We had on a municipal day, we had the city councillors, and, you know, from lots of different municipalities, but, but they had some reps there from St. Catharines. And even the

 

Erwin  

counsellor I was talking to it was booing you, when you were on stage?

 

Ken  

No. Like this, the city counsellor from St. Catharines was basically saying, yeah, they’re gonna make up of counsellors right now, an older mindset, an older way of thinking about things. And that’s why you see, certain municipalities really just not come around and embrace this idea because they have this old mentality,

 

Erwin  

but the protectionist understand that nobody wants, you know, I remember getting mad at people parking outside my house. But you know, so much thought is, it makes sense, like the existing neighbours are the ones that both come in, and they don’t want development. They don’t want more density. They want to preserve their sightlines and their parking, like Ben wants on street parking, those sorts of things. I get it. I get

 

Ken  

it, like nimbyism is, it’s a powerful thing. It’s a really tough thing as a politician to deal with, especially as a ward councillor, they get the worse, you know, the first one that gets called if they have a complaint, but from the NIMBYs exactly right. So I can see, you know, from the province perspective, like why on their task force, they said, in order to get some form or fashion of housing built, like we have to start limiting to certain extent, the amount of public consultation, so it’s a hard road to walk, it’s a fine line to walk, you know, living in a democracy, you know, being able to, you know, have public consultations about certain things. But at the same time, you know, it’s not, we’re not doing justice to the everyday resident by fully engaging them and asking their opinions on like city planning matters, and zoning bylaws for which they’re not truly equipped or educated on the subject matter to really have a valid opinion. You know, like, we have planning staff and city, city planners, who have they’ve gone through years and years of education and public planning, city planning, and know they spend their lives figuring out like bylaws and how to grow the city. And then we go ask Mr. or Mrs. Smith around the corner about oh, hey, should we put a garden suite in a backyard? They don’t want to go to the city? You know, like, why are we asking them for their opinion? Right, like,

 

Erwin  

even like, there’s like a bunch of people say, it’s your favourite restaurant. I don’t want to get busy, right? I always want to be able to get a table, so I’m not gonna tell other people about it. So same idea. Yeah, NIMBYs don’t want other people coming into their neighbourhood. So it’s,

 

Ken  

you know, I’ve been up against a lot of nimbyism, like a lot of angry neighbours that you’ve had a bad event in the paper. Been in the paper of I’ve had people drag me through the mud on like social media. So like, have a couple of recent examples. So we tried to do this to garage conversion and existing garage conversion up on Rendell Boulevard and Hamilton’s in the newspaper. So I don’t mind saying the street name. But no, we had to apply for a minor variance for a reduction in one parking space. So this was before Hamilton had changed their bylaw to basically remove all of the parking requirements. So you don’t need any parking. We don’t need any parking spaces now for new St. Use and Hamilton. But at the time of our application that we still did. My personal opinion is that they did change the bylaw in light of this reaction that happened with this project on rundown. They saw the uproar in the neighbourhood about something so silly that, you know, Council and planning committee went and kind of revised the parking lot to basically remove it. But

 

Erwin  

it makes sense because with climate change the way it is there’s just so much rain, we can’t be expanding all of our parking pads taking away ground to absorb the water. Yeah, it makes less sense to not have keep creating more parking pads on property covering up lawn.

 

Ken  

Like this particular application. This property we were very close to a bus stop. We were within 120 metres of a bus, a major transit corridor. This parking was required for this garage for a unit which was only 520 square feet a little little one bed unit. And so is like even the ward Councillor agreed that parking wasn’t the primary issue here. You know, the street was wide open. There’s plenty of on street parking. Parking was not the problem, but it was the variance that was required. Yeah, it was the neighbourhood who just didn’t like the idea of a garage being converted and so we saw like 100 150 Plus neighbours sign had a petition against our application is subsequently got denied a committee of adjustment. We then appealed it to the llt, the Ontario land tribunal, and during the period of time between the denial, and when we applied for the llt appeal, the City of Hamilton changed their parking Bylaw and removed the parking requirements, which was great for us as we went and we reapply. And we got our building permit approved for the garage conversion because you guys were likely the trailblazer. It was the first application up on the east mountain in Hamilton in that particular ward. And a couple of other applications. Were some of the first ones in the city, Israel, just because we’re actively doing this been working with investors all the time, right. So soon as a new kind of chamber comes about. We’re on top of it right away. But anyways, it goes to show you that like you know, nimbyism is powerful, very powerful, very powerful. It’s not going away. It’s not going away. It’s something that size can be very problematic as we try and grow the housing supply. And to certain extent, yes, we have to limit to a certain extent the amount of public consultation, but it’s really about getting the correct common sense zoning bylaws in place, so that we don’t even have to go from our doing it more as of right, and this is where, you know, we hear the politician saying, as of right zoning, like being being able to do things as of right. So

 

Erwin  

there, we needed less red tape on certain things. Yeah, yeah. So again, like you mentioned, like people cannot make educated decisions on this. So for example, Mike, Dr. Mike Moffet. He tweeted about, he doesn’t like the whole Greenbelt expansion thing. Right. And but he’s saying it’s nimbyism, causing it. We either we either intensify existing neighbourhoods or we go into the Greenbelt. So this is why we’re going into the Greenbelt. So we know who to blame.

 

Ken  

Yeah, you can’t have your cake and eat it too. It’s like we you know, it’s a balancing act here of, you know, growing within the existing boundary or expanding the boundary. You know, we see protests on both sides. You know, we can’t even get a garage, converted without 100 neighbours coming out protesting. Yeah, the structure, there’s no change to the exterior, like every single developers application in the city, get hundreds of neighbours coming out opposing their towers and their condos. And stuff is being appealed all the time. Right. So I don’t understand how the public thinks that we’re going to get housing built, if they don’t want it here. And they don’t want it there. Where are we going to build this stuff? Right.

 

Erwin  

I think we’ve been at all benefit if all those who want more housing, go have a protest?

 

Ken  

Yeah. Well, at some protest City Hall. It’s very interesting to watch, because some of the people that are actually out there protesting. They’re the ones that need to housing the most. Right? They’re the ones who need the housing the most. It’s very fascinating. The people who don’t need to housing there are they’re busy, they’re working, they’re building their businesses, they’re growing their companies, they have a place to live, right. The people who have the time, first of all to be protesting, you know, they’re the ones who need the housing, there may be renters or low income. And they’re like, they’re not helping themselves. Right. Right. I don’t want to get too political.

 

Erwin  

I know. I know. Because this is a real estate show. We need to get some folks in the listener some tactics. So one thing I wanted to cover off is your investor. Reindl Randall Randall road on rental road. Yeah. Brandon Boulevard rental Boulevard. Yeah. How were they able to hold the property while they’re trying to convert the garage was the house already rented was well,

 

Ken  

so we were we already obtained a building permit to convert the bungalow into two units. So the main floor unit in the basement unit, we had an active building permit we’re active on the site constructing that while we’re also trying to apply for the garage. So the bungalows weekend. Yeah, the drop is still at this property is still vacant, cuz it’s still under construction. We’re still actively

 

Erwin  

renovating the property. This isn’t fun for the investor.

 

Ken  

No, it’s been very stressful on him. Yeah. You know, he’s, he’s from the Ukraine, actually. And he was going to use some of the or the garage unit for a family member from Ukraine. And so that was also you know, even on him, you know, the neighbours to basically didn’t believe him there. They kind of dragged him through the mud as well, thinking that he was lying about this whole Ukrainian thing. But it’s very true. You know, anyways, is is it’s just sad. And also nice guy. But look, we got to get the permits approved, you know, and ultimately, we got the permit. And we’re forging ahead with the garage conversion.

