**Transcripts are auto-generated.

 

Erwin  

Hello, welcome to another episode of The Real Estate casting show. We have a whole bunch of great stuff lined up for the New Year guests that we have to put up our fantastic include today’s episode, we’re rolling out a lot more educational content. So stay tuned to our YouTube channel, my Instagram, this podcast, we’re basically doubling up in terms of the amount of education that we’re providing and sharing on this on our all of our channels. There’s a lot of bad advice out there. And it saddens me how much how many people are out there interested in lending their own pockets rather than actually helping people get ahead in life. My team and I are taking it upon ourselves to put out stuff that actually works. So that is the treatment real estate investing show. Straight up. Last week, I met with my clients, a whole bunch of our client, my clients who you know, from five to the last 10 years. For those who don’t know, I’ve been a realtor and coach, investor specialist realtor since 2010. So I’ve had I’ve had lots of clients with me for like 10 or more years, and they are doing outstanding. Sadly, there’s a lot of people who are suffering right now who are struggling, some may be approaching bankruptcy, some are being forced to sell, feel really bad for those folks. And at the same time, there is an incredible opportunity on the horizon. So anyways, we have it sounds like a bummer. But we have a wonderful guest today. Actually, I think Dana’s extremely refreshing. I’ve been going down this rabbit hole of investigating what happened with some of these companies that went bankrupt, trying to understand what went wrong, speaking to one of them as well, but that’s that’ll be, that’ll be for another episode. Today we have someone who’s actually successful, and she caught me off guard. We’ll be honest, Diana’s Instagram handle is extremely underwhelming, not underwhelming. It just investor girl, Diana, when it really should be sophisticated investor, Diana, but I get it. We’re Canadian. You know, we’re supposed to be humble and modest in our marketing or social media, whatnot. But screw it, Diana is legit. She shares her experience in numbers flipping more recently, she exited successfully exited a $2.3 million luxury house in Toronto. She sold it this year in the middle of this massive decline. She just did a century home in Hamilton, Ontario. And she even does private lending on a property Windsor. We talked through much of this. So there is a bunch of numbers in this episode, including deal numbers and mortgage rates. And that’s particularly important because a lot of the capital that Diana uses is private. So but now, it’s not talked about enough, I think, or maybe talking about too much because there’s a lot of people hurting from too much private money. But Diane shares how she personally lends her money and she talks to her experienced borrowing as well on these projects. Diana has taken expensive courses and Masterminds as they leave. She mentioned three of them on the show. The quality of some of them were questionable or questionable is questionable. As folks from those masterminds, which were years ago, folks that she met at the mastermind, are now unfortunately bankrupt, financially, potentially other ways bankrupt. But that’s right, some courses members, coaches, Financial Group real estate influencers, there can be a negative return on your investment of your money and your time. I myself have the same challenge. I was looking for Zhan YouTube for some training videos to watch in terms of like personal fitness. There’s like so much that’s not good. But yeah, the internet in social media can be both wonderful, and it’s truly terrible at the same time, it is your job as a discerning investor to conduct proper due diligence on anything you consume, and invest in including your time and money in education. Diana, however, with her conservative nature and her projections in her husband as a still general contractor, my understanding is he does that for a living. They have navigated this declining market and exhibited flips, profitably, some very profitably, some less profitably, but all profitably, which is which is a marvel in this declining market. Again, it’s not without challenges, Diana goes through many of them. And they were some of them are doozy. And that’s the point of the show. We discuss both what works and what doesn’t work, so that you may learn from the lessons I may learn from the lessons as well. So side note, I’ve noticed a trend where an investor’s ability to execute on construction or renovations will make or break their deal, especially the folks who are attempting to go full time in real estate. In my experience, if you work continually with the best of the best contractors, in my experience has been instrumental to my own portfolio, my clients in our success, those unable to execute, they’re in for a whole pile of hurt, especially when they’re if you’re paying private money or anyone should have if you have a vacant property. No one likes vacancy, right? I don’t like that. You can see I don’t like paying into vacant properties and then some least folks who tried to become full time investors, flippers burn investors. Unfortunately, they have multiple properties that are vacant, burning a massive hole in their pocket. It’s not that any contract is perfect. I had some samples of that when I have the term my own properties. Anyways, there’ll be another episode. But if you marry one, if you marry a great contractor like Diana did, she’s married to one, you can mitigate a lot of risks with hiring the right contractor and proper oversight. That’s something that we do for our clients, we connect them with the same contractors that we use personally on our own properties. And we regularly check in with our, with our contractors, because we need updates on quotes and renovation statuses. And while we all have those conversations, for our own properties, we’re having those conversations on behalf of our clients. As we hear it. In real estate, we do volume, as you can imagine, hence, we are usually our contractors top referral source, and we’re all looking for we as a team, we’re all looking for that Win Win, win result, and win for the contractor. We want them to make money win for our client, we want them to be a successful real estate investor A win for us, because we want a happy client who buys more houses and sends us referrals. That’s been our model for a successful business. We are in this not just for the long term, but rather intergenerational relationships to create intergenerational wealth for ourselves and for our clients. As we literally have already three generation clients, we have grandparents, parents and their adult kids as our clients. So and that only comes when you produce results for folks. And that includes our general contractors, some of them our clients, as well. So without further ado, I give you Diana, hi, Diana. Hi, what’s keeping you busy these days?

 

Diana  

actually feel like I’m not busy? Because, yeah, real estate wise, I feel like you know, all our deals, like last year was super busy. So much going on. Now with the transitions and you know, recession coming, or maybe we’re in it, I feel that, you know, like, thinking of February, like, I could not make any numbers or Alright, so things just went very slow. At least on the active side, I mean, some private lands, we were doing it but you know, we changed, right? We did a lot of, you know, last year, I was doing seconds would not even touch a second this year. You know, so just even just the word just so many changes happening and having to adapt to what’s what’s going on.

 

Erwin  

Yeah, I don’t know if anyone thought that things were shift so violently, not violently. But

 

Diana  

I felt like I felt this year things were going to plateau. To be honest, I did feel like that they were going to plateau. And I think that’s why for like the flip does telling you about I think, you know, I did We did well, like it went fine was because I had that expectation that I don’t think things are gonna go up and I felt this year was going to be like a plateau. And it really solidified when we did that super high up. That was just like, Oh, wow. And obviously not counting at the plateau from that top. I mean, as in like from last year, you know, I was thinking that this year would probably be more of a plateau type of thing. Pretty cool.

 

Erwin  

Can you tell us about your most recent flip? Because I’m sure we both think you’re insane. Because we’re recording this. We’re now mid November. So when When did you acquire the property?

 

Diana  

So this one actually came with a lot of problems? Because we bought it last year? So we actually bought it in September of last time? No, no, it wasn’t a bad time. We were supposed to though we if everything went as planned, actually, we would have been selling at the height of the height of the market. So we would have actually probably made a lot of money. And I mean, so like you would have been like like that we probably added we were probably added maybe like a 50 60k to it like Yeah, well what happened was, so the person that was selling the home, they were losing the property, because of a business deal that they did that they were waiting for that money to come back. And they were it was just like a huge deal. And they needed some time to wait for that money to come back. So we did a right of refusal of right of first refusal, and to allow them to buy back the House. And so when we looked at the contracts for the business, and when the payments would be coming back, it should have actually come back within that year. It was literally actually through the contracts they should have been like within that month, like that’s how but the banks are going to already foreclose on it. So we learned a lot about contracts for straighter refusals and knowing how to write contracts properly now, because that was a problem. So because the guy was stalling because he wanted to buy back his house. He kept on using many stall tactics. So imagine that we started negotiations in January, and we didn’t find out, you know, 2021 and we didn’t finalize until June. And then yeah, and then he didn’t close in July. The closing was in July. And then so we didn’t think to put it on the market in August because cuz we’re just like it’s slow season, let’s wait it out. And then we put it on the market mid September, and then that one really fast a week and a half, we got an offer, which I would say was very surprised because the stats right now are 30 to 60 days. So that was like, amazing. And we got her number which was same thing that was amazing. We were really happy about, you know, that, that it went at least at what I went well, in that sense, it’s so it’s, I felt like for all the stress that we had to go through with this guy, we still reap the rewards of it. And it was because like that, I did the analysis with thinking what happens if issues come up, and making sure we were nicely padded, because we knew this was like an emotional type of home. So you know, with that comes a little added baggage, which we kept, we got all of it, you know. So, so it came with its drama, but it went really well. And I attribute it to like that conservative numbers. Like I think it’s so important to like, run the numbers and make sure that it makes sense and you’re not hiding it. Or one of the things that I see a lot of investors do is predictive values, you know, oh, you know, it’s this and I do the flip. And by next year, we’ll be up like another 10%. So I’m good. I don’t do this. Yeah, scary stuff. I think very

 

Erwin  

scary. Yeah. Now we know it’s really scary, but even in any time. Okay, so Okay, so I’m having trouble. The timeline. started negotiating January 2021. You closed in September 2021.

 

Diana  

The actual clothes? Yeah. The actual one with the with the new sellers. Yeah. And sorry, the no, sorry, the the offer was in October, like we put it on the market in mid September. So we went probably firm like, end of September or beginning of October. And then we close close at the end of October or I would say like is actually November 1. So beginning first day of 2021 2022. This is on 2022

 

Erwin  

or sorry. Sorry, I’m asking when you got into it when you got into the

 

Diana  

last year. Yeah, yeah. So I bought it last year, September. And we just sold it now. I don’t know if first

 

Erwin  

so the timing is terrible. It can be worse but but it looks like you did the homework to make this work out.

 

Diana  

Yeah, yeah. And like that we had Plan B’s and stuff because we did discuss because of all these issues if we had to hold it then what would happen so we also weren’t in a situation where if let’s say things were just really really bad like I know other people were they have to hold it we were we were also able to hold it but are we were trying to maintain plan A and see see it through because like that at the point is still everything still looked favorable. It was just Yeah, it was still favorable is just like got another couple of months still waiting kind of a thing. But things were still things were still good. Okay,

 

Erwin  

so tell us about the property. single family detached

 

Diana  

single family detached? Yep. Like three bedroom. They got two and a half story. Oh, yeah. I had like, also like a huge, like workshop in the back. So we never did anything with that. We left that out as was because there wasn’t enough space at the front to do what you needed to be able to actually make that an accessory dwelling. Maybe now you could maybe maybe with all the changes. Yeah. But our strategy was just to like that foot just to flip it and just single family home like a quick and like that, because we also at that time also had in mind was that we were selling it back to him. Right. So like, he probably wouldn’t have wanted that. And for us, it was just, it just didn’t we weren’t sure if it mates or actually even in running the numbers to be honest, at the time, it didn’t make sense to put the money into it because it was quite expensive to, to put it in and the timeframes and everything because we did we wanted this to actually be like six months in and out that was the plan like so. So in six months, we wouldn’t have been able to get the permits and everything done for the back unit. So it was just not really in our plans.

 

Erwin  

So the plan was to do like, How bad was the property? Didn’t you a lot

 

Diana  

it wasn’t actually bad. Okay, it was actually not very much renovations needs to be done. I would say bad in the sense of we did have to get both the roofs done. We had to go okay, yeah, so we had that was there was so there was like a water issue upstairs in one of the window like one corner of the house. So we did need to get both the roof done because that was bad. The basement so there were some bad things actually. It’s not I’m saying like yeah, it was literally, like, aesthetically, it wasn’t bad. But the basement for example, is unfinished and it was like leaking from everywhere that like I don’t know what place didn’t have water coming out of it. It was just leaking like crazy.

 

Erwin  

Not that bad. It just turned into basement leaking everywhere.

 

Diana  

But it was it was actually not expensive to fix. Because the way the way the leaks were coming it was just like deteriorations like for example, leak was coming through the window for example. So it’s just you had to do proper sealing and fix the area around it. And then there was one crack going through, which they’re able to do, I think it’s called the injection molding and fix it. And then like that there was plumbing that went out to the, to that workshop. And that wasn’t done to code at all. And that’s where a lot of the water was coming in. Well, there was like a flat there was like a, like just plumbing going straight like that. So it was like maybe two feet from the ground, not even like from the floor from me like a foot from the underneath. So we completely just took it out to because that was like where the major water come was coming out. And then we from the interior, we waterproof the whole basement.

 

Erwin  

Not that bad to have a waterproofing job. I

 

Diana  

mean, it’s not that expensive. Like when I think of like exterior waterproofing, that’s like insanely expensive. This wasn’t like even though it had like a lot of water issues. It wasn’t really it wasn’t expensive. Renovations, defects like like it wasn’t like there are some where you have to do the waterproofing from the outside. So I feel like those ones are really bad type of water or like water issues. And so this wasn’t that type.

 

Erwin  

So did your husband’s team do the interior or interior waterproofing? They did? Yeah. Contractor for no. price difference? Yeah.

 

Diana  

Yeah. My husband did it.

 

Erwin  

saves you a ton of money. 1000s of dollars.

 

Diana  

No, no, we’ve had companies come in. But again, maybe because there’s our subcontractors they charge differently to like clients, because it’s odd to me. I was like, I know, there was one job that we hired someone else to do it for a different one. And I can’t say I remember what it was. So this number may sound ridiculously low. But I know it wasn’t a big deal when two though. But they did a waterproofing and it was like like a 1500. Yeah, but again, it’s like we didn’t know them. That was the first time we had met them.

 

Erwin  

If it’s not a huge drop in costs, that’s close. Just in my experience. A lot of people are proven copies of markup like crazy. Like, that’s my own property. My own property in Hamilton. It was it was over 10,000 for interior interior. Yeah. It was the entire perimeter, though. Yeah, it was the entire perimeter.

 

Diana  

Which kinda did you use the like the blue skin? I don’t know, all the terms, like the blue skin the whole thing? Because we didn’t have to go to that level. We went to

 

Erwin  

a higher level. Yeah. Because because the city wanted it. I hadn’t needed an engineer to approve it all.

 

Diana  

Okay. Yeah. So I think it also depends on like that, I think it does depend on the level of helper, but it was because ours wasn’t not by that we didn’t need to do Blueskin because we weren’t contemplating having to do the Blueskin. The two layers, I can’t remember what they were, but I know one of those Blueskin. We didn’t have to go to that level. That’s why I say like, it wasn’t bad. Like, it sounds bad. But you know, there’s always those kind of, and I’m just talking because I’m with it so much with my husband, like, I know what he does

 

Erwin  

is different than a newbie, yes. Yeah. Like, for newbie is not bad for you.

 

Diana  

And I can give like a really funny example, actually. So on another project, we were doing a luxury flip. And this was in Toronto, and the whole house was guided. And the first thing we had to do was the roof because there was terrible leak problems in there. And so and this, we bought it in just before spring, like in in February. So everything is melting. This one was probably two, this was probably two years ago. 2020 or 2021. Okay, maybe this one was so actually yeah, sorry. That was last year. Yeah, cuz we did both. Both of those happened last year. Yeah. So that one was really funny because my husband sends me pictures of like waterfalls, basically all over the house.

 

Erwin  

Like nice ones are like your house is leaking. The house is leaking.

 

Diana  

Like, we were having water coming in from the windows. And then one side of the house was just like leaking really bad. Like it was like we I just cans all over the place. Right. And it was just really funny, because that didn’t traumatize this. But nothing was done to the house, right? Like it was just a fully gutted house. And as experienced investors, we know you have to get the outside done before ever wanting to do the inside, right? Because oral it’s what happens you destroy the everything right? So like that we knew that house, we knew that roof had to get done. And we gutted the whole place because that one was a full gut like it had to be gutted were to the studs, like all new insulation, I was like we basically built a new house that one that’s how the extent of the amount of renovations we had to do. Like for example, an experienced investor would know that you do get the outside of house done first make sure that you know you’re gonna be able to protect everything you do inside right so like that. So we got the roof done first. And then everything interior started to get done, but it was just really funny to see the pictures. And again, I’ve never seen something to that extent of like that kind of problem. But But I can tell you that when he sent me the text message or the videos, all I ask is like, is this a problem? And he says no, don’t worry, I And then as when he tells me I’m like, Okay, I’m like, as long as you tell me that we feel good about this, I feel good about it. But if he tells me, we’re in chaos, then I thought then I would be in chaos. Right? So I can I can tell you that also, I’ve never seen it to that extent of a problem. But I can tell you like that he was fine with it. He said it was no problem was not affecting anything. And yeah, it didn’t do anything for us. And there was nothing to worry about. But it was just like something funny to show that a first time home investor, no, first of all, they would never I don’t think you I hope you never know. But you as a first time so you shouldn’t

 

Erwin  

have it was three seasons of HGTV, good to go. Listen, we’ve done half an

 

Diana  

hour. Yeah, that’s true. So this labor do not do those kinds of projects unless you have a really good team because like that, that would give you a heart attack and a half, if you didn’t know what you were doing.

 

Erwin  

For novices. They don’t even they don’t know how to qualify a really good team. Right. That’s what we’re seeing now that’s out there. So let’s start with the Toronto flip. Where did you find the deal? MLS? Okay, okay. Yeah, people who say there’s no deals on MLS,

 

Diana  

I know I find it really funny. And to be honest, when people tell me things like that, you’re closing your eyes to opportunities, because for example, I look everywhere. I’ve done all of them. I found a deal like the Hamilton one. That one was private.

 

Erwin  

We’ll come back to that. So you find it on Toronto, you find it on realtor.ca. That’s right, this proper term realtor.ca That sounds like a disaster.

 

Diana  

Yeah, it was a full gut did actually when we saw when we saw it, for example, no one so already the third floor was gutted. So there was no installation up there. Oh, no kitchen. Period, no kitchen at all. Like it was in mid demo. Yeah. And then also another thing I noticed was that when we were closing, the previous owners hadn’t paid their taxes so they had to like they have no money. Yeah. So yeah, although but they had owned it for a long time to so I don’t know if it’s like maybe it was like a rented property neglected neglected. They

 

Erwin  

were bad with money. Yeah, maybe but I’m thinking maybe they

 

Diana  

were trying to see if they could do it themselves and then maybe just

 

Erwin  

why you can’t afford your taxes. You thought you’d get into renovation? I don’t know. winning formula. Formula. No kitchen partly gutted bathrooms were their bathrooms.

 

Diana  

It had a bathroom. But one you don’t want to even set foot. Yeah, like Yeah, it was not maintained or anything that definitely that type of thing.

 

Erwin  

So how did you finance the purchase? All private money because

 

Diana  

you can’t? Yeah, I mean, no ARB lenders are gonna definitely lend to that. Right.

 

Erwin  

Do you care to share who you probably borrowed from? Or? Oh, I

 

Diana  

don’t even know actually, because a broker just it was like, a make or something. Okay. Yeah. Something like that. Okay. I don’t actually know, like, the actual name or anything. It was just a broker that found it for us. Do you still like this broker? Yeah, yeah, actually, he gives me a really good dad deal, sir. He helps me you know, get deals and stuff started this.

 

Erwin  

Can you give us an idea what what the terms were like that one? Oh,

 

Diana  

my God, I feel like I think it was very standard deals, I think it was probably like 2% lender fee. And like six point something or seven, something somewhere in between there. So I can tell you like that, like the loan itself. And I tell people like, again, you have to have experienced for this because I think we were paying around $7,000 a month to cover just the mortgage. Right? So it’s like, you definitely do have to know what you’re doing right? To be able to have the guts, right for that kind of thing.

 

Erwin  

So this is negative 7000 cash flow. Good. Sounds great. And then how much did the house cost?

 

Diana  

1.4 foot boy.

 

Erwin  

Okay. All right. And then how should you put into it? Renovations budget

 

Diana  

450,000. It was a big project. Right? Because his interior and exterior work like like I when I say we built a new house like that’s basically what we did. We built a new house.

 

Erwin  

Yeah, that’s That’s enough budget to build one of my bungalows. Yeah.

 

Diana  

We basically built a new house,

 

Erwin  

then you and your husband served as general contractors, right? Because you’ve experienced that. And that saves you a lot of money.

 

Diana  

Yeah, it definitely definitely helps. Because especially like that if things are going wrong. At least we’re cutting into our budgets to just make sure that it happened. Right. So So yeah, I feel like it’s always good when you haven’t like when it’s your teams, right? Because it’s, you can always sacrifice or move. You can move things around a lot easier. Right? Or what I would really say what is the biggest thing that I noticed and especially between people who hire and then let’s say, if you have your own teams is that my husband goes above and beyond, you don’t get that from people that you hire very often right? To go above and beyond. Yeah, exactly right. So I feel like I noticed, I always noticed that kind of thing when people tell me about their projects that, let’s say, because I could tell you that I pay him retail. But I can tell you, for example, like, I’ll pay him retail. But if things go wrong, usually we still stay within that budget, there are times that we may have to go a little over. But for example, like that, I think like another person would be like, not my problem, you know, whereas like, we’ll try to make sure that we try to work within our budget, you know,

 

Erwin  

just for you, this is impressive. I know yours this, you know, I should just automatically assume you’re so sophisticated. And my policies, I don’t believe anything I see on social media. So the worst of people. So when you hear so many stories, right? You just feel like, Oh, God. And then how long did it take you like, this is a very big budget.

 

Diana  

That was a huge project. And can you imagine we got all of it done within six months, seven months? That’s impressive. Yeah. And I can tell you, though, the last two months, was the most stressful things of our lives, because we were non negotiable having to get it done within that time type of thing. So that one, I would say that one was a very stressful one, because what was the deadline? Because we wanted to, we just wanted to meet, we wanted to make sure we’re catching the right market and for this one luxury home. Family. But what I mean is also like in the luxury home area, specifically as a single family home, you’re only dealing with a very small clientele. Right. Yeah. And that clientele is in that march to the summer timeframe. Right? very price sensitive to Yeah. So to us, it was because other ones like for example, I feel like investment properties, they’ll almost any time of the year because it’s about the investment. Right. But when you’re dealing with families, that’s a whole different story. Right? They want to buy within a turn timeframe. And so we were like it has to be we want to make sure we catch that good market. So

 

Erwin  

through as a full business. Oh, yeah. Investment. There’s a lot of planning involved in this. You’ve even thought it through to who your customer is.

 

Diana  

Yeah. Yeah. I mean, especially if you’re dealing in the luxury home. I mean, you need to know like how that works. Right? It makes sure you know, where you’re, you know, what’s plan? Well, my point is not everyone thinks this through, Oh, yeah. 100%. And it shows like that the importance of like planning things, and that it’s not that simple, right? It’s like there are and kind of graduating through it, right. Like, don’t make a luxury flip your first one probably not a good idea, you know?

 

Erwin  

Yeah. And then, and then you staged it listed, listed, and then have the, the song go,

 

Diana  

it went well, that one actually was on the market for I believe, a month, maybe even a month and a half, but then it closed quickly, within a month too. And that wasn’t like the height of the market to write that. So it was like that, like what we, for example, expected I was when I was looking at I feel like luxury market always is like, that’s normal, you know, like that, at that time, we’re hearing other properties, like bidding war, and then sold that day, right. In the luxury market. I wasn’t seeing that I was still seeing like, you know, 30 to 60 days for the luxury market. So so that when that one fell through like the exact what we expected, right, it took like 30 days or, or maybe a little bit longer, like between 30 and 60 days for it to go. And then a month later it closed. Can you share what you sold for? 2.3? I believe it was 2.3 2.4 2.3. Somewhere around there. 2.3. Yeah, not 2.4. Yeah, sorry. 2.3.

 

Erwin  

She made a couple $100,000. Yeah, we

 

Diana  

did good on it. But remember, we have like a lot of holding costs. So it’s not like amazing, but we did good. But again, you’re supposed to do good in the luxury home. Right?

 

Erwin  

Oh, don’t be saying on the show. They’re trying to do the fair now.

 

Diana  

I meant it in a different way.

 

Erwin  

But the market was right. And you had the ability to execute. Yeah. And you have the funding to do so. Yeah, you had the pockets to do it.

 

Diana  

Yeah. But what I what I mean is though, like when you are getting into more expensive houses, you’re spending a lot more because you need this house to look amazing. Because your clientele is amazing. And the clientele pays amazing. My Nemorino like, I feel like it’s because of that, but again, like if you don’t do your numbers, you could screw it up royally too, right. Even in the luxury. Yeah. Because I mean, if they’re not,

 

Erwin  

that’d be done. Right. Yeah. Has to be done, right? Because I’m sure your staging Bill was enormous. Not as

 

Diana  

much as I thought it would be.

 

Erwin  

How many square feet was that? us,

 

Diana  

I think the Oh my god.

 

Erwin  

Did you watch in Toronto? Was 2.3 is a decent amount of money?

 

Diana  

Yeah, I can’t remember maybe 2800 Without the base is pretty big, but it’s three floors to. It’s pretty. So it is. I mean it is big. Yes. Because we did for example, like the whole third floor was the ensuite just for the master bedroom. So we had like the bathroom or walk in closet in the bedroom. So the whole third floor was like just for the master. And then three bedrooms and two bathrooms on the second floor.

 

Erwin  

Okay, so actually, this is a good question like, Would you do this deal right now? No, not at all. So even if you could buy this house again, for one point for what to do it?

 

Diana  

I mean, I’d have to run the numbers. But yeah, definitely. I would not do a yeah, this is way too unstable of an environment to go into something like that. And to be honest, I mean, when you’re going into this kind of thing, what suffers the most the luxury market too, right? Yeah,

 

Erwin  

well, yeah, the higher the higher. Because people I don’t know, if people who dig into the stats will know, it’s the entry level stuff that’s still transacting, which is partly bringing down the average price. Because anything that’s a good luxury. So for example, like anything on Treb, that’s over $2 million is probably not moving. Right? Yeah.

 

Diana  

Well, well, you were telling me last time on my show, right. That you said the reason why mine did was because it was under 800. Yeah. So I just found that interesting. Because yeah, like you just know like that. You don’t want to be in it like free market right now. Yeah. I mean, don’t do it.

 

Erwin  

4 million, for example, in Hamilton is not moving. And that’s really that’s really nice for Hamilton. Yeah. Mark is different.

 

Diana  

Yeah, yeah, exactly. It depends on the market to be talking

 

Erwin  

to your Hamilton flip. Sure. Okay. So where did you find that one? That one was private. How did you get them like flyers?

 

Diana  

flyers? Yeah, there’s flyers. Yeah. And like that, like, just something that you always know about? That’s very known in at least in the real estate community is that homeowners wait to the last minute are in denial about the problems are going through. So he’s like, textbook case. We were like, literally two weeks before the House is getting possessed. And from the bank from the, like getting possessed. Yeah, to go to the bank and like them to do the sale. So we had to act quick. Because obviously, it goes because imagine like in the height of the market. So in the height of the market, we bought it for 500. It appraised for 600. So probably fully sold with the if the bank took it, it probably would have sold for 600. Right? What would you get it for? 500.

 

Erwin  

Okay, so it was worth 600 At least

 

Diana  

it got appraised for 600.

 

Erwin  

All right, and then you said it wasn’t that bad in terms of condition. But yeah, your qualifying is not your average person’s Yeah. 600 in health is not disaster.

 

Diana  

No, no, no, I like that. Like the main floor. The only thing we did on the main floor was paint. That’s it. That’s it. Okay. What else stairs just where the second floor is where we had more renovations done. So like that one area, there was a leak problems. We had to fix the ceiling and just have that fixed. Like the damage from the roof leaking that damage from the roof leaking. Yeah. But then also what it was actually a one bedroom house. Oh, so they opened concept, the whole second floor. And he had his office was two bedrooms. So just open concept and just a master and then a loft upstairs. Yeah,

 

Erwin  

that’s permanence. Right.

 

Diana  

No comments about what they did there by

 

Erwin  

Adam. I remember Justin Hamilton in the house that we’re looking at the panel had an ESA and in my experience, it’s like one in 10 panels have an ESA sticker on it. I don’t know who does rent work and Hamilton but yeah, yes, I joke. I bet you $10 And there were no permits for those walls being taken out. Well, we heard

 

Diana  

that because she didn’t do any of the work. So this was actually the previous not him. It was actually the previous owner, the piers were owner who apparently was a woodworker, so he probably was just like doing whatever he wanted in the house. Right? And he’s the one who put like that illegal plumbing and that was just like one foot off the floor. So you can imagine that in the winter because there was actually a bathroom in the workshop, but obviously probably wouldn’t work in the winter probably I don’t know what they did there. Yeah, I’m

 

Erwin  

glad it took the plumbing.

 

Diana  

Yeah, no, I understand why took it out right. Or we took it out I should say.

 

Erwin  

So what did you do with the second floor then?

 

Diana  

I added the two bedrooms back in see the put on walls we put in walls? Yeah. But again, like do you like It wasn’t that big of a deal, right? You just put the walls up a couple grand no big deal. Did the house we had to do all the flooring because of the water damage because there was water damage. And there was previous water damage in the master bedroom. But there was no evidence of like, like they must they had fixed it already which the I mean, the homeowner said that was fixed. But there was water damage all over the floor. So we had to fix the second and third floor, we did flooring, that one had a new bathroom done. We fixed it because it was very the old style bathroom where you cannot even sit down if you’re a tall person because like your vanity is like right up to your knees when you sit on a toilet. So so we had to do the whole so that so the upstairs is where the second floor is where the most work was done. We added the walls, and we added a new bathroom floors and paint and the whole house like the whole house was painted. And then just second and third floors where we did all the flooring. So what do you think your renovation budget was? Our renovation budget was? So I did actually we just did the numbers because I thought it was 60. But I forgot about like taxes and stuff. So it’s like 65 Plus HST, sorry, them and HST the answer was 75.

 

Erwin  

Yeah, that’s not bad. And then how do you finance it? Also private? Yeah,

 

Diana  

that one was private. Similar terms. As you know, chimps are bad. The terms aren’t bad. Yeah. And these are not people that we know, like, are the brokers founder for? I can’t say remember what this one was actually, I think it was the same, like around 7%. And this one was, and then this one was broker plus, I mean, both of them were broker. The other one was broker, but it was one in one or something or 1.5. And one point, I mean, 1.5, and point five for the broker. But this one was, I believe, two and one for the broker. So that one was three 2% lender fee plus one precise, 1% broker. Yeah, whereas the other one was 1.5 to the broker, sorry, point five to the broker and 1.5 to the lender to the blenders for the listeners

 

Erwin  

benefit, but there’s lender fees broker fees. And so we’re, for example, overseeing 1% broker fee, it’s 1% of the loan amount that goes to the broker that’s an appropriate is paid, the interest rate is goes to the lender, whoever is actually has the money. And then the lender is also taking 2% lender fee based on the amount of the mortgage. Got her a complete novice. And then how long does how long this run will take.

 

Diana  

But that long, right. This one was not that long. That was like, two months. Yeah. Pretty good. Is a two month project.

 

Erwin  

No kitchens, no bathroom. Don’t you just use the

 

Diana  

bathroom? Yeah. Because it wasn’t. Yeah. And like that, for example. My husband doesn’t do exterior work. So the roof was done from like, one of our supply whenever, right.

 

Erwin  

Half story, it was one, two and a half, three and a half story. Yeah. So those those are really tough. Yeah. Because they’re steep peaks. Yeah. Okay. And then can I ask what you sold it for? Seven. But you sold for eight? And you

 

Diana  

know, 754? I think that sounds right. So I’m 54. Yeah, because we were above because our our numbers, we want it to be above 750. So that sounds right. 754

 

Erwin  

is a pretty good. Yeah, we did go up 500 for the house. 7500. Rent a budget. Plus your carrying costs and costs. Yeah. For only two months.

 

Diana  

No, no. What do we know? This was my this is the one hole we were there for a whole year. Remember, even though the rhinos were to mind member? The whole problem with the homeowner your

 

Erwin  

dirty clothes. So you had to pay carrying costs the entire time? No, so

 

Diana  

we had money. So we we weren’t sure what was going to happen. So we ended up paying the house in full. You pay cash, we paid that house. So we had a six month term with with the lender. And when it was time to renew, we decided not to renew because we weren’t sure of what what happens. So we just paid it out in cash instead. So we did that for the purpose of not knowing how long this would happen. And we didn’t want to put ourselves in a bad situation.

 

Erwin  

Damn, good thing of cash. Good, Lord.

 

Diana  

I mean, like,

 

Erwin  

when you can renovate credit, you had to close on it, but you didn’t have control and you couldn’t renovate it. Is that what you’re saying? How can you the holder for six months?

 

Diana  

No, no. So our plan was it to be in and out in six months. So we did a six month term with the lender. But because we had the negotiation problems with the buyer, first right of refusal, then midway

 

Erwin  

he was like saying he was going to buy it but then never bought it just drags you along.

 

Diana  

No. What was happening was basically we had our APs. And so we put the terms together. And we with our lawyer was send it to his lawyer and he would take two weeks to respond by. So imagine every single response by would be two weeks and he would try to change something small every time to make an excuse, waiting for his money. And so basically in the end, we just agreed to all his da, and we’re just like, whatever you get it. And we’re just like, because we knew he, after a while, we realized it was just a stall tactic. And then we just agreed, and then he couldn’t close. How long was that negotiation

 

Erwin  

period?

 

Diana  

From January to June? Good lord. Yeah, it was six months

 

Erwin  

to negotiate a sale.

 

Diana  

So that was like, for example, a huge learning experience for us. And first right of refusal, for example, terms become very important, right? Because with our lawyer was, since we didn’t have a defined negotiation terms,

 

Erwin  

you need the end date that right refusal? Yeah, well, we that we

 

Diana  

had an ND to the bigger part of it, but we didn’t have like negotiating back and forth, like allowable time for you to respond back. Right. So for example, then it becomes ambiguous. And then the lawyer is like, well, two weeks is allowed. And so he was doing his maximum. Right. So it was like that, because because there were certain things that were ambiguous, we have to go with what seemed right, or what seemed acceptable, like even for the appraisal, actually, some of that time was also the appraisal he took, he took a month to get his appraisal, where we were, we got it in a week, you know, like, and so he was just taking his time, because he’s waiting for his money to come. Yeah, so we have pretty like exciting type of project. But then use it

 

Erwin  

like that’s a really good lesson. I’ve heard this one before.

 

Diana  

Well, to be honest, yeah, good. Using our first right of refusal, I think, I don’t think that kind of project will ever come again. I don’t think it’s very normal like that. This guy knew a lot about a lot about law, like the this guy works on like crazy as business projects. Like he knows a lot a lot about the law. And he’s a lawyer, he’s an accountant, but the kind of projects he works on are like hundreds of millions of dollars kind of negotiating. It’s professional, I was negotiating, it’s a professional 100%. So I can tell you that I learned a lot from him. But the guy was actually really super nice. Actually. I learned a lot about his business to be honest, me and him were chat a lot. I would like ask him because like, you know that his contracts for his business? I mean, I didn’t know this. But I feel like everyone does are very similar to the way we write our contracts to like the same terminology gets used. I found that very interesting. Actually, like they have finder’s fee like he was the Finder and his business deal is really cool. Actually, I really enjoyed reading his contract. Right.

 

Erwin  

Right. Right. It’s actually a Dan Kennedy lesson that whoever writes the contract is in control. Right? So if the professionals if they’re in control, and they know more than you do that you’re an advantage disadvantage? Yeah. He probably knew this the whole time.

 

Diana  

Probably. Yeah. Or Yeah, or like that. He just knows some, like, he knows a lot of lawyers like, because the guy is also much older man. So he’s very well connected with things because even a little thing, for example, in the market, this is how well connected he is in the market. The house should have been appraised at at the height of the market, probably around 760, the lowest and around 800 The highest. That’s the numbers we were expecting. And ours came out at the lowest at 760. That’s what you got to pray. Oh, no, no, sorry. We got ours got praise at seven 790. Do you know what his got appraised because this connections 725. So imagine when we have to go in the middle? Great. It was but it went to 760, which was our number anyways. Okay, because it’s funny when we first sent him the offer, we sent him I think 762 or something like that was our offer. Because like that, to me, I’m about being very fair. I was like, this is the fair number. I think this is so kovanda funny that we ended off in that. But again, it was more not about being fair. He was stalling. That was his thing. So he was willing to spend the money to just wait until he got to it to like the hopes of being able to buy it back, which it just didn’t end up happening. Right.

 

Erwin  

So some rough numbers. Let’s see You cleared over 150 on this. No, no,

 

Diana  

no, like ADK 60 to 80k.

 

Erwin  

So on a deal that went completely sideways, you still

 

Diana  

can you imagine if we actually bought at the height of the market like that would have been like a homerun. Right, right. Yeah. Like like 50 or something. Who knows? If we got it and if we sold it when it was supposed to be in like February March, we probably would have been laughing

 

Erwin  

but this is the truth about real estate investing because of your sophistication. The fact that you had cash to be able to carry it your contracting background and how you did how you analyze the deal getting in he’s told me he has to make a pretty good amount of money. Like you know, like we were talking before like before the show before we recording, there’s all these other flippers are bankrupt. Yeah. Versus you made a pretty good amount of money. I know it’s not as much money as you wanted. No, but

 

Diana  

I mean like that, like we’re hitting a recession and we’ve made that kind of money, right. So that’s just the numbers.

 

Erwin  

Yeah, terrible.

 

Diana  

Yeah, and this is like I everything, you know, everything’s dying, you know, I don’t know, I like everyone’s liking

 

Erwin  

ourselves. Are you guys proud of yourself? Yeah, I

 

Diana  

think like that, like, to be honest, it definitely is. And even the private lends to that I do. Like, they’re all been going well. And I feel like, I feel like it’s really actually helped me solidify specifically actually, on the private lending side, I started making changes to things like that, like, for example, I only go on first right now, just because of how things are. And I feel like all those things that I did, really helped me to make my deal safe. And I made some other changes, too. But I feel like that was the because before the last few years, I was doing seconds, you know, I felt very comfortable at the market, I was okay with it. Whereas like, now, I’m like, No, first, and like, under like, 75, like one is that like, 60% loan to value, you know, like, now is just really being careful with the market to tell you how crazy things are. And for example, you know, I kind of lost actually, what do you call it, like, I lost faith in the appraisals. So there was this deal in that I was private lending to. And I look at this deal. And there aren’t enough deals around for meat and like, not enough property sold, that my expectation was I was going to really lean on the appraiser for the valuation of this property. And I remember talking to lenders, because they had bought for bought it for, let’s say, 300, or 325, something like that. And his, the appraiser appraises it for the exact same number. And when I was looking, I’m seeing things at like 250. And I’m seeing renovated properties as 325 and 350. Like, or like I would say, like, yeah, like renovated properties as a 350 and higher listing, maybe 360, or something. And this appraiser appraises at that.

 

Erwin  

And this property was like needing renovation,

 

Diana  

like a full gut cosmetically. So I was just, I was like in shock by that appraisal. And the funny part is that I kind of checked his listings, because I was like, What is going on? Like, how can you do that? First of all, there’s no pictures of any other houses or like, you know, when they when it’s like those MLS listings where they just see soon or coming soon or something like that. So they had no pictures, which is strange, because

 

Erwin  

like, sold, you know, these were sold properties, but no pictures,

 

Diana  

but they had no pictures. Like, yeah, like, I feel like those happen, you know, when it’s construction type ones where they’re in the middle of a construction. So they don’t show you the pictures, but they kind of put the listing up or just to see if anyone’s interested or didn’t even know but you don’t like it busy. You have that? Yeah, but then you have the picture of the house. I’m in the front yard. But don’t you see those ones? Usually I feel like people do that are the ones that are like in mid renovations, or like they’re just trying to see like drum up business, I guess? I don’t know, you know, that’s better than me. A

 

Erwin  

picture of the house outside? Yeah. At a minimum an artist rendition, right. At a minimum? None is weird.

 

Diana  

Well, that was an eye thing I was gonna say maybe is just the way like realtor.ca. Or actually, I was looking at how a sigma, maybe how how sigma displayed those specific properties, because that’s gonna say, so I look at them. And I’m just like, I’m not seeing pictures is really weird.

 

Erwin  

So that’s a good point that you double checked, the appraiser went back and you’re checking the appraiser.

 

Diana  

Yeah. Because like that, because I usually do my analysis. And then the appraiser to me normally is just a clarification on the numbers that like, close like resemblance like, okay, my thoughts are right, or vice. Yeah, but when I realize Yeah, you that’s what I mean. That’s I kind of lost faith in them. Because I had two situations like that. That was this one was just the worst one, but like that, like we were so far off that I just got really confused on why so I made me look into his because I was like, what are you seeing that I’m not seeing? And then by chance, I don’t know how I see a property. I happen to see the a YouTube video of it, like a listing of showing the property. And I was like, Oh, that’s weird. Why isn’t it on the listing? So then I was thinking because I know like Hamilton has their thing where like, they kind of segregate themselves,

 

Erwin  

like Hamilton has a share with Toronto.

 

Diana  

Yeah, yeah. Or even on realtor.ca Because I’ve checked everywhere like I was like trying to check out this listing, like trying to find this listing wherever I could. So I was thinking like that because it was strange that I found a YouTube of it showing the property the house and the property or house cat. It wasn’t dynamic or anything, but it was livable. It was an okay conditions just dated and then not even date it just not really. I don’t know, nicely done, I

 

Erwin  

guess. Okay, so, like a 10 or 20 year old renovation.

 

Diana  

Yeah, maybe something like that. We’re like you know, like it A time when people love to put so much colors on the wall. I did that to me. Like it was kind of like that, like a little like you can tell a family’s living there, you know, like, massive blue bedroom because it’s like a boy must live there like pink bedroom because, you know, like, that kind of thing going on. Whereas like, I feel like when you go to sell, you just paint the whole house gray. Right? So just not ready. So it was like that, like it was like lived in but it was livable, and it wasn’t bad. Like, maybe super, very minor cosmetic. And they were comparing that to my rundown, their rundown falling apart house and saying that they were about the same price. Right. So then I go and tell the guy and the thing is, so this guy, a friend of mine, like lending to him. And he had all the money to fund for it. And obviously I asked for proof of it and everything. And he just wanted to work with me. And he’s just like, I want to work with you on a lend for you. So he’s like, even if you don’t lend at the amount, I’m happy to do whatever managers want to work with you. So I ended up lending to him to the number that I felt was and doing 80% of that. So he for him, I think it came out to around like 55% loan to value from the appraiser he got there was something like that. But it was because I didn’t feel comfortable. And I but I felt comfortable because I saw that he had enough money to do the project himself and get it done. But I just wanted to like that make sure my money was super safe. And I just had to do my numbers. And I couldn’t even take that appraisal as as like for anything. Like I was just like, I don’t know where you got that from closely. As like one they were very far away from the house already. But again, I understood that because there weren’t enough of them close by. But still, I was just like, why didn’t you use this one? You know, like, this one’s

 

Erwin  

pretty that 325 That was in Windsor. So that was the Windsor one. Right? Windsor is cheap. Yeah. Okay, then everything worked out. You got your money back.

 

Diana  

That one’s still on the go, actually. So that one is not a flip. That one’s a burr. So they’re planning to refinance it.

 

Erwin  

So it’s pretty recent. So they picked it up for a pretty good discount already.

 

Diana  

Yeah, like it was. I don’t actually remember sometime this year. I personally didn’t think it was a good deal. I even told them, are you sure you want to do it? And but he was like, I’m ready for him on it. I’m confident and numbers. He’s like, I’ve done this one before. So I’m like, Okay, I’m just letting you know. But again, like I was like, I’ll definitely help you out. And I definitely like that, like, that’s one of the things I like about private lending is also just knowing what everyone’s up to, you know, like, I like having that relationship with them. Like, how’s things going? Or I usually ask, like, hey, when you’re done you can we talk about it, how WANs and whatever, whatever, you know, I even had one guy, for example, he was having problems selling the property. And I was helping him out trying to, you know, give him solutions to help sell it out. And he was able to sell it this other person. So I kinda like a little bit of the end, which is a little nicer when you’re don’t know someone at all. I feel like it’s nice to lend to someone that you kind of do know, and can actually have that back and forth conversation.

 

Erwin  

So everyone you’ve learned to they’re still taking your calls. I ask because I hear lots people aren’t returning calls. Oh,

 

Diana  

really? Oh, no, I actually, although, you know, it’s really funny. Yeah, they actually everyone did. And but again, the way maybe it was the way I came about it. Because when I saw this whole thing in September happening with just like, everything kind of going crazy, because I was just hearing so many weird things like people weren’t getting there. People weren’t getting refinances, or not the high, like not even 85 80% loan to value or 75% loan to value. I went into like panic mode, and not panic mode, but I wanted to like let all my borrowers know what was going on. So I sent everyone a message actually, I’m like, Hey, this is not panicking. I just want you guys to start looking into your refinance options. Yeah, cuz all of them are burst. Yes. Because like that right now, for example, I would never lend to a flip right now. Unless if it’s like a super stellar crazy, amazing deal. But so all of mine are barrage right now. So I told them, I’m like, go talk to your brokers figure it out, make sure you’re still okay. And if not, like start making your plans now so that you’re ready and prepared for whatever your options are. Right? So I kind of like mass messaged all the people that I told them that because because obviously if I’m hearing information, I’m going to share it especially cuz I’m like, like what I said, right? Like, if you guys fail, I’m failing. And I’m like, we’re not going to fail. You know, this is not an option. Right? So I let everyone know and yeah, everyone respond back. Some of them were Thank you, you know, thank you for that. Other ones like, oh, like he was a broker. So he’s like, Oh, he’s like, you know, I haven’t seen anything on my side. It should be fine. So yeah, everyone responded back so

 

Erwin  

let me excuse me still happening are here. Some appraisals are coming in late, but then usually just go to the switch to the lender and then the appraisal will come in. Yeah, I’m hearing. I’m hearing appraisals are light that’s the really the only real issue for people who can qualify for stuff. But the bigger thing is bankruptcies. And again, anecdotally, I have clients, I have nothing to do with these private lands because I don’t private land. So I’m biased. Obviously. I have clients telling me like, people aren’t calling the back. If you believe like money, too.

 

Diana  

Luckily, I don’t have that. But again, I like chatbot check up on my people. Like I like I run the numbers with them, too. You got to, I need to make sure they can afford

 

Erwin  

a little due diligence. Yeah, and we’re gonna get into that. Very, very important. So you’ve invested heavily in your education. Yeah. You mentioned a certain rich company. When you What’s that? What year? Were you with them?

 

Diana  

I don’t even know. Definitely before. COVID. Like we said, per day, your time all right. Yeah.

 

Erwin  

Yeah. So like, 2018 or something? Like,

 

Diana  

yeah, maybe around there. Yeah. 1718. Somewhere around there. Yeah.

 

Erwin  

So you’ve been you’ve you’ve taken some of their courses. Nothing crazy. No, no,

 

Diana  

I didn’t do any like mentorship, because I was just more like, we were kind of going into the next phase where we need to start figuring out how, like, that’s actually what Rich Dad Poor Dad did. For me. I never understood how people were getting big off things. And are not in Yeah, or especially when you’re told for example, like don’t work with others, you know, people are gonna scam you. And like, I would always be told a lot of these things like people are going to scam you and stuff. So I was just like, bad advice. But I mean, yeah, like, there’s not bad advice, but at the same time, it’s not. It’s not advice to like, yeah, like, you just have to be careful with the way you go. If you’re gonna do partnerships, definitely, you’ve got to do like, in itself, that thing has due diligence. And that takes forever to find people that you can. But so my mind of how

 

Erwin  

Steve Wozniak and Steve Jobs partnering? Yeah, we never would have apple. Yeah, right. So it is possible. It’s a lot easier, in my opinion is a lot easier. Because real estate such a, there’s so well insulated by the market. But still people managed to screw it up. Continue, you’re learning about, you’re saying that you were learning how to scale. That was one of the was it that was my

 

Diana  

thing like that we were doing burrs and flips very slowly, though. Like, I think even a year, we didn’t do them, I think we got traumatized by one, it was like, so stressful that we were, let’s take a break. And then we realized, for example, like the community is important, it’s good to have we didn’t have any of that. What else was, what was the other thing? And it’s just I didn’t, I always thought you had to do things alone. And and like that, like your money kind of depletes after a while. Right? So that was that was one of my issues. Like I’m like, How am I supposed to grow, which is me and my husband, I just didn’t understand it. And then reading Rich Dad, Poor Dad, and going to the courses really, like was one of the kickstarts to figuring out, this can actually be done. And it’s okay to you know, do partnerships or like to group things together, have a community, all that stuff, you know, specifically not working with people was the big or, for example, I didn’t even know there are communities out there that could help you. Because I think that’s one of the biggest things, you know, you have a downer, having like something stressful happen, you can go talk to people that understand you, right, because being an entrepreneur is like completely different to a person who has a job, like they don’t understand the kind of stresses and things that you go through. So those kinds of things that really kind of kick started, because it was like, Oh my God, there’s people that can understand me, you know, the people that can help and that are, they’re willing to help and share because I think that was also a mentality that I got somehow that, like, people don’t like to share knowledge. And, and so, you know, like, you’re trying to figure all this out on your own, and it’s so hard to do a whereas like, if you have a community, you know, you can help support each other in so many different ways. Yeah, bounce ideas and just problem solve together and things like that

 

Erwin  

the quality of community was important. Yeah, I mean, some of the lessons of the last like six 810 months is quality matters.

 

Diana  

Well, and even coffee and all different areas and all different areas,

 

Erwin  

like contractors, for example, quality will matter. Yeah.

 

Diana  

Yeah. Like it’s really funny. People tell me because our projects always go well. And they’re really funny because people are like, how does it happen? And I’m just like, my husband and yeah, you have more control because like a contractor can just disappear on you if they want to my husband cannot disappear from me. I know where he lives

 

Erwin  

and beyond Rich Dad, you were part of a certain tribe.

 

Diana  

Yeah, it was part of cash flow tribe. I was also I’ve been part of so many. I mean capital Tribe i like paid for because I’ve been part of other ones. I guess the free ones. I think you also get to a point where, like, once you’re building that community, and you’re the people, I feel that you get to certain levels that, for example, there’s like that all these different groups. They’re very entry level and have an entry level. Yeah, yeah. But it’s Yeah. But I mean, as an even information, I feel like it just gets very entry level. And then it’s really about getting to know the right people and getting into the right communities. But to learn things, like let’s say, right now, I’m in Marstons. Group, but that’s because like that, like I’m interested in capital raising, and he has done, you know, he’s raised $250 million, like, the guy is, like, very experienced in the area. And, and I have, you know, like, I’ve not done that much, right. So then I went into his which, and that type of thing, to me, capital raising is a much more advanced type of this, like something an advanced, I don’t know, real estate strategy, I guess you’d say. Whereas like, I was like, Yeah, I know how to do a flip. Yeah, I know how to do a burn like I get it. You know, is this

 

Erwin  

more of an offline, we’ve had some past guests who’ve done very well, I can share with you how they do it. I know exactly how to do it. I’m friends with a lot of them. Because that’s helpful. Yeah. I always love to learn $30,000. Thank you. So sweet of you. Like some quick tips, for example, like, for example, my friends who raised lots of money, allow the system so people that you and I both know, who have lots of joint venture money, they usually have one whale investor. Oh, yeah. Right. That’s usually like 80% of their funding.

 

Diana  

Do you have any whales out there?

 

Erwin  

Actually, no, some of them listen to this. I’ve actually no, I know, I’ve had some guests that track whales on the show. That’s not the point. Just joking. By just by them. They have like their personal interests. Were rich people do the same things. For example, like boat clubs. All the rich people belong to them. Yeah. And if you’re interested already is in boating. Just talk to people at your boat club. Like literally, I know, people who have raised millions and millions of dollars at the boat club through one individual. Right

 

Diana  

here. You actually we started getting into golfing for that exact purpose. And you I know you’re in it too. And I’m like, I know the golf. We’re just like, we’re not. Where do you go? We just go like right now we’re learning. Okay, so we’re just going to the T zone. Okay. Oh, we’re actually going to play yeah, we first need to learn how to play properly, right? We don’t want to embarrass this especially going to talk to people and need to like actually know how to play first.

 

Erwin  

Hopefully no one hits on this. But for women, that’s less important. And it seems that’s just from the stories I hear from my field friends who are actually no log log clubs have extensive beginner lessons specifically for women. So they’re all on the same level. And lots of them are just loaded. So don’t be don’t be afraid of joining one of those. Because again, like a lot of them have the wives of the loaded. They’re loaded to Yeah, right. And in my experience, there’s plenty of women who are responsible for the household investments. Mm hmm. Right.

 

Diana  

Yeah. Like, isn’t that very common? I feel like yeah, so because usually the man’s like out working and stuff, and then they leave like, okay, especially if we’re gonna be the housewife might as well like, make sure all finances are taken care of,

 

Erwin  

I suppose. Yeah.

 

Diana  

I’ve seen both. Oh, yeah. No, for sure. Both. But I feel like it is very common for women to or the wives to kind of take care of now, I’ve just seen it on my side, the families that

 

Erwin  

in my experience, my clients, even if the wife, that’s the one that’s steering the ship on the investments, they all have jobs to now that I have maybe a few of them are stay at home. But very often, they have full time careers, six figure careers. And there’s other driving the household investment driven work. So for yourself, I wouldn’t be afraid to join any of these women’s clubs, especially at the beginner classes. I know it costs money, but I don’t think that’s an issue for you. But I want to get to like you’ve met people who are now bankrupt, as well as being a part of these groups.

 

Diana  

I meet a lot of different people, which very helps to learn from everyone’s mistakes or whatever they do even their successes,

 

Erwin  

but you saw the red flags before they got into trouble. What are some of these red flags? We’re not gonna name names.

 

Diana  

But I saw very, very big red flags was disorganisation was one you know I remember asking for information on a deal whenever you want me to lend you money. I need details what’s and and I wouldn’t even get the basic like I have my first level I don’t even go full on like I have my first level I just need to see if it’s even worth it to me to go further. Like I have like phased approach I’ve like to generally but sometimes even a third like I have two to three phases before I like to go through your lending, I mean, sorry, I’m lending you money, right? And so I couldn’t even get through phase one, you know, so that one was already a very big red flag. You raised

 

Erwin  

a red flag with them. You were going to due diligence. Due Diligence you’re gonna do, we can’t work together. This is not a good fit.

 

Diana  

Yeah, this appeared. And and that was one and that happened twice. Yeah, same person. So then, so when the second time it happened, it was kind of like that came into my head, okay, this guy doesn’t have like, he’s just looking for easy money. And now it’s like, I don’t give easy money.

 

Erwin  

Wow. And we were speaking before we were recording this individual investors now bankrupt most professionally and personally.

 

Diana  

I don’t I don’t actually fully know the details. But yeah, at least professionally, personally. Yeah. Okay.

 

Erwin  

It’s very sad situation.

 

Diana  

Yeah, it’s crazy. But it’s like that when you’re very. And one of the actually, this was one of the big issues that I found was that when you’re finding a team, don’t find people that are the same as you. Because I saw that I was saying that this is going to be a big disaster was because who’s helping run the numbers in the business? You know? And I was so worried about that. Because I saw I saw that I saw. Well, that I mean, that was small indicates, but I saw like the deals, I had deals come to me to that they actually did make it to me. And they, again, we didn’t even get past phase one. Like it just didn’t work at all. I was looking at these numbers. I was like, you want to be in debt? 300 A month or 1000 a month? Because I don’t want any of that. No, like it was just create these deals that I was just, but then it was

 

Erwin  

like the deals that were cashflow bad now and worse later,

 

Diana  

yeah. Oh, that’s

 

Erwin  

a that’s a great offer.

 

Diana  

But it’s because they didn’t have someone behind them to actually, you know, check the deals for them make sure that they were good deals,

 

Erwin  

right. That sounds like a terrible business. Yeah. And

 

Diana  

that’s why it’s so important to have the right team, it’s like, you have to have people that are opposite to you to make sure that this is your weakness, but it’s their strength. Right, right. You have to have that kind of thing. Because if you don’t, that this is exactly what happens. I feel like in general, I mean, I feel like in general, if something is going wrong, like you’re missing someone in the team to to make it happen. I mean, yes, there are, let’s say probably situations where you go bankrupt, and maybe I don’t know, I don’t I don’t know enough. I’ve never seen like, I think they’re the second people I’ve ever heard that are bankrupt. So I don’t know really how that works. But I just feel like maybe there are some people that go bankrupt, and it’s just happen, like just everything aligned badly. I don’t know. I don’t know if this is that a thing? Because that happened or is usually it is just like,

 

Erwin  

This is real estate. Bull Run for 12 years. Right? You have to do something really wrong. Right? And when we’re talking about partnerships here, like back to Apple, it’s not bad example. Steve Jobs and Steve Wozniak, they’re completely different skill sets, right? And then when Wozniak bowed out, then you have Tim Cook. Tim Cook is very, very different. He’s an operations person. Yeah. Great. He’s about the execution versus jobs about you know, product development. Very, very different talents. Yeah. All right. Well, class, obviously. But I can’t believe like this partnership that we’re talking about. They were very similar people.

 

Diana  

Yeah. But everyone seen another one, they go through a foreclosure and they were actually very different. Super super. What is it called, like, extroverted, you know, meeting everyone. And then the introvert, like, probably doing the numbers operation. I mean, I know they did operations, but like, so I’m assuming that they would run the numbers. And then same thing going through, they’re going through a process to and it’s just very interesting, that I mean, they’re opposites. But someone dug the hole for someone or they were trying to grow too quickly. Like, it’s, you know, there’s so many different factors. So, yeah, I think that’s another thing. For example, for me, I’ve never been a person that wants to grow super quickly, because that’s another issue that can come up. You know, when you’re growing so quick, like, really quickly. You just don’t know what kind of things you’re missing. Things can get left behind, just because your goal is way over there. And you’re in the future. But you forgot about what’s happening right now. You know, so there’s just Yeah, it’s so interesting to see different ways of also how failures happen because it’s also to be honest, for me nice to learn from their mistakes and just be like, Okay, I should not do this. Some of them. I mean, some of them already knew I was like, probably shouldn’t be doing that.

 

Erwin  

But you don’t know. That’s why I never say anything. I’m sure lots of people thought jobs would fail. Lots people thought Elon would fail. And Elon will say like, Tesla almost went bankrupt three times. Oh my god. Yes. SX, if I think it was Falcon nine, I think it was a third or fourth attempt, I

 

Diana  

think sleeping in his factory or office just trying to get things to work.

 

Erwin  

The Falcon nine, I think it was talking nine if the third or the fourth attempt didn’t have didn’t happen, they were going bankrupt. Yeah. Right if it didn’t work, and that’s probably when

 

Diana  

he was sleeping enough, enough is trying to make sure happens.

 

Erwin  

But my point is that there’s risks. And also also these companies that have been have gone bankrupt. Like for example, I’ve always done buy and hold, like I buy, renovate and hold I flip. But I do a conservatively because my experience with construction and contractors is it’s not that easy. So I do one at a time. Right. So even if one goes out of the disaster, it’s not the end of the world.

 

Diana  

That’s what we do. We also do one at a time, too. But like

 

Erwin  

the gentleman we’re talking about, they had just the bankruptcy statement. There’s like nine on the go. Yeah, that’s five hour radius. And one of them’s One of them’s in the Caribbean.

 

Diana  

Yeah, that’s exhausting. One of the reasons why I like private lending, you know, how some of my past is done working, so that I can like work put my energy into like the what the one maybe like that we may try to expand to go I mean, now it’s things are changing. But I do plan to expand but like that, like, you can’t go from like nothing to like a million so quickly, because it’s just, to me, that’s inevitable. Like, you see it happening, you grow so quickly. And you’re not any fear, especially maybe not, I don’t know, I don’t know what the situation but like, I’m just saying in general, like, if you don’t hire enough people, you don’t know how, especially the people that maybe making sure you have a good trusting to grow that big. Like you just that’s going to fail. Yeah, if you’re gonna grow quickly, like you have to have like a quite a few trusted people to just manage all that, because that’s just a lot of work.

 

Erwin  

Right? Difficult out there. But congratulations on your success. You’ve done really well. You should be proud of yourself.

 

Diana  

Thank you. Saying hi from you. You have so much experience I don’t

 

Erwin  

I don’t have the most experience has talked to a lot of people. So I know and again, I know a lot of people are hurting. And sure you are if you if you face some difficult challenges when you came out with it quite profitable. Right. So congratulations on your success. Thank you so much for coming on the show. Working people in your social medias exploded. Is that where you spend most of your time in terms of like sharing? Content Creation? Specifically Instagram?

 

Diana  

Yeah. Instagram, Facebook also just started LinkedIn.

 

Erwin  

Frequency tick tock. No. And then where can people find you?

 

Diana  

Like on Instagram investor girl, Diane? Actually, LinkedIn is the same. I left the investor girl Diana. Facebook is a little more complicated. It’s like my full name. Spell your full name. If you want to share, the group might be easier to find, because it’s labeled as read. But it’s the real estate investing district is what the group is called. Real Estate Investing district. Yeah, and it’s probably actually easiest. If anything, I’ve now my dad lives raza.ca Which that links to all my social medias. And we have a challenge if anyone’s interested. It was challenge yeah, it’s to help people set their goals. So if you’re looking to set your goal if you don’t, if you are not motivated or energized by your goals probably have the wrong goal. And so we’re doing a five day challenge to help you identify your goals and try to see if we can motivate you guys to find your goals. Okay, cool. Because you don’t realize actually that some of us have the wrong goal and we wonder why we’re not able to accomplish it.

 

Erwin  

Yeah, that was just our chairs presentation on Saturday was related to goals. All these feel things like buying more properties is the answer when at the end of the day, really, you need income and cash to retire. Properties are not income and cash

 

Diana  

so I always found it especially when I started going everyone was like always about the number of doors Yeah, and yeah, I didn’t never got that. So I’m like I technically don’t have very many doors because all my money is going into private lending or like that we’re

 

Erwin  

doing it all wrong. Obviously all that money in the bank wrong

 

Erwin  

and I just because honestly some of those people with lots of doors who don’t cash flow there, and if they didn’t run their numbers with

 

Diana  

you, you’re gonna see all this craziness happened to people that are going to really struggle with like all these doors and because we’re gonna go through a phase of a lot of people also probably having to go through evictions right now a lot of people Mr. I mean, I know employment is still high, but I don’t know I have forecasted that employment is going to get worse. I think employment will get worse if that happens. We’re gonna go through a whole bunch of evictions and if you go Got a lot of doors and you can even withstand a couple vacant properties or people just not paying. That’s going to be a crazy thing that I think we’re going to be seeing next year is that we’re going to see a bit of chaos happening. I think, firstly, curious on your opinion,

 

Erwin  

greed was so bad, right? So for example, we have this one client, we a recent client, who has new construction condo just closed a few months ago, even though he’s rented. We split today’s interest rates after heart costs. He’s negative $800.

 

Diana  

Oh my god. Yeah.

 

Erwin  

Right. What about these people have multiple?

 

Diana  

Yeah. closings and new construction condos on variables?

 

Erwin  

Yeah. Well, yeah. So is this gentleman? Yeah, negative 800. Right. And we’re in for probably two more raises. Yeah. Imagine if he had like, three or five of those, if you had five to be negative 4000 a month. But what if your vacancy

 

Diana  

is crazy? It’s really crazy. But I think I don’t understand that let’s say people did was like that. Like, for example, we actually went fixed on our all ours because it was just like, the rates were so amazing. I was like, What is saving a couple extra pennies and going variable? And I also felt like that like yeah, I was just like, why did people worry about the variable I don’t know. Like, at least my my holds are, are on fixed. And I mean, we actually went through a refinance. So that was kind of a nice hits. I was like, oh, in a negative way. Obviously not nice and was a bad hit. Not bad. We’re still cash flowing, but just kind of sucks to see some of your profit go away. You’re like, Okay, goodbye, little dollars.

 

Erwin  

You need to change your handles. This should be sophisticated investor day, and just an idea, just royalties. History. Thank you so much for doing this. So great talking to you. I’m glad we get to spend some time. I don’t know how else to say it. But I think people should like bounce questions off of you. If they’re looking at joining clubs, because you’ve been you’ve seen some crazy stuff. Of all the people I’ve talked to you’ve seen some of the craziest stuff in terms of people who were didn’t get the greatest guidance in their bankruptcy court.

 

Diana  

Alright, so yeah, thanks so much for having me on the show. This was a lot of fun was fun chatting about this, all this stuff. And yeah, thanks so much. Thank you.

 

Erwin  

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

 

 

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**Transcripts are auto-generated.

Erwin  

Welcome to another episode The truth about real estate investing show with me Erwin Seto as your producer and host. The truth is we do have more than more than 17 listeners of the show. And I want to thank every one of you who has left a five star review on iTunes and share the show with people you care about. Davis thanks to us and our wonderful guests that we have ranked number 81 And all of iTunes in the business category. When I started this podcast in 2016, I had no idea this podcast would be a top 100 in any category in the entire world. So I’m speechless. Shout out to my friend Jay Wong, who is a mega Podcast Producer for sharing this on social media letting me know, I don’t check and ask for you my 17. Listeners, please do continue to share this podcast. And if you haven’t, please do leave a five star review. For the most reason comments as well. I do read some of them, I generally avoid them. And because I try to avoid the negativity that’s out there. But for those of you who do care about the truth about real estate investing, there are many unqualified real estate experts out there. Many of them are good people don’t realise they’re unqualified, and they have, unfortunately bad advice. And sadly, a lot of them paid a lot of money for inexperienced but charismatic coaches. I was chatting yesterday with a recently bankrupt real estate investor, who has been advised against coming on the show by their lawyer, but I’ll share my thoughts. I did bounce my thoughts off of this individual agenda and bankrupt investor owing almost owing almost 10 figures. It’s Yes, very sad. There are several real estate investors and businesses that who are going bankrupt. It’s still early. There’s many rumours out there. I haven’t seen anything like this. Since 2008. This actually, I think it’s much bigger now, because of the amount of good and bad of social media, like they think the popularity of social media. Again, more people were able to raise capital and gained fame. They social media, and then more investors have ponying up money. Hence, there’s more companies that are going bankrupt. Again, many are good people, they unfortunately just put their trust and 10s of 1000s of dollars into memberships and coaching programmes, who often did teach a lot of good stuff. But many too many investors bought too many properties too fast. Without proper systems execute. mindsets, not everything, anyone who tells you that can feel free to come hang out with my friends. Because even like Cory Lee, who was on the show, a very successful entrepreneur, we joked in the show, you know, vision might be 10%. Without execution, the other 90% You’re going bankrupt. So, and also the quality of the deal to me is everything, not mindset, quality, coaching and mentorship is everything as well. But to me, those are based on track record. And again, there are laws on successful coaches out there right now. Anyone I say so rightly or wrongly, I evaluate a coach or membership group based on their client outcomes. How are their customers? How are their coaching clients doing? I personally was lucky. My own first joint venture partner, my ex now my ex wife has a renovation business. Her father who mentored us was an office investor, but he was a very successful master plumber, I experienced firsthand how difficult renovation projects are and including staffing them. I’ve personally swung hammers removed, removed rusted out plumbing stacks from 100 year old properties, and slung paint on walls and ceilings. I didn’t do it long because I wasn’t very good at it, and was hurt myself many times. I’ve had my own burrs, mail flips, go over budget take too many months too long to complete, putting strain on budgets. For that reason, we only ever did one local project at a time. And that’s all my team did handle. It had to be local, because it needs to be close in order for time purposes. And also for staffing. We teach our clients the same again. That was how I learned how to real estate invest. It’s always worked out for me. This is the same thing we teach our clients and will only work with the best the best contractors as their there’s only so many of them. To me from my experience. Again, staffing, a renovation project is not the easiest thing to do. Hence, we are ultra conservative on how many projects we take on at a time. This may have kept us from scaling up big but also took us from being overstretched, as generally, again, we only ever had one vacancy in our own portfolio. We’ve only ever had one vacant property at a time. That was the property that’s being renovated. So we always had rental income coming in to cover everything else. And we’ve also had past guests of this show who grew really big portfolios 50 doors 100 doors 100 properties like Russell Westcott Jared hole, Ben Westerfeld. They’re all good people, but they shared on the show the lessons they’ve learned. So hopefully everyone’s had a chance to listen to those. The pursuit of a big portfolio and the rush of raising capital was not the way to necessarily build a successful investment portfolio. successful investment portfolio is one that makes money. Making money is the key performance indicator. Now how many doors are property about the properties one has, it’s making money. And that includes cash flow to cover everything. And that means different things for different people if you’re a real estate developer, and cash flow means very, very different things to versus myself as a small residential real estate investor, making money, a good return enough on your time is important. And also on your grief. That to me, that’s a sign of good investment. Joka stands who has been a client of ours, he used to drive I think about four hours each way to Sudbury. So that was his choice. I let him know my thoughts on that. But again, that was his choice. He felt it was a good return on his time, that wouldn’t have worked out for me that everyone has to make the decision for themselves. Again, while being a visionary is great. Visions great. But without execution, that business is doomed. It’s well documented that Apple would be nowhere without Steve Wozniak. And then later on Tim Cook, who is now the CEO of of Apple, Elon Musk did not do this all alone. He’s not just a great visionary. It’s my opinion that that’s one of his greatest talents is attracting top talent, right, because you still need to execute. Vision, ideas that are great, they still need to execute something that people will pay for the risk is great in every business, Apple Tesla SpaceX of all nearly gone bankrupt several times. I believe novice investors and novice coaches do not understand the risks. As these recent bankruptcies in the real estate market involve investors holding multiple flips at the same time, they’re either flips or their burrs, or their developments with no rent coming in finance with expensive private money. Right? No investments without risk. But to me, it’s all about mitigating risks through continuous improvement, implementing best practices, surrounding yourself with a quality team, a quality coach and quality mentors. None of our clients like these interest rates, from my speaking to clients. And I still, you know, I speak to clients all the time, I speak to my coaches all the time how our clients are doing. And our worst case scenario for our clients is, like the worst among story among our clients is they might have to sell a property or two, they’re taking profits, right? They’re taking profits. The funny thing, though, is that listen, these are what we’re coaching our clients to do. If you’re tight for money, sell a property or to take your profits pay off some of those debts. Right? The funny thing is that probably at least 80% My clients say no thanks. They expect their investments to improve over the medium long term range. So they’ll suffer you know cancelling Netflix or Disney plus or eating home more often, or cutting back on expenses in exchange for greater future returns. So if you do want to learn my best practices for from investing since 2005, being an investor being the original investor, specialists, realtor since 2010, my team of award winning coaches who have done 100, duplex conversions, and another 100 or so student rentals, then do make sure you’re on our email list to get our offers, including I have a free book. It’s the only real estate investing playbook. We have webinars, we have one coming up in a week or two on how to convert a house into a triplex which takes advantage which is teaching folks how to take advantage of the new Doug Ford legislation, which will allow us to do so to create triplex is by right, we have street smart property tours of Hamilton and Asha coming up where the rubber meets the road. And we actually apply our theory to looking at actual investment, income properties. You don’t want to miss it because from my experience, well, we all have to work to invest and then we invest to live. Now speaking of folks who invest to live we have client and single mom Arminda some out as our guest today. Armando is a student rental investor, who is being going benefit massively from the over 40% increase to the market rental rates for student rentals. As per the short title, her current cash flows by $1,500 per month between just two properties $1,500 per month, across those two properties, that cash flow will more than double, possibly triple with the new rental rate with the new market rental rates, the inflation on student rentals and such as the benefit of buying rate, using a fundamentally sound investment strategy, renovating with a return in mind and the importance of mentors, friends and community quality. If you’re interested investing in property investment properties, like I’m into my award winning team of investors, specialists realtors are ready to go. You can find us at www dot infinity ball.ca You can find me on social media, if not already. Give you Arminda Arminda what’s keeping you busy these days?

Arminda  

Oh, quite a bit. Actually. You know, I have two kids that are now one is in dental school. One is adventurism school. We have three dogs. I know I’m pretty busy. I actually tell my friends all the time. Now that the kids are older, I feel like I’m busier than when they were actually younger. One of my friends said is because we facilitate them in their world of trying to be adults, and we’re just facilitating and that keeps us busy. And I actually agree.

Erwin  

Oh, I wouldn’t I’d be easier like you’re not shuffling them around for like soccer and dance and all those sorts of things.

Arminda  

100% But then I have my daughter Alexia was in third year dental school and she’ll be like Mom, can you please go to such and such central office and go pick up a jar of extracted teeth? Because she has assignments? And yeah, so that’s what I’ve been doing the last couple of weeks doing it on different dental offices to go pick up jars of extracted teeth from unknown people.

Erwin  

We were in school. This sounds like real stuff.

Arminda  

Yeah, she Yeah, she’s in school. And it’s real stuff. And she’s already seen patients and a lot of her projects. Actually, she has to have real teeth to mimic a situation. So yeah, so yeah, if you saw my laundry room where we keep jars sometimes of unknown people’s teeth, it’s quite interesting.

Erwin  

I have so many questions, but I don’t think I want to know,

Arminda  

I know. Yeah.

Erwin  

So you said nothing about nothing’s off limits,

Arminda  

nothing’s off limits or when our school costs. Okay, so yeah, so school for Alexei presently, it’s $50,000 tuition a year. When that’s just tuition, tuition, along

Erwin  

with lab fees, or books or anything,

Arminda  

everything’s included in respect to that. But then there are extra things like her loops, which can cost up to $4,000. What is that? So the loops are, you know, those looks like the magnifying glasses that they were that were Yeah, with a miner’s lamp on it. There’s that? Yeah, it’s about 4000. And she has a pair and she just invested in another pair right now, a little cheaper, because the magnification is a little different. So all in you’re looking at about six or $7,000 just on lips alone. Becoming a dentist. Hopefully, it’s all gonna pay back one day, but right

Erwin  

now. Yeah, it’s expensive. And this is after four years of undergraduate

Arminda  

after four years. Yes. So she went to McMaster University for four years, she got an honours in biochemistry. And that cost about $45,000 for the four years, minus the living expenses that we were lucky enough, we’ll probably talk about a little later of owning a property. So there was no fee in terms of rental. But yeah, that was about $45,000.

Erwin  

Just tuition alone, just tuition alone. Computers and books.

Arminda  

Computers on top, give or take because we did get a new laptop when she started university. It’s pretty expensive.

Erwin  

Okay, so 50k a year for dentistry school plus other stuff. Yeah. Six to 7k for the ocular. Where but yeah, wow. Yeah. I thought there’d be some deflation there. But obviously not no, no. And then she’s lives for free.

Arminda  

And, of course, and then obviously, so we had to make the the decision. Does she commute from Toronto, or from Mississauga where we live to Toronto, or the she rent? Now dental school is not like an undergrad. So they’re in school from eight in the morning until five? Oh, yes. So the commute would have been a little bit a little bit nerve racking for her an hour each way each way. Right. And now let’s put in if there’s an accident, if you know the wintertime right road conditions, so we thought that just for her own mental health as well. It would be better to rent so she hooked up with the partner with a dental school friend. And they rented a condo in Toronto.

Erwin  

Remember, we discussed this we did. One was it?

Arminda  

This was 2020. Oh, yeah. You can’t near the bottom? Yeah, no, yeah, I actually contacted you because I thought, should we invest in Toronto. But the prices are crazy, as we all know. So we made the decision to rent. So she got into this lease with her friend. And of course COVID hit right. And well, it had hit in March of 2020. And this is now July of 2020. And everybody was still very unsure of what protocol dental school was going to take in terms would it be hybrid would it be in person online, and it was just very fluid. It kept changing. And we actually ended up paying for a year and she barely even lived in Toronto. Oh nuts. Yeah, because a lot of it was online. She would go twice a week for an in clinic lot of assignments. But she was mainly living in Toronto. So we were paying so her and her roommate have found a really nice apartment place on shooter and Jarvis more or less. It was really nice. It is really nice. They were actually the first ones to move into this this place on the sixth floor brand new brand new two bedroom. Two baths, which was very important considering they’re both dental students have the same schedule getting up at the same time of the day. So yeah, it was perfect. Until like I said, COVID hid in here. They were paying and they had to have internet so we’re paying internet, you know, hydro, at least the minimum payments for hydro because obviously they weren’t living there. So it wasn’t a lot of usage. But for that year, yeah, it basically were living at home Right. And then how much did it cost for so that when they first signed the lease was 2450. It includes the parking space.

Erwin  

Oh my God, that’s

Arminda  

yes, it is a very good deal. And you know what? So we agreed because Alexi does have a car that we would be paying a little bit more because she has a car with a parking spot. And then her roommate was had a budget of $1,100. So my daughter now we concluded that it was worth Alexa paying a little bit more because Alexa actually has the bigger room with the ensuite bathroom,

Erwin  

and probably gonna feel like they have time, but I knew you were getting a deal.

Arminda  

Yeah, I know. You seem very positive when I spoke with you. And I was like, Okay, I told Alexia we got assigned, because I’m getting good vibes from Erwin. So I think we’re on the right track.

Erwin  

Yeah, no. You’re like $1,000 in our market. Based on today’s market, today, to to bed, two bath with parking, you probably won’t be paying more than $1,000 more than the than what you paid.

Arminda  

And it’s a brand new apartment. They have a beautiful pool, they have gym, and you know what, it’s 24 hour security concert building as well. Very, very safe, which obviously, you know, dealing with my daughter for the first time. I mean, she had lived in Hamilton, but I kind of felt like it was a very safe space when she was living in Hamilton. So now here she is, for the first time, you know, raise suburban, right, going to the big city. So at her condo, it’s so secure that they have fobs. And you actually cannot go between floors. Yeah. So she currently got a dog as well. She must have, you know, the dogs that we have at home. So a year ago, she got a dog, and she has a dog sitter for her dog, nya. And actually, she’s very lucky because her dog sitter, once again due to COVID, her work change and now she works from home. And she lives on the second floor. So this is all to say that whenever Sonny takes care of Nya, she actually has to use a Lexus fob to go to Lexus floor and go pick up nya. So you cannot between floors at all.

Erwin  

Amazing. Yeah. So the reason I have you on the show is Yeah, I mean, I’ll tell you why. No, you didn’t. Okay. It was over Thanksgiving. I was talking about my clients. One of my clients is a teacher. So teachers have a pension sports, usually around, like market value for the pension is close to $2 million. And then she has a nother enormous for real estate portfolio, I think like six properties, right? So she made around $2 million, right, just with her investments. And I said to her, what was harder earning teacher’s pension or earning your real estate $2 million in net worth. Right. It was a good 10 years for the two mil as a side hustle while she was a full time teacher. Yeah. Right. And then also, she takes care of the family. Like beyond being a breadwinner, right. Also, like all the net worth for the family is from her. So she’s able to take care of extended family as well. Like all the times and stuff like that, like five 6000 a month. Right. And I said to her, I hope your family spoils you. Because you are the household hero. Yes, yes. All right. I’ve met a lot of people, and not many people can do what you do. And what I find with real estate investors, the ones who aren’t bragging on social media, is it generally incredibly humble. Very private to. And so when I thought about Wow, household heroes,

Arminda  

I thought about you and Frank. Oh, what an honour. Right.

Erwin  

But you tell me who drove the decision to start investing in real estate? Well,

Arminda  

to be honest with you, I have to think Carol Dias, our good friend, Carol Diaz. Yeah. Honestly, this, you know, we always had this vision of having more than just our own primary residence and, and not talking about financial freedom of one day, not only being able to help the kids, if we could, but even for ourselves. We have this the stream of, you know, Frank retiring, and we were going to have our primary residence, possibly either rent or buy a property in Florida. We love Miami. And we also have property in Portugal. So our plan was to couple of months here in Canada one day, couple months in Portugal, and the winter in Miami. So Kara once invited us to her cottage or beautiful cottage. And she said, Well, you know, now that Alexa is going to make mess. You should seriously think about investing in the house, the house there, right? She’s she had done the same thing for her son, Zack. And she said, it’s pretty amazing. And obviously I was like, but how do you go about it? I still have a mortgage and she said, You know what? I’m going to take you to one of my meetings and and she wanted me to meet you specifically, Mr. Hamilton. And she’s like, You know what, and I’m here and I’ll guide you through it. So that’s exactly what happened. And yeah, she was actually my motivator. I think her all the time. I still get together with her often. And I would say Kara fills in for you. She’s very Be humble person. And she’s always willing to share all the information. She actually shared with me how to write a proper receipt. I remember she’d be like, Okay, here’s my a copy of mine. I’m going to share with you. This is exactly if you ever get audited. This is what the government dinos looking for. So it’s very important to have that that network of friends who are amazing, right, Margaret was another person. Tired. She I know. I know. Right. I think she’s off to Paris right now. So I Yeah, so she helped quite a bit to I remember when we had to go through the building inspector and drawings of how we wanted the basement to look. And it was like, Oh, my goodness. And she helped me out with that as well. So was the network. Yeah, it takes it takes a village, it takes a village. It really does. And then you made it really easy to or when I remember asking you, and you probably don’t want to risk I we were at one of the first properties. And I said, Are you not afraid of having all these mortgages? And they said, No. As long as there are tenants, you’re okay.

Erwin  

Yeah. So someone else is paying for

Arminda  

right? And just the way you said it, and I remember you’re sitting at one of the sofas on one of the sofas, and it was like he made it sound really easy. I think we got it. The key is as long as we have tenants, okay, we got this.

Erwin  

Right. Yeah. Well, your daughter is moving in.

Arminda  

She was moving in. Yes. Yes. She was moving in there pay rent or you buy a house. 100% 100%. Right. And it was amazing, because she moved in, and probably jumping a little bit ahead. But you know, that house ended up having seven rooms. So for the years that she was there for three years. Yeah, it was getting rent from six rooms, which was absolutely amazing. And she was there for free. And, you know, kept an eye on on the place as well. As she enjoyed the process. She really did. She really really loved it so much so that she actually was encouraging her brother who else was now adventurism school. He’s at George Brown, in Toronto Waterfront Campus, and she actually wanted him to go away, because he also got accepted to a programme at Georgetown college. But due to our circumstances for Leandro, it just it different times, as you know, we went through lots of different times, and he made the decision to stay closer to home. It’s worked out certain colleges far, isn’t it? It’s, it’s an earlier, as far as far as I know, that’s for Carol has her beautiful cottage and she said, Well, if you need a place, you know how to reach right.

Erwin  

And you can it’s not easy to buy a house in a typical church.

Arminda  

Well, he’s got the Waterfront Campus in Toronto. Yeah.

Erwin  

So it’s crazy expensive.

Arminda  

They’re crazy expensive, right? Luckily, because Alexia is at the Faculty of dental school, at U of T, he walks 20 minutes. So on the days that he has clinic, he stays with Lexia. And he walks to school, and then that’s where her car comes into, into place. And he drives home because he’s got his licence. So he’s, he’s also my little Uber driver. Now, he drives me around everywhere, but all worked out, worked out really well, at least for now. We’re going to take it year by year because truth be told, as he gets busier with clinic isn’t really feasible that he’s sharing, you know, a room with a sister, we’re not really sure, you know, so we’re going to take it year by year and just do it that way.

Erwin  

So the decision to invest, where do you think you and Frank were like, even in your interest in doing so?

Arminda  

Percent? Percent? Yeah. 100%. And, yeah, with with Your wisdom that you provided contacts, we got in contact with, I believe, Dion. Berg about Yeah. And he, yeah. And he actually thought that we would be excellent investors. We had a plan, you drew up a plan. And our plan was to acquire five properties. He said it would be attainable within a year. And that was going to be our plan. We started off really well. We got two properties right away, literally within a month of each other. Right? Purchase the first one November of 2015. The second one came December of 2015. And then we stopped a little bit because of the renovations of both of the homes, right. They were family homes. One was actually an estate sale. One was also retired couple who had been living the same house for six years. So we had to convert it. They’re trying to speak right. Yeah, they were Yeah, just, you know, make the rooms more for students. So yeah,

Erwin  

it’s didn’t prepare us now. You know what I mean, right? Yeah. Yeah, I know. What you paid for.

Arminda  

Yes. Oh, no. Present. Yeah. Yeah. So ballcourt went for $366,000. And I know, right, and Oldfield went for 370. So yeah, they were pretty much the same price.

Erwin  

Okay. Do you want to go to work today? Yes, I’d love to. Oh, you don’t know I do.

Arminda  

Oh no. Like, is it close to a million? Possibly, or is that too much?

Erwin  

Maybe maybe like earlier this year? Okay. At the peak? Yeah, yeah. But today, I think conservative would be my beat,

Arminda  

which is amazing. Yeah, absolutely amazing. And you, you’re on our emails so

Erwin  

that we Yes, yes, I

Arminda  

just Yes. I saw that. It’s speaking up again, which is great.

Erwin  

No, I don’t. I think it’s pretty hot. Actually.

Arminda  

Is it really hot? Oh, yeah.

Erwin  

I saw two this morning. That sold, one sold done firm. It was only in the market for six days. Yes. And the other one was, has a conditional offer conditional sale. And it’s only been seven days. Wow. Yeah. So things are moving. That’s really good to know. So when people ask me about the real estate market, like it really depends, yeah. Right. Because here we’re talking about niche market. We’re talking about near McMaster University. Yes. And then I’m in malaria as well. So my experience was pandemic soccer. Yes, I think I got worse than most. Did you have any vacancy during the pandemic,

Arminda  

only for four months. So that wasn’t bad at all. Okay, it wasn’t bad. That’s not bad. Obviously, it was hard to get students and I get it because having my own daughter, having paid rent for a year and really not having used the condo, I totally interested in where they’re coming from. So I remember showing the place and they were interested. However, they didn’t want to move in until September. Right. And this is March. So we agreed halfway, and I said, Okay, possession July 1. So yeah, you know, for those months that it was vacant, although I knew there was a group coming in, but they weren’t interested in signing me first. Right. So yeah, not quite four months, but it Yeah, but it worked out. It worked out.

Erwin  

So again, the price is very, I’m gonna get your stuff probably pretty nice. One really nice house sold for missile for asking 950.

Arminda  

Wow. Yeah, that’s amazing. Full asking. That’s amazing. Yeah.

Erwin  

So again, when people ask the cup, what’s the market? Like? Do really depends. And I think one of the hardest, my opinion, I looked at a lot. So student market is possibly one of the hottest markets.

Arminda  

It’s all about supply and demand, right? supply is low, demand is high. So that’s great to know.

Erwin  

It’s actually funny, because I know that many people got out and even just talking to our clients like Evelyn and it was telling me like she saw her neighbours Yes. Convert to either a regular families, from student to regular family, or they sold during the pandemic, right. So yeah, like you said, supply demand. So there’s way less supply rentals, right. And the demand really hasn’t changed? No. And so it’s kind of like the pendulum has swung the other way,

Arminda  

which is great. Yeah, because the student numbers are still going to be the same. Right? Same. And now that everybody’s back at school, and yeah, it was that insurance as well. Student res no student res. Exactly. And so a lot of parents, like I read it, a lot of the emails are scrambling to oh my goodness, I had parents reach out to me knowing that I have rentals. And unfortunately, it’s hard to turn people away and they’re like, Do you have any friends? And I’m like, You know what? Everybody’s okay. Right now. Everybody’s got

Erwin  

students. Yeah. Yeah, this is the highest ever had people reach out to me, like from all over the city. Right. Right. People, right. Even ask them to hire a realtor to help them find a place like, wow, there’s, I’ve never Yeah, never heard of that. No, I’ve been a realtor since 2010. No one’s ever asked me for rent realtor service to find a student rental. It’s crazy, right? Oh, it’s totally crazy. And just like your experience, like, I’ve never seen so many inquiries about friends of friends looking for a place. Yes. Like they’re great, blah, blah, blah. And then we started seeing rents like skyrocket, right? Right. Yeah, yeah. So in the summer, like Jamil is on my team, like you’ve seen 800 room for vanilla hosts. Wow. Yeah. And then red panda. They rented out medicine University of Guelph. Right, but this is what we’re gonna think we’re gonna see coming. Yeah, apparently was a really nice house. Seven bedroom. Yes. 7500 a month. Wow.

Arminda  

That is yeah, that’s, that’s, that’s excellent for us to know. Yeah. The flip side is being a parent who also pays rent. It’s scary. Oh, it’s terrible. So I always tell even my student rentals, renters that I get both sides. I totally understand both sides. Right. So yeah.

Erwin  

Oh, my site is

Arminda  

no, small amount. Right. So

Erwin  

yeah, it’s the realities of inflation is is terrible. It is. It is. Right. It really is. Including my properties. And also we took a hit. We took a haircut during the pandemic as well. So this is just yeah, the belly, but I’m not gonna ask them. No, yes. Just move on. And we’re advertising for this. That’s what the market decide. Yeah. So it’s actually my opinion that the probably the most optimal investment right now is student rental. Preferably, I guess, some sort of multifamily like a duplex or triplex that’d be perfect. Right. Right. But, you know, nothing’s perfect. Nothing’s perfect, right. So I actually didn’t know that your plan was to buy five properties. It was it was just life happened. Life happened for God’s sake. Okay, I have no idea. Yeah,

Arminda  

we kept it private, I think because we ourselves had to digest the information. So life was going really, really, really good for us. We, like I said, had those two properties, Frank being in the construction industry, obviously, those houses, they do look very nice. We made them look nice. And then we thought, You know what, we needed a little break. So the students moved in, and we’re like, we’re going to take a little break, and 2017 Reach out to Orion again and see what’s out on the market. We took a nice vacation Christmas of 2016. We did a cruise. And then yeah, March of 2017. Right at the beginning, Frank was diagnosed with glioblastoma, which is the deadliest form of brain cancer. And our world just flipped completely, completely.

Erwin  

The reason why, just looking back to the fact that you guys were built buying property, I had no idea. I didn’t know what Frank was sick. Yeah. And then when Frank ideal, I actually was wondering, was this all part of the plan for his legacy?

Arminda  

Not not in terms of long term short term, right. Like I said, you know, we thought Frank was always a very healthy person. He was very proactive about his health. He was the one like, it’s time for us to go to our physicals and all that. But as we learned, glioblastoma is like playing like life played Russian Roulette on us. Honestly, there’s no rhyme or reason. As a doctor explained, he was just very unlucky. I life happens, right? And so yeah, so our plan was to have financial freedom, help with the kids, like I started telling you, you know, travel, we love to travel, we travel a lot. But yeah, I wouldn’t when life happened, it very, very happy that we have those properties, because there was a sense of, okay, you know, what, if I need to make financial changes, I do have those two properties that I could always tap into, you know, I’m happy to say it’s where we are now, almost five years since he’s passed and still have those properties and long term is to keep them, my daughter is going to have a really big debt. Once she’s she’s done with school. We don’t know what kind of help she hopes to open up from practice, obviously. So right now, I don’t know what those properties what the end goal will be. Will it be to help them? We will see, that’s pretty

Erwin  

cool, though. It is way better debit to selling one house,

Arminda  

one house, just with one house, right? Yeah, that’s pretty attractive. Is it really honestly, and I try to preach this too. I know, things are different. Now. I got into the market at the right time. I know it might be a little more complicated now with the prices. But I’m just so blessed that the universe at that time worked in our favour. It really did. Because my reality is at 45, I became a widow, my son was 13. So he was in grade eight, when his dad passed away. Alexia was a third year at McMaster. And all of a sudden, I had to be everything, right? And, you know, the interest of landlord and landlord. And, you know, the only role I really recognised within myself was the role of mom, because everything else was taken away. I mean, I remember the first time the students called me, the fridge broke down, and I was like, Oh, my gosh, can’t call Frank and say the fridge broke down. So I had to learn a lot. I had to learn how to not be afraid to sound like he knew what I was doing. Because he would always take care of that stuff. Right? I will take care of the administrative making sure, you know, everybody’s paying rent on time and in getting things ready for tax season. But anything went wrong, frankly, go to the property fix it. Right. And all of a sudden, I had to go into my rolodex, so to speak and and learn how to contact plumbers, electricians, like roofing company. And yeah, I’ve been able to do it. Thank God, I’ve been able to

Erwin  

do it. I tried out a new roofer in case you need one. Yes, you

Arminda  

did. Honestly. I’ve used them twice. Yes, yes. So and that’s what I do. I reach out to people that I know and it’s like, do you know, right? It’s all about networking. Do you know a roofing company? Do you know a plumber? Do you know an electrician? Yeah. And so yeah.

Erwin  

You random. Your landscaper referred you to like I haven’t talked to him in ages. I need some work done.

Arminda  

Robert. Robert has been my eyes don’t share his information with anyone. He’s awesome. Honestly. He’s awesome. And he? Yeah, he does. You know, by the time you factor in driving to Hamilton, great cutting bras and all that it’s not worth it. And honestly, it’s just great because I know he goes every week. And then any extra little things like I need like one of my backyards needed a little bit of decluttering and he said, You know what? I can do that for you. So it’s nice to have people that you can reach out to and help you out.

Erwin  

Ask them work for him. He probably won’t.

Arminda  

Reminded me of the one year the one that gave me his content.

Erwin  

Well, this is the job. Right? Our job is to see people successful. Yeah. And the crazy thing is a lot of people don’t know, because it’s no one’s public about social media is not real. Right? I hear every week about people going bankrupt, right? People who are just way too aggressive, trying to get rich quick. Yeah. excessive debt, expensive debt. And they paid like coaches like 15 $17,000. Yeah. And like, I’m all for coaching. But I’m also all I’m an investor, I’m all that returns, right? Whatever you paid when you invested in investing in yourself, the red one return. Now there’s all these people with massive negative returns and bankruptcies. Right, not just their own bankruptcy, but they also lost their partner’s monies. Right? Right. Terrible. Yes. There’s nothing like, you know, versus what we were teaching is very conservative, very concerned. Yep. All right. That’s a little aggressive in the student rental side. But the your daughter is in the house, you have a community of people, you’re basically your neighbours or your friends. Yes, yes, for sure. For sure.

Arminda  

You know what I’m actually I would be more afraid to be honest with you to be landlord of non student rentals. I think it’s really easy with them. I always say, you know, when I think of like renting out to families, and like I said, you know, you see a lot on social media. That scares me more than having student I always say if you’re good to them, they’re gonna be good to you. And it’s a two way street. Right. And I’ve been very lucky. I mean, obviously, after my daughter loft, I’ve had a few other groups. I have one house that actually, Oldfield is very blessed house because they find tenants for me. So I don’t even have to at least be yourself. Yeah. Because that house is actually it’s my master students, PhD students. So I just they find them each other. And it’s like, oh, I have a friend blah, blah. Okay, fine. So I haven’t advertised or field since I bought it actually didn’t even have to advertise it to me, because all field was a group that was living across the street, walked across, and they said, Oh, are you going to be renting this house? Is it Yep. And they’re like, we’re living across the street. But we like your house better. So.

Erwin  

Yeah. Yeah. Most most and rentals are not nice. Or they’re tired. Or they’re just, for example, anyone can go look, anyone go look for rental ads? Yes. Because we always got this. I don’t know if you’ve ever asked. But we got this consistently from our clients, like, Hey, I went up to GG, one on the university’s website, and the rents are much lower than the word you’re telling me. And like, Why do you think they’re not rented? Exactly. Why do you think it’s cheap? Because nobody wants it? Yeah, exactly. Exactly. Versus we always priced higher. And we were never vacant. Have a good product.

Arminda  

Right? We know what you have. Yeah. So

Erwin  

I don’t know if we need to get fairly. We don’t need to get product to have to get 800 room.

Arminda  

Once again, right. Supply Demand has made people things change a bit. Yeah.

Erwin  

And that’s the nice thing about stream rentals right now is pretty much every landlord out there who’s been around for a while we have legacy rents. 356 10 year old. Yep. leases, right. So that way under market versus students will turn themselves over naturally as they graduate and move on. Yeah, right. Exactly.

Arminda  

So every two, three years, usually that’s that’s how long they stay. Then you can oppose rents. Not a problem. It’s like it starts all over again. Clean Slate.

Erwin  

Wonder if I can get 7000 for our house. Oh, my

Arminda  

goodness. Oh, my gosh, well, at this rate?

Erwin  

Well, I’ll need to talk. Make sure we got we’re on the same boat, for sure. Booking the same page in December. I hope I tend to leave.

Arminda  

I think mines are going to be staying until the end. I think they have a good deal with me. So I don’t see them

Erwin  

leaving. There’s a reason for that. Yeah, but they will leave.

Arminda  

Right? Eventually they will. They will.

Erwin  

All right. Versus I have tenants that I don’t think will ever leave. But like my regular tenants are like families, right? And that’s what I’m saying. Or even individuals, right, right, are like in their 30s or whatever. I don’t know if they’ll ever let

Arminda  

you and especially the way the market is there. Yeah. Even though it’s cheap now. I know. But who has money for down payments? That’s a problem, especially first time buyers, right?

Erwin  

So I don’t have ever told you. When you told me about Frank’s passing? Yeah. I’m a very, I don’t know how to say it. The first thing that came on my mouth was thank God they have real estate. Yeah, for sure. Thank God, you have those two properties? Because even at that time, you probably made at least 100 grand and each of them. Right. So you had immediate capital as available to you pretty quickly. Yes. Did you want to divest them, but you didn’t just stick with the plan to hold on to them? I stayed with the plan. Even thinking about selling them?

Arminda  

No, no, no, really. Luckily, we also had life insurances, so I knew if anything first I’m going to use those funds, and just let those properties keep growing. So yeah, I never and you actually you didn’t message me that he texted me and he said I’m really sorry, but I’m so happy that you have those properties. And so am I and so I realised that I was scared. I wasn’t sure what my future What’s gonna look like? But yeah, I never thought to be honest with you, I thought of investing even more I thought, okay, so I got this life insurance money, what should I do with it? Should I invest in real estate? And I almost reached out to you start looking again, what stopped me was because now I didn’t have Frank to do the construction. And I know that’s where we saved a lot of money. Right? He knew how to build stuff. And I was like, What am I getting myself into? I’m still no looking back. I think it was a mistake on my part to not have invested

Erwin  

these little accounts. I was right. I know, the pandemic renovation costs are a lot less.

Arminda  

And yeah, and now I know that I’ve had people that I could have reached out to. But all of a sudden, like I said, around, the only way that I recognised myself was I just killed myself as a mom. And slowly I had to adapt myself into all these different roles, right. And I thought, you know, what, I’m going to continue the legacy, you know, the legacy was at least five properties, right. But yeah, so we hope to continue that, once. Now. The kids fully will become my partners, as I get older. So you know, the big is still there, right? The hunger is still there. We’ll see what markets will will make sense to us as well. But yeah, I never thought about selling to be honest with you. I knew how much it was a dream of his to have, you know, we have, like I said, our principal property and then have a property for each one of the kids, you know, if we could help them that way. So it was like that was going to be and it still will be the last thing that I do to sell those properties

Erwin  

may ask how much you rent them for right now. So right

Arminda  

now, as some of them leave, I’m starting to slowly increase right. So like I told you my Oldfield health, someone that’s PhD masters students, they help bring students in. So I started that place with $530 a room, I still have one person that’s still original, believe it or not, really, because masters PhD was seven years ago. Yeah. So he’s still their career student. Yeah. Yeah. And then I slowly raised to 560. And now the new ones that have brought in I’m $600 a room.

Erwin  

Okay, so So below,

Arminda  

it is below.

Erwin  

So fantastic. It’s still dreaded right cigar when you started? Can you imagine getting 600 a room,

Arminda  

so I was already thinking asking 500 was like a lot. And so and ballcourt they’re getting a really good deal. $550. But this was during a pandemic, and I was really afraid. I thought, You know what, I’m gonna go a little bit lower guarantee your group, then ask the

Erwin  

600 they will see, yes, this happens.

Arminda  

They’re happy because they keep bringing so a three of them have for the year they have the coop, and they want to Hang Hang on to the room. So they rented to somebody else’s. They they sublet right to somebody else, so that they can come back because they know they have a good deal. And that’s including everything, right? I pay for all the bills, internet and all. So they have a really good deal.

Erwin  

That’s a really good deal. So for one, we’re releasing our properties, we actually, we usually have an idea who the captain of the house is yes. And it’s usually then that we reach out to, to to lease out our home for us, we actually usually ask we offer in the money couple $100. And then we also offer money to each of the students to compensate them for their for the disturbance, right. So basically, we let them we write the Facebook ad for them, and write them what what to put and then they go and post it on Facebook, in the students off campus housing group, right, like, Hey, I got a great place. If my family look at it, come DM me, right. And then they become our leasing agents. And it’s a fraction of the cost of hiring a leasing agent. I never sent Yeah. And then also they provide they endorse what we do, because we do good work. Yes, we’re responsive, our properties are tight. And then also we have the buy in from the whole group to you know, leave the doors available and clean. Yes. Right for showings. And again, this has worked has worked really well for us versus paying like a month’s rent or something for our leasing agent.

Arminda  

100%. So I kind of did the same thing. So I call them my PR. Like I said there is a solution. Yes, yes. So usually, I always said, You’re the first one that reached out to me when you were looking for a place where you become a PR of the group. So anything that I need, I usually reach out to the PR of the group. And I do the same thing. Like I’m I’m very blessed as well. But like I said at the beginning, if you’re good to them, they’re going to be good to us, right? So I to be honest with you, I have never really had to go and show the property because they themselves do that for me, similar to what you’re saying. So I’ll put the ad and I’ll say You know what, I have a group that’s interested Are you guys okay with showing Come the place. And they say, Yeah, not a problem. So then bring them box of doughnuts as a thank you. Gift Card or something. Yeah. And it works out.

Erwin  

I imagine masters and PhD students are pretty serious. Yes. And around.

Arminda  

No, no, they’re not very, very responsible students. I’ve never had any issues. And then your other group, do you know what programmes or any other group? So it’s a new group. And I believe they’re all in engineering programmes.

Erwin  

So typically, you don’t have much time to goof around either. Yeah, they have so many labs do they

Arminda  

do? They’re very busy. And usually the engineering programme is a five year programme. So that means usually they’re there for four years.

Erwin  

Got it? In St. Catharines. I’ve had a lot of luck with teachers, college students. Yes. That because it’s really competitive programme

Arminda  

to get into because it’s a concurrent universe. Yeah, right. Yeah.

Erwin  

It’s broken current. So my point is, this seems the heart of the programme, often the better the tenant is, for sure, like engineers difficult to get into a scene course load. And labs. Yeah, there’s no time to goof off,

Arminda  

you know, and actually, what I find interesting, they usually asked me, how quiet is the area? Right, right. And I always tell them, it’s a very quiet area, because you’re you’re out of the fray. Right. And closer to 14 knows on that side, which is perfect. Honestly, the bus Yeah. All in they have hot food. Yeah, I have to cook. Yeah, they don’t have to cook. And I always tell them actually, the way the bus erode is it’s perfect. You’ll always get it’s guaranteed you’ll get to the university as to where the closer they get sometimes sight Emerson in those areas, the buses are full. And guess what? They don’t get it. Right. So

Erwin  

yeah, yeah. And that’s something that was something that was we were it wasn’t with our strategy was to just stay out of the extremely hot area. Yes. Even though the demand was massive for like, you know, within 500 metres of the school. Yep. Often the properties were rough. Yes. Often, that’s where the most of the garbage was. Yeah, like garbage blowing around and people urinate on lawns. Versus your properties are about 15 minutes, but about 15 minutes. Yeah, yeah. That’s kind of been a pretty consistent baseline for any property that we do. Yes. For any university. 50 minutes. Walk or bus? Yes. All right. That’s it’s worked out really? Well,

Arminda  

it has, because that was my concern, to be honest with you, or even the first time when we, you know, I looked at Klein, which was like, location was perfect. But the house would have needed a lot more work. And what we the vision was different, right? It was probably

Erwin  

twice the age twice. Ch right. But 1920s versus 1960s. It’s very different. Very different.

Arminda  

Very different house. Right. And so yeah, so but I was concerned and usually their that is their number one question how far though, like, how long will it take me? And I always say no, no. Right. I know. But I always use my daughter as an example of her loving the a little bit of if you want to call it a little Kimmy. It’s not me. It’s just Yeah, it’s a little frustrating. Yes. Yeah. It’s perfect. Actually, a lot of students just love walking. They’re like, You know what, after Dave, being in school, it’s great to just walk home. So yeah, I wanted to walk in. It’s about 25 minutes if you Yeah, keep up the pace all the young people there. People, right. Yeah. So instead of going to the gym, walk home.

Erwin  

I’m not even sure back then, like 14 was had all the hot food.

Arminda  

They did, but they did. And you know why now because when we were doing the renovations, that’s where I would always go buy food. So yeah,

Erwin  

like literally you have no reason to cook breakfast or dinner. Nothing is

Arminda  

possibly get I think 10% off on Tuesdays students as well. At 14. Yeah. Board. Yeah, no. So

Erwin  

sorry for the listeners benefit other than being close to school. It’s incredibly important to be close to grocery stores. Yes. Right. Yes. Maybe less. So now with UberEATS and all that. Yeah. But it’s definitely it’s that’s a big deal. It is. Yeah. And close to transit, for sure. For sure. Which is all those all those partners made that right? Yes. Yeah, I did. I did. And also, of course, sorry, I apologise. Some people do listen to these things. We renovate to with as much life safety as we as we can. Yes. And we do our leases as one. Yes, it’s still doing that. Yes, still doing that. So we operate everything that keep the fire department and local bylaw officers happy 100% 100% Sure. Experience has been a good one.

Arminda  

It’s been awesome. It’s been awesome. And you know, I always say to them, my daughter lived in one of those houses. And the reason why we also purchased was because we knew once again through Carol, the garbage that is out there and the thought of you know, we’ve always protected our kids, right. They’re suburban, they live in homes. I mean, I grew up sharing bathrooms, right? Our kids have no concept of that. So going from homes that have everything in anything and then moving into one of these houses that you know, I mean, she had a friend that actually had mushrooms growing between the baseboards, believe it or not was in the basement. Right closer to that. Yes, it is bold.

Erwin  

closer and advanced stage a mould inside the house.

Arminda  

That’s scary. That’s terrible. Yeah. So can you imagine what’s actually going behind the walls? If you’re already starting to see that?

Coming to where that is?

Arminda  

I actually thought pictures because I couldn’t believe it myself. And it was crazy. Yeah. So I knew that we had to have standards, right. So I’m one of those people, whatever I want for my kids I going to want for other people’s kids too. So yeah, and that was the other thing too. Basement rooms, right. People are like, Oh, how many basements rooms do you have? And one house has no basement rooms. And the other one house for me like, well, I’m like, Come and check out the place. My daughter actually prefer to basement room versus an upstairs room. And here are the reasons one of the main reasons was she liked more of her privacy when you’re upstairs. It’s also the common area. So can be a little bit noisier. Yeah. So I’ve had no problems once they walk in, they’re like, Okay, yeah, we like these basement rooms.

Erwin  

I find out that boys prefer the basement because it’s cooler.

Arminda  

Yeah. I’ve had actually I’ve had groups of girls groups of mixed boys and girls, and now it’s a group of guys and no complaints whatsoever.

Erwin  

And the guys or the engineering students are Yeah. What do you think pay for frankly, think about all this.

Arminda  

I think it’d be pretty proud. Honestly, I think so. I always, you know, it’s a question that I always every decision that I’ve made since he passed, I always think, what do you have agreed with this decision? Is he okay with, you know, the things that I’m doing? But one thing for sure. I know, he wants me to hold on to these houses, not only for so that I can have some financial freedom one day, but definitely to help other kids because that was the end goal, to be honest with you was to help out our kids.

Erwin  

Okay, in that situation, do you think they’d be without these houses while they’re still in them, but I’m gonna be an option to wipe it out.

Arminda  

Like we just said, if if we decide, you know, what, Alexia, you have this big debt, she will have a big debt, and she’ll have when she’s on these for years. proximally a debt of $300,000. That’s just the reality. And then she hopes to open up her own private mortgage, mortgage writer, and it’s insane. It really is. I wish I could have helped her but obviously, with our situation now, and, and with Frank not being here, even a friend Frank was here, to be honest with you. We’ve got to be real, like it’s $50,000. That’s a lot of money. Plus my son who’s now also on denturism. School, and his tuition is $23,000 a year. So just tuition alone,

Erwin  

maybe there’s less things on YouTube. I know really enjoy school anymore. We can did you even try to save you? 23 grand a year, right?

Arminda  

Yeah, so the material, the materials are just as expensive.

Erwin  

Yeah, just go on. AliExpress. Right. For months,

Arminda  

you know what they actually do a breakdown of how much you know, the courses, just for materials. It’s over. $6,000 right. And I know with Alexis tuition to a big part of it is all because of the materials that we use.

Erwin  

So please just keep holding on to them. Yeah, that is the plan. All right. You guys gonna suck up the debt then.

Arminda  

They realise how fortunate they are. They really do.

Erwin  

Yeah, cuz the motivation for me to buy my house for my kids was I didn’t want to pay for the university. I wanted someone else to pay for. That’s what the investment properties were for, as budging for like a 70k tuition for your tuition. How many years is Landrieu have

Arminda  

three his his preps three years. And then that’s it, you’re done. And then he’s shaped be done. But Alexios route was completely different, right? So we did. She did her four year undergrad at McMaster. So that was her biochemistry degree. And that was like I said about $45,000. And now we’re looking at 300,000, another four years. Now, if she decides to specialise. We’re looking at even more, so she may not be done. So

Erwin  

here’s the other thing about why I bought the property says she’s one of my clients. His name is Rob Don’t say his last name. He made the point to me. He’s sharing me with his own experience with him. His daughter is also He also bought a house for his daughter. I bought a couple for them. First Daughter and McMaster University. Anyways, his point was he shared with me a conversation with his daughter. She was interested in potentially going to medical school, but then she thought I can’t afford it. Maybe I should work a couple years. And his point was, I think there’s too much risk that she won’t go back to school, just because it’s hard to go back. Right when to take a break. It’s hard to go back. His point was like, I don’t want her to make this decision of going to med school or not over money. Right. That’s right.

Arminda  

You know what it looks it took a year off. So I think it also depends on how motivated you are. Getting into dental school is extremely hard. I don’t know if you know a little bit about the process, but we only have two dental schools here in Ontario. We have EFT and Western, is it

Erwin  

it’s very competitive. In Canada. There’s not many periods

Arminda  

no not not many. There’s one in BC, and Dalhousie in the East Coast, we’re number four. And that’s all we have. So when you think of how many students apply, it’s a very, very competitive school. There are a lot more options for med school. But when it comes to dental school, and so she took six months to study for this big exam, which was a six hour exam, so called the debt, right, there’s the MCAT, which is for medical school, the debt for dental school. And then a series of other basically tests she had to do she had, it was really, really hard process. So she graduated in 2019. And so she took those that year, well lit six months after graduation, so from June and she wrote her debt exam in November. So you write the exam, and then you have to wait until February to know if you have been accepted for even for interview. So then she got an interview process at U of T. And then only after the interview that she got, yes, you’ve been accepted. And over 2000 apply only under 100. I think her programme has 98 per year. So it’s very competitive. And yeah, obviously, you have to have excellent grades and your perfection and your perfection. Oh yeah, your your GPA has to be a four. But they don’t longer just look at your GPA, you have literally ethnic tests that they do. They want to know where your ethics are, believe it or not yet, like where your ethics are. And then the final is imagine you’re putting in groups. So you go into different into different rooms, I should say. And they’re given questions by a professor. And it’s all based on their personality as well. So it’s a very, very long process to get into dental school. So she for her it worked out, she was going to attempt to write while she was in fourth year, but she was doing a thesis and that alone was was quite a bit. So and you know, obviously with dealing with her dad’s passing, it’s interesting, because once somebody that say that to her, Oh, you’re going to take a break, you’re never gonna go back. And I think that actually even fueled her more to say, You know what, don’t assume anything. We’re all individuals. We’re all different people. We want different things. So for her workout,

Erwin  

do you feel reassured to have a knowing that you have investments that she can go on?

Arminda  

Oh, 100% or a specialist? Yes. 100% 100%. But we’ve always Frank and I have always done investing in, in our kids futures in different ways. So real estate has just been one, but we actually invested in CST Canadian scholarship trust fund from the day they were born. I mean, what that is, okay, so that’s the private version of our ESPs. Okay. Okay. So that worked really well. That was once somebody to who said to me, your daughter’s to have you thought of an Educational Fund for her? And I was like, No, I’ve just heard of our ESPs. And, and so he said, Well, there’s a company called Canadian scholarship trust fund. And, and these, they’re really great. And you know what, that was the best thing. So yeah, when Alexei was two, we started so we would contribute $200 a month. So when she turned Oh, four, she she turned 18 Because she’s a December, baby. So when she was ready to go to university, she had $30,000 in this account that had been saving. So University costs, nothing to be honest with you, because we have this and then they the grants as well. So with the grants that she also got, every year that she was studying because of this, of this trust fund, we were lucky University costs are nothing. And the same thing now for Leandro, so Leandro because I knew what I was getting myself into. So the earlier you start, the more shares you have. So I started as soon as Leandra was 00 months, and happy to report that I just received $45,000 from this font. So what I did once, there’s a seven year difference between my kits, so when Alexia finished I call the company I said, Well, I’m used to putting in $400, because I was putting in 200 for each one. Can I now do this just for Leandro, they said absolutely. So 400 for you and a full $400 Really, because I was used to it right? It was like the little mortgage payment that we were used to doing. So yeah, so I just got $45,000 principal payment, and he just got a grant of almost shy of $10,000.

Erwin  

Now No, I want to know why I’ve never heard never heard of yeah,

Arminda  

look them up Canadian scholarship trust fund. I only have great things to say we already had. So right now, I’m okay because then that’s why maybe why I hadn’t had I didn’t have to touch or even think about selling the properties because we had we had this we also had critical illness insurance, which was amazing. So as soon as Frank pass was diagnosed, we had a critical illness insurance for $100,000. And we were able to collect that right away. And we also call Like the insurance money that we also had life insurance money. And so that has

Erwin  

helped us tremendously. Because if you had this pretty well planned, we did

Arminda  

or when honestly, we had everything really well planned, except for one thing, we only made, I think one big mistake. So when we basically got a home line equity credit line, we got that from our principal residence that we actually were able to pay off, we bought our principal residence in 1999. By 2012, we were mortgage free. So we were doubling up our mortgage payments, obviously, the property was a lot cheaper than what they are now. But in 1999, we paid $207,000 For our main residence. I know right and at the prime of the market now and I don’t live in a big home, I live in a detached semi detached it, but it’s a wide lots. So you know, it’s it’s comfortable for us. It’s funny, because every time Frank working in construction, obviously it was at every site, you can think of an every time we thought about upgrading to a bigger home. My question to him was, will it change the way we live our life, though? We love to travel, we were very blessed. My kids have seen a lot. We were travelling twice a year. So that was always my question having a bigger house, will that mean a bigger mortgage? And the answer was always yes. So I’d be like, No, I’m happy. And I was privileged because I was a stay at home mom. So for me, it was really, really important. You know, being there for my kids being the first face that they would see in the morning being the one picking them up after school being the first person to hear about how was your day at school? That was just important for me. And for Frank, we agreed. So he was the sole breadwinner of the family. And yeah, so at the peak, the houses were going for $1.2 million right now. But yeah, sorry, I kind of lost my train of thought we’re talking about so many things

Erwin  

that you had to regret. So

Arminda  

sorry. So the regret was when we took out $200,000 to invest in these properties in Hamilton, I remember vividly the bank person saying to us, do you want to get life insurance on it? Right? And I said, No, what’s $200,000? Right? We honestly thought we had a plan, we were going to do what we did before we were going to double pay, right? So we knew that one payment was all towards principle. And yeah, would you already so much money? I don’t know. 200,000? Didn’t seem like a lot to be honest with you. And he’s like, Are you sure? And we’re like, No, we’re gonna pass on that. This was 2015. And he was diagnosed in 2017. So I still have a mortgage now, because that was our only mistake was not having gotten life insurance. Now I personally have life insurance on my mortgage, God forbid something happened to me. At least the kids are okay.

Erwin  

You got insurance for that via the bank or the bank. But I also have

Arminda  

I have private life insurance. Believe it or not, my kids already have life insurance too. And critical illness. And a lot of people like they have life insurance. So yeah, because their principal will sorry, their payment will be the same for the rest of their life. And with inflation and rising costs, they have pretty good insurance, I’m paying for them. But one day, they will take over $150 a month for $350,000. In the critical illness critical illness is 100,000. So it’s 100,000 critical illness 250,000 Life insurance

Erwin  

that costs you 150 a month and 150 a month. Right?

Arminda  

That’s I think it’s pretty good. Think about it one day when they’re in their 50s. And people are paying 1000s of dollars, possibly, they’re still going to be paying 150 And the way the critical illness insurance works. If you don’t use it in 20 years, you get it

Erwin  

all back. Because you know how know how lucky they are? They do they

Arminda  

do? They really do. You know, they honestly, we are three of us were team. They know everything, every decision that we make, actually in the process of selling a property that we own in Portugal right now. So yeah, yeah, that one we are going to sell because we don’t use it. We don’t need it. And so yeah, we were in the process of taking care of that. But every decision that’s made, it’s made between the three of us. What’s the

Erwin  

process like in selling a property located very complicated. So

Arminda  

the way the law in Portugal works when a spouse passes away, so when Frank passed away, not only do I inherit property, they inherit as well, automatically. It’s just to protect yeah, see here, everything even though they’re minors, it doesn’t matter. They get their share automatically. It’s kind of to protect kids. So it complicates things, though, right? override a will if I had a will, right. But we didn’t think about a well. And so we actually were waiting for Leandro to turning teen so we can sell this property, it would have been even more complicated. You can’t sell it because he’s a minor. We could have we could have earned but the thing is, he would need to have like a sponsor. So I couldn’t be a sponsor, because of obviously conflict of interest. Oh, yeah, it’s very complicated. And even now, there’s a big possibility the three of us might actually have To file to Portugal to sign I know the sale the contract because we need power of attorney. Well, in order to have power which need to have somebody with power of attorney, we need to go through the Portuguese consulate and that is a nightmare right now even to try to get an appointment to go there. It’s months on it. So my lawyer said you might have to come here which of the worst not the worst, but right now with Alexa adjustable rate? I don’t know. But you know, right now with Alexa being in dental school, she can’t just like Leandra next week actually has the week off, it says reading week, but not Alexia. So an all three of us have to be present. But it is a very complicated process. It’s not like here at all. No, not at all.

Erwin  

That’s the thing that people need to consider. Like, for example, I see all these people and understand that the path but because I’m so risk averse. I’m not the right person to ask. I see people for like investing in Ontario, and like, oh, I can do whatever I want here. So they only go to New Brunswick. And then they Oh, I can’t do what I want to do here. Then they go to the States, and like, oh, I can’t do what I want to do here. Then they go the Caribbean, right? Yeah. We’re a property laws so different everywhere you go. Yes, it is in like, for example, my friend who has a property in Costa Rica. But you know, here like we have a legal description for our property. Yes. Very, very specific. His legal description is like how many metres away? He is from the main intersection?

Arminda  

Wow. Yeah, that’s that the sanitary every country has very different laws.

Erwin  

Yeah. Like, to me, that’s like, that’s too much. That’s I’m incredibly risk averse. There’s so I’m the person that talks about making money fast. So

Arminda  

this is always said it’s long term. Right? What’s your long term goal?

Erwin  

Yeah. Get Rich, slow. Yeah. I mean, we none of us predictably get these properties or shoot up so quickly. Nobody expected the money, governments to print so much money in their global command dynamic. But yeah, near misses don’t sound that bad. No, but I think the listeners if you are investing, if you have more than I think if you have any sort of complexity in your investments in your assets, I think wills are a thing. For sure. I’m not anyone to talk, though. Cheering I only got ours done like two years ago. So we waited.

Arminda  

Yeah, yeah. Because, you know, even when it comes to wills, and things like that, nobody really wants to talk about it. I didn’t have a will either, to be honest with you. We didn’t have we didn’t have anything until Frank was was diagnosed. And I’ll never forget the surgeon. After he Frank came out of surgery, he said to me, you know, this is fatal, you know, that he’s going to pass away. And like right now I can say these words, see, would actually understand what they mean. But at the time, you know, you always have hope. And he said, Do you have a Will you have power of attorney? Do you have medical direction. And I was like what it was, I suggest you get that done as soon as possible. While he’s still coherent, while he still understands. So imagine my position or when knowing that my husband, literally, the doctor is telling me he’s going to die he has between seven months to 14 months to live. And how do you bring up we need to get a well done. So somehow I did. I don’t even remember exactly how I started the conversation. I think we’re in the hospital. And I think I said something like, You know what, maybe this is a sign from the universe that we need to get our paperwork. And we did, he came out of the hospital. And the next day, we’re at the lawyer’s office getting it all done, because I knew I was literally racing against time. Right. And because the minute he started with radiation, which was like a month after his surgery, he changed and he just was never the same Frank and I think that’s why we kept the so private. Had you seen Frank you know, the person he became with the illness? It was just I didn’t want people to see him that way. So I I was protecting him so even though the image you have a frank as a Frank, you know, being there and so we I just wanted to protect him. I wanted to like I said, the image you had of Frank was Frank, working at the houses and being so happy. Remember, he was me wanting to make sure how the basement was and even that house on Oldfield, we, we got it because we had no conditions on it. And, you know, he just became a very different person. And they took his driver’s licence away from him automatically. Wow. And, yeah. And he had bought a new truck. He had it. He had bought a new truck. You wanted this Ford truck. He bought it January of 2017. And he was diagnosed in March. So he drove it twice. He drove it twice. And yeah, so that’s why we kept it very private. A lot of people didn’t know he was sick. And then his funeral was very private, too. We had there were 20 of us at his funeral. That was a decision my kids made especially Alexia, I remember rehearsing. I don’t want people to come and tell me. You know, your dad was a great man. I knew my dad was a great person. Right? And yeah, so those have been our choices.

Erwin  

Well, I still think you both qualify as household heroes.

Arminda  

Thank you so much. It’s honestly, we’re trying our best, right? We’re trying our best. And like I said, like, I think we did everything. You know, well, we read we prepared ourselves. We thought we were going, like I said, travel when it’s continued travelling a lot. That’s one thing too, we’ve been able to do. I mean, pandemic did what it did. But in 2018, we did go to Portugal 2019, we were very lucky. We went to Italy. We went to Greece. And we did Portugal. So we were gone for a month. So that’s something that was very, very important for the kids to, to explore the world, right? We just went to Punta Cana this summer. So we’re still continuing with a lot of them. And now we have three dogs. So that’s the biggest change that I think that’s the only thing he would not have agreed on with us. He thought dogs are cute. But you know, it just wouldn’t really fit our lifestyle because we love to travel so much. wouldn’t change them for anything right now. They’ve been they’ve been you know, part of our healing process. So but we always say it’s not an end we actually made a little another little investment you we have a little resort style cottage in Muskoka. It’s basically you know, like srixon shores or they’ve turned used to be trailer parks into trailer home parks. So, so we did that and also 2020 because of the pandemic. We’re like, where are we going to go we have the dogs we like to travel. And Alexei came across this resort called Great Blue and lantern Bay, which is in Costa Gravenhurst. And we went to go check out this place, and we fell in love with it. So my best friend and I went on in as partners and we co own this little place and it’s great. It’s like a resort style place. So we have our own private beach pools. We have you some kayaks. So if I ever post say that I’m in Muskoka, that’s where we are. There’s a marina. So whoever has a boat has the marina. And so that’s another thing we’re like, would Frank have agreed with this Muskoka lifestyle? Because he didn’t believe in always going to the same place? And that’s exactly what we’re doing. Keep going to the same place. Right. But yeah,

Erwin  

what would you tell someone who’s who’s on the fence about investing?

Arminda  

Oh, go for it. 100% 100%. I tell my best friends all the time. They never took the plunge. And I tell them, Frank, that was the biggest thing Frank wanted for them was to invest. But they’re like, well, we don’t know what university our daughter is going to she ended up going to McMaster Believe it or not. And I remember saying the same thing Karen pearls like it doesn’t matter. The rule that I’ve learned is you should be within like a certain limit, right like area, and McMaster makes perfect sense. Even if Alexia goes somewhere else in either back to subsidise for her friends like I can help you for her rent somewhere else. Because it actually ended up happening with her daughter, Nicole, who went to Laurier believe Nicole went. So she she said, you know, she’s not going to McMaster. But guess what, I have enough now coming from McMaster that I can use that to help pay her rent. So yeah, so I, I always told my best friends do it. Do it the way we did it, right. And you know what? They haven’t invested. Their house has paid off. And I’m like, What are you guys waiting for? Right now? They’re like, well, the markets different. That’s a great market. No, it is right. So I got to have the conversation with

Erwin  

Americans or Arkansas like almost 30%. It was actually in the paper this morning, they held like Toronto was down this and Hamilton is also down this. They’re only they only have space for like three cities. Like how terrible it is. So prices are down.

Arminda  

What worries them, to be honest with you is, so if I have kind of that type of mortgage, I guess they always say, well, we’ll have we’ll pay a lot more for the properties than what you paid. Yes. Our mortgage will be Yes, exactly. So how do we make the numbers work? So that’s what they always worry about. How do we make the numbers work? Because they know my situation, right? Like, is very profitable for me right now? With 12 rooms, right? I think I’m there’s like a net at the end of month of $1,500 each and both together.

Erwin  

That’s pretty good. That’s

Arminda  

really good. I know, right? It’s a lot of money. And that’s why I also had wanted to invest because I was like, oh, maybe that can actually even help cover another mortgage or you know, or eventually we’ll we’ll get there again.

Erwin  

Ya know, in turn are gonna find all the property within 12 months, are

Arminda  

you Oh, yeah. See that? Maybe that’s what we got to do. Like what

Erwin  

markets different, you know, 10 months ago prices are high interest rates are low. Yeah. Now interest rates are high prices are low. Well, would you rather have?

Arminda  

I know right, the lower price, the lower price, especially if you have tenants who are praying for your Yeah, your mortgage. Right. Yeah. Specifically student rental rentals. I love them.

Erwin  

But the rent though is wet. Well exceeded inflation. Yes. Yes. What else do you want?

Arminda  

It’s it’s a win win situation for us. No pun intended, but it’s a win win.

Erwin  

Ya know, my two cents about that no matters. But I think Frank would be incredibly, incredibly proud of you all.

Arminda  

Thank you so much. For the kids. Thank you.

Erwin  

Great. I remember Leandra would was, I think he was doing the I forget which dance you were teaching me one of the dance that the cool kids are doing? He was 11 at the time was 11. At the time. Yeah. Because we’re in a we’re in a an empty property probably was an estate sale. So it was empty, very tired, looking. Bored. And, yeah, here he is. Now He’s the mayor.

Arminda  

And honestly, I, a lot of people asked me, Are your kids closer to you now that daddy isn’t here? And I’m like, No, we were always like this, where we set a very strong foundation, strong base, we believe in doing things together. Now, they have a different appreciation for their mom, possibly, they see that no matter what we don’t quit, no matter how hard things get. We just we push through it. And we have and I think if anything, that’s the legacy that I hope to leave for them now is no matter how hard life gets, you just push through it, and everything will be okay. The Universal may not always be what you want it to be. Like, obviously, we wish Frank was here. You know, there’s always like, I wonder what life would have been like right now, like, how many more properties would we have had, but that’s going to be left in that other lifetime. And now we could only move forward right and have different dreams and continue.

Erwin  

Just not necessarily are better. Yeah. You know, having the outcomes that you have two kids in school to Happy Healthy Kids. Exactly. It’s it’s more important.

Arminda  

100% Because you know, the odds, when you think of like, all of a sudden, that could have gone the other way, right with the loss of their dad. And especially Andrew went through a lot because Alexi was away she was sheltered by being in school bully, enter was there he was my right arm taking care of daddy. So he he has, he’s, you know, he’s 18 Now, but he’s very mature, because he’s seen a lot. And yeah, like now today he came, he chose me. He’s my Uber drivers I call him.

Erwin  

So there’s different levels of like, financial, whatever. Like there’s financial security, or financial freedom, which is the other end of the scale. There’s financial, bad, dammit, if it wasn’t Tony Robbins book, how would you describe your situation like you’ve never gone back to work, I never

Arminda  

gone to back to work don’t. So we also have a little construction company as well, which my brother manages in the sense of he, so he’s doing what Frank was doing, right. He always my brother always worked for us. So right now, you know, between whatever I, whatever profits I get from the company, I have a salary from the company. And that’s that, and Frank had a pension. I forgot to mention that to you. So he worked for his union was local and 183. So because there was a 13 year difference between Frank and I are 55. He got his pension. Even though he was still working almost like a teacher’s you can still even get your pension. Because of the age difference. He didn’t get his full pension right away, which was a smart thing to do. So I will get his pension for the rest of my life. As long as I’m living. I get his pension so that that’s another source. I know no other source of income.

Erwin  

I gotta imagine French pretty proud of himself.

Arminda  

Yeah, he is honestly, like, like I told you, we did almost everything perfect. Except getting that life insurance. principal residence. But nothing’s perfect, right? Nothing’s

Erwin  

perfect. Those who wait for perfection often don’t do anything. 100%, which is way worse.

Arminda  

Yeah. So a lot of people wonder how does she do it? Well, I got to thank my husband. Obviously, it was a collaboration between both of us, where we’d be like, yeah, maybe we should get this and maybe we should get that and, and we were really prepared. In case things went bad. Not that we ever thought they would. Right. But here we are. Right.

Erwin  

I mean, thank you so much for doing this. All right. Thank you. Oh, and FYI, Margaret, and Carol is still yet to come on the podcast. You’re the first one here.

Arminda  

Really? Oh, no. They have a lot of valuable information. They don’t think so. Oh, they do. They do while they’re both travelling.

Erwin  

Before they were travelling. They were invited.

Arminda  

Yeah, you gotta get them because honestly, I owe like I said, I owe everything to Carol. Especially all her guidance, all her guidance. Even I remember the first lease before we had to use the Ontario leases. She was like, here’s a lease here’s we’re gonna do she sometimes I gave her. Okay, so. So we have to thank you. We have to thank you. Okay, it’s partly part of the job. Yeah. So yeah, but you know what, she made it easy for me. And I was willing to do the same for my best friend. I told her listen, the tools that I was given I will pass them on.

Erwin  

So you better believe I’m gonna give my least to Carol was a lawyer like free lawyer review. You get a free lawyer review to

Arminda  

honestly what having really good friends, right? This is what what? Yeah, even the first meetings that that we went to. She took me as a guest. So that’s how I learned a lot of stuff,

Erwin  

man. Please take the first step. Yeah, we thought we saw the meetings, not as frequently but we still have them. Yeah.

Arminda  

And even all the things that cherry put sell. It’s so valuable. It’s it’s absolutely amazing. So you guys are a wealth of information. We try. No, you really are you don’t try you guys work really hard. work really, really hard.

Erwin  

could work harder.

Arminda  

Oh, I know. I don’t think so. You know what you got to live life to

Erwin  

share what’s going on Portugal? We can talk to her about it. Oh,

Arminda  

and you should? Honestly obviously Portugal is such a hidden gem like people think of Italy and Spain. Portugal looks exactly the same. A lot cheaper,

Erwin  

has grown. America is not nearly as attractive with Exchange

Arminda  

right now. No. No, it’s not. It’s nice to go to Europe. Right. Have you been to that side of the world?

Erwin  

A long time. Yeah. All right, Myrna thanks so much for doing

Arminda  

this Q. Thank you so much. It’s been a pleasure and an honour. Thank you so much.

Erwin  

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

 

 

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**Transcripts are auto-generated.

Erwin  

Hello and welcome to another episode of The Truth about real estate investing Show. This week we have on Superstar real estate accountant extraordinaire. I know she’s extraordinary as stress tested her myself with my outrageous tax questions can deduct, fill in the blank a million different ways and she CFO to our own configure investment portfolio of both residential and commercial holdings not to mention our four businesses in one registered charity. Those are each a corporation as well. Are you seeing a single accountants out there? Know that you are a hot commodity? Everyone else? You don’t know the benefits of an in home CFO into the one who understands your books, does your accounting for cheap, takes your calls from the CRA on your behalf and applies for all your mortgages refinances. I literally took a call from the CRA this week while standing in Sherry’s office on speakerphone, so she could feed me all the answers. Not to mention she’s an amazing mother to our two kids, Robert and Bruce. I give the kids silliness. Sherry is the disciplinarian and loving one hand, she’s responsible for all the compliments that we get from our great kids. They’re, for example, she’s the one that got the meat to eat vegetables. Thanks to some early walltime yelling, yeah, straight up revealed that her kids not so much anymore, though. They’re quite well behaved now. And either Reggie’s so right or wrong, something worked out. I’m introverted one, while the kids have regular conversations with adults, adult parties that we bring them to. Yeah, our kids get invited to many functions where other kids are not invited, including their CrossFit class that they attend. That’s meant for teenagers, but the gym trainer and the owner, and the owners believe that they’re well behaved enough so they can, yeah, they’re in a class with kids that are like 510 years older than them. I don’t know where they got this from definitely wasn’t for me. Please do allow me one parenting moment. My youngest, Bruce, he won’t get the mat have his Brazilian jujitsu class. It’s not that big a deal. That’s classic like 13 He’s not the biggest though. But anyways, as you know, I’m a fan of hacks as in like efficient shortcuts. And so I’ve been teaching Bruce tactics to counter the trips and throws those classmates are taught in class versus countering what’s taught in class the most the kids practice, because that’s what they’re taught in class. I’ve been teaching them how to counter those trips and throws and worked out specifically using single and double leg takedowns were successfully countered and took down each of his classmates, including his sister Robin, as super proud, but you can’t win them all. My daughter unfortunately lost all of her sparring matches, so still much learning to be done for all parties, including myself, like they think I can be a much better parenting coach all the time. No one said I was perfect. I’m definitely far from it. Speaking of hacks as efficient shortcuts, now in how they pertain to wealth creation, this is the last call for tickets to the wealth hacker conference wealth hacker.ca. After this episode, I don’t think I mentioned it over again. At least for a while. Wealth hacker dossier for tickets, this event was the event of the year last time, don’t take it from me take it from the people who attended, they’ll all be back for this time. And the entire community will be there as expected. You know, rock star key spire rain Rich Dad trust your talent, of course, I win all the other smaller groups that are out there, they will be there in force. Why? Because our investment community faces the greatest risks I’ve seen. I’ve never seen such widespread financial trouble. These times honestly make 2009 look like a blip for like for the context of a Canadian real estate investor. And there’s more challenges coming. I’m hearing regular requests for private borrowing. I’m hearing from lawyers, I’ve even receiving them myself my email. I’ve never even advertised myself as a lender. So anyways, these are people not investing, but they’re looking for liquidity. As in they’re trying to hang on to stay liquid. As they’re not looking to sell. They’re trying to avoid having to sell for losses. So it’s tough out there. And it’s only gonna get tougher, I expect at least two more interest rate increases. And for that reason, fear is high. The time for greed assume so you’ll want to be learning from the best of the best experts. My friend and sixth time best selling author Derek Foster, who learn to invest while studying Warren Buffett. Derek is outperforming Warren Buffett’s Berkshire Hathaway this year in 2022. Derrick’s up 5%, Berkshire Hathaway’s but even on the year, and while the rest of the stock market is down 20 to 30%. So I want to learn from people who can completely beat the market. I think we all can benefit from that. Jordan Anderson is our leading crypto expert. He’s likely the best crypto expert you can find in Ghana to speak to the subject. And I think if you’re a real estate investor, you understand the need for hard assets and how fiat currency is yuck. So you want to hear what Jordan Anderson has to say and how he’s investing his own money. Jesse is our keynote speaker. If you google him, he’s worth well over 200 million and he started from nothing. Start from nothing used to sleep on his friends couches because he had no money He’s almost been broke many times. Now he’s worth over 200 million. And that has nothing to do with being married to billionaires. So he will be sharing how to overcome challenges and thrive in markets like these cherry chan real estate account, we’ll be sharing how to retire faster with corporate structures, so you can pay less tax, she’ll have some advice and advice. And because, yeah, this is the time, the will the time is upon us soon. Maybe even now, I don’t know, to be investing more cherry in her accounting partners have been consolidating lessons from their experiences working with 500 Plus real estate investor clients. And since no one hides anything from their accountant, you know, real estate investors usually highlight their losses to their accounts so they can account for them properly. Harvest tax losses account. So the truth about real estate investing returns, losses, and more importantly, the path forward cherries on the show today to share about the burning client. I’m asking her why she knows she has told me what the burning questions are, that she’s getting from clients. They include tax implications of short term rentals and an Airbnb, especially when selling where clients lost money. And all that surrounded was around not understanding the risks, setting up businesses and corporate corporations specifically for investing in the United States. Please enjoy the show. I give you my lovely wife, Jerry Chang, pitcher chin.

Cherry  

What’s keeping you busy these days? Planning the wealth hacker conference?

Erwin  

Was that keeping you busy?

Cherry  

I know like you’re taking on most of the work I’m taking on most of the stress.

Erwin  

I think there’s lots of stress and work to spread around. Why don’t we agree to do this?

Cherry  

Well, I think there is a need in the market, to be honest, to answer the question like, What are we doing next? Like how are we going to survive this recession? And I think recently one of our clients sent in a question. And it just got me thinking this is really the reason reason behind why we’re doing wealth hacker conference, like how do I protect my investment income? I mean, this is pretty hard to answer. Like, I don’t know why this client thinks that the the account and the boring accountant here will be able to provide a solution to that question, because we didn’t get everything right. Yeah. But then the reality is that everyone is looking for a solution. And so that’s the reason why we gather all these expert to help answer that question in wealth, the upcoming wealth hacker conference.

Erwin  

I think that’s the answer for for today. When we plan the conference back in 2019. We plan that we will do the conference again back in 2019. We were not thinking we’d be in this situation, going through a gold pandemic pending or we’re already even recession economic winter. But yeah, but that’s what we’re leading to now. Because we’re here to answer what the current today’s problems are.

Cherry  

Yeah, well, I mean, I tell people, I have clients who come to my team and ask, Oh, is cheering not doing accounting anymore? That’s not true. I always tell people that I am a problem solver. I don’t care if it’s accounting tax, or whether it is answering a question for clients how to protect their investment income. That doesn’t matter. I’m just they’re out there to try to solve problem. And today we’re seeing that problem, how to protect your investment, how to protect your investment income as well. So those are the questions that we’re trying to solve.

Erwin  

Because we’re seeing, like, we’re recording this October 20. Again, we’re in recession pending recession, pretty much every investment category is down over the last 12 months. Stocks crypto real estate, where should we start? private lending is a hot topic these days. I’m hearing lots of pain out there. No one that I know personally, at least not that I know of no one to share with me. But I keep hearing from your other lawyers and mortgage people that there’s a lot of pain out there from people who have lent money and people who have borrowed money at high interest rates

Cherry  

is actually really sad. You see it on the news all the time. Like recently, I saw another news article that this older lady who wants to invest in real estate, sign up for a course that’s hosted by someone in BC. And this lady the course heavily promoted promissory note. So private lending without promissory note is essentially you sign a piece of paper saying I owe you to me, and promise me to pay certain amount to me. And that’s it. And there is no backing, no underlying backing, there’s no security,

Erwin  

sometimes there are often there isn’t. Yeah.

Cherry  

So in that situation, the borrower went bankrupt. And older lady it was boring against the property to parties that like sorry to lend out the money. And now there is nothing

Erwin  

she borrowed from like her home. Yeah, just paying interest on that. Yeah, exactly. Where does the money

Cherry  

I mean, within my clientele, I’ve heard problems from a few of our clients not being able to collect. Some clients are losing money on lending, lending now doing private lending. Another client actually participated in this type of scheme. It’s not really a skim. I never really, yeah, strategy. Like it’s been promoted heavily by a lot of people on YouTube as well. I’ve seen a few, a few of the videos from influencers. Yeah. And basically the

Erwin  

ideal place to go to get quality information. With some people throw us in that category as well.

Cherry  

Yeah, sir. Yeah. So like the one like the strategy basically works like this, if you are like, I’m the one that’s boring and lending money to you. And so you need, say, $200,000, as the mortgage, you like, the house is free and clear, you’re just boring $200,000 from me, so I can structure that $200,000 loan, a portion of it is in my own name. The other portion of it is in RRSPs, name my RRSP. And then the last portion of it is the in a TFSA accounts name. So three portion, but it’s the same like total $200,000. But because they are trying to rank the put the, they are trying to play around with the ranking of the debt. So for example, the money that will go to me, so my portion of the law, my personal name, not in any register account is going to be ranked first. So by ranking first against your property that I’m lending money on, essentially, I’m first I assume the lowest amount of risk. So it could be giving me a 3% 5% 5% loan there right now is 5%. That’s what the bank are going for. So let’s say the first 50,000 Is that 5% loan, I borrow from my line of credit, lend it to you 5% 5%, clear, nothing happened now. And then the ranking sets the RSP, that’s right, second, would be ranked second. So RSP second mortgage, so RSP would be the second mortgage. So over there, I’ll lend you $100,000. And because it’s ranked second, so the interest rate is high, maybe 7% 8%. Because like CLA can, you know understand because you go ranking, the loan itself is ranked second you earn high interest rate. And then the last portion is the TFSA. So TFSA account would lend you say another $50,000, that TFSA $50,000 loan, because it’s the third mortgage on the property is assuming the highest amount of risk, and therefore you will give 15% on that TFSA third loan. So by doing this, what the ultimate goal of having this type of arrangement is that majority of the income is going to go to your TFSA account. And a lot of you would know the TFSA account has no tax on it. So when you withdraw money, when you’re earning 15%, on your $50,000 loan, you pay $0 tax. So this is a pretty good deal, like good deal to redirect some of the income from your personal name all the way and then from potentially from your RRSP name to the TFSA account. And you’re while you’re still generating reasonable amount of income. So what happened with this type of structure is that when you fall through, if you are in some of our common case, clients case, the borer is not able to return the money. So what happened is that let’s say the property is 200,000 was 200,000. I lend 100%, loan to value 200,000. Now the property go down $250,000. So when I take over the property, and I sell the property in the open market, I’m only able to get $150,000.

Erwin  

You’re simplifying processes actually pretty ugly process. But yes, yeah. So that 100 control the property and all these all the cash cash flow, for sure.

Cherry  

The $150,000 that you get back from selling the property, the first $50,000 is gonna go to the first mortgage, which is then the like to unregister a personal one. So your first one will be totally recover. You don’t have any goodness, yeah. Now the next $100,000 is going to go into your RSP, because it’s based on the ranking of priority. So then that $100,000, get that 100, that your RSP get back $100,000. Now, then your TFSA also has the last the third mortgage, the $50,000 that we mentioned, but there is nothing going into the TFSA account, when TFSA accounts incur that $50,000 loss, there is nothing to write off against. That’s it, it’s gone forever. So you can’t write it off as a capital loss in your personal name because of the ranking. So when things go, Well, this type of strategy worked really well. But when things doesn’t go well as in the example, like I mentioned, what’s going to happen is that your TFSA account, taxpayers TFSA account is going to absorb all the loss. You can’t recoup any of the last because TFSA account there is no it’s not taxable. The amount that you earn in the account is not taxable. The amount that you lose in the account is also not deductible. Oh crap. So then you lose the contribution room, you lose whatever you accumulate there. You start from scratch, you lose the contribution room to well, you contribute it that $50,000 somehow at some point but it’s gone, it’s gone. The contribution room is gone. RSP is your contribution when we go on to if you lose money in The RRSP Yeah, the contribution room is used up when it was done, it was used up, it’s being used at the time when you count your bill, not whether you take money out or not, or how our portfolio is performing,

Erwin  

right? So when you do take RRSPs out, you’re just taking less, you never actually get to have a capital loss.

Cherry  

You don’t have capital loss, you have less money to take out, oh, arguably, you would have made some money on the tax saving, right, arguably, but that’s how it works. So those are why those strategies don’t work now. So for people who just lend money out directly using their own personal name not using TFSA or RSP, if there is a loss incurred, you will be able to write it off likely as capital loss. You could potentially write it off as business loss. But it is a lot more strict in terms of rules being applied, if you want to write off as business loss,

Erwin  

but in the case of the the old lady in the article, not likely, yeah. This sounds like an investment,

Cherry  

it will be more likely a capital loss, meaning the laws would only be able to be apply against capital gain that you make

Erwin  

wunderbar. So what are we were talking offline about private lending. My own thing about private lending is I don’t personally want to do it because I don’t want anymore I already have we already have an exposure in real estate. I don’t want more exposure to the real estate market. I don’t know if everyone understands how to gauge risks.

Cherry  

I think the biggest challenge with people who have promissory note is because it’s not promissory note, private lending to private lending, is because they want to be able to make a high return and not really understand their risk, understand the risk or not really needing to lift a finger. Literally, the lender don’t need to pay for anything. So it’s always the borer who paid for the lawyer, the lawyer, the borrower would pay for the mortgage fees, lending fees. No, yeah, no brokering fees, Dad’s velcroing fees. And then as well as probably the institution fees, all the fees are being borne by the borrower, whereas the lender really just show up at the law of legal office to sign. So a lot of people and clients are attracted to these type of deals, because they’re easy. And then you get like 10% return, like Where else would you be able to do that by signing that away. But people don’t usually do the level of due diligence, they only focus on the percentage return, they don’t look at their risk tolerance. And that’s where the biggest problem is, I personally have no problem with people investing in this type of strategy or investment vehicle, it’s just that you have to understand that hey, like, if things go south, you have that risk. And people don’t focus on the risk side, they only look at the 10% 15% or 20% of it is promissory note. Right? They don’t

Erwin  

understand the risks. Yes, that’s the problem is ever since a friend of ours had had their second when the owner stopped paying the first and they had to take over. It’s pretty painful. Like there’s large legal fees, like it was over $10,000 in legal fees immediately, that our friend had to pay being the second in order to take control the property, and then also that the start making the payments on the first mortgage. Right? That’s not something I want to get into. We’re not in a financial position to be taking on other people’s mortgages. I don’t know if everyone understands these things.

Cherry  

Yeah, like so what happened in that particular property was that I actually have a YouTube video on it. So for anyone who wants to go on my YouTube channel, there is a video on hydel, I think turning $50,000 losses to $100,000 or $200,000 gain. So what happened was that so our friends mortgage was second to the lender, a lender, a banking lender, a bank and everybody’s bank. Yes. So the borrower was not able to make any payment anymore without telling her so she’s a second mortgage holder. So the bank is starting the foreclosure process ha says getting all the legal fees exactly, and adding on all the fees that would otherwise be charged. And so now all of a sudden that first mortgage say $200,000, all of a sudden there’s an additional $50,000 on fees being charged by the bank. And the probably you would property would be able to be sold for like maybe $300,000 minus all the fees, maybe net 250. So then there is no room to repay her own loan amount of the loan could be $50,000. So so then what she did is to take over the entire property. And at closing when she took over the property, the bank said that we can’t sell it to you because the owner the previous owners still owe us after paying all the fees and other $10,000 to pay it. She had to on top of the $50,000 loan that she had she had to actually pay and other $10,000 Cover the owners. The owners should For the issue, the fees being imposed by the bank. What people don’t understand is that when you’re ranked second and your loan to value is really high, there is nothing left, realistically, legal fees until legal fees. So what she did is she then turned around and then renovated that property and subsequently sell it for a lot higher. A few years, but not immediately.

Erwin  

She held it for at least three years. Yes. Right. So the market saved her.

Cherry  

Yes, absolutely. And it’s not for everyone, right? Like how many people are able to close the property and resell it for a profit? Exactly. Yeah. Because

Erwin  

love people got in probably got into private lending, because they didn’t want to be landlords. Now, here’s someone who is forced to become a landlord. Yes, yes. And take on a mortgage and take on, I forget who lived in the property as well if there was a tenant or not, to the previous owner. But so to me way too much risk for the return. Just me personally,

Cherry  

like everyone’s priority investment priority is different. And there are options out there that could generate similar amounts of return, or would give you similar amount of return. But with lower risk. Like we mentioned, our wealth hacker conference speaker, their foster, he was on the show before he talked about how he used the stock dividend portfolio to retire till today. I think those are a lot less risky, compared to like doing and truly passive. Yeah, exactly. So those are the options available, and which is why we’re having this conference to present all the options available. There’s not one answer to every single question

Erwin  

there isn’t. But we believe in people having options, like our own our own investment plans for next year, like we’ve talked about growing our dividend paying portfolio of stocks. And I can’t think of anyone better to learn from the derrick Foster. Derek is actually up 3% This year, while the stock markets down 23%. And so as the real estate market, I don’t know where the real estate market is. But yeah, we’re probably down somewhere around 23% to this. But you know, we made some smart decisions last year, we didn’t get everything perfect, but we locked in some mortgages. We refinance a lot of them at the beginning of the year, as well. Again, I kind of wish we sold some at the peak, in order to have more cash, we didn’t get everything perfect, but we did better than most.

Cherry  

We’re very blessed. Yeah, we’re

Erwin  

very blessed.

Cherry  

There’s always something that in your life, you can look at. Whether we were able to sell it at a peak or were losing money, we have some unrealized losses. We’re so very blessed. We’re so in the position to say that hey, like we are still surviving. Like we have no financial problem, knock on wood. We’re doing okay, we have no health problem. We’re doing like way, way, way better.

Erwin  

I’ll trust you that we’re okay financially, since you have all the books. And I just trust that you know that number. Molly, before we start recording, we talked about other things you see your clients doing. We talked about, like markets and stocks and crypto, we’re all down. I don’t know anyone who’s really avoided that. That’d be accurate.

Cherry  

The stock market is down and we see losses in the tax reporting side from tax reporting side. But you also have to understand that tax reporting side, it’s like four months later, so like, oh, maybe a year later. So we’re seeing it in what we do. And we’re seeing it from our clients books. We’re also seeing a lot of people investing in or at least engaging us to start talking about structuring investing in the US. We also see a lot of our clients trying to increase the cash flow by renting all their properties via short term rental.

Erwin  

Okay, said a mouthful. Let’s just before we move on for stocks and Kryptos, for example, what is the tax treatment of losses? What is the what do people do with those losses?

Cherry  

So while that is a great question for tax purposes,

Erwin  

so as in crying bed at night, so

Cherry  

you’re talking about private lending losses, or

Erwin  

yeah, let’s handle each one private lending losses. How did they I think you already covered that.

Cherry  

Yeah, private lending losses, I

Erwin  

already covered an RSP you’re just Sol

Cherry  

Yes, there is nothing, you can’t really claim anything. If your private lending loss is incurred in your own name, you’re the lender and you lend it to small business, you might be able to claim something called allowable business investment loss. So you have to check and they always see I always do audit. The benefit of claiming allowable business investment loss is that even though it’s only 50%, again, if you lost $100,000, only $50,000 is can be claimed that 50,000

Erwin  

claim. So continue with your example $100,000 loss 50,000 can be deducted from your income, regular income, regular incomes to reduce your tax liability, yes,

Cherry  

but if you lend it to someone that is just using it to for whatever reason, as an investment not a small business, then chances are you will not be able to claim it as allowable business business investment loss, you will have to claim it as capital loss, capital loss is still 50% but capital loss can only be applied against capital gain that you make. Okay. So it gets complicated.

Erwin  

Okay, speak to an accountant. Mm hmm. Generally though the people that we see losing money in private lending, they’re lending to real estate investors, the landlord laborers are,

Cherry  

yeah, sometimes people aren’t using corporations, sometimes they’re not, right. So

Erwin  

after lending their lending to a corporation or an individual is that,

Cherry  

that makes a difference, that makes a big difference. Because a lot of them are doing it as an investment, right? They’re not doing business, right. So depending on the structure, and see if the corporation that you’re lending to qualify, then you may be able to have another way. And then which is a lot more beneficial. To be honest,

Erwin  

he gets a lot of borrowers are using corporations, that would lend to the corporations to protect it or protect their liability. Assets, protect, protect their personal assets, oh, boy, this could all get really messy, more messy. And as you think about private lending, I didn’t want to take someone’s house from them. But that’s great. You want to secure a second mortgage or a first mortgage, whatever on your home, I don’t really want to take it away from somebody. Which is why again, like I don’t want to get into this right, versus a lawyer that I met for meeting that we’re doing, we borrowed a friend of a friend’s lawyer, lawyer office, and then I got to meet the lawyer owner that wrote that practice. And we are talking about real estate and how they how she originates private mortgages. And it was really interesting. What do you what’s the underlying security? Right? He says, all these are like 100 unit apartment buildings by like investors with like, 30 years, 40 years track of years track experience, never lost money. I’ve never lost my technically Oh, fascinating. Then they said, Oh, how can I invest? She’s, she’s like, first of all, if I like you, you have to have a million dollars to invest. It’s like, oh, sorry. My point is that there’s wonderful stuff out there available for private lending. From the surface level, there’s not advice, obviously, from the 30,000 foot view, it looks like a wonderful opportunity. But it’s only available to the ultra wealthy.

Cherry  

Well, to put it another way, like these people would have a bigger appetite for higher risk stuff as well, like they can risk to lose some of the money. And I’m pretty sure that they would have not put the entire million dollars in that particular one property, probably over a month. But yeah, so then, if you are able to afford to do that, like, that’s the easy way to diversify your risk. Lend it to different people, different borrower to diversify. Exactly. So

Erwin  

it’s the thing I think the most people most people get, like, they’ll look at someone’s like Instagram, for example. And they’ll like them, and that’s enough risk analysis for them. I like them. And we’ll let the lend to them. Oh, yeah, move on. We got a lot of other things to cover. And it’s cottage rentals bigger than us investing?

Cherry  

Well, they’re both I wouldn’t say necessarily caught Asia, I think a lot of people are trying to do college and short term

Erwin  

rental. Yeah. What are clients asking about in that area?

Cherry  

short term rental is tough like they like I mean, you and I did short term rental in the past, we try to do it passively. Meaning that we hire a property manager to do it and pay 20% Pay 20% and all that. But then if you really look at the numbers, I don’t know if it is necessarily better than having strict rental. Now we shut it down. Yeah, we shut it down. But like in general, I’m talking about in general. Now, a lot of the people have to understand that like having that short term rental a lot of time means that you do have to handle the tenants on a regular basis. It’s a real business. That’s a business like a hotel. Yeah. So what all it also means is that there it comes to a different type of tax implication, especially when we talk about selling the short term rental. So a client of ours is considering buying this cottage rental that has been running as a short term rental, and the seller is asking for HST on top Oh, so and so this is I don’t know the exact number. Let’s say you find a property for a million dollars. And the the 10. The seller is asking for HST on top the reason why they’re asking for HST on top is because they have been using the property for short term rental and short term rental are primarily consider the rental period for less than 30 days. So when you do short term rental and your property only does short term rental for sure you’re going to your property is considered to be converted to commercial property, you’re conducting commercial activity and therefore, you would have to it’s a commercial property when you sell it, you will have to charge HST if the buyer is using it for personal use basis. If the buyer is also going to buy it as a short term rental, they could sign the form and get registered for HSC. They may already be registered for HST, and by providing the valid HST numbers to the lawyer or causing, you can get exempted from paying the HST as the buyer, but at some point that property have it’s ever been converted Back to a longtime residential or for you to use personally, then you have to pay the HST on fair market value at the time of conversion. Damn, I wouldn’t buy this. Yeah, it’s no different than like buying a unit at the hearse resort. If you for any of you who knows our D hers is a it’s a resort place up in

Erwin  

hotspots on resort and has condos available for sale. Exactly. And

Cherry  

you can put your unit into a rental pool. And for those of you who put the rental the unit into your rental pool and the hotel, manage it and rent it out for you, they have to charge HST on the sale,

Erwin  

how much of the year does have to be rented for to be considered commercial?

Cherry  

So see, this is a great question. And this is the reason why I have to prepare this. This stack of paper is actually not an easy answer. So typically a property as consider a residential complex in the eyes of the excise tax act, provided that is considered like you know you live in it’s a house, it’s a house or a condo unit or townhouse, whatever. Now, so there are typically the rule is that it’s always a residential complex. And so unless it’s brand new, you don’t need to charge HST on the resell value. Unless three conditions are all met. The first condition is that it’s it’s like a hotel is being run like a hotel. So what does that mean? You’re hurt? Yeah. So what does that mean by run like a hotel, then that means regular housekeeping, regular housekeeping, there is a common reception area, that could be one of the conditions that they look at, you may not have a common registration area, but doesn’t mean that it’s not a hotel. It’s always available for public to rents and short term rental. Those are like some of the characteristics of a hotel. The second condition is that it is not used primarily as a place of residence. So it’s not used primarily for someone as a long term place to live in their primary home. Yeah, so it’s not 50% More than 50% not. So you have to like it’s written in such a convoluted way. So then you have to go like not not, so you’re not hotel, you don’t live in it for more than 50% of the time. And then the last condition is that all or substantially all of the leases are for less than 60 days. So what’s all or substantially all, meaning over 90% of the leases are for less than 60 days. So how do you prove that your number is less than 90%? And this is on a

Erwin  

service project. Second of all, the midterm rental people are less paying attention. 60 days is important number.

Cherry  

Yeah, 60 days is actually specified in the act. It’s not me making up the number. It gets a bit confusing, because what

Erwin  

post municipalities are saying 30 days is the cutoff between what’s considered short term. But to appease disposition tax purposes, you need to be over 60 days.

Cherry  

Yeah, for so then you don’t have to charge HST on the sale of the property. Oh, yes. Oh, absolutely.

Erwin  

The million dollar property example that’s $130,000 HST, I would

Cherry  

argue that million dollar which would be inclusive of HST, so it’s divided by 1.13.

Erwin  

But the seller is covering their ass by making it on top.

Cherry  

Yeah, yeah, that’s exactly what the salary example like the the salary is doing in the examples. Yeah, so but then we would have to advise our client like, hey, like, at some point, if you change the use, you have to cough out that, whatever. 100,000 $130,000. At some point, she’s complicated. Oh, it is complicated, but you may keep it as short term rental forever, then you have no issue at all. You don’t care. Interesting. A lot of those resorts, even though in BC they’re selling it plus GST or plus HST, selling it as a set business as a short term rental business. So those are like you have to look at it almost differently, even though there are exemptions. So looking at it, like you’re buying a business. Yeah, exactly. So when you’re buying a business, obviously HST is applicable. But then you can get exempted from paying the HST.

Erwin  

And I’m guessing this is like kind of like a wild wild west, because for example, it’s I see it a lot there on social media, people are doing rental arbitrage. Say for example, you were to rent a property you owned to a property manager, who’s gonna then operate our short term middle term rental business, put it on Airbnb, for example. So even though your lease is with the property manager,

Cherry  

so it’s probably like a residential lease, regular residential lease, then you don’t know what that person is doing. And if they turn around,

Erwin  

everyone knows what they’re doing.

Cherry  

No, like, if I’m the landlord, I land I rent it to you. And then you turn around and real realistically, if you turn around and rent it as on Airbnb, then how would I know? How would I know? We’re not suggesting something like this? No, I’m just saying like that. That’s That’s the reality. And then how do you define it? Like, technically speaking, technically speaking, I would still have that same sort of liability, potentially. But I don’t even know this position. Yeah. Oh, boy. I could, but I don’t know. Yeah, we

Erwin  

don’t know. That’s my point. That’s my point. Is that this kind of wild wild west? Yeah, it is. Because for example, I’ve spoken to a couple of investors who are doing these strategies, and they do not have short term rental insurance. They tell me that the property manager does. I’m like, this is kind of gray.

Cherry  

Yeah. So how do you enforce your property management is going to pay you so long as possible like for the damage or destroy damage

Erwin  

to them like Oh, great. I tried to simplify my life only to see more people

Cherry  

so the Airbnb like the short term rental. So like, I also got client who asked me about cottage, the same criteria apply actually this literatures about the cottage space on the cottage example.

Erwin  

Okay, but the rule should apply to a condo apartment. Because I play Yeah. Same as with the Deerhurst example that doesn’t even have a kitchen. You don’t know how you can argue residential, and then there’s no kitchen. Well, while there argue that that has, yeah, some do. Yes. Yeah. Interesting. So people need to pay attention to these terms. And then I would say is from the investment standpoint, like this can’t be your only investment strategy for that property. But you need to have multiple options. Absolutely. Because this there’s a, there’s a chance to this one, this one option will fail since somebody municipalities are banning short term rentals. And then once all the short term rentals, join medium term rentals, then they’ll have there’s a chance to be too much supply. And then if you ever need to get that strategy, and then What’s plan B. Right? Do what a lot of people we know are doing trying to get people off of Airbnb just renting their property directly. Yeah. All right. Anything else in college rentals, anything else on short term rentals? Are people making money with them? Is it profitable?

Cherry  

I think to some people they are if they are hands on naturally is profitable. You’re earning the management. Good. Good. See, right. But if you’re not hands on, like how we operate it before, it’s harder to make money. Yeah, you’re just escaping the landlord tenant board control. But you’re not necessarily making a lot of money.

Erwin  

Yes, yes, I’d have more much more expensive property than I hope most people do. Yeah. And also, we don’t generate the rents like a cottage would. A friend of mine told me yesterday she paid $6,000 in rent for a week for a cottage. But like 1000 square foot bungalow with a hot tub. $6,000 We got a deal. Wow. Not we didn’t get that kind of prices. That’s where we failed with our Airbnb.

Cherry  

I mean, we got a deal from for our own college rental.

Erwin  

But I would also add, like, I don’t know how long this lasts. I think this is this is a bit of a vacation, boom. I don’t know if the boom continues. And also with so many people getting into it. Will there be an oversupply of vacation properties? I don’t know. But I see risks. I see rents everywhere. There’s opportunity as well, potential opportunity. I’m not saying no to it, just be aware of it. So why are people engaged in you speaking to you about us properties,

Cherry  

they’re our clients, then they’re looking into investing in the US. And we got lots of clients because they got sold to these properties because they are supposedly providing a lot of return. cash on cash return. And no rent control. Everything is better and free. Some of them are investing in like the Troy so they’re okay. Yeah, so not necessarily all in Florida. Okay, Texas. Some of them yeah, in Texas as well. Yeah. Dallas.

Erwin  

I know claims and friends of mine. They got whacked in coral. What is it? Keep Coral Coral? Yeah, very sad. And yeah, I was sharing with you before we were recording like I was reading The Economist this morning. The advice that that insurance adjusters are giving they’re giving hurricane victims is photos are everything. Get your claims ASAP, because some insurers are going under? Great, some insurers will go bankrupt and then I don’t know, I don’t think we get paid. And then to add to that the fastest growing insurance provider in Florida, and they also have the highest market share is a state backed insurance company. So meaning it’s a government insurance company is the fastest growing. That’s to me, this is fear. Private industry doesn’t want to share these properties. Right? This is Florida is supposed to be like, you know, the home of capitalism. Here we have a state backed insurance company.

Cherry  

So like I well, I personally what consider having us property, but after I crunched in the number, the biggest challenge that I see that people don’t usually mention is foreign currency exchange rate risk. I think we were on our way to Orlando to our marketing conference. And sitting next to me was this lady who’s also a realtor, a local artefill realtor, and she bought this property in Florida, which is around $350,000 market, a detached house in a gated community. And I was lending the whole time the total three hour flight talking to her about this property. And she shared with me the number like it could be rented for $2,700 a month. And property management is about 10% or $270 a month, which is all great. But then when I come back and crunching the number, the biggest challenge that I have is the foreign exchange currency risk I have on paper, it looks great. But then because of how the US dollar has gone up, in relation to the Canadian dollars, the probably the US dollar has to stay at that point for me to make money. So what I mean is that back in 2008, basically the US dollar is on par with the Canadian dollars, if at that point in time you just buy a property in the US, which was also the best time to buy. Even if it doesn’t go up in value, just by holding on to the property and you saw it today, the property would have gone up the conversion of the Canadian dollars. Sorry, the US dollar has risen for like now 1.42. Canadian. Yeah, somewhere around there. Yeah. So even if the property value doesn’t go up in value on the fly, you make all your money in ethics, which contrary to today’s market, you’re paying 1.4 the market now is terrible getting in right now people don’t talk about that 1.4 conversion, which is which makes me worried because you know, like it’s realistic. Are you going to not spend your money in Canada? Are you not going to retire in Canada? What are your long term plans with owning that property?

Erwin  

Or being able to earn income in US dollars? Great. Yes, absolutely. But if I’m investing right now, I’m probably buying Canadian stuff. Yeah, because my goal was further.

Cherry  

Yeah, so like people don’t talk about at 1.4 40% conversion. So you have to pay 40% more. So that means in the future, if the dollar goes down against the Canadian dollars or US dollars goes down, then the property has to go up that in value big enough to cover your foreign currency loss. So I hope people will actually understand what I’m talking

Erwin  

about to do like, people, I think things are, especially our audience will understand like cross border shopping. Yeah, you go cross border shopping. You know, you go to Buffalo. When when the dollar is closer, when the dollars when are Canadian dollar strong. It is not strong at all right now. Yes. Dollars incredibly strong. It’s been one of the best investments of the year.

Cherry  

Yeah, exactly. So then you, you have to understand that it’s not good value to go back to American stuff. Yeah, like, Well, I’m not trying to say you shouldn’t do it. And you just need to account for the potential that the dollar is going to go down. And the house is just another variable that you can’t control.

Erwin  

But even if you put in you know, put yourself in the Americans shoes, you have a super strong dollar. They are probably coming like when we were Niagara Falls just last month, there were tons of Americans are in Canada, because their dollar is so strong. It makes sense for it to go for them to go the other way. Anyways, but yes, foreign exchange rates risk is something it’s a big mountain to climb, if you’re going to buy today. Yeah.

Cherry  

And then the other thing that people don’t always talk about is the cost of compliance and costs of setting up a structure. So I got clients who come to us and say, like, we should set up all these corporations or I talk to this lawyer in this particular state, and they said that I should set up an LLC to own these properties. C stands for so I think LLC stands for limited liability corporation, but LLC is actually kind of like a follow through structure. So it’s just provides limited liability protection to the person who owned that LLC. But essentially, ultimately is the person who’s b Who owns the LLC that reports the income and expenses. It’s a flow through entity.

Erwin  

Where’s it based? Where’s the entity base? State, okay, it’s

Cherry  

because there’s a tax filing status. Let’s put it that way. It’s

Erwin  

it has to be in a state. It can’t be just being the country of us. It’s a

Cherry  

tax filing status. It’s not something that you create you like to the IRS that you’re filing as LLC. Anyway, the point is, with that LLC, see it doesn’t recognize LLC, okay. And so LLC is being recognized as corporation in the CIS eyes, because it has many attributes of a regular corporation. So when you file taxes

Erwin  

are coming together to different tax law structure. Yes.

Cherry  

So then in the US you file as if you are owning the property in your personal name. In Canada you are filing because you need now need to file both taxes both sides of taxes in Canada, your personal name like CLA is considering that LLC as a corporation. So now you have a foreign corporation. Now, if you pay tax on the US side, under perfect integration, both psi, the Canadian government would give you credit for what you actually pay in the US. But because you have this LLC set up, the government doesn’t recognize it. So you pay tax in the corporation. In sorry, in the US, you pay the tax under the LLC and the personal name over here in Canada, you don’t get recognized for the tax that you pay. So any money you drew out from the LLC, it will be taxed again, in your personal name in the Canadian side, so you pay double tax. And so like, the biggest mistake that I’ve seen is that, hey, like, if you do that, you just work with a lawyer, random lawyer in the States, they may offer you certain type of deal, it would only be applicable, those structure would only be applicable to the people who are located locally in the States, they’re not necessarily applicable to people who invest from Canada, crazy. And then when we promote, not promote, when we put forth a plan that would avoid double taxation, it’s often very complicated, and clients do not like it. And clients do not understand it. And then clients don’t want to pay for it. And clients also didn’t understand that they, they have to set up like three, four entities in order to achieve that objective of not paying double taxation. They don’t take into account the potential costs of filing. That’s what I’m trying to say. And they’re surprised by like, Hey, I have to file taxes for three entities with this much money. And on top of that, you’re Canadian psi has reporting as well reporting risk responsibility as well. So it gets like super complicated. If you’re buying a single family rental gets really complicated on one side, on the other side,

Erwin  

sounds like to me you need some scale for, for this to make sense for the structure. Yeah. And also, you need to be able to make so much money to cover this foreign exchange risk, and are highly motivated to invest in the US.

Cherry  

Well, I feel like we have gone through so many negative things. Maybe you can talk a little bit about the positive things.

Erwin  

I honestly don’t know, we’re heading to a recession. Yeah, there’s gonna be at least two at least two more increases in interest rates in the US maybe more like right now not motivated at all. Right. So

Cherry  

are you suggesting to the audience do nothing?

Erwin  

I can see, like even for cross border shopping doesn’t make any sense right now. Right? I probably wait until I have more clarity and weren’t thinking where things are.

Cherry  

So don’t do private lending. Don’t do cottage short term rental? Don’t Don’t do

Erwin  

I think they’re all fine. Just the investment has to be quality. Right? My challenge is I just see too many people do not know how to judge quality and risk.

Cherry  

How do they get learn how to judge?

Erwin  

Like the whole reason why put on the conference, best practices from experts? Right? You know, we’re down on our crypto, we had the leading Canadian expert on cryptocurrency, and he’s Jordans gonna be telling us exactly what what and when he’s gonna be buying. Right? These are things I asked him for our speakers to say the same thing with Derek Foster, I asked him to share what are you buying? And when are you going to do it? Alright, and how much Alright, he’s gonna be sharing these things at the conference. Now, you and I, we’ve seen some horrible, horrible things happen in real estate, where we’re sharing what didn’t work. And you know, what we think will work going forward and where we’re going to put our own money going forward. Because I still believe next 18 months, two years is our generation’s chance to build, like, significant wealth. This is the time this is this time we’ve all been waiting for. This is our our Great Recession of 2008 2009. This is a repeat of that opportunity. And this is just a repeat. This is just a cycle. Great. Your wealth Hacker dot see if you know anyone wants more information. Journey funnel forwards want to leave off with bigger does not necessarily mean better.

Cherry  

Yeah, so like I’ve I’ve gone to multiple conferences and all they like to talk about by no means I’m just talking about real estate investors. But I’ve gone through all these conferences, even the one that we went to Orlando during the marketing conference. Yeah, it’s a marketing conferences, people always talk about gross revenue. I sold a million dollar US using a one funnel, it’s $2 million dollar side by no means is a bad number. It’s like great, great number. It’s a number that people are striving to get to. But I just wanted to reiterate and which is also the purpose of our conference, is that bigger is not necessarily better. And I just wanted to remind using my little voice to remind people if you want to listen that, you know, whatever you’re investing is just a means to an end. And don’t forget your end or your initial reason to invest for us is to provide a secure financial future to our kids as well as having the financial freedom or just freedom on its own. So like is it going to be real estate can it be something else? Or is it just purely real estate? I don’t know. I’m still learning. I’m Social. Trying to figure out that solution. And I mean, I’m hoping to be able to present that to add the confidence and message to you to everyone. But at the end of the day is a means to an end. Bigger is not better. So I could be owning 200 doors, but I could be negative cashflow. $100,000 a month, you wouldn’t know that. Yeah. So just keep in mind that bigger isn’t always better.

Erwin  

higher returns is not necessarily better. And chasing the

Cherry  

shiny object can be that that shiny object could mean running a marathon, that shiny object could mean doing different things with your kids as well

Erwin  

in the portfolio, because we you and I have been talking about that we need to shift more of our investment towards cash flow. We’ve been so focused on growth and wealth, which has worked are great, but doesn’t necessarily give you freedom. So hence our shift to more generating yield. And then that’s again, something is gonna be covered at the conference. Yes, absolutely. The How to the what and the when in details. Yes, as little risk as possible.

Cherry  

And then never lose sight of your own. Why. Amazing. Thank you, Jerry. Thanks for having me. Don’t forget to subscribe to my YouTube channel.

Erwin  

What’s the call?

Cherry  

It’s called youtube.com/real Estate Tax Tips. Amazing. Thank you. Thanks.

Erwin  

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

 

 

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**Transcripts are auto-generated.

Erwin  

Welcome to another episode The truth about real estate investing show. This is Erwin Szeto. The show is for Canadians. And did you notice how retail stores are already playing Christmas carols. I was bothered by this until Christmas truly came early in the form of proposed legislation from the Doug Ford government to allow triplex on residential lots. This is the toughest talk I’ve ever seen from any government in Canada at any level, where we are going to increase housing supply to the missing middle that goes against municipal governments who are voted in by NIMBY Christians constituents. And I thought it was hilarious how the minister even mentioned how the NIMBYs have gone too far so far as to become bananas. Banana is an acronym for the term was introduced to me by one of our 17 listeners, Christians spiritual goal, and that stands for build absolutely nothing anywhere near anything. acronym for Dana. I get it. No one wants more cars parked on front of their homes or on streets or condo towers that casts a shadow on their homes, nor they want the values of our homes to increase by less. But less more supplies created. They’ll be less homes for workers, people who pay taxes and contribute to our economy, you know, greater good stuffs anyways, and I can’t wait to get into the details and share more at the wealth hacker conference on number 12. What the most of the most optimal real estate investment property is going to be in a rising interest rate environment inflationary environment with an LTV landlord tenant tribunal that’s eight months in backlog, including how to apply the list technologies to maximise rents and minimise expenses, wealth hacker.ca for tickets information. My discount code for you is the five letter word truth Truth. If triplex by rate wasn’t good enough, the Bank of Canada looks like they’ve pivoted. Some people think it’s bad that interest rates went up 4.5% Understand that the market expectation I believe 60% of those polled, expert poll analysts were polled. Were expecting point seven five Governor tiff macrons talk has been mostly very tough talk in terms of fighting inflation. But this most recent talk that he gave is the most balanced, it’s ever been. As he mentioned, the economy is softening in that economic data points. And also from the economic data points that I follow. Like there was a flash Amazon Prime Day sale. And also, again, anecdotally, restaurants are noticeably less busy. Manufacturing inventories are down all over the world. And they’re going to continue to go down as businesses are ordering less. They don’t want their cash tied up in inventory in during a global recession. That same time. My friends who have been travelling for mainly for pleasure, or my friend that works on Air Canada, they tell me how busy tourism is, for example, Italy is still busy.

Erwin  

Understand that the busy season for travellers usually ends when the summer ends. But travel was still busy throughout September into October. And airlines are already continuing to add more flights, even though old prices are high. So there is room for inflation to continue to come down in the travel sector. But in a lot of the other sectors, it’s brought the economy down. Why is point 5% Good news for investors, I anticipate future increases will be fewer, less frequent, and we may even go flat pretty soon, then we’ll see only a slow rise until rates are cut again to save the economy. So I’m guessing one, maybe two more interest rate increases, I would guess less than point five. Again, I’m guessing there’s too many things going on the world that can happen. And so these things change almost on a daily basis. But this past week has been some major economic announcements. And again, at the moth hacker conference on November 12. For one day, all day event, I’ll be sharing more how to take advantage of this information for an optimal real estate investment portfolio. Also, we have the best vendors on hand all the folks that I do business with or recommend in all in one place under one roof. All for one day only. We have vendors coming in from all over the country. We have a bunch of services with list technologies. For example, front lobby, the owners of front lobby are based in BC so Vancouver so they’re coming to trial for this they own landlord credit bureau which most people may know more be more familiar with landlord credit bureau. I use it in my own portfolio. I’ve imposed it on my property managers to use it for my clients as well to hold tenants accountable to their credit, rent Panda, a high tech screening and leasing services. They’ll be in the house as well a single key who just bought neighbourly which was big news. We have folks coming in from Alberta just for from single key for this event for single key is for those do it yourself, do it yourself landlords to help when they’re screen tenants and we’ll have some pretty good offers coming up thanks to single key now they also offer offer rental insurance, which is something I think some people would like, especially us with deeper pockets out there. We have my personal insurance guy Jason Lowe missing the financial more and more people. A lot of people have done really well the last few years I know right now is ready to tough, but in general overall, if you’ve been at this for over five years, you’ve done really well. So I see more and more people getting interested in whole life insurance. Because honestly, it’s what the rich people do sweet editions at Tran for all you Home Edition geeks design geeks and it will be in the house like he’s my go to guy who have questions around zoning can weaken them legal second suites my good friend, you know he’s also in addition design renovation and construction, you definitely want to meet him Dalia Barsoom Of course one of our Platinum sponsors of streetwise mortgages, who is probably the most in demand mortgage professional in our community. You want to hear what she has to say on the investor journey, because no investor journey happens without inexpensive money. And if you haven’t been paying attention, it’s those who have expensive money, who are the people who are hurting really, really badly right now including bankruptcies that I’m getting into arguments with people over social media,

Erwin  

multifamily expert Seth Ferguson in the house, he’s the guy that can teach you how to do apartment buildings by yourself or if you want passive registered options. You know, folks who are Licenced under Ontario Securities Commission, like behind the strictest level of securities Securities screening, we have Equitana Inc, for real estate developments and real estate investment trusts short form REITs. So if you want either growth in your investment portfolio or if you want, income, equity has options for you. We have exempt market dealer Steven Vlasic and the house representing Pinnacle wealth, Pinnacle wealth, place, my money, my registered funds, and my mom’s registered investments are doing just fine in this market. That’s just one of the few things that are green in my portfolio. Shout out to post investments entrepreneurs organisation, Toronto chapter is also in the house. This is a private membership group for seven figure entrepreneurs that Terry and I belong to. If you are a business owner, I can’t recommend this enough that you’ll be able to speak to Yannick a while he’s who’s representing EO, Toronto at the conference number 12. Keller mortgage is the lender of choice for private fast funds for your burgers or your flips. They’ll be there for 12 as well, they’re coming up on the podcast as well. So not only will can you borrow money from them, they have investment opportunities in the business itself, should you be interested, they are registered as well there and he’s that market dealer. So not a recommendation. Talk to them. If you want more information, all the connections any professional investor needs will be there under one roof, so you don’t need to go anywhere else. And that’s on top of our expert speakers that I’ve talked about enough on the show. Speaking of expert speakers today, we have daily Barsoom who’s everywhere these days and who can blame her. She’s incredibly popular because she’s she’s really smart in your here. When we go through this interview. She is diligent in her underwriting. She coaches her clients who guides her clients towards quality, which I think more people could use that going into this market. Unfortunately dilly dally and streetwise are picking up the pieces from deals gone sideways brokered by other mortgage brokers or people who just got themselves into too much debt too expensive debt. I know the feeling of having to pick up pieces it’s an incredibly rewarding work but I feel so sorry for the people that got hurt. So today we chat about where rates are going, what private mortgages, rates and terms are going sideways, what investment deals are going sideways that we’re the both of us are having to pick up the pieces on from other you know, we had nothing to do with the origination that just coming to us after after the fact to help them get out of this mess. Some tips on how to weather this rising interest rate environment, including joint venturing, who our favourite economists are to follow where the challenges aren’t getting new financing, apart and building financing, update and much, much more cheap debt is what makes the world go round. Which benefits real estate investors. So you don’t want to miss this episode. Dalia knows how to get it, get that cheap money. She knows how to maximise it. And most importantly, keep you safe. Have a pen and paper ready. Give you Dalia Barsoum. Medallia what’s keeping you busy these

Dalia  

days? Hi, everyone, what’s keeping me busy these days? Really, that new environment we’re in and the questions from clients, the solutions, the navigation of the new qualification rules. All of that is what’s occupying my energy where my energy is going.

Erwin  

So let’s dig into it. What’s like the top question.

Dalia  

The top questions are about cash flow pressures and finding the impact of the rate increase on budgets, especially for clients who are on an adjustable rate mortgage or a variable rate mortgage where the bank has adjusted their payment because they’ve hit something called the trigger rate. So the questions are Dalia the rates have gone up on multiple properties that has eaten into my cash flow or on my primary residence has increased the payment. How can I alleviate the pressure? That is the common question? That’s the first question we’re hearing right now? What do I do? And I’m happy to talk about some of the solutions were proposing. And then the second question is, I want to continue to buy properties because the market ahead will present opportunities but I’m hearing that qualification stuffer in how am I being impacted right now because of these higher qualifications because now our qualifying at a seven and a half percent versus five points. So these are the top two, I would say. And of course, the third one is the rates. The R word. Okay, do I lock into a fix? Do I take a variable? Where are the rates? Going? Top three.

Erwin  

We could be here all day just on any one of those topics. Yeah. Okay. Let’s start with where do you think rates are going? I have my murky crystal ball. I love to hear your thoughts.

Dalia  

Tell me about your market crystal ball. And then we can talk about it.

Erwin  

My murky crystal ball is based on not much. I googled some things. Therefore, I’m not an expert. For example, I Googled what inflation was last year, September CPI for Canada was 4.4%. So where was our controlling our 2%? Target? Ben? 12 months ago, we were above target, where was the cut? Right. So that leads me to think the Bank of Canada might be slow to respond to any sort of headwinds we have going forward. And so I’m not holding my breath for when they cut, I’m gonna guess, two, three more raises. And in general, they’re just gonna follow the US Fed. And the US Fed looks like from what they’re saying, looks like they really want to put as an end to this runaway inflation. Yes. And I can see why. Because, for example, I’ve been telling, as I mentioned this lot, CRA the union, so the employees of CRA want a 33% raise in their new contract negotiation over three years. And the teachers, Ontario teachers can’t blame them. They rejected their contract offer, which had a very low res in it. So if we are to control government spending, yes, inflation has to come down. Yes. So I’m not holding my breath. I think we’re in for a few more raise more rate increases, but just funny because I thought of two more rate increases to marine rate increases that was to rate increases ago. So the quality of my crystal ball is not very good.

Dalia  

My rate Oracle retired, she retired, she just retired, Are you fired? Me political politically correct. I just read a statistic that Canada is the top g 10. country in terms of that pace they’ve increased interest rates are at. So they’re actually up there, in terms of the pace of increases and the magnitude of the increases, but I’m with you, there is still room to go with the over nitrate increase. I mean, we started to see an improvement in core inflation. But I think it’s too early to say, hey, we’re starting to see results or sustainable results. Again, I lean a lot on industry experts and research and I do a lot of reading. And I don’t have that crystal ball. But what I am gathering is there is more room to increase the rates this year, likely at the upcoming Bank of Canada meeting in October. And there’s another one in December, is it going to be by the same magnitude that we’ve seen unlikely. But there’s probably another point seven five baked into the system is what I am gathering. And then the banks, if history repeats itself, the bank tends to sit on that rate for a period of 18 months or so before they start to remove their feet of the brakes. And fast forward 18 months out sometime in 2024, we may see an improvement to the overnight rate as the Bank of Canada tries to re stimulate the economy. On the fixed rate front. There is an expectation based on the four year swap that the fixed rates will improve sometime next year when I don’t know. So when clients ask me right now, do I take a variable? Or do I take a fixed rate? If I am to make a new rate decision today? What should I do? Here’s what I’m telling clients. If you’re on a variable, and you’re okay with another, you know, 75 to 1% increase and you can absorb it stay with the variable because Fast Forward 18 months out, there is a good chance that rates will start to come down and you will benefit. If you can’t sleep at night, you may want to consider what’s called sorry, the first option is adjustable rate mortgage they the payment changes as the rate changes. If you can’t sleep at night, then let’s look at a variable rate mortgage where your payment stays fixed. But as the rates rise, more goes towards interest versus principal. So you can sleep at night because your payment is flat. But beneath the surface, the allocation state changes and when the rates start to go down, more of that payment will go back to principal. So that’s one option second option is one or two years fixed. Interestingly enough, the advantages of variable rate have diminished above fixed rates, because right now, variable rates are at or even above the five year fixed, where in the past there was a big, you know, advantage. So one or two year fixed why than the banks are basically seeing the fix will come down between during those five years? Yes. Because why else? Would they be low? Why would it be at or lower Exactly? The variable? Exactly, exactly. So, if you lock into a five year fixed rate now, in my view, we’re locking in at the height of the cycle. So fast forward, when the rates start to come down, that mortgage payments will be locked for the duration of the term. And then the market is going below that. So just sleep at night, one or two years fixed right now, if you’re to make the right decision or a variable rate, the fixed payment, or if you can continue to absorb the increase and want to pay down the mortgage and stay with an adjustable rate mortgage.

Erwin  

And then folks also with a several properties they can they don’t have to do all one strategy for the whole portfolio.

Dalia  

Yeah, absolutely. You’re right. Yeah, it depends on the property depends on what they’re looking to do with the property. Yeah, how much cushion is in it?

Erwin  

For example, I was speaking to one of my clients, it made sense for him to keep the variable in single family properties, versus his duplexes and student rentals that he plans on keeping for forever, he chose to lock them in, because as investors, you should look at which ones would you sell off? Or do you want to sell off? The ones? To me the ones with the least value add options? Yes. Hence the single family homes that cannot be converted into a different use of higher better use? Yes, no. And I want to make this clear to the listener, not all lending institutions can do all these strategies.

Dalia  

Right, right. Depends on how you qualify and wetlander were talking about. And one key thing to consider if you’re trying to make the right decision right now is to also consider whether or not the property has equity in it. Because if I know that values have gone down, but nobody’s equities down to zero, unless they, you know, just bought recently, yeah, bought recently. But if there is equity, where you can walk in our add in a secured line of credit on the property, and especially in advance of a line that increases as you pay down the mortgage, do that before you choose to lock into a fixed rate. Because if you lock into a fixed rate, and later you want to invest, because the market ahead is gonna present opportunities, you want to make sure you’re gonna be able to access that equity and not pay a penalty. And we know like the banks change the rules all the time. So there is no guarantee that you would qualify with that same lender to set up a line of credit. So set up the line before you lock into a fixed rate.

Erwin  

So just for everyone knows, no one gets there questions advance? As I think of questions as we go, we you mentioned, are you throwing them at me? Apologies, everyone, no one’s listening. Anyways. Something I want I want beginners to avoid. For example, you mentioned opportunities are coming. I saw opportunities come across my desk. These properties were distressed sellers who already started renovating. So the pictures on realtor.ca showed no kitchen because they’d already removed it. No bathroom, no toilet, cuz it already removed it. They’re mid renovation. They’re distressed sellers. Yes. Now, how does one finance something like that, because I would hate for a novice to try to get into that thinking that their pre approval with a schedule, a bank will get them financing on that.

Dalia  

Great point, pre approval, I just want to comment on it quickly. pre approval means that you’ve been given a range of mortgage amount that you can theoretically get approved for but pre approval comes with a bunch of conditions. Right? There’s all of that fine print. And one of the fine prints, fine print.

Erwin  

Small fonts,

Dalia  

very small one, but the smallest font we can talk by? Yeah. So what’s the fine print, we want to see income confirmation, we want to make sure that credit is still there for the lender that you’ve been pre approved with. We want to make sure that the downpayment sources are approved. And this is something we actually deal with a lot in pre planning. We don’t leave it to the last minute, but since we’re talking about conditions, property condition is big. That’s 50% of the approval.

Erwin  

50% is pretty important. So

Dalia  

to your question, Erwin, if you have a rundown property, and let’s say you are pre approved for $500,000 mortgage and you need $500,000 mortgage on that property, well, given that it has no kitchen washroom, and it’s got it, that’s private money that is not a traditional. So we get private money, we make sure that we understand what you’re going to do with the property, how much renovations you’re putting in, when are you going to finish it? What do you expect the value to be the rents to be and before we take on this private money, we want to make sure you’re able to refinance and paid back. So that’s basically the way to go about it.

Erwin  

So there’s a lot of planning involved. Yes. Could you imagine? So I’m going to try to pull this deal off at a schedule a bank, with a branch person? No, no offence to the branch people. I just know that my experience is when you’re at the branch, you’re really defined with what they have to offer. Yes. Right. And I’ve been I’ve been quoted a private Out Of Schedule a bank, and it was very expensive. Well, really, all the London fee was over 3%.

Dalia  

Really? Wow, that’s expensive, private. Yeah, that is expensive.

Erwin  

And the rate was high, too, is like higher than anything that you and I would see on a regular basis. But at least like, you know, you and I have quite a bit of exposure to this to the private market. The novice doesn’t. Yeah, so the office might not take it. Well, the banks aren’t rich for rich for a reason. They’re very good at taking money from us.

Dalia  

Yes, I used to work for a bank myself for 15 years. So you know, I was an insider at the bank, knowing why things get recommended and what options are typically offered. So yeah, I can relate.

Erwin  

Right, right. Now, we talked to Paul, we talked about so many things. This is terrible. And merging together two questions. Is private financing part of the financial roadmap?

Dalia  

So So do you want to talk about the financing roadmap? Yes, to talk about it. Okay, so the slide four was a four. So the financing roadmap is really for investors who are looking to scale up a portfolio. So typically, someone has a primary residence, and they’re looking to grow, often investors have a primary residence, they bought their first property or their second property. And now they see the power of investing in real estate. And they’re looking to grow that portfolio to 3040 50 properties, and then at some point, get into apartment buildings, or smaller, like construction projects. So what the financing roadmap is, is our exclusive methodology around how we plan financing, to scale a portfolio and how do we actually get money at the best cost of money because as an investor, you’ve got multiple money tools available to you, you’ve got private money, you’ve got joint ventures, you’ve got bank money, alternative money, commercial money, and sometimes there are options to use RRSPs, as you and I know. So the question is an equity of course, right? Equity. So the question is, if you want to grow, what does that look like from a money standpoint? And this is what the financing roadmap outlines for every client? So we talk about, where are you currently? What are your goals? Are you looking to get into flips? Or is it buy renovate refinance? Or is it student rentals? Or is it multifamily? What is your strategy? And by how many properties are you looking to acquire by when? And then we look at, where’s the money going to come from? Okay, and what type of money do you use first, to actually start building up that portfolio? And not only that, how are we going to make sure that we maximise on your borrowing power, because sometimes if deals are not structured the right way, or the wrong money tools are used, it does impact the numbers, it’s a numbers game. So we talk about where’s the money gonna come from what to use first, to get to the first round of properties? How are we going to maximise borrowing power to give that approvals coming? And find which lender and from which lenders? Yes. So we pre plan that. And then how are we going to structure your deals? Who’s going to be on title? Is it a personal? Is it a corporation, we talk to your accountant, because there are always pros and cons from a financing standpoint? And then we answer any questions. We open up your eyes on the mistakes are things you need to be aware of simple things like, Hey, I’m getting into the birth strategy. I’m running the numbers, and I’m going to be able to refinance at 80%. Take this much money out at this rate. Well, let’s wait. Let’s validate that assumption. Let’s make sure Yeah, and stress tested Exactly. So these are some of the mistakes that we see. And we share with everyone who’s doing the financing roadmap, and then we basically put it into practice. So first round you want to buy for, okay, here’s how it’s going to look like and go shop, we’re going to close the deal based on what we talked about. Once you’ve hit that milestone, let’s get together again, and plan the next round. So it is really a map around how financing is going to come together to support your goal. And it is customised for every client. It’s a it’s an intensive document and we do a one to one and a half hour planning session with every client to put that together.

Erwin  

And this costs $5,000

Dalia  

It is complimentary Believe it or no Yes. You

Erwin  

know, PBS financial planners.

Dalia  

I know actually, my financial planner said This is gold and you should be charging for it. But we are not. We’re not.

Erwin  

You probably shouldn’t mention where people can find this. Well, our 17 listeners are voracious learners. So they may collapse your website.

Dalia  

It is on our website, you can book a complimentary planning session and request a financing roadmap. And that’s how you kick start the process.

Erwin  

So I’ll leave it to you, if you want to share where they can find it on our website or something listeners, there’s a good chance all of them will do this

Dalia  

streetwise, mortgages.com book a complimentary planning session? And to answer your question private money, absolutely. It’s part of, you know, the money toolbox that we talked about. And we do private money as well. But I only use it as a stepping stone, or for some very, very sophisticated investors who are, you know, comfortable with that type of money and they know exactly what they’re doing. They rely on private money. So depends where are you on the investment journey? And we want to make sure, obviously, you have an exit strategy,

Erwin  

right. So it’s a really good point, because I’ve always been afraid of private lending personally. But again, it’s such a big topic, right. And I think the people that are hurt right now, investors are hurt, including the developer that we were talking about earlier, offline. They were having to pay debts, they’re having to cover bad debt coverage, and to pay interest costs. So for example, what was the years kind of like 2009? Ish? When, if you remember, urban, I want to say the name because I’m probably gonna get it wrong. A condo developer went bankrupt. Yes. Right. Yes. And, you know, for about 20 years before that, the housing boom, but in between, basically 1989 and 2008 is a boom, yes. Right. And so for a developer to go bankrupt, who had built a huge condo, all these Realtors were, I don’t even know what happened people’s deposits. But all these realtors, they lost their commissions, or they have to pay it back, probably whatever they did receive. And then just the lesson from that was they were a beginner developer is the first high rise condo Mecanim property they’re building and they had debt. They had the service debt, which is what I think what caused them caused the bankruptcy, they eventually sold the property for more than they paid for it, which is wonderful stuff. Some people got paid out. But then ever since then, I’ve personally stayed away from any sort of development that has to pay debt. As long as I put it a question in there.

Dalia  

Development is the riskiest type of real estate strategy.

Erwin  

I can’t believe people will accept that kind of risk for 12%.

Dalia  

You know, and we’re here are things that typically dilute I guess, the decision when people make a decision to invest, things are packaged, nicely packaged in a fancy way. People are dressed so well, they talk well, and the project looks fantastic. And then there is a dinner and there is an event. I’m being blunt here. Okay, I’m not saying every project is like I’m not saying this is I’m just saying that take the fanciness of the sales pitch out of decision making and focus on doing diligence and assessing risk in anything you do. That said, I said what I had to say what I wanted to say.

Erwin  

It’s actually I think it’s I want to say who because I don’t have permission, use their name, but a friend of mine actually said, you know, these parties are mezzanine financing, essentially. And the professional investors will want 30% Return versus what was being sold out. There was 12% return. So why would I? Why would I accept well, when the smart money wants 30? So yeah,

Dalia  

yeah. And on your message about the returns, okay, I’ve published an article on private lending called Beyond the double digit returns. Beyond the double digit returns, it is not all about the returns, it’s about I come from a banking environment. So this term is used, maybe the audience is not familiar with it, but it’s called the risk adjusted return. So you got to look at the risk for the return you’re earning. You can’t compare one investment that is earning 30% to another investment that is earning 12% and go, Oh, I can earn 30% here, but what is the risk? What risk are you taking? That is a question that I find is missing in some of the conversations.

Erwin  

There’s time in the conversation. A lot of people didn’t. So sorry, trying to get us back on track where it was originally going private room private lending, because for like the smaller investors right now, and I imagine you’re seeing it as a big challenge people who have existing privates,

Dalia  

I’ll share some stories with you real stories fresh out of the oven. So I’ve never been a big fan of very high leverage on anything, whether it’s traditional money or private money, specifically private money. So I know creative strategies. I know that investors love to pick up deals with less money in the deal. I’m an investor myself, but I’ve never been a big fan of high leverage private money. So here’s what we’re seeing. There are investors who took very high leverage private money, at the height of the cycle six months ago that I’m talking about money on the street at 100% financing of a first mortgage with 100%. Financing for renovations on loan to value Yes, above lunch on multiple projects that are running in parallel at a time where we know you and I know, trades have become more expensive. Things have been taking longer supply chain all of the stuff that we know about. So, unfortunately, so high leverage is a no no, in my view, but that’s the situation we’re seeing right now. We’re seeing some investors, unfortunately, it’s a house of cards. Sorry. It is it is we are seeing some investors who have approached us saying, Hey, I was working on a buy renovate refinance, I expected the market to rise by the time I’m done. And now I am in a position where the value is below all of the debts that I have on multiple projects. And some of my private lenders want out because they don’t like where the market is heading. It’s a painful situation to be in. And, Lord, I haven’t seen that before. This is the first time I see it. On the market secured hustle. Yeah, yeah. So there are solutions. They’re not necessarily easy solutions, but there are solutions. So that’s one thing. And the other thing about private money is validating exit before we enter the deal. By validating, I mean, it’s not about saying, Oh, I will refinance, or I’ll sell the property. Validating exit means let’s actually underwrite the deal upfront as if you’re going to that future lender down the road. So I want to gather income, I want to look at credit, I want to assume where the rates is going, where where the values are going and be conservative, and run the numbers to see how much you would qualify for with which lender how much you’re going to be able to take out. It’s not something we leave till the end to figure out because I’m

Erwin  

planning if we can get this to a schedule a bank. Let’s let’s plan if if worst case, hat because I always plan for Worst case, that I can get a debt of the lender, and then I can rent it out. Worst case rented out? Yes,

Dalia  

exactly. You gotta have multiple, you know, A and B, and C and C plan. But I find with private money on the street, there is an abundance of private money, abundance of private money, actually, people are looking to put money into good deals, right? So the mistake that I often see is investors take private money, it’s easy to get. And then they don’t do the work upfront to validate exit, because they’re going like they have a rush deal, or they don’t want to provide a lot of paperwork. And they deal with it later. And later is where the problems lie. The art is in exiting the deal. Not an entering video.

Erwin  

Yeah, it sounds like Warren Buffett says like, if you’re gonna buy a stock, you plan to hold it for like 10 years. To me, if I’m private lending, I’m planning to for the worst case that we have to hold that property for 10 years, these people are asking for their money back. And just they didn’t do that.

Dalia  

In some cases, unfortunately, not. So we’re seeing different challenges in this market. Are there solutions there are some of them are not straightforward. And in some cases, there are no solutions, depending on how severe the case is.

Erwin  

Maybe like a new fresh out of the oven examples of people being able to exit successfully, unsuccessfully.

Dalia  

Okay, so let’s go back to that example of a client having a property upside down. Yeah. So now there is

Erwin  

very easy. Yeah, when you’re 100%, everything. Everything handed to you Sure. What’s the range of rates, what the rates were

Dalia  

the rates on 100% financing and high leverage private money. I’ve seen rates anywhere from 10 to 15%. With you know, two to 3%. In fees, that’s what I’ve seen, and then on renovation money. Here this, I’ve seen rates at 17 and 18%. With high fees. Again, these are not mortgages, we arranged to clear these, aren’t you? You’re picking up the pieces? Yes. Yeah. These are clients coming to us in a challenge to pick up the pieces not because you set them up, right. Yeah. So with someone who’s got

Erwin  

all of these were their brokers involved in any of these just out of curiosity, or did they was this privately arranged, no broker deals? Oh, crap. So there was Oh, boy. So just for clarification, mortgage professionals broker these private mortgages.

Dalia  

Yeah, as far as I know. Yes. Yeah.

Erwin  

Oh, Lord. Okay.

Dalia  

As far as I know, they were brokered. Yeah.

Erwin  

You need a unicorn deal to make these numbers work.

Dalia  

Again, if you were using this type of money, and I always tell investors that here’s the risk with this type of money. And some investors are comfortable with the risk, regardless of what I say they want to take the risk, regardless of what I say they, they think I’m too conservative, and they want to take the risk mine. Okay, when the cycle is going up, you know, the the high waves are lifting all boats. Now the wave has gone. And this is one of the issues. Yeah, yeah. So to answer your question, someone has a private mortgage, and they took high leverage, and the value now is upside down. So if you want to do an 80% refinance, you can’t there is a shortage, right? So what are some of the solutions we’re looking at? You don’t look, you don’t look like you believe there is a solution. But there are

Erwin  

you sell something?

Dalia  

Well, if you can sell and absorb a loss, yes, you’re right. But from existing portfolio. Yeah, so that’s exactly where I’m headed. So some investors who wanted to sell are not selling for the prices that they thought are going to sell for or the properties are sitting on the market longer than desired. So their burn rate is very, very high. And the 15 to 18%. burn rate is very, very high. There is an investor who came to us who’s paying Do you want to hear the number? Oh, yeah, sure. I was. I was gonna die, I was gonna have a heart attack. And I felt so so bad. His monthly costs on three rentals, high leverage with all of this type of money is $15,000 a month? Leverage,

Erwin  

sorry, but your

Dalia  

analyst? No, they’re not. Okay. So back to solutions. One solution is, like you said, to look at the rest of the portfolio, if the investor has a portfolio, if we have a shortage, can we extract equity from somewhere to pay off the private lender through a refinance and cover the shortage from the rest of the portfolio? That’s the easy solution, right? If there is equity, another option is to go to the private lender and say, Hey, you right now your money secured against air, technically, right? Yeah, your security is gone. Yeah, you know, your secured maybe at 80% against equity, but the rest of the money is secured against air against nothing. If you even want to power sale of this property, you’re gonna lose money. So how do you take your paper loss immediately? Yes. So how about we pay you through a refinance and for that shortage, we secure it as a second mortgage against another property in the portfolio that has equity for let’s say, a year or 18 months or something, and the market corrects, and then at that point, we pay you that remaining portion, so that requires negotiation with that private lender. Right? That’s number two. Number three is to rely on, you know, a combination of equity and unsecured loans. There are lenders on the street who are providing unsecured loans up to $50,000. They are not cheap. And I use this as a last last last resort. But let’s say there isn’t enough equity in the portfolio to cover the shortage. Can we take some? And can we take an unsecured loan temporarily, to clear it, it’s better than getting the property to a power of sale, and it still helps from a, you know, a cash flow standpoint to a certain extent. So that’s solution three, solution for is to find a JV partner, who can come to the deal. inject money into the deal in this market? Well, it depends on what you’re giving the JV because here’s the thing. I mean, you have a property, if you rent it, it can cash flow if you have a good rate mortgage on it. So if someone is willing to come on board and benefit, okay, inject some money into the deal. We use some of that to clear off the private and then we refinance the property with a JV partner with an A lender, then the numbers start to work again. So these are the four solutions right now.

Erwin  

Not easy. No, the saying in my head comes, you know, this, this thing, an ounce of prevention is worth a pound of cure. So if they just had a proper plan, they would have hopefully, foresaw how bad this could be. Maybe done one property instead of three.

Dalia  

Yeah, it’s the House of Cards, right? Because when, when you have high leverage money and private money, and the clock starts ticking, and things go sideways on projects, it’s much easier to deal with one versus two on on multiple at the same time, right.

Erwin  

And also, you mentioned early like, like really, really professional investors that the really really professional investors I knew when that know who take on private money. They’re paying like 80% or less for like 100% loan to value type stuff. Right? for not paying 10 to 15

Dalia  

Yeah, I mean, there are lots of private money that are cheaper, especially sophisticated investors get to a point where they’ve established their own network of individuals who who are comfortable lending them money, because usually it’s Well, yeah, there is that a whale yet the trust and the relationship so they would give preferential pricing? And yeah, I mean, the pricing in the private market crane, just depending on who you’re dealing with, and your experience and all of that. I mean,

Erwin  

what we all like, not that there any wants to too much. I mean, they are financially like, just like, you know, beyond comfortable with their cash position. Yes. Right. Which is not likely with the these folks who want these private lenders want their money back. Play very different demographic. Okay. We’ve talked a lot about this. Yeah, we’ve covered a lot. So I’m meant to ask you crazy things we’ve seen, I think we get out that, oh, our Home Equity Line of Credit maintenance, because it often comes up to around these times, I remember came up a lot in 2017. People’s people’s questions are around, because a lot of investors use or have only three lines to finance their investing downpayment, or renovations. So people often ask, well, will the bank ever take it away from me? Or reduce my capacity? What are your thoughts? Have you ever seen

Dalia  

it? I have not seen it. But you have like lots of

Erwin  

clients, a lot of clients, lots of home equity

Dalia  

lines, yes, yes, a lot of clients who have utilised their home equity lines. But but here’s the thing, I mean, in any in mortgage agreements or line of credit agreements, the bank reserves the right to blah, blah, blah, blah, blah. That’s standard language, right with the banks and to manage the risk. So I’ve seen a situation where a bank hold a line of credit, because the client defaulted on their payments, which is expected, right? Like if someone’s falling on their payments, the bank is gonna shut down the line there the credit facility, if the credit score of the client has gone down significantly, the bank’s monitor credit scores behind the scenes. So maybe in some cases, they may get uncomfortable. But that’s like a soft decision. In my view, it’s not like black or white rule. And then a line of credit. In particular, I recommend that clients pay principal down, you know, when they can, they don’t just make prints don’t just make interest payment forever, because the bank wants to see that you’re paying down the debt. And if you’re sitting on a line of credit at a high utilisation, and it’s interest only interest only interest only for a very, very long time, that could raise some concerns about the ability to, you know, repay that debt. So always make an effort to put some principal payment towards that line of credit. So these are my

Erwin  

tips. All right, find somebody to put into it. Again, I’ve been around a long time. I only recall like one person ever saying this happened to them.

Dalia  

It’s very rare. I very rarely should except for one client.

Erwin  

This gentleman was in Alberta. And he said he just went to the branch manager and they got fixed. And this was years ago. Right. So again, I only know of one instance of someone I know personally. So yeah, I don’t know what the risk is.

Dalia  

Otherwise. Yeah, there was a lot of talk about this during COVID because clients were concerned that you know, the banks are getting conservative given the COVID environment. Are they going to pull the lines there was a lot of talk, and I haven’t seen anything happen. Other than that one client, but again, it was a default situation. It wasn’t anything else.

Erwin  

Oh, can I ask? Another question I didn’t prepare you for Do you have any favourite economists?

Dalia  

Favourite economist I for example German tall

Erwin  

Okay. Bloomberg interview this

Dalia  

week. Yeah, I follow Benjamin I find some economists with all my respect to economist some economist I find just paint a doom and gloom you know, the day of doom is coming picture and I I can’t listen to them. Yeah, I can’t.

Erwin  

I like to read them all. And then like see what they all agree on. Like a diet plan. Basically, I like to read them read them all and see where they all agree on like leafy vegetables, leafy green vegetables they all seem to agree upon. So that’s definitely kill me apparently. Just need to be more disciplined about it. But the Yeah, again, I’ll read the doomsayers see what they’re saying. And then I’ll check on their on their track record. Is this the other thing I look for? Like, oh, yeah, this guy said Doom gloom. But yeah, he’s a columnist at this company. Like, okay, what’s his track record? Well, he’s been a bear for last 10 years. Well, what’s track record? He hasn’t been very right. Has he?

Dalia  

Yeah, absolutely. Right. Yeah. Yeah.

Erwin  

But I like Dr. Sherry Cooper has read

Dalia  

Dr. Sherry Cooper for sure. Yes, yes. That’s the second one.

Erwin  

And again, I’m asking because I worry about my own confirmation bias. Like just because I like them. I’d like to hear contrarian opinion. So 17 listeners if you have a better economy She like, you know, let me know.

Dalia  

I like in the mortgage industry. I mean, he’s not an economist, but I, I like the depth of the research he does and the insights he shares, his name is draw McCluster. I actually interviewed him recently on our adapt and thrive series. Really, it’s about the research for me and the track record, like you said, so he’s another analyst that I follow.

Erwin  

I’m just so worried about confirmation bias because it keeps getting repeated almost across everyone that we follow. And like I said, before you say who you follow the same people I follow with also we don’t have we don’t have houses. I think CMHC came out yesterday, saying our housing starts are not even going to match their predictions. So the shortfall is greater than what they predicted. I’ll surprise so it’s, well yeah, cuz you can’t, you can’t build anything. And it’s gonna surprise like for anyone who didn’t, here’s the drilling the background, we were getting new windows in the gentleman who was putting them in told me he had to wait four months for them. Right. He’s just to build anything. And it’s just a stitch when you think I suffer a property when you takes four weeks, four months for Windows. Yeah, right. So

Dalia  

yeah, talking about like, waiting. I’m ordering. I’m not building anything. I’m just ordering furniture for my house. And I ordered back in July, and it’s coming in November, couches, once the things

Erwin  

have improved. And then the permit for the whole my wall. I don’t know how long it’s been taken. It’s just a permit. Is this paper? Yeah, versus just a hole in the wall. Like, everything’s slow. Anyways, we’re off track. We’re talking about whole life insurance. Because again, another thing that I’ve heard consistently among people in our community, generally people who are do pretty well. So I asked you, before we start recording, if you invest in it as well, yes, sorry, I’m putting words in your mouth, you own whole life insurance. I don’t mean to say that you invest in it. I view it as an investment. So but I love you, I love asking you about it. Because you have it. Yes. And you understand the mortgage implications of owning whole life insurance. Can you share on the subject?

Dalia  

Yeah. So my whole life insurance policy is under my corporation. And obviously I contribute to it and

Erwin  

Oh, so you’re using using cheaper after tax money to pay for it? Yes. Because it’s through the corporation versus paying personally. Yes. Because you’re rich. So you paid probably maximum personal tax rate?

Dalia  

Well, I’m always looking for tax efficiencies and ways to optimise right. So this was, this was one powerful strategy to have it in my corporation, so that I contribute through the corporate money. And then there is a cash component that accumulates that I can access. If I want to buy properties, or, you know, for any reason, from a real estate standpoint, some lenders are opening up to now considering this cash value towards downpayment and they’re not taking it as debt in the calculation, which is nice. Yeah. Because when you when you take money from your insurance policy, you’re taking a loan from the policy, right. But the bank, some of the banks are not, they’re not looking at that as a loan. So it’s, it’s a powerful tool, in my view.

Erwin  

For example, I had a past guest who who mentioned that if you have gold, the bank looks at will look at it for collateral if you haven’t heard good amount, how is Whole Life Insurance seen as in terms of a quality of collateral?

Dalia  

For the lenders looked at us net worth part of your net worth? collateral? They’re not securing? So I’m using the wrong word. Yeah, they’re not they’re not securing anything against it, but it is an asset on your balance on

Erwin  

1. Yeah. So improve your network situation? Yes, maybe, maybe I’m using the goal analogy in the wrong net wrong. And now, that’s why I have experts like you on

Dalia  

your bank on or when so it is part of your net worth, but you can leverage your insurance policy towards to extract cash to put towards rental properties if you want. And the banks, some of the banks are good with that.

Erwin  

Right. So I would categorise you as smart money. And so it seems to make sense of validates cheering I doing this, because I usually talk to insurance people about this boy, you know, you know this thing. You know, whoever you’re talking to whatever they sell is always the solution. Yes. Yeah. So So I wanted more context, which I appreciate. Thank you, again, from smart money. So if you’re doing it, like I maybe I’ll do it too. She will love it. Because, for example, Terry and I are one of our plans for next year is contributing more to our whole life insurance, because we don’t want to sell any of our assets when we pass in order to pay the tax tax, man, tax woman, tax person tax

Dalia  

people get tax. Tax everything. Yes. Yeah. Because

Erwin  

they need to fund their 33% raises, I understand. But yeah, I’d rather pay less tax. And sorry. My point is I’d rather have my insurance pay for me or tax liability when we pass so then things can continue operating.

Dalia  

Yeah, that’s what I like about the life insurance policy to cover your future tax exposure right but in the same time If you’re able to access the cash value of it to do something, if you want in the meantime. So it’s you’re not just paying for coverage on the future, you can access it today, if needed. And that’s where that is very powerful. In my view,

Erwin  

it’s the difference between term and term insurance, which is what the vast majority of people have, yes, especially if they have an employee plan, company plan, insurance via their company plan. It’s it’s almost always term. I’ve never heard of anyone on our company Plan who has whole life, just because it’s way cheaper. So

Dalia  

yes, drum is cheaper. And for the life insurance policy, I know it’s more expensive, but also it’s a long term commitment.

Erwin  

Any benefits to having term insurance for mortgage ability

Dalia  

when it comes to mortgage insurance? So mortgage insurance, I always recommend talking with a third party company outside of the lending institution to get it because if you leave that lender, you don’t want to lose that policy, whether it’s term or not, it’s not something that I can comment on, because I am not in the insurance business

Erwin  

understand Me neither. But I’ve never taken insurance, mortgage insurance from the lender.

Dalia  

Good. Good. Obviously, it’s a product that they offer. But it doesn’t work best when you life changes, right? Things change. So you don’t want to go and reapply for your insurance if you choose to switch your mortgage from one institution to another, which happens, oh, it’s life happens and it will happen.

Erwin  

I think I’ve turned over all my mortgages to different lenders.

Dalia  

Yes, you want to have independent provider of your insurance policy

Erwin  

that makes sense. seek expert advice, not from the person making. Oh, I’m running out of time. But I wanted to ask about apartment buildings, because we’ve seen massive correction in the single family space pretty much almost everywhere across Canada. The more expensive the bigger the correction, the more investor popular that area. This is the bigger the correction. I was talking to friends in Windsor, for example. It wasn’t in the news that Monckton, which was a big hot, sorry, sorry, New Brunswick as a big hotspot for many people leaving Ontario, they see and they’re expected to lead the decline for Canada. I’m sorry, I’m just rambling. What are you seeing in the multifamily apartment building space,

Dalia  

we’re seeing more and more investors move into multifamily. And I understand why. Because in that asset class, if specially if you’re renovating, you have more control over the value add because the valuations of apartment buildings is very different from single family homes or residential where they’re looking at comparables and apartment buildings is based on the net operating income. So we’re seeing more appetite to buy apartment buildings. And also, because of the multiple units, despite the fact that also interest rates are higher in the multifamily space, because of the economies of scale. The numbers are looking more attractive from a cash flow standpoint in that space. So we’re definitely seeing more and more investors go into five units and above. And we started servicing out of province investors, actually this week in Alberta, BC, British Columbia, sorry, Alberta, British Columbia, Nova Scotia, Saskatchewan and Edmonton. And we’re seeing more and more apartment building deals in these in these markets.

Erwin  

So when the deals that you’re seeing, have any of them corrected in price at all, like we see in like the the regular residential market,

Dalia  

I finding that the apartment building sellers are still holding on to holding ground when it comes to what they want to sell for, compared to the residential. So people are saying, you know, oh, I’m gonna get better deals and apartment buildings right now. And we’re not seeing it yet. We’re seeing the sellers more open to offering vendor take backs, more vendor take backs. But price wise, we’re not seeing a reduction per door. Yes,

Erwin  

they’re smart. Not yet because they’re smart. Yeah, yeah, the sellers are smart. They know, they probably got incorrectly and they’re probably trying to exit. How that makes sense. I feel sorry, for listeners benefit. Generally, if sellers are willing to take vendor take back mortgages, they usually want a higher price. Right?

Dalia  

Right. Exactly. Exactly. Well, on smaller properties or when like the one to four units. There is we’re seeing now deals with negotiations, clients going in offering asking or below asking putting in conditions. So there is more leverage for the buyers right now. And that space?

Erwin  

Would I be correct in my assumption then that the single family is where the greatest room for negotiation is?

Dalia  

Residential one to four units? Yeah.

Erwin  

I’m guessing one unit would have the most negotiate versus the four. Yes. Yeah. And which leads me to think like, yeah, that’s tough, though. Still. I don’t know if I’ll buy single family because I’d have to renovate.

Dalia  

Yeah, I mean, unless there is an upper Jeanette to do something to increase rental income and cash flow, right? I don’t know, single family is a question mark.

Erwin  

For many condo investors coming across your desk.

Dalia  

We’re seeing some investors that have purchased condos pre construction, depending on when they purchased them. They may have variations in value depending on when they were purchased. But not a lot. I mean, I’m not seeing any big challenges in that space. But one of the challenges I’m seeing is someone who bought a house wanted to sell their house and their house is no longer selling, right? So they can’t really bridge through traditional lenders, because the lenders want to see that you’ve got a firm sale agreement to give you a bridge, and they still need to close and they firmed up conditions. So that’s a situation we’ve seen some cases in invoice for not not a big no, no, but no, not a big number.

Erwin  

Okay, interesting. Any assignment issues, those cross your desk? Like, for example, someone can’t close on their pre construction condo deal? Are you seeing investors picking up assignments?

Dalia  

So there are a few investors who approached us who had multiple condors that they were looking to assign? And they nominees

Erwin  

multiple 544? That’s a big bite.

Dalia  

Yeah, that’s a big bite. Yeah. And they’re all going to close, within like two to three months from each other. So they’re coming. They’re not closing yet. And they were planning on assigning them one of them. Oh, boy in this market, when they bought them, like when they committed their plan was to assign these deals. Right. One of them is the house that is at close to $2 million that this investor wanted to assign. Yeah, yeah.

Erwin  

This is no condo. $2 million. House is supposed to be gorgeous.

Dalia  

It is gorgeous. It is gorgeous. It’s a beautiful lot. And yeah, and the market, we used to be this would have been a no brainer. But now this investor has to figure out okay, how am I going to keep these? What’s my holding costs? How am I going to close them? What type of mortgages am I gonna get? And that’s the type of discussion we’re having right now. So some investors who were in the assignment game may not be able to assign as they initially thought, right now, they have to hold on to these properties for longer. And the question is, what does that look like?

Erwin  

Did they plan for that? Because again, for me, it’s like, if I was to buy a pre con, my plan, my my plan f would be to hang clothes on it, rent it out. Hang on to it.

Dalia  

Yes, I know, I know. You would plan that way you would teach your students to plan that way? Unfortunately, there are some investors who did not go through that.

Erwin  

Are all four of these properties. Houses in the millions, no condos and this house. Okay. condos in this house? Yeah. We’re still talking like 4 million of exposure. It is the reef mortgages on

Dalia  

it is a large exposure. Yes, it is a large exposure. And I find a whole discussion didn’t take place initially. So

Erwin  

this is the truth about real estate investing, folks. This is things that people do. That’s the truth. Right? I’d argue, yeah. Not the grasp. Best planning. But we have planning available for folks, apparently. Because with with the financing roadmap to save this individual

Dalia  

debt financing roadmap, we would have discussed this part in avoiding the mistakes. What’s What’s your plan closing hang on for 10 years? In case we you cannot assign?

Erwin  

Because having corrections happen? Yes. And it’s painful for everyone. But again, these are cycles. We’ve been on a bull run for since like 2009 was like nothing. But yeah, we did a bull run since then. 12 years. last forever. Wow. Okay, Dalia, I could keep your all day but obviously turn into any final thoughts. I’ve heard a lot of the question and airtime.

Dalia  

I enjoyed this conversation, all the questions you’re asked, you asked for a great. My final thoughts are when really is about the markets ahead. Right? Definitely. We’re navigating new waters here. And anybody out there who’s experiencing challenges are as concerned about things. It’s about planning and understanding what the options are. And there are solutions. It’s not, it’s not a one size fits all. There may not be solutions, you may have thought there is no solution. But there are always ways that’s what I believe in. And what goes up comes down and what comes down goes up. So there on the rates front, I know at some point things will improve. It’s not going to be anytime soon. I don’t have a crystal ball but like we talked earlier, likely sometime in 2024. We’ll start to see some tears some breathing room is two years away. So what are we doing in these two years to hold right? I’ll be looking for deals. Yes. So so there is there are clients who are experiencing Pain and we want to deal with the pain so that we can get them back into a state where they can thrive in the market ahead. And then there are investors who are in good shape who want to get ready for what’s ahead. So this is the time to plan this is the time to actually dig and find solutions and preposition if you want to invest. And that’s really all I wanted to share as a wrapping point, right?

Erwin  

And folks in distress can can go to your website and yes, Richard 20 years your team members,

Dalia  

absolutely yes, streetwise, mortgages.com. Or they can email us at info at streetwise. mortgages.com

Erwin  

Fabulous. So, no to 17% 18% renovation.

Dalia  

Please don’t take high leverage private money right now, folks, please don’t even if someone wants to offer it to you. Please don’t let someone

Erwin  

was the land. Still no.

Dalia  

If you ask me, I always say no to high leverage private money and my view will never change on that.

Erwin  

Geez, I wish all the epic investors listened to this before this. Thank you so much for doing this

Erwin  

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

 

 

To Listen:

 

On iTunes: https://itunes.apple.com/ca/podcast/truth-about-real-estate-investing…/id1100488294

On Stitcher: http://www.stitcher.com/s?fid=87335&refid=stpr

On Spotify: https://open.spotify.com/show/6Z8yd37AQfQI5DK0J0Xwzz

On Google Podcast: https://podcasts.google.com/feed/aHR0cDovL3d3dy50cnV0aGFib3V0cmVhbGVzdGF0ZWludmVzdGluZy5jYS9mZWVkLw

Youtube: https://youtu.be/SaQBbmUKaQ4