Erwin  

Hello, welcome to another episode of The Truth about real estate investing show. My name is Erwin Szeto and I trust everyone is out there enjoying the lovely spring weather. Fun, useless fact of the day, Denmark is slowing down their vaccine rollout because apparently they have COVID in the control, which is fantastic news for them. Statistically I can verify that they’ve got COVID pretty much under control. And that’s fantastic news for what is probably hopefully to hear calm as well. COVID less of a concern. It seems to be seasonal. I’m not a doctor, folks, please listen to your doctor. Not me. Anyways, but the Yeah, all positive news. Me I’m still planning on getting boosted in the fall. I have too many friends who’ve had bad symptoms several multiple days in bed. I have a low tolerance for suffering personally. So that’s my risk tolerance. Everyone else has their own risk tolerance. I just can’t stand being stuck in bed sick. I have too many things to do. Anyways, I trust everyone’s enjoying this lovely spring weather. I was lucky enough to get in a round of golf with some buddies, my first round of the season, unfortunately, was pretty darn cold. And I’ll use that as an excuse why didn’t play great. I shot a 118. But that was much improved over my 12 months go score the same course, were I shot 130 for my first round of the season. Yeah, my puting was garbage. And I swing way too hard. I swing too hard and lose control. That’s actually a good analogy for real estate. A lot of these companies and individuals who are who are not having a good time investing in real estate, you know, I’ve mentioned some of them the show, oftentimes it’s not because they’re bad people, it’s just they swung for the fences without having a good foundation in place. Anyways, golf prices are also a victim of inflation. Like many things, the posted rate at my golf course is the price of the public is up around 30% higher than last year, which I know it’s upsetting to many people. And I also heard the cost that they’re paying for bag of fertiliser, used by the golf course went up from $38 last year to $71. Last year. So this year, sorry, from 38 last year to $71 this year. That’s an increase of 87%. And I think we all know that fertilizers are used more for more than growing grass on golf courses. They’re used to grow food as well. And sadly, I think we know where food prices will be headed. Since fertiliser is used for going through too. 

Erwin  

One thing that’s not going up in price right now is real estate. And as predicted here, I believe I shared it on the show. And I shared it at at our real estate meetups. Now in real estate meetups hosted by Cherry and I, I predicted this coming we advised our clients that they’re planning to sell within the next year they should be selling early in the year ahead of the interest rate increases and some of them did and did really well for it. Obviously, they’re over the moon having peak. So congratulations to them very happy for them. Actually one of them just told me on weekend at our most recent meeting, but they’re handing me in the resignation this week. There. It’s time for the retirement. And we’ve discussed it, this would not be possible without investing in real estate. So yeah, maybe the lesson would be if you want to have an early comfortable retirement, consider investing in real estate. Let’s be honest, a lot of real estate is coming down in prices. We’re seeing prices down 5-10%. It could go down even more. Some see that as a bad thing. Not our client last week as we scored a detached bungalow for under 700,000. In Branford Zoning Bylaw allows for a basement apartment. And the early quote for converting the garage the existing garage to a self contained apartment was well under 100,000. The early number was like 70. So our client can be all in for hopefully under 900,000. For what will be a triplex early estimated rent would be around $5,200 per month. Plus we have a lender who will provide the construction loan for the renovations. This is all bleeding edge folks. This is probably be only the second in all Branford that will execute with like this with a garden suite in a construction loan. So the something that we’re staying on top of I do believe that garden suites the which would be an addition, or tiny home on the same existing property will basically be the last opportunity for a major value add renovation to a property. So hence you can appreciate that we’re all over this strategy and to know knowing everything we possibly can. Anyways, two months ago, we may have needed to pay easily 5 or 10% more for the same property while also completed competing against a ridiculous number of offers. Because just like most of us, you understand the opportunity here. It’s not that common. So yeah, our client jumped on it. Thankfully we’re in a bit of a dip right now. And because of that, we were able to compete against less properties. And actually, before I go on our our keynote talk for the May iWIN real estate meetup hosted by cherry and I is all to do about garden suiting. So again, that’s an addition or a tiny home, built on an existing investment property, typically in the backyard, where we’re talking about the ins and outs of it at the May Iowa meeting, so you probably want to be attending that at our live and in person meetings again, so we’re only doing live and in person, there is no zoom or recording option. It’s a lot easier that way for us. So how awesome is that? While there’s some people are out there panicking about interest rates and falling right prices. Historically, again, I noticed a lot of people have trouble zooming out, not for all of you, because you’re all educated folks are smart, if you can zoom out. And you will see that the rates right now are historically still really cheap. And our clients will gladly use this cheap money to create some serious cash flow. And who doesn’t want more cash flow in an inflationary environment? The cost of pump gas is just ridiculous. And I think and on my way, driving today, I think gas was approaching $1.90. Our Tesla cannot get here fast enough. It’s funny enough that people keep asking me when the Tesla’s coming. Our current eta is July. It just keeps bouncing around. We were supposed to have it this month or in the next few weeks. But we get pushed out to July somehow. Anyways, technically, everyone should want more cash flow in their lives. It just makes complete sense. Also, on the other hand, real estate is pretty much the perfect hedge against inflation. Preferably our ground on government is best. And if you do follow the stock market, Like I do all the best dividend paying companies are trading at all time highs. So the market is buying companies that cash flow, right? Quick sidenote, thank goodness we own some of these companies. It makes shopping for example, it makes shopping at Costco a little less painful, knowing that we own a slice of their business excellence. Not advice, folks. Anyways, I hope everyone out there has their finances in order. I mean, like their mortgage capability in order to go deal shopping because that’s exactly what Cherry and I are doing.

Erwin  

On to this week’s show. Today we have an old friend of mine Moe Hansrod drawn who’s been in real estate since the early 2000s as both a investor and a property manager, Mo is currently an owner of one of the owners of kW property management. kW stands for Kitchener Waterloo, not Keller Williams, with around 2000 doors under management that includes 600 clients, mostly single family homes, with the average investor client owning three to five houses Moe’s on the show today to share some truths about real estate investing. Hopefully I don’t get in trouble for this. I’ll be sharing some of his experiences having to pick up the pieces after what some out of the term Realtors promised to investors in terms of overinflated tenant profiles and rents by as much as 25%. So it’s not me saying bad things about realtors. It’s Moe. So please, yes, blame Moe. Moe is also an investor in a startup company called RealMe property, a startup real estate financial technology company offering blockchain based affordable investing opportunities in cash flowing real estate. Moes young friends are here with us today as Akshat and Rishard, who are super bright. I don’t need to tell you about you’ll realise that quickly when you hear them talk about their experience and their education. These gentlemen are going places and they’re here today to explain what is a fractional ownership? What is their business, which is surrounds fractional ownership of real estate investment opportunities. As always, anything said on this podcast is for educational may be entertainment purposes. And it’s not endorsement of any investment, no matter what. I’m licenced to talk about real estate. And that’s it. For investment advice. Please seek professional advice from a financial advisor, which is not me nor my guests. My unprofessional opinion. I’m excited to see where RealMe goes. As I’m sure many of you would like an opportunity for potentially an early exit of a portion of our investment properties One day, while offering opportunity to those with smaller amounts of capital to invest because everyone needs exposure to hard assets. If you don’t know what that means, please read Ray Dalio’s principles of investing in the change of world order. I’m not gonna post that here because the book is honestly like an inch and a half thick. Please enjoy the show. 

Erwin  

Gentlemen, Moe, Akshat, Rishard, what’s what’s keeping you guys busy these days? 

Moe  

Real Estate. 

Erwin  

Differently, though, for you too. 

Moe  

Yes, definitely for us, too. 

Erwin  

Because we have a bit of a generational difference here. 

Moe  

Yeah, yeah.

Erwin  

Sorry, Akshat how old are you?

Akshat  

I’m 25

Erwin  

Oh, gee, okay. 

Moe  

Yeah, he’s half our age.

Erwin  

You don’t you can only in real estate. You’re too young, Cause Moe bought it all.

Moe  

Oh yeah, that’s why we’re here. Right. So I actually met one of the people on his team online, actually Facebook. And that’s how I got connected with them. So I can start tell you what I do how I know you. You and I have go back about a decade, that REIN, probably more

Erwin  

Yeah 2008. Yeah.

Moe  

Probably nine up, but I didn’t get into later, right. But I mean, I remember you had the tiger cats jersey. He’d wear it all the time. So he would call himself Mr. Hamilton. And anytime I say I’m going to meet Erwin, or talk to Erwin if somebody knows REIN or knows real estate, I say Mr. Hamilton the guy says Oh him. Okay. So we’ve been part of REIN, you know, acquaintances, and we talk online here and there. And I was with, you know, I would attend with a few landlords and a realtor team. And, you know, we we picked up a lot of business from REIN, it was great. Stop going probably mid about, say like, 14,15 when things changed, and yeah, so we’re still landlords, we’re still investors.

Erwin  

What? You’re not you’re still a landlord? Didn’t you hear the market slowing or something? You know, it’s government has some new plans for I don’t know, whatever.

Moe  

They’re gonna try to slow us down. But, you know, Tiger is not going to change his stripes. Right. So I’m part of kW property management. I had my own company tried to do rentals. I met a girl named Trish Montag, and she ended up taking over my company and I do the intake, new client sales leads for kW property management, and we’re out of Kitchener. And we service about 75 to 100 kilometre radius outside of Cambridge, Kitchener Waterloo, actually expanding into Hamilton and Milton now and some in Brampton, and we’re in Woodstock. Brantford, Paris Fergus, air Trumbo, all those smaller towns outside of KWC as we call it.

Erwin  

He made up some cities there I think, but we’ll let it slide.

Moe  

If you live down there, you’d know them right? So but we’re up to about 2000 doors, mostly single family residential, the majority of our clients have 1 to 3 doors. A lot of our clients are working abroad and don’t want to sell their homes because they they’re unsure of what the future holds and they don’t want to be chasing the market obviously which is taken off down here. Well in kWC anyways and in southern Ontario in general. So we look after it for them we sell the units collect rent to the evictions, if necessary, and you know, your regular Property Management shop so we have an office downtown

Erwin  

Regular means different things to many people. This sounds pretty end to end.

Moe  

Yes, end to end yeah, so it’s a full shop full hands off. We got clients all over the world. A lot of clients we’ve never met before they buy property here we you know, as long as you have a Canada bank account and FINTRAC it, you know, you’re aboveboard, we can deal with you. And so we make it hands off for our clients. We do everything from you know, placing that tenant dealing with them day to day to cleaning, to doing their banking to doing their licencing if the town requires it, etc. And we have a staff of 15 downtown Kitchener, where our office is and we do some commercial stuff like warehouses, medical pauses strip plazas, we even look after shuttered McDonald’s. So if McDonald’s closed the restaurant down within about 75 kilometre radius of our downtown office will look after for them. Right now. We’re looking after one for them beside Google downtown Kitchener. So they’re still undecided what they’re doing with that piece of land because very valuable now. So they’re one of our clients. But our main focus is single family residential, and, to a lesser degree, we have about 5% 7% of our portfolio is student housing, but it’s a lot more work we rather stay with single family and I’ve found it as a landlord myself just to be a better business, less turnover, less wear and tear, less dealing with, you know, students, parents yelling and screaming about something, and children fighting etc. Right. So that’s basically what we do, who we are and what I’m into. And I’ve always been into real estate investing stock market. Now I’m into crypto and I know Erwin is into all these things as well. 

Erwin  

I like making money. 

Moe  

Yeah, exactly. 

Erwin  

And, and we’re not hurting nobody. 

Moe  

Yeah, exactly. Exactly. And I attended his seminar with Grant Cardone pre COVID. And that was great. And that being said, you know, it’s sometimes you know, I like to dabble in other things. So, I met Amna from x shot and Rishards team of RealMe property, and they will explain what they’re up to. And I’ve joined their team as consultant advisor/acquisition guy I, and kind of help them grow out what they’re trying to achieve. And we’ve already acquired a couple of properties out of town. ones in Kirkland Lake.

Erwin  

How long you been in real estate? I’m still trying to qualify you as an expert. I’m not sure we’re there. 

Moe  

Yeah, actually my first property I bought was in 89-90.

Erwin  

Okay, longer than you two gentlemen are alive. 

Rishard  

Yeah, of course.

Moe  

So fresh out of high school. Okay.

Erwin  

And then, and then how long you been in property management? You mentioned it before.

Moe  

Early 2000s. And then I’ve been with this particular company, kW property management, who took over my business, which was self run, I was running it out of my house. We merged in about 2011-2012. And 

Akshat  

Moe was a startup guy, huh? 

Moe  

Yeah, we’ve been going strong since and we’ve grown the portfolio. From about, like I said, about 150 doors combined to over 2000, and about 600 clients close to 600 from all over the world. So we got a niche market down there, we have a lot of people that come to us for help, advice, consulting, and you know how to help facilitate transactions for realtors, that may want some assistance for their clients. So we’re a full service shop, we do some leasing agent stuff as well, where some people want to be hands off and want us to manage their properties. I mean, just fill their properties and not manage. So I mean, it’s all over the map, sometimes we’ll get clients, they’ll be living in the basement of a triplex and want us to manage the two upper units and don’t want the tenant to know that they’re the owner. Sometimes I’ll get a call from China, you know, fill my unit and email me the lease, and I’ll deal with a tenant directly and I don’t need management, and they’re halfway across the world different time zones. So it’s all over the map, you’d think the person in China would want the property management, and the guy living in the basement, the triplex would manage on his own. But it’s complete opposite. Sometimes

Erwin  

We’ve seen it all then. 

Moe  

Yeah. And we have a mix of business coming in, you know, we have business going out, obviously, because of the sales market’s been on fire. So people that have been long term clients that are cashing out, but then again, I was telling these guys earlier, people that have bought properties, say back around Christmas, have seen substantial gains in their, you know, investments in are cashing out six, eight weeks later, in some instances. So it is what it is. 

Erwin  

But that’s not the norm. 

Moe  

No, that’s not the norm. That’s not the norm. 

Erwin  

So I’d actually like to ask normal questions. Normal questions. Yeah, that did not come out right. So here’s my question, because the show is called The Truth about real estate investing. And thats the thing I like about when gentlemen, like yourself, you have access to a wide database, essentially, yeah, how many of your clients are full time and you call full time investors? In t percentage. You mentioned earlier, your average client has like three to five properties.

Moe  

I would say 75% of our client base are probably investors and about 25% are working abroad or out of town and are just using our services to keep their unit rent in cash flow, make some money, while they’re, you know, either deciding whether they’re going to come back, or they’re going to sell the property at a later date. So I mean, some don’t want to be landlords there is it’s just something that has been thrust upon them because of job change or something like that. But yeah, it’s it’s kind of all over the map. And as I was saying, I do the client intake and half f it is, you know, talking to new investors, first time buyers, and half the business these days seems to be people that have went and did it on their own DIY landlords, got themselves into trouble have delinquent tenants, you know, it’s all over the map.

Erwin  

This sounds like regular people just doesn’t sound like foreign buyers, or, mega multinationals.

Erwin  

So foreign buyers isn’t really…

Moe  

Like, there isn’t like massive foreign buyers showing up, they are there. But I would say the majority of our portfolio are Canadian citizens, even if they’re living abroad. So they’ve bought these properties when they were here and moved abroad. I mean, I do have the, you know, calls once a while from the Middle East, Latin America, Europe, California, China, or like, you know, wherever, in Asia, where they want to invest here and Vancouver and Toronto had arranged now and so they’ve, you know, set their sights on, you know, kWC or other parts of southern Ontario. So, yeah, I mean, if we can, you know, get them to buy obviously, it’s business for us, and, you know, whoever our Realtors are, that were, you know, dealing with at the time. And, you know, they’re looking at all sorts of places in southern Ontario, so they’re looking at London. We really don’t go down there. It’s a little bit far we’ll help a few clients that are good clients. If they really want us to, you know, travel that far. We’ll do it for them. With multiple units 

Moe  

Yeah, foreign buyers, I think, you know, vs. 

Erwin  

I bring it up because they’re now banned. 

Moe  

Yes. Yeah. I mean, they’re, they’re banned. So we’ll see how long this lasts. See if there it makes any difference? I think the government’s gonna find out quickly that there’s just no worries. Yeah, exactly. 

Erwin  

Which is surprising cause it made headlines. Yeah. That’s what you got to talk about in the budget, there’s much more important thing.

Moe  

I think the big thing they’re going to realise, and if they asked anybody that was in real estate, what the real problem is, their policies, obviously, the as far as Ontario government, provincial LTB, guidelines, etc. And a shortfall in new housing. And I just, as I was saying earlier, I just don’t think there’s enough labour to keep up to demand and kids these days aren’t getting into Brick Lane, you know, framing all the things that are needed, because they’re, they’re getting into, you know, computer sciences, etc, to the comforts of Yeah, of not their parents. Exactly. And they’re not prone to physical labour. And I think there’s gonna be shortfall there. And I know, the government has said they want to build I believe 400,000 new units in the next few few years to you know, I just don’t think it’ll be enough. And I just don’t think they’ll reach that number.

Erwin  

Okay. So all right. Well, no, and I want to talk about other things, but I need I need to get one of these bad realtor stories. Oh, yeah. So can you tell me about the bus tour outside of Google.

Moe  

Yeah, I was telling Erwin earlier that. Yeah. So I mean, I think I’ve been dealing with lately is lately. Forever. That’s for the last few years. We’re noticing because of the Toronto prices, invest your money, like you know, especially investors that are reifying to take that money and put it to work in Toronto would just won’t work. And so they come down the highway to Guelph, Guelph is getting out of control. So they’ll come down to Cambridge Kitchener Waterloo, and they’ll think, you know, I was our area experts now. Yeah, we’re getting realtors that Yeah. Think they know the area. Meanwhile, they’ve probably been here once just go through town.

Erwin  

They know Toronto very well. Now they know Guelph really well. Now they know Cambridge really well got it

Moe  

Yeah, exactly. Exactly. And some of these realtors are over promising and under delivering. So they’re no, yes, yes, it believe it or not. And they’re bringing their clients down. And they’re telling them, you know, pie in the sky stories of outrageous rents at low prices as far as like, you know, units, they’re acquiring. And when by the time they get to me, I have to, you know, temper their expectations, so to speak. And we, you know, this is a common thread, I’m seeing a lot of realtors come down here. And they know that at the end of the day, once they get the sale, they can move on. And if they find a property manager, like me or somebody else, then you know, the issue is then foist upon myself or the other property manager to deal with. And like I said, there’s sky high expectations coming from these landlords. I was telling Erwin, a story of some Asian investors coming down with clipboards on a tour bus, like the same that would go to casino ramaa, etc. And instead of a gambling, yeah, different type of gambling and even argue it’s better. They were coming down to look at condo projects, downtown Kitchener. And one Saturday morning, I believe the realtor sold about 20 of them to these investors and then passed my number on. And when I finally spoke to some of these investors, they were under the illusion that, you know, the prices didn’t align with what I was telling them the rents would actually be because this isn’t downtown Toronto is not the street. You know, you don’t have guys from the stock exchange renting these places with six figure salaries. 

Erwin  

Yes, that’s not the financial capital of Canada. 

Moe  

Exactly.

Erwin  

Cambridge is not the financial capital of Canada. 

Moe  

Exactly. We haven’t we have to hold on, which has, you know, you know, which manufactures Lexus. So, I mean, there’s some high paying jobs there. There’s Google, but there’s only a few 100 people working at Google, and the majority of those people probably own their own unit. So these six figure salaries, they just don’t exist.

Erwin  

These these landlords aren’t gonna attract that tenant profile. 

Moe  

No, and it’s a blue collar area, even though Waterloo has the universities, the majority of single family, you know, tenants aren’t the same profile. So they’re not white collar. They’re mostly not educated. And the average wage even in the manual, even if you count some of the manufacturing outside of Toyota is still under $20 an hour. So once you’ve figured out the cost of living, there’s not much left especially if…

Erwin  

Wiat these are landlords who put up their money they must have done due diligence and knew this already.

Moe  

No, the realtor does the due diligence is the problem, right?

Erwin  

I’m sure he did a really good job to take care of this client. 

Moe  

Well, we do the clients that do come on, and I can convinced that, you know, you may be underwater, but you’ll make money with mortgage pay down and appreciation. You know, they’re the ones that, you know, after a while they gain our trust. And they understand that, you know, we weren’t the ones to put them in this predicament, but we’re here to help them out.

Erwin  

What was the rent delta between what the what they were sold, and what was reality.

Moe  

Anywhere between 500 to $1,000. So massive discrepancies. And, you know, the numbers just aren’t working anymore, unless you’re getting into bigger multi unit projects, where, you know, the cap rates may be above 4%. But just the prices have skyrocketed

Erwin  

And you can’t do 20 of those in the bus tour.

Moe  

Yeah. And the the lending rules have tightened. And, you know, we’re seeing even banks asking for asking us for like letters of opinion, you know, and sometimes we can’t lie, obviously, I don’t want to get involved in mortgage fraud. So we have to be honest of what we can get in rent. And then you know, you have realtors or mortgage brokers coming back and yelling, oh, you should have put 2500 down for that place. I’m like, you can Yeah, I was like, Yeah, you put up your licence, I said, you know, in reality only fetches 1800 dice. And even if the underwriter does due diligence, they’ll figure out that my number is closer to what he’s gonna find. And I said, it’s gonna be that dumb. They run comps. Yeah, exactly, exactly. And, but I mean, you know, at the end of the day, this is a commission based industry. Everybody’s chasing a quick buck, and they’ll move on to the next deal. And, you know, especially with mortgage brokers and realtors, once their deal is done, they’ve been paid, they wash their hands and let a guy like me deal with the fallout.

Erwin  

And that’s why I love the opinions of property managers. commission based, yes, right.

Moe  

Exactly. We have some commission based, like structure, but I mean, the day to day residual payments we receive, you know, the headaches from that don’t correlate actually, with what, you know, somebody on the other side is being paid as far as their, you know, outrageous commissions. And, I mean, I have nothing against realtors, you know, some, some realtors are my best buddies, but, I mean, their commissions have stayed the same ever since I’ve gotten real estate, which is, you know, half of 5% for one end. And, you know, house prices have, you know, in some instances gone up, like, you know, 500 to 1,000%. But the salaries from, say, 30 years ago, haven’t gone up commensurately. So, you know, these things don’t align. And, you know, but realtors, just because they’re making a lot of money, and the the biggest players in our town in our area, are doctors, lawyers, engineers, they’re not the you know, university educated. They’re actually realtors, some with high school education. And they’re good marketers, good salesmen. And they’re making outrageous sums of money. 

Erwin  

And that’s one of the problems of Canada. 

Erwin  

It is what it is, right? 

Erwin  

And this is part of the bigger problem, because as long as all thhose who are making money in real estate, that doesn’t really help the future of Canada. Which is why I’m guessing we have these young gentlemen here, who are gonna save us all. Yeah, so pay for the bill that we’ve kind of racked up.

Moe  

Exactly. Generation is social media generation, right. And, I mean, I like Gary Vee as much as the next guy. But I mean, the way he promotes things, sometimes it’s like he, you know, he’ll say, you know, everybody can just triple down on what they’re good at, and go make a tonne of money and not have any education, etc. Right. Not that I have an education myself. But I think, you know, there’s a, you know, we need people in STEM, like those areas and subjects and homeowners forward. Yeah, exactly. And yeah, if you can make, you know, or sell something online and use tick tock to, to sell it and promote it, and you know, have a business create good for you. But the majority of people are going to fail. And so I mean, that’s basically. 

Erwin  

All right. Well, I think we’ve qualified you as an expert on real estate. So hopefully, you’ve vetted these guys. 

Moe  

Yes, I’ll let them talk now

Erwin  

Akshat, Rishard. What are we talking about today?

Akshat  

I mean, you know, Moe covered his side of the story. You know, we met more through a social media group, you know, got connected and now we’re looking at the other side. You know, I always look at the older folks the experience folk, as not understanding technology or and

Erwin  

Now we’ve ruined everything for you people. Yes. Young people.

Akshat  

Yeah. But Moe was one of those few people that we really like, you know, we think he’s a great consultant to the team because he brings the experience and he understands technology is something that will move us forward. And hence, that’s why we’re here, myself and Rishard both co founders we met in Waterloo. He’s doing his PhD from University of Waterloo. I finished my degree? BBA at Laurier. This is our second startup. Just a quick background about ourselves. You know, I was running my first startup in 2016. I started, it was in the rideshare space. So basically how helping, you know, the younger generation, let’s say the college students carpool from point A to point B, because Uber is pretty expensive go buses, you know, you have to take multiple buses, whether you’re travelling downtown from Waterloo or Waterloo to say East End to see your parents. So when you start a carpooling platform, you know, using technology where we connected drivers with student riders, and you know, they just have to pay $10 $15 per seat, so the cheaper way for them to travel. 

