**Transcripts are auto-generated.

Erwin  

Hello and welcome to the truth about real estate investing show the ranks number 81 on Apple iTunes in the business category. Thanks to you, our 17 listeners again, thank you so much. Thank you to all of you who’ve been leaving five star reviews on iTunes, liking and sharing wherever we post as that really helps the algorithms across the board either iTunes or Facebook or Instagram or it makes it the show more visible and in turn, we may help more everyday Canadians learn about what actually works in real estate investing, no get rich quick schemes, but rather get rich slow, as low as little risk and effort as possible. We do have guests that successfully flip and we have many side hustle real estate investors who will make great money at their jobs, which happens to be the highest and best use of their time. Not everyone has to be a full time flipper to make great money. The whole point of the show is to introduce you to investors with repeatable results who are willing to share their losses as well. A lesson I’ve learned along my journey and told to me by my one of my mentors is to not believe anyone who never loses because if they’re willing to lie about never losing, but what else are they willing to lie about? Speaking of losses, sadly, a developer in Vancouver a midsize developer, coral Mandel properties Limited is making headlines filing for bankruptcy protection from its $7 million in debts across 16 major development projects, I’m told that’s about 2000 condo apartments across those 16 developments, and most of its unfinished, and the cause is rising interest rates. The cause for these financial troubles is rising interest rates, and then in turn debt service costs from the article they cannot raise more capital or debt. And then add to that red tape and delays due to COVID. And working with the City of Vancouver as well. Even though chief the chief operating officer of the company Coromandel properties is a former city, Vancouver city, Vancouver counsellor. So even though they had you know, inside track on how to make things go make my things more smooth. Unfortunately, the developer still is failing, I have a link to the article to the Vancouver Sun in the shownotes. But hopefully this all works out. I’m never want to celebrate other people’s losses. I’m generally just a cheerleader for everyone to be successful, happy and healthy. Anyways, hopefully this all works out, including the condo buyers who put down deposits. Hopefully those those monies are returned in a timely manner. But again, we’re talking about early bankruptcy here, it could be some time until they get their money back. from a market perspective. Again, that’s 2000 units, that’s a whole bunch of supply that will be delayed for who knows how long while at the same time that demand from immigration is only accelerating, including work visas specific network justice, work visas, but visas for international students that sometimes gets missed in the whole immigration number. We still have other folks coming to Canada about another 400,000 or so visas, mostly International School students that are also coming as well who also need a roof over their head. And will you know, they’ll require health care as well. So extract Vancouver housing prices to be even less affordable. Very sad news. This is what happens when NIMBYs folks who push hard for not my backyard policies. And at the same time developers who take on too much debt. As mentioned before on the show, I personally won’t invest in any development that is debt financed. construction loans are fine. For my level of tolerance. I’m not saying that’s fine for everyone. For the projects I invest in Yes, there are construction loans, which to me is a normal business practice, as construction loans are not given unless the pre sale thresholds are met. But other than that, I wouldn’t touch any investment. That’s the sort of this sort of large syndicated mortgages. Anyways, sadly, I anticipate there, there will be other smaller mid sized developers that will fail. As in this as it’s early, it’s still early. Sadly, this is a win for the NIMBYs, as you know less housing is being built, which is exactly what they want. This is terrible news for the investors that were involved. And that would be condo owners who were working to, you know, move into their new homes. And of course, the lenders involved the creditors of the $700 million on the positive, or Chanda created 150,000 new jobs in January, that is 10 times greater than expected pushing unemployment even lower into historical lows. The macro news still generally points to a soft landing in terms of the economy, but we can use do have a lot of debt and which is why the Bank of Canada is pausing interest rate increases on the micro level. I just interviewed today my lawyer friend who’s a Mississauga lawyer. He’s currently working on 32 Power of sale files. And he’s a sole source practitioner office as in, he’s the only lawyer in the office 32 Power sales. I imagine if you extrapolate that across all the real estate lawyers that are out there, it’s probably getting to be a pretty big number of power sales that are coming onto the market. Also, again, on the micro level, a friend of mine is a certified financial planner at the bank who works with a financial planner, and counts 200 households among her clients. And so I asked her are her clients, are they worried about a recession? No. I asked her, Are your clients worried about their jobs? She said yes. Why? Because they work in technology in the tech sector, specifically, Amazon, a company called Amazon. Maybe you’ve heard of it, only only that individuals worried about their job. But the bigger concern, the more widespread concern is how her clients are feeling overworked, due to being understaffed, overworked and understaffed. For a major housing correction, we need higher rates, like maths, like we need mostre, expensive interest rates, and massive unemployment. So far, we’re missing the ladder, and time will tell what happens. On a personal note, cheering I just returned from three days and three nights, together with my brother, my cousins, families in Blue Mountain. For those who don’t know, it’s for those who are outside Ontario. It is a it is our biggest public to ski ski resort in Ontario. It’s really, really big. In terms of like development, how many restaurants and stores they got and how many houses have been built around it. It’s crazy. I am really ashamed or old, or out of shape and old as my legs were toast about in the first day. And then the day two, which was the next day after was pretty bad. I think I’m getting all the soreness now. It’s been a few days now. My kids are doing great. Now they’re skiing. They’re seven and nine years old. The kids have very little trouble keeping up their old man. And pretty much we wait together at the bottom but each run while we wait for cherry who’s much more cautious skier. She’s getting cherries giving her money worth money’s worth by covering all the real estate of each run. This is now your three my kids having having hard lessons and part of being part of ski camps. And it’s the investments really paid off. The kids did not fall once over two days, versus I fell while unloading from the chairlift after getting tangled up with with my cousin. My ski gets caught in a snowboard binding. So I fell on the ground in front of the chairlift a chairlift operator to slow down the whole system. You’re welcome everyone. I’m that guy who’s slowing down everyone’s ski day. We all had a great time over food, great food and drink all the second cousins so my cousins and my brother, their kids, they all go along with my great with my kids and each other. They even rolled around in the snow hopping in and out of the hot tub. unknowingly. This generation is doing what really popular Cold Therapy folks that are that I see everyone’s doing on my on my social media. People do an ice baths. Yeah, my kids are doing the same thing rolling around the snow, hot and cold. You know, popping into the hot tub. Yeah, so they’re following a trend that they don’t even know that’s trim. Did I mention we got a quote unquote great deal on the five bedroom cottage that we were renting off of Airbnb? Only 750 per night. Note that we that we were staying Monday Tuesday Wednesday nights so off peak off peak means $750 night it’s unbelievable what moneymakers times rentals can be 115 per night does not get you towels or bed sheets. Those are $25 more per bed. But whatever at least that we didn’t take. We didn’t have to take our garbage which in my experience the last three Airbnb is a state that that was a requirement otherwise you get in trouble or they give you less than five stars. That actually happened to me one property, we left the garbage expecting to pay the $35 penalty. They didn’t charge the penalty. Instead they gave us some less they gave us I think three stars. So for all you Airbnb operators out there, please know that is my pet peeve. Don’t make me take my garbage with me. I’d much rather pay a fee or not pay it off.

Erwin  

All of this can of course be avoided by just staying in a hotel which was my frustration with Airbnb in the inconsistencies among how they’re operated. staying in a hotel will likely be my preference when we travel without kids. By the way pro tip for travelling with gratuities escalating and being automatically added to restaurant bills when we were in Florida. Last month. We instead of we had dinner at a restaurant again, it wasn’t that all that healthy. French fries came with everything. It operated very much like a takeout place. They automatically added each 18% gratuity. After that experience. I said hey, let’s just go to Whole Foods which was around the corner. So we dined at Whole Foods on their prepared foods. So everyone ate healthier. You got exactly what they want. And everyone’s got to pick out what they wanted, including portion size. And generally it’s quite healthy, high quality and fast. This was way cheaper than dining at the restaurant. And I’m least my dad jokes of telling the kids and chair that we were slumming it at Whole Foods, which never fails to deliver eye rolls and handshakes. That works on my friends as well. Please try it yourself and let me know how it goes. Let your friends know that you’re slumming it eating at Whole Foods. onto this week’s show, we have Todd Pierce. Returning to the show. He is a math teacher in kindergarten to grade 12 math consultant at his local school district in Windsor, Ontario. He’s co founded an online learning business for math professional development, tal actively invest in real estate for value in cash flow. Stockton, asked me to stocks and option trades. And he partners to co own North Shore properties that holds 30 units in and around Windsor, Ontario. Please pay attention to how Kyle and partner Matt divide up responsibilities as they come to the table with complementary skills. In my studying of some now failed business partnerships. A couple of them the two co founders, the main drivers of the business had very similar skills instead of complementing. So why have they partnered from the beginning? I do not know. Kyle is currently on unpaid leave from teaching to pursue the these above businesses, investing ventures, and CO hosting the investment Teacher Podcast. We get very detailed on Kyle’s most recent acquisition of an eight Plex and the vendor financing in terms. We also talk more detailed about how to teach kids about how investing works. So I’m planning on rolling out those the the recommendations from Kyle and I recommend that you have listened to it as well, please enjoy the show. Hi, cow, well, what’s keeping you busy these days?

Kyle  

Well, too much is keeping me busy. I’m actually in the first week of leave of absence from work, were actually a bit of a long story, my wife and I actually applied to teach at a school in the Netherlands. And we had both applied for these leaves of absence. And things were going along really well. And we ended up not getting the position. So I thought hey, I’ve already got a leave of absence, why not just you know, kind of do some of my passion projects, which I know we’ve chatted about, you know, previously still knee deep in math, you know, math education world and all the fun that goes goes along with that. And then of course, all the other pieces that keep us busy. The kids sports investing, real estate, all of those pieces. So it’s, it’s been busy, but it’s exactly the way I love living life, which is busy and active. So here we are.

Erwin  

Excellent. I think you’re probably the first people to talk about leave of absence. So can you explain for the listener doesn’t know what a leave of absence is? Can you explain it?

Kyle  

Yeah, this is actually it’s kind of a it’s kind of a crazy concept, because it’s not available in very many industries. But something that, you know, we are blessed to have is the opportunity to apply in certain education contexts where you can apply to take some time away from your from your work, and ultimately the board can decide, you know, yes or no, or, you know, get back in and you know, if there’s enough in terms of human capital, if there’s enough occasional teachers on the supply list and all of those things, then sometimes they say, Yeah, go for it. So it’s been, you know, a bit of a blessing that they were open to this idea. And I’m, I’m just going to try to make the most of it, hopefully do some of these passion projects, like I said, with the extra time. Super cool.

Erwin  

So you are a teacher with the public school board.

Kyle  

That is correct. Yeah, public board here in Windsor Essex. And yeah, it’s amazing. The crazy part is it’s like I love my job. And, you know, stepping away from it has actually been really, you know, more of a mindset shift. You know, it’s like kind of a bit of FOMO, right, where you step away from something you love, like, if you imagine, I know, I know you are when and Sherry enjoy the work you’re doing. Like, if you could just imagine that you just stepped away from it, and sort of entrusted someone else to come in the person who’s in, you know, filling in for my role is an amazing person, I totally trust, you know, the great work they’re going to do, but you sort of, you know, you feel like it’s your it’s like your baby, you know, you’ve you’ve worked so hard for it and my role as a consultant with the district. There’s so many projects that you have your hands involved in and you want to see them through. So this has been definitely challenging from a mindset perspective, but I think it’s also good from like, a just a personal growth perspective to you know, sort of step back and maybe get rid of that hero syndrome like hey, the world will go on without you and, you know, and hopefully I can I can make some some noise, you know, doing some other things at the same time here.

Erwin  

Right. And my own experience, I took a sabbatical back in Oh or nine or 20 or 2010 ish. My employment allowed for that. Two weeks paid. And the other two weeks you decide whether or not you want to take unpaid or use your vacation, got to get out. And we were allowed four weeks uninterrupted sabbatical. And that’s when I made my I was like my discovery to see if I want to be in real estate full time. Love it. So that was four weeks paid again, I was going back to a job. Are you being paid during your leave? Or? Yeah,

Kyle  

so this leave would be unpaid. Completely unpaid? Yeah, definitely. Definitely. So that’s how long how long is it? Technically right now it is until September. So, you know, we’re taking, like taking a real step away here, you know, to kind of kind of play think things through you know, there’s, there’s also pieces to like, for the longest time, I know, I want to go back to the classroom as well. And, again, something that sort of stopped me from doing that is again, I enjoy the role I have now and part of it is like Am I okay, stepping away from it. So again, it’s a bit of a an experiment similar to yours. Your four week experiment feels a lot smaller. And like, you know, how many sleepless nights did you have when you’re, you know, trying to make

Erwin  

so many emotions still working?

Kyle  

That is incredible. That seven

Erwin  

months, seven months? No income? You’re saying?

Kyle  

Yep. So my wife is going to be working during this time. Okay. You know, luckily, long

Erwin  

vacation. That’s

Kyle  

it? Yeah, exactly. Luckily, you know, we’ve positioned ourselves to be okay. Without that, and, you know, I have my, you know, side hustle, and, you know, some real estate and other things that are, you know, helping to support that. But, but ultimately, yeah, it’s some time, part of it’s just to say, I did it, you know, and to be able to say, you know, there was this time that I did this thing, and I’ve kept myself extremely busy. I know, it’s only week one, but I haven’t stopped and I’m exhausted at night. So, you know, I’m feeling good about it so far asked me in a couple months when the lack of paycheck is starting to get to me. We’ll, we’ll see how we’re doing back then. Or further down the road, but hopefully, hopefully, still feeling positively about it,

Erwin  

or carry on what Jimmy Butler helped keep me going was also I took my RRSPs out, right, because then because my income has collapsed, right? So it’s just my own path. And also I want it for real estate investing as well. So if I was gonna take my RSPs out, that was the time to do it. Sorry, I forgot to mention I resigned when I got back from sabbatical. That’s why I’m here. Now. I no longer you are. There you are. There’s no ei nothing,

Kyle  

nothing there. Nothing. And actually, now that you say that, I should probably look into that. But I think because it’s voluntary. It’s probably Yeah, it’s probably no but I’m gonna write that down to look it up. Because I’m like, hey, if it is available, then it’s probably not a bad idea.

Erwin  

You’re not paid into it. Money. Yeah, exactly.

Kyle  

Give me some of it back. You know, so definitely one to to look at for

Erwin  

sure. And then what else has enabled you to do this? Would you say you’ve lived rather frugal deliver like a massive home like already you live in Windsor, you’ve lived there for quite some time. So it’s not nearly as expensive like the GTA totally. If you’ve tried like an ancient car type stuff I used

Kyle  

to I used to now my mind is less ancient, but for a very long time. Like I’m I am definitely a more frugal person I don’t enjoy like actually spending money actually, this like bothers me it’s probably something I need to work on. Like my relationship with money. I don’t like spending with it or spending it unless it’s on something that actually generates money as I’m sure you can relate and many people who are listening but you know, we actually live we’re blessed. We live in a beautiful home that we built built back in 2016. So before things kind of got completely crazy, but ultimately Yeah, I would say you know, we’ve been I guess blessed to live in a part of Ontario receiving a good pay for you know, living in this area at the price point you know, that homes were at like when I bought my first home I bought it was a it was a power of sale so there was a lot wrong with it that we had to do and put our you know, rolled up our sleeves but I believe the closing price on this home which was about a 15 to 18 year old ranch of about, call it 1800 square feet in a subdivision just outside of Windsor. And I want to say the closing price was like 172 or something like that when we bought it. So you know, the price point is probably comical for anyone who’s living in GTA since you know since they were born, even but the price point was obviously much much lower. I now realise you know, every property I’ve ever sold. I wish I didn’t because that same property is about 10 minutes, you know, five minutes up the road from me. And you know, it probably is going for more like 550 but even 550 to a lot of People who are listening are probably shaking their heads thinking, why am I, you know, in the Golden Horseshoe when I could be in Windsor with Kyle? Right?

Erwin  

Yeah, cuz, you know, your mortgage like was like 150 versus someone’s mortgage would be today there to buy that same property, we’d be like over 400, probably,

Kyle  

totally, totally. Yeah. And I was in a GREP returns the mortgage sighs Yeah, and I was really what got me into real estate back in 2011, as we discussed, the last time I was on, you know, was the fact that I was aggressively paying down a small mortgage as well, right. So that, you know, obviously helped. And then I guess, having the, I’ll say, the luck to land on these real estate books and these methods of, you know, taking that dead equity and doing something with it allowed me to kind of enter into the market, and then, you know, the rest is history. So, you know, in order to get into this home, you know, we did have to, I say we did have to, I felt more comfortable selling our Florida property that we had to sort of help us with the build and just sort of help everyone sleep better at night, knowing that, you know, the bills, were going to get paid, and you know, the the house would be completed. So the actual mortgage would come through, because as you know, if you’re building on your own, we own the property. And you’re building on your own that, you know, sometimes lenders can can be pretty, pretty difficult with the drawers and things like that when you’re trying to do it yourself without a builder.

Erwin  

So Kyle, for anyone who doesn’t know your story back in was it Oh, nine that you bought an investment property in Florida?