 

Erwin  

So Alex is a nice guy.

 

Ken  

I’ve met him at my charity event. Yeah. He’s a great guy. He’s a great guy. It just it’s sad to see him go through that didn’t deserve this. No. But it’s a result of an outdated Zoning Bylaw. And so if the city was much more proactive, right, we could have avoided all of this nonsense,

 

Erwin  

but if you were to start this practice today, what’s the difference in the process? Well,

 

Ken  

the biggest thing is parking, where they got rid of the parking like 95% of minor variances for st use, were was a result of some form or fashion of a parking issue, right landscaped area, are we gonna have enough space for the parkings? Right, they’re gonna reduce the parking or we have to expand the driveways. So now we’ve reduced our landscaped area

 

Erwin  

seriously, we remove 90% of impediments to Yeah, executing Yeah, like I’m not

 

Ken  

Committee of Adjustment anymore for parking. reductions were, you know,

 

Erwin  

what are you still doing for, like setbacks? Or,

 

Ken  

um, yeah, so for like, the latest variance obligations on that to see for is just some of our Commercial to Residential commercial projects, and especially right

 

Erwin  

before we move on to that, because I want to finish off, I want to finish off the, because my thing is, for most people, most investors, most of the time, thought real estate investing should be a side hustle. So for example, the SDU conversion, the basement conversion, the garage conversion to a garden suite that is accessible to a side hustle investor, we’ll get to the very sexy stuff in a moment. But I want to go through some of the numbers, for example. So what why should someone convert a garage sweet, besides creating more housing, very social people, very nice people to create more housing, but there’s financial implications, right?

 

Ken  

Yeah, like, well, obviously, you know, there’s another opportunity on land that you already own, to basically invest further money in and get a good return on that money, right? Let’s say you have $100,000 or $150,000, rather than going out and you know, putting a down payment on another piece of land, and investing another couple $100,000. To renovate it like this is you’ve already got that land, you already own it. You don’t feel like re qualify and go to the bank. And like you own that, that parcel, right? And so you take your 100,000 and you know, you invest it into the existing garage, or it’s not, it’s gonna be more than 100,000. So like, 150,000, to convert these existing garages typically depends on condition. Oh, yeah, yeah, definitely depends on the condition, like going to a new build structure, like from scratch is gonna cost you a lot more. But we’re seeing them around 150,000 right now to convert existing garage structures into units, whereas the new build stuff, you know, it is a bit of a sliding scale, depending on the footprint, you know, single story two story, is there a basement involved or even a modular versus stick frame? What type of foundation are you putting the structure on is a helical piers is engineered grade slab is an actual report foundation walls there. So there’s a there is a sliding scale of costs, right? Like, I’m seeing some guys do them in around the $200,000. Mark, and other people have done them up like 350 On Toronto

 

Erwin  

that everything’s over for, because they’re making them really nice, big, like, I’m

 

Ken  

consulting with a client right now. He’s got a huge piece of land. And we can do an 800 square foot like single storey structure. Well, even that’s like a bungalow, you’re building a house or building another house is very fast house on your property. Right. And so he’s probably, yeah, easily be 350 400,000 on his belt, you know, what do you think is like the sweet spot? So like we were saying earlier, like, day by day, things are changing. Yeah. So there’s been some some leaks that a certain municipalities already going to grow goes straight to fourplex. Well, so Hamilton is actually very proactive. They already back in August 12. Council had already approved for unit conversions in the city as part of their new official plan. But the Official Plan was appealed to the llt because of the Boundary Expansion issue. And so that kind of was put on hold until the province kind of ruled on on this whole issue. So they ultimately did rule on it, like we heard in the news. So back on November 4, you know, Hamilton has now approved a four unit conversion bylaw. So um, so a lot of these like Hamilton mountain bungalows, and these different types of neighbourhoods have now changed into this r1 and r1 a zone which allows for unit conversions. So you can do either four units in the principal building you could do three units in a principal building last the coach house you still can’t do two units in the coach homes only one unit in the strong

 

Erwin  

chose holism when it’s going on here

 

Ken  

that’s really opened the door to like create a lot more opportunity. You know, four unit conversions were happening anyways, like especially in you know, these these two and a half storey older Victorian century homes, three and four unit conversions were happening all the time. No, many of them were illegal twos plus an illegal third or illegal fourth. So now we’re basically just you know, recognising what was already happening so there’s good on Hamilton’s part for doing that because you know, now they can properly inspect the units they can you know, select their building permit fees and property taxes and all that kind of stuff. So it is a good move

 

Erwin  

right the path for all US investors to do things properly. We want to do things properly. Because for example, I had a friend convert a little six Plex I think the legal uses one single family home slash was chopped up into a six Plex and he converted to a triplex but it was like a two year process. Right? Yeah,

 

Ken  

yeah. So Like it’s yeah, there’s some really exciting things happening on that front, you know, and like I said, like, week by week, we’re finding out about these updated bylaws and requirements. So what I tell investors who are out there looking for opportunity is like, look for these bigger houses, look for these bigger plots of land, the bigger the building, the bigger the land parcel, the more potential opportunity, you have to do something as far as increasing density when you need to do a street tour, you know, and because zoning bylaws are changing, like things are aggressively changing right now in the province, with the bills coming out with each municipality, updating their zoning bylaws, and so you can be buying something now that may not be zoned exactly for what they want to do. But who’s to say that six months from now, a year from now, next year from now, that the zoning to change, and all of a sudden, you’d be allowed to do a four Plex or a truck or like a six Plex there?

 

Erwin  

So when we were speaking earlier about opportunity, like the bigger houses, especially with current use of single family life, you know, even if it’s the chopped up illegal, whatever, like that property, and on bigger lots is what’s been discounted the most in the current market. Yeah, it hasn’t like the prices have come the furthest off the peak. Right? Yeah. So to me, that sounds like a great opportunity. Obviously, you need a significant amount of capital. It’s not like it used to be, but that is the opportunity that is probably your, your opportunity for greatest ROI.

 

Ken  

Yeah, right now, like the sweet spot is in these little not at all, but they’re, you know, these three, four, maybe six unit conversion projects, we can’t make the numbers work off to we can hardly make them work off of three units, you really need to start getting into that fourth plus units to kind of really get your ROI and get your cash flow.

 

Erwin  

I think we shouldn’t coordinate a street tour, you know, some listeners might come out and look at some of these smaller properties that would make sense no 100 100%.

 

Ken  

Like there’s you got it, you got to walk buildings and houses a lot to kind of see the opportunity. And to see how you can subdivide, you know, I’m in houses every single week, you know, I’m looking at 20 houses and land parcels a week, not always on site, but even just online, like through through the listings or through the aerial maps and the city mapping software and like you have to be actively analysing buildings to see opportunity, right. And so for an investor out there listening, like if it was not easy for novice, it takes practice, it takes time for sure. But if this is something you want to focus on and be the full time on even, or really make this your side hustle like you got to learn your city, you know, don’t learn the province. Don’t don’t learn 4050 different municipalities. Focus on your focus,

 

Erwin  

not just city, but focus on your team. Yeah, you don’t need three cities, three different teams, that’s just yeah, not right off the bat.

 

Ken  

Stay up to date on what’s happening in your city. So that you can see opportunity when it’s right in front of your face.

 

Erwin  

And no one can pull the wool over your eyes if you’re focused. Yeah.

