It’s a sad day at the Truth About Real Estate Investing For Canadians. A highly leveraged group of landlords with hard money loans, heavy renovation investment strategy in tertiary markets group of landlords is seeking bankruptcy protection. I’ve included links to the appointed monitors website where you can find all the court documents, articles in CBC and Globe and Mail.
Fingers crossed this all works out and the articles report how over 30% of the portfolio is sitting empty. Maybe I’m small minded but I only renovated one property at a time as I don’t like negative cash flow or vacancy.
There’s a liquidity crisis, no more cash to renovate as they have only $100,000 in the bank, $144 million owed to investors between first, 2nd mortgages, and promissory notes which means unsecured debt. The promissory notes add up to $54 million.
I’ve spoken to a couple insiders as well who know the principles and thank you to the fans of the show who DM me as well knowing I don’t shy away from publicising losses. But this is a fluid situation, innocent before proven guilty but there are many things I don’t like about these deals AND I don’t have all the details.
One thing for certain, many lenders have criteria they don’t lend to. For example, when I worked for a bank, they would not give mortgages to properties in small towns nor on septic tanks. Fine whatever.
Calvert Home Mortgage came on my show and stated, they do not lend in small towns below 50,000 population.
These landlords have a large market share of small market Northern Ontario. They make up so much of the market to quote the Globe and Mail article, it would take 49 months for a controlled liquidation to exit the Timmins portfolio and 23 months in Sault Ste. Marie. Populations for those towns is about 42,000 and 73,000.
Funny enough I’ve been criticised for investing in small town Hamilton, Ontario with exploding population over 500,000 and it’s a suburb of Toronto. Timmins is a suburb to no one. Sudbury, ON is 294 kilometres away…
I can’t help but think of the book “The Psychology of Money” by Morgan Housel and the history of greed causing highly successful people to “go to the next level” only to lose everything.
Everyone knows Bernie Madoff for his ponzi scheme but did you know he had a legitimate brokerage firm that was successful and he helped develop the NASDAQ stock market. He served as chairman of the board of directors.
Then greed got a hold of him and he started his investment advisory service, the ponzi, the rest is history.
Slow and steady folks. Be strategic and value-focussed like Warren Buffet. Speaking of Warren Buffet, I was reading about how the late Charlie Munger influenced Warren’s investment philosophy toward preferring to buy a wonderful company at a fair price rather than a fair company at a wonderful price. This philosophy underscores the importance of investing in high-quality companies with durable competitive advantages and strong future prospects, even if their stock prices might not seem like a bargain at the time of purchase. This approach is aimed at ensuring long-term value creation and capital appreciation, aligning with their overall strategy of value investing but with a focus on the intrinsic qualities of the business rather than just the price metrics.
I just got back from Austin, Texas which tops many lists for top places to invest in America. I’m looking to invest in wonderful single family houses which is almost the opposite of tertiary markets in Ontario. If you don’t believe me, just check the Sault Ste Marie population. Stats Can says they shrunk between 2021 and 2016.
This Saturday I’ll be sharing my findings from my visit to Austin, what properties I’m looking at and how I plan to grow my portfolio to cash flow $100,000 per year before taxes from rental operating income. I’ll need around 20 properties to do so or $5,000 cash flow each. Note these houses are 100,000 to $350,000 USD, the same cost as a basement suite conversion or a garden suite.
I can’t wait to show all real estate investing Canadians what I consider the best investment for most Canadians, most of the time. 100% ownership and control maintained, 10 times easier to scale than in Canada, all the benefits of being a landlord with fully outsourced property management.
Saturday morning, February 10th, link to register: https://www.eventbrite.ca/e/797034109477?aff=oddtdtcreator
Epic Fail II $144M In Debt, $54M Unsecured Seeking Bankruptcy Protection
On today’s show I invited my good friend Christian Szpilfogel to discuss the sad truth about real estate in managing and recovering distressed assets, understanding the root causes and having proactive strategies.
We discussed the risks of private lending, the responsibilities of the borrowers. Christian has the unique perspective of having worked in a heavily securities regulated environment of Mergers and Acquisitions when he was a general manager under one of Canada’s richest Canadians only to see the wild, wild west that is real estate investing where some investors openly violate securities laws in soliciting the public for capital even offering guaranteed returns.
The last time I heard “guaranteed returns” was from the owner of a now bankrupt company and he’s on the run from the cops.
Christian being one of the good guys in real estate, I thought he was ideal to text at 9:30am to come on the show for 10:30am to talk about losing money. Christian is the owner of the Aliferous Group where he invests his and only his family’s own money, he has no courses to sell, no coaching to sell, he’s not accepting OPM other than the bank’s, he just wants to help people. It’s why we get along so well.
Christian is also Vice President of OREIO, the Ottawa Real Estate Investing Organization, a non-profit, membership based educational organization. Annual membership is only $127, I’m a member too and the value is unmatched. https://www.oreio.org/Membership
I’ve included some links to news sources in the show notes as well. Sadly, I saw investors go belly up in 2008 in the financial crisis, we’re seeing many have problems today and we’ll see this happen again because some didn’t learn from history. So please take this chance to learn from history else be doomed to repeat it. Also watch out for confidence artists, note that con artist is short for confidence artist.
Please keep your investments safe and enjoy the show.
From the Globe and Mail article:
HELP US OUT!
BEFORE YOU GO…
Before you go, if you’re interested in what kind of properties I am looking at in the landlord friendly states of the USA please go to www.iwin.sharesfr.com for what I consider the best investment for most Canadians, most of the time.
I’ve been investing in Ontario since 2005 and while it’s been a great, great run. I started out buying properties in the 100,000s and now it’s $800,000 to $1,000,000. How much higher can it go? I don’t know
To me, the remaining potential for appreciation does not match the risk hence I’m advising my clients to look to where one can find rental properties that are affordable range of $150,000 to $350,000 US$, with rents that range from $1,400 to 2,600/month plus utilities. As many Canadians recognize, these numbers will be positive cash flow and are night and day compared to anything locally. Plus the landlord has all of the rights, no rent control, and income is US dollars which are better than Canadian dollars.
If you don’t believe me, US dollars are better than Canadian dollars, go ask 100 non-Canadians which currency they prefer to be paid in.
So to regain control of your retirement planning. Go to www.iwin.sharesfr.com and check out what great cash flow properties are available in the USA.
The best part is, my US investments will be much more passive compared to by local investments as I’m hiring an asset manager called SHARE to hand hold me through the entire process. As their client and shareholder, Share will source me quality income properties, help me with legal structure and taxes, they manage the property manager and insurance provider while passing down to me preferred rates so I save both time and money.
Share will even tell me when to strategically refinance or sell. SHARE can even support investors all over the country for proper diversification hence my plan is to own in Tennessee, Georgia, and Texas. Share is like my joint venture partner but I only have to pay them fees while I keep 100% ownership and control.
If your goal in investing is to increase cash flow, I don’t know of a better strategy for most Canadians most of the time. One last time that’s www.iwin.sharesfr.com to see what boring, cash flowing real estate investing can look like on your path towards financial peace.
This is how I’m going to make real estate investing great again for my family and hope you choose the same. Till next time!
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 event.
Till next time, just do it because I believe in you.