Kyle  

I think the actual first property the Florida property would have been 2011. So and again, Mark was ruined, right? Yeah, it was, it was still way down there. And actually, when you actually look at things, too, and this is maybe, you know, to provide people with context, who may be just entering into the investing world, you know, after post 2008, when you look at the housing market, comparatively to the stock market. So like the end of Oh, eight, and in 209, there was a lot of, you know, kind of like what’s going on in the markets right now, where there’s lots of these, like, bear market bounces, and like right now we’re like ripping, you know, above the downward trend, which, you know, don’t get me wrong. I’m like, Ooh, maybe, you know, maybe things are looking

Erwin  

for listeners benefit for context. We’re recording this show every second, I think we’ve had like five huge positive weeks in a row for the NASDAQ. Right, yes.

Kyle  

But as a reminder, going back going back to the the last time, or I think it was maybe the tech bubble, you know, there was a similar occurrence, and then it dumped about 40 or 50%. From there. So not saying that’s gonna happen, but it is something for us to maybe be aware of, because, you know, raising the rates by only a quarter percent shouldn’t be a situation where everyone’s like, rejoicing, it’s, it’s less harsh than 50 basis points. But at the end of the day, there’s really, you know, not not to mention that more and more companies are like, they’re trimming the fat, like, there’s a lot of, of challenges out there. So, you know, food for thought. But anyway, my point being is that when you look at the market, and you look at what happens in the stock market, that’s obviously much, it’s much faster, the effects happen quickly, right? rips up that rips down quickly. But the housing market is more gradual. So when you actually look at what happened to the housing market, it wasn’t like right in 2008 2009, where it hit the bottom, it just kept going down for the next couple of years. So when you came in, and like 2010 2011, you know, you were kind of like in a place like it hadn’t, you know, it didn’t really start like the uptrend yet. So there was still like this fear in your mind that, you know, could it continue to go down for me, I was like, well, it’s worth the risk. At this point. I had no skin in the game in the US side of things. So that’s when when I dove in was in that 2011 year and then the very next year, I purchased the Arizona property and actually, my wife was pregnant with our daughter Talia, and we purchased that home while we were in Vegas, bought a property in Arizona, so she’s waddling around and we were just like in Vegas for no reason just to say we did it. And you know, we met a notary and signed it in the Luxor hotel, like at the bar, like, I felt like such a baller it was

Erwin  

sorry, did you buy a property without seeing it?

Kyle  

I did. I did. But But I will tell you this that property which I still have today, the one thing I will say is that, you know, I would say an asset I have is my creative thinking so back then, you know, picture yourself like over 10 years ago, I had a realtor, an amazing realtor who went around and would go to properties for me and basically take me and record a video on like a crappy cellphone way back then. And you know, take me through and like bring me right up to the wall where like, you know, where the hole in the wall was or you know, all the different things and you know, we had this inspector that if it was serious consideration, I’d pay for the inspection to get the full report all of those things, and I was gonna go check it out. And then something came up and I was just sort of like, I guess I won’t. And it was only $70,000 at the time. So I was like, I’m gonna go for it. And it was a home that was built in 2006. So it was like a home that was built in, like near the end of their bubble, right, right before it burst. So it was like, you know, in great condition and in a gated community and really, having had my experience with our Florida property, which was in a gated community. I was like, I’m willing to go for this and, you know, we pulled the trigger and got to look like ballers for at least 15 minutes in the Luxor Hotel.

Erwin  

Sorry, you sit, you still have the property what still happen. What’s it worth today? What do you rent? Well, I

Kyle  

can tell you what it was worth. I’ll tell you what it’s worth today in a second. But I’ll tell you what it was worth like four months ago, according to Zillow, Zillow told me that it was worth about 410,000. But, but just like this past week, Zillow told me it’s worth like 340,000. So you know, that’s soul crushing. But at the end of the day, we have a tenant in there it’s cashflow positive, as you can imagine, and you know, part of you thinks Hey, should I have, you know, shoulda, woulda coulda type thing. But at the same time, you know, I always I always second guess like, whenever I’m thinking about selling, especially a property or real estate property, I always think, what am I going to do with the money then? Because then you have this money, and then you’re sort of like, well, now I need to go buy something to make money with it. But I had something that was making money with it. So maybe I should just keep it over there. So that’s maybe something for you to think about. Whenever you’re in the mood to panic, sell something. So I’m just sort of hanging on to that one, and letting it cash flow and do its thing. And, you know, over time, it’ll the ups and downs, I’m sure will be mostly up instead of down.

Erwin  

And then how did you finance these were the downpayment come from? Because these American properties are not easy. I see stuff on social media, people are saying it’s easy. As far as I know what it ain’t easy.

Kyle  

No, no. And back then, like back, you know, when you’re coming out of the financial crisis, basically, was a housing issue that caused all of this right over leveraged lending issue? Oh, yeah, totally, not really lend more. Yeah, totally. So my, my first Florida property was home equity line of credit. You know, as I mentioned, I was I was essentially like, creating all this dead equity in my home. And we go through this idea about debt equity on on a new podcast, we’ll talk about that later. But this debt equity is just building up and I realised I’m like, it’s, it’s not earning me anything extra, you know, like, my home is gonna either rise in value or fall in value, regardless of how big my mortgage is. So I went and got that home equity line of credit, and then, you know, managed to purchase that Florida property, you know, with that line of credit, and then I just aggressively instead of paying down my mortgage aggressively, I just started paying down my Home Equity Line aggressively so that I could open up more access to capital for another purchase. And that’s when the The Arizona property happened. Except for that one, I was able to get a mortgage, but it was very challenging, I will put it that way. So it was, you know, I was thrifted very well, in order to get the mortgage that we had pulled for that one. And it was only for like, you know, 50 60,000, right. So it’s definitely hard. I’m sure it’s maybe easier now in the US. But I think it’s still not the easiest thing to do, especially if it’s an investment property. If it’s a second home, I think it’s a different scenario as well. So that’s something for people to think about. So I

Erwin  

just want to just want to reiterate, for the listener, you were able to use your home equity line to basically write a check for the entire value of the Florida property. Yes, exactly. So there is no mortgage, there was no qualification process for now, in terms of from a bank. And I

Kyle  

guess, the only qualification process you have is to get your home equity line. So you know, you’d have to with your neighbourhood bank, your big bank or your credit union, whatever it is, who typically they already know who you are, if you know you’ve got a mortgage with them. And you know, they do that drive by appraisal, typically, unless there’s any sort of challenge like nowadays, I’m guessing that they probably Yeah, be a little bit a little bit more explicit, simply because housing market has gone up so much and is now sort of, you know, wavering a little bit so they’re probably going to make sure that there isn’t enough equity in that home but but it’s definitely a great strategy. It’s something that I’ve I’ve advocated to a number of people who I’ve worked with and have asked for advice around how do you get into real estate investing and it’s like if if you’re able to release some of that equity in your home and if your cash flow now like not dependent on the property, but if your cash flow from your job or however you earn income, if it can be covered by that. That is where I think you are in a Safe Place, right where you can feel comfortable that it’s like worst case, worst case, worst case scenario, you are able to cover that, you know, interest only payment or hopefully more than the interest only payment. And then the cash flow from the property is quote unquote bonus, like you take that cash flow and you use it to aggressively pay down the line of credit. But I would never advocate for someone to borrow against their primary residence, put themselves in a situation where if that cash flow isn’t as I anticipating or projecting that they feel strapped for cash. So it’s, it’s almost like you want to make sure that you’re still, you know, conservatively approaching this, but again, when I say that a lot of people are like, that’s, it’s not conservative to leverage the equity in their home, right, if that’s all they have. So be very cautious. And just make sure that you’re over planning for what to do in all of those very, very unrealistic on probabilistic scenarios of not being able to rent the home or something along those lines.

Erwin  

That’s a great disclaimer. And just like cheering myself, we make good incomes, likely you and your wife make good incomes, so multiple streams of income to be able to cover anything that goes wrong.

Kyle  

Yeah, and you’ve been seeing this message a lot, or when on the show, I’ve got to say, and I appreciate it is just this idea of like going slow, and you’ve referenced, you know, coaches and consultants and things that have, you know, suggested to people to like, go do like five flips, or, you know, do all these different things happening, like, take it slow, and make sure that, you know, you get one success, you know, like get one rolling, we’ll call it right, because, you know, you’ll never hit success for many, many years. Right, you won’t see what the end results gonna be for a very long time. But if you can get those wheels rolling, where you feel like that systematic and you kind of are in the routine, then you start looking, you can still look at properties, you can still you know, kind of sniff around, but you know, wait to pull the trigger, so that you’re not, you know, you’re not putting yourself in over your head without realising it just kind of get under control, feel good about it. For me, I waited too long to kind of get in after I bought that second property. But you know, it was like four years after that, when I started our local real estate holding company with with my good friend and colleague, Matt Bigley, who I think you chatted with recently.