 

Ken  

So, ya know, there’s, there’s tremendous opportunity out there. And it’s like, you know, I was doing a consultation with a realtor actually, who was we set up a meeting to talk about, you know, opportunities so that she could then inform her, her clients. And we’re just selling the mapping software, like just the interactive zoning map on the city mapping website. And I was saying, look, here’s a property, you could do this. And this site. Here’s another one. Here’s another one, like the neighbourhoods are littered with, with opportunity, you know,

 

Erwin  

and there’s less bidders out there. Yeah. Oh, man.

 

Ken  

So yeah, man, it’s sweet.

 

Erwin  

You free January 28?

 

Ken  

No, it’s, it’s really exciting.

 

Erwin  

You think I’m joking.

 

Ken  

I’m back from my holidays. So So you know, like, it’s, it’s good, you know?

 

Erwin  

Okay, so, a lot of the people be listening to this potentially in the new year. So a lot of people are gonna be thinking, like, really ambitious goals. So before you got full time into real estate, what did you have that enabled you to go full time? Because for example, a lot of projects you talked about, like your your conversions their weekend, right? So you have no money coming in. So you must have other venues of money coming in? And to allow you to be full time. Am I right?

 

Ken  

Yeah. Like, like, my journey is no different than many, many other investors. You know, but

 

Erwin  

you’ve been a lot longer than I specifically bring this up, because there’s been a string of bankruptcies and I’m gonna guess there’s gonna be a lot more of them. Yeah, because a lot of people were doing aggressive burrs and flips. So they, again, they have no money coming in. And if they can’t get stuff done on time and exit, they’re gonna go broke, you know, for sure, obviously, like, how do you how did you not go broke?

 

Ken  

How did I not go broke or I’m not going broke? Well, like my personal portfolio properties, like, you know, the vast majority of them are student rentals. You know, so, you know, I thank the Lord for my Student rental properties. I know not every single investor likes that type of type of investing product or a student rental. But for me, it’s really kept cash flow coming in. And what’s nice is that the students do turn over. And when I hear about a student group that wants to move out, like, I get super excited, you know, cuz it’s

 

Erwin  

Well, I mean, tenant, Ontario.

 

Ken  

But, you know, it’s, it’s an opportunity for me to refresh the unit and get a fresh batch of students in there, full market rent, or even above market rent. And so, you know, just on the personal side, that’s, that’s allowed me to, you know, keep keep cash flows coming in. But I also have an active business to like, I’m, you know, the design side of the business, and the construction side of the business, all obviously brings an active income, right? And so, you know, if you’re an investor, you don’t have a active source of income coming in, yes, it can be very difficult to know, keep things going, if you’re just using all private money, but you have no other source of income to help pay those. So those interest payments, right, yeah, it’s like anyone can get a private loan or a private mortgage, but you have to pay the interest on the monthly interest on those. So you don’t have active income coming in. Yeah, that’s where people get tight, right. And people they over leveraged themselves, and they can’t make those monthly payments. And if you get any sort of delays, or hiccups on your project, permits take too long contractors or you know, the mess off or something or you’re over budget, like, you know, should never happen, right. So, I’m,

 

Erwin  

I’m being complete, sarcastic. So like,

 

Ken  

so for me, I’m a little bit of a different situation where yes, I have, you know, pretty high cash flowing student rental properties, because that’s how I built my portfolio at the beginning, which laid a really strong foundation, and then I have my active design an active construction business that are bringing also active income in. And so then when I’m getting into like my other, you know, personal investing projects like the triplex rebuild, or the church conversion of land development and opportunity, like I have active income coming in to carry and cover those interest payments, you know, not to say that, you know, like everybody else, you know, interest rates are rising and your your monthly carrying costs are increasing. But that’s why in my business, I’ve made a really conscious decision to double down on my marketing in the last couple of months, we’re doing radio campaigns now on 900, CML, we’re broadening we’re casting our net wider, as far as the types of clients that we help, my focus has always really been on the everyday real estate investor, you know, doing it for a return on investment and doing this, you know, to make money and all this kind of stuff. But you know, as interest rates have risen, the investors are the amount of investors or less coming in the door doing conversion work, right. So we’ve really switched our focus to focusing on the everyday homeowner, and helping everyday homeowner with basement units and conversions for their ageing parents, or their disabled child or their adult child who needs a place to stay. So that’s really kept no leads coming in the door. It’s like any business, when you start seeing a slowdown in the market or a slowdown in your business coming in, you have to be quick to pivot. Right. And that was happening for me, basically, you know, into June, July, August, where we saw leads, like die off from investors. You know, nobody was buying anything. Right? So I’m like, crap, what am I going to do? You know, I got to do something. To do the staff, I got employees, I got, you know, ongoing projects, we got to we got to find, right. So I’d like, I double down on my marketing. Right? You do regular rentals, too, right? Yeah, we’ve no, we’re doing just interior alterations, you know, you know, our company gets involved in, you know, kind of some custom renovations for a homeowner, you know, it’s not all just investor projects, you know, so the vast majority is, but, you know, we’re a design build construction company, contractor. So, you know, we can do all sorts of types of projects. But, you know, if you’re a business owner out there, or you’re an entrepreneur out there, when things are getting tough, don’t pull back on your marketing, you know, keep your marketing budget there, spend the money, because your competition is probably not spending money on marketing right now. But if you keep spending money on marketing, when the market does rebound, and those leads come in, who they’re going to call first or even calling you first, right, right. And that’s what’s happening right now with us, right

 

Erwin  

being being better known as incredibly important in business. Yeah, everyone needs to know that. where to go next? Can we run through some numbers for a garage? For garage conversion? No, like for example, if we go back to like the last class garden suite build that you’ve been doing? Yeah, how Big sets a empty piece of backyard. How big is it? How many square feet

 

Ken  

is a great question? Like, this is what you know, everybody’s asking me Okay, well, what’s the what’s the cost here of what we’re going to build?

 

Erwin  

Because I’m looking for like a cookie cutter solution because like our basement apartments are pretty cookie cutter, we’re all looking for two bedroom. We know we have our egress window requirements we have our fire suppression requirements is pretty, pretty similar between all of them. I’m just waiting. I’m just wondering like, what is is there a best practice for

 

Ken  

garden suite to a coach house is not like cookie cutter? Because, you know, there’s depends on the city you’re working in. First of all, great, you know, because every city will have different setbacks or gross floor area requirements were to dictate the size right? For on a bigger parcel, we’re building a bigger structure

 

Erwin  

than something else government needs to standardise

 

Ken  

a lot, we’re gonna be doing a much smaller unit. Once you access like to get into that space, you know, we’re working through a three foot gate, or do we have like a big laneway? We can drive in excavators. And right now we’re doing poured concrete foundations versus helical piers like

 

Erwin  

this and start with what are we looking for in a property? Because I think I think especially in this market, that we’re in having a bit more balanced in the market, I’ve been telling you telling everyone be more picky, and what you want. So if you’re being picky, what are you looking for in a property in a lot? If you want the option?

 

Ken  

When we’re looking at stuff, you know, let’s just take the simple, you know, bungalow model, a bungalow on a nice 50 by 100 foot lot or something there, the very first thing I look for is do we have good good side access to get into the backyard? You know, if we’re looking at doing a garden as the strategy, no, we’re getting involved in new construction. Okay. And so you know, we need good access into that dark side, you’re not only for equipment, but also know some of the zoning bylaws require a one metre wide, unobstructed pathway. And the reason for that is for firefighter access. So from the street to the entry door of the unit in the backyard, you need a one metre wide, unobstructed pathway. And that’s so that, you know, an ambulance can show up with a gurney and go down a pathway to get somebody out of the unit. Right. So So that’s first and foremost is making sure we have the space to get into the the yard.

 

Erwin  

So I guess it’d be like a bigger issue like lower city, for example, where the houses are really close together. Yeah.

 

Ken  

So in the older parts of the city, like the downtown cores, houses are much tighter together, right? This has been a very common issue. I’ve seen come up with people with properties. And I’m like, Look, you know, what, you do not have that pathway, you do not have the whip, you will not get a building permit, right? Yes, it’s a zoning bylaw requirement, but it’s a zoning bylaw requirement that has specific health and safety, which we were talking about one of respect. Yeah. And, you know, to me, if adjustments will not approve or variance for that,

 

Erwin  

then sounds like you need way more than one metre. And because the analogy I would automatically comes to my head is if you’re trying to put a pool in the backyard, you need room for equipment. Like like, you know, like a bobcat, for example needs to be able to fit through, yeah, if

 

Ken  

you’re, if you don’t have that laneway access, and you have like, you only have a three foot gate to work through, like your cost of construction is gonna be through

 

Erwin  

the roof, so you can just create it in.

 

Ken  

Yeah, but modular is not always cheaper than stick framing, like that’s a bit of a myth out there. You know, I’ve interviewed and met with lots of different modular builders as we’re exploring different options for these garden units. And they will admit to you directly that it’s not cheaper, you know, modular is not always cheaper, in some cases, it can be more expensive. And I’ve had numerous conversations about this, because we’re trying to find an efficient way of investors, there is a lot of efficiency on site, right, your overall site time is reduced because the structure is being built off site. But that doesn’t necessarily translate into lower cost

 

Erwin  

or error All right, right you know, so like we’re good corner lots be something you would target for example,

 

Ken  

no definitely corner lots right because we have no it’s with the corner properties you can definitely create a more kind of separate private coach house you know, people have their own personal driveway oftentimes, you know, you can fence the yard in such a way that it feels like they have their own kind of throw their own separate house you know, it’s a corner lots are great, they’re fantastic. He’s got to be careful sometimes with the corner lots not the principal building the house is not too far to the one side because you know, there’s still setbacks you have to maintain from you know, the rear and side lot line, but also many municipalities have a minimum setback between the house between the principal building and your coach house. And so sometimes in a corner lot that could get difficult, you know, which could could also lead to minor variance. Right. So, I’m always looking at it because these are still relatively new types of structures happening. I’m very conscious about minor variances, because I want to avoid that at all because dever you know, the vast majority of neighbours do not like this idea of you putting in a coachhouse okay, you think it’s a great idea, but Usually you go talk to 10 of your neighbours, and they probably won’t agree with you. Right. So I’m very conscious about the particular zoning bylaws of that city and trying to do it as of right now, at least in the current climate that we’re in right now until they further clean up their bylaws to make it easier. But, but as you sit right now, we’re kind of in this period of time between the passing of Bill 23, and the municipalities updating all of those zoning bylaws, the current bylaws are still in place, you know, and so we still have to comply with them. And so it’s, you know, to make your life easier, you want to avoid these variances at all costs. So yeah, that’s why it’s so important to know your city, to Know Your City to know where you’re working and to know your city’s bylaws, for sure. And to have a great team to help you out. If you don’t yet have the time to learn everything, give me a call, absolutely, you know, reach out or your cell phone number, or reach out to us at our website legal second, suite.com. And, you know, we’re happy to set up consultations and that’s what I do, you know, three days a week, I’m doing consults all day, I probably do anywhere from like, eight to 10 consults a week, with people discussing their projects. So yeah, there’s tremendous opportunity. You know, sometimes it’s easier said than done. And, you know, we’re dealing with construction and bylaws and permits and so there is some complexity there some technicalities. You know, it’s all about the black and white on the paper.

 

Erwin  

See, I have a 50 by 100. Lot. I have good eyesight access, what would your recommended size for garden sweet b? Again, let’s generalise and say town with the mountain. Okay,

 

Ken  

so let’s say we’re okay, we’re in the City of Hamilton. Right? Okay. So, you know, in Hamilton here, they have a 75 square metre maximum area, sorry, how many square feet is that? That’s 800 square feet, approximately, oh, that’s big, gross floor area. So maximum gross floor area, 75 square metres or 800 square feet. That’s that’s Hamilton’s bylaw. But they also have another bylaw provision that basically says the building area, the building footprint, can’t be more than 70% of the principal building. So this is where I tell people like the bigger the building are, the bigger the the bigger the lot, you know, the bigger potential structure you can build. But there’s other bylaw provisions like we have to be 7.5 metres from the principal building to the coach house, right, which is 25 feet, that’s a lot too big distance. It’s not. And that’s in any direction, right. So let’s say let’s say you have a bungalow off to the side, you have a side driveway, and then you have your backyard, it’s not good enough just to put the coach house like off to the side in the backyard, where it’s not directly behind the principal building, because they’re going to take a dimension line from the corner of the house to the corner of the coach house and gotta be 25 feet. Right. 7.5. It’s a big gap. Right? It’s one of the Zoning Bylaw provisions that I’ve seen in other municipalities too. And it is can be very restrictive. It’s one of those, what I call a not common sense bylaw. Because, you know, you could build a garage, or an accessory building or any other type of building in your backyard, and they don’t have that Zoning Bylaw provision, you can be closer. Right? You know, so it’s a bit ridiculous to me that we have this 25 foot 7.5 metre kind of restriction, you don’t

 

Erwin  

ever agree like, like house fires are so rare, like what are we trying to prevent here?

 

Ken  

I don’t know what the existing

 

Erwin  

houses aren’t 25 feet from enough

 

Ken  

for them to control, you know, the size of the structures, you know, and control density to within a neighbourhood because, like, the bigger the structure, the more bedrooms you can put in the more people in the neighbourhood. More potential cars, you know, it’s one of many things that they do to help control the size and how many of these units are out there too.

 

Erwin  

Okay, so So because she with this example, I have good side access 50 by 100 foot lot, I have my 25 feet distance, what am I looking at a building in terms of a garden suite?

 

Ken  

Well, so in here in Hamilton, we can go up to six metres so we can do single story or two story or you can do no single story in a basement if you want that’s not really happening a whole lot. We’ve designed one out like that with the basement. But as much with my client, I think it’s my might be my client, possibly. Okay, but it doesn’t, you know, it’s much more costly to build putting a full basement underneath a coach house, right? Like you’d only do that really if you’re, you’re very limited on your building footprint. And maybe your particular Zoning Bylaw doesn’t allow two storeys because some cities don’t like Branford for instance, we can’t go to stores on our courthouses, they have to be single store. Hamilton allows to store other municipalities they only allow single store and so in order to get the gross floor area, you know, you dig down and you put a basement and but that gets a lot more costly. Right

 

Erwin  

now the only reason I would do it is for the upside potentially to suite it in the future.

 

Ken  

No for sure. And like I said, you know, zoning bylaws are changing, you know, and who knows, maybe at some point in time, they’re going to Are two units in these coach houses? Right? Which would be like super exciting, you know, but ya know, like a lot of structures we’re building like, you know, we’ve done a lot of like 20 by 20s. You know, we’ve done some like, you know, 14 by 20s are 1212 by 30s. You know, what’s nice about when you’re doing a more traditional stick frame build is that you can fully maximise the allowable footprint and gross floor area of your structure. And everybody I’ve worked with so far, they want to maximise their structure, they’re not looking at putting in the tiniest structure, they’re looking at putting the biggest structure they can possibly third doctor because they want to create nice units, nice one bed to bed units, they don’t want to just feel a little tiny bachelor, right? And so I’m sorry to

 

Erwin  

surprise you there. Because from my experience, that that sweet spot is for rental income, you want that two or three bedroom. So you need usually around 600 square feet, at least for two bedroom roughly, in order to get enough rent for the build to make sense.

 

Ken  

Yeah, yeah. And so like on the modular side, when you’re working with a modular type of structure, you’re working with a preset size, right? And that’s fine if you have a really big lot. And, you know, you don’t have to worry about setbacks, and all this kind of stuff, or gross, like lock coverage or anything else, because you’re such a huge land parcel, and you have great access to no crane in a unit or to ship in a unit. And so, you know, maybe not case modular, is suitable, right, because you’re not restricted. But in so many properties, we are restricted, you know, with lot size, access setbacks, floor area, you know, building area. And so oftentimes, when we’re looking at doing a modular unit, we’re not fully maximising the opportunity. Sometimes I don’t really know how to maximise opportunities, and given that modular is not necessarily cheaper. And in some cases, it can be more expensive to say, Okay, now we’re at a point where no cost point can be the same, or potentially could be more, but then we’re not fully maximising the available footprint we have, right? So that’s what I’ve been seeing a lot is like, it just, you know, modular has its place. But especially when we’re working in urban settings, and existing backyards, it’s not always practical,

 

Erwin  

or it. So you mentioned a couple of like, you mentioned a couple footprint sizes, like 20, by 2012. By 30. How do you price these by square foot? Or do you have

 

Ken  

lost? Like, you know, I hate talking about square foot pricing? Because it’s really scope of work, when construction is all scope of work? And I’ve mentioned it a couple times already is like, okay, like, what’s your foundation? Like? Is it single storey to storey? Are you doing, you know, simple vinyl siding? Or you can do like a brick veneer for most

 

Erwin  

investors doing? A lot of data, I

 

Ken  

know, you’re still relatively new, right? What would you do? You know,

 

Erwin  

if you’re building a 20? By 20? What

 

Ken  

would you do? Right now I would. And the ones that we’re actively getting into, are like a traditional stick frame built structure on an engineered grade slab.

 

Erwin  

How thick is that slab?

 

Ken  

Typically, you’re about, like, you know, two feet thick on the sides. And you go to like a four inch slab in the middle. But it’s engineered with rebar, and Styrofoam like insulation, rigid, rigid insulation, for the frost protection. And then yeah, rebuilding, you know, depending on the city we’re in, you know, we’re building a single story or two story structure on it. And, you know, most cities are, you know, if they do have a bylaw in place, like we’re basically the max we’re going is a two bedroom, a two bedroom unit. And most cases, it’s the one bed, a one bedroom unit. Yeah. And, you know, those are kind of starting at, like 200,000 to 250 rooms. You know?

 

Erwin  

And then what do you see in terms of rent for these

 

Ken  

for rent, so we’re seeing similar rents to a main floor apartment of a house. So like, in that, you know, anywhere from on the low end, maybe 17 to the high end, like 2000, you know, and that really depends on the size, the overall size, if it’s a bachelor, one bed or a two bed unit. Alright. So but you know, there’s still not a lot, a lot of data out there are really only this construction season that we saw units going in, you know, and so in some of those units aren’t even done yet. They’re still under construction. Some, you know, they’re done construction, but they’re, they’re not rented out yet. Or they’re rented out yet, but we haven’t got the appraisals and yet, or they haven’t been refinanced yet. So we don’t know what the lenders are doing. So it’s still next year for sure. We’re going to be a hell of a lot better data.

 

Erwin  

Just a typical numbers, for example, it used to be old rule of thumb, if you could get the monthly rent to be 1% of the investment, then that’s a no brainer, right? So we have 2k some around 244 1000 Right, that’s pretty close. This is pretty much a no brainer.

 

Ken  

Yeah, like I tell people, like, let’s

 

Erwin  

look at the money

 

Ken  

right now. Given that, you know, it’s we don’t know, 100% where appraisals are going to be, we don’t know 100% Really what the lenders are going to do.

 

Erwin  

We’re bleeding edge here. Hopefully everyone appreciates that were your bleeding edge here.

 

Ken  

Every investor I’ve worked with so far has been like, one of the very first ones, you know, kind of doing them. Yeah.

 

Erwin  

So the banks have ever seen these before? I look out

 

Ken  

okay, no, you’re gonna get your let’s just say $2,000 A month rent for it. So that’s, what’s that? That’s 24,000 a year. Right? And so if it’s gonna cost you BCT, 50, to build, you know, like, that’s a good 10% return. Right that,

 

Erwin  

like, I think people would, I think pretty much everyone would love a 10% return. Right?

 

Ken  

So 24,000 divided by 250,000 builds been very rough. No, yeah, it’s 10% right to 10% cash on cash return. So if you’re gonna take that money, and you put it into the mutual fund, or a GIC or something like that, like, you know, it’s still better spent doing it this way, getting a 10% return of, you know, the alternative that you could private lend that money to you and get 10% or borrow. Yeah, but that’s just the straight cash on cash return. Like obviously, we do know that there’s an improved the property, we’ve improved the property, we do know that there’s appreciation there on the property, you know, we do know that that there’s no principal pay down on that. If it’s a loan, you know, that there’s principal payback on there. So like, we do know that the return is higher, but I tell people look like just very simply, you know, run the math, you know, if you’re happy with just that basic simple metric, have a cash on cash return and do it.

 

Erwin  

And this is why I love especially the two car car garage conversion, if you’ve can find a good one. That’s one that’s in good shape, because then your renovation budget like half

 

Ken  

Yeah, no, exactly similar, same rents. So you know, I love the existing houses, the existing garages, because, you know, we don’t have to worry about setbacks. You know, with existing garages, they could still they’re even more vaguely six inches off the fence line. And it doesn’t matter because it’s an existing structure

 

Erwin  

that American put your garage, Guy garage, but really close to his house, but it’s existing so,

 

Ken  

so So yeah, like these existing garages are amazing. You know, if you can find a good solid one, like a good cinderblock garage, or something good brick veneer garage, like, good, solid structure. There’s not that many out there, though. You’d be surprised, you know, you go look at an aerial map of the city and you start

 

Erwin  

I know by hunting for sale, don’t for sale? Sure. If you want to buy one today, it’s probably not a heck of a lot of them. So that’s the warning I’ve been giving people giving people Yes, the market expect the market to decline until probably April, March, April, and then things will probably start picking back up. But you can’t just wait to the bottom because you can’t find these unicorn properties that easily. Yeah, right. Unicorn unicorn makes makes itself available. You kind of gotta get it. Yeah, because it won’t be available in the spring. It wasn’t will not be available, like this time next year.

 

Ken  

No, it’s gonna be it’s gonna be really interesting seeing what happens here. Like, I’m excited, you know, like these new changes in Hamilton with these, the r1 and the r1 a zone like these four unit conversion zones, like, like hack, if you have a nice big, big house with a garage like, easily default limits, you know, your neighbours not going to like it, because they think that it’s only a single family home zoning, but they have no idea what’s coming. You know, that’s,

 

Erwin  

that’s the future because that’s like, that’s exactly like downtown Toronto. Right? Like, there’s tonnes of houses being converted. Yeah. And there’s like, no resistance from the city, like the city is incredibly supportive of densification. Especially if you’re near transit, like you don’t need like any parking. And the stories I’m hearing from folks in Toronto, right, like, you mentioned that you weren’t 320 metres from a bus stop. If that was Toronto, they remove all requirements of parking.

