I am Canadian. Born and raised.
And I’ve been full-time in real estate since 2010 when I left my seven-year career in tech at Big Blue to apply my analytical and operational skills to something that would actually build me intergenerational wealth.
I’ve been investing in real estate since 2005 and owned over 40 properties, and we renovated almost all of them with budgets in the six figures.
Call it BRRR investing, call it value investing, call it whatever. I call it logical and practical, and scalable.
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As an investor focussed Realtor here at iWIN Real Estate, we’ve helped clients acquire around 100 student rentals and convert around 100 houses into 100 duplexes.
We are every NIMBY’s nightmare as we expand to garden and garage suites.
In my experience, these are the ideal investments for most Canadians most of the time, and our track record includes over 45 clients who’ve made a million or more, investing in the properties we helped them acquire.
What I don’t think is ideal is preconstruction for most people most of the time.
Of the 40+ properties I’ve had in my portfolio, only once did we buy new. Those were 5-bedroom student rentals in Brantford, and I paid $275,000 for them.
The cash flow justified the purchase, and if you know downtown Brantford, the properties are pretty rough and quite old.
Compare that to investors in distress who call me. Middle-class folks with middle-class incomes who are negative $500-$1,500 per property.
I’m no financial advisor, but most Canadians can’t handle that kind of cash outflow, and negative outflow goes against the basic economic theory of what to do in inflationary times as we’ve been in forever, which is to increase one’s income.
One investor I spoke to bought a 3 bedroom for just under $1.4M. Projected rent, $4,000, to which I said, wow, that’s great! Then they shared the occupancy cost is $6,800.
So how many months can one afford to be vacant then the cost to carry is $6,800, and when once rented, the cash flow is negative $2,800.
If it were me, I’d want to sell it, but rates are still high, and any smart buyer out there is looking for a deal as mortgage appraisals are already coming in less than what investors paid per the article in The Globe and Mail, titled “Looking for blood: Condos nearing completion with mortgage appraisals less than investors paid”
What novice investors don’t realize is condo builders/developers pay Realtors very well.
The emails I receive from condo builders have 4% commissions in the subject line and in big, bold letters in the email body.
That’s nearly double the rate a cooperating agent would get on a resale condo, AND aside from the short-lived down markets we’ve experienced, resale condos are a sellers’ market. Read multiple offers, lots of showings, effort, losing offers vs. pre-construction, it pays nearly double, and there’s a good amount of supply.
A good agent may not get as many pre-construction properties as they want, but they get some, and from a business owner’s perspective, that sure beats losing in multiple offers. More money for less effort: like the LIV tour of golf but the preconstruction property again is not the best investment for most Canadians, most of the time.
Note, I know many who’ve made tons of money in pre-construction, we’ve had past guests, I have personal friends etc… but their timing and the locations were near impeccable. Plus, they had deep, deep pockets, and that’s not most Canadians.
What I have noticed in my nearly 20-year career as an investor is those who’ve been around longer have generally fared better.
Investors in BC and Ontario generally have made the most money.
Apartment building investment work best when one does not overpay and renovating when tenants turnover to achieve higher rents.
Another commonality I see regularly is no one is cash-flowing any significant amount from the operating income after paying the mortgage.
Our portfolio is no different, nor did we ever plan to take any cash out on a regular basis.
I graduated from Business School with $30,000 in debt and now, with Cherry, own an eight-figure real estate portfolio.
That didn’t happen without taking on a lot of debt, with no direct assistance from family, and it was only made possible by investing in high-density: duplexes and student rentals.
Without great rents, the bank won’t keep lending us money along with our day job incomes. Thankfully we did not overleverage, and our loan-to-value is quite reasonable.
With several economic fundamentals in our favour, we’re well set up for the poo storm approaching.
For example, CMHC predicts home building could drop by 32% this year, and a developer called StateView in Ontario is having all sorts of financial trouble putting their 1,000 pre-construction houses at risk. I feel terrible for the buyers who put down deposits on those pre-construction houses.
I don’t buy pre-construction as I can’t stomach the negative cash flow, but I do invest in housing developments, and I only do so because the builders involved are household names.
I have low tolerance for risk hence I’d never give money to a builder with under 200 units of experience (I went to State View’s website and counted up the units of their completed projects). Sadly the speculators will pay a hefty price.
Another US regional bank, First Republic Bank, was failing and acquired for pennies on the dollar as the stock was $115 in March earlier this year and now is $2.30, and the new owner is JP Morgan.
How many more banks in the US fail? No one knows, but investors remember bank turmoil equals cheaper interest rates which equal more fuel to the fire for our real estate markets.
Just over a year ago, I shared on this show the short-term timing was right to sell.
Fortunately, I was correct, and many of you listeners and clients nailed the peak.
Now the pendulum has swung, and it’s time to buy; if you want to learn how I can’t recommend enough that you sign up for my email newsletter.
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Don’t miss out – sign up now and join our community of engaged and informed 17 listeners! https://www.truthaboutrealestateinvesting.ca/. As always, we’ll tell you how it is to be an investor of real estate in Canada.
The real estate investing community is a big one, and it’s gotten really big after that last 12-year bull run.
Lots of courses out there teaching folks how to be influencers and raise capital from the public via social media by posting selfies of themselves on properties they’re offering on.
I was speaking to a newer investor who took a course and was instructed to use his personal line of credit as part of the capital to fund his investment and renovation.
I shared with him that’s not something my clients or I would do, especially when the investor is a first time and has two properties needing major, six-figure renovations each. That personal line of credit now costs 9% in interest.
He asked me how to avoid shiny object syndrome, so I’ll share with you my 17 listeners what I told this young investor. I told him to turn off social media as it’s mostly lies.
He was smart and asked if my social media is a lie, and I said yes, I change my shirt and style my hair, and I’m well caffeinated before I turn the camera on.
I’d rather not share my investment journey as I’m an introverted, private person, but that makes for terrible Marketing and social proof.
Having around 350 successful investor clients, they generally fit the mould of “The Millionaire Next Door” by Thomas J Stanley.
Basically, rich people are pragmatic and frugal, they buy used cars, not new, and they’re private about their investments.
Anyone posting on social media about their investments and cars has something to sell.
I’m one of them, selling our real estate investing advisory services and coaching. We’ve transacted over $400M, mostly small multis and student rentals, since 2010, and it doesn’t take a rocket scientist to figure out our clients have done extremely well.
Not everyone selling stuff is bad, but there sure are a number of investment opportunities, and it’s buyer beware, there are way more bad ones than good ones otherwise, everyone would be rich.
I will say, though, if one wants to build wealth, direct ownership of physical real estate is the way; it’s by far the easiest and most reliable path to building intergenerational wealth from my experience.
Anyone who’s not at least owning one property in Canada is being left behind, while those with multiple properties get ahead in life.
How to Buy Apartment Buildings and Raise Capital With Savvy Investor Michael Ponte
Speaking of having multiple properties, today’s guest, Michael Ponte is an old friend of mine… Us old guys who’ve been buying properties and REIN members for over ten years ago.
We’ve known each other and run in the same circles what feels like forever and forever is the perfect time horizon to own real estate.
Michael owns, with partners, Apartment buildings across the country: BC, Alberta, New Brunswick, Nova Scotia, and probably Saskatchewan too.
Michael is a Savvy Investor, and that’s his social media handle and the name of his private Facebook Group with over 5,200 members.
Michael being old school, he’s investing successfully in the multifamily apartment building space, has no trouble raising capital and educates others on how to do so as well while living in BC, but most of his portfolio is out of province.
On today’s show, Michael shares how he’s navigating today’s interest rates and how multifamily is fast money. I’m kidding; it’s not.
He walks us through the numbers of a couple of apartment buildings, including how he found the deal. The different phases and costs during the due diligence process, seller financing, screening joint venture partners, the biggest mistake an investor can make when buying apartment buildings and if you wait till the very end, how a new investor can get started.
If you’re interested in investing in apartment buildings, this is a must-listen-to episode, and I’m sure there are many of you since the ticket sales to Seth’s Multifamily Conference are massive.
I’ll be there at my booth if you want to come by and say hi. www.multifamilyconference.ca, and my discount code for you, my 17 listeners, is iWIN for 10% off.
See you there!
This episode is brought to you by me! We don’t have sponsors for this show. I only share with you services owned by my wife Cherry and me. Real estate investing is a staple in my life and allowed me to build wealth and, more importantly, achieve financial peace about the future, knowing our retirement is taken care of and my kids will be able to afford a home when they grow up. If you, too, are interested in my systematic strategy to implement the #1 investment strategy, the same one pretty much all my guests are doing themselves, then go visit www.infinitywealth.ca/events and register for our next FREE Online Training Class. We will be back in person once legally allowed to do so, but for now, we are 100% virtual.
No need for you to reinvent the wheel; we have our system down pat. Again that’s www.infinitywealth.ca/events and register for the FREE Online Training Class.
To Follow Michael:
Private Facebook Group: https://www.facebook.com/groups/341243106757064/
HELP US OUT!
BEFORE YOU GO…
If you’re interested in being a successful real estate investor like those who have been featured on this podcast and our hundreds of successful clients please let us know.
It is our honour to give back and educate others on how we build cash flowing real estate portfolios using all the best practices shared on this podcast, from the lessons of our hundreds of clients and of course our own experience in owning investment real estate.
If you didn’t know already, we pride ourselves on being the best of the best real estate coaches, having the best property managers, contractors, handy people, cleaners, lawyers, accountants, everyone you need on your power team and we’re happy to share them with our clients to ensure your success.
New investor or seasoned veteran investor, we can help anyone by providing our award winning coaching services and this isn’t all talk.
We have been awarded Realtor of the Year to Investors in 2015 by the Real Estate Investment Network, 2016 by the Canadian Real Estate Wealth Magazine and again in 2017 because no one told the judges no one is supposed to win the award twice but on merit, our peers deemed us as the best. In 2018, we again won the same award by the Real Estate Investment Network.
Hopefully being the most decorated team of Realtors in Ontario will make you consider us for your first or next real estate investment. Even if you don’t invest in our areas, there’s a good chance I know who would be ideal for you.
I’ve been around for a while, some Realtors are talented at servicing investors there are many with great ethics. The intersection of the two, talent and ethics is limited to a handful in each city or town.
Only work with the best is what my father always taught me. If you’re interested, drop us an email at firstname.lastname@example.org.
I hope to meet you at one of our meetups soon.
Again that’s email@example.com
Infinity Wealth Investment Network – would you like to know how our investors returned 341.8% on positive cash flowing real estate over the last five years? On average, that was 68.4% per year.
Just imagine what winning in real estate could do for you.
If you would like to know how we did it, ask us how by calling 289-288-5019 or email us at firstname.lastname@example.org.
Don’t delay, the top markets we focus in are trending upward in price, so you can pay today’s price or tomorrow’s price.
Till next time, just do it because I believe in you.
Hamilton, St. Catharines and Toronto Land Development, Real Estate Investor, and soon to be builder.