Erwin  

He’ll be on the show soon.

Kyle  

Okay, there you go. We came together, and we started buying properties in this area. And, you know, that’s sort of where we spend most of our time in the real estate world. Now, not to say that there aren’t other deals in the US. But again, local is, it’s definitely easier, right? You can feel more confident in the area. And, you know, just kind of knowing that you can drive to the property, even if you’re not self managing is, is something that I like nowadays, especially with two young children, a busy family and lots of things going on all the time.

Erwin  

Right, understand your point, it’s a much safer, easier investment when you can be an insider. Yes, exactly. Exactly how to be an insider in Florida and in Arizona and in Vegas.

Kyle  

Totally, totally. I know that, like the lions, you know, the whole, you know, other side of the tracks scenario is is not as common in Canada, especially in smaller Canadian cities, but like, there is those nuances to every part of every city, every town, every county, that you just want to have sort of a feel like you want to know sort of like what’s going on in that area. And what’s typical, and yeah, we feel really comfortable in this area. We’ve seen some stuff kind of heading towards Chatham way or heading, you know, a little bit further closer to London. But, you know, part of us now we sort of put it through a filter and just say if if it’s going to take too much work too much effort on our part to feel as confident as we do here, then maybe it’s just not for us. Maybe it’s for somebody else, right? He’s he’s really eager to learn that area. But for us, we’ve looked in Chatham, we’ve looked in some other places. But again, it’s like unless you live there, unless you’re there all the time. You always wonder what you don’t know, right?

Erwin  

For me, the opportunity has to be a no brainer for me to go outside my area of operation. Only totally mentioned, like rocks on the tracks. Like it made me think about, there’s a there’s a handful of streets in this one neighbourhood where there’s groundwater that runs underneath those houses. So all those foundations are compromised. And not everyone knows. But I know that. I know that because my home inspector has a structural engineer who told me that not everyone will know this. Right? Totally. And then like there’s certain neighbourhoods in St. Catharines, where it’s, it’s high clay soil, so the drainage is terrible. So then you’ll find a lot of busted foundations. So you got to know these things are like in Branford there’s many neighbourhoods that are in the floodplain. So you cannot legally sweep those basements, things like that. Like every neighbourhood every market has have their own nuances that you need to know. So that no one can pull the wool over your eyes?

Kyle  

Well, I think you’re articulating as well, why why joint ventures happen as well, like a lot of people struggle with that, especially people who have invested in themselves? Or like, why would anyone want to get involved in a joint venture. And the reality is that is it takes a lot of time to feel comfortable. For me that first property in Florida, I spent over a year of every single night, you know, this is pre kids, every single night researching and looking at every neighbourhood, and we travelled there, and we, you know, and I’m happy that I did all of those things. Like I gained many skills. And there’s people who are listening, who might be the same people, right, who are listening to podcasts and doing all of those things. Class paralysis. Yeah, there’s so many other people out there who they’re just like, right away, they’re like, Oh, I’m not gonna do that. And right there, those are, you know, those are the ideal people for a potential like joint venture opportunity for, you know, for both the, you know, the person who brings the knowledge and the skills and then the person who maybe is loving their salary job and just doesn’t have time or doesn’t have an interest to do all of that extra work. They’re like, I don’t want to go check out the clay samples with or when, you know, tonight, after work, I want to go do something else, right. But you and I were totally into it, right? Get the galoshes and let’s

Erwin  

go, I’m a geek. To know, everything meets me too.

Kyle  

I’m like, if there’s an opportunity to learn, I’m all over it, you know, and oftentimes, you know, some people look at a scenario as a waste of time, like look at a property and they’re disappointed when it wasn’t like they expected I’m like, okay, but I learned something about it. And I’m like, you know, you make note of, you know, a property like this, maybe next time, I don’t go to view it or, you know, there’s something about it that you can you can learn from and it will help you with your process moving forward.

Erwin  

Right. One of the things I did your mathematical is I saw a lot of houses. I don’t think within those four weeks, but pretty quickly, I saw 100 houses, lately spent at least 15 minutes on property on site, walking around, invest into the house, look into the basement. So then once you have once you’ve seen 100 properties, you realise what the top 20% looks like. And now I focus my attention on only acquiring I’m only paying attention to this 20% Then I’m looking for the top 20% of the top 20%. So I’m really looking to look at 4% of the market 8020 rule, right? And then take it to another level down to 4%. Right? Yeah, absolutely. 20%, top 20% of the top 20%. Right now down to 4%. And then that makes screen property a lot easier. actually avoid a lot of issues. You know, what neighbourhoods Do you want that sort of things? So Kyle, we talked about, we talked a lot about Florida and Arizona, but you’re choosing to focus on your local area. Actually, you’re just in the suburbs of Windsor?

Kyle  

Yeah, like I live out in a town called Belle River, which is about you know, 2025 minutes outside of Windsor. So not too far. But, you know, close enough to call Windsor home for sure.

Erwin  

So you’re investing in Bill River, are you investing in Windsor, a little bit

Kyle  

of everything. And actually, like one of our specialties, I’ll be honest with our property holding company has actually been focusing on the smaller towns outside of Windsor. And, you know, some of the benefit is like, again, we know the area, which is great, we avoid sort of the city, maybe challenges, right? You know, there’s lots going on inside the city. So we go to small towns, like Belle River, for example, right up the road from me up, you know, literally, like 500 metres from me, we own six little cottages that, you know, we found this was our first purchase as as a holding Corp. This was back in 2016. And, you know, this seller was selling privately and you know, as we do with every deal, we got pretty creative learned about the seller and trying to figure out like, what is it that they want? What do they need? Like, why are they selling? And how do we help each other sort of, you know, satisfy each other’s needs. And, you know, we’re able to arrange that. So we, you know, have that there. We know obviously, our town, Matt lives out in Kingsville we’ve got a couple duplexes out in Kingsville, which is, you know, in a wonderful town, anyone who’s listening and wants to come down to this area staying, you know, in Kingsville, and wine country is is an amazing, amazing experience. And then now actually this coming week, we have a joint venture with a an investor who we’ve picked up a nine unit building in a town called Essex, which is sort of halfway between Bell River and Kingsville. So for us, small town is kind of like our niche, it’s quiet, you know, it’s easy, I say easy, like Nothing’s easy, but you know, it’s it’s easier. It’s like not complicated, and not complex. So that’s sort of been where, you know, our niche is and then you know, if you go into Windsor, the neighbourhoods you want tend to be much higher price points, just because it’s like you’re getting a Better neighbourhoods, then maybe another neighbourhood within the city limits. Whereas here we get all these nice little neighbourhoods, inside little towns that investors from Toronto may never have heard about. Right. So it sort of keeps the price point a little bit further down. So maybe a little bit better on the cash flow side as well.

Erwin  

Right. So your part of the strategy is to stay away from where everybody else is where all the hype is. Yeah,

Kyle  

I mean, it’s all honestly, it’s like, not that we necessarily, like stay away, we still know what’s out there. But it’s like, we’re just we’re like, that’s just not for us. You know, like, and we’re not willing, especially these past couple of years, you know, we were kind of getting frustrated that we didn’t buy anything over the past couple of years, just because we’re like, we’re not gonna go into a bidding war for an investment property to basically prove to everyone else in the world that we were the biggest sucker. You know, that’s kind of the way I looked at it. It’s different if it’s your personal residence, and so on as followers.

Erwin  

Like when you mail to Kyle,

Kyle  

yeah, when you really think about it, you get 20 offers on a property, right, and it’s an investment property. And basically, what you’re saying is like, I want to make sure that I pay the most possible money for this investment, because nobody else in the world so far wants it for this price. Like, that’s basically what you’re saying. And so we started just never did it. We threw some offers in on properties, but we weren’t gonna get serious about, you know, trying to outbid anyone were like, No, the time will come, there will be opportunities, we’re just gonna have to keep searching. And this latest one, you know, ended up being a pretty good deal. So

Erwin  

we’re excited about it. And you’ve lived in Windsor for quite some time.

Kyle  

Yeah, yeah. I’ve been here. I lived in Pickering when I was young. And then when my parents had had met my, my mom, and my stepdad met, we moved here when I was young grade two. So I’ve been here all my life, other side of Windsor in LaSalle, another great town. And, yeah, I love the area, we’re close to Detroit. And, you know, we get a lot of the big city, sort of, you know, excitement. So bands come to town, you know, you get to go over there the leafs come to town, we just hop over and you’re there in 35 minutes and have a great time. And then you just come back across the border, and we’re back in little town Windsor.