Erwin  

Okay, okay. Did you make money on this?

Akshat  

So just a little story on that, in 2019, we pitched on Dragon’s Den and that was our, you know, our first go to pitch that came out on TV. And we launched it in 2019, as well, we had around 25,000 users in that year, myself, Rashard, and our third co founder, we sold it to a company down in Toronto. So we got acquired in 2020, just before COVID. And then we worked with that company for I would say, 12 to 14 months, and you know, myself Rishard and a couple of other people. He said, You know, we like the startup space. Let’s do it again. And that’s where we are here. Right. That’s where we started RealMe. I think before we get into the solution, I think the biggest thing, you know, I wanted to talk about is the problem we wanted to solve. People, you know, that are fresh grads, starting their families off, you know, they have, you know, not too much knowledge about real estate, as again, Moe was talking about how there’s, you know, real estate agents, I’m not generalising. But there’s real estate agents that are good salespeople, but they don’t know about the market, they don’t know about the area that someone wants to buy in, you have a lot of lawyers, but again, they’re not very well educated, you know, how to cater to the younger generation. And if you’re looking at from, you know, someone who’s 2627, talking to an agent, or a broker, they don’t even get taken seriously. Because people think, you know, us as a younger generation, we don’t have enough money, we’re just kicking tires, you know, looking for houses. And that’s where we wanted to come in, because we see the younger generation, you know, the 10 20k, they have saved up. So in some cases 50 60k, when they’re starting up their families, they’re investing, they’re investing in stocks, they’re investing in crypto, because it’s very simple. You open up our app, you put in your KYC know your customer details, and you can invest. We got thinking

Erwin  

Gradebook everywhere. Exactly. But then Dogecoin

Akshat  

Yeah, exactly right. Dogecoin, Elon does a tweet, it goes from a less than a cent to 40 cents in a day, right. And the younger generation is acustomed to that kind of technology. They like everything on their phone, everything done quickly, convenient, hassle free. And that was the biggest problem we wanted to, you know, address is younger generation want to invest in real estate, it’s a high switching costs, you got to put in a down payment of let’s say, 90 200k, get a mortgage, go through all the different aspects that the younger generation doesn’t like, and maybe don’t have the money to do so right now because of the house prices going up. And that was the biggest problem. Right? So one of the biggest things we do even before putting up a solution is talk to people in our target market. A lot of people you know, we spoke to they want to invest in real estate, but they don’t know how to, you know, we asked a lot of people, you know, why don’t you invest in REITs 75% of the people we spoke to they don’t even know what a REIT is. And there’s a huge major gap in terms of the you know, the education point.

Erwin  

You went to business school, I went to business school pay ever mentioned a REIT to us? Sadly, no, no. I think you’re on a lunch and learn they mentioned real estate to us. Brokers, brokers came in. Yeah, but there’s no nothing.

Moe  

Nothing on personal finance. I heard in Florida, they’re gonna be doing that.

Erwin  

I still don’t trust them. Like that’s funny, those Florida, I wonder if I’ll mention Bitcoin

Akshat  

We will get to the crypto very soon. I’ll kind of have Rishard kind of handle a solution piece. But I think, you know, that’s the biggest piece, right? Like, I think in the news, I saw, they’re trying to put in personal finance in the grade nine math education. But that hasn’t passed yet. I saw this news two years ago, I know me and Rishard, were talking about it. We’re excited. We’re like, you know, we learned how to do taxes, because, you know, we had our family members, you know, CPAs you know, we we know how to manage money because of that. It wasn’t because of the school education. And you know, that we got excited because we saw the government, you know, posting something like this. But soon we understood as we are growing up and getting more experience in the field, as you know, government will put up a lot of policies, but barely anything happens. And that’s why we wanted to be on the field and try to make a small change for our niche market so that at least people within that age group within that market can see a small, you know, customer gain for the solution that we’re offering. So, you know, I’ll have Rishard kind of handle our solution piece.

Rishard  

Oh, thanks, actually, then more manageable. Again. If you think about the entire In the market, right, the stock market, the crypto market, it has evolved so rapidly. And that’s why you have so many people adopting and coming into the market. For example, with the pandemic, in the last two years, we’ve seen so many people actually coming into the stock market and the crypto market than it has ever been before. But if you look at the real estate market, and if you ask the same target group, they haven’t really been been exposed to the real estate market, just because of the friction associated sure there has been a uptick in the number of people that are coming into real estate. But these are the same people that were already in real estate, not the newer generation, not the younger generation, like myself. And actually, we still have that entry to barrier becoming higher and higher, because with time, only the downpayment that you need to put in has gone up the mortgage, that the amount of income you need to qualify has gone up. So it has become harder and harder for people to like myself and actually to be a part of real estate. So we wanted to create a system that is accessible to anyone and everyone, because right now it’s not. And it is a problem for us, because as much as we love putting our money on stocks and crypto, like you said, it’s diversified, it’s not diversified. And then also, it’s dependent still, it’s in early stages, especially crypto whatnot, it’s it can be manipulated easily, like you, you try putting your money into some kind that was launched couple of days ago, hoping you make 100x 1,000x Like the people might be crazy. And if you really ask that when we did have a customer discovery, we talked to a lot of people we went to miles, we basically gave away Christmas gifts, talking to people understanding their pain points, we went to skating rinks giving away free hot chocolates trying to understand their pain point to a different audience, right, especially the younger generation, no one knew about REITs, everyone has forgotten about owning a house, most of the people at least for the next 1015 years, because they can get into it. But they still know the gains associated with real estate. They’re like, hey, my parents owned a house, they’re looking for another house, whatnot. So they know the importance of getting into real estate at a young age. And they also understand there may be there’s one friend out of their entire friend, group friend circle, someone who got into real estate now has done fairly well compared to the rest of the group.

Rishard  

In case it’s positive can you hand over Moes cell phone number? So they can call? Make a friend? 

Rishard  

For sure. So what we did was, again, for myself, and actually, it just looked at took a step back looked at all the research we’ve done. How much do these people have as disposable income, right? Most of the people don’t have that much as disposable income. When you’re young, you have bills to pay, you have debt to pay, you have student loans to pay. And if you look at the disposable income, it’s always in the range of let’s say, anywhere from even $50 Up until $50,000. Sure there are some people who are outside of those lines. But most of these people fall into this category. With this category you can the current real estate market doesn’t really address anyone within that range. You can buy a house for 50,000, at least internal nowadays, people in other age don’t think like, oh, we have to move to Calgary to buy a house. We still want to live here because this is where our families this is where our work is. This is where we have our friend circle is.

Erwin  

I know it’s cold here, but it’s called. 

Akshat  

Just to add on to Rishards point. I was reading an article average gift sites from parents to their kids, but it’s 130k for a downpayment.

Erwin  

That’s across Canada. What is it for Vancouver, Toronto? 

Akshat  

It’s probably doubled that right.

Erwin  

I think it’s close to 200 or Yeah, exactly. That’s, that’s what the reporting

Moe  

If it’s longer than 90 days in your bank, then it’s just yours not not a gift.

Erwin  

Yeah, so much is missed in the data that’s available. 

Rishard  

Yeah, there’s so much that’s missed. And also, we look at the ones who are not privileged enough to be a part of the real estate game. And thanks to our parents, but now we are privileged enough in a way to be a part of real estate in the real estate game. But use a research show, just talking to people showed us how many these younger people are actually underprivileged and cannot be a part of the real estate game for the next 1015 years. And this was a problem for us. And as being the younger generation we wanted to solve it.

Erwin  

You actually think they’ll be able to get in 10-15 years from now? I don’t know

Rishard  

I’ll let Moe handle that question.

Erwin  

How can you save fast enough to keep up with the market?

Akshat  

I think it’s not saving, it’s investing.

Erwin  

Okay, okay. So if you do the right things… oh my!

Akshat  

because it’s honestly about financial literacy right. From day one. Like imagine being a teen. You know, my dad is a CPA. He’s like, Akshat, let’s get a credit card. Let’s build your credit history. I had no clue what a credit history meant. Oh, because how School doesn’t teach me that. Right and having the privilege as Rashard said, right. Our families were privileged enough, right? These guys are CPAs these guys are business people. They know steps, right? They have RRSP fund for us, everything was set up, but around us and being in the target market where a lot of people weren’t, we could see the problem, we could feel the problem, even as buying, you know, the story us buying the first house was a huge issue, because we were on our own. Yeah, we got the help from our family. But it was a difficult, you know, process because we had no clue how to buy a house. You know, we’re second time tech startup founders, you know, we have a lot of we like, Yeah, this is easy. But as soon as you get in the real estate market, it’s difficult because it’s your major purchase that you’re doing in a tech stock, you’re investing maybe five grand 10 grand in real estate, you’re investing 100 grand.

Erwin  

And if you have known your title mortgage, exactly, right. It’s really it’s a big commitment.

Rishard  

Yep. Yeah. So that, like I should say it again, those were we ended up being we had a roadblock, okay, there’s no solution. It’s just like, Okay, you, you basically put your money in a random coin and hope it goes up by 10, next 100x, in the next 10 years, and maybe, maybe still, I’ll have a chance that real estate, right.

Moe  

I mean, as far as like financial literacy, like a lot of our clients are white collar, very educated, but some of them come in with no concept of how to invest or anything. And, you know, they were these tenants know, landlords, I mean, like, like, you know, some of our clients are doctors, lawyers, engineers, smart, smart people. But I mean, you know, the basic concepts of landlording elude them. And, you know, sometimes it’s like, we deal with people all the time. And sometimes it’s the ones that, you know, that are the smartest that out with themselves. Right? And, you know, I think you’re You told me your dad’s a doctor, too, right? Hey, yeah. So I mean, I don’t know, if you got him.

Erwin  

Yes, he understands a lot more of the poems and why, why we need to invest. 

Moe  

Yeah, so. And as I mean, you’re a father, you got a couple of kids, but I mean, make sure that you know, this is going to take priority, and your kids are going to know this stuff growing up.

Erwin  

We’ve already had discussions with our kids. So first off, my kids are eight and six. We already have discussions with them about what money is, wow. And what fiat currency is.

Akshat  

Because I remember when I was a I know, from mine, and Rashard, that we were outside just playing with our neighbours, that was our only.

Erwin  

Can’t see other people

Moe  

So, his children, it will be the rare circumstance where they’ll either, you know, figure out a way to buy their first property or investment property have their property, you know, I didn’t want to say that he’s probably already got them set up.

Rishard  

I was talking to someone else yesterday. And then he’s into real estate investment as well. And he said, Oh, I’ve already gotten the properties for my kids, but they won’t know until they get married. They will, I will surprise them with the gift, because I know for a fact they won’t be able to afford the house when they get married. Yeah, I’m like, wow, say it’s a you have to plan now, if you are privileged enough so that you can help your kids maybe in 20 years.

Moe  

Yeah, I mean, they’re already SOL, the majority of them coming out of school, you know, married in debt and nobody to guide them. Right. So this is going to be a common theme going forward.

Erwin  

we can blame whoever we want. But from my experience, second generation investors are much better than first generation investors. So who we assign the praise for that. Right there. Parents. All right. Wish, like more were you’ve seen this. You’ve seen second generation investors and how much better off they are? Yeah. Second generation anything second generation cop, Doctor? Teacher? Anything? Yeah. All right. You’re better at you’re probably better than your parents were when they started. Yes, no. So we can blame everyone. 

Moe  

Yeah. I mean, there’s lots of blame to go around. 

Erwin  

But we know that we know the path of success, though. 

Moe  

Yeah, yeah. 

Rishard  

So even so going back to where I left off, even with, let’s say, in our case, we had money saved up and had some help from parents and family too and still then you look at all the debt to income ratio, all of us, like, you know, we have all stepped up and we have a car that’s leased out and you add all that up, you still can’t get into real estate market, even if you have the downpayment, even if you’re making good money as we are both in the IT field too. 

Erwin  

I have both those things, and I had girlfriend, alright, continue that last one that you guys do, so please continue.

Rishard  

Well, so it’s hard. Even if you have the money, you still don’t have an entry point, especially in the in the generation that we are targeting. That’s when we decided together to come build a solution that can cater to the entire younger audience. And it doesn’t it doesn’t start from the younger generation it can It caters to the entire population, like you said more. There’s a lot of these folks who are really smart, who are who are doctors, engineers, who still don’t have that literacy enough to make that right choice. And people want an easier and easiest solution. Because with, with the day and time today, people are used to more of Tap, Tap, Tap Done. It’s even the checkout process, everything is becoming so much simpler, that you take away so much friction. But real estate is one of the biggest sectors in the world, but has remained the same ever since you’ve gotten to the point sure the prices are increasing, but the technology associated with it has stayed the same. That’s pretty bad, pretty bad. And it was outrageous. That’s when we decided to build the system where you can buy fractions of a house, we looked at Bitcoin, we looked at stocks, we look at what Wealthsimple is doing now, you can buy a fraction of a stock, you can buy a fraction of a Bitcoin, you can buy fractions of crypto, but can you buy fractionsof houses? No.

Erwin  

Shipment needs to happen.

Rishard  

That’s when we saw an opportunity. And the need was confirmed by other it’s by talking to people, we need to build this from ground up. We basically said hey, we buy a house, we divided into $50 units, you can now invest anywhere from 50 to 50,000, whatever the number that person wants to now you’re a part of the real estate.

Erwin  

Wait So are you guys capping it?

Akshat  

There’s a cap just to make sure I mean, Rashard, we’ll go into more governance pieces 

Erwin  

Well not for me, right. Yeah, so I’m not Catholic, right. All right. All right. 

Rishard  

Anyone who’s anyone who’s who’s already in the real estate market? I’m sure you are most likely that not an accredited investor.

Akshat  

Yeah, cuz I mean, you have probably two properties is worth more than 3 million.

Rishard  

The record is there, then you’re good. There’s no limit when it comes to that if you’re an accredited, but then sure, we still do have to play by the book, we need to ensure that we are looking at your risk to your risk ratio. And we are giving them advice through our partners. To tell them this is how much you can invest safely in this so that they’re not just taking a random bet on the real estate market. We are also still mitigating the risks through all these other partners that we’ve made. We’ve, for example, like more, comes with so much experience, we want him to advice we want him to tell us if we want him to tell me how much should I invest in this, this particular property, I want to diversify my portfolio as well. For example, we looked at REITs, right? When you when it comes to REITs you’re putting the money on the entire portfolio that they have. But I personally prefer putting my money in each house.

Akshat  

Because you look at commercial REITs right now, last five years, most of them are actually losing 8% Over the last five years, which is a crazy stat. I know COVID is a anomaly where you know, REITs are commercial rates went down because there’s pressure off of space. But you know, the as Rishard talked about, a lot of people obviously first don’t even know about REITs. But when they look at the returns, the younger generations, you know, used to 40 50% return in crypto, imagine showing them REITs they’re like, no What the hell, right. And that’s why using individual real estate, and you know, providing them an actual house $1,000 into this, and you know, we’re gonna maybe finance maybe cash, whatever that is, you’re leveraging your debt as well. If the market goes up by 10%, you’re probably making 20-22 back, depending on how you’re leveraging your debt. And that was the case, right? A lot of folks within the target market wanted to be part of individual fractional ownership, right.

Erwin  

As you just mentioned, something just run a clip, I just want to highlight it, a lot of people don’t understand our returns are so high, because we’re so leveraged   Exactly, exactly, you put on like put down 20% For example, then the returns are basically if property goes up 3%.

Akshat  

Yet, your cash and cash is great, even if the market is going up. 10 15%.

Rishard  

then the point being is that a lot of younger generation, they look at this news, write all that and then they’re like, Okay, it’s 23% 23% doesn’t really mean much to me when I’m making maybe 20% over four months, but they don’t see the leverage piece because you’re putting 10% down, let’s say you put 10% down 90% leverage and then you’re nine times whatever the profit that you’re making, so if it is 10% You’re making 90% on your downtime.

Erwin  

And that is just an example we don’t worry. Yeah. Are you guys actually finding landing for this 90% value?

Moe  

People yeah, like I mean, you know, I get younger generation though, you know, talk about crypto and stocks and you can get a mortgage for that stuff. You know, you can get a line of credit for whatever you want to do. But for you know, mortgages you know, it’s you know, you can’t beat it at night you know, and explain to people bad debt, good debt, etc. Right. And okay, You know, what are you going to do in 10 years? You’re gonna catch it, everything’s there, no, oh, well just stay in debt. The more the more debt you have, the more you make, right? And they don’t seem to get that right and explain to people that, you know, how does this person buy 30 properties while I go, they go further into debt, I said, you know, I tell them, you know, the, these properties, they appreciate the mortgage gets paid down, and you know, their equity increases, they’ll go back to the bank and borrow even more money. And I said, go buy it, and then, you know, rinse and repeat. It’s a common, you know, formula. And that’s just how it works. And, you know, the people that to realise that leverages everything, and this game, they’ll, you know, do better than the person that doesn’t, 

Erwin  

And this isn’t financial advice.

Akshat  

You know, example, like, I know, so many of my friends, they’re like, 2625, two years after university, they have money sitting in their savings account, a 30 40k. Because they’re working jobs, they say they’re making 80 90k in Toronto, they have money saved up, but they’re putting it just in their savings. They’re maybe putting some in stock, some in crypto, but most of their holding isn’t savings. Because they they think saving the money. They don’t think what inflation means, right? Last year’s inflation was what, eight 9% or something, something crazy. And for them another example right for them. There is this year OSAP Bill 30k, I can tell you, like 80% of my graduating class would pay that 30k Right away, if they have money sitting because like, then I’d wait there as long as like, when you look at the interest rate right now. 24, the government’s doing on OSAP it’s close to 1% you’re paying what let them borrow 1% pieces off, like, you know, understanding like from financially.

Erwin  

Like God, I go London. Give me 5%

Moe  

Or 14 for somebody else.

Erwin  

This is not this terrible for the gentleman, please. Let’s go back to the investment though. What is the investment? What is the underlying? Because that yeah, if the underlying is good, that protects the investment, right? Because we’ve seen Epic Fails of not very good investments. So please, what is the investment? So Metaverse is it plays in universe, 

Moe  

It’ll be actual real estate like brick and mortar, right? You know, where someone’s not going to wake up and decide to sell it right away. Right? So, you know, we’re going to do a mix of different things, see what works. You know, right now, it’s, even though myself we’re in kW car companies in kW, see, I would prefer if we bought these properties that we’re going to be getting funding for down our way. But the numbers just unfortunately, don’t work with how prices have skyrocketed. So our first couple of investments have been out of town, and ones in Kirkland lake, the home of Alan Thicke and found a property. And Elizabeth Kelly, I think, you know, her, she or her husband runs a property management company up there. So they’re helping us, we got a great deal. It’s a lower end unit. But I mean, the numbers are terrific for what we’re trying to do. And you know, what would be a down payment here, you can buy the whole unit up there. And then we picked up a duplex in that that one, Kirkland Lake is a four Plex, the duplex that we got off market is in Peterborough. And we’re looking to eventually move the current tenants out after their school term and raise Yes, students and raise the rent, I forget, I think you want us to Stanford for school, and the other unit is vacant, we’re going to be doing some work on that one and try to get top dollar for both units come trespass. Because that’s when that term ends, and you know, have a nice cash flowing property that we can either flip for, you know, a profit or cash flow and hold long term and see what the appreciation is like between two and five years. So, you know, depending on the situation, it’s gonna determine what we do with these properties, right, you know, might be buying hold, it will be the, you know, the majority of what we do, but I mean, you know, if the market dictates a flip scenario, and the money’s there to be made, you know, that’s how we’ll go about it. Right. And hopefully, these smaller investors can enjoy these types of returns, and it’ll be a little while, it’ll be a lot safer than crypto safer than, you know, the stock market. 

Erwin  

Real underlying. Yeah, that’s a real physical asset. 

Moe  

Yeah, exactly. The underlying asset is stable, and you can’t get a better market than Southern Ontario. And as I was alluding to earlier, yeah, Vancouver and Toronto are basically, you know, out of most people’s range, and, you know, so they’re looking at other parts of southern Ontario and we’re right in that area. And I think there’s lots of rumour run. So I think the next five years is when you’ll see another big leg up massive gains. And I think people will look back on this time, like, slightly post COVID, if you can call it that, where they’ll say, You know what the war is going on rate hikes are coming, this is actually a good chance to buy, because these are temporary, yeah, this is just going to be before the next run up. And, you know, even in the last six to eight weeks, because we’re talking in early April of 22, or now, with the difference between end of January, early February to now we haven’t seen the amount of bidding wars that were going on, you know, slowly, you know, conditions and inspections have come back on some properties, especially where we are that we’re doing the same thing. And, but I mean, I think this would be short lived, I don’t think a home inspector should get too cosy, because it’ll go back to the craziest soon enough. That’s basically what we’re doing. And that’s where I’m trying to help these guys. And they’re obviously taking care of the tech portion and the platform, and they have some great developers, and NF T’s will also be a part of it. I have no idea how they really work. So I just keep hearing it, and I’m trying to figure it out. But it’s one of those things that like crypto, I still, you know, understand the basic concept, but it’s hard to wrap your head around.

Erwin  

All security. Yeah. That’s Internet security.

Moe  

Yeah. Blockchain. I mean, you know, I don’t know what these guys have planned as far as the technical aspect. But they’re bright guys. And I believe they’ll have a solution that works. And it’ll be different than someone like Addy, where, you know, they’re looking for I believe, minimum $2,500.

Akshat  

Maximum is $1500. Okay. The holding period, I think, four or five years, okay, you have to hold on.

Erwin  

Folks, we love it, we’re, for sure. Feel free to like, I’m not positive as I don’t know, for sure what the cap is %1500,

Moe  

I thought was 2500. That’s where I got the number of I thought it was credit investment. I know, there’s another platform out there. They’re coming out with Willow, and they have a little bit of a different structure. But this one should be a lot easier for junior investors to migrate. And it will be more along the lines of something like Wealthsimple.

Erwin  

And then so can you describe the investment is a DOW, is it or is this blockchain based?

Akshat  

It will be tokenized, essentially. So you know, just to kind of go into a background about NFT’s right? The last couple of years because of COVID. Everyone’s you know, on their computers and Facebook changing their name to meta Metaverse, and everyone going into buying, you know, land on a server. Right? All the influencers are putting their own tokens out, right, you you look at the note, boys, right? They had a huge token offering for a lot of their followers, they raised $4 million. And the tokens are nothing tokens just provide, hey, the boys minted our token on a on a network and giving it to let’s say, Rishard and me, what this token holds is, let’s say you and they get some free merch, you know, maybe they get like, say meetups, exclusive meetups in Toronto exclusive meetups everywhere. That’s what the token meant, okay means for the influential membership card. Exactly. From a from a digital standpoint, well, how we are looking to use NFTs, and combining it with real real estate is when we buy real estate, we put it under a smart contract. So when we meant tokens, let’s say we’re using Etherium blockchain to make a smart art, get a smart contract together. And mentor token through that, what we’re doing is we’re making a set amount of tokens that are worth set amount of value for the real estate that we have on our platform. So now we are basically using digital contracts in order to give you a token, give Rishard token, you have more token, give myself a token. And when you hold this token, you will get obviously rental income. And when you want to trade it in, you know, we look at appreciation even before the house is sold to give you the appreciated value for token how real estate right now it’s done is I buy a house, I get investors, I sell the house, I give you the profits. But why can we change it how stocks are? Right real estate always is appreciating? Right? 

Erwin  

Not always, depends on where.

Akshat  

long term. You’re looking at, let’s say from 2000 to 2019. It’s in Ontario, it’s gone up eight to 10%. Every year has been a gift. Yeah, no bad performance. But sorry, Alberta. Yeah, you look at you look at from a being a safer investment and a long term outlook. But if you have tokenization and give tokens to let’s say, 100 people, and you provide them a appreciation if they want us trade it in when they need the money, it’s a better angle for them to get into real estate on day one, and try it out for themselves. Right and by providing them tokenization you can also provide governance as you talked about Dow we’re not there yet. But what we’re doing is providing individual decision making, let’s say we have a house in Kirkland Lake four Plex, you know, we want to sell it, we can, you know, send out a quick update on our application. Hey, what do you want to do. So once we have a majority vote, we can sell it. So we’re providing a vehicle, right, as a technology platform, what we want to get into the future is homeowners can list their homes, we’re not going to charge them 5% of the home value. So there’s a huge positive advantage for them. On the flip side, you have fractional investors, people that want to buy this token, this NFT. But now this NFT is backed by an actual physical assets that you can touch. So it provides you the best of the technology world, but also it has good hedges you against, you know, a scam, like how a lot of NFT projects have been. But the technology itself just tied to something in cyberspace. Exactly. But yeah, if the network shuts down, yes, there’s that but then you can back it up. And you can have those things in place as well. 

Erwin  

No, my point is more like a like digital art, like, for sure. Yeah. What is it? Like? How you have that? Fire? Yeah, across the market for it, you know, versus a house in southern Ontario. And so again, like, there’s a market for it.

Rishard  

There’s definitely a market. And then also, we want to be able to if you’re going after the younger generation, who are into crypto and all these other assets, digital assets, we want to be able to talk the same language that they are able to understand we don’t want to go to them and be like, Hey, this is the mortgage, this is the agreement you assign, this is what you’re getting all that stuff, we can still do it i There’s nothing wrong with it. But we we don’t want to reinvent the wheel, if it is already been invented by a different cryptocurrency the digital asset, we’re just building that together. There’s real estate on this side. There’s digital tokens. On the other hand, we are basically marrying them together. And we are basically telling people, Hey, instead of putting your money on an asset and betting on it, why don’t you do the same thing that you’ll be doing with crypto, but instead of just betting on it, why don’t you take a calculated risk with us, you’d not only take precision, but there’s also rental yield that will be paid out to you on a on a quarterly basis, or whatever that we get to that point. And nowadays, if you look at a lot of these crypto projects that are coming up, even even I saw a project a couple of days ago, where they basically the concept is you initially buy into these currencies, the digital tokens, and they want you to hold because more people hold this, this particular the token, the value gets goes up because of supply and demand. Again, just like how it is with real estate, more people holding and don’t want to sell it sell their assets. So there’s less supply on the market. So there’s the value for each token goes up. But now that has no there’s nothing backing it up. It’s just that me buying a digital token and just keeping it up, just because it’s gonna go up, it’s just manipulation of the market, I’ve, unless there’s a real, real utility to it. With our kids, what we are doing is it’s a house, you’re buying a house, and we are going to keep it without selling it. And so you can so can you if you want to sell this completely fine, but you will be losing out on the entire position that we would be benefiting our when we sell the house, but you will still be able to benefit it partially, there’s nothing like that right now you can’t benefit partially out of a position, either you by yourself, right? What we are creating is that platform where you can buy into whenever you want, you can sell whenever you want. And at the same time, if you hold it for a longer period of time, you’re gonna get more appreciation, and also you’re gonna get it rental yield, that’s going to be paid out to you. So it’s a simple system that the younger generations are aware of, and the real estate market not so much, but bringing two together so that now you can invest in real estate without actually having to gain more knowledge. But this will make them research into more into real estate. 

Akshat  

Exactly, exactly.

Erwin  

Something so at least we need the easier starting point than buying a million dollar house. I’m in this business. So I understand how hard it is to get someone off a zero to from zero to a million dollar investment property. Exactly. So you mentioned yield paid for people who are holding tokens is that paid in cash is that paid more tokens?

Akshat  

So that’s something we’re working on it probably wouldn’t be paid in cryptocurrency we can use stable coins which are basically like let’s say USDT is pegged with the USD dollar. So people get digital currency like that. So let’s flip it to cash if they want. They can flip it anytime or they can.

Erwin  

Okay, we all need cash in our lives. No one’s taken my USDT. When I go buy lunch first mind shawarma.

Rishard  

This little piece about that having USD T or digital tokens that that’s pegged to $1 is now you can Do whatever you want, right? You can buy more unit in the same house and you’ll stake it. Yeah, you there’s so much utility to it.

Erwin  

I think we’re not so there’s gonna be a couple people who think we’re not. And we’re talking to foreign language. So I have a few more questions, follow on questions, how does someone exit their investment. So say I buy, say a pub $1,000 bar to buy tokens, I put 1000 hours of fear to buy tokens, how do I exit?

Akshat  

So currently, we have a one year hold period, just so that we get the demand and supply side, you know, getting to a point where we can do the buy sell for now what we’re doing is, let’s say you hold Rishard holds a token for 12 months, he wants to give it back. He wants to make the appreciation. He just, you know, messages the company, we give him the money or the digital currency with a precision back to his wallet account that’s connected with the real means account. So he gets it back, let’s say in 24 hours.

Erwin  

And those are gonna be a limit on how many people can redeem.

Akshat  

Again, right now we are seeing a one year hold period. And the thing is, you know, we have a we have a limit on how much you can invest. Let’s say you can invest 100k 200k On a rainy day property because then when you look at the governance piece, you hold the most value then right? We want to make it truly decentralised where people actually have the voting power, or they feel empowered, let’s say, you know, our limit is 5k. Again, that’s something we’re deciding on and working on, as we

Erwin  

Addy is 15 to distract Yeah, that’s the math 1500 1500.

Akshat  

Yeah, so I think that’s the piece where we where we say, okay,

Erwin  

Sorry, I said that wrong enough is 1500 Yes, 1500 is the maximum,

Akshat  

let’s say our limit is 5000. So when you invest 5000, and you want that money back, it’s easier for us to you know, go to our wallet or our own fund and just give it back to you. Right, but rather than someone investing 100 grand. But now when you make that system, and you have people buying and selling, we don’t even need to be involved, we truly become a platform, you want to sell your token, someone else can buy it at appreciated price, and they can hold it.

Erwin  

Right. So I unfortunately, it wouldn’t be the most liquid thing and the bid ask and probably be pretty wide on it, like years of market makers for this.

Moe  

No, I mean, like I said, he’s gonna, you know, it’ll take a while to get to that point where it’s actually, you know, tradable you know, on a day to day basis, right. But up until that point where there’s, you know, enough users in the platform, you know, big enough, you know, you’re kind of be stuck in it. But the end, the end goal is to make it like basically, well, simple for real estate.

Erwin  

Any like structured exits, for example, like in five years, so we’re gonna sell it no matter what type of thing or…

Moe  

Nothing, nothing. You know, yeah, we’re

Moe  

gonna refi it? 

Akshat  

That’s all decision of the folks that own the tokens, because we let them decide because it’s, like a Dow, exactly. I mean, that’s where we want to get into right, basically, making everything decentralised. Right,

Rishard  

first couple of property properties, people like most gonna make the decisions. But once we get to that point where we have enough users being able to make that decision with still some expertise from people like Moe, we don’t want them just going crazy. Clicking a button. Yes, yes, yes, let’s sell this property to trigger happy.

Moe  

And, like, I mean, you know, like I said,

Erwin  

this isn’t quick money, you know, we’ve been at understand that this is still I mean.

Moe  

If we, if we have a market run, like we did back in late January, early February, you know, that’s where, you know, it could get exciting and, you know, be everybody can decide, okay, yeah, you know, what, the 51% want to sell? And, you know, the other one wants to hold, right. But me, you know, the 51% that sold would have been right, you know, this time around, right, especially with the you know, incremental dip, right. 

Erwin  

So again, it’s purely need to get off zero. Yeah. And if you can afford to buy your own property, you should probably buy your own property. Yeah. Make your own decisions,

Moe  

You know, likely not going to be the case, right? 

Erwin  

That’s not the target investor for this. I mean, I’ll just give a quick example, I’ve been criticised for not doing our ESPs right, because it’s not too much. It’s I have too much going on my life. I don’t have the time for it. Right. My kids already each own a house. So yeah, they’re doing all right. 

Erwin  

Yeah, makes sense. Yeah. RRSPs are RSPs like, you know, a lot a lot of that stuff is, you know, for the working individual nine to five, it’s set up to vote for them. And

Erwin  

RSP is so much smaller than our RSP it’s so small.

Moe  

At least it’s something you know, better than nothing, right? Yeah. But I mean, if you know what you’re doing, you’re just gonna do other things.

Erwin  

Really cool. And can you share what your criteria is for an investment property?

Moe  

We don’t really have a criteria whatever the deal is solar same as like, you know, your realtor, you know, your Realty, taking investors around and showing them places is always just a matter of what works. Obviously, cash flow and future appreciation come into, you know, they’re probably the top Two things.

Akshat  

Two most pointed right. That’s why we looked at Kirkland Lake and Peterborough, because you’re looking at a cap rate of at least seven to 8%. So now you can give some rental yield back to the folks. Because if you buy something in Toronto, it’s maybe a percent.

Erwin  

Yeah, that’s given my credit card. So you can take money from me each month, you know, yeah, exactly. Gonna make it work. Unless you buy cash. So sorry, are these properties that you mentioned, like computer brunkert, like, there’s mortgages on them?

Akshat  

Right now, we it’s all cash offers, you gotta move,

Erwin  

Because how else you’re gonna get more who’s gonna who’s gonna qualify for the mortgage,

Akshat  

Exactly. You have move the model get into the market, or then you can look into, you know, getting some private folks private funds involved, right? Like there is I know, the the pension plan does a lot of investing in real estate. So getting folks like this behind you, so that they can fund your operations, maybe work with banks on the commercial side, right, where we can get some money that’s asset backed, so we can get to 80% and loan 70% and loan that 30% could be people’s money put in. So appreciation could be leveraged as well, over time.

Erwin  

I mean, the structure and the regulation for this investment, does it fall under Securities Commissions or rallies all cities?

Akshat  

Again, we are looking at an LP structure. But if you look into let’s say, a token versus a security, right, there’s four criterias. So again, you know, we’re working through the legal side, we have some partners, but if we use tokenization, it doesn’t fall under securities for now. Exactly. And you look at some of these companies in the US doing it for I think the last two years and getting over 100k users. And there’s no you know, rules or regulations, because you’re basically getting smaller amount of money, you’re not getting 100k from a non eligible investor, you may be getting 5k from that person. So the limit itself is very small per individual. And if you’re tokenizing it and the transaction that happens is done through digital currency to a token, so your security has to be a cash input. So if you can change that, it currently, as of today, it doesn’t fall under that.

Erwin  

I can imagine how long things will take if the government gets involved with security.

Rishard  

If you really think about it also, like if we are truly a platform, at the end of the day, we are not selling securities, like looking at the concept of it. We right now currently, you see people, four people, five people getting together and buying a house. And they don’t have to go through exempt market dealer or trying to understand if they’re accredited or non accredited. When you’re putting let’s say me, and Moe and Asha, then let’s say four of us decide to buy a house together, put, put, let’s say, out of the 10 of 20%, that we are going to put, let’s say each of us take 5%. And 5% means 50,000, or 100,000, doesn’t really matter. No one’s going to check if you’re an accredited, non accredited whatnot, but you are still able to do it. And it’s completely legal. And what we are trying to do is the same thing we are trying to bring into for people, we’re trying to maybe bring 100 people together per property, we are trying to bring 200 people per property, we are not we are we’re basically bringing them together to buy that entire property. So we are truly becoming a platform, a middleman to actually provide, hey, there are these are some great opportunities for you guys to invest. And if and then on the other hand, we are bringing people, Hey, here’s how you can invest using tokens. And we are bringing two together, and then now it’s a close community for that house. But for let’s say for house that we have in Kirkland Lake, let’s say we get 200 investors through this platform. So it’s 200 people closed in and look with that house. They’re married to the house. Now they make whatever the decisions later on to do whatever they want without so it’s exactly how we would own a house. With four of us. It’s now with 100 people with the medium to do that communication. For first we can make easy decisions, right? Right now, let’s say mom wants to paint the house. We all agree we paint the house. But when it is 100 people, you can’t necessarily do it the old way. To make that decision, you need a structure. That is what we are bringing into our platform as well.

Erwin  

 I look forward to and this all works. Because I might want some early exits on some of my properties while maintaining a lot of ownership.

Moe  

Exactly. And I mean, it would be no different than you know, buying a stock and getting something in the mail, like a proxy vote or whatever. That were, you know, they expect you to chime in and you know, like I mean, it may not matter depending on you know who the major shareholders are. But the term we’ve bandied about is democratisation. So I mean, that that’s how we’re gonna look at it and small investors, they, you know, in that 1000 $2,000 range, there’s no way you can get in the market, there’s nothing you can do. You can’t even pay legal fees with that number, right. So I mean, to get up piece, you know, real estate and, you know, consider yourself a real estate investor. You might be the only way to do it,

Erwin  

Right! Could I ever, ever use like RealMe and offer up 49% of one of my real estate properties?

Akshat  

That’s something we looked at. It’s just is difficult because, you know, you probably have to put in a property in an LLC, like if you’re going in the States, and then using that putting that LLC in a smart contract, so that people can buy it. So it’s hard to do fractional we looked into and maybe in the future, okay, because it, it opens up your, you know, where we’re at, and gives you cash right away.

Rishard  

Exactly. So like I said, we wanted to start from that initiative, because we always believe in technology. And we, again, Moe is a great guy when it comes to real estate making those decision. But at the same time, let’s say for us to scale up, right, like, we can be going around trying to find properties every day, let’s say we grow. We want to get into the place of even for a in our case, example, we got a house and I wanted to see if I can sell a portion of it and liquidate that, but I couldn’t, I had to sell my entire property because that’s the only way to get out of the investment. So we looked at okay for us to become truly a platform. And to be able to scale this up, we need to really become the platform that connects the two sides. Right now we are doing this part right now, buying properties and doing all that. But we want to get to a point, there’s technology, you let’s say you want to put your property down, we do the evaluation using all of our the algorithm that’s involved, we say, Hey, this is the price that we can offer you for this many shares. And of course, mitigating the risk at that point as well. And then getting to that point where you can still own 51% 49% goes in here, they own 49%. And when you get to that point, again, this is very long term. But again, that is that is sort of the direction that we would love to go forward.

Moe  

And I recently picked up a triplex that we were going to throw it on the platform, and I was gonna do exactly what you’re saying is, you know, but I think you know, there’s a huge market out there for that. Because I mean, what you’re suggesting is, you know, what, I can avoid going to the bank and doing a refi. And, you know, giving him you know, all that information, I can just go to this platform, raise the money, you know, have it on there, right? joint venture partner? Yeah, so, exactly. And so I mean, but in that instance, you know, then you would have people that own these properties and decide, okay, something happens in their personal life, they need to sell that property, like, you know, what’s the exit strategy, they’re far more invested is going to take the house out, or you’re going to have to basically make everybody hold that investment. And, you know, plus whatever appreciation they have, and then take the unit back. So it gets a little bit complicated. That’s why we’re just doing it in house for now. And then later, as it grows out, then we can, you know, see what kind of model there is for that.

Akshat  

Because in that model, it’s very hard to leverage that as well. If I’m taking, say, 40%, I’m giving you 40% cash. Now, appreciation, how does that work? Do I get 40% off your returns? Or do I get 40% of just the appreciation, right? It gets tricky. And we actually did a couple of test runs. And I mean, we still made money for some of our family and friends that put in money within our first two three properties that we you know, we didn’t launch, we just did test runs on. It made sense. But it’s just that aspect of real estate has always done well with leverage, right. And in this case, maybe there’s a way we can do both so that homeowners happy because it’s easy for them. And then the fraction investors happy as well. 

Erwin  

So we mentioned stocks and shares a couple times and one of the things that shareholders don’t like is shared dilution. So how do you control how many tokens are issued for?

Akshat  

So each property, we’ll have a finite amount of tokens that are issued on day one, so the tokens can increase or decrease? Because on a smart chain, it’s a contract you’re writing. So once a contract is written, you can change it. So it’s, you know, you can say for if it was just a corporation, we can just issue more shares. But on a actual blockchain, you cannot. So the the people that get the tokens, there’s no more tokens that are made by us. But what we can do is these people can buy and sell within a platform or long term.

Erwin  

But this is the same tokens. These aren’t new tokens.

Rishard  

These are not Yeah, exactly. Imagine now once we get to the point where we have that many users, but finite tokens. Now you have that marketplace to buy and sell whenever you want

Erwin  

Like NF T’s and they’re finite. 

Akshat  

Exactly.

Moe  

Bitcoins finite, right.

Erwin  

Fully becoming finite. Yeah,

Akshat  

there’s about, I think 2 million left somebody’s mind. But then I think this crazy number 3 million has been lost by people.

Erwin  

Yeah, who knows how much was lost? And how many people will refuse to sell it no matter what.

Moe  

I lost some, but 100 bucks worth. I lost the seed phrase.

Erwin  

It’s only it’s worth 100 bucks today.

Moe  

It’s probably no it’s probably worth about 300-400 now, but I mean, I contacted

Erwin  

Coinbase Coinbase stuff

Moe  

You know what? I don’t want it to at least give it to charity. They wouldn’t even do that.

Erwin  

No, they can’t access it. It’s gone. They can access it. Yeah. 

Moe  

So just in the ether just sitting there. I stopped looking at it because you know, as can be 1000 bucks now, right?

Erwin  

Yeah, that’s a weird, crazy thing. Yeah, I had a friend who lost a bunch and went to see a hypnotherapist to see that you’ve figured out his password didn’t work out.

Akshat  

That’s crazy. He went to a therapist?

Erwin  

Hypnotherapist. Oh, there was a guy from my tribe members password.

Moe  

I was reading a story some guy from 2010 2011 in England, he he bought pizza with a bunch and he had a bunch of those. He there’s girlfriend threw away the drive that had the password. And he’s still fighting with city at somewhere in England to dig up the landfill. Half a billion dollars or something crazy and go and touch it.

Erwin  

It’s gone. How you find it too? 

Moe  

Well, he’s got all this stuff figured out. 

Erwin  

Yeah, people that would that would help them find it for a piece. Yeah.

Rishard  

So funny faces. I remember my password. But I did invest. So it was at that point when I was in undergrad doing my undergrad 2000 This was back in 2015 14. I think I wanted to test out so I put I think I put one buck or two bucks. And it’s it’s now I’ve somehow I was able to log in few days ago. It’s one buck two bucks. I think it was close to $20 but not so I’m like, only if I had put baby 100,000 or 10,000 Forget about geez, I actually tried it out but of course didn’t keep track of that, but not.

Erwin  

FascinatFascinating. Gentlemen, this is fascinating stuff. I wish you all the best. How can people follow on your journey?

Akshat  

So we have a landing page on real me property.ca So they can join the waitlist. So for the first 10,000 people, we’re going to be launching our MVP like our minimum viable product platform so that they can you know get into the first two investments. So that should be going live in the next 30 days. But you know, they should be able to sign up on realmeproperty.ca through their email and once our platforms live or at least for MVP use, they’ll be the first ones to use it.

Rishard  

Yeah, then they can also follow us on all social media at TikTok Instagram and Facebook as well. RealMeproperty and RealMe.

Erwin  

What do you guys putting on TikTok.

Akshat  

Right now on TikTok is more the education side, okay, telling people but…

Erwin  

How long are the videos? 

Akshat  

15 seconds. You’re giving them that quick word.

Erwin  

Test Moe, 30 years in 15 seconds and we’re done recording. You’re gonna dance your dance while you’re doing.

Moe  

Ssocial media part is taken by anti thing care of by some social media experts, we’ll call them younger people than I asked. Right? So. And yeah, our company, kW property calm. You know, you can find us if you’re looking for a place to rent or you’re looking for management. We have landlord forums, tenant forums and Instagram, Facebook, tick tock, we have kW property has accounts and you can engage with us there as well. And whatever you need, like I said, 75 to 100 kilometre radius, we can manage your investments. And the one thing that really separates us from everybody else is because of all our foreign clients, we do not touch the money that we don’t touch the clients rent. So majority of property managers take the rent, take your cut, give you the difference. Problem with that is embezzlement, fraud misappropriation of funds. I believe there’s a property manager in Waterloo who stole about half a million bucks being charged right now. So that was in the paper. And we have some clients that will have anywhere between like 2030, up to 120 grand storm. And so that being said, our system is different than everybody else’s. And the rent goes from intense chemicals to the clients account. We bill you separately. You can even pay us by credit card. If you click your mouse, we make it really hands off software focused and we can scale. So if you’re a landlord, and you’re looking for a good property management company, we have to be able to take you on.

Erwin  

And then the real estate market is gonna collapse. 

Moe  

No. I said no, no. I just say you know, I mean, like I said it’s that the sky is always falling right and if you listen to these people, they’ll they’ll tell you right you know, stop watching the news basically turn off Fox turn off CNN and every book. Yeah, exactly. Good book. You wonder how the, you know, you gauge the market or news, look at stocks, see how they do and then you’ll figure out what you know, I mean, I’ve been reading about like food shortages and then you know, there’s gonna be a shortage on fertiliser in Russia, etc. And I always tend to go back to the market. Whew, I look at McDonald’s, I look at Weston’s in those talks just keep climbing. So that tells me that the analysts and people following those things, which are huge institutions, are, you know, worried, then I’m not worried. Right. And those are multibillion dollar corporations and costs are just a new high. Yeah, exactly. So I mean, you know, you follow the big money, and that truly is big money. And, you know, you can base your decisions on that. Right. And so that’s a that’s basically it. So thanks for having us on. Appreciate it.

Erwin  

Thank you, you know, thanks for coming in. This is fascinating stuff. Yes, yes, the bail is one of these problems. Yeah. Any final words? Any final words?

Rishard  

No, I think you can make get in touch with us using our website. And of course, we are always looking for ways to improve test and 100% new people join our team as well as we grow. So get in touch with us. If you want to change the real estate game. Join us today. 

Erwin  

I offered my property 49%. Alright, thank you, gentlemen.

Akshat  

Thank you.

Rishard  

Thank you so much, guys.

Erwin  

Before you go if you’re interested in learning more about an alternative means of cash flowing like hundreds of other real estate investors have already, then sign up for my newsletter and you’ll learn of the next free demonstration webinar I’ll be delivering on the subject of stock hacking. It’s much improved demonstration over the one that I gave to my cousin chubby at Thanksgiving dinner in 2019. He now averages 1% cash flow per week, and he’s a musician by trade. As a real estate investor myself, I got into real estate for the cash flow. But with the rising costs to operate a rental business, it’s just not the same as it was five to 10 years ago when I started there. Forget the cash flow reduces your risk. The more you have, the more lumps you can absorb. And if you have none, or limited cash flow, you’re going to be paying out your pocket like I did on a recent basement flood that 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.

Erwin  

Hello and welcome to another episode The truth about real estate investing show for Canadians. I am Canadian. My name is Erwin Szeto. And since 2016, we bring you some best tips in past experience from some very successful investors. And today is no different. I count as half and our guesses counts as a whole. Anyways, as I’m recording, the Bank of Canada just released an increase of point 5% to the overnight interest rate. So the overnight overnight rate is now a whole 1%. This is the first point five increase since the May of 2000. That’s almost 22 years ago. I can’t believe I’m saying that 2000 Seems. Anyways, remember y2k. Anyways, they said it would be shrinking. It’s holding government bonds. So that’s called quantitative tightening. So there’s the opposite of easing, which will reduce the amount of money supply all this is meant to curb inflation. To me, this is a good thing as the pendulum has swung so far towards the money printing money supply increases, which law ever had bap and to save us from the savings from economic ruin from the people from starving over the last few years thanks to the pandemic, and inflation needs to be controlled. These are historic times. With you know, there’s a war going on in Ukraine. We are just coming out with a pandemic oil prices are crazy. And again, thanks to the war, we have oil prices and gas prices to think on top of that food and fertiliser. For example if anyone follows nutrient, which is a favourite stock from stock tanker Academy, they make potash which is a fertiliser anyways, so that stocks been going nuts. And as inflation remains high, so interest rates will increase. But my prediction is interest rates will fall again after the war is over. And supply chains are restored back to some sort of normalcy. As for when that is that’s anyone’s guess. Dr. Sherry Cooper is saying the market predicts the current overnight rate of 1% to rise to almost 3%, just over a year from now. And that the Governing Council of bank Canada expects inflation to ease from there dropping to 2.5% over the second half of 2023, which is next year. And we’ll see something more normal in 2024. So, again, big caveat again, though, is the the Bank of Canada misjudged inflation during the war in Ukraine, I misjudged it too. So I do not blame them at all. I didn’t think Putin would do it. And it’s a big unknown when that war will end. I personally do expect inflation to remain higher than pre pandemic levels as governments, governments all over the world, they realise that we are too dependent on other countries for critical goods. So governments will look to mine dig, drill or manufacture more locally, which will cost more, China did not become a world manufacturing superpower because they cost more, because they cost less. So if you bring some of those things back home, things will cost more to produce. On top of that government’s continued increased spending, as we’re seeing here in Canada, with our new federal budget and provincial budget in Ontario provincially. We’re talking about new spending for daycare. And federally, we’re talking about new dental and pharmaceutical programmes that and from the provincial government, I received a check for $120 For my licence plate sticker. I don’t know why I got a refund. When I haven’t renewed my sticker in over two years. I believe my licence plate sticker still says 2020 on it. So I’m not sure what they refunded. But yay, free money. Someone’s trying to buy votes out there.

Erwin  

And I as always a bit of a frugal person that might go spend it. My preference would be to reinvest the money that I got for free. And I’m thinking about my maybe I’ll buy some TD shares with it at the number one share. But TD pays a 3.8% dividend, which is more cashflow than a lot of real estate pays. And the stock has been beaten up for the last few weeks. As a full time capitalist with a social conscience. I do really enjoy making money. But again with the social constraints. So what’s the new interest rate mean for real estate on the streets, people knew this was coming and people knew this was coming. And we’ve talked about on the show multiple times. On the streets. We’re already seeing showings of properties for sales slowdown. For example, we had a new listing come on the market last week and Branford starter home asking price was right at the market value of 700,000. We received zero showings over that weekend as predicted, buyers rushed out to get ahead of expected interest rate hikes. And now buyers are fatigued. And the funny thing is, if folks had just been a bit patient and they bought today, from what we’re seeing prices have already come down five to 7%. So that’s what buyers today are buying to be saving. And that’s as of right now. This gets slipped further, as I mentioned on the show, we could see 2017 all over again, I don’t know, Much will depend on how things go in the next few months. Note that the days on market in our area are still single digits. I think we are looking at around eight days on market, which is absolutely ridiculous. That’s about five times. That’s about five times less. So when I started when this when I started on my licence as a realtor in 2010 days on market, we’re like 40 to 50 days. Today, we’re eight. Alright, so days on market for a property to sell. It took it like five times longer back in those days. And that was more like balanced. What I used to see, this is not balanced at all, this is still a seller’s market. What are cheering doing, as previously mentioned, we prepare for this moment ordering for several properties for free refinancing so that we could raise some capital appraisals were done at the peak of the market about two months ago, paperwork is in the progress. And we’ll wait. I like to sign some cash and wait to see what opportunities that it brings me timing the market is hard. But I would just be lucky this time. But thanks to having our finger on the pulse. And I read a lot, which helps. It’s a substantial amount of capital that we’re freeing up, and we’ll be adding some of it to our stock. I can’t count as some of the companies that that I like I’ve been beaten up lately. And we’d like to keep our money working for us. And generating cash flow of the dividends and selling options for cheering is much preferable option to having cash to sit around. We want more cash flow in our lives. And, as always, we prefer to be in control of our money. What about private lending? Erwin? Oh, who was that? Who said that?

Erwin  

I hear that question a lot. I’ve been around. So remember, folks, I’ve been part of organised real estate investing since 2008. I’ve seen too many people lose their capital via private lending. The risk reward is not there. For me, I don’t like the idea of having kept gains. And for me my experience, I know where the risks are. And that’s not enough for the reward for my personal preference. Also, knowing where the market is right now, this is not really a market, I’d want to be private lending. And yeah, maybe I’m a bit too on the conservative side. But again, I’ll just reiterate, I would say my opinion is that you’re the best at managing your money and to manage your money and indeed be control of it. So we can take care and attitude to educate ourselves to control our own money and earn returns. Hopefully for you my regular 17 listeners that you’ve been following along closely and taking action and time the market got lucky timing the market like we did. Hopefully you’ve been attending our meetups in order to continue to set yourself up for optimised success. Speaking of meetups are next in person, zero zoom, we’ve cancelled a large part of our Zoom account. We have a live meeting in person Saturday, April 23. Doors open at 8:30am. We’ll wrap up the meeting around noon and then head to Hilton for a street smart tour of actual physical real estate investment properties. It’s all live and in person, there will be no recordings of these people’s some of these are people’s personal homes. We’re not going to be recording that the tours for educators educational purposes, there is no pressure to buy anything. Honestly that pressure should come from within as to your why why are you invest and your understanding of the world that hard assets will win? Because if you’ve haven’t been paying attention to what what asset classes have been winning, I think you should have a look at that. And that might help motivate you to take action. Those sadly, who do not have our assets are being left behind and where do you think there’ll be in the next 10 years? Do you think those without assets will be ahead or behind over the next 10 years? Maybe by answering that question, you’ll know what you want to do. Investing wise, April 23. We’ll be sharing about joint venturing the latest happenings on the streets in terms of rents and resale prices and renovating for returns. There’s another reason to renovate. I was talking to a friend who wants to take some money, invest some money in the kitchen for her home. I’m like we’re real estate investors. We don’t do that. Or like the shoemakers children. Our homes are last after you make a lot of money. Anyways, if you’re on my email list, you’ll receive invites to register. If not go to www dot truth about real estate investing.ca I should have slower WWW dot truth about real estate investing.ca and put your name and email address and you’ll start receiving email notifications for our events. Is it doom and gloom for real estate investors? If you think it is I highly suggest getting educated and in spending more time around veteran real estate investors who take action those preferably someone who’s actually invested through a recession before the last real one was 2007 and eight. I was personally investing in 2005 And guess what? I’ve made a lot of money since then. 

Erwin  

And enough for me onto this week’s guests as we have a real estate investor from Belleville, Ontario that Far East located and for those who don’t know where Belleville is that’s east of the GTA the greater truth Don’t area but before Ottawa with affordability being terrible in the GTA in Ottawa homeowners, tenants investors are all driving further than usual. And that was proven in a report from U haul. You know the truck rental company the moving truck rental company, and it listed Belleville Ontario as the number two and destination for their moving trucks. I’ve also spoken to several offshore investors who have expanded their search to Belleville investors I respect and then when you know Stephen Phillips reaches out to me and says hi and here we are. He’s on this today’s show as far as our guest, Stephen or his business had been featured on HGTV 24 times and Scott McGilvery. More importantly, Stephens real estate experience includes managing over 1200 apartment units. So that’s a lot of that’s a lot in his previous career. Then he went on vacation in Costa Rica and I ended up moving there. But he came back he came back to Ontario like many people do start a family, raise a family and then from there, he jumped into real estate with both feet back in 2014. Joining real estate networks hiring coaches like Ian Zabo and Quinton D’souza near the end of the interview, we get into detail on what current opportunities look like in Belleville. And Stephen tells his awkward celebrity fan moment when meeting Scott McGilvery. Please enjoy the show. 

Erwin  

Hello, Stephen. 

Stephen  

Hi, how you doing?

Erwin  

I’m excellent. Thanks for coming on the show. So what’s keeping you busy these days?

Stephen  

Mostly you and my kids and my kitchen business. I got a lot of things on the go man getting older gotta keep busy.

Erwin  

Speaking to the like, you already have a successful What do you call it? kitchen cabinetry and countertops?

Stephen  

Yeah, we started as like a countertop business. But like predominantly, and then we’ve kind of morphed into kitchens in the last 12 to 14 months with COVID. So yeah, I guess so I just call it a kitchen company now because it’s just easier to define it as that but we do everything. countertops, design and kitchens.

Erwin  

And it’s pretty successful, is it not?

Stephen  

It’s doing well we’ve we think we’re doing well. I mean, it’s one of those businesses that it’s like you start from a place where you don’t really know what’s well like what I had no idea I got into the business. Quite, quite strange, I guess you could say. We were we moved out to this way my wife and I moved out. I mean, the Quinney west area, Belleville, we live in caring place, Prince Edward County, all of these areas. And so we moved out here, and I meant to like slow down and relax and take a break from real estate. And I got here. And within two months, about a month and a half. We had JV and partner to bought a flip house in Prince Edward County and Airbnb that we were flipping it into an Airbnb. And I had no contacts. I had nobody here I didn’t know what was going on. And then we got to the countertop stage and the kitchen stage. And we shopped around, and I just saw this massive hole, like just, there’s just wasn’t a lot of options. There wasn’t a lot of people here. And there was a lot of people about to come here from Toronto. And so we kind of got in front of that before the people got here and opened this company up and made some made a partnership with a with a really good person who’s an importer, and just kept running from there, man. My wife loves it. Like that’s the reason I got into this business is because I was building a real estate business. And my wife hated it. She hated it. She wanted nothing to do with it. She didn’t like Like, she didn’t want anything to do with it. So renovations. She liked the design, like she liked designing. And she liked that it made me happy. But she didn’t like any of the other things about it. She just wasn’t into it. She’s the daughter of a property manager. So the thought of managing people and property and tenant like it was just the last thing she wanted. Then I had this all those things. I know. But you know. And then I had this like, fear. I woke up one day and I had this fear that if I died tomorrow, my wife inherited my real estate business, she would be very mad at me. So it just worked out that she was into natural stone and into design and into kitchens and into all this stuff. So I took a break and walked away from real estate for a couple years to help her build this business and leave her something that she could run with. And that’s that’s where we’re at today. She’s good. She’s got it all under control now.

Erwin  

Right and has. So did you put the investing business on pause then?

Stephen  

I really did. Yeah, I wasn’t able to multitask like I couldn’t. I tried at the very start. I was trying to be both realtor and selling natural stone. I mean, that’s what I do. I’m a sales guy. I swear I’ve been since I was probably six years old. And so when I was doing it, I wasn’t able to disconnect my brain. And it just got to the point where I was being pulled to many different directions. And I mean, you know, when you start a new business, you really need to put 120% into that to get that momentum just to make the thing roll. And so it took it was a hard decision, but I did I froze my licence for about two years and stepped away from real estate so that I couldn’t be tempted like by freezing my licence. I couldn’t get these calls, I would still get the calls, right? And people be like, Hey, did you see that? And so this way, if I froze my licence, I can legitimately say like, No, I can’t help you. But I have somebody who can help you and do that kind of thing. And it just forced me to take it really seriously and not get distracted.

Erwin  

And it’s been quite the journey has a not. So we have quite a journey to cover. So yeah. Was it your first job at a school you worked In property management? Yeah. So I just didn’t get into isn’t it?

Stephen  

Yeah, it was ideal. Man, I got into condos. My father, my now father in law was he’s owned a condominium property management company for I don’t know, since the late 80s. So like, whatever this is now, 40 years, 30 something years. And so when I got out of school, I had really no direction, I’d gone to school for marketing, didn’t really know what I wanted to do. And so he looked at me who’s about to marry his daughter, and he’s like, You better get a real job come work for me. And so I did. And then that led me into managing condos pretty early, and managing a portfolio of like 1200 doors 12 condominium corporations 12 Board of Directors, learning condo law had to learn architecture and design and carry on warranties and reserve fund studies. And just like, wow, it was in over my head really quick. So I learned a lot just by being over my head and having to try to catch up. And so that just talked, it took me down a really cool path and if at the time, so it’s like 2004 2005 by 2006, the condo preconstruction market booms in Toronto, and we just like start taking off, and condos start to just like develop really quickly. And so then I got my licence, my real estate licence by 2009. And started selling pre construction condos at the same time. That, that I was kind of managing them. I had an advantage. I understood a lot of condos when people were still trying to figure them out.

Erwin  

2009 That’s a funny time to have the recession.

Stephen  

Yeah, but you know, Toronto, it’s weird, right? Because like Toronto in it didn’t blink, like it was so weird. And I think that time kind of led me like I was I was young, I bought a pre construction condo, which is so ironic that I just said I knew what I was doing. Because at the end of the day, I bought a pre construction condo in Durham. And that builder was had this awesome project. Now if you go into Pickering, you’ll see it. It’s like this beautiful San Francisco project right on the goal line. Like it just checked every box growing community, like you couldn’t find anything wrong with it. But what I didn’t put into that is that once you send your money into that trust account, you give it to the lawyers, you can’t touch it anymore, right? I didn’t learn that lesson until I learned that lesson. And the builder ended up getting into a squabble with one of the tenants in the old mall that he had bought that he was going to tear down and rebuild on. And that drew out in a court battle for almost four and a half years, while he tried to evict this veterinarian out of this plaza. And it was a nightmare. And so I got stuck and sorted a whole bunch of other people with like, pretty much all my money, everything I had in this trust account, and I couldn’t get it out to save my life. And so it was a really weird time to Yeah, it was really, really, really stressful time in my life. But I learned a lot I learned a lot about easy. Yeah, it was crazy. It got built, it took seven years to be built.

Erwin  

So would it take like two and a half of everything that normal?

Stephen  

Should have, like every other project was going up in like a year, right? Like this is the time when like there’s some pretty heavy hitters made their career between 2006 and 2010. Right 2009 It they should have been able to go up really quick. It was just one of those projects. I don’t know, Luck of the dice, I guess. But But yeah, in the end, that actually could have been the best thing that happened to me. It gave me a lot of like freedom. And I learned a lot of things about like making bad decisions and how people are going to judge every decision. And then it just made me a lot stronger dealing with how people judge you and should they judge you and do you care, like at the end of the day? Do you care at the time I did. It led me to leave and go to Costa Rica. That’s how I ended up in Costa Rica. Wow. But essentially, yeah.

Erwin  

So you so you were working professionally in real estate during the recession, which is the last…

Stephen  

 Yes, I got real estate licence. Yeah, technically.

Erwin  

We typically think we technically had a recession for COVID. And we tend to really hit a recession for the financial crisis. We didn’t feel as much in Ontario as the West for example. Can you? Because we may see a recession soon? Like what was your experience like as a property manager for condos like to show you the p&l is handed in there? Oh, left home. And

Stephen  

This is the pitch my father in law gave me at 23. And it’s true. He wasn’t lying. It’s true. condominium property management is recession proof. Now, it’s essentially recession proof. Yes. Condo management, okay, you get paid on a contract, the contracts 3060 days, you can get kicked out. Sure. But you’re on a contract that money set. The owners of the Condominium Corporation have to pay their maintenance fees every single month. If you don’t, the only other person who can lien your property and take your property is a condo board. And so they have to pay like there’s no option. And so people were buying condos, they were living in them. They were paying their maintenance fees they had to, and then that feeds the property management company. So yeah, I was sheltered from it, right. Like because I was working in condos and my life didn’t change. All it did was get busier, we were getting more condos, there was more opportunities as these things were being built. And so to me, it looked like you know, I did 22 I was 26. Like, it didn’t even feel like there was such a thing as a recession. You heard it, and I could see it down south in the US, but I didn’t feel the life. Oh, or a West. Yeah, for sure. I mean, everywhere but where we were, which is oddly enough, right, like, so I get into pre construction condos, and we started selling them. And I was working with a realtor was really experienced. He was a really good guy and very charismatic, very super charismatic. And one of the early adapters of pitching the builder to take 50 units. Like at the time that was like boggled my mind, I didn’t think that was possible. But he was very early into that game where he would bring 50 investors, they would all buy a unit or more. And he would clear out a building on his own before it ever hit the market. We were turning renters into multi part a condo unit owners, they wouldn’t be paying 15 to $1,600 in rent, they had a little bit of money saved. And then like you had to keep in mind the condos were selling for like 235 289 really low. And at the time, you can do 5% down deals. Right? And and so 10, 20 30 grand people were just pitching 30 grand out of grab a bunch of units close into the three years. And yeah, man, it was crazy. We watched a lot of people make a lot of money. So that’s how I got into real estate. My first year, I did six figures and lease deals. I did leases for my whole first year. And due to that I would show up, I would show up with like six different rental applications at the bottom of the building. And I’d book appointments all day. And I just keep showing the same unit until I found somebody who took it and then we fill it out, submit it and try to win. And then I would I would do you know, 1500 bucks or two grand off of the half of first month’s rent and a lot of leases, a lot of leases, but it was early and I didn’t know what to do. And so that was the best way to learn.

Erwin  

If these are solid units.

Stephen  

Well, I did that too. But but you have a trustworthy, right? Like you’re 2526 like what do you know about real estate and a lot of people are telling you that and so it was hard. It was hard for me to and I like to save a baby face. Like I like to think that I look young. And so it was hard to get a lot of confidence early on when I was a realtor from other people. So it was a challenge.

Erwin  

So you say you don’t need to retire to Costa Rica.

Stephen  

So I go to Costa Rica to vacation, I take a vacation, I’m making some good money, I’m doing some good things. I take a vacation with a buddy of mine and his girlfriend and my wife. And we go down and we essentially booked one place we were gonna go for like three weeks. I had one hotel booked and it looked like it was only like, you know, three inches away from the on the map from the airport. That’s got to be easy to get to. So we rented a car we start driving through. Turned out it took us 12 hours to get there on some like washed out roads. And we ended up getting there seeing most of the way and had a great time and just like loved it and had this amazing trip, right? I come back and I tell this story often but I come back and it’s midnight or one o’clock in the morning our time to dark I’m at the airport, I go to pick up my car from the rental place. I go to the gas station, and there’s nobody to abandoned right by the airport. And I’m pumping gas and this guy across the way from me on this other pump just starts kicking the pump like booting it like like just stomping on it. And I literally looked at when I looked over at my wife in the passenger side. I said we’re out of here. These people are crazy. Costa Rica was so much better. We’re out I’m gone. I’m not staying and six months later, we sold pretty much all of our little furniture and possessions, a car and some other things. And we cleared out. And we moved to Costa Rica and ended up staying there for like a year and a half.

Erwin  

All because of a pump!

Stephen  

Just because it just it was like this. It was like the epitome of madness, right? Like, it was just crazy. You have everything in this world. You’re so privileged, and yet you’re mad at a gas pump, you know, and, and the prices weren’t even half as high as they are now. Right. So it wasn’t about price. It was just like it wasn’t working. So yeah, so I, I went down there. And again, very little planning, I just went and within two to three months got pretty bored of sitting on the beach every day and trying to pretend like I could surf. And so we opened a business there and we started we walked around the towns, right, we looked around and everybody had a restaurant, the only one I couldn’t find was Pita Pit. So I ripped off Pita Pit and made a little rap shop that we call wrap it up. And it was a little chicken and barbeque chicken wrap shop and we serve them surfers wraps at sunset.

Erwin  

And I’m only doing that?

Stephen  

Of course not. But I survived. I survive. And I thought I was marketing genius. You know, like you have to leave Costa Rica every 90 days to because you didn’t have a visa, right? So I didn’t have a visa so we had to leave every 90 days. So I flew into Florida because it was dirt cheap to go for three days. And I had family there. So I go into Florida and I go into Dick’s Sporting Goods and I buy a hockey stick and an orange ball. And it cost me like 20 bucks for a hockey stick and an orange ball. And then I go back to Costa Rica and I’m bringing it with me through the airport. And Costa Rica is 100% tax, whatever you’re bringing in, they just charge you 100% tax duty on whatever your value of the thing you have. And so at the time, that’s what they were doing. I don’t anyways, so I bring this stick and this ball in and literally 10 Costa Ricans are sitting around trying to figure out what it is and what is what’s the value of a hockey stick. And so essentially, they charged me $60 of tax on this stick and ball. And it was twice as much as I paid for the damn thing. So I had it in the country. My wife said you better use this. I don’t know why you brought this here, we’re in a tropical place. But in front of our shop was a concrete wall and a concrete parking spot. And so every day at about like 2:30, 3 o’clock, it’s like siesta time sleeping, everyone be sleeping or resting in the sun’s hot, I’d go out and shoot the ball off the wall, and then like, boom, boom. And it was like, I don’t know if it was like a smoke signal to Canadians, but all the Canadians would come out and they’d be like, that’s the last thing I thought I’d see in Costa Rica. And I’m like, Yeah, well, it keeps me busy. Maybe like, well, what are you doing? So I’m just having some fun waiting for the surf. Hey, are you hungry? And they were like, Yeah, I’m starving. Like, you should go in there, man. They make a great wrap right there. They’ll get you a wrap take care of you go in and say that you know me, they’ll take care of and they’d walk in, they’ve talked to my wife and my employee there and they buy a wrap. And I just keep shooting the ball. And every day I attracted Canadians from all over Calgary, Vancouver, I met a whole bunch of people just because of a stick in a ball. So yeah, man, that was a marketing genius.

Erwin  

And then, You left paradise….

Stephen  

So then my wife gets pregnant. We’re having our first child who’s my daughter, Mia. And at the time, we thought we were gonna stay because there’s a way to get citizenship if you have a child in Costa Rica. So we’re like, all this is. This is a way to get our residency. But then my family starts talking like you can’t have a child there, like you don’t have anybody. How are you going to do this? And so my wife, I guess, fell for that. And she’s like, Alright, fine, we’ll move back. And so we moved back, we moved back to Toronto. And yeah, and I stayed in Ottawa for a couple of months while we were first got home, to re-acclimate. But it’s funny, because when I was in Costa Rica, I was talking to a bunch of people down there. And like, 2009 hit them hard, like hit them hard. Like they were Hatfield condos everywhere, like, just destroyed. And I would talk

Erwin  

There’s crazy money flowing, right?

Stephen  

Americans, the Americans were coming down from California and all over and then buying all these things, pre construction, and then when the market tipped, they all took off and just like abandon the place, right. And so I’m talking to this guy, I’ll never forget him. His name was Hans, he was Italian. He was a realtor in the area. And he’d be like, Steve, where are you from? And I tell him, and I’d be like, Hans, it’s crazy condo market, and they’re building condos everywhere. It’s amazing. Like, they put them up and they sell them out in hours and blah, blah, blah. And he looks at me, I’ll never forget the day looks at me and goes, Steve, what are you doing here? And I said, I don’t know. I really don’t know. I guess I’m missing a really good opportunity back home. He’s like, I haven’t seen a buyer in six months. You should go home. Yeah, I guess. So. That kind have fed into it too. And yeah, and so we came back home and we got a pretty good thing going in Toronto here. I guess I should go back and try to take advantage of it. So yeah, so that led me back into Toronto. I got back into property management again, first things you’re having a kid you freak out. So what am I gonna do, I need a real job. And I don’t want to start being a realtor again from scratch. So while I’m waiting to do that, I get the job as a condominium manager. And I started managing Maple Leaf square, which is right across from your canvas centre. And at the time. At the time, it had just been built lanterra and just bought it I built it. It was in its first year Terry on on it’s it’s just in may have the bottom 10 floors are Cadillac, Fairview runs those and commercial and the top floors 80 to 90% of the building was tenanted, and there’s not like defects, but there was defects. And so there’s a lot of work to get kind of fixed. So that’s where I landed.

Erwin  

Were investors renting them out, or was that a rental builder?

Stephen  

Yes, a lot of the building had been sold to investors in two major countries, I think you can guess which ones in here, those maybe not here. None of them were Canadian. And a lot of them were foreign buyers. I was a legit foreign buyers when they were there. And so the foreign buyers owned them, and realtors would represent those buyers in the purchase. And then they kind of be like the property manager, like the pseudo property manager when you take over, but as a condo manager, you had no context, you didn’t know who any of these owners are. And most of them never knew where their units were. So it was like, at least once a month, once a week, the elevators on the 10th floor would open. And then somebody would walk off, and you’d be standing there with security. And they’d be like, Yes, can you take me to my unit? You’re like, what unit? Is it? I don’t know. Where is it? I don’t know. I just know I own two of them here. And you’d be like, okay, you’d have to go and track the unit and you take them up there. And sure enough, they don’t know. And they’d be vacant or rented whatever. And so it was crazy. And yeah, and then in 2012, I remember my daughter had just been born in March, it was April of 2012. I’m getting ready to get on the go train to go down at seven in the morning. And cp 20 fours on in my house. And all of a sudden, my dad building Maple Leaf squares on the news and smokes bellowing out of the window. And I’m like, Oh, that can’t be good. That should be a good day. My phone starts ringing and it’s my head of security. He’s like you got to get down here in the next 30 minutes. We just had somebody jumped out of the 47th floor, they set the unit on fire before they’ve left 12 floors up, have smoke damage. 20 floors down have water damage, and we don’t know what to do. It’s chaos. And so yeah, so I just want to go down and and it was the craziest, craziest thing ever. It was foreign. It was foreign students. There was no visas, there was no lease in place. They were Korean students. They were just here for U of T. The people on the lease had sublease to these three guys. Nobody ever collected their information. So nobody knew who they were the the owner of the units. dad lived in a foreign country. She was going to school at Waterloo. So I had to call him and he came down. And he didn’t know where his unit was. He’s on the hook for a $25,000 deductible for the insurance claim. And he goes, What do I got to do to get out of this? And then the tenants look and they go, What do I got to do to get out of this? And I’m standing there, like somebody’s got to pay the deductible. The tenants went down to the basement to the TD Bank, they came back up with a cashier’s check. They gave it to the landlord for 25 grand did like are we good? And he’s like, I guess so. And they left and they were never seen again. And the landlord gave me the check. And he was my good. They said I guess so. And the units. It was just madness. It was crazy. It was crazy. It was crazy.

Erwin  

That’s okay, that’s truth about real estate investing that can happen with a condo like I’ve had I’ve had family and friends affected by fires, floods that weren’t didn’t originally from their condo, right?

Stephen  

The crazy thing about that, and so the deductibles 25 grand, right? How did we get to a deductible of 25 grand, there was a pipe that kept bursting in every unit behind the laundry. So every time the washing machine pipe would blow, you’d have water come out, and it would take out like one or two units. So that happened maybe 3040 times like I can’t remember the number but it happens so frequently, almost every other day, it would happen and we’d have to go fix this. And over time we got so bad that you just you couldn’t even put in insurance claims anymore because the deductible just kept climbing and climbing and climbing and climbing. And by the time when they actually needed the deductible to be low. It was 25 grand and things like that, like, those are crazy condo stories. But they happen, right? They’re not the norm. But once they happen, it’s really hard to get insurance again, like there’s a lot of there’s not a lot of insurance providers for condo corps. And so crazy stuff happens. And then you’re kind of just caught up in it as an owner. In one of those buildings. The hardest part for me was like everybody dumped out because the smoke alarms were going at seven in the morning, and they all fell like they all came out the same door, which is like river the ramp goes when you’re watching, like ACC or whatever it’s called that switch. When the players come out the back ramp that goes to the guts of the building. That’s where the body felt, that’s where the person felt, right in a car and the coming up the ramp actually ended up like driving onto them and staying there. All of the people dumped out of that building and had to walk past that scene. And all that we had was a $12 an hour security guard fresh into the country barely spoke English. And he was trying to like steer traffic away from this thing. And you’re trying to you feel so bad for all these people. And there was chaos. It was chaos. They didn’t know where to go. You’re right at the Gartner it was mayhem it was man. So that’s when I left condos. That was the day I was pretty much within the next two months, I went back to real estate full time I was like this is it’s a lot easier to sell them than to manage them. This is too much. So there’s lots of job opportunities and condo managers. There’s significantly not enough managers to to meet the demand of how many managers are needed. But it’s just a tough job, man. Nobody calls you to say hello and no there’s no glory. There’s never a good, like happy day. It just doesn’t happen. So you ended up in some really negative negative vibes. negative vibes. Okay. Yeah. So we’re talking about condos, right? Like I’m biassed, I don’t know I like pre construction condos. I’ve seen millionaires get created by creating pre construction condos but I’ve had another vision like a version of it and I met a lot of people from the inside out. And it’s just it’s a good business it’s it’s a need you need to have them but it’s a tough it’s a tough sled man. It’s a tough sled. So so that’s how I ended up into real estate again in by 2014. I was back into real estate full time.

Erwin  

And then what was that like?

Stephen  

That was like I better learn something.

Erwin  

How did you start learning?

Stephen  

I started learning the way that I think a lot of people try to learn I read books I did. It wasn’t as many big podcasts like 2014 There’s no pod I still listening to Sirius Radio. There’s no podcasts like Joe Rogan was an epiphany that hadn’t even been thought of yet. I was basically like going to meetups, I became a member of Durham Rei, and which is a real estate networking group in the Durham Region. Actually what ended up happening is I started learning from multiple different meetup groups. I went to a seminar like all people do, I went to this seminar, I was just actually telling James about this. I went to a seminar and 2013 2014 I can’t remember the company that did it. The gentleman that was there was from Calgary, and he was like an expert rent to own guy. But he did sandwich lease options. So like, you don’t have money sandwich lease option. So I’m like, Wow, that’s crazy. Like, how does that work? So he teaches me sandwich lease options. And so in a room full of people. His pitch was he would call Kijiji rental ads. And people that were trying to like landlords trying to rent out their unit and be like, Can I show? Can I come see the unit? Does it have to die? Yeah. And then when he had him on the phone, he’d be like, so when do I rent to own or something? And he would just keep saying that until they were like, I don’t understand you come and see the place and we’ll go from there. And he would just play country dumb and so I learned this thing. So I actually got into try to do sandwich lease options. I thought they were crazy and got in got a couple of them and made them kind of work. You know what’s ironic? My first one was in Wellington, Ontario, which is in Prince Edward County, which at the time I had no idea where it was. I just knew the Trenton army base was there. The house I got the house for like 220 I think I did it with $100 bill as my holding like guys my deposit. It was crazy, man. Yeah. So that’s kind of how I got into that just trying to do like everybody does, like go to the seminars, they teach you something. I just wanted to be the action taker. I always wanted to be an action taker. Like I always wanted to be the guy who did something to just waste my money and listen to somebody and go home. So I would try whatever they said I would try it at least once and see what happened. And after trying a couple of these crazy ideas. I was like I gotta learn from somebody. Really good. I got to figure this out. I got my real estate licence back I had put an option or got a property in Oshawa, that in hindsight now was just glorious, but at the time wasn’t a great deal. But I had two houses side by side that were on the market and their total frontage was just it was up from downtown Whitby actually total frontage, like 150 feet, and massive lots together. And I had them under contract, but they were like the old wartime houses, you couldn’t really duplex them. And I was trying to find a JV partner to do this deal with. And so I called the desperate effort I called number on the sign, you know, like, you call the sign like that guy buys houses. You probably want to buy this house, so I called it and on the other line was quitting D’Souza, which was my introduction to one of the greatest real estate coaches I’ve ever met, and was amazing. And so I pitched him this deal. I told him and he’s like, like, No, I don’t want that deal. I don’t want that deal. I can’t do Plexes. I’m in the duplexes. I stay focused. I only do duplexes. I don’t want that deal. I said, Oh, but he knew so much. So I’m like, How do you like who are you? Who are you who is this Quinton D’Souza and he said, he goes, Well, I have this group, maybe you should come to it. And I’m a coach, and I can maybe teach you some things you should come and I said, Okay, and so and so that brought me to Quinton D’Souza. It was also the hardest real estate deal I ever had to do. Because I never found a JV partner. I had the deal under contract. I couldn’t close on it. I had a deposit in place that couldn’t close. I was by myself. And I had to go back to the sellers. And the seller was a eighty year old man and his wife and his kids. And I had to tell him, I couldn’t close. And I had to sit in their living room and tell them face to face because I couldn’t do it any other way. I had to face it. And I walked in and I said, Look, man, I can’t close. I’m really sorry, I bit off way more than I can chew. And I’m, I’m sorry, I’m sorry, I did this to you. And I’m sorry, I did this. And it was a terrible, terrible feeling at the time. And he was really cool about it. He just said to me, he’s like young man, you’re gonna make a lot of mistakes. It’s terrible. You did it to me, you’re gonna make a lot of mistakes. Just don’t ever do this again. And I really took it to heart and I feel like I think like I believe a lot in all these things. I’m a person where nothing happens by accident. And it brought me to Quinton D’Souza. And it brought me to that real estate group. And that’s when I just was like, I gotta learn, I gotta learn something, I can’t do this without learning. So I became when I joined the mentor programme with Quinton D’Souza, one of the early ones, I think, third or second into his coaching programme. And I spent six months with some really, really cool people who are now like in the industry titans in their own regard. But at the time, we were just, I think we were like the second wave like, I came in with Ryan Carr. And a lot of those guys like we were young at the time. And like you and Quinton and Zappo and lawfare. And all these guys had already been doing it for a while. And so we were just trying to learn from everybody around and I was in that group. So I was surrounded by some really smart people at the time and could absorb a lot of information from smart people really helped very much. 

Erwin  

And then you quit?

Stephen  

Why didn’t quit right away? No. I then got into it full full bore, like so from like, 2014 through to like 2017 Four years. Yeah, like I did a lot of deals like, you know, I think so I was pretty good. Like I wasn’t, I wasn’t a slob and and I put myself around good people. And I’ve heard I harassed Dabo until Ian would, you know, let me hang around and learn some things from him. And then I learned a lot from him for about a year and a half, two years and I got to be around people that you

Erwin  

Just to backtrack, Quinton is one of the best coaches in our community. ultra successful investor has since moved on from duplexes to only does apartment buildings, it seems. Yeah. 

Stephen  

And quote, sorry, just to cut off, but like one of the most humble people I think I’ve ever met, and very much and although he answers questions very truthfully, and honestly and bluntly, he puts you in a position where you have to ask a good question. Like, if you don’t ask a good question, then you know, you don’t take anything from it. So you’re in a spot where you really have to be a good learner and be wanting to learn and want to teach yourself. So yeah, really, really, really just a really good person. And I was really blessed to be around that at the right time. learn a lot from people.

Erwin  

Shout out top teachers, Teachers seem to be really good investors.

Stephen  

Yeah, because they know how to deal with stupid kids, I guess, right? Like I say that about myself, right? Like I was the class clown. So I know that I put a lot of stress on a lot of teachers. I think when you’re used to dealing with that kind of stressful environment. You can like a contractor and a project management scenario. I think you can handle it. I think they don’t think they can but they actually can cause There’s a lot of similarities there.

Erwin  

And then shout to Ian Zabo, who’s, you know, have many, many obstacles, and he’s done very well for himself. He’s written two books, I think. 

Stephen  

Yeah, Ian is, is just one of those guys that, you know, he taught me more about people, a lot of people. And when I approached his apple, I was trying to learn about real estate. In the end, when I looked back on it now, he taught me more about people than I ever really expected. He taught me how to be empathetic. He taught me how that like you’re in a real estate transaction. But there’s people involved here, like, it’s not numbers, it’s its people. And you need to figure out how to communicate and solve problems for people. That’s how you get good deals. And it’s not about how many doors you can knock on and volume, it was about how many relationships he would always amaze me, like he wouldn’t have to do is he did have to work in like, he worked really hard. But he would be able to knock on like three or four doors, he would be able to talk to like three or four people and convert to all these deals. And I was like, how do you do that like, and the way he did it is just, he’s just a really, really, really good person. And he would take time and listen to people and then he he’d hear things, and he’d solve problems for people. And that’s a really valuable skill that I think a lot of people don’t, they get caught up on spreadsheets. And I think there’s more to it. There’s more to real estate than that.

Erwin  

He gave a lot in his business by renovation business. He gave a lot. People were Yeah, we’re lucky to have him.

Stephen  

On I’m one of them. I count myself as one of those lucky people to have him and to be around him at that time. I mean, I’m blessed. That was it. It was a great, it was a great experience.

Erwin  

And then you started the kitchen business. 

Stephen  

Oh, and then I started kitchen business. Yeah. And then and then 2016 2017, very similar to now the market was crazy. And it was very stressful as a realtor and very stressful for investors prices are going up every day multiple offers, things were happening that were new at the time. And then like I said, my wife didn’t want my business. And so I had to figure out something else. I had two kids now. And by that time, I had a daughter and a son. And they were getting ready to go to school. And I wanted to make sure I brought them to kind of a smaller town, a smaller community slower vibe. And so we moved to Brighton, Ontario in 2017. We came out here we looked at one house on a Tuesday and bought it on a Wednesday and we moved out here. And so the story goes, and then we and then we started our kitchen business. And then to start our kitchen business, I had to get a building because I had to put the stone somewhere. And so I found a commercial property that’s out here at the gates of Prince Edward County that nobody else really wanted. It had been up for sale, I drove by it every day as I was going to my Airbnb project. And this simple 6500 square feet was an ugly building at the time, but had a big lot. And it was right that you had to drive by it to get into the county. And so I drove by it every day, and nobody bought it. And so one day I called the guy up the real estate agent, I’m like, I want to do a rental and or something. So I ended up ended up doing that deal as a rent owed. So I use that skill again, we locked up the property in 2018, we did a rental, we closed on it crazy enough in the middle of COVID and March of 2020. Which made it really hard to finance because nobody wanted to touch commercial property at the time. But we figured it out. We got the deal done. And we bought the building. And it’s been it’s been been going ever since.

Erwin  

You actually just raised a really good point is like real estate investing is deal business. It’s all business. These are business relationships and business skills you have to develop and they can translate into other areas of business. Just like you said, right? For example, a friend of mine who bought a business in Canmore, Alberta. She hated VTB to buy it. Right, right? Like the business, the business have failed. And and here’s here’s the second one in so he’s buying that business. And he’s like, Well, I don’t have all the capital, can you? Can you like loan it to me? Can I work? Can you lend it to me? Right? I’ll do that. Yeah, so use the real estate strategy in buying a business, right, these things apply.

Stephen  

It applies. I think what you get when you get to be into like into the trenches of real estate is you get to get a thicker skin that you can ask questions like if you don’t ask, you’re never going to know. And if you know the strategy and have the tools to know how to structure it and know what to ask for. Yeah, it’s very, very versatile. You can figure out how to use it in multiple ways. So I try to learn skills that I can use different ways because I just I don’t ever want to learn something and then never use it again. I think that’s a waste. I would rather use something that I’ve learned. I can

Erwin  

Okay, so I’m actually trying to think so everyone, everyone on our team has a nickname There’s just HGTV So Ryan’s out of the bag now he’s gonna know HGTV. But my understanding is

Stephen  

I didn’t say that card, it wasn’t me.

Erwin  

He posted on Instagram last night. It’s all good. He posted it first, I’ve bitten my tongue for over two years.

Stephen  

Exactly, exactly. So how did I end up on HGTV?

Erwin  

So first off, you’ve been on HGTV more than anyone I know personally.

Stephen  

Well, yeah, you say that. And then it makes me hungry. I try to be humble. And when you say that, I feel like right away your Hollywood. Right away, I feel like I should, I should stack this and put it into context. My company, our company did 23 episodes of HGTV Scott McGilvery vacation house rules. My wife and I heard. Yeah, my wife and I were on three, two episodes, three episodes, one in the first season two in the first season and one in the second season. And then they shot in our shop. In the second season, I think episode six, and they shot in our warehouse in episode season one. And then they we were on site, and I did the walkthrough at one of the instals and season one with Scott. So yeah, okay, at times.

Erwin  

That’s all the TV time you get when you product when your products and services in the in the building?

Stephen  

Yeah, man, that’s that’s what you get? Well, you don’t actually they put our if you go back and watch this season, and I encourage everyone to do that, because it helps everyone. There’s our logo soulstone by GMI will come up at the very end. And we got like in the credits actually logoed in the credits. So yeah, I mean, that’s, that isn’t given out to everybody. That’s, that’s a unique thing. Because we worked really hard for those guys and did a lot of good work for them. So so they were able to put us in on the credits, and then have us included on the show.

Erwin  

So how does one get in on HGTV on an HGTV show? And is it beneficial?

Stephen  

As a contractor, I think it happens one of two ways. Either one, they do a call of action, like they’re coming to an area, they do a casting call for contractors to come and do the work. And you kind of figure out if you fit and you go in there, right? That’s not what we did. We didn’t do a casting call. We didn’t respond to them. Essentially, the way we got in is we’re out here in the county, right? My wife and our team put a lot a lot of effort into our Instagram account and our social media. And so our Instagram was doing really, really well we we were very good at it. They were very good at it. I was just sort of along for the ride. And as a result from that, one of the producers and the designers of the show, found us on Instagram. And so soulstone by GMI shout out shameless plug at soulstone by Dubai, we ended up getting picked up through Instagram. So we had seen a lot of our content, seen a lot of our stuff. And again, they had to drive by us to get to their projects as they were scouting out houses. So they kind of connected that the building was cool. What we had done was cool. I have a 1947 old Mercury flatbed like farm truck, I call up here. And it’s parked out front, and it’s bright red, and it has a stone on the back, right big slab on the back. So there’s like a lot of like cachet about it all. So they were they were interested, they’re interested in using us for the jobs, especially in the county, they wanted us to do the first three episodes in Prince Edward County and season one. We did those episodes. And it just so luckily happened. They were the first three to shoot. So once we did those, those were free. So that’s how they start the conversation. We need you to do this for free, can you? And it’s like, I don’t want to what do I get? And basically you get you get the ability to say you’re on HGTV, do you still want to be part of it? And I said, Okay, well, I have a condition I’d like to put in there. And they said fine. If I’m going to give you something for free. I don’t want it to be plain white quartz or any quartz. Because everybody does quartz countertops. There’s they’re everywhere. We have a product that we use that we’re really big on which is quartzite, which is a natural stone comes from Brazil really, really pretty. We would only use quartzite. If you’re going to have us on the show, it has to be quartzite because I know that nobody else has those stones in my area. So if you see me on TV, and you like the countertop, there’s only one company out here that has it. So at least it gave me this like isolation that I could protect. And they were like okay, well it’s, you’re paying for it. If you want to do it. Go ahead. And so we did. First three episodes went well. Then that turned into my encounter with Scott at the shop. And then that led into us being asked to do the rest of that season. And then the following season, which was actually right in the middle of COVID. And then they change the structure Once we did enough of those episodes, they changed the structure so that we didn’t have to do it for free anymore. Oh, good. Yeah, they would cover cost and like the homeowner would pick up the cost because they could see the value of the product was really, really good. So we gave them a really good discount on it, but at least broke even and homeowner got the benefit of the renovation. And we just didn’t have to go out of pocket for the rest of the season. So it worked out really, really well. And I think ultimately, I would I would do it all over again. Like it was a really, really good experience. He, that whole crew worked so hard. And McGilvery is one of the smartest business people I’ve ever been around. So just getting to talk to him and kind of absorb little things and not even just sort of seeing how he’s built his his structure of that. I mean, it was it was like paying for mentoring without having to pay. It was crazy.

Erwin  

I’m on their Instagram, and yeah, I haven’t seen stone like this before. Right? is it a quartz or It’s natural?

Stephen  

It’s quartzite quartzite. So quartz is the derivative of quartzite. So you The story goes that there’s these guys with like the quarry owners have all this quartzite that they’re cutting. quartzite is like a sandstone based or it’s crystal quartz quartz mineral. So it’s like translucent. So a lot of these quarries have all this product, this remnants dust is about 1020 years ago, they have all this dust and they don’t know what to do with it. But it’s really hard to sell natural stone because once you sell the block, it never go, it’s never going to look like that again. That’s why you hear the horror stories of people going into the builders picking from a sample, then they go into the house and it never matches is because it could never match like the blocks are always different by piece. Yeah, exactly. So courts was that answer, like they could take the dust of a natural stone, combine it with a chemical binder like a glue, and then put a pattern into it and print it off. And they could reproduce the same image multiple times 1000s and 1000s of times. And so then quartz takes over because it’s easier to sell internationally. People like working with it because it’s easy to hide seams. So all of those things kind of pick up. But quartzite is the natural stone, my importing partner from GMI. They have contacts with the quarries. And they tend to do a lot of the deals directly from the quarry. So people will spotters that are in the quarries will walk around on WhatsApp and video blocks that are coming out. Really you want this? You want to buy it? Yes. And then you fill a container. You stuffed that container up and put it on a boat and you ship it up.

Erwin  

So I’m actually on your Instagram and I am scrolling. I still don’t see one picture of Scott.

Stephen  

He’s there. Yeah, he’s there. My they’re pretty busy though. My my team and my wife are pretty active. So it’s, you’re gonna have to scroll quite a ways. Not every third one. That’s for sure. I know you. I know. You’re gonna tell me that’s a mistake. It probably is. I shouldn’t have there. Somehow subbing can be into every image.

Erwin  

Was it hard to get a procurement? 

Stephen  

Ah, so that story so he showed up with his with his producer, kind of unannounced one day he was in the county and kind of just dropped in and his big truck drives into the lot. And he comes walking up to the door. And and right away. I’m kind of shocked. Like, I was kinda like, Is this really happening? Like, what are you doing here? So when I opened the door, like hey, man, he’s like, Hey, is this soul stone? Yeah, it is come on in. And so he ended up having to talk with us for the day like for, you know, half hour an hour or whatever, walk through our showroom, looked at all the different materials kind of got a good Bible, what was going on. And he was really, really, really quiet. He was actually really quiet. And he didn’t talk a lot, which made me incredibly nervous, right? Because like, the perception is that this guy is going to be over the top and very boisterous and outgoing and extroverted. And he really wasn’t, and so made me nervous. But it was cool. And so his producer or his designer that was with them, we had been in contact with many times, I was friendly with him. And so he was kind of filling the void and talking to us. And so when we’re done the walk, we’re coming outside to go out and buy his truck. And I’m waiting for my wife, Laura to be like, Scott, can we get a picture? Can we do a picture because she’s running Instagram and she wants my accounts and she should be thinking, but my wife is so cool that she’s just like, alright, well, we’ll see you later, you know, thanks for dropping in. No big deal. See on the other side, and so I got off fanboy Yeah, it’s I got all fanboy. I’m like, Please, can we get a picture? And then it got awkward. He’s like, Sure. And I’m like Okay, thank you. So now I’m trying to get him to like, stand up beside us. And then I’m trying to do a selfie, but I can’t get the selfie right and get my symbol and my sign in the back. And so then I asked the producer, can you take the picture for me? And he’s looking at me like, are you serious, man? Like, we’re just I’m like, Yeah, please. And so he’s like, Okay, sure. So now we’re taking the picture. And Scott standing beside me. He’s a little bit shorter than me, but not that much. And, yeah, yeah. And, and his hair is like, perfect. And he’s got great white tea. And he’s got this, like, beautiful cologne on and I’m standing beside with my wife on the other side. And I’m like, I gotta look good at this picture. And I ended up completely blowing the picture Ed, like, doing this weird, sucked in got tin face thing. And it’s probably the worst picture I’ve ever taken in my life. Not to say that I have a lot of good pictures, but it was a terrible one. And that’s the one that we got. And he walked away, and he got in his truck. And that’s all I ever got.

Erwin  

Footage of you on the show? So 

Stephen  

Yeah, we have footage. And we can use sparingly, right? You can use something. There’s rules. There’s rules. Well, there’s rules, HGTV, and, and McGilvery. Is production company, you know, they they own the rights to all of those episodes. And so you can get away with a little bit but you can’t you can’t run the you can’t run big clips. So you do little clips. And you can kind of put it in here and there. But they’ve been good to us. They never called us or or said anything. But you never want to really push that envelope too far.

Erwin  

Yeah. You can’t see if these guys endorse us. Like that’s not 

Stephen  

Yeah, exactly. Because he has other contracts, right? There’s people paying big money for to be in relationships with him. And so make sense.

Erwin  

Cool, cool. And then you got bored with this business? Or you thought you felt you know, this real estate market is hot. 

Stephen  

I started to see a pattern here by my psychiatrist told me something, right? No, yeah. So then like, I don’t know, towards the end of last year 2020. Like COVID has been for contractors. It’s been incredibly challenging. I can only speak for myself. But I’ve seen a lot like we’ve done about 700 Plus countertops in the last three years. Dozens and dozens of a day. Yeah, it’s crazy. And we’ve done dozens of like kitchens, right? Dozens and dozens of, and in doing that I was doing all the appointments. So I would meet three to four people a day. So I’ve met and talked to about renovations with like, I don’t know, somewhere between 15 102,000 people, you don’t win every job, right? But you talk to them and you pitch them and you try to get the right material to match what they’re doing. And so you just talk to all these people. And COVID is like, it came in and it changed the game. And then it threw off all the timelines. And we’re the last people into the job. My crews are the last guys that get there. So at the start of COVID, everybody’s excited. They got tonnes of cash, because they didn’t go away on any holidays. They feel like they need to do something they need to change, they need something. And so they start renovating their house. contractors get inundated and overwhelmed with work. A lot of contractors can’t scale, right. Like they have a lot of trouble scaling because it’s them and like two guys or whatever. And so they get like overworked the prices start climbing, the timeline start extending. And by the end of last year, people were just fed up like they’re absolutely fed up with renovations. They didn’t want to they were in it, they started it they had to keep going. They didn’t want to people had already ripped them off by the time I’m getting in there. So they’re angry and cranky, and you’re dealing with a lot of stress. And so we had a good system. Our system is built to scale. We run for five crews, our teams go from Kingston to London. We base ourselves out of our Markham warehouse in the middle, and then we kind of expand out from there. And so we’re able pre COVID We would be we would measure on a Monday and stall on a Saturday. Like we were very efficient. Once COVID Hit we could keep going efficient. But then you have breakouts and like lock downs and like if you get too many guys in a space at the same time it becomes reckless in a household right? So then you have to adjust to that. People forget how heavy stone is. I don’t know how many people I get hurt with. You lose fingers like a mistake. You lose fingers and toes or you go like bye bye. There’s no gaps, right? And so for some reason, really big islands became trendy. So like 12 and 15, and 10 foot islands become trendy, and nobody seems like nobody wants seems. So now you’re carrying a piece of stone that’s like 10 feet by five feet four feet. What’s that weighs 2000 pounds on wet night, like, anywhere from 1500 to 2000 pounds, depending on how thick the stone is how dense it is how old it is, like the black ones are heavier than white ones like it’s because they’re just denser, darker, heavier stone. So you’re carrying these things into people’s houses. And it’s crazy, right? And so you needed eight or nine guys to do something like that. And when you start doing that in COVID, it becomes really, really difficult to put that many people in the same room in the same place at the same time. Yeah, so it was a challenge. So by the end of last year, we had figured out pretty much everything that had been thrown at us. We were still scaling, we were still able to do it. We’re still, you know, marketing wise handling it all. And I was getting kind of bored. So we Yeah, I love. I love real estate. I never knew how much I loved it until I took those couple of years away from it. I kind of like tell my wife, it’s like, you know, like when a football player or an athlete retires early, and then they realise like, oh, I shouldn’t have done that. I gotta go back. That’s what it felt like it felt like that, like, I gotta get back into it.

Erwin  

Right like Tom Brady. You’re just saying you’re Tom Brady. Got it? Of course. I’m Tom Brady. I’m gonna go yes. Tom Brady of real estate.

Stephen  

I feel like Yeah, it’s hard to walk away man. It’s hard to walk away from something you love doing. And it was probably in hindsight really, really hard for me, but I’m glad I did it. It gave me perspective. Maybe a lot more insurer. I don’t know what the word is. I think a lot more in terms of, of lessons I’ve learned in the past that I might have been taking for granted when I was in the mix or in in the in the trenches of real estate before.

Erwin  

Right. Now you’re in Belleville, which is like

Stephen  

Now I’m in Belleville that was awesome in Belleville is blowing up that was blowing up delvers. Awesome. People from Belleville would challenge what I just said but Belleville is awesome. If you have seen this story play out before. So like, for me when I’m talking to new people about Belleville I’m telling them it’s like taking a time machine. It’s like going back into Oshawa or maybe like I don’t know the West well enough to say it but it’s a ticking time machine back three to three years, right? Like the prices are more in line to that the markets more in mind to that the local realtors are kind of figuring it out the game like every time we talk to a realtor like it’s crazy. This is crazy. Do you understand it? And? Yeah, I’ve seen this before. I’ve seen it play out before. And so when you know what the last thing did, it makes it very like very, very appealing to be in this place at this time watching what is going on right now. It’s a city that is expanding. It’s a city that has no choice but to grow. It has no choice. It’s been squished by Kingston, and by Toronto. And it has the last, the last real bastion of good prices. And as well not just in residential, but commercial like like warehouses and industrial spaces. And like there’s a lot of square footage 1000s and 1000s of square footage of manufacturing being built here. warehouses that need tenants. And so those tenants are coming from very far, because they’re they’re getting incentivized to come here. So if you can look out and have a long vision, Belleville is awesome. It’s an awesome place.

Erwin  

Do you need any vision? Yes, you already get pretty good cash flow there?

Stephen  

Well, yeah. Yeah, I mean, we do. But I think that, you know, cashflow is an equation and the more money you put in, the more equity you have, the better your cash flow is. And I think prices like like help when there’s still six hundreds and five hundreds and three hundreds. And I know there’s a whole bunch of people are going to get mad because that’s not affordable housing, but it’s the reality of the market. And if if it’s if you’re able to contribute and produce more housing to a marketplace that needs it, we need it. We have zero vacancy. We need more units here. It’s really the best thing to have. And I think here we’ve been dealing with short term rentals, right? It’s been a really big part of the economy here for a while. Big vacation area, very, very tourist driven. And when you’re just strictly tourist driven, you’re very handicap like you’re you only have one lane, you only have one rudder for how the economy grows. And so that just equals taxes that just equals more taxes and And you know, they’ve contemplated putting a toll on the bridge as you entered Prince Edward County, so that you have to pay $1 or $2. Every time you come into the county. Well, why, right, because it’s just easy money. My shop where you drive past my shop, they put a road ticker to tabulate the traffic. And three times they had, they would go and it would reset, it would go back to zero. And they would think that thing was broken, and they come back and they’d set it again. And then to do it again. And really what was is there every Thursday and Friday, for pretty much June, July and August. Every Thursday, Friday, we get 25 to 30,000 cars going past us. And every Sunday, you get 30 or 35,000 Going back, and they do a big loop over the Bay Bridge, which is highway 62. And then they come back up right in front of my shop. I’m 33. And so they do this big loop and wrap around as they come into the county from either Montreal or Toronto, and they fill the whole place. It’s incredible, incredible amount of traffic here.

Erwin  

Crazy. And then 

Stephen  

Which means that I can’t go to a restaurant.

Erwin  

Why too busy?

Stephen  

Yeah, like you end up living like, like your shoulder seasons like I go to, I go to the cool restaurants and we’ve got all these cool places, right? Like tonnes of restaurant tours come here to either retire, or to do something they’ve always dreamed of doing. You have like a very good friend of mine has a food truck here, just as floss and sandwiches just as sandwiches. It’s amazing sandwich place, right. And he’s just this food truck doesn’t sandwiches. He’s one of like, probably three dozen, two dozen people out here, just living that dream, just chasing that thing, right. And so as a local, I can only go there like this time from like, March to May, after May, there’s no way I’m going into the county, it’s way too busy. I’ll be standing in lines, and it’s mayhem. And same with the beaches and all this stuff, right? So you can only really enjoy it on the shoulder seasons.

Erwin  

So it sounds like there’s Airbnb opportunity.

Stephen  

994 Airbnbs in this market, and just in Prince Edward County, there’s only there’s less than 8000 houses. So it’s a tonne of the the there’s a tonne of the market in the county is Airbnbs. There’s opportunities, but quite frankly, if somebody’s asking me they want an air b&b, I think you’re a little late. The best opportunity is about three to four years ago, the rules and the way that the game is set up right now for the by the politicians, it’s challenging, it’s going to be hard to get in, you have to buy a pre existing one, which isn’t cheap. So you end up you end up paying for that opportunity.

Erwin  

Good to know. So then what opportunities do you like for investors?

Stephen  

So I’m a big fan of the long term rentals here. Because I know that the politicians and the community wants that, right. So I don’t ever want to be in a position where I’m going against the tide, really, I mean, personally, I kind of like to go with the flow of what everybody’s into. And they’re into long term rentals. So they need more of them. The businesses need more of them, the the community itself needs more of them. So I think long term rentals are really going to be a big player out here. We have a lot of multi units like multi RES is eight plexes, five, six plexes. And I get people reaching out and inquiring about them, because they’re fairly cheap, considering like price point wise compared to the rest of the province. But I think the community itself is into more of a lifestyle where they’re looking for their own house. And so there’s a lot of independence here. There’s a lot of people that have been here for a long time. And the other thing about this place is like as these bungalows that we’d love to buy the 60s and 70s bungalows. As they’re being sold back into the market today. The thing that a lot of people don’t take into consideration is that the people selling them aren’t necessarily buying the brand new builds from the builders hear. They tend to want to build their own house. So they’re buying land and building their own new version of their own house. A lot of my kitchen business is done in new new development, but I don’t do any major builders, like no builder work, just custom builds. And so there’s a lot of that market out here. People generally, generationally get handed down land, or they get it through like relatives. So it’s easy to get an acre two acres or three acres if you’re from here for a couple generations. And so they’ll build their own house that way. I think the opportunity here for the bungalows and the birth strategy is significant. I think that in time, the comps of a well finished duplex will start to sell they haven’t sold here. You very rarely see a converted duplex that’s done to the level that I’m sure most of your listeners are accustomed to seeing. And like other areas, we don’t see a lot of those hit the market, a lot of them are really rough. The multi units have really low rents, a lot of that stuff. So opportunity is kind of wherever you want to see it. The other thing I like is little house, big land, Big Lots 70 and 80 foot lots, by 130 140. With a little tiny house on there. There’s a lot of opportunities like that still available, where those things are, are under 500,000, you can buy that for three for 380 to 450. So that’s a good price point for some people to even almost breakeven or be a little bit negative on the cash flow. But they can they have a big opportunity with land in the next three to five years with something to develop.

Erwin  

Sorry, Steve. That’s that’s small single family home, what is it rent for?

Stephen  

It’s depends on the area, I would say 1800 At the very low end 1800 Plus utilities at the very low end. I’m seeing upper floors of bungalow duplexes starting to get 2000 to 2100 a month. That’s just the top floor of the bungalow. So I think that for a full single family house, that’s not unreasonable either. But I think the market is so desperate for inventory and rentals that it’s hard to say necessarily what that we’ll get in a couple of months from now. But I think that ultimately, that’s a more of a longer term play for developer people. You know, we’re talking about car like, I mean, guys like that, who have long vision, know that those lots become valuable, the more the more the game, or the market kind of plays out.

Erwin  

Right. But it sounds like today, someone could do a duplex conversion and do quite well. Yes. Yes, they can. The duplex what would the downstairs rent for?

Stephen  

You know, I just was in one today and they’re getting 1800 in the basement plus utilities, which is one of the higher prices I’ve seen. I’m more comfortable telling people 1600 1550 Plus utilities is a standard conservative number. But I’m I did see the unit today that is getting 1800 So

Erwin  

That must be must be really nice.

Stephen  

Three, three bedrooms, right three bedrooms for sure. Wasn’t really nice. It was big though.

Erwin  

Got it. And then what does it cost for someone to get into a duplex?

Stephen  

Price point right now for those bungalows is somewhere between 640 and 680 Depending on where the area is, the certain parts of the market towards the hospital side are very attractive East Hill oldies Hill is a really nice it’s a nice market like a nice little pocket. And I think some of those areas are highly desired. But you can also you know, Belleville has outside markets, right? So Trenton is just down the road. Brighton is just down the road. Those are very, very sought after kind of communities for Belleville residents as well. You can work in Belleville and live in Brighton it’s really not that big of a deal. A lot of people do. And Brighton is a smaller community with a little bit more of a of a lower pace, slower pace, again 600,000 anywhere from 580 in the Trenton area up to about six 650 If you’re going towards the Brighton area. That’s a pretty steady, steady price. 

Erwin  

And all these areas are benefiting from the ridiculous prices in Toronto. You and I follow these numbers but the Toronto is shrinking in terms of the number of families that live in there. And I saw a chart yesterday from Dr. Mike Moffitt, you’re sharing a number of children under the age of five is like falling off a cliff in Toronto, right? Because the families moving out of Toronto and so places like Brighton, Trenton Belleville, they’re all benefiting.

Stephen  

 Ithink so i i can tell you for lifestyle for having two kids. I have two kids 10 and six. They go to a school here that’s called a tree school. That’s not like pre like tree TREE The school is on 10 acres of land. It’s like old Scott old school, old style of schooling. All the kids there’s only 35 kids in the school, all grades kind of are in the same areas. There’s five teachers to 35 kids, and they all get individual time and individual work. And two days out of the week they spend at least the entire day or more on out in the in the forest. So they’re in like nature, learning how to build shelters and fires and camps and learning about biology with trees. I think it’s it’s that kind of a setup. That lifestyle is what brought me here. I know that there are other people that are doing the same thing because there is a opportunity for people to kind of have their kids in an environment where they get to see nature again. It’s all lifestyle that way. So I definitely think it’s one of the highlights of why I moved here. And I’m quite happy with how that’s worked out for my kids.

Erwin  

Sounds like you can get a house in a good size lot for the less than the price of a one bedroom condo in the GTA.

Stephen  

Yeah, yeah, it’s kind of scary. But I mean, like you do have. The other challenge here is you do have some really, really nice houses that are selling for a million dollars or 1,000,001. But if you pick that house up and bring it to your market, it’s not a million 1,000,001. It’s much more, but but, I mean, that’s the market. Right? That’s, that’s what’s here. So it’s not like we’re all living in $600,000 houses. It’s not that way. But we do have opportunities at that price point and really nice houses, right.

Erwin  

So different than Hamilton, you know, the stuff I correct, you know, 100 $100,000 and just James MBM access house $2 million, not far from each other. It’s only 10 minutes apart from each other. If you have high end areas, we have middle class areas, we have low end areas that we don’t we don’t buy property.

Stephen  

Correct. That’s exactly the way it goes. Yeah. 

Erwin  

That sounds like Toronto.

Stephen  

Yeah, no, I think so. I think like the every city thinks their city’s special. But I think the more you get out of the city, you start to see a lot of the similarities of each city. And yeah, I think I think that’s the other advantage for people that are outside of this marketplace. Coming here, right? When I bought that Airbnb in Wellington, four years ago, we paid three 343 40 for the house, right? Literally, for the whole first three months that we were doing the renovations on that house, every almost every day, somebody would walk into our house, like no knocking, they would just walk in because this is a small community. We all know each other here. This is how we live, right? They walk into your house, they’re like, Are you the guy who bought that place? This place? Like yeah, like, wow, did you get ripped off? paid way too much money for this house. And I’m coming from Oshawa, wimpy and I’m like, man, like you have no idea. You have no idea what I would be paying for this house somewhere else. And today, the house is a million dollars. And so did they? Did they predict that? No, because they were here. And they kind of only knew the market that was here. They didn’t see the forest through the trees? Of course, right. And so I think the guys, oh, and the people that get out and start to spread your wings as an investor and get out into new markets and new communities, you’ll be able to spot the signs, you’ll be able to see things that are like you said the quote the other day, right? History doesn’t repeat, but it rhymes. Right? Like, that’s real start to see. That’s right, like you’ll start to see, you start to see all of those same similarities. And you can start to kind of guess where you want to be in which one do .

Erwin  

You should have told that neighbour in your house you want, you want to rip me off too. And I’ll make you rich, some of your…

Stephen  

Buddy, I tried. I tried so many times. The door, I was introducing myself as the guy who just got ripped off. Like I’m the guy who just got ripped off, do you want to sell and none of them wanted to sell? And none of them wanted to sell and it was hard on them. It could just be talk.

Erwin  

Yeah, Robo crash versus a crash. Like, you know, I’ll save you some of your home. And I want to know exactly what you’re not willing to put your money where your mouth is?

Stephen  

No, I, you know, at the time, when I first got here, maybe four or five, six years ago, there was very, very, very, very little inventory in the county. A lot of the inventory was in Belleville and now it’s kind of shifted like there’s a lot more inventory in the county than I think then for a very long time. It’s expensive, but there’s a lot of inventory. Belleville is kind of dropped, right? So it’s interesting. It’s interesting how it’s worked.

Erwin  

So Stephen, how are you doing? How are you doing? Are you showing property in Belleville for people that are just Okay, so we have people that want to learn more. And then I have people that are wanting to jump in with both feet? What do we do with people who just want to learn more information on Belleville.

Stephen  

So when they want to learn more, they set up a one on one call with me they contact our team. They talked to Fiona or somebody on our team and set up a one on one one on one call. And basically, I’m just here to answer and give you real life stories and go through listings and show you and teach you what’s happening and figure out within your strategy, what you’ve already had success in and then try to apply it here. If you’ve had that success, right? Like I don’t want you to try to learn new tricks. I just want to bring you into something that you you’re comfortable with and find the opportunity here.

Erwin  

Because we literally it’s in Hamilton doing exactly that there. They exit their property in Hamilton, they’re looking to redeploy that capital in Belleville.

Stephen  

That’s right. That’s right. And they’re getting more bang for their buck off of that capital that they’ve earned and they’re able to get to a new opportunity. So yeah, definitely that’s that’s what we’re doing with that. When it comes to people that are ready to pull the trigger, or ready to get into something with two feet like He said, What I tried to do is you have a long drive right for me to you is about two and a half hours. Most of the time, if you’re past Oakville, Burlington way, like you’re three hours plus on a good day with no traffic. So what I do, never. So what I do is, I use a lot of video apps, FaceTime and things like that to start the process. I don’t, we don’t, I don’t ever encourage somebody to buy a property from the video, what I encourage somebody to do is to save time and know if it’s something for you or not for you. If it’s not for you, it’s totally okay, then we start to narrow down your selection and kind of narrow down what is exactly what you’re looking for. I can send those videos and save you a drive out to be disappointed, right, I eliminate the disappointment drive. So we go out and we scale. Me personally, I’m looking at five to 10 properties a week. And my mind I like that’s what I’m trying to accomplish, as long as the market is, you know, yielding that many opportunities, but we’re out to look as much as I can. And then I’m scouting and if if, if it isn’t a good lead or a good opportunity, I don’t bring it to people’s attention. So I’m trying to narrow down their their purview and so that they just see good things good opportunities. When they’re ready, we set up an appointment, everybody’s holding offers, still, for the most part here, very few are, you know, running the gamut and trying to list that value. Some are but even then they’re sitting a little longer, set up an appointment, come out, walk the property, walk the property, and then you get almost like a mini streetsmart tour because you get me showing you around Bellville one on one for the day and the hour or however long you want to wait out here for and then you get a full surrounding, and you get to understand everything. So now if you don’t buy that house totally good. Because you’ve now learned a lot more about the area by being here. So now when I send you back if I now if I tell you the house is on an street, you kind of know that neighbourhood you know what that is, you know what’s around there. And so it makes a comfort level go up, it builds you as an investor and get you ready to make more transactions and take action.

Erwin  

Fantastic. And then how can folks get a hold of you?

Stephen  

So you can reach out through the team, you can find me on Instagram, I went on the east side, I went on the east side. And you can you can come and see me at an event. I think that’s the best place if you’re gonna come to anything, come meet me at an event that we do with the island team. I’m out and I make the drive to you. And then I I’m there, I have to get a hotel when I come out there. So I got nowhere to go. But to talk to you guys. So come loaded, see me there and take advantage and kind of pick my brain and make that happen.

Erwin  

Fantastic. And I’ll have all Stephen’s contact information in the show notes, folks. All right, Steven, any final words? How happier to be back in real estate? Other than that, no, give me give me your own. Give me your own final words.

Stephen  

I’m so happy to be back in real estate. No, I am happy to be back in real estate. I think it’s a great opportunity for people who think that they’ve missed their opportunity. Like I don’t know, I’m one of those people like I’ve told you personally, I had trouble kind of getting over this hurdle. Like I might have made mistakes. Or I’ve even used the word imposter syndrome. Like I’m trying to figure out myself in real estate. But I think that I know that I’ve done a lot of things in this game in this industry. I’m really glad that I can get back in and started learning and continuing to grow within this industry. I purposely sought out the best. Like if I’m gonna get back in the game, I want to be on a good team, I want to be around good people. I never have given away that strategy. I never stopped doing that strategy. So being around you and the rest of the team has just elevated me and hopefully just continues to make me better. So I’m trying to. I’m just trying to embrace that. And I encourage other other people to kind of embrace that. Let yourself go through your own journey and take it on and keep pursuing it. Right. It’s not over till you’re done. You’re not dead till you’re done. And if you’re not done, it ain’t over. So keep going.

Erwin  

And hang out with good people.

Stephen  

Hang out with good people. Yeah, they make you better. That’s for sure. 

Erwin  

At some point, hopefully people can buy a property without seeing them because I’ve bought property without seeing them. I’m not saying everyone can do it. I’ve done it because I don’t have all the time in the world.

Stephen  

I’ve done it but I think you have to build trust right? On the first day. No, but I think if you can build trust with people then Yeah, absolutely. You can do that. But I think it’s just about dancing a little bit. Get to know each other. Let’s talk. Let’s talk first.

Erwin  

All right. Thanks for doing this Stephen

Stephen  

Thank you for having me, man. I really appreciate you. Thank you so much. 

Erwin  

Awesome.

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 forget the cash flow reduces your risk. The more you have, the more lamps you can absorb. And if you have none, or limited cash flow, you’re going to be paying out 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 and register 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.

Erwin  

Hello real estate investors! This is Erwin bringing you the truth about real estate investing show and this is not a normal episode either; This is a solo podcast. Unfortunately, you’re stuck with just me today. I wanted to do solo because I shared an article on my Facebook my Instagram last week from an article from the CBC about epic alliances collapse. The link to the article you can google real estate company collapses 500 homes affected 10 million from investors across Canada missing. Again, it’s an article from the CBC. If you’re unfamiliar with the story, here’s some points from the article. The founders of epic Alliance, Rochelle aplomb and Lisa Thompson they were everywhere podcasts, webinars, real estate groups, real estate groups you and I know I don’t belong to you, either of them. I know many people that do. Quick side note. Neither Rochelle or Lisa has been featured on anything that Cherry and I have hosted not my read up groups moment not my podcasts ain’t like that. I agree. They were everywhere and on the show. We I do I put my own guests and I deliberately don’t book guests who’ve been everywhere. Bad and also I reference check everyone that I don’t know everyone that I know personally. In the art world has mentioned of affordable housing in Saskatoon which I find odd. Again, side note, there’s a pretty decent size Reddit string on on the on the story of a client’s one person’s example is to achieve the cash flows that they’re promising. The rent would have to be over $1,500 month on a property worth just over $200,000. So it sounds great for the investor. I’d invest in stuff like that doesn’t sound exactly affordable for the people of Saskatoon. In January, the whole founders hosted a 16 minute zoom call. So January this this past January, they hosted a 60 minute zoom call to investors to let them know the business have collapsed. And the private the borrowed money was gone. And blaming the local Securities Commission the provincial Securities Commission for further reason that the money was gone. Provincial Securities Commission issued a cease and desist order. It was temporary back in October 2021. And accounting firm has since been appointed to investigate. They’ve been appointed by the courts and they’ll report their findings later this month in April, over 500 properties are affected. I see varying numbers, just over 500 Some like five or 20 or so properties, it’s a lot of properties. And there’s numerous out of province investors involved again, again, this is me not only articles, they I know which organisations they were close to the theme of real estate. The event organised real estate investing is I find most people, most people generally stick with the groups that were they learned how to invest. So if he had sampled the popular groups would be like, No, this is Rich Dad, there’s T spire there’s rain, there’s Rockstar, right? There’s all these communities that are out there and in most stick to their own groups. Just because that’s you know, those the people they came up with I know epic Alliance was promoting it one of the other groups as well. And they’d likely got a lot of their investors. They’re very, very sad. I first learned about epic alliances, public alliances problems back in December. So if you follow the show, you’ve learned something good. On December in December, I had the gentleman from the financial independence garage on the show. If you heard that show, I had the mechanic and the accountant on I can’t remember which one of them one of them so they have pseudonyms, right? You saw the names because they still have day jobs so they don’t want their employers to know that they’re about their investments. And so anyways, they want privacy. But one of them did share with me how they were having issues with their investment with epic Alliance. He didn’t go into details but just didn’t go into details which is fine. But I put that away in my mental database for red flags, red flags, hopefully all 17 of you listeners did the same thing. Because personally, I’m I’m extremely risk averse. I have new I have the luxury of having opportunities come my way every week and I’ve been around for a while I know exactly how the best of the best invest thanks to my decades plus some networking interviewing a successful folks in the here on this podcast you know I mastermind a lot with other six eight figure entrepreneurs investors with a eight 910 figure net worth. Remember, I had Grant Cardone on the show, I’ve looked at his CARDONE CARDONE investing model. You know, I’ve had some great apartment building investors on the show.

Erwin  

You know, when you’ve looked at a lot of things, the term, it’s all relative, it means something, because I’ve looked at a lot of deals. And I’ve looked at a lot of deals since I started being a part of organised real estate since 2008. And I’ve, so I’ve looked at a lot of deals, and again, it’s all relative. If you look at a lot of deals, you’re not gonna do them all you’re gonna do, you’re gonna cherry pick the best ones. And that’s kind of what I felt I’ve done. Anyways, since 2008, I have witnessed some epic collapses of real estate investment companies, some small, you know, to be an investor with like 135 properties. Sometimes even one I’ve seen, I’ve seen Yeah, in this real estate market, can you imagine still failing on a single property, there’s gonna make mistakes. People can be blinded by greed and make mistakes. Some of these, some of these collapses are still in court for hundreds of millions of dollars being deemed it’s being disputed and hopefully can find it. There’s several private lenders out there. Even mortgage brokerages who originate private lending have had deals go bad. I know people personally that are problem. Which leads me to think of the Warren Buffett quote, only when the tide goes out. Do you see who’s swimming, swimming naked? So my first exposure to an epic collapse was a a husband, wife, investor a couple. It was mostly the the husband that was driving that business. So we’ll focus on them. We’ll name him, we’ll call him Mark. Mark had an over 50 property portfolio with mainly almost entirely with joint venture partners. It’s hard to have that many properties on your own. I’m sure over 40 of them were with joint venture partners, Margaret speak from stage of his experience and how to in raising capital and investment. This was in Hamilton that he was investing in our contributed to an organization’s joint venture education programme. That organisation sold a binder and educational binder with lots of materials and samples. Mark’s own materials were featured in that doc in that binder. And it wasn’t very expensive. So it was more of like a volunteer thing, I think. Anyways, then as Warren Buffett describes it, the tide went out. This was in 2009, during the financial and credit crisis in recession. That then the swimming naked moment was what everyone found out, sadly, was market taken out a blanket second mortgage on many of the investment properties. And he used the lawyer who was the sponsor of the organised real estate networking group. Can you believe that? You believe what a what a violation of trust that was. So this was 2009. So pretty early in my career of being a professional investor. I started to invest in real estate started investing really seriously in 2008, even though he owned a couple properties with my partners. This event opened my eyes to how even influencers cannot be trusted. Right? Like I’ll listen and listen and again. So it’s not all sunshine and roses. I don’t think everyone tells the truth on our successes and losses. In speaking with friends who hadn’t personally invested with it before it’s the these these passive investors are now actively scrambling to take control of their properties, their experiences working with sorry, so back to back to Mark’s story. The passive investors they meant they didn’t have to scramble they had they have their own title as per being joint venture partners. So the the mortgage money probably all went bad partner that was paid and their experience in But then semesters shared me with working with their experience working with Mark was. And I’ve seen it repeated many times, investors and business owners, business owners, lots of great ideas and visions. Executing small, like 510, even 20 properties is doable. Obviously, the bigger you get, the harder it gets. Because you add tenants, you add contractors, you add staff, or each of those variables are a challenge in itself. It’s not easy to be a general contractor, it’s not easy to be an employer, it’s not easy to be a landlord of 510 20 different tenants. Add to that the time and cash flow pressures. So for example, if you are a private, but if you are a private borrower son have made this mistake of starting the interest payments, starting the clock for when interest is starting to be earned. When the private mortgages are signed, that places a lot of pressure on the borrower to be doing business. That’s no different than having salaried staff or salary contractors. The lesson is to only start the interest clock, when there’s actually a deal in place.

Erwin  

And I’m sure all general contractors would like to do the same thing. They’d like to have their salary staff start getting paid once there’s actually a job to be done. So yeah, not the easiest thing to do. Put yourself in the place of a private bar, private borrower. Understand like, you can see the pressures. There’s many big investors that I know they’ve shared, shared with me the pressures of needing constant deal flow, constant properties that they have to work on, so that they can keep their salaried staff busy, their salary contractors. And some of them will even take on a break even project just to keep their staff and to keep them busy. So that they don’t leave, they leave their teams go working elsewhere. Right. That’s just the reality of things. That’s the truth about real estate investing. This is the truth of having a scale where you actually have employees doing work for you. And add in, you know, it’s not like it’s been easy to last two years adding tenant problems and the pain related pandemic tenant problems and supply chain issues. And think of how it would tell it would take to scale to a 500 plus portfolio property portfolio. Like epic alliances, you have a lot of moving parts. In chatting with the with the flipper client of mine, he flips in Hamilton, he flips only a handful of properties like less than six in a year. I told him I was telling him about epic alignments. And how Rochelle, one of the owners of epic line shared on her Instagram, how in one day, she bought 10 houses in one day. I flipped her friend could not wrap his head around that. And he didn’t given he flips for a living. So he makes a living. You have trouble getting his head around how many trades you will need to pull that off. If you’ve never done before, it’s probably not that easy to understand. But if you’ve ever done a significant renovation before, like say like your kitchen in your house and see a tent never had any of 10 kitchens to renovate, how easy would that be? And the thing with tradespeople are? If you haven’t I think everyone almost everyone has had had trouble hiring people for anything. For anything landscaping fence deck anything trades people were in the middle of the housing boom, this housing booms are going for a while tradespeople are in high demand. And they can go get great jobs with great benefits working for any union, any local union. Right? It’s not an easy time to be a general contractor. So Oh, and also just to note, this property is that epic Alliance, they’ve advertised that they’re usually need work. From the articles I’ve been reading some some of these have been boarded up. Right, so they’re not even occupied. No one’s taking care of them. They’re not tenanted either. No one’s paying rent. So I’m not saying it’s not impossible. I never want to step on anyone’s dreams. Maybe you can be the one that go do it. I just don’t know anyone personally who could pull this off. And I know quite a few people operational. Needless to say, operational excellence would absolutely absolutely be needed. And that’s rare to have without exceptional talent, often high priced talent. I know because I pay these high priced out. If anyone wants to trade places with me, I pay several six figure salaries on this from operating this business. So from friends who’ve shared with me their experiences, working with epic lines, one, one investor sold a property to them. They sold it to them privately for under $200,000. And then add a Curia curiosity, they wouldn’t pull title to find three mortgages that total to over 30% more than he had just sold the property to sell the property for two epical lines. Sounds like a red flag. As an investor that’s enough for me to know I don’t need to learn any more. I’m not I’m not. I’m not saying anyone’s guilty of anything. I believe in innocent till proven guilty, but for me too. You know, spend my time to research and investment or to put up, let alone put up money. This is that’s enough for me, another client of ours, a new stock hacker, she shared with me that she had joint ventures on a house with epic lines. And then when, you know when the tide went out, she felt deceived by the appraisal that she had received. That was 20% above market value on a house that was boarded up, non tenanted needs a lot of work. She’s now having to take over control the property in the town of Saskatoon where she’s never been before. Not the easiest thing to do. And again, there’s, I don’t know for sure, but from the articles I’ve been reading online, there’s 200 or more properties that are not tenanted within this portfolio, and they’re all pretty close together. And understand like Saskatoon is it’s just over 200,000 population. So it’s not even that big a town. So to hire staff to take care of all this, the hire contractors take to take care of the whole this will not be the easiest project to do.

Erwin  

Yeah, so now there are many lessons to be learned. And questions. I always have questions. That’s what keeps me up at night. I always have questions. I do believe again, I do believe in innocent until proven guilty. But again, one red flag is enough for me to say no to learning more about an investment, let alone invest. So like, like Warren Buffett says, this is a different quote, I promise. It takes a lifetime to build a reputation in mere minutes to destroy it. Some of my questions we get would be as follows. securities laws are quite clear around not soliciting investment from from the public. Unless you’re licenced. Right? Speak to your lawyer about this. And then the next question is, how’s sorry, the question is then how, as a company with 500, plus plus properties, not listening to good legal advice. I imagine that a lawyer must have said something. And if it didn’t, if not the best lawyer, maybe a different lawyer. How many investors have never inspected these properties. So I’m not going to poopoo just on Epic alliances, the investors at the do level of due diligence as well. So how many of them out of these out of how many of these out of province investors actually went to see the property. I personally have passive investments. I invest in a REIT using registered funds. And I personally toured three of their apartment buildings, I think they only had 11. At the time, I knew where they all were to because they’re mostly in Hamilton. I personally toured three of the buildings after I’ve been friends with the owners for over 10 years. That’s, that’s my level of trust. And also, I only invested what I was willing to lose. I’m also told that in epic lines advertises This and other marketing as well, a lot of the properties that they do that they transact on they’re done privately, as in they’re not on MLS or realtor.ca, which can be great for saving commissions. But those who participate are doing so without the help of licenced professionals represent who represent their best interest. So not just realtors. But what about the appraisers? For example, when myself or my client goes, goes to a mortgage gets a mortgage from a bank? The bank chooses the appraiser. And these private deals and private borrowing, who chose the appraiser? I don’t know the answer. But I think someone should look into it. And also, if you ever dove into one of these deals with private lending deal, which was the appraiser can you trust them? Can you send your own? If I wanted to know, for example, for example, if I know so I’ve hired a priest, you know, I’ve had appraisals done on brown properties. And the bank never lets me choose. And that’s for done for a reason. Again, I don’t have all the details. But there’s more than enough red flags for me to ever invest in a project like this, any of these projects like this. And again, a lot of due diligence needs to be done. Over this, many of the people learn their lesson here. As I said, if repeated several times for charity night, our investing will remain the same boring, predictable stuff will mostly own duplexes or sells with or without partners. Cheering I have enough clients in our lives. We don’t need investment partners to be married to some we have some passive investments in our registered accounts and land development and apartment buildings. We stock hack for cash flow, we also invest in dividend stocks, dividend paying stocks, for our stock hackers in 2021. If they’d followed the shared trades to a tee, they would have received between 12 to 15% cash on cash returns, as of course does not predict the future. But that’s pretty safe, boring stuff, especially in relation to a lot of real estate stuff I see out there. And also this is not the market. I really won’t be over exposing myself. I’m already very exposed to the real estate market. If you see any sort of if you see any sort of slowdown, it’s not really a market. I want to be getting to For private lending on flips, I know this all sounds slow and boring. But I’ve never found a more repeatable path, repeatable path for myself and my clients to get rich and for retiring for planning to retire comfortably. If you’d like to be educated on slow, best practice, best practices to get rich, I can’t recommend I recommend enough that you’ll be on our email list newsletters, and attend our events, real estate or stock hacking. Take your pick your future you will thank you. And that’s enough for me. Hopefully, it wasn’t too boring. And if you don’t like these shows, we have plenty of more interviewed guests coming up. And if you’d like to hear something else, or you have another show topics you’d like to hear me talk about, reach out, and we’re happy to do it. All right, stay safe out there.

Erwin
Greetings friends welcome to another episode of The Truth about real estate investing show hosted by me Erwin Szeto. Where since 2016, where we’ve invited on the show investors of varying success, including some mega successful folks, like Grant Cardone, best seeling author, Don Campbell, Dmitry Buterin and has recently and several everyday investors as well. Some just starting out some of my clients, many of whom are were able to create seven, seven figures of net worth.

Erwin
Apologies for my ramblings, second time you listen to this, I will have turned 43 years old. This will be my third birthday since the pandemic began and celebrations will remain muted, which is fine by me. We had a family dinner that was bit over the top in terms of what we get back Portuguese scorpion fish, lobster and steak yes all in one seat. Cherry paid for an Apple Watch for me for my birthday present. Actually, let me pick it out though because I’m picky. There’s a lot configurations to choose from. I’ve always wanted one an Apple watch that is can never justify paying that kind of money for what’s mostly a toy. That to me, those are the perfect types of gifts. Stuff People want to pay money for. Speaking of my brother, he’s taking me to lease game versus the New Jersey Devils. But what’s super awesome is Mark to Dino our new deadline trade acquisition, we making his debut which is exciting. That reminds me I need to make your dinner reservations. And yet the rich food court keep things simple and cheap. I don’t need much. We did just returned from a March Break ski trip in Muskoka. And we all had a blast, Andy Tran and his family joined us for a couple days. And it was great to chat with someone who’s so like minded about what’s happening in the world, and how investors should prepare for it. It’s several ideas several crazy interesting and likely quality ideas. It’s no secret either. There is a method to my madness and the guests that we have on the show and Cherry and I are honestly quite transparent our investments are doing with our money we think the best thing to do is a crazy thought in training even updated me on the latest in garden suiting during our trip a building in addition or tiny home in the backyard apartments and properties to rent a separate apartment apartment. This is what I’m inviting my team and my clients is the next leg up real estate prices like we saw in Vancouver with laneway houses were first approved. It is not all roses out there in the real estate market though, it does look like we’re taking a pause or a bit of a breath here. More listings are coming out. fewer of them are holding offers because some of them remain on the market after offer dates, we could see a dip that 2017 Which to me is just presents a great buying opportunity and likely the only buying opportunity would get for the next 5,10 years beyond that. We’ll go into more detail at our monthly real estate meetups as of course. We are back in person meeting up so you don’t want to miss out from my understanding people are tired of COVID and what to do back to back in person meetings. If you’re on my meal email list and you know how to register if you’re not well, that’s just silly. You can go to www.truthaboutreal estateinvesting.ca. Just enter your name and email address. You’re good to go!

Erwin
On to the show, George and I used to work at the same real estate brokerage called Rock Star real estate owned by my good friends Tom and Nick Karadza. I’m still a rock star and George has since moved on to Keller Williams, which is totally cool. He is on the show today to share his journey from getting fired from his first job out of university interested in transitioning into real estate full time as an investor and realtor. He’s hustling and you’ll hear from his interview, he’s driving around and targeting small multifamily properties to acquire with his partners. He shares how he sold his wife’s home, which was a condo during the pandemic and use the proceeds to buy two multifamily properties for a total of seven doors in St. Catharines, Ontario, Jordan shares how he’s finding deals, we get really specific specific, because you know, the point of the show is learn. So I’m going to ask detailed questions, how he do it, so that we all repeat the same success. And yeah, this is the show The show is about truth about real estate investing. So I do ask himm about success rate as well. What kind of success rate in the strategies so that we only set reasonable expectations? No, it’s not easy, but it’s worth it. GEORGE does make it look easy, though. That’s why he’s on the show. Sharing the truth about real estate investing. Again, it’s not all roses out there. It’s not easy money by any means. But with hustle and resiliency. You know, like, please enjoy the show.

Erwin
Georges?

Georges
Georges. Yeah, sure.

Erwin
We spent some time working on your name before the show.

Georges
Yeah, no, it’s not. It’s not the simplest name, I’m sure.

Erwin
Oh, dude we look you’re talking to me? It’s always been a thing a thing for me too, because it’s in the book, Win Friends and Influence People get people names right? Yeah. Right first of all know their name. Yeah. And then even better said how they say it.

Georges
Yeah. Well, just to clarify for anyone listening if you ever meet a George and there’s an S at the end it’s silent. It’s the French spelling.

Erwin
Right? Let’s American then. Yes. I don’t like he’s we’re talking about like Georgia St. Pierre like, Yeah, I’ve seen American St. Georges. us know, I’ve seen saw seen lots of people.

Georges
Yeah, which is incorrect. Yeah. And whether you’re American or anything else, that’s not the right way to say it.

Erwin
All right. So how do you say your name full name?

Georges
Georges El Masri is the way I would say it, I don’t know if you want to hear the Arabic version of it.

Erwin
I like the Arabic version.

Georges
The Arabic version if you were to say it legitimately would be Georges El Masri. Don’t Don’t try to search for Romania. George, yeah. Yeah. I’m named after my grandfather.

Erwin
This is the same grandfather we were talking about?

Georges
No different

Erwin
Okay. We’ll get to that. Yeah. So what’s keeping you busy these days?

Georges
Keeping busy we have a baby at home. So I’m a new dad just getting used to all that getting back into working out to had a little little break from that when he was born. It was kind of hard to to have the energy to do that. But yeah, been running a little bit set up a little gym at home, going back to lifting and working hard on on the investments. We’ve got a bunch of renovations happening. We have some some townhomes that we tied up in welland that we have under contract. So bunch of stuff.

Erwin
So you had I was doing the math in my head. That’s when he was my shop. So give it a pandemic, baby.

Georges
Yeah, we did. Yeah.

Erwin
How is having a baby in the pandemic?

Georges
For the most part, it was fine. The only thing was the hospitals really short staffed. So when we were when my wife was in labour, she didn’t get like she didn’t get the epidural right away. They had to kind of wait and then it was painful for her. And you know, it’s a little bit more challenging when the they’re short staffed. Right.

Erwin
I remember when Cherry before she got her epidural, she had my hand for our first child when Robin was being born. As wear my wedding ring I don’t wear I rarely wear just for I have eczema. So that’s why I can’t wear a lot of jewellery. She had it, she got a hold my hand, the contraction came and she found the way to manipulate my hand to make to maximise the pain. And I was not going to say anything. Yeah. Cuz I did not deserve any empathy.

Georges
Yeah, for me was a little different. She was like, in so much pain that I felt bad for her. Yeah, like, I wasn’t even worried about anything other than like, Oh, I hope you’re okay, you know, this looks like it’s really excruciatingly painful.

Erwin
I remember being at the the prenatal classes where they teach you like breathing technique and stuff for like, natural birth. And then I was like, I put my hand up. Because, you know, I’m not the brightest. So I have questions. So I asked the nurse who’s given the lesson? How many people get the take the epidural versus natural? She was over 90% of the epidural. Yeah, like, Okay, well, we need to pay attention, just like the epidural.

Georges
We can hear women from the next room screaming. It was the loudest scream. I’ve heard from like three different women after our son was born. And it was obvious they didn’t have the epidural. It was crazy.

Erwin
There’s no doubt to me with the stronger sexes. Happy International Women’s month this is. So how’s the investment going? Can you start with? What was your motivation? So I take us back to the year you started getting motivated to buy real estate.

Georges
Yeah, I think I’m going to start a little bit before that because I think it’s a kind of cool part of my journey. But when I was studying at U of T, I had this part time job. I was working for a tech company called Flip. I don’t know if you’ve seen it, you know, the app where you can kind of like, look to see what’s on sale at different stores, whatever. So anyway, I worked for them.

Erwin
And oh, cool, like a retail Groupon.

Georges
Yeah, it’s similar to that. But like, let’s say you’re looking for a chicken that’s on sale at different grocery stores. You just pop in chicken, and then they’ll show you all the stories that have been on sale that week.

Erwin
Are they still around?

Georges
Yeah, yeah. They’re one of the top apps, I think, on the Apple App Store or whatever. But anyway, after graduating, I just took the easy route. They offered me a full time position accepted, even though I didn’t really like what I was doing. The company’s great, but I just wasn’t happy. And after working there for a couple months, I think they noticed that I wasn’t too happy doing what I was doing. And they called me in 4:55pm on a Friday. Oh, no, I get the phone call at my desk. And I’m like, Okay, I know what’s about to happen. I walk in the lawyers there. He’s got the documents in front of them. The managers there and they very nicely, let me go. So I felt like a huge like weight off my shoulders. I just felt although I was kind of you know, nervous about not having a job and whatever. It gave me an opportunity to really reflect and think about what I want to do and it took me a couple months but I realised I wanted to be in real estate and my intention was to invest. That was always kind of like since I was a I had this idea of owning homes and renting them out and whatever. So, yeah, I got my licence. This was in 2013. And I started in I think 2016 really considering buying because I had some income now and a bit of a track record. So I just reached out to a bunch of people, like I Googled, we buy houses, whatever, I was just trying to get in touch with investors. I called like, 10 people, they all turned me down. Nobody wanted anything to do with me, except one person. I had lunch with that person, hs named Sandy Mackay, by the way. He he was nice enough to like, sit down with me. And tell me about the BRRR strategy. And from that point on, I was like, Wow, this makes so much sense. I’m going to do this. And I bought my first rental in 2017 and Hamilton, little fixer upper for 215,002 and a half storey detached home, still have it to this day and kind of just kept going from there, refinanced it and moved on.

Erwin
Who gave you the idea, like not many kids think about owning real estate?

Georges
My mom, my mom, I remember as a kid, she just said, Hey, did you know that some people buy homes, and then they rent them out and the rent they get covers the mortgage payment? Really, you can do that. Cool. And then I just kind of you know, let the idea slide and later on, ended up doing that, right.

Erwin
Did she own investment property?

Georges
No, my parents never owned a rental. Actually sorry, no, they they had they bought a condo in Lebanon at some point, which they were gonna they were thinking about, like maybe moving to when they retire or whatever. And they rented that place out. But that was the only only rental experience they have. Right? Yeah.

Erwin
So you have your roots in Lebanon. You’re not just like, you know, OG Canadian. But the name like alabaster?

Georges
Yeah, yeah. So I was born here, born and raised in Canada always lived here. But my parents left because of the conditions in Lebanon back in the civil war broke out in 1975. And my parents were both really young at that point. It was really tough for them. Like they grew up with people killing each other, and missiles going off. You know, my mom lived close to Beirut, close to the Capitol. And it was really tough for her as a kid, she I think she still like has trauma from her childhood. So yeah, they decided to leave in 89 came to Canada, and I was born a year later.

Erwin
Any parallels to what a route was like to today’s world?

Georges
You know, I don’t really know like, personally, I don’t I it was a political thing. There were political parties that were, you know, going to war with each other. And there was also some religious aspects to it. So I guess there would be but I’m like, I’m not really a political person. I don’t I don’t understand too much of what’s going on today. I don’t I don’t read too much about it. So I can’t say other than what I just shared.

Erwin
So So Civil War, so his fellow country people, yeah, fighting because they have different ideals in religion?

Georges
Different religions, different political beliefs. So yeah, like, it got to a point where, basically, if you entered, sir, because they have checkpoints in Lebanon, and that they’re short soldiers that are carrying like these rifles and whatever. I think my dad was telling me that at some points during the war, if you went to certain pockets in Lebanon, and you said your name, and let’s say you had a Christian name, then you might get killed. Right there. You know, it’s it was crazy. Like, just to just to think.

Erwin
Seems like a nice place to raise a family.

Georges
Yeah, definitely not.

Erwin
Lucky for you to be Canadian.

Georges
I’m definitely grateful. Yeah, it’s, it’s totally different. I never had, I mean, the only experience I know I’m kind of rambling here. Just let me know if I’m talking too much. But um, the only experience I have that’s somewhat related to my parents experience was we went on a trip on a vacation to Lebanon, I think it was in 2006 or 2007. And a war broke out between Lebanon, Israel. So there were actually like missiles launched towards Lebanon, and we would hear them and we were terrified because I was a young kid. I was like, I don’t know. 15,16 years old. Yeah. So I remember we had to take a, like Canada, the Canadian Embassy sent a ship to take us to Cyprus to evacuate us because they had bombed the airport, we couldn’t fly out. When we went to Cyprus. At one point, we were staying in this place with a bunch of other Lebanese Canadians. And the lid of a garbage bin dropped. And it was a loud sound. And I just remember kind of being scared like, oh my god, or there are the bombing this area too. So that was like the only traumatic experience that I had, that I can kind of relate to my parents. But that was it. Nothing, right. Like in Canada, you don’t ever experience anything like that.

Erwin
I had my air pods in the other night. And Putin had just declared war on Ukraine. And then I don’t know what time in the morning, but that emerged another emergency, you know, Amber Alert. Yeah. And that’s all I hear like, Oh my god. Putin’s probably doing some shit. By launching a missile, because you know, you get waking up at 4am in the morning, you’re from a deep sleep. You’re not rational. Yeah, for sure. That’s That’s my closest to so grateful to be living here.

Georges
Yeah, yeah, for sure.

Erwin
So you shared before we were recording you talked about your your grandfather still lives in Lebanon.

Georges
He recently passed away. But yeah, yeah, he was there his entire life. Yeah. Right.

Erwin
And he had saving his life savings were in the local currency.

Georges
Yeah, yeah, that’s crazy. My grandma used to be a saver, she saved all her life. And they were living off of their savings. So they were, they had their money in the Lebanese currency. And they were earning an interest. And I think they were living off the interest that they were earning. But Lebanon experienced hyperinflation, I think around two years ago, it started. So whatever money they had, basically became worthless, almost worthless. So my grandfather who was counting on this money to live out the rest of his life, now everybody’s worried, is he gonna have enough, you know, cuz he’s only got like, maybe he was able to survive for five years from the money before 5,10 years. But now he’s only got a couple months left. So it was a very scary thing and makes you realise how important it is to have assets have something to counterbalance against inflation. I don’t know if we would ever I don’t know if we would experience hyperinflation here with the Canadian currency, but you never know. Right? You got to protect yourself right?

Erwin
Before recording, we’re talking about like hyperinflation versus inflation. Yeah. Because, you know, Canada’s law, we’ve spent a lot in the pandemic, I think, rightfully, and then we’re gonna experience inflation. And I keep reading headlines that we’re we’re investing or donating military resources to Ukraine. This is all gonna cost money. Yeah, someone’s got to pay for it. Yeah. Right. I’m not gonna argue right or wrong. But just, there’s going to be inflation, more than ever. And, yeah, so of course, no one gets their questions in advance. Yeah. How would you advise your grandparents to invest?

Georges
I don’t know. It’s, it’s a little bit tough for me to say what they should have done over there, like, or even translate the other way.

Georges
I always like to translate. The usual question I usually ask is, What are you teaching your kids? Yeah, I know, you can’t really have that conversation today. But looking back, before I’ll answer your first question, looking back, I think they would have been much better off had they converted their Lebanese currency to US dollars, because US Dollars are accepted in Lebanon. So that would have been a lot safer for them. I don’t know. Maybe they couldn’t have invested the US dollars in Lebanon turn an interest? Maybe that’s why they didn’t do it. But the treasury bills 2%. Yeah, yeah, anything would have been better than what they had. But for my kids, I mean, I just have the one the one right now. But I want to make sure he understands that saving for your entire life, and then living off those savings. That’s not a very strategic way to live in this day and age. And you have to get creative and find other ways. And don’t worry about what most people are they’re doing or what most people are doing. Just do what is strategically make sense for you and maybe follow our model, right? Because we’re we’re doing pretty well with our investments. So yeah.

Erwin
Statistically, most people won’t be able to ever retire. Now, if you don’t have a pension, then then there’s different quality of pensions. So not all pensions are good. But yeah, statistically, I think it’s somewhere around two thirds, two thirds of teens will never be able to afford to retire. So don’t do what most people do.

Georges
Yeah, for sure. For sure. I don’t know why people just like if most people are doing it, you just feel like it’s the right thing to do kind of like what you said, when you said 90% of people are getting the epidural. So you’re like, oh, okay, let’s do it. That’s a different situation. But when it comes to finances, that’s not not a very good way to go about it.

Erwin
Well, the I brought up the epidural thing is like, I don’t think most people know what most people do. Yeah. So ask questions. Yeah. And like, for example, if you want to be rich, find out what rich people do. Yeah. Yeah. But we talked about most people, most people say they want to be rich, they’re not willing to put in the work.

Georges
And it’s not just that, I think a lot of times fear gets in the way because you have to take a risk when you’re investing. And I guess maybe sometimes people need more a lot of information before they can take action. And one thing that I think I’ve been either lucky or stupid and doing is that I don’t I’ve never had too much information that I was just reflecting on this but every single real estate investment I’ve purchased so far, I felt like I wasn’t ready for it in that moment. You know, like you’d never be ready yeah, you just you just do it and it somehow doors open. Like I’ve experienced it so many times where I didn’t feel like I had everything in place but I committed to it and like the doors just open for me. Obviously I took took action but it just works out all right.

Erwin
The analogy I give is no different having your first kid. Yeah, you’re never going to be ready. Yeah, you know, I’m talking Yeah, you’re sure you’re never be fully prepared.

Georges
You can read all the books you want when that baby comes There’s gonna be a lot of surprises yet…

Erwin
You can be as rich as you want, you still won’t be fully prepared. Yeah, that’s true. She’s things do not go smoothly. Yeah.

Georges
But that’s that’s what separates people being able to figure it out. I think that that makes a big difference. Like if you have obstacles in the way some people might walk away or might be afraid, but I think people who are successful, take on those obstacles and just move forward. It’s not just being just not knowing that you can take it on. It’s also knowing that you’ll figure it out.

Erwin
Yeah, just no different than the analogy of having your first kid. You’ll figure it out. Yeah. It’s not like all these booklets, not like all these people have failed as parents. Yeah. It’s not rocket science. You will figure it out. Yeah. And how did people figure it out? It takes a village. Yeah. That’s the beautiful thing about the investor community. Like we are a village and we’re very open. You have a podcast, I have a podcast. Like when we started, there were no free resources. Yeah. That were quality. You still You said you’d all these people turn you down to teach you. Yeah. Versus we just give the stuff away for free. Yeah.

Georges
And yeah, that was funny. That reminds me one of those guys I think is like website was Mr. Nice Guy, real estate buyer or something. And he yelled at me because I called him he’s like, Do you have a house to sell? I was like, No, I’m just trying to learn for you. Is it good? Don’t call me again. He just hung up on me. I don’t remember what it was. Exactly. It was something along those lines was the nicest salesperson.

Erwin
I know who it is. Do you know who it is? Or not?

Georges
I don’t even know who it is. So I never had I never spoke to him again.

Erwin
Okay. Yeah, I think I know who it is. False advertising. You want to talk about your wife’s condo? Yeah. Tell me Tell me about your wife’s condo.

Georges
Yeah, she she bought a condo few years ago that she lived in. And North York by the subway line. Nice building nice place. When we moved in together. She rented her condo. And then when the pandemic hit, I don’t know if you remember this. But there was a time where rents just dropped in Toronto. The drop significantly. So the tenant that was there was like, hey, I can just move to another building down the street or even in this building. Yeah, yeah. And pay like 600 bucks less a month. So I’m leaving.

Erwin
What percentage? Is that? Like a like a third. I didn’t drop.

Georges
She had it rented for like, 2300. And they went down to like, 1700.

Erwin
That’s pretty good. But yeah, big drop. Yeah.

Georges
So yeah, he left and then we just got together. And we’re like, hey, what do you think we should do? Because if you’re renting right now, for 1700, it’s gonna cashflow negative, we’re gonna have to be paying out of pocket and who knows what’s gonna happen with the market. So we decided to let’s sell it. So we put it on the market, got a decent price for it. And we took that money. And we bought a four Plex in St. Catharines. We ended up doing really well on that four Plex, we also used some of the sales proceeds, and we put it into a triplex and Hamilton. So we basically were able to take her her condo, and essentially turn it into seven units. And that was so beneficial for us. So I think it’s just, it’s just an idea for some people who might have a rental condo. I think if you keep an open mind, you can end up doing a lot better by reinvesting your funds into something different. Everybody’s different, but that was our experience.

Erwin
So this is a conversation I have with many new investors. Yeah. I think part of the first level of challenge is often that, let’s let’s take a step back in my own head. Sorry, there’s a lot of realtors who just focus on pre construction condos, because to be honest, they pay very well. And you have a large supply of them to sell. Yeah, right. Which versus when we do regular real estate, there’s not much supply. No, right? It’s a very, it’s a very lucrative business. Most of the most successful realtors are in the industry. For like you and I, we want scale. So we’re often having to educate investors around that, including my dad, who does buy new construction condos. So when we’re comparing investments, he says, oh, like my condo did just as well as your duplex, like no dad. Because I get all this extra rent. I can refinance that house and go buy another Yeah, you will never be able to do that with your condo. Yeah. And then also my next leg up is I mean with the guard, maybe the garden suite, some of these duplexes? Yeah, yeah, right. I’ll be able to add more more value to it. I’ll be able to cash 1000 bucks a month. Now again, my credit will look better. And I can go buy another house. Yeah, right. You can’t scale your new construction condo portfolio. Right. And you’re just your example exactly that because what could you have done with that condo? If you held it? You just wait. That’s it.

Georges
But yeah, you’re waiting but like in that situation? We’d be we would have been short 200 bucks a month. Yeah.

Erwin
You would have been fine. Yeah, we would have been okay, I’d rather but you did. Yeah. Uh, yeah, if you run for the person who’s willing to hustle, right? I always tell people there’s nothing wrong with owning preconstruction condo. And if that’s your goal for someone wants to hustle and scale, then that’s not going to work.

Georges
Well also if you want to compare values, so let’s say that condo today, okay, she sold it, or we sold it, I think for 530 or something at the time lesson a pretty nice condo. Yeah, yeah, it was one plus 10. And then we bought the four Plex in St. Catharines. For 465. The legal fourplex we refinance that four Plex a year later for 840. So we did some work to it. Like we renovated two of the units, actually, sorry, three of the units we renovated. So we put some money into it. Yeah, 840. If you look at like even today, I don’t think that condo is worth 840 Today, I think it’s worth less it’s probably worth 750 would be my guess somewhere in that range.

Erwin
Can you rewind the condo? Can you share what you originally paid for it?

Georges
I think she paid maybe 425 or something in that range.

Erwin
So still fantastic investment.

Georges
Yeah.

Erwin
Alright, so just to recap the condo north, you’re paid around for 25 as a pre con pre K.

Georges
No it wasn’t pre con it was like Sorry, relatively new was like three years old. Just kidding at the time.

Erwin
Yeah. Yeah. Nice. Time to get it.

Georges
Yeah.

Erwin
So bought 425 sold for 530. Yeah, in a pandemic.

Georges
In the pandemic at the height, like just maybe three months before we sold it. It was worth like, 570-560-5570 came down. Yeah. Yeah.

Erwin
And you decide to put more money in the real estate market?

Georges
Yeah. Yeah. Cuz I had seen what was going on, because I had sorry, and we’re kind of jumping all over the place. But I had bought a place in well, and that did really well as well. So I’m like, Hey, let’s just take this money, put it in that area where we’re doing well, there. So but yeah, anyways, keep going with your numbers.

Erwin
I think I’m good. So I paid 425. It went up in value to 570. Because the market was hot. Yeah. And pandemic hit. Yeah. But yeah, condos were among probably the worst performing asset during that time. And then for anyone who listened to me, I was saying, you know, while we’re early pandemic, like, to me the best investment is condos and student rentals. Yeah. And even if you can’t buy a condo, if you’re a renter, like go rent something, lock it lock up that new rent. Yeah. And that would have worked out well. Because if someone who rented if someone got that rented your condo for 1700. Lock that in?

Georges
Yeah. Yeah, we would have been stuck. And that tenant probably wouldn’t leave me to see what rents are now. Yeah.

Erwin
Wouldn’t for the tenant. Sucks to be because the market rent was likely bounced back.

Georges
I think it has Yeah, yeah. I’m pretty sure like, I don’t really monitor that area too much. I’m not really in that market. But last time I checked, it was a lot higher than 1700. or

Erwin
Pretty close to previous.

Georges
I think so. Yeah. I think it was in the mid 2000s. Maybe low to mid 2000s. Yeah.

Erwin
Because we’re seeing it now. I’m seeing a lot of headlines about the back to work. Yeah, people are being asked to go back to work. Yeah. So let’s see lots of pain on that.

Georges
Oh, yeah. And condos are hot right now. Like we had a client that was looking for a condo we looked in Vaughan, Mississauga, Oakville, everything had multiple offers on it. So we know that that condos are back now is just, you know, like for our model, we prefer these multis, it’s it just works better for us.

Erwin
Yeah, again, is I need I need higher rents to in order to be able to get refinancing. Get more.

Georges
Yeah, it’s more sustainable over time.

Erwin
For growth.

Georges
Yeah, right. Yeah.

Erwin
Yeah, cuz the condo models not gonna work for growth unless your your income is exponential, like our real estate is.

Georges
Yeah. Yeah, that’s true.

Erwin
Cool. Cool. What’s your wife think about all this? She’s supportive. Imagine Yeah, she sold her house. She sold her home.

Georges
I sold mine too, by the way. Just just to be fair to live in the triplex four Plex? No, we don’t live in it. I sold I had bought this little bungalow in Hamilton in a pretty bad area. North End. But yeah, so I had this place and I had it rented for 1350. Then we were just kind of looking over everything and I’m like, Hey, I lived in this place for a bit but it doesn’t really make sense for us to keep it as a rental anymore. So ended up selling it got a good price and dumped a bunch of that the sales proceeds into a renovation that we had going on I one of our multis, so I’m not just telling her what to do. I’m kind of doing it myself, too. So yeah,

Erwin
Where do you live now?

Georges
We live in Brampton.

Erwin
Bounced around.

Georges
I grew up in Brampton, my wife’s family’s in Woodbridge. So she wanted Brampton because it’s close to my family and close to her family. I didn’t want to be encrypted. If it were up to me, I would have been in Oakland.

Erwin
Not bad. I’m obviously biassed. Yeah. So what other investments do you do? Actually, let’s go let’s killing to deal with this with this real estate. So what’s the plan now? Are you looking to buy more Multis?

Georges
Yeah, the goal is to buy some more Multis. We have a cash flow goal that we want net cash flow.

Erwin
Would you share?

Georges
yeah, our goal is to get to 15,000 a month in net positive cash flow.

Erwin
Can you share where you’re at now?

Georges
It’s kind of hard to say we’re not because we have a bunch of vacant units. Like we I have one building a five Plex that’s completely empty because we’re renovating it. We have a triplex that has two empty units. So if I gave you what our cashflow is now owed wouldn’t be terrible.

Erwin
In the last year, well, thanks. Appreciate sharing, because that’s the reality of a growing portfolio. Yeah, no, definitely like a growing growth stock. Like, say, robots, for example. They don’t make any money. Yeah, they’re supposed to grow. Right? Like you’re just doing your growth stage not expected that cash flow.

Georges
Not right now.

Erwin
You’re speaking to negative cash flow?

Georges
Yeah. Yeah. It’s kind of challenging in that sense. Because like, when you have a five Plex that’s totally empty for months and months, because you’re renovating it. It’s not easy. But you have to set money aside for that kind of thing. Right. But yeah, I think it’s important to say there’s all this glamour around having cashflow. And some people think, well, I’ll just replace my income right away. I think it takes a couple years before you get to that point. And you’ve got a depends on what kind of properties you’re buying, but we’re buying fixer uppers and those ones, it takes a few years to really get them to perform at their highest level. So something to keep in mind for investors.

Erwin
Can you share how you you’re finding these deals?

Georges
So some of the ones that we found a couple years, two years ago, roughly, I did a marketing campaign directly to owners. And we picked up the the five Plex that I just mentioned in well in we picked up the four Plex in St. Catharines. That way, sometimes we find deals straight off the MLS. And recently I actually picked up a nice deal off another realtor, an exclusive or a pocket listing. I got four side by side townhomes freehold with a 73%, VTB 1% interest.

Erwin
Sorry, he owned these who did the realtor own the more and all his or her client? Yeah. And they’re willing to give up the VTB. Yeah, in this market?

Georges
Yeah. Yeah, that’s pretty crazy.

Erwin
What was the motivation that they would take a VTB?

Georges
The rents were really low. And the owner owns a lot of real estate. So he understands the game. And he just said, like, I’ll do it for one year. I’ll help you out. Because I know there’s a lot of work to be done here. So I think that was the motivation. He was kind of helping out. Your fellow investor.

Erwin
Isn’t it nice to work with people to speak the same language?

Georges
Yeah, it’s awesome. I love it.

Erwin
And let’s just let’s, let’s give some context. How you Realtors you think know what VTB is level negotiate? One? I’ve actually negotiated.

Georges
I think a lot of them have heard of it, but they don’t understand it. I’d say like 95% of Realtors don’t understand it yet.

Erwin
So they’re naturally going to be afraid of it.

Georges
Yeah, for sure. They’re gonna, they’re just gonna say no, you’ll be like, Have you even discussed this with the client?

Erwin
Lawyer and the lawyer is gonna say no to yes.

Georges
It’s true.

Erwin
That’s awesome. Sorry, when you mentioned them, when you send the marketing campaign to owners of fire. Google AdWords.

Georges
It was a flyer.

Erwin
So very targeted, like you dropped people in the door.

Georges
Like, yeah, actually sent to in the mail. Yeah. So what I like to do sometimes I used to do this, maybe more, but I would just drive around, pick out certain properties that I liked. Either drop off a flyer or mail it to them.

Erwin
Driving for dollars.

Georges
Yeah. Yeah. So that I’ve had some good success with that kind of thing. Nice. Yeah. Cool.

Erwin
Do you do this for clients too?

Georges
No.

Erwin
That’s what people need to understand that how much work this is. Yeah. Right. Yeah. Because you’re investing a lot of time. Yeah, to do this. And then it’s not like these deals match to this happen. You someone flyer doesn’t deal with this happen. Right? Like, how long does it take to do a deal? Can you share some metrics? Like how many flyers yet? So you’re driving for dollars as a highly targeted?

Georges
Yeah. Even even with that I still get depending on the campaign, a one or 2% response rate? Yeah, even recently been on the direct flyer. Yeah. Wow. Yeah, yeah. So one to 2%. And then out of those I call, I might get, like, one out of five of those calls, leads to an opportunity because four of them, either the owner is not that motivated. They’re overpricing it, or they’re just curious to know what you’re gonna you know what what price you want to give them tire kickers. Yeah. And then you’ll have that one out of five that’s like, Hey, I’m actually thinking about selling. So yeah. And then you might go over there. And you might see like, this place is in really, really rough shape. And I just, I don’t see how this doesn’t fit my, my portfolio. So it’s pretty rare. Like it does take a lot of work and a lot of screening to get to that one property that you’ll actually buy.

Erwin
So I can’t just offer to pay you a commission and you do this for me.

Georges
I mean, I would do it but I’m not that focused anymore. I’m not as focused on like, just finding deals for other people at this point. I’m finding I’m just reaching, trying to reach our goals for now and I help people along the way, but yeah, it’s kind of a different phase of my life at this point.

Erwin
That’s pretty cool. happy for you guys. I tell I tell beginner Realtors all the time, like people who are interested in getting in. I always start off with, please understand investors make more money than realtors. Yeah. Right. Yeah. If you want to be a realtor, it’s purely cashflow play. Yeah, right. It’s a job. Yeah, it can be very lucrative. But I know lots of real estate investors will make more money than us for sure.

Georges
Yeah, that’s really important to know. Like, I wish more Realtors would understand this and spend more time investing because it’s going to change their lives. I know tunnel.

Erwin
We don’t want them to do that. Then there’s some competition for us.

Georges
It’s yeah, yeah, maybe maybe stick to the north there somewhere like Barry or something. No, I hear all these great things about Sudbury. So yeah, North Bay. But yeah, it kind of makes me sad to see that 75 year old realtor that’s still working because they have to, you know, it’s you’re in the industry, you should be investing at least by one one rental property. But again, it’s harder than it looks like dealing with tenants. You know, we all made mistakes. When we started investing. We’ve all got, we’ve all put ourselves in a position where we had a crappy situation. And it was stressful, and you have to dish out a bunch of money. And then you never make that mistake again. It’s just part of life, right part of investing.

Erwin
Yeah, I have conversations with all these people that want to be entirely passive. So they’ll tell me about, Oh, this guy’s offering this and he’s guaranteeing that rent for however long and I’m like, I don’t trust that guy. Want to just buy a property yourself? buy anything? Yeah. Right? Because I wanted us to call me. Like, do you understand that your worst case scenario versus losing your investment is my worst case scenario? Yeah. If you invest with someone else. Yeah. Like, people just don’t want to put in the effort. Yeah, yeah. The worst case, which is possible, you and I know people who’ve lost all their money on passive investments. Like that doesn’t sound worse than attended calling you. Yeah. Yeah.

Georges
Yeah, they’re both stressful, obviously. But one is worse than the other. But, I mean, you could you could lose everything. If you make big mistakes in real estate investing, like we’ve gone to the tribunal where we’ve experienced a guy who had three separate cases with tenants. And among the three or across all three, he was owed over 100 grand in rent. Like that’s, you’ve gone way too far. If that’s how much rent the tenants oh, you should have filed and hired a paralegal and done it properly. Way before. Don’t let yourself get to that point.

Erwin
But you said it though. Do it properly. Yeah. Yeah. If you’re exposing 200 300 grand, isn’t that worth doing it properly? Yeah. Pay pay a paralegal three grand or whatever. Hire property managers, screen tenants. Yeah. Use. Use landlord credit bureau to screen tenants. Yeah.

Georges
And I was I made that mistake when I started. When I bought my first property. I found the tenants and I did a terrible job. I found really bad tenants. And I had to go to the tribunal and lose 1000s of dollars. And it was part of the experience and I never made that mistake again. I use a property manager now I work very legal. I do everything the way you’re supposed to do it now. And we it’s been so much better, obviously. Right.

Erwin
Sorry. You share you live in Brampton, your property sound like they’re all Hamilton further west of you.

Georges
Yeah. Niagara.

Georges
And so they’re all under Park Management. Okay, so we’re high managing the ongoing stuff, but we have a property management to fill our property manager that fills all our units. Yeah.

Erwin
Anything else you outsource? Are you unplugging toilets? And oh, changing them?

Georges
No. No, I don’t do any of that. We’ve got plumbers, electricians, everything. I don’t want to drive out to well, and to fix it to I don’t even I think it changed the toilet once. It did a terrible job for you if it was in my own house. I put the bolts in the wrong place. And the tank was leaking. And I had spent so much time trying to fix this that toilet. So after that, I said I’m paying somebody to replace toilets for the rest of my life. Never doing it again.

Erwin
Yeah. Anything plumbing related to our high risk if you do it wrong. Yeah. Well, you know, in families, I’ve had leaks and properties that can cause a lot of damage if done wrong. Yeah. Yeah, that’s fine. Don’t mess with it. No, for even in my own home. Maybe if it was in the basement, so like, you know, so it’s near. It’s not that far from a floor drain. Yeah, dare risk it, doing it myself. But yeah, I categorise that with electrical. The worst case is just too much for me for sure.

Georges
Yeah, yeah. But I thought changing a toilet would be easy. And I was like, Hey, I just want to learn how to do this. That’s why I’m just curious. I want to see how hard it is to change a toilet. Right? I don’t want to do it every day.

Erwin
Just watch YouTube.

Georges
Yeah, you can watch YouTube but the bolts I don’t know, it was just too similar bolts. I put them in the wrong place. And it caused the leak. So I have to pay someone like 200 bucks just to replace the bolts later because I rented the house after and the tenants are like, hey, it’s leaking. Okay, so I got to spend 200 bucks on where I could have just done that originally.

Erwin
Wherever you’re lucky as always. 200 even cause any damage. Yeah, like a ceiling leak or something. Yeah. Inexpensive, inexpensive problem. Anything else you wanna chat about?

Georges
Anything else?

Erwin
I want to ask is your realtor. Yeah, we used to be along the same one. Yeah, you left not me because people always ask me if I’m still at rock star. I think you own rock stars. Because of stuff that I’ve said, that implies that I own it. I’m gonna go home rock star real estate and you’ve been to different real estate brokerages. Yeah. So I only bring this up because I know there are aspiring realtors who listen to the show. How did you choose? Where have you been? And how did you choose?

Georges
The first office I went to I picked it. It was a real page office because it was a nice office. They had like glass doors, and nice little offices, whatever. So I was like, Okay, this looks like a nice place to work. I’ll work here. Second place was Rockstar. And I picked it obviously, because it was investor focused. And that was my goal. And I had to fight to get in Nick didn’t want me. I was like, Nick, I’m not taking no for an answer. I just kept pestering him until he said yes. And then I eventually switched because there was a an investor at KW. That was like, recruiting me pretty, pretty heavily. And I really respected this investor. So I wanted to learn from him and be close to him. And that was the reason that I left and then I stayed. I’ve been with kW ever since my wife and my mother in law, they’re both realtors and we all work together and word of the kW and Vaughn. So that’s the reason. But to be honest, rockstars one of the better experiences that I had, I loved the morning meetings, just talking to investors all the time making Tom and Nick’s brains on marketing. They have so much knowledge. It’s an awesome place.

Erwin
Yeah, if you’d stick around, you’re playing some bitcoin.

Georges
Yeah, probably for better or worse. I know. Yeah.

Erwin
Yeah, I appreciate being around Rockstar. And to add to that, you know, be able to talk about economics with Tom and Nick time, you talked about being a business owner with them as well, and then even talking to like, the other successful realtors that are around what they’re seeing in the market. And I don’t have I don’t know what it’s like in other brokerages. That’s why I ask people like yourself, you know, what is the grass really greener on the other side?

Georges
Well, if your goal is just to sell homes and not work with investors, then maybe Rockstar is not the best place like you can find another brokerage that’ll serve you better. But for investment focused, I don’t know if there are too many brokerages that focus on investors other than Rockstar.

Erwin
Maybe small ones that are started by people that we know.

Georges
But yeah, yeah. There’s a couple of maybe I’d Yeah, it’s this one. No, yeah. Cool.

Erwin
And then oh, the your, your wife and your mother in law. Was that more recent? Were you the agent first? Or were they first to be licenced?

Georges
No, they were. They were licenced before me.

Erwin
Oh, you’re recruited these people?

Georges
Yeah. Yeah, they were they were looking for a change. We were all gonna join forces. And yeah, I just told them kW has been good. And I think it offers room to grow. And at first they were so against it, because they were Remax. And, you know, ReMax is all about the marketing and whatever. And they’re like, we can’t change, people aren’t going to work with us anymore. And whatever. And we went had the meeting with kW, and they they liked it. And so.

Erwin
Yeah, that’s interesting, because I mentioned to my marketing team, that we have to push a personal brand. Yeah. Right. Like people don’t even know I worked for a rock star. Yeah. And then some people actually think I own it. That’s a much smaller number. That’s the only thing it because I haven’t heard of it before. Yeah. So it’s the first time you hear it, they think that you own it. Right. Right. That’s my experience. When I mentioned I were a rock star like, oh, I never heard that you own it. You’re a broker? It’s like, No, it’s not my brokerage. Have you never heard of it before? Yeah, but because we’re small. Yeah. And the goal is never been to make a huge Yeah, I can’t speak for them, because I’m not an owner. But again, the point was, their focus is investors. And it’s not for everyone. That’s true. Because, you know, investors can be hard to work with. Yeah.

Georges
And you’re always on the buying side with investors, right? For the most for the most part, like Yeah, you get some listings, but in a market like the way it is now, it’s a little bit tougher for buyers. So you face some challenges in that sense.

Erwin
Yeah. Yeah. That’s like doing someone who’s interested in getting their licence just yesterday. Just you know, like, I love investing in laptop investing. Good. Lots of will do. And lots of investors will take your time and they’ll be nothing in it for you. Yeah, they’ll gladly waste your time because people don’t have to invest. Part nearly as motivated. Like when people when you work with homeowner homebuyers, for example, they often have a really motivating reason, job change. They need to upsize because there’s a baby on the way you know, you know, the feeling. Yeah, right, versus an investor’s. It’s really, you don’t have to do this It’s true, right? At least bless the masses think, like from from from your background like, like knowing what inflation hyperinflation looks like. To me, that’s incredibly motivating. You have to do something to hedge against inflation.

Georges
But that’s the nice thing about working with investors. If you get that one investor that’s driven, you might do five, six deals with them in a short period of time. Right? So you’re not maybe not working with as many people, but you can group them all. Or sometimes it’ll buy a full portfolio and you just do like five transactions at once.

Erwin
Yeah. And then if you have other investors, like they want to buy when, so I have investors want to exit because I’ve been around for a while. So they’ve gone they’ve aged with me. So now they’re exiting. Yeah. You know, taking some profits too. Cuz they’re near retirement age. And then we have clients that will buy them. Yeah, nice.

Georges
Oh, yeah. That’s awesome. Yeah, you’re a good person to be in touch with for that.

Erwin
Well, yeah, like you said, like, you had to do a pocket deal to do an exclusive deal. Yeah. