** Transcript Auto-Generated**

Erwin 0:00
Two weeks ago Cerry and I visited Ottawa and chair was interviewing Ottawa real estate investors and her clients from the nonprofit space. For me, I was invited to as a guest speaker of Oreo, which stands for Ottawa real estate investors organization. It’s a wonderful organization. I remember too, in case you’re interested. chair was the other guest speaker, and she shared her experience about buying a new accounting practice, which we now own, which is called the oldest group we closed in August. It’s now October, with everyone looking to invest or improve their cash flow along with avoiding long term rentals. It’s a very popular theme these days, and all the challenges that come with long term rentals in Ontario, and BC, business buying has been a growing topic of interest in our community.

Erwin 0:46
Elizabeth Kelly, who is a guest for the show, she actually detailed how she has been telling her investment her client or coaching clients to be looking for more businesses that are in real estate.

Erwin 0:56
But our commercial, for example,

Erwin 1:00
she mentioned motels as being a potentially good strategy. And in Funny enough, we have one of our clients. Also Oreo member, Victoria Clooney, as an upcoming guest of the show. So make sure you like and subscribe on the iTunes, YouTube and Spotify, which are my personal favorite platforms. To see you don’t wanna miss that episode, cherries talk to explain the awkward dating like dance first dating like dance

Erwin 1:24
that she had to do in order to submit an offer. She had to go through, you know, a gatekeeper, which was the broker and the broker only. So she had to do an interview with just the broker. And then she was able to have get on a call with the owner so voters, and then only then was she able to offer like there are people were pre screened before they’re allowed to offer on and we were one of five offers. And if you can imagine that business buying even in a recession can be competitive. My talk was on student rentals strategy, which I’ve helped clients transact on over 100 properties 100 Plus properties in the strategy. The thing about student rental strategy is that what I shared in my presentation is it’s it’s awesome, because universities, university students, they typically turn over every two or three years, as soon as they finish their program, either masters or undergraduate usually that those programs are usually two, three or four years when they graduate. Now as they lead them, they go home they leave, allowing us for investors to raise rents back to market. So hence we’re not stuck. backstopping our long term tenants housing inflation, which is how I feel, but my several duplexes that I hold, we have parents that sign guarantees for rent and damages. And we’ve only taken a small number of actually even started, we’ve never taken the university student, university student to landlord tenant board about my clients experience, and only a small number of college students, again, were ever taken to the LTB. Unfortunately, the worst in rental experience was was a college student. And it happened to be my own property. But we’ll save that story for another day. There’s a strong investment case to avoid long term rentals. Hence, we’re seeing so many in our community, having pivoted to Airbnb, midterm rentals, flips, development, anything that avoids long term rentals. Now just recently, BC, is looking to ban Airbnb is outside your own home, you can do it so you’ll be able to still Airbnb, your basement or your garden suite. But otherwise, if it’s outside your own home, so people with multiple properties, they’re going to be having to look to pivot or face pretty severe fines. I think it’s only time until we see the same for Calgary, or even a continued ban on midterm rentals. I don’t blame the government, since they answer to voters and voters number one concern is about housing and maximizing long term rental supply. Stupid democracy. So back to the Oreo meeting before the Oreo meeting, I had a blast with hanging out with Christian skilful rule. If you don’t know Christian, I highly recommend the follow him on Facebook and Instagram and his company Olympus properties. He’s a former tech executive like pretty high, he made a pretty high. His boss was one of the richest people in Canada. He’s a sir. Anyways, if you’re a real estate geek like me, you’ll love his projects. Here I have a picture in the show notes of Christian standing inside the is on the second floor of his six or seven flags that he’s currently converting into a 12 Plex. So he’s adding five units from seven plus five equals 12 Plex. In the picture, you’ll notice there’s no floors.

Erwin 4:34
He’s removed all the floors and sub flooring. So we’re having to walk and stand on floor joists, which is not fun for anyone with fear of heights like they’re true. It was truly I don’t know why but I continued up the stairs to the third floor even and one can stare straight down for stories because from third floor I can stare into the basement directly. And I don’t know if it’s just a fear of heights thing. But for me

Erwin 5:00
My experience my imagine my imagination immediately visualized myself falling through the hole in the floor, bouncing around on my way down and coming to a bloody rest on the concrete floor of the basement. That’s just a me thing is that a fear of heights thing? Maybe Krishna explained to me how the deal penciled as and it worked financially as a renovated seven Plex. So as is so he just renovate it. And as as a simplex it’ll work of note, he’s not the kind of guy that pressures tends to leave, he lets tenants leave naturally, so so that so then he can renovate and then raise my rents to market. But again, no pressure on the tenants to do to move out. He’s not a cash Ricky’s kind of guy. But anyways, but by working with his architect with bikers and working with his architect, he found a way to add five more units, which includes building an addition on the back of the property and extending the roof over that new addition, which needs to be done before it starts snowing.

Erwin 5:56
FYI, there’s part of the roof is open. It’s a bit of a crazy project. If you love rental projects, you’ll you’ll love the look at this place. Anyways, I hear snows it starts snowing in snowing heavily in the frozen tundra of Ottawa and like the first week of November, so pretty soon, like a week away. Anyways, Christian took me also took me for a tour of his commercial and mixed residential commercial properties in Belmont, which is a suburb of Ottawa, home of Canadian basketball legend, James Naismith, who is known as the inventor of basketball, Christian was in the middle of a conditional purchase of a former post office. And it looks like a miniature parliamentary building. So it’s tall, narrow, solid, brick, solid red brick. And of course, like all of our parliamentary buildings, that signature steep roof that’s made of copper, and it’s stained green. So looks, looks amazing, has a clock tower as well, super cool. The building is designated heritage as you would expect. It’s you know, it’s from like, I think it was built in like 1900, like, like 19. So it’s like 120 years old. So there’s rules and guidelines to maintain the exterior appearances of said and inherited properties, because they’re, they’re turned to be significant.

Erwin 7:10
And I’m speaking in terms of architecture the way they look. So while heritage buildings look amazing, maintaining the materials that go into them, and the workmanship, for properties that was that were built over 100 years ago, is both challenging and expensive, especially at the Makey Makey. reuse the same materials that were used in the original bill. Can you imagine that? Anyways, so I take along with Christian and his daughter, Veronica to meet with the local planner, because again, he’s going through the, he’s going through the diligent can this conditional period, so he’s making sure he’s crossing his eyes and

Erwin 7:42
dotting his eyes and crossing his T’s.

Erwin 7:45
I understand that Elmont is a small town. So we met with the planner, who and she wears three hats. She’s one half of the planning department. So she’s a planner. She’s also responsible for territory, edge, and engineering.

Erwin 8:01
Again, she’s only one of two in the planning department. They do have engineering staff, but the other engineers, she’s one of the two planners, the meeting was productive, the planner was helpful. She shared with us about the heritage heritage grant programs, which helps pay for Christian to maintain this properties. And because the property in that we’re looking at is a conditional. He, as you can imagine, that has a property like that has a ton of exterior stone work. So he asked where he could find a Mason. As usual, city staff don’t provide referrals due to potential conflict of interest and liability. So she referred us to speak to the head of an engineer NGO, which means sorry, acronym, non government organization, as a not for profit Heritage Committee, also where to find him. And Mike is his name. And we could find him at the local Textile Museum, which is located only 450 meters away, she told us where to go.

Erwin 8:57
So again, appreciate that Christians only a week and a half away from a conditional period being over. So this is so time short. So we leave the meeting with the planner and walk and we walked to the edge of town to find the head of the heritage committee, Mike, we’re in luck. He just happened to have just returned to his office in the textile museum.

Erwin 9:16
And consistent with my stereotyping of small towns. He’s super helpful. He refers us to the top Mason in town. The guy that that almost everyone uses in town for Heritage properties.

Erwin 9:30
So in truth into small town fashion, Shawn the Mason lives just eight doors down from the Textile Museum.
Erwin 9:38
That’s right eight houses away, not even 150 meters away from where our current position. It’s also on the way way back to the car anyways.

Erwin 9:47
I’m laughing out loud as we walked out of the meeting, and I suggested Christian we go knock on the on Mason, Steve sorry Mason Sean’s door to see if he’s home. Christian was thinking he called the next day. But again, the Masons house is on our way home

Erwin 10:00
So we have his business address. We realized that when we get there it is actually his home. Because we come up to a residential home. We see in the driveway, there’s a contractor’s pickup truck in the driveway of a century home that’s been immaculately maintained. Always a good sign when hiring a contractor when their house looks amazing. We knocked on the door, Sean’s wife answers the door, and where luck Shawn is home for lunch. Just he was about to leave, we exchanged pleasantries.

Erwin 10:27
We get Shawn’s card. Most importantly, is that we book Shawn for an inspection Monday morning at 8am.

Erwin 10:35
I know I do the silly sense of humor. And social media has commented Yes, I’ve received feedback on the show that I often I laugh at my own jokes. But please do understand where I’m coming from. We just completed three back to back meetings within on foot within 90 minutes. And for the success, we got accomplished our objective, found a mason and we booked them for an appointment to go look at the property subject property to check it for the final condition, exterior maintenance. In a bigger city like Ottawa or Hamilton, this would take days or weeks of email and phone tag, it’d be very painful. Thank goodness for Shonda Mason. So he’s actually given Krishna an hour, a rough estimate, thanks to his experience, localized knowledge, he’s able to quote 25 times cheaper than a competitive quote from a large unionized company in Ottawa 25 times 25 times cheaper. There’s obviously different materials being used.

Unknown Speaker 11:38
Obviously, there’s difference in material labor costs when you’re talking about unionized versus nine. But again, 25 times cheaper. All it took us was like 90 minutes. Needless to say, the ladders, quote, the big corporate quote will kill the deal. But thanks to small town, kindness and efficiency, the deal is still alive. But actually no, sorry, Christian has since gone from another deal.

Unknown Speaker 12:01
We’ll have Christian back on the show to talk about this talk about his investing. And also this deal. I’ve been bugging him to build a course around commercial real estate investing, specifically around his specialty and where he’s been successful as identifying high traffic areas. Because Christian’s portfolio consists of commercial office, retail, and restaurants. So all generally considered the tougher parts of commercial real estate. He seems he made just to make it work. He’s got no vacancy, and he’s got a lineup of people who want to rent the spaces.

Unknown Speaker 12:33
Oh, by the way, my name is urban Seto. And this is the number one number 81 Business rank podcasts in the world prop of iTunes, which, by magic we achieved with only 17 listeners. We’ve been here since 2016, with over 300 episodes over an hour each. Thanks to the success of my clients not going. We’ve got not gone unrecognized. My team and I win real estate. I’ve been honored as the realtor of the year for Ontario, or eastern Canada for four consecutive years. It’s been an amazing journey since 2010. And as the saying goes, the only thing consistent in life is change. And I will do my best to stay ahead of the trends and reading the tea leaves. So this past I have a meeting, I was sharing my research on the problems that China’s faces. China is among the worst in the world for birth rate, well below the number of babies to maintain the country’s population. Pretty much all development of the developed world has the same problem. And Canada is not immune. But we are able to draw young international students mainly from India, who hopefully will want to stay in Canada so that they get jobs and pay taxes. Back to China though their unemployment rate of young young people aged 16 to 24 is over 21%. And demographically, there’s a lot fewer of them than any other age group, except for maybe people younger than them. housing costs are high, like here in the big city. No different than here versus the big cities of China and between unemployment and expensive housing. Do you really see China having more babies immune to catch up and fix this problem? No. My point is, relative to the rest of the world USA will dominate in terms of economic growth, thanks to better affordability. They have their own. They have their own oil, that tons of excellent farmland so they can grow their own food. Versus we pave over our farm and our farmland and the Greenbelt at least, that’s our plan to and the Americans benefit from Mexico as their biggest trade partner in the world.

Unknown Speaker 14:31
And a source of low to mid level manufacturing labor at cheaper rates than China.

Unknown Speaker 14:37
Point is USA is near and reshoring nearshoring and reshoring its manufacturing. If you’ve been following the microprocessor manufacturing story, critical which is critical hardware to the AI revolution. The US federal and state governments and local and municipal governments are investing hundreds of millions and billions in order to divest from chips made in Taiwan.

Unknown Speaker 15:01
Funny enough Taiwanese chip manufacturer TSMC is building their own plant, a $17 billion plant in Texas. And then oh, coincidentally enough, I’m booking myself for a trip to Texas in January. Next month remember the Ohio this week I’m going to Atlanta? Yes, I’m bullish on American real estate. I’ve kind of headed up to here with rent control real estate. And again, none of this is possible without without a proper power team, and financing. And from my experience, this was only made available. Just recently, my friends at lens city, I have their contact information in the show notes. My friends at Len city are the first and only Canadian brokerage I know of offering mortgages on US income properties in the US. And these are for again, these mortgages are strictly for income properties. That’s why they can lend on up to 10 to 15 properties. Anyways, informations on the show notes. As I mentioned, building up our Power team, and going to Atlanta Next this week. I can’t wait. As I haven’t been this excited about real estate investing in a really long time. We’re gonna make real estate investing great again. onto this week’s show. We have covered home mortgage investment corporation in the house, or Calvert for short.

Unknown Speaker 16:22
I teased them about the they use an acronym as their website instead of Calvert, which everyone knows them by anyways. They specialize in short term financing for flippers, burn investors, even pre construction investors who need short term financing to close a property so that they may immediately sell that property. As a real estate geek. I enjoy learning about what’s going on in the market, where investors are putting their money and their borrowed money from places like Calvert where they’re putting into work. Where do we find deals what cities provinces on or off market, and I hope you the listener enjoy geeking out as much as I do. I even turn the table on both Ryan and Garrett who both live in Calgary and ask them where they invest their own money. For anyone who wants to lend their funds privately, which is a pretty common topic these days. I think it’s a good idea to listen to how professional lenders invest their own money, because if it’s good enough for an insider,

Unknown Speaker 17:13
just have a listen to the show. For more for more information, their website is www.chmc.ca or you can reach out to Ryan at Ryan at ch M IC dossier. Please like subscribe, leave a five star review on iTunes or Spotify or YouTube. Funnily enough, our Spotify ratings are higher than iTunes. Therefore, Spotify is now my favorite podcast platform. Please enjoy the show.

Unknown Speaker 17:43
Right, Garrett, what’s keeping us busy these days? For sure. So Ryan from Calvert home mortgage, Garrett and I just had him on a trade show right now visiting all of our clients in Ontario. It’s been extremely busy to say the least within the company. So obviously we weren’t recovered home mortgage. planning out next year’s volumes and targets we’re on a massive hiring spree right now. Just hired three Junior underwriters. So the team is growing exponentially, which is awesome to see. Managing our portfolio and just staying busy with what’s going on in the market trying to mitigate risk while aggressively growing the portfolio on good loans. Right? Yes, yeah. So sorry, is gonna ask you what is the portfolio? So what is what can you give me more specific? What is the portfolio for sure. It’s just full of like, you know, pet cemeteries like,

Unknown Speaker 18:32
what’s in this what’s in this portfolio definitely not be good, single family detached homes, primarily 97% of our portfolio is first mortgages, the other 3% Second mortgages, we focus on short term lending in major urban city centers. So primarily populations 100,000 And above, in Alberta and Ontario, and we really focus on 12 months and under loans primarily lend to flippers, but if any, just anyone requires a quick closing solution for a mortgage. It’s a single family detached home, or typically we’d like to be the first call to help out those clients. Most of our clients are real estate investors. We we love the real estate investing community really carved out our nation that aspect to help serve real estate investors in Alberta and Ontario. Excellent. So this is a real estate investing show. So let’s start there. What do you guys seeing among real estate investors? Where are they focusing their money? And where? Yeah, well, we were we were talking about before the show that we had 60% of our book in Ontario and 40% in Alberta, about a year and a half ago, I’d say. And then we had that big fall off at the start of 2022. And now we’ve shifted our book to 60%, Alberta 40, persona, Ontario. So we’ve seen the real estate investor community in Alberta a little more a little more bullish than than the Ontario market. But that’s not to say there’s not good deals in Ontario too, like a lot of our flippers are finding great deals good buys.

Unknown Speaker 20:01
and they have more time

Unknown Speaker 20:04
with your time.

Unknown Speaker 20:06
Like, like, there’s a difference now, right? Like you have more time to do your due diligence on these properties because they’re not selling right away. So you can do your inspection, you can do all your numbers and stuff without having to put in an offer with no conditions and really quickly close and make a decision. Yeah, so imagine the phone call sound different. Yeah. Now now we’re seeing it in Calgary, right? Like Calgary is now the one where I’m getting calls from some of my best real estate investor clients. And they’re saying, I don’t have time to do all my due diligence. Will you do this? For me? It’s like, well, we still need this, this and this word. Yes, we’re very quick. And we can find deals in 24 hours and in Alberta, but

Unknown Speaker 20:47
we still need to see that they have a budget renovations, what they’re going to do to the property, and so we can understand what we think the ARV is.

Unknown Speaker 20:57
Okay. So the it’s again, a bunch of for example, you need like a renovation. Cool, and they usually takes a bit of time. Yeah. But a lot of our clients are typically doing those themselves. And they can they roughly understand, like, if they’re experienced, they know, hey, like I seen this property, this is what I’m going to do. And we have a reno checklist that I think we have we sent it to you before, probably yes, yeah. Anyways, it just, it’s a really easy way to just fill out, Hey, I’m doing this, this and this, we have all the different checkbox. And you can give us all the details about it. So it’s it’s high level. And then if they have to get a full quote, they can do that after the fact. But if we understand what they’re doing to the property, makes it easier for us. So really, so these guys can really turn that turn around their own financing in 24 hours. Yeah. And Alberta. Yeah, cuz we can use one lawyer in Alberta. I mean, there’s only one. Yeah, there’s only one. So we have done up our own legal search. And there’s not just one way that does it is that you can you can vote? Exactly, yes. So we can use the same lawyer clients pick their own lawyer. And we have done our own instructions internally, and we send them to that lawyer to act for both Calvert and the client. So it saves costs and time. And sometimes when lawyers are dealing with other lawyers, it can, it can take a lot more time. So when we’re like home inspections, and appraisals, both appraisals for value and for rent, if you even require any of these things. Yeah, really good question. So what makes us really unique is we have four appraisers that we use in house that do remote valuations, as long as the value is under 1.5 million. And it’s four units and below them within 24 business hours. And I know that makes

Unknown Speaker 22:35
out of all the private lenders or even MCs out there, something really unique.

Unknown Speaker 22:39
A lot of our clients do tend to buy properties off market, so just not having to deal with those tenants. Or if there’s a seller in there, they just want to offload it quickly. So as long as they have property photos, we have that off to our appraiser. If they are flipping the property, and they have the renovation summary that Garrett mentioned, then we either value it as is or as if complete if they’re going to be doing renovations. And what we’re looking for there. It’s just like number one, the clients gonna make money, we’re doing everything very conservative, they have a reserve fund, if they take it’ll take five months, we’re forecasting six, seven months.

Unknown Speaker 23:12
Because from our experience, rarely are things ever done on time on budget.

Unknown Speaker 23:19
So we just really want to see our clients successful, even though we would make money off fees and interest. We don’t want to do one deal we really want to build a long term relationship with with our investor clients. Right. So you mentioned photos. So let’s see what we generate or what I’m trying to make your listener who’s gonna wants to bring your business? Yeah. What do they need to show up prepared with? You mentioned photos, a budget, but what else did you need? Yeah, so you actually needed an agreed accepted offer? Yeah, no, we actually don’t

Unknown Speaker 23:48
know.

Unknown Speaker 23:49
Right away. Right away, we pre approve on a personal basis. So what we like to do is we like to get their information upfront, which would be application, credit bureau and their most recent notice of assessment. The other thing we’re going to look into is if they have what sort of funds they have available for their downpayment and their rental costs. So if we get those four things upfront, we can pre approve people on a personal basis so that when they find a property that they like, we can act quick, and get a value completed. And what Ryan was saying, we have four appraisers on staff, Ryan and I are both realtors in Ontario, we’re never going to buy or sell a property, but we use it for data. So our appraisers can go online and check out the data internally and base it on your rental budget and rental details to be able to figure out what we think the as complete value is. And so our two biggest underwriting criterias are are they going to make money and do they have the money to do it? So your appraisers don’t drive into the property or simply because a drone out there? No, we do a drive by though like every single day that we do we do a drive by to make sure that the property is there for one and then that it’s in the shape that we think it is okay what is

Unknown Speaker 25:00
you guys live in Calgary lifted properties in Muskoka, Ontario. We don’t live near Muskoka.

Unknown Speaker 25:06
Within Yeah, within reason. Like we have this one fantastic company, I don’t remember their name off the top my head, but pay them per drive by X amount X amount of dollars, they complete them typically within 24 to 48 business hours. And then we do track all the properties that we land on as well to to understand what it sells for. And our appraisers have that as a KPI within their within our company to ensure that the appraisal that we actually the the value that we actually evaluated at is within reason of what the property actually sells for. Typically, we’re within two to three ish percent. Obviously, some crazy stuff has happened in Ontario over the past few years. So there are some outliers but Calgary Edmonton typically or within that 2% mark of what the property actually sells for versus what our appraiser valued at four. You mentioned crazy, it depends on your context. But crazy is

Unknown Speaker 25:59
will elaborate a little bit between like, you know, markets in Ontario versus like you haven’t in Calgary, because it’s all crazy.

Unknown Speaker 26:07
So again, let’s let’s go into the Mises elaborate bit on the more on the sandbox. So when your clients diplucate doing their buying, like, give me an example, like what’s, uh, what’s what kind of market are they in Edmonton or the suburb of Toronto? Like, what’s the property? Like? How bad is it? For sure, it is like, like Reno is these major Renault’s? Yeah, typical purchase that we see is probably around four ish three, like in Calgary.

Unknown Speaker 26:34
In around 30 minutes max from downtown core.

Unknown Speaker 26:38
They’re typically doing like cosmetic renovation, spending around $75,000 really depends on the client as well, too. But that’s average typically what we see they’re in and out and probably around six to nine ish months, really depends the

Unknown Speaker 26:51
the tradespeople that they use and how established the real estate investor is like, if they have a whole trades people that report into them, they work for that real estate investor, very different experience in terms of their the systems that they have in place. But it’s a very, it’s a very small number of yes to have trades on payroll, yes, most of our clients, our business for self as well, too. So on Grand they show that they’re making to be tax efficient, you know, 3040 grand, as long as the clients have the capital as of today, from start to finish for the project. That’s mainly what we’re looking at, if they’re flipping, so we don’t really take a look to too much on gdSt. Yes, it’s as long as they have a profitable deal. They’re going to be in and out in under 12 months, they have the capital, we have confidence in their business plan, but what they say they’re going to do that they’re going to actually do.

Unknown Speaker 27:38
And we looked at that all internally, typically within 24 business hours, but to your point, yeah, average pay was probably in around nine ish months on the long end, and then they’re selling the properties for depending on the location and property type. High sixes

Unknown Speaker 27:56
interesting.

Unknown Speaker 27:57
Like six to nine months. That’s a pretty long. To me that sounds like a pretty major renovation. Are these like these, like these houses? Like really ugly? Quarter houses? Like? Yeah, yeah. So you still want pictures? Yeah, on average, on average, it’s eight like eight months. But like, that’s, that’s long, it’s, ya

Unknown Speaker 28:19
know, HGTV 30 minutes. No, no, but like, the average rental is probably around 50 grand. So but then you have people doing the $10,000 rental, and then you have people doing $150,000 rental, and even higher sometimes, but on average, I’d say it’s about 50 grand. But like we have one client who just pulls out all the junk out of the property, maybe paints it and throws it back on the market. And that seems to be the easiest way for him to make money but that’s not everyone’s strategy. Like we want to say to every different real estate investor strategy to make them successful. Yeah, we want to vet them all right, like we don’t want to just limit to Hey, you can only do a 20 grand ran out different properties are going to need different upgrades depending on where they are. But our main markets are the are the secondary markets. So like London, Cambridge, St Catharines.

Unknown Speaker 29:20
Ottawa like we would go to all those markets we’re not really too focused on the GTA it’s usually we’re lending on properties that are

Unknown Speaker 29:30
around the

Unknown Speaker 29:32
450 500 range stuff the fine is fine so it’s got to be in those secondary markets. We’re not doing the GTA because things are we’re doing some in the GTA but yeah, exactly what’s wrong with it? If it’s, yeah, probably going a $1,600 condo fee at that price. Yeah.

Unknown Speaker 29:52
But I mean, we do offer products for those too. It’s just we require more money down because our, our ranges you can

Unknown Speaker 30:00
put 25% down or more, or you can put as little as 20 grand down. If it’s a property worth 800,000 or less, a purchase price of 800,000 or less, and working the down come from is a cash is a home equity line is a second mortgage money. Yeah, and any of those sources, gifted funds as well too, as long as they have a gift letter. Cash, you can also be debt lines of credit. Similar to your point, we also do blanket mortgages. So if you have a property with equity value, it’s as long as you have property photos and property photos is essentially just like an MLS listing. So of all the bedrooms, bathrooms, kitchen accessories, just to get an understanding of what the condition of the property.

Unknown Speaker 30:39
Once we have that we do evaluation on the property. And yeah, as long as the clients making money, then we’d love to help supports, we do really focus on the lower end to mid price point of the market as well to typically from our history within the company, there’s

Unknown Speaker 30:56
a threshold to how low property prices can go. From our experience as well to typically we find that there’s the most demand for the lower end to mid market price point moves, the quickest.

Unknown Speaker 31:06
Where we’ve ran into struggles before in the past is lending on higher end luxury flips. When the market decreases, typically, obviously, those are most susceptible to larger price decreases, which in turn,

Unknown Speaker 31:20
could hurt or diminish our the quality of our loan.

Unknown Speaker 31:24
Fit decreases to three 400 grand in a short period of time. Very cool. Yeah. Like in Hamilton, for example. It’s under 600 grand I’ll go.

Unknown Speaker 31:35
So actually, you raised a couple of good points. Asheville, my some of the things you said just let do more questions, like you mentioned, like MLS pictures, which led me to the question, how many of these properties are on market versus off?

Unknown Speaker 31:50
Hobby? How the how your client acquires the property? Yeah, good question. I’d say most of our real estate investor clients are buying them through wholesalers, the majority 60 80%. Yeah, I’d say 60 Probably

Unknown Speaker 32:06
could be more in Ontario.

Unknown Speaker 32:09
Because we only have one main one and not in Alberta. But Ontario is quite a few.

Unknown Speaker 32:14
So a lot of our real estate investor clients go through them, they have good relationships with them. Otherwise, they’re going through a realtor that they trust. And maybe it’s an off market listing as well. But a lot of times, we need to ask for pitcher pictures, because they’re not on the MLS, but we can get them through the wholesalers. And we have good relationships with them as well. Yeah, because I’m sure you’re gonna see some crazy stuff. Oh, yeah, or even just like fake pictures.

Unknown Speaker 32:40
Just from a different, some of these properties are nasty. And it’s kind of actually this leads me into the other side of our lending that we do, which we kind of talked about, but like, we focus a lot on just short term, Like Ryan said, short term, but it’s not necessarily all flips and birds, we also do what we call an interim purchase. And sometimes these properties are just not in good enough shape for the banks to consider, right? Like, it doesn’t say much so no, totally, it doesn’t make much. So like, if the bank appraisal comes back, and it says it’s in fair or poor condition, they’re gonna say no, like, almost all the time. I gotta know for because my shrubbery was overgrown, but it’s really

Unknown Speaker 33:23
an exception.

Unknown Speaker 33:29
Anyways, and usually they get that appraisal back like a week within funding, right? And then they’re stuck. And they’re like, Well, I gotta find someone because I can make this fix in like two seconds on this property. So they’re like, Okay, Calvert, can you fund this, we’ll fund it short term. And then they do whatever they need to do to the property, and then refinance with the bank. So we want to be that short term option to get people in those properties.

Unknown Speaker 33:55
And before we’re recording, we’re talking about interim also for like pre construction folks. DQ share care share what kind of pre constructions you’ve seen. Yeah, so we’ve, we’ve done a lot of those lately, like a lot of people have either one, they bought it three years ago, and the property has gone up in value.

Unknown Speaker 34:15
Or four years ago, five years ago, however long these condos are taking to get built. You never know.

Unknown Speaker 34:22
They always say an estimated closing date, and it’s never close to that before after usually after. But anyways, so they they go into these contracts and then it comes up and usually the builders and developers won’t give them much time. They’ll be like Okay, your closing is coming up. Now you got to have your financing in place. And people who don’t will often come to us and say hey, I’ve got this now and maybe the property has gone up in value. And we can land on that as is value and a lot of them just want to sell it right after they’re like okay, I’ve made my I have 40 grand equity 50 grand equity, sometimes more like this

Unknown Speaker 35:00
You know that bridge? So they’re like closing? They’re like, Can I Can I just go to you close it will offer a fully open mortgage so you can pay it off the next day if you want. And they they’re good with that right like, like the bank’s a prepayment penalty. Like we we like the banks, what they do for the industry is it’s good for everyone. But for the maths, further maths, but like they do not like the short term stuff and the prepayment penalties can be huge. So they’re enormous. Yeah, yeah. So we love those kinds of deals. And then same with the, if it’s gone down in value, we’ll still consider those but we are going to consider them on the as is value compared to the purchase price. So if it’s less than the purchase price, we consider up to usually 70, maybe 75, if their exits really strong on those types of properties. And so when you’re trying to recruit construction of these these houses, these apartment condos, what is either or, either either we’re well consider both townhouses, condos, single family detached homes. Yeah, like we’re seeing a lot of people now unfortunately, not qualify. So if they bought it, you know, two, three years ago, and the interest rates are at historical lows,

Unknown Speaker 36:07
rates have gone up, they can’t qualify anymore. It’s essentially just a solution for someone to offload that asset

Unknown Speaker 36:14
in a timely manner. So even like a condo where like when there’s like the interim position, time, you know, occupancy, yeah, the occupancy period. Yeah. You can still finance some financing for the occupancy period.

Unknown Speaker 36:27
Before the occupancy period, meaning you would need title. Yeah, like they have to have their own title they have to take, they still have to live through like the occupancy period, then.

Unknown Speaker 36:38
Yeah, it would, yeah, you’re right. So it would depend on the contract what it states and we would want to make sure that their exit is

Unknown Speaker 36:48
it’s what is based on the contract, like if the contract has stipulations that they have to live there for a certain amount of time, their exit would have to abide by that. So when you live there, but you have to hold it. Yeah, sure. They can live there rented, leave it vacant, kinda like theirs, but it’s not.

Unknown Speaker 37:05
All those contracts are like, like 60 pages, like they are their extensive sticking through TPT. And

Unknown Speaker 37:14
it’s getting easier. What do I need to know? That’s my prompt.

Unknown Speaker 37:19
So you can literally ask your questions, but yeah, so sorry. So So So can someone. So it kind of sounds like it’s kind of case by case it is. So in your emails, we’ve filled with 60 page PDFs by Monday.

Unknown Speaker 37:32
Yeah, we’d love to review that. Yeah. Okay. Okay. Well, I know toxic air is favorite to reveal.

Unknown Speaker 37:38
Quickly, how can people? How can we get get their information to you? or what have you worked with us throughout the process? Yeah, probably just our website is easiest. And you’ll find both of our contacts on there. But website C hmic.ca.

Unknown Speaker 37:52
I can. I can just be covered on ca. We’ll have to report that to Dean as we need it. Mm hmm. I see. I know. But so let’s do that. That’s true. I know. Yeah. Everett, the founder, he wanted to be close to CMHC.

Unknown Speaker 38:11
Like whenever you punch it into Google, so it comes up I believe, with with SEO and stuff like that. So see hmic.ca Because everyone calls you guys Calvin. I know the community. Everyone calls your caliber. Like, try to like find for your website, or your emails. Over time. Ch M A c.ca. Or if you have any live deals, I’ll take them on. It’s just Ryan at ch M ic.ca. Is the email or you did that you gave your email. Yeah. Hopefully I don’t regret that. Yeah. It’s hilarious. It’s like I have guessed that like, yeah, I still get emails from like that. No.

Unknown Speaker 38:49
Actually, no, if you’re still there, then that’s okay. Yeah, but if you’re gone and Yeah, remember that Calgary daily? Superfriends. We’re gonna find like 10 years from now.

Unknown Speaker 39:00
To funny. Oh, so how do you guys invest your own money? Do you guys do fix and flips yourselves in London or Calgary? Or what are you guys doing? Yeah, I just have a few buy and hold right now currently in Calgary.

Unknown Speaker 39:13
Just long term tenants currently in there the bulk of my net worth sin in the fund within Calvert No kidding. Are your net worth is in the MC and the MC he has more in the company than your own your own portfolio correct and real estate. Okay, interesting. Correct? Yeah, yeah, I think you’re in the minority of this show.

Unknown Speaker 39:32
Because most most to have much larger

Unknown Speaker 39:35
portfolios. I’m actively looking right now for more properties within within Calgary just haven’t found the one that where the numbers make sense. I know. It’s a crazy market out there and things don’t make sense already.

Unknown Speaker 39:47
You have to get creative. Yeah, like anything. 600 grand and lower is just moving. Like it’s like Ontario was like we’re now in the same situation of I gotta put an offer right away or else I have no chance

Unknown Speaker 40:00
So for the listeners benefit, like Calgary’s, like most of the country is down in transactions and prices. That’s not the opposite truth. The opposite is true of Calgary. Calgary seems to be the one market that has, it’s definitely in a seller’s market still. Yeah, like last I checked last month, it was 1.3 months of inventory. Really low, insanely low. I believe we actually are the hottest market in Canada. Currently right now, if not, to your point when we were chatting earlier, earlier and Dorthea North America or the world at least for for a developed country. But yeah, who else would be growing this quickly? Yeah, we have like 30 to 50,000 people moving for the last three quarters just to Alberta. So immigration is really, really strong. It’s wild. How busy it’s gotten over the past past few months here. Fascinating. Because I wonder when and when that stops? Because it ain’t good. Because again, like for example, I told you guys, I’m looking at US markets. Yeah. And they’re all the good US markets are also have experiencing pullback in prices. So that’s usually a sign that, you know, immigration and stuff like that. But like Calgary is like the lower 80s. Yeah, I know. We did a lot of marketing in Ontario to move to Alberta. Very affordable no land transfer tax. For me the mountains. I was the reason why I moved out there. Beautiful scenery, even 45 minutes an hour drive, no land transfer tax, no land transfer tax in Alberta. And I know do in Toronto, I know. I couldn’t believe it. Like we’re running numbers from deals that we get people flipping in Toronto, and it’s insane how significantly you need to buy below market value just for the numbers to make sense. Because you could be looking at like 3070 grand and land transfer tax alone. It’s just people’s renovation by state and seriously, you’re buying for over a million bucks. Like,

Unknown Speaker 41:48
yes, we haven’t done too many deals in, in Toronto, just short term purchases. For people who are not flipping they just need a bridge mortgage, like the the sale date and the purchase date don’t line up from the house that they’re selling and purchasing for their primary residence.

Unknown Speaker 42:01
It’s rare that we find people flipping in. Yeah, we’ve done a bit though, like as long as our loan of our max loan amount right now is 1.5 million. So there are opportunities there. It’s just they have to make sense with the numbers for how common is that? It’s not uncommon, rare. Pretty rare. Yeah. What is that? What is that then? Like? It’s not for Plexus? triplex. Like, what? Like, 1.5? Yeah, yeah. It’s just single family, right. In Toronto. Or like a row house? Yeah, yeah. Yeah. Tough to make the numbers work. Nowadays, it’s a lot more risks than than than most people undertake. Yeah. Because they’re the holding costs. What if something goes wrong, and you’re holding this property for a lot longer than you expected? But you’ve got to have a huge contingency, when when it’s that much of a purchase price. I found that a friend of the one that weekend with Rockstar event. They’ve been holding something for well over 12 months. Oh, my word 1000 to fourplex conversion. I think they’re saying 4000 a month. Just to carry it. Check. Not including like the renovation budget. Yeah.