Erwin  

Right. And so you have the advantage, since you’re local, you live there, there’s advantages over the town investor.

Kyle  

Oh, for sure. For sure. I don’t like and again, this is again, not living there. But I couldn’t imagine trying to invest in the GTA, just to me, it just seems so challenging, just from a cash flow perspective. I know rents are higher, but especially these past couple of years, it really, you know, I would look at properties. And you know, I’m on different email lists and things just to sort of learn as I go. But I really liked the simplicity, like you’re not gonna get the appreciation that we got over the past couple of years here in Windsor ongoing, but we know it’s, it’s a strong enough market. And if you’re cash flowing well enough, and you know, the area, then you know, you’ve got a pretty solid investment, as long as you’re not in it for some sort of short term gain, where you’re just looking to do a quick flip. As long as you’ve got a long term horizon, you’re in a in a really great position.

Erwin  

Don’t forget, our federal government thinks that investments are so good. It’s worth it to leave your houses or houses vacant. So, you know, if you put down enough cash, the investment will make sense. Yeah, exactly. There’s a lot of them out there. Yeah. I don’t know anyone personally. On a witch hunt for these places. A lot of them out there. For sure. For sure. Kyle, what else is filling your time while you’re on absence?

Kyle  

Well, we’ve got lots I mean, like I said, I am I’m so passionate about this math education thing I’ve been for a really long time, wanting to you know, write a book, and I’ve had an outline, I’ve done all of those things. So I’m going to continue hacking away on those little projects. And, you know, those are like the passion projects that I really, really enjoy. But then on the other side of things, too, just recently myself, Matt, who is my real estate partner and now realtor here in Windsor, former teacher and my other math co worker co Hustler, I suppose John, or we now have a podcast called The invested teacher podcasts. And, you know, we’ve all been teachers or are currently teachers, Matt, having moved on to real estate similar to your scenario with your your sabbatical that you took and he sort of took his exit and he’s into that world now. And we come together every week to chat on on the podcast about investing. We tend to focus on real estate, but we do talk about some of the other aspects. We talk about the stock market and investing there. We talk about some whole life insurance pieces. We’re going to be going deeper in over the next few episodes on that as well. But yeah, it’s been awesome. It’s been such a great uptake from the community, not only educators but other people who are in we would Hot, like typically salaried positions, people who are, you know, kind of busy, oftentimes, maybe have like a pension and they haven’t really thought much about, you know, investing because they maybe haven’t felt the need to. And people are coming out of the woodwork and reaching out and saying how much you’re enjoying it. So we’re having a blast. And, you know, we look to continue doing that over this time as well.

Erwin  

So I’m going a bit backwards. Can you tell me what you’re seeing right now in the Windsor market, because for example, here, entry level investment grade properties that we always focus on starter starter category, there’s anything that we’re interested in looking at, or showing our clients with multiple offers on it got 349 offers, or what are you seeing anything similar in Windsor, every second,

Kyle  

not a tonne of multiples. But even for example, Matt had a property he was personally selling, and him and another partner, you know, they were selling it, they received multiples on it. But it’s not like multiples, like where it’s going all the way above, you know, way above ask. So you’re still getting in the entry level market, you’re still getting activity there, for sure. I just saw some stats come out. For this past month in the past, you know, for January, the numbers did bump, you know, by like, I think 30 I think it was 30 grand or something for average home price. So even though we you know, sort of took a bit of a dive, it kind of popped there for a little bit. So who knows if that’ll keep up. So, you know, if you’re looking for like single family entry level homes, I think there’s still enough competition where you’re not seeing the action is with more of your like higher end. So luxury homes, of course, are sitting a whole lot longer. Some investment properties are but to be honest, not too many, because I think, I really think it’s like it’s a different clientele who, you know, are in the investment space. So you know, there’s still a lot of action, we haven’t seen the price per door come down a whole lot with the investment properties, but you’re just seeing some properties set maybe a little longer than they were over the past couple of years.

Erwin  

Right? Well, you mentioned that you just recently bought a nine unit, have you been looking to buy some small Maltese this whole time during during this correction?

Kyle  

Yeah, we are always on the lookout. And with this particular property, we really liked it, the location being one in a small town was really tidy, it’s probably going to be the nicest building in our portfolio. To be honest, back when we started, we were sort of, you know, we look for the, you know, the ugly ducklings that are out there that nobody else wanted. And you know, we’d get them for a good price. But then at with that comes lots of added capital ongoing until you know, you’ve you’ve completely sort of fixed it up and are able to refi it. So with this property, it’s actually in like great shape. The seller, you know, had it up for a while since the spring. And they had a couple offers that were accepted and conditional and then fell through for financing and other other reasons. And we just kept on it with the selling agent. And we were trying to be super super, you know, creative. I remember back, you know, we were at at Cedar Point, it’s kind of like Canada’s Wonderland, but for Windsor eighths, who go to, you know, Ohio instead of to Toronto to go on the on all the rides. And I’m standing in line, having a conversation via text with this agent. That was back in August. And you know, we were on the phone all day, every day for a good couple of weeks, and just couldn’t get it together. And then finally, they came back to us a couple months after and said, hey, the latest offer, you know, fell through and we made it work. So, you know, we got some really favourable terms that are favourable on both sides, we figured out what the sellers wanted, and what they needed, like why they were selling, like, what’s their goal. And once we knew that goal, we were able to come up with something that made both sides like made it make sense for both sides. So that one’s going to be a JV deal. And our investors really excited about it as well. And we’re extremely excited about it to to add such an awesome building to the portfolio.

Erwin  

What about the negotiation of the offer that made attractive to the seller? And then what for yourselves?

Kyle  

Yeah, for us, you know, we obviously want the tough part in real estate, and really in anything is it comes down to price, everyone gets fixated on price. So what I tried to do, and this is maybe the math background that you know comes in, but also a little bit of the creativity as I try to figure out okay, so if you were to get that money, like what are you going to do with it? And for them, they just wanted to put it into some sort of safe investment. They were just done. They had reached an age of retirement, and they just want it to be done with the like, I think as you get older, you just don’t want any concerns like not that it was causing them any problems but they just didn’t want to own a rental property any longer. And, you know,

Erwin  

get the money into a GIC or something. Well, exactly, exactly. So

Kyle  

they were basically looking to cash out and they were making a significant amount In terms of the, you know, sweat equity that had grown and ghost equity, whatever you want to call it just from appreciation that they were just going to take that and put it into something super safe to just spit out a really easy fixed return. I said, Well, you know, what, why don’t we pay you that? And guess what, imagine a world where if we don’t follow through, that you get to take back your property. And you know, when they started to get the wheels turning about this going, like, wait a second, the asset we know it’s ours, you know, we own it right now. We’ve owned it for 20 years. So they know everything about this thing, they put nothing but love and care into this thing, can we find a price that would work where instead of us going to the bank, we go to you. So we looked at a vendor take back and we got really creative, to make sure the numbers work, because I said, I don’t care what the price on paper is, what I need are for these numbers to make sense, which is how much money is going to be coming out of this property. And you know, what, I propose some different various scenarios, which you know, I won’t dig into here, we were able to come to terms and essentially meet in the middle so that everybody was happy. And really, at the end of the day, they’ve got a better situation than, say, a GIC. Because it’s like, it’s backed against something that ultimately they get to take back. Plus keep, you know, the down payment, if, you know, if we weren’t to follow through on on our side of things,

Erwin  

right, they get the security of the property versus believing the government’s gonna pay them back. Exactly. Yeah,

Kyle  

exactly. Yeah, it’s worked so far, but who knows?

Erwin  

Can you share what the terms were on the b2b, it was

Kyle  

a really, it was really good terms, we managed to get 3% interest only for five years. And that was, and it was on 70% loan to value. So we were able to really make this work. And also, you know, we talked about, you know, the turbulent markets, and the uncertainty of interest rates, and all of these things. That allowed us also to bring the price point up, which, you know, we had conversations as well around, like, I’m like, actually, it probably makes sense for the price point to go down and us to pay more interest, but you know, whatever, we don’t need to talk about that. But they were happy with that. And they were happy to sort of, quote unquote, move on. And like when you actually look at the numbers on their front, on their end, you know, they’re going, like we could pay off this mortgage that they had on it. And they could essentially do better in terms of cash flow than they were doing, having owned the property, at least given the numbers that they were working with, right. So it’s like, at the end of the day, it’s like, we made it we exactly completely passive, where they lose out is they don’t get any sort of appreciation potential, right. So I mean, that that’s what you’re losing in this exchange. But you know, when you when I’m turning 40, this year, and they’re, you know, turning 65, it’s like, we have very different, you know, sort of needs and wants for why this investment. So, again, being creative and having experience to be able to have these conversations and go okay, well, just because we can’t see eye to eye right now, maybe there’s an opportunity for us to work together. And essentially make sure that everybody gets what they wanted in the long run, right. And that really worked well, for this particular deal.

Erwin  

In my experience, the challenge of btps often is the selling agent, they have to understand btvs themselves, usually folks in the commercial world, it’s not a problem. If they have a regular residential realtor, usually, it’s not something that they’ve ever covered before. So it’s really hard to have those conversations, were you speaking directly with the seller? Or were you going to their agent,

Kyle  

and that was the challenge, I had proposed a number of times to get the actual sellers to the table, and we’d all be there. Matt was our representation on the buying side. So you know, that’s always a benefit as well. So I spoke with the selling agent quite a bit to ensure that there was clarity there, we did a lot of three way calls. So I’m, you know, involved in that whole process, but we never had access to the actual seller. And I, I wonder, I wonder if this could have happened a whole lot sooner. Had that been the case. So as I mentioned, it was on since spring, you know, we kick tires in, you know, in June, and then by August, you know, we had been through the property and all of this process had happened, but it’s again, no, no blame here, anything like that. But I do wonder, we all sat down and just had an open conversation. You know, like everyone’s cards are on the table. Like, I’m all about being transparent. Like we’re not trying to pull the wool over anyone’s eyes, we want to tell you exactly what we’re trying to do. And if you tell us more about what you want to do, then that gives us something to work with. So we can maybe make this thing happen and you know, I think in real estate that’s one thing Matt brings to the real estate world is he’s super creative. He He also is like really good at reading people and trying to sort of get to the bottom of like, okay, what do we really want here? So you know him and I work really well in that in that capacity. So it’s really great that now He’s on our team instead of us working through an agent, like we used to have to do a number of years ago when we first began.

Erwin  

Alright, yeah, again, if the agents not well versed in this way more challenging versus if it was my listing, I would involve my clients, my sellers, lawyer and accountant, all at the same time, and discussion with the with the buyer, if I felt comfortable with my seller being there. Yeah, for sure. So that so we can all be on the same page and my client when the seller can get professional advice from both a tax perspective, and from a legal perspective, is there is there VTB safe, and also tax implications, which are generally very favourable of giving? vendor take back mortgages? For sure. For sure.

Kyle  

Yeah. And I think as well, like you knowing what you know, also just frames it differently for the seller to even consider setting up a meeting like that, because like, if you can’t articulate to the, to your seller, why this might be a good conversation to have, right. If you’re not fully clear yourself. They they might just be a be opposed to it right away. So yeah.

Erwin  

If I’m representing the seller, I’m trying to get more money from you. Which I’ll be able to get with it. But the VTB

Kyle  

totally, totally. Yeah. maximise for everyone, right?

Erwin  

I mean, it’s a win win for my client. Exactly. Exactly. I mean, that’s a way for you guys to get the deal done. Yep. Keep your financing costs low. For sure. For sure. One good story. Yeah. Yeah.

Kyle  

Yeah, one of many one of many, for sure.

Erwin  

Interesting, because actually, this actually brings up a good point, like, you know, probably like two years ago, wouldn’t there be multiple offers on this thing? Probably some of these offers firm.

Kyle  

Yeah, and this is where like, for us, I think we definitely knew like the market was softening, like, so in the spring last year. And I know, in Toronto, I think Toronto was a little ahead of us on the market softening, or maybe was the opposite. But yeah, last spring, things started to slow down a little bit, you know, obviously, all the talk and, you know, rates and all those things, were starting to sort of, you know, bubble. So we had waited. And once we noticed the property was still up past, you know, the offer date, then we kind of came in, and one thing that we do notice is that if you get a building that isn’t purpose built with multi units, so it’s kind of like that nine unit is kind of approaching some of your more, you know, higher higher roller investors and like, oftentimes, they’re gonna go straight, they’re gonna go straight to purpose built. So purpose built was still selling like, like hotcakes, there was one in particular that Matt had listed, and it was a 12 unit. And at the price point that the seller want, like, we liked the building, we were like, this would be a great building, but we only want it for this. We know the seller thinks they’re gonna get this. And we were sort of like, I don’t think it’s going to happen. Well, guess what somebody came in. And you know, and they scooped it. And it was like, it was like nobody’s business. This one isn’t purpose built originally. But it’s been really well done with all separate metres and everything, and it’s really well cared for. So I think it got some attention. But it didn’t get as much attention as it could have had it been purpose built and hadn’t been advertised as such. So it sat a little longer. And yeah, and we were, like I said, we were, you know, pretty, pretty resilient, too, you know, and just kept pushing on it. And out came a positive result doesn’t always happen that way. But at least you know, at least you know, you gave it your all

Erwin  

right, that this market is also in favour in your favour. To be able to get this deal done with favourable terms. Totally, just two years ago, you’d be screwed to be like six offers for? Exactly. They’re never there never return your call? Yeah, for sure. For sure.

Kyle  

I know, I know, the tables that the tables have turned, I know, the sellers have taken a little bit longer to kind of believe agents and you know, in that, but, you know, I’m hoping it’s not going to be a long, long ago, but, you know, there’s still a little bit I think of, of rocky times, you know, over the next little bit anyway,

Erwin  

so can you paint a mental picture of this property? You mentioned it’s not purpose built? Is it like, like a two desert like two structures? Like what is it? Yeah, it was

Kyle  

actually originally a single family. And then there was a building built sort of off around it. So the single family home is the largest unit and it’s actually really, you know, really well done inside and then the rest, the rest of the structure is essentially purpose built. So for the most part, it is purpose built, but, you know, it’s got this sort of like, you know, unique sort of, sort of look to it, I suppose, but in really great shape. It’s walking distance to like the main street in the town, and you know, right across the street from the post office, and you know, near the Home Hardware, like grocery stores across the street, like so it’s, it’s in a great spot. And you know, the rents are, are definitely under rent right now, which is again, when if we can cashflow with under market rents, that’s fantastic. And we have three of the tenants three of the nine have inclusive, inclusive utilities, despite the fact that there are three, you know, they have separate metres for the utilities. So there is a lot of upside there. So it’s like to cashflow with also that upside sort of built in, for us is like a really, you know, it’s a good position to be in whether you do Cash for Keys at some point, or, you know, whatever you need to do. You know, it’s nice to come in and not be anticipating cash flow in the future, but rather cash flowing, and then being able to pump those numbers up over time.

Erwin  

Now in turn strategy, are you just taking like taking what’s been gone coming your way? For example, this nine unit building or any of your other properties? Are you just doing long term rental? Or are you doing short term rental, midterm rental,

Kyle  

we are all longterm. I know, Matt’s had, you know, an Airbnb, and, you know, he’s learned a tonne doing it, he’s, he’s done well with it. But for us, it’s like, almost too active to you know, to sort of replicate that repeatedly. We’ve also done a number of flips, but I would argue, you know, for us anyway, it like feels like a lot of work and a lot of risk to in terms of you know, how many things can go wrong. So like we look at will buy with the intent to hold typically. And now that might be a property that does need some love, like we have a 10 unit building and another town that’s a little further out, and it needs lots of love. And we give it that love just little bits at a time. So you know, one unit at a time, we sort of flip you know, and a bump the rents a little bit, so we bought that one in the spring of 2020. And it has turned out to be an awesome building. Lots of again, little, you know, little fixing along the way, which requires capital. So we’re totally all in for that. But we’re in no rush to sort of, you know, try to get it done in five months or six months, and then flip it again. And all of those things we just find like it’s a lot of work. And we we just aren’t interested in it. So we try to go more of the the buy and hold strategy for the most part. I

Erwin  

love it. I love it. I always love hearing other people’s investors journey. It sounds like you were you guys were quite aggressive active at the beginning. And now you’re settling into long term boring, low effort.

Kyle  

Oh, yeah. Well, you think of all the mistakes you make, too, you know, there’s one in particular we bought and like now, again, it would have been a home run regardless because of what the market did. But, you know, it took all my gosh, what we thought was going to be a three month renovation and what was quoted as a three, you know, it turned out it just seemed like it was never ending. And we ended up you know, turning that that property over for a profit. But again, even after that, we’re like, God, do we want to do this again, and then another opportunity shows up? So then we do it. And then you know, it’s like nine months later, you’re like, why did we do that? Again, you know, that’s not, it’s not our specialty. And I think that’s really what it comes down to is that, you know, something I noticed on your show and other shows around real estate and investing is like you have to find your your niche, you know, you have to find what works for you your personality. And, you know, I think for us, it’s like we enjoy, we enjoy, obviously property hunting and all of those things. What we don’t enjoy is like a renovation that feels like it’s never going to end. And you know, like we don’t want to be for men I think is really what it comes down to. So we would much rather you know if it’s a one time thing, so we keep it and we can you know, grow it and cashflow from it. Totally we’re game but if the sole intent is just kind of flip it and put it back out there. Just not our thing, at least at this time in life. Who knows what happens down the road.

Erwin  

Recently, I had a gentleman named Avery birch on my show. So he he’s young. I don’t even think it’s 30 yet, so he has a 100. Airbnb rent arbitrage properties. definitely sounds like a nightmare to you.

Kyle  

I think I listened to that episode. Yes, yes, that was so cool. But like and I actually when I listened to that episode, I was like, wow, that’s like genius. And then I like thought I get excited, right? I’m like, wow, this is so cool. And then I’m like, Jason, I do not want to do that, you know, like I like that would have to have like a tonne of upside there and um, you know, good for someone who wants to be in that but I’m like that is so not that’s not going to be me. Or at least if it is me, I’m probably going to drop the ball. You know, because I’m just not I’m just not going to be in that part day to day for sure.

Erwin  

This is the point of the show is I want to it’s kind of like a buffet. I want to show people their options. And I want to have guests on who proved that strategy works, they can repeat it. It’s It’s whatever the risk top left risk level is, and we discuss what the risk levels are. And then folks can choose for themselves. There’s no right or wrong. Everyone’s gonna find their own journey. Absolutely. Absolutely. I agree. Super cool. All right. Hopefully I find my compound interest back.

Kyle  

My favourite. Isn’t your favourite bit? Is it? Totally

Erwin  

nerds? Yeah, it

Kyle  

totally is totally is Yeah. What do you want to know about compound interest?

Erwin  

let’s reiterate. Because I guess for myself who naturally, naturally, you know, my parents worked with numbers. Math was a really important skill set to have in my household when my parents forced on me. And then just being able to DBT Senate math, and then understanding compound interest. Like to me naturally, it does not make sense to be to spend so much money. When I know I can make money. With money, the return on investing money, the utility from that is greater than me spending on something frivolous. For example, I mentioned it in another podcast, I used to drive a Honda Accord a used Honda Accord for the longest time, right? I mean, even early days when I was a realtor, but based on what I was doing, I needed a nicer car. So I did eventually get into a BMW, but that BMW certainly give me return because my sales increased significantly once I started driving a BMW. Right, right. Right. So the car cost like triple what my card costs, but there was a return. My point though, is that if I had a regular day job, I would not be driving a brand new car ever. Yeah, I would not be leasing a brand new car ever. Totally. I’d be driving something very modest. That’s reliable. They have low maintenance costs and great resale value.

Kyle  

i We definitely aligned in that regard. Because like even back when so you know, thinking about the the Florida and Arizona property, I was driving a diesel Jetta. And you know, it was a 2003. So if you picture you know, 2011 2012, like we’re talking about, you know, going on a 10 year old, but I kept it until it was like 14 or 15 years old diesel Jetta. So at the time diesel was like comparable to you know, that the cost of gas, you know, get 1000, you know, kilometres a tank, all of those wonderful things. And yeah, just like, just like you’re saying, it’s like every, you know, something we chatted about on our investment teacher podcast recently was this idea that, like, you, basically, you’re making a choice with money, money is a tool. And when you think that money, and you realise that you can either make money with that money, or you can help someone else make money with your money, and like, if you kind of break it down in those two ways, it really kind of opens the door to this, you know, compound interest, you know, conversation, for example, but when I, when I go, and I purchased that brand new car, and it doesn’t actually serve me in a way like you describe to make me money. I’m just making BMW money there, you know, and I’m losing money, but,

Erwin  

and you’re leasing company and insurance company, hopefully, and the gas company.

Kyle  

Totally. And you know, you have all the conversations about, you know, well, why are you doing it, like you should be able to, hey, if you get joy out of it, and that’s like what you’re about amazing, amazing that most people have a hard time really articulating what they get happiness out of like, they want happiness out of everything. So it’s like, if you’re a car person, great, be a car person, but maybe don’t be a house person. If your house person, you know, don’t let an essay house like your primary residence, right. So it’s like, whatever you choose to be all about. Because you say or claim it, it gives you happiness. I’m all for it. But you know, I just think a lot of people say those things, but they don’t actually, like give them much thought. And they just, they just do what everyone else is doing. It’s whatever the herd is doing. So I’m not a car person like you. Like, you know, you’re you did it for a reason. I have a truck now it’s a newer truck, simply because it’s not the best high end truck. But because I love boating, so we have a boat, and I need to move the boat around some people like trailers, you know, hey, if you want to go out on all out on your trailer, great, but maybe don’t go all out on you know, vacations to other places, right? So it’s just choices and then you know, the more conscious and intentional you are about that, the easier it becomes to kind of go down this other path and go okay, now I have more of this stuff that I can then try to go and figure out how am I going to use this as a tool to grow right and build that that compound interest snowball?

Erwin  

Alright, so how do you get kids interested in compound interest? Which is actually a good way to to educate even adults too?

Kyle  

Yeah, yeah, I think one of the things that, you know, we discussed it briefly the last time I was on, you know, this whole I think I mentioned the 20 to one ratio, you know, for every $20 My kids keep at the end of the month, I’ll give them $1. Right. And that’s compound interest at work that kids don’t know it, but and again, anyone who’s quick with math, like 20 to one is like, oh my gosh, that’s like five for every $100 I That’s 5% a month, not a smart investor move on my part. But I did it intentionally because the more dramatic you can make the pattern and the shrinking of the time, if you can make the time shrink all the way down, that’s another piece. So for example, in the classroom, what we do, and I can’t remember if we talked about this or not, but I did talk about it with the guys on invested teacher was, you know, I used to mention to students, I’d say, Listen, if you What would you rather have? Would you rather have $10,000 now, or I’ll give you a penny today, I will give you a penny doubled tomorrow, and we’ll just keep doubling so on like the third day, I’m going to double that two cents to four cents, like which would you rather have, we’ll do that for a whole month, what would you rather have, and like a lot of kids are gonna be like, I’ll just take the $10,000 like pen, you know, they do it, like for 10 days in a row. And they see like pennies. You know, that’s like only a few bucks, it’s not even a big deal. But it’s like later in the month that they start to see like this compounding really happens. So if you can make it extreme. And if you can shorten the time span, because the problem is, and this is the problem I think adults have, when you stretch out the time horizons so much. And then you you also make it less dramatic, because like when you do penny a day double that’s 200% per day. So that’s dramatic. Like that’s dramatic growth. And the time horizon is only over 30 days, instead of 30 years, right or 60 years, or whatever your time horizon is, it’s harder to recognise the pattern over that long period of time with a really small growth number, which is why interest rates don’t seem all that bad up front. But when you can do that, when you do this penny a day example or my 20 to one ratio, or, you know, my colleague, John or his daughters are older now. He has a spreadsheet. So he does 12% a year. And they do one

Erwin  

for age appropriateness, how old are they are

Kyle  

they would be grade grade seven, his twins are grade seven, his oldest daughter is in grade nine. So my kids are grade five and grade three. So the younger they are the more Concrete Mathematics research would suggest. So for me, I kept it not in a in an account, we just opened accounts for our kids because they were begging for them because all their friends have accounts. And we had jars because I wanted them to have bills, not only for counting, but also they can pull it out and they can see $20 Bill, I’m gonna give you a loonie for that $20 bill a loonie for this $20 bill. And oh, well, here’s $100 bill from your birthday from so and so, you know how much is that going to be. So all kinds of things you can do there, but they see it and they see it growing. And that really helps. And then with his daughters are a little older, they can be a little more abstract, they look at the spreadsheet, and he’s got a spreadsheet that will show the compound interest at a percent per month. And it’s like, even if they don’t add anything to it, they see that it’s like wow, every single day, I think he actually even has like a daily version if they want to see that. But from the monthly version, you see, it’s like wow, my money is doing nothing. And it’s just growing. And it’s like just to get that, you know that understanding. And of course, you’ll have the conversation and say, hey, 12% might be difficult for you to do unless you want to get into private investing, which we can or private lending, which we can talk about later as you’re older. But in reality, though, when kids see that, it’s like, wow, keeping money is more beneficial than just seeing a number on an Account screen, that it actually can do something and that, hey, I imagine a world where maybe just the interest I earn on this money or whatever that return is that cash flow on that money would actually pay for some of the things I want to do. And I’m not getting to that seed capital, I’m not getting to that principal amount that’s going to like just continue to print money for me. And that that’s something that I don’t think we do enough of in school and I I’ll be honest, I feel like most educators actually don’t have that knowledge to be able to share, right? If you don’t know it yourself, if you’re not comfortable and confident with it yourself, it’s really hard to try to help more students understand as well. So it’s definitely an area that I think’s of utmost importance for our kids.

Erwin  

Love this case. So I have some geeky questions. Like the term what gets measured what gets done, but how do John’s daughters see the spreadsheet? Is he printing it or? Good?

Kyle  

Good question. I think it’s to be honest knowing him I don’t know the answer, but I’m gonna guess it’s probably just a Google sheet that he has shared with them. And I’m guessing they’re you know, they’re able to hop in there and kind of look at an almost like the other piece too is like encouraging them to like, play with it and kind of go like what would happen if stress right and let them play with those things. And I don’t know if he’s had this conversation but at some point I’m sure it would come John’s a math teacher, he’ll probably say like, Hey, imagine if the rates this or imagine if you’re compounding instead of monthly, like what happens if it’s daily, like you start to see, oh my gosh, like the more often you compound like this is something you might do in a grade, you know, 10 or 11 class and it’s like, you know, these kids are seeing it in a different light because it’s not just something to do and check off the list. It’s like, they’re kind of living the experience. So definitely something worth doing.

Erwin  

Right. I explained to him what my returns are in real estate and they’ll understand why I do it.

Kyle  

Yeah, exactly. Exactly. Imagine getting the three the three ways to grow your wealth from real estate, you know, instead of just this cash flow over here. You got these other things working to

Erwin  

super cool. Yeah, we just got a bunch of we’re not bonds we have some money for Chinese New Year. It’s funny with my kids because my daughter is not money centric at all. So I don’t want to give her money. She won’t shovel the driveway for money. My son will mean like three bucks. We are winners. So then at least with him I’m we’re able to quantify what something costs in terms of driveways shovelled early. I love that. I want a donut. Okay, don’t get caught is the equivalent of you shovelling the driveway? Is it worth it? Right? No. So no.

Kyle  

Honestly, and again, once again, I feel like most adults don’t have that perspective, right? Like, when you especially I look at car payments is an easy one to pick on, especially like leases, you know, like these expensive leases, like, your lease payment is like $600 a month? Or maybe it’s more now, I don’t know, but $600 a month, it’s like, how often are you actually in your car? And you know, how happy are you when you’re in the car? Right? And is that really worth it to you or imagine it’s like, imagine if you could retire earlier. Because you chose not to buy that car or that more, you know, an expensive car, whatever it might be. And when you when you do that, that’s, you know, we call it proportional reasoning, right? This idea of being able to actually think about two quantities changing in tandem. Now this is kind of maybe going a little too deep for the audience. But really, it is an area where most kids fall off the rails in mathematics. So it’s like students who are able to understand proportional relationships and proportional reasoning, they tend to be able to continue on down that path. But for those who struggle there, and they think additively instead of multiplicatively, that is a major sort of, we’ll call it like a GET OFF spot for kids in mathematics. So if you’re like that person who never got math, quote, unquote, like, that may be that sort of land where you sort of fell away. But when you can quantify that, hey, every you know, driveway is worth this many dollars. And now you can say, how many driveways does it take you to buy that over there, you’ve now got these different varying quantities that are all going to scale in tandem. It’s like every driveway, the dollars go up, and I gotta get to, essentially, you’re solving proportions, but you’re doing it through reasoning instead of sort of like an algorithm or a calculator. And that’s a massive skill that the younger students are able to do those things and it can be easy numbers doesn’t have to be hard numbers. But just to know how numbers work, and then having like some sort of understanding of the magnitude of number is so important for them to be able to see their financial future, you know, and be successful with trying to invest.

Erwin  

I’m just cheeping along with that Dona

Kyle  

Natrum mention it’s horrible for you. And the kids are gonna stay up all night, but either way,

Erwin  

and how I get out of having giving the kids a dog is I explained to them, I think it costs over $100 a month to feed a dog. So I explained to that is how many driveways Is that worth? Yeah, totally. When you tell it the kid that or get to walk the dog, they never say no to that. I find I find that this money equation? They say no. No, that’s interesting. Yeah, because they can like they can tie how much effort it is to how much or cost to feed the dog. No. Is that worth it to your kids? Yeah, yeah, totally. Totally. I love it. Kyle, thanks so much for doing this. Where Can folks folks share your podcast? where can folks learn about the math educators stuff that you’re doing?

Kyle  

Oh yeah, for sure. The the invested Teacher Podcast is on all podcast platforms. So go check it out. Hit that subscribe button as you know Erwin a super helpful for for people to find out about the show. Invested teacher.com is where you can find out more about you know what we’re all up to and the different projects we have going on. We’ve even got some some goodies there that you can grab like an investor starter blueprint. And on the math sides. We are at make math moments.com make math moments.com And I I’m telling you, you know, we love the work we do there. And we love the work we’re doing with the invested teachers. So it just feels like such a good mix. And hopefully some friends in your audience will find some use to either one or the other. And hopefully, we’ll bring some communities together here.

Erwin  

Thank you, Matt. Sorry. Thank you, Kyle. I was gonna call you, Matt. Because I was thinking about, I was thinking about Matt, question for you. You have two partners in these ventures, and they’re the same partners in your investment business. Yeah. So

Kyle  

actually, Matt and I are the CO owners of our holding Corp for the real estate. And then John and I are the CO owners of our McMath moments Corp, got it. And John does some investing with Matt and I, he’s done some jayvees In the past, and, and now that we’re doing this invested teacher thing, you know, more and more, I’m sure that, you know, will, will be taken on more and more projects as a as a trio. But we also have other jayvees that, that come in get involved as well. So exciting times ahead, that’s for sure.

Erwin  

Excellent. in these in these difficult times of real estate, that’s actually I’ve seen it out there where partnerships are falling apart. How do you define your role versus Matt’s role? Oh, yeah,

Kyle  

great, great question. I mean, I’m definitely the analysis guy, I’m sort of the, the yea or nay as to whether we go deeper with a deal. Matt is great at you know, he’s a relationship builder. I mean, not not to say that I am not, but he’s out there. He’s in the world, now that he’s a realtor as well, makes it super easy. So he’s talking with everybody and, you know, typically getting us access to some pretty, pretty awesome opportunities for us to explore. And then I kind of run the numbers, I grind through it, I, you know, let people know, when the numbers that are being advertised maybe aren’t so realistic or exciting, versus when they are and and then kind of together, we put our heads, you know, to put the deal together, and we’re definitely a great fit on that on that front.

Erwin  

So that’s pretty good deal together. What about the day to day operations? Yeah, as a property manager, when he was more the contractor type?

Kyle  

Yeah, for some time, that is the way it went, we actually have some outside management now as well. So that handles some of those pieces. So some of the things that we don’t enjoy. But ultimately, yeah, so I handled essentially all the finances, the books, organising the books, the, you know, working with the accountant, so, you know, cherry and I would get along. And then Matt is on the other end, he’s typically, you know, working directly with the property manager that we have dealing with any of the, you know, the bigger contracting jobs, like he’s usually getting, you know, getting those quotes together and doing some of that work. So, yeah, we definitely have sort of our niche, so that we’re not overlapping. We’re not sort of, you know, doing double duty. And, and that’s really helpful. So we, we believe in that clockwork system, where, you know, we want to make sure there’s, you know, an integrator, and there’s a visionary there. And, you know, we both have a bit of both of those skills, but we tried to ensure that, you know, that we don’t try to repeat the same jobs over and over again, for redundancy purposes.

Erwin  

Amazing. Excellent. Thanks again. Anything else? Any final words you want to share?

Kyle  

Oh, hey, keep up the great work. Again, I’m guessing that you’re at 19. Listeners, I think you got to 18 listeners the last time I was on, and hopefully maybe one more now. But no, I really appreciate the work you do. And you know, I hear from so many people that Well, I found out the last time I was on how many people do listen to your show that I knew that I never knew listen to your show. So there you go. And yeah, it’s it’s great work. And yeah, I really appreciate you bringing the community together.

Erwin  

Amazing. All right. Better job. Congrats on your success.

Kyle  

Hey, thank you, you too. And let’s stay in touch. Come on down to Windsor, my friend will will show you around.

Erwin  

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

 

 

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