 

Ken  

Shouldn’t be like, Oh, the tower shouldn’t be, you know, because that we need to encourage transit. When you remove, like, just parking, as an example, like, what we’re doing is we’re allowing the market to dictate what should happen, right? Like, if a tenant is not going to rent that unit, because it does have a parking space. Like, yeah, that landlord will quickly switch gears and be like, You know what, I can’t rent out my unit because I don’t have a parking space. Well, on the next project, I’m going to make sure that there’s a parking space. Yeah, you know, so like, it’s in the rent will be cheaper. It’s supply and demand right. Now, why are we telling people how to live? Like, why are we telling people, you know, oh, you should not live in a 300 square foot unit, or you should be living in an 800 square feet, you know, like myself and my family. You know, like, everybody’s living situations are different, right? Everybody’s needs are different. We have to have a wide spectrum of different types of options for people.

 

Erwin  

Alright, can we move on? We just a lot of you have lost sexy stuff to talk about. 75 hard

 

Ken  

75 Finished. I did. Yeah. I, shockingly, but I did you. So how many people started out with you. So when we first started, we set up an accountability group, and we have 83 people in our accountability group. So before we officially launched, we had that many people in our group, how many people you think got started. So how many people fail to start, so more than half failed, who even start, so they got excited, they join the accountability group. But they didn’t even start day one of the challenge, you know, there, there are more there just to make themselves feel good. And don’t get me wrong, it’s good to be part of a group with other people doing stuff so that you can feel motivated, like we do it all the time. We’re joining Facebook groups for land development, even though we’re not land developers ourselves, we get there just for education and to get motivated, right. And there’s, there’s something to be said for them. But this was an accountability group. Okay. And people joined it to be free. It’s free. So yeah, more people are gonna join. Yeah, but they’re, you know, the joint have to be held accountable. And yeah, sure enough, you know, not even half even more than half didn’t even start. So that was really interesting. And then yeah, another, you know, I would say, so, let’s say just for easy math, you know, let’s say like, you know, whatever, 50 people didn’t even start, okay. And then there’s probably probably another 20 people who did start, but then they quickly failed. So like, whether it was day two, or day three or day 10, they failed to do one of the five daily tasks, and then they didn’t even restart. Like, they didn’t even bother trying to restart, you know, then there’s probably another like five guys who, yeah, they made it quite quite a ways through like, they made it to like day, 30 day 40 day 50. But then they failed for whatever reason, like they got sick or something like legitimate happen, and they failed one of the tasks, but they restarted and they’re, they’re like, no, they’re back on track. And they’re now did like day 50 or something. So like, there’s a bunch of guys that are okay, are still working through the but people who actually started and finished, I think there’s only like four of us out of the 80 people who actually okay, or 83 people have actually started so very interesting. Just

 

Erwin  

over, I’ll give credit to the folks who are continuing and going. I’m just gonna assume they’re strong enough to finish. So we’re talking about nine out of 83. So let’s just over 10%

 

Ken  

Yeah, yeah. And I would say that’s probably a stretch. So it goes to show you that you know, that Yeah, well, one the challenge, you know, the challenge is difficult. I’m not, I’m not gonna say it’s easy, or easy at all, it’s definitely a challenge. But it goes to show you that like out of, you know, out of the public or other people in general, like, you know, people in our community 80% of people don’t do anything right

 

Erwin  

now, I think it’s even higher, because there’s people like me that even join during the accountability group.

 

Ken  

It’s that small percentage of people who actually take action, who actually follow through who actually commit to actually get it done that fall through all of this, you’re gonna see results, right? And you got to take action. Right? So it’s very interesting. I’m actually shocked that I actually even made it like that actually completed, I thought I was going to fail on day five, too, you know, because I’ve never been a guy to work out go to the gym, like no beyond diets and read books and all this kind of stuff. Like that was not me. I wasn’t that type of guy. But, but I was I was the one who started the accountability group. And so I’m like, crap, I can’t like I can’t be the guy who starts the accountability group and and not be the one to actually finish it either. So So had a lot of motivation to keep going. That’s obviously I kept it going. So congratulations.

 

Erwin  

Yeah, you look I can see in your face. You look slimmer. Yeah, I

 

Ken  

know. I’ve definitely lost weight of oxygen. No, I did put on some muscle mass too. So like I’m still alive. So I’m done. 75 heart I’m not doing the five daily tasks anymore. But there’s couple things I am still keeping up and keeping up. I’m doing one workout a day now. Just primarily strength training. You know, as we get into the colder weather here, I’m not as eager to be outside on my bike, and biking so I’m just sticking with indoor strength training

 

Erwin  

if you check out his lift party maybe tried his lifting. Stop. That’s like a virtual biking indoors. You put your bike into basically a treadmill for your bike like a trainer. Yeah, no, but it’s all kind of a peloton, but it’s been more a bit more for racers.

 

Ken  

Okay, yeah, I have a trainer from my from my my bike. So I can ride out inside

 

Erwin  

there. Yeah. And then it’s interactive. Like it’s part of your no oh, there’s dinner. I just

 

Ken  

had my road bike and I put it into a trainer and I can ride my road bike like just like a stationary bike

 

Erwin  

or Yeah, so you can actually make it like a character video game. You can gamify and other people all over the world will out with you. Interesting. Okay, yeah. So you see everyone starts to see each other’s avatars.

 

Ken  

Okay. Check it out,

 

Erwin  

I’ll share with you the I have a couple friends as well. It’s not cheap, but I think you can afford it.

 

Ken  

I definitely recommend it to people like it’s no, if you actually finish the challenge, it actually is life changing, you know, not just physically but you know, the daily reading of self development books can have a huge impact on your mindset. You know, for me, I read two parenting books I read. So I read like 14 gospel principles of parenting, I read the seasons of fatherhood. So the different stages of life that we go through as fathers sort of founders to be very, very beneficial with, you know, how I how I’m raising my son, and being a parent, and all of this. And then I read how to win friends and influence people and never split the difference. So like in a negotiation book, and I found those two books very, very helpful with how I work with my staff, how I work with my clients, being a lot more patient a lot more empathetic, being a lot more intentional about giving praise, you know, really praising my guys are really praising the team, giving kudos really pumping people up, you know, when I pick up the phone, and I’m talking with the client, putting a smile on my face, trying to come across in a positive manner. You know, like, all these types of things can have a huge impact on your, on your brand on your business, and ultimately on your pocketbook. Right? And so, yeah, super thankful that I decided to do the challenge. And I encourage anyone out there listening, like definitely take a look at it and do it because it does all of the guys I’ve seen who’ve done it, they’ve been able to scale up been able to do more, and they’re doing more and they’re doing amazing things in their life because of it. So I’m not trying to reinvent the wheel. I’m just following success and I’m following other people that are doing amazing things and just copying what they do.

 

Erwin  

Amazing. Well, I’m sure a lot of you will know what else you’re up to because you’re doing another amazing things. Which project would you like to cover next your triplex build or your conversions I

 

Ken  

got a triplex build going on in in Branford that was a really interesting experience. Like we’re actively on construction right now we’re on we’re on a couple of weeks into the build. But again, that project needed a minor variance. And so it was interesting was one of my first experiences where I had to be escorted out of city hall by security because we had 25 neighbours come out you’re building a triplex protesting my my project they’re doing this for your safety date. Yeah, they did mine. Yeah, yeah, very interesting. No, that got quite heated in the council chambers where we were having the minor variance here and again, like you know, people were were digging through my personal Facebook digging up stuff I said about housing trying to use it against me for building a triplex or monster although all I was doing was applying for a variance to be able to put a full second story on a bungalow, and make the house into a triplex and like a triplex was permitted like as a use. It was only a gross floor area increase that I needed, but again, so a lot of like misinformation and misunderstanding of the technicalities of the Zoning Bylaw and how we’re asking neighbours for permissions on stuff that they really aren’t fully equipped or educated on to make an informed opinion on and

 

Erwin  

usually selfish opinions Yeah, I don’t want to be I don’t want to hear construction now once the construction vehicles I want construction vehicles blocking my driveway. Like I get it

 

Ken  

Yeah, but that’s not really interesting anyways, yeah. How to get escorted out of City Hall security walked me to my vehicle to make sure I got there safely.

 

Erwin  

That’s nice. Yeah, no

 

Ken  

is definitely very appreciative of them. But so yeah, that was an interest anyways, the project is underway and super excited about about to build and to be nice. So we tore down old bungalow, we tore it down to the existing cinderblock foundation we put two courses of cinderblock on the foundation to raise up the basement height and then just doing a two storey framed structure on top and make it into into a triplex

 

Erwin  

when you first look at the property what was it about it that you that made you interested

 

Ken  

in once a corner property? And yeah, it was just it was well priced? It was an old outdated, rundown bungalow not was very well it was on MLS, but it’s just very very well priced. Given the current market that was in when I was when I bought it bought it about like 10 months ago,

 

Erwin  

right? Was this such a bad condition that like no bank would touch it type thing or? Um, no, I

 

Ken  

got a mortgage on it from the bank. Oh, like a regular schedule a bit. Yeah, CIBC mortgage, oh, you know, just regular typical a lender on it. But it was it was quite rundown. It was quite rundown. And you know, I wanted to increase the density there. So like I first explored you know, doing a typical basement apartment, but I’m looking at it like shoot, okay, well, maybe I could do a second floor on this. And then you know, then you start looking at what it would take to put the second floor on the project and I made the executive decision to basically let’s just tear it down to the block to the cinder block and rebuild one of the bank. Think about the the bank is excited about it. They’ll find out when I do the refinance. No, no, I’ve already been talking to CIBC about construction financing on it. I ended up not going with them for construction financing. I’m just self financing it. But by no the bank was the bank is okay.

 

Erwin  

Why did the decision to do a top up versus garden suite? Like I could walk us through the math? Because again, we’re trying to educate? Yeah, mainly novices like I’ve never done I didn’t top up, but it was like over 20 years ago.

 

Ken  

Yeah. Well, so like anything like any project you’re looking at doing. It’s all you start with the Zoning Bylaw, and what you can and can’t do, right. And in this particular zone, in the City of Brantford, which was an RC zoned residential conversion zone, we weren’t permitted to do courthouses in that zone. But we were permitted to do what they call the converted dwellings, which is basically, you know, we can actually do X amount of dwelling units, as long as you can comply with building code. So so in this case, we’re applied as a converted dwelling. But one of the bylaw provisions was for a converted dwelling, we can only increase the gross floor area of the building by 50%. So in this case, we had a bungalow, but they only counted the main floor as the gross floor area. So I would only be allowed to increase by 50%, which would be only half of the main floor. So it will be very expensive. A second, a full second floor. That’s 100% increase on that, on that gross floor area. Not uncommon. No, no, it’s ridiculous Zoning Bylaw. It’s so it’s such an outdated Zoning Bylaw, which I had my you know, own arguments with city staff about it that they had to clean up the Zoning Bylaw provision that they hope to, you know, increase density here, but no one

 

Erwin  

would do it then if you if it was just 50% Well, it’s way too expensive.

 

Ken  

The zoning bylaw dates back to the 1950s. But people weren’t like expanding buildings for adding additional dwelling units for

 

Erwin  

Britain have a housing crisis than the other. So it’s only been in the last like, you know,

 

Ken  

three years that people actually started expanding the buildings for additional units. And now they’re discovering that this Zoning Bylaw provision is really restricted triggering minor variances I’ve another one in right now tune the city for the exact same Zoning Bylaw provision, but you know, so for the neighbours, they see a minor variance application for 100% increase in growth they think I’m building a mansion you know, they think I’m building an apartment building that was some of the comments that were coming back. I thought you’re doubling the size of the foot. I’m like no, this is we’re only adding a second floor to this house in the zoning permits three floors. I wasn’t fully going for three floors I was only going on two floors. Anyways I don’t like you know interesting stuff when you’re dealing with with neighbours and zoning but yeah super exciting project super exciting project you share some numbers like what the property cost you so I bought it for basically for 454 and 50,000. My build is about 500,000 and I got an as built appraisal in today’s market 1.2 million on it. So I had the appraiser get done did this so I hired an appraisal company to give me an as built valuation on the building

 

Erwin  

right you know you made money already if I haven’t built it finished it

 

Ken  

Yeah, yeah. So that faster basically I was I bought for 450 My build price is about 500,000 including the landscaping and driveways and everything and then I my as built is valuation is 1.2 in today’s market so obviously once construction is done and it’s rented and actually get a true like bank appraisal on it. We’ll see what comes in at that time.

 

Erwin  

But sorry to have you back do you have pictures on your Instagram on this property or anything?

 

Ken  

It’s on my Facebook right now I’m doing updates on my Facebook where can where can folks find your Facebook? I’m the only can beacon dam in existence on planet earth so you Facebook slash can be condemn Instagram slash can be condemn my website, obviously legal second suites.com

 

Erwin  

They will have this on the show notes folks. Sorry, what do you think he rented for?

 

Ken  

Yeah, so basically we’re looking at about so we have we’re going to do a two bedroom basement unit. So I’ll be putting that up around 1900 Plus utilities. We have a three bedroom main floor unit, which we’ll be putting up around probably 21 or 2200 ish. And then we have a three bedroom second floor unit which would probably be very similar around that 2000 Maybe maybe 2200 range. Also three bedroom or Every bedroom, so one, two bed and two, three bed units,

 

Erwin  

and then how much parking you have on site. I’m talking about parking so much.

 

Ken  

Yeah, how the required parking. So we’ve made we have X kids, it’s a corner lot. I have two driveways on the property, one from each street. And so we can actually fit basically, upwards of six vehicles. So basically three, three parking spaces, but in tandem. So each each occupant or each tenant can have basically two cars parked in tandem. So that’s trick Yeah. And that’s what that’s what’s nice about corner lots is that you can have multiple driveways oftentimes. So it can really help your parking situation. And in this case, in this zoning, they still had parking requirements.

 

Erwin  

So hyper comply with parking. Sounds pretty sweet. I’m gonna keep this one.

 

Ken  

So yeah, that’s gonna keep it as a long term buying hold. You know, it’s kind of just a personal one I’m working on right now just for my own fun. You know, it’s not like necessarily like a slam dunk investment. But but it’s still I’m getting my money out. It’s going to be good. A good project. I’ve done know, others have been like, you know, a lot a lot better projects. But But yeah, it’s it is what it is. It’s good.

 

Erwin  

Now slam dunk. Till that hurt yourself. Hey, we’re running out of time talking about want to tell me about one of these, like larger, aggressive commercial conversions you got going on? Because that’s that’s like not that common?

 

Ken  

Yeah. So yeah. So this year, we’ve definitely pivoted into the Commercial to Residential building conversion. So looking at vacant office buildings, and converting them into like, you know, 20 plus kind of apartment units. So we do have an active project right now. We’re actually purchased it. We’ve submitted for the building permits, we’re still waiting for the building permit. But basically, it’s a vacant medical office building, downtown Hamilton, and we’re converting it into 22 apartment units. So really exciting project. It is a yeah, basically a cinder block, building cinder block in steel trust building to a very solid building. It’s really just going in and framing up interior partition walls. And what was nice about this project is that we could do it all or

 

Erwin  

it’s not just that, but we’d like to do it all the wiring, and everything. There’s no kitchens and bathrooms already.

 

Ken  

There’s there’s a lot going in on the mechanical side, and for sure, 100%. But what was nice about this practice is that we could do all as of right zoning, so it was zoned to permit multiple dwellings.

 

Erwin  

And that was absolutely key, wasn’t it? Yeah.

 

Ken  

Key key point is it permitted to 100% residential. And the other key point was that because it was an existing building, and in this particular zone, when we convert existing buildings, there’s no parking requirements. So because this building took up 100% of the lot, like there’s no excess space for parking. But because we’re just converting the existing building in this particular zone in Hamilton, we didn’t require parking. So we could do all 100% As of right routine, which is nice, because we’d have to go through any sort of like rezoning or any sort of like additional processes is really just a matter of doing the building drawings to mechanical drawings, and then submitting that to the city for this type of project that the mechanical design took some time to sort out because we were we’re also applying for the CMHC MLA select programme. And we’re trying to hit some of the points with MLA. So we’re doing that through basically energy efficiency. And no, we’re doing it all through energy efficiency. So we’re sorry, we’re targeting 50 points with a multi select, and we’re doing it all through energy efficiency. So there was a lot of back and forth between our mechanical designer and our energy efficiency consultant to sort out the mechanical systems here. And like when you’re getting into any sort of larger, multi unit conversion building, mechanicals, typically is our biggest hurdle, figuring out you know, how much electricity capacity can we get to the building, we’re going to split everything Individual heating systems are going to have a common heating system for the building. You know, there’s a lot of decision points that happen along the way. So in this particular in this project was no different. There was a lot of back and forth between our our contractor like our H fac contractor, H fac designer and the energy efficiency consultant. But anyways, really excited

 

Erwin  

for him to fight with the city and neighbours though.

 

Ken  

No and what was nice, it was vacant. So we didn’t have to go in and evict tenants. There was no tenants, there is a vacant building. We can go in and we can design it however we like. And we can set the rents to whatever we like, and they’re not subject to rent control. So that’s what’s really nice about doing these larger projects, these Commercial to Residential conversions, is that you know, the biggest thing is we’re not dealing with existing tenants and anybody who’s bought a larger multi unit building and trying to do Cash for Keys right now is Having a hard time, the price for Cash for Keys has gone up tremendously. Like we’ve had a building recently where, you know, it was in need of major renovations, like it wasn’t a habitable building. But the tenant was offered up to $30,000. And they still would not leave, because they had no other they wanted to accept the money. They could not find another place. There’s no vacancy, right? Yeah. And they may not qualify and didn’t qualify, nobody would accept them. So sometimes, people want to accept the money, but they just can’t find a place. So anyways, that’s what’s nice about the vacant commercial stuff.

 

Erwin  

Can you share some numbers? I’m gonna let you go.

 

Ken  

Yeah, we bought it for 2 million, our renovation budget is 1.7 million on it. And the as built appraisal is 6 million on it. And it’s about an 18 month timeline. And it was costly to carry this on, like monthly cheering costs. Well,

 

Erwin  

we have because we need to stop people having going bankrupt. People seem to forget to like bail, calculate carrying costs.

 

Ken  

Amazing financing on this building, actually. So we have is BC 7.95%. And that’s mortgage plus construction. So we have 100% financing on the construction through our lender magenta. And they’re paying out the construction money in $300,000 drawers as we as we need it.

 

Erwin  

That makes me a good contact for from agenda. So shut up agenda.

 

Ken  

So we had a really amazing financing on this on this project. So definitely, you know, the we’re not like paying through the nose on monthly interest. You know, for a project of this size, like to get mortgage plus construction for 7.95% is great.

 

Erwin  

And then when you can also rent for

 

Ken  

the total building, like all of the units. So on average, we’re targeting about 1700 a month on average for their 22 units.

 

Erwin  

Yeah, I have a calculator too. I want to let you go after this. 1700 times 20 units. That’s over 34 grand times 12 Started with 35,000. It’s almost 450 Oh my god. So we’re, we’re also taught foreigner that’s almost 450,000 in rent plus utilities.

 

Ken  

Yeah, plus utilities. Everything is separated. Yeah, we’re taking you through the CMHC programme. So we’re going to get a really good exit financing on the back and when it’s done. And we’re also applying for a lot of city grants, because this particular building is in it’s in a box in the street village.

 

Erwin  

In the winter, where the rents are low.

 

Ken  

Well, yeah, so there’s cinnabar street village. And and there are their smaller bachelors and one beds.

 

Erwin  

Oh, well, yeah. Well, how come you chose the smaller units versus two bedrooms? Well, so

 

Ken  

this is great top disagree. Point is how do you define your unit mix, when you’re doing a larger building, it’s really like, You got to consider the location that you’re building is it right, and this location, being in the Burton street village area in the downtown core of the city, the demand for Bachelors in one beds is much higher than demand for two beds, or even three bedroom units. And when it comes to building, it’s all the building valuation is all about your noi, your net operating income, right? So basically, we’re looking at the building footprint, you know, how many units can be fit in the building. And basically, you know, there’s a lot of things to consider like windows and means of egress and other building code requirements, minimum unit size, and all this kind of stuff. And be able to thought through what we came up with, we came up with like, you know, a mix of bachelors and one beds for the unit mix. And that’s, that’s what in demand in that part of the city. You know, this was up on Hamilton mountain, we would definitely be wanting more ones in two bedroom units, not bachelor units, it’s really important to know, know where you are in your city, and what types of units are in demand in that type of location. Yeah,

 

Erwin  

fascinating. All right, Ken, we’ve gone way over. I think, hopefully, the listener enjoyed this because I enjoyed this. I took several pages of notes. Yeah, no,

 

Ken  

thank you for having me. And it’s great to come in and kind of chat with you and get updated on stuff. And there’s a lot of things happening right now. And I’m even having a hard time trying to stay up to date on all the changes, you know, cuz they’re happening. They’re happening weekly right now. It’s crazy. It’s awesome. But it’s exciting. Yeah, it is. It is,

 

Erwin  

especially as more deals come up. So Ken, thanks so much for doing this. Oh, where else can folks reach you? You shared your screen? Yeah,

 

Ken  

basically, Facebook can be condemned. Instagram can be condemned legal. Second suites.com. You can definitely go there. Please book a consultation. If you do have a project coming up. You do want to talk about it. You know, I’ve been in a position in my life or a point in my life that I have a fair bit of experience in different types of things. And so we’ll definitely talk about your project and see if there’s a way that we can help you

 

Erwin  

raising and then what about the do get ahead are these for sale on your website?

 

Ken  

No these are just for fun know what I got these hats sweet John legal and the basement of business so I got these tasks to give to my clients so when they successfully finished a project, then I’m gonna give them the hat basically saying sweet on legals

 

Erwin  

at least was signage in the in the suite for the tenant 10 Thanks for doing this.

 

Ken  

Yeah, thanks.

 

Erwin  

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

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

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

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

Erwin

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

W: erwinszeto.com
FB: https://www.facebook.com/erwin.szeto
IG: https://www.instagram.com/erwinszeto/

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