Unknown Speaker 43:06
That will cripple some people. Definitely not cheap, average clean, does not make 4000 does not take home. 4000 a month. Right. So yeah, really tough. So the sexy real estate stuff, like a lot of it cripples people. It does. Yeah. Yeah. Don’t don’t have all your eggs in one basket. Yeah. And that’s a challenge was that Ontario property is, you know,

Unknown Speaker 43:27
any property really, if it’s over 400, grand, 100 grand like that. It’s all expensive.

Unknown Speaker 43:33
Especially when, like some people get experienced, but you know, I had an episode on the show, I think we had like, they have like, five or eight flips, going at the same time. All of like, none of their own money. And it was all interest bearing tough to manage. Yeah, I know, historically, from us, that’s where we typically see the most issues. Clients buying multiple properties at once they try and manage too many projects at once. They’re too optimistic with how long things will take. Think it’ll take seven months to complete. It actually takes nine to 12 ish months. When you have those many projects, just managing the trades on on multiple properties. It’s

Unknown Speaker 44:11
it’s very challenging to build the systems or processes to get things listed on time if the market drops, whatever X amounts.

Unknown Speaker 44:20
And then to your point, having having a contingency budget, it’s yeah, that was like mainly the end of 2021 When everyone was like, oh, everything’s great. Everything’s going up. Everything’s going up. 30

Unknown Speaker 44:32
So it was like, let’s just buy everything and it’s gonna go up and yeah, the plan wasn’t there. It was all anticipatory numbers. I was here but like assignment, like wholesale fees, like 70 grand Yeah. Yeah. See few six figures. Quite a few insects figures from Yeah, so like, How good was the deal that you had to pay that much? And then like, we’re generation budget money gonna come from like how you make these numbers. We’re gonna get paid right now.

Unknown Speaker 45:00
I’d sell to have meat on the bone for, for the client purchasing the flip, unfortunately. So the question, do you guys register your mortgages? On title? Yep, every single one. Have you ever run into folks? Where does it for example, if someone gets a promissory note, for example, how would you know? Yeah, so typically, they would register behind us, and they would inform us. But otherwise, we can always find it on title too, if we pull them, but we’re not regularly going to pull them. But upfront, if we, just like any other lender, they expect you to tell them and be upfront and say, Hey, we’re gonna do this, because for the most part, we’re usually okay if they do a second behind us. But we want to see the terms of that mortgage and make sure you can hold that and numbers still make sense if you’re doing that.

Unknown Speaker 45:49
But yeah, it’s so important to be upfront with your lender, if we find out later, we’re not as inclined to be friends. Yeah. Good. Well, I understand what they what they were doing and why they did it. I bring it up, because I knew you guys were gonna say, but there’s a certain wrong club out there, where the owners are all being accused of not disclosing all their mortgages on properties. They’re being accused of raising second, secondary funds, and secondary mortgages, promissory notes on properties that were already 100% loan to value. And but you guys are proper organization versus these are individuals. Yeah, yeah, the individual said, we’re doing your due diligence. And like, we’ve we’ve had times, and especially when, like I was talking about into 2021, everything’s going up. There were a lot of seconds behind us that we didn’t know about. And so they would call us and say, Hey, like, what do I do? It’s like, well, you should know that we’re in first, FR is, is in trouble, you’re in big trouble, because you’re behind our security. So it’s just, if you’re doing private lending on your own, you really need to understand the due diligence that goes into these projects, or these mortgages that we do and understand the risks, and how much management it is to handle these foreclosures or empower sales. Even on that knowing from the borrower’s point of view as well to like, if you’re in a position where you need to take out a second mortgage.

Unknown Speaker 47:21
Like, the one thing that we can highly recommend is reach out to the lender as soon as possible, whoever’s in first position, try and find a solution. Just be upfront, be honest, yeah, hey, this is how the projects going. I think it’s going to take three more months longer. This is my financial situation, if you just honest, direct and upfront, it’s can significantly help just both parties be more collaborative and find a solution that works for everyone, as opposed to calling a week before your next mortgage payments coming out. And it’s kind of asked me before Yeah, asking for forgiveness. Yeah, it’s a good point. Because we’re a super relationship based lender, we do a borrower interview on every single deal that we do. So we call the clients, make sure they understand the terms of the mortgage, make sure we’re okay with their ability to service this mortgage and go through with the project. So we want to hear from our clients and, and want to understand what they’re doing what they’re up to, and make sure they’re okay. Especially in difficult times, like we want to work with them. Our last resort is power of sale.

Unknown Speaker 48:24
As I speak to another investor just last week, like talking about the explaining the situation where like, they were the second. So just hypothetically, say you the second say the first is to schedule a bank, and you find that there’s problems. Now you’re calling the schedule a bank, they don’t know who you are, know, we’ll even talk to you.

Unknown Speaker 48:45
Now, it’d be a good question. Yeah, typically, I mean, I don’t know the bank side that I don’t know. My point is, I’m guessing there’s going to be some documents signed, talked like they will want to hear from us. Because what will happen is if we have troubles in a second mortgage, buying a bank, we’re going to be making the bank’s payments, to keep them up to date and figure out this solution in the meantime. So it’s a call talk to each other.

Unknown Speaker 49:11
From me,

Unknown Speaker 49:14
gladly.

Unknown Speaker 49:16
Someone’s making their payments. That’s different from from you guys. Because you guys how big your book 600 million or two or 300 millions or under million button. Yeah, versus individual whose book is 120 grand. Yeah. And talk to you and 90 90% of our book is first mortgages. So yeah, so you’re in the driver’s seat. Yeah. So people have to pay you in the second. So So let’s let the listener understand what that means. So say so,

Unknown Speaker 49:46
say the investor, the owner doesn’t have to be investor. The borrower isn’t paying either the first or second.

Unknown Speaker 49:54
Second position, whoever is the lowest on the line, they’re the most risk. What there should they be doing now?

Unknown Speaker 50:00
Yeah, like they should understand Understand upfront this could happen. First step, yeah. Because I think most people if they understood, they would not lend to an individual on one property. Yeah, when there’s much better options available. And we’ll get into that in a moment. Yeah, it depends like, like, if we’re looking at a second mortgage, we’re typically lowering our loan to value. So like our typical loan to value highest loan values, 80%, go to 85 on bridge deals.

Unknown Speaker 50:28
But other than that, when we’re doing second 75 is for sure the max, right, and we might scale it back to 70, depending on the situation, so let’s meet on the buffer there. But if if the market turned like it did at the start of 2020, you, then you run into issues and you have to realize, hey, I can lose all my money. In this second, I can make the payments on the first take over the property, and I could rent it out.

Unknown Speaker 50:55
If that’s the case, and it’s different. The rules in Alberta and Ontario are different. But it’s, it’s quite risky. Like you want to get all the information upfront. And obviously, the property value is the most important thing, because that’s what you’re registering your mortgage on. So let’s get into some numbers, then, like, what is your typical first payment? If someone has to start taking over your they’re taking over the payments of the first mortgage? How much 500 bucks? Well, our average or average interest rate right now was around 11%.

Unknown Speaker 51:25
That’s our average.

Unknown Speaker 51:28
I don’t know I don’t know the math.

Unknown Speaker 51:31
But 11% on, on average art, or mortgages around 404 50. So

Unknown Speaker 51:39
certainly, about 44,000 a year. Yeah. So almost two grand a month. Yeah. So that’s sort of my point is I’m speaking to the listener who might want to do a second mortgage, you could have to be paying your $2,000 a month, you could be you got into this because you want a passive easy investment that earns you cash to keep that updated. They might not make those payments, and they might like that, but they what they have to understand is that that mortgage is going to accrue interest until it is paid out. So like that 2000 a month. It’s gonna keep accruing accruing eating into your equity while it’s not paid out. So yeah, my math is terrible. Yeah, I needed that 10 The Chinese person that doesn’t do math. So this is 240 4000 divided by 12. That’s almost 3006 66. Right? So you know, again, for the listener who wants to do a secondary second mortgage, and these are not that big compared to

Unknown Speaker 52:33
you, you were you got into this to collect cash flow every month, and now you’re shelling out almost $3,700 a month. Yeah, it’s not coming out of your pocket, it’s coming out of your equity.

Unknown Speaker 52:44
Equity in the property. So if it’s not, if you’re not paying the first mortgage, then

Unknown Speaker 52:50
I saw Gary like, Yo, can I pay on the

Unknown Speaker 52:52
mortgage is accruing. And the interest is accruing all the way until it’s paid out. So the mortgage is increasing eating into your equity in second position. At least it sounds better than paying out $37. That’s right. Yeah, it sounds a little better. But at least we have to talk. So I can just control the property. Yep. Like, trying to sell it make us all whole. Yep, make all of our lives easier. You just gotta let you know that there’s no public money, you can pay out the first mortgage, which is even more, or $400,000 mortgage, if you have that in your in your bank account. My point, though, is that people who get into private lending the means to be passive. And now you’re like, if you lend to someone across the country? Yeah. All of a sudden, your account, you’re very active.

Unknown Speaker 53:36
To finish the run? Oh, yeah, I think we talked about it last time where Jesse and I both came from the same syndicated lender. So in the syndicated lender platform, it’s you underwrite one deal, and you send out that one deal to everyone on your list of investors that are out there. And those investors will invest either a chunk of it or they will invest

Unknown Speaker 54:02
the whole thing, but it’s against one mortgage, right. And it’s the same thing with private lending, where it’s against one mortgage, but you’re doing all your own management and stuff. And then as is where Calvert is we have 820 mortgages on our book. And the money is diversified across all those. So if you have issues on one, it’s not going to impact you as much as it would by just having money in one mortgage.

Unknown Speaker 54:27
And that led diversified and because I told you guys before, a lot of people asked me about private lending, right? I don’t I don’t do it myself. So then I naturally asked you, Ryan and Jesse like you guys, can people lend to start can people invest in your stuff? And that’s what you were mentioning that most of your net worth is in in caliber. Yeah. So can you explain it that means that most your investment in Calvert Yeah, for sure. So you essentially purchased preferred shares within the company. We pay distributions on an annual basis on May 10 of every year. If you invest in our fund, it’s similar to purchasing stock

Unknown Speaker 55:00
From the public market, we do it through a company called Olympia Trust. So everything goes through a company called Olympia Trust.

Unknown Speaker 55:06
Your capital is quote, unquote, with us for one year. So we are a very illiquid investment. It’s not like you can liquidate your stocks on the public market at any given time for us. It’s your private mortgages, but yeah, exactly. Exactly. So you’re with us for a year at a time. Currently, right now, our show, I don’t know if I’ll be able to share the share price. They can reach out yeah, they want to get into like the numbers, details. But I mean, we can just say like over the last 10 years, we were 10%, on average. But yeah, we don’t, we don’t really get into it too much. Because most of the shareholders that we have are through our network, and our network will tell other people and we’ve been in business for 40, over 40 years or so.

Unknown Speaker 55:53
And then the funny thing is that I asked Yeah, because it just because, again, why would someone lend to an individual on one property, when you can essentially own shares of Calvert? Yeah, to be diversified across your entire portfolio? So if you are looking to do it on yourself, you could get higher returns? If you’re doing it individually, assume you’re fully invested all the time. Exactly. Assuming you don’t lose your shirt. Exactly. So that can be you know, the grass is greener, kind of on the other side, why would I give someone my money, when I can just do it and make you know, one to three ish percent higher. But there’s lots of stuff that can go wrong, very time consuming. If you ever have to deal with anyone in arrears, that can be a full time job just trying to collect.

Unknown Speaker 56:38
Yeah, the main thing we have to say is like our, our returns are not,

Unknown Speaker 56:42
they’re not flat, like we’re not doing the same thing. We’re not promising anything like our returns vary on a yearly basis that tempers and I said is just on average over the last 10 years, but it can change. And we’re deemed a high risk investment.

Unknown Speaker 57:00
And we’re exempt market dealer. So we have to say this stuff, even though like our average loan to value on our book is 59%.

Unknown Speaker 57:09
And you guys do advertise this, you only talk about? Yeah, we don’t, we don’t do it anything like if you go on our website, you won’t see anything, you have to reach out to us. And then we’ll we’ll have a discussion and talk about it. Because like a big part of it is you have to be accredited to invest with us. So you have to either either make 200,000 as an individual 300 as a household or have a million in net financial assets. So it’s a it’s a wealthier class to be able to invest with us. So I think it’s interesting just to raise the point is you guys offer no commissions, nothing. You guys aren’t paying me for saying this. You’re not sponsored? No, no. You guys, we want the money, really? Not financial advice? No, it’s not for sure. We have we have a lot of capital, like available to our clients. So we don’t necessarily need the money right now. And we just want it to be an option for people out there to be in real estate investing, but very passive. I just think it’s funny because like, you know, most of what’s out there, like people who asked to come on the show, people have ads and whatnot, they’re all trying to raise money versus you guys are

Unknown Speaker 58:12
not

Unknown Speaker 58:16
interested in lending.

Unknown Speaker 58:18
And it’s not like it’s not that we’re like, we’re very transparent. When you get to know us. Like if you contact us, we could send you everything if we get to know you, but we just don’t want it out there on something we want out there. We’re We’re regulated by the ASC. And, and we just don’t want it to be a public matter, right. But like I’ve told you guys, like I believe people need to know their options, for sure. Because like, again, you can be diversified across the portfolio, and is regulated under Securities Commission versus a one to one relationship, one person one property. Like, what if the person gets hit by a bus? Or the bus hits the property? And exactly that may screw up your timelines. Yeah. And turn your passive investment into something incredibly difficult. Yeah, it’s a full time job.

Unknown Speaker 59:05
People don’t understand that too. Like all these like quit your job strategies. Yeah, like you. It’s that you guys see. You see your clients a lot. How it’s similar. What is the truth? What is the truth? And what is when I’m not using it? Yeah. But like, what is what are these folks doing? Like in terms of like, their their work life balance? You mean, like their client list investors, your real estate investors? Yeah. Like, it depends on how experienced they are and what knowledge they have in the industry. But

Unknown Speaker 59:34
I’d say the majority of ours are keeping a full time job while doing this. And they have a plan in place like, yeah, they come into this, like I have my realtor said, I have my trades. I have a mortgage broker, I have whoever and they’re like, I have this planned out and this is how I’m gonna do it. This I’m gonna execute, and they’re ready to go like we don’t. We don’t want to see if I ask questions.

Unknown Speaker 1:00:00
I was on the phone, like, who’s going to do your electrical or whatever it’s like, well, I might find someone at Home Depot and just, whatever, like just something random, it’s like, well, that’s, that’s not gonna work out. So essentially pitching your business plan, like come prepared, come with all of your ducks in a row, have a plan, show us that you have a contingency, contingency fund. And just outline essentially your business proposal, like you’re pitching to

Unknown Speaker 1:00:26
a joint venture partner or another lenders just come prepared most have a plan or a coach or something that they can rely on if if stuff goes wrong. Like I think some of the biggest issues we’ve seen, there are people that have no plan, no plan in place, or very basic one and then getting into the cost later on, and realizing oh my god, like, I just put this on a paper, this is what I thought it’s gonna cost. And now it’s costing me 60. grand more. It’s like, Well, gotta get into due diligence, especially if it’s not your full time job. Like, you don’t want it to be your full time job. Like if you have to take over this project, it will be a full time job. Yeah, it might be different I mentioned that I spoke to on the weekend, who’s whose four Plex is just taking it forever. Their original budget was the record original budget renovation budget quote, was 250. And then when it came down to start, it went up 50 grand. And so then they put a pause on that and went shopping. And they found out that other contractors are quoting like four or 500. All right. Did you know you know why it went up? I don’t know why. But what I do know is that that contractors, they’re generally always the cheapest, they’ll get it done won’t be on time. Right. So you know how it is like, you can’t get it all? Out? Can’t be on time can’t be on budget? I can’t have quality all the same time. Yeah. To give somebody has to give. Right? Yeah. So that contract originally called it was still the my first choice. I just know that. I just know it’s going to take longer. But if you don’t know these things, yeah, now they just spun their wheels. Now they’re delayed more. Yeah. Right. I think the most important thing is just to be conservative when you’re budgeting things, like so many people will come and yeah, that helps like at least at least a good contingency.

Unknown Speaker 1:02:10
But a lot of people come in and say hey, I’m gonna, I’m gonna renovate in two months sell it at one, like, like, let’s budget for renovating three sellin, three, maybe. Yeah. And like, and like blitzkrieg, 6090 days. Let’s base it on that. And then if it’s still profitable at that point, then we know, okay, this is a good project to take on. But let’s let’s be, let’s be conservative at the front. And then if things change, we can we can adjust. Yeah, I think novices especially with understand that the more cash you invest the lower risk it is. Yeah. Versus planning to use, like your personal line of credit to fund your renovations. For sure. I think everyone can appreciate which one is lower risk, I think I hope. Yeah.

Unknown Speaker 1:02:52
Do you want to confirm that?

Unknown Speaker 1:02:55
Like what’s, what’s personal line of credit money these days? 9%. Probably in and around there. Yeah. Eight 9%. Give or take it’s You mean like, like a home equity line? Oh, just purchased a personal line. I bet it’s even on it. Could it be? I think it’s higher isn’t it? Could be could be? depends on us, too. Yeah.

Unknown Speaker 1:03:13
Yeah. But even the HELOC money is expensive.

Unknown Speaker 1:03:17
It’s around seven.

Unknown Speaker 1:03:20
So yeah, a personal loan can be personal money can be nine or more. Not cheap nowadays. No, not at all. Because I feel the fatigue. I told you guys for example, my next down payments will be cash. Yeah, right. I’m tired of borrowing for my down payments.

Unknown Speaker 1:03:35
So you guys both live in Calgary. Yep. That’s the best time to a little bit. Yeah, like I I’m similar to Ryan, I don’t get into the rental side. I bought a house

Unknown Speaker 1:03:47
in December of last year.

Unknown Speaker 1:03:50
But I hold most of my financial assets in Calvert

Unknown Speaker 1:03:55
ch MICU.

Unknown Speaker 1:04:03
And then just stocks and whatnot, but I don’t get into the

Unknown Speaker 1:04:09
buy and hold stuff. Actually. My wife and I had a rental property.

Unknown Speaker 1:04:14
A we sold it in June. Really recent. And we turned it was very good timing in June to sell it but

Unknown Speaker 1:04:25
we just got sick of it. I was like I can I can put it in Calvert to have this passive income instead of

Unknown Speaker 1:04:32
having to deal with tenants who are like and they were great tenants. They were really good. But still, there were issues. The fridge broke, furnace broke, washer broke, I think all in one year. And I was like, Okay, well, I’d rather get the money out especially now the markets been so good. And just invest passively. I think everyone needs to appreciate like that understand their own values and make their own decisions. Like for example, Elon sold all of his real estate at one point. None of those he had no tenant

Unknown Speaker 1:05:00
All right. He just didn’t want any distractions in his life when you’re trying to be like, asset free minimalist. Yeah, we do.

Unknown Speaker 1:05:11
We do have people in our office field that do real estate investing at least two or three. So they’re doing it and they do a great job of it. I’m not saying it’s not a bad investment. It’s just not my strategy. Yeah, but for example, my next My next investments will be single family homes, because I want to simplify, right? And the people that don’t do an apartment building are like, you know, are like an infill or like, Yeah, I’ve been at this for a while. Yeah, I’ve seen it all understand what to do. And you tell us about that. Like why you’ve chosen to simplify on that side. It’s just like my mind just Yeah. And also, you know, I don’t like negative cashflow. Like my friends are spending 4000 a month in carrying costs. I don’t want that. I’m down for like a 3050. Grand Rando for labor. Yeah. And I can get like a six seven cap on single family home in the States. So what I need to be so aggressive, because like, You guys seem like people kill themselves here. It seems like multifamily is a big thing. No, it’s all multifamily. But that’s how you that’s how that’s how scale you need to do to get like a six, seven. Yeah, but I can get that in the states in the single family home. So why would it be so aggressive and kill myself? Especially in Ontario? Yeah, like have a 30 unit building and try to turn it on. Turn that three cap into a seven. Yeah. How much turnover renovations you have to do? Insane? Yeah, too much. How many people hate your guts for it? And how many tenants you have to the Oh, yeah.

Unknown Speaker 1:06:32
Yeah.

Unknown Speaker 1:06:34
Yeah. That’s true.

Unknown Speaker 1:06:39
But, yeah, but that’s that’s another episode. No. So

Unknown Speaker 1:06:44
again, I know a lot of people on social media or Edmonton bowls, which is why I always ask is always ask Ryan and Jesse now yourself, Garrett as well. Like, what are the differences between Edmonton and Calgary? I know you don’t live in Edmonton, but you made the distinct decision to live in Calgary. Because

Unknown Speaker 1:07:00
I’ve never been to Edmonton. So I’ll say, alright. But I’ve gone three hours north of Toronto. And it is small town. It is cheap. But it’s like a totally different climate.

Unknown Speaker 1:07:13
And I say three are specifically is Edmonton about three hours north of Calgary. Exactly. And, and so I’m just trying to understand what who would move who would move to Edmonton. I’ve been to Calgary in Calgary is lovely. I’ve been to Banff and Jasper. Edmonton, very multicultural.

Unknown Speaker 1:07:31
Again, it’s three hours south of Edmonton. The weather’s better. I’m assuming.

Unknown Speaker 1:07:35
It’s awesome. Yeah. So my point is I always I would do due diligence we always talk about so I asked people on the on the street. What’s the case for Edmonton? So I can’t speak to it as well as Ryan and Jesse can because they came from Ontario and made that decision, but I was born and raised Calgary. I’ve never really

Unknown Speaker 1:07:54
never really chosen but I’ve chosen to stay because you couldn’t go live for cheaper and I chose to stay. I bought a place I have a seven minute drive to work in the morning. Can I can walk in 40 minutes. I’ve got a 900 square foot lot. Or sorry, square. Square meter lot. Yeah, sorry. square meter.

Unknown Speaker 1:08:19
Sorry. What’s that in feet?

Unknown Speaker 1:08:21
series? It’s I can’t remember feet.

Unknown Speaker 1:08:24
Is that 4000 3000? No, it’s higher. Yeah, it’s a larger lot. So you have all this space and it’s a good spot to grow up with the family like variable neighborhood. It’s wide open and right by the river. So it’s just an enjoyable lifestyle. Yeah, for me why I moved to Calgary vers Edmonton. You primarily have the mountains. I’m a big outdoors guy. I’m in the mountains pretty much every other weekend for skiing and snowboarding.

Unknown Speaker 1:08:53
Edmonton certainly is cheaper. I’ve done a few work trips over to Edmonton. Personal preference. I just like Calgary I thought it was I don’t want to say nicer. But I’ll use nicer for an easier way to easier way to explain it.

Unknown Speaker 1:09:08
And then I guess there’s my relationship with Calgary like went out there when I was a young kid. First trip out to Lake Louise and just always told myself I live out here one day me and a bunch of the guys that I grew up with. But a big reason why people do moves admitted is it is a bit quite a bit cheaper as opposed to Calgary.

Unknown Speaker 1:09:25
So just your living costs would be a little bit a little bit cheaper verse. Verse Calgary, we’re trying to get after is I’m trying to understand people’s investment business case for investing in Edmonton. Because I feel like for the longest time, people always talking about Edmonton, Calgary seem to be like very distant second. Versus to me like again, just a bias is if I was going to live somewhere else. If I was gonna live in Alberta, it would be Calgary. Yep. And so again, I’m just gonna search for like other people’s opinions. And I know Gary, I think you mentioned it earlier as well too is it is a little bit easier in order to legally suite from like an investor point of

Unknown Speaker 1:10:00
Have you? Basement suites there verse verse Calgary. So that would be suites in Calgary isn’t that hard to do? It’s just a longer process.

Unknown Speaker 1:10:09
Two weeks, six months? No, no.

Unknown Speaker 1:10:14
Yeah, it’s just it’s just easier to do in Edmonton based on what they’ve provided for their, their housing market up there and their rules and regulations around that. But overall, it’s just Calgary has provided more opportunities to and it’s higher salaries than than Edmonton. But there are pluses and minuses to both. It’s just Calgary right now. Is the hotter market. Has no supply, Like Ryan said. And yeah, it’s just it isn’t a nice place to live, or desire. Yeah, I think he’s a development actually makes prices typically cheaper. Yeah. Which is one of the reasons why a lot of US markets housing is a lot more affordable. Yeah, they have a lot of land. Again, there’s less red tape, versus here in Ontario have tons of red tape. Which forces values up? Yeah, supply. So if it’s so easy to develop in Edmonton, it is easier than that. Yeah, he’s gonna be prices down. Yep. He’s both rents and housing prices down. Yeah. So again, I’m trying to understand the investment case, you guys aren’t helping.

Unknown Speaker 1:11:18
I’ll speak to some real estate investors that we have.

Unknown Speaker 1:11:21
I’m sure people are hitting my derogate

Unknown Speaker 1:11:25
I really think it’s just that it is the cheaper it’s just cheaper. Yeah, that’s it. It’s cheaper in Sudbury and North Bay. But it is a major city as well to like, I think it’s a major city. 1.2 million population for everyone. Up at Edmonton. So major city obviously has all the amenities.

Unknown Speaker 1:11:44
I don’t think traffic’s too, too bad there. Yeah, I don’t know. I don’t go. I rarely go to Edmonton. Yeah. I don’t know. Nothing against Edmonton. But in Calgary. Yes. I think it’s the place to be so sorry. I’m a tourist Dublin. No, no, there isn’t much to do that. Unless you’re a sports fan. Like I know the Oilers. Thanks for coming, guys. Yeah.

Unknown Speaker 1:12:05
I got like David there shouldn’t ask your opinion on their sports team.

Unknown Speaker 1:12:11
All right. Anything else that we haven’t covered?

Unknown Speaker 1:12:15
I don’t think so. Did I get you guys on everything?

Unknown Speaker 1:12:19
Yeah, we had a list of stuff. But no, I’m out of question. Because you guys are in the community. You must be on the other end of all these OPM courses and coaches have that experience like?

Unknown Speaker 1:12:33
Yeah, I think the one thing that we would kind of preach is just be careful. Make sure that you’re not to over leverage. A huge issue that we have found is just boring all of your funds, borrowing downpayment, boring renovations, when you’re that leverage, and the market does turn and things take longer than anticipated, and you have a low reserve fund. I know the numbers can seem very alluring. But if it’s all borrower,

Unknown Speaker 1:13:00
even though the returns are very attractive, there’s even obviously more risk and more issues that could be uncovered. If if things go wrong. People have obviously been successful doing it not nothing until negative against it. But there’s always a time. And a place where things unfortunately do go wrong. And

Unknown Speaker 1:13:20
rates were at all time lows. So it was it was a lot easier to say, hey, I can borrow this money. Cheaper than any other money out there. I’m just going to keep borrowing and buying properties properties are going up. But now the mindset has changed a lot. And using debt is a lot more risky today than it was two years ago.

Unknown Speaker 1:13:42
A lot of there’s a lot of coaches and gurus and investors who weren’t around in 2000 2007 Eight, because history doesn’t repeat itself. But it rhymes. The crazy thing is that the people who’ve gone under these days are way bigger than the folks who went back went under back in oh seven.

Unknown Speaker 1:14:00
So I’ve so I saw who went under back in oh seven and they studied, studied what happened like I knew who their coaches were. So I asked them I talked to their ambassadors and whatnot. So I understood when went wrong. And then I see people who do like 10 Exercise business models here during during the period we just went through and I was like, Oh, I’m staying away. I don’t want a mission. I wish no ill will on anyone. Yeah, right. I felt horrible for Alex. For example. I feel horrible for his investors. Yeah.

Unknown Speaker 1:14:30
his in laws. He owes like 130,000 promissory note money, and he lives in their basement now. These are your grandma’s stuff. Right? I wish not I do not wish that upon anyone. But these are the truths about real estate investing. Hey, yeah, yeah, that’s having your eggs in one basket. Like let’s diversify. But I know you guys all the lending

Unknown Speaker 1:14:51
investors some cash. Yeah, totally.

Unknown Speaker 1:14:55
What’s your take on the Ontario market right now?

Unknown Speaker 1:14:59
Everyone I speak to

Unknown Speaker 1:15:00
Who is trying to stay away from from exposure to the Residential Tenancy Act landlord tenant. So a lot of people are looking at commercial however possible, right Airbnb, hospitality, however possible.

Unknown Speaker 1:15:12
Industrial, but the problem is like industrial, for example, like that ship was a long time ago like that that market was crazy on fire during the pandemic. So what he saw and a lot of those people, like were bigger players and has the industrial market not seeing the decrease that the residential did. I don’t really watch it. So I can’t really say, but if you bought right, you should be good. Like I freaked I have a friend who has a manufacturing.

Unknown Speaker 1:15:39
So I’ll say this about industrial. Seems everyone’s rents are going up.

Unknown Speaker 1:15:43
And, and from the people I hear from the tenants, and they all resign, because there’s nowhere to go. There’s nothing to buy. Yeah. Right. So it still sounds like whoever owns industrial is in the position of strength tends in a position of weakness. Versus in residential. And residential, the tenant has the position of strength. Yeah, not equity side, obviously. But in terms of the short term, control the property, the tenant has control. And the same with commercial commercial office, who has who has negotiating power, and they’re like, I don’t remember what Toronto’s vacancy rate now is things like 20% or something for the office vacancy. And at the same time, we had Greg capture on the show was a friend of Jesse, Jesse knows Yeah, he’s fully occupied now on his on his Calgary office spaces. Yeah. For like, a decade. It was like, I think it was like maybe 60% occupied. Yeah. And even still, some of that was like what they call it.

Unknown Speaker 1:16:40
Like, people were paying rent, but they weren’t occupying the space. Yeah. Right. So like phantom vacancy. Right, right. And now Now the pendulum swung. So yeah.

Unknown Speaker 1:16:50
So yeah, it’ll be interesting to see, these are interesting times. It is very interesting. Do you see actually the question? Did you guys see any deals around commercial office around conversion? Yeah, we don’t we don’t do that sort of stuff really? Like we’ll do some. But it’s never, it’s never commercial conversion. Conversions. Do you see them?

Unknown Speaker 1:17:11
Just from like, some of the student housing, they can be converted into some of the multifamily stuff or, or the other way around. So that sort of stuff. But we don’t see a lot of that, like adding suites, those, I guess you could consider convergent. And we won’t consider like anything that involves a large, like a permit for a large garden suite, or addition or that sort of stuff. It’s just, it’s just more risk. Yes, there’s good opportunity there. But it’s just more risk. When you get into the permitting side and having to get all the different inspections to make sure everything’s up to code. It could easily be a year

Unknown Speaker 1:17:53
for us, and it seems this seems like the permits take forever, a year or two. So everyone’s Bill 20.

Unknown Speaker 1:18:00
Like that’s every time I hear someone they’re like, oh, it’s taking me forever to get the permit. So Hamilton is example like bailout for Plexus. I’m doing air quotes for the real estate bailout for plexes. The development charge difference between 30 triplex and fourplex just the development charge difference is $90,000. So how long barley or border you really for for plexes? Right? And also the,

Unknown Speaker 1:18:24
the, the the, the requirements for the property are way different, but you need way you need like an extra like three inches in the basement for ceiling height, for example. So don’t quote me anyone. But I think he needs something like six nine in the basement. For four four Plex our triplex versus four basement apartment, it’s usually just like 667. Right. So again, this they even though they’re open for business for plexes, they make it way harder. And then from our experience with garden with the so we’ve done garage suite and conversions. We lump that in with garden suites. I call it a garage suite. And then if I really want to be a jerk, I’ll say we rented a garage for $2,200. Yeah, but that $2,200 garage is a two bedroom, one bath that cost my client 121 30 to do and that seems to be much bigger budget than you guys have seen for your run hours. Yeah, and what those garden suites we’ve never seen the appreciation or increase they want to praise, right? Don’t want to praise it won’t. It’s too new. And that’s it. Sorry. Just to clarify, that’s a garage conversion. So there was already a gorgeous, yep, detached two car garage on a concrete pad that that already had much of the utility has already picked up. You go from scratch. Yeah, like you dropped like basically pour pad drop a tiny home on it. You’re talking 250 300 Right. And I want to praise no until maybe two years from now. Yeah, yeah, you need me you need comparables you need you need other sales in that market to be able to understand what the value of that is.

Unknown Speaker 1:20:00
Alright, so So you guys will because there is no exit. It’s not something you guys will be looking at. Right? Not not no short answer.

Unknown Speaker 1:20:10
But like if it’s a rental of a garage, maybe. But it’s nothing to do with permits, if there’s permits involved, we’re not getting into it. Because of how long do they take too long they take the extra risk. We just don’t understand the construction side of the market in Ontario. We do a tiny bit of construction in Alberta. But it’s not our focus. We’re focused on the short term rentals in and out, refinance or sell.

Unknown Speaker 1:20:38
And typical refinance or going to a schedule a bank. Yep. Yep. Exactly. Yeah, actually, good question. How many people are hanging on to the property after how many of them are going for a refinance and for long term rental or versus selling? I think, right now it’s more towards flips. So I’d say if 6040. Around, flips tubers, you know, I bet you any money. If it’s Ontario, it’ll be leaning towards selling. If it’s in Calgary, I’m actually more than more than where it’s holding. No, our bigger clients are selling in, in Calgary.

Unknown Speaker 1:21:13
They’re flipping I’m still

Unknown Speaker 1:21:16
trying to think of all them, but uh, yeah, I think the majority would be flipping in Alberta, too. So in my experience, generally, it’s easier to find a flip project than something you want to renovate and hold. Yeah. Because especially if you’re good at it, you’re usually really picky on wanting to hold. Right, right. You’re looking for like a like a gorgeous, something you can turn to like a gorgeous fourplex for example, and then it’s gonna grow on trees. Yeah. Versus versus this for 600,000 or single family home. You find a lot more of those. Yeah. generally don’t want to hold those because they won’t cashflow. Yeah.

Unknown Speaker 1:21:47
So yeah, sorry, I just put a whole lot of words in your mouth.

Unknown Speaker 1:21:53
So final words, anything else you want to share?

Unknown Speaker 1:21:57
I think I’ve covered everything on my end. If you have any questions, comments, if you’re even thinking about private lending, you just want a second set of eyes before you lend out your capital. If you’re a real estate investor, you want someone to re review your deal. We’re more than happy we do those all day long.

Unknown Speaker 1:22:13
My emails Ryan ry n at ch M ic.ca. More than happy to reach out I’d love to jump on calls and just help the real estate investor community and private lending community

Unknown Speaker 1:22:25
either become more financially literate or help them mitigate and reduce bad deals, sharing all the insights that the company has learned over the 45 years being in business.

Unknown Speaker 1:22:36
Calvert’s all about education so whether it be us helping you with your projects, or you have another project you want advice on, or you want to talk about our fund, we’re happy to talk about it. So reach out with any questions.

Unknown Speaker 1:22:53
contacts on the on the website. It’s funny with Calvert because I have numerous people say I should have you on the show. And again, you don’t pay anyone to do any promotional for it, you guys.

Unknown Speaker 1:23:06
We don’t do a lot and but we enjoy coming out here and talking to you guys. And just being out in Ontario. I think the face to face stuff is a lot more valuable than our zoom stuff that we were doing in COVID. So we try and get out here at least once every quarter relief game

Unknown Speaker 1:23:25
last night. Yeah. Bad luck, I guess. Yeah. Are you a leaf fan?

Unknown Speaker 1:23:32
So

Unknown Speaker 1:23:35
that was a log in as a big pause. That’s pretty much every leaf fan. Yeah, because you’re you know, it’s it’s kind of like those like like marathon runners, you’re just a sadist for pain.

Unknown Speaker 1:23:50
Alright, we’ll leave it there. Thank you guys for coming on the show. Thank you really appreciate it

Unknown Speaker 1:23:55
wants to shoot.

Unknown Speaker 1:23:58
Thank you for watching. If you want to learn how to invest in real estate from scratch, my team teaches beginners how to use the number one investment strategy that I personally use in a virtual free training class every month. Go to investor training.ca/youtube To register for our next class. send links also in the description as well. I publish at least two to three videos a week here. So subscribe if you want to keep learning from seasoned investors like myself, my guess? And if you’re just starting out, feel free to ask questions in comment below. And I do the best to answer each other’s comments and questions myself. Again, if you’re ready to learn the nitty gritty about real estate investing from a professional investor register for our next virtual class at that investor training.ca/youtube Thanks again for watching. See you in the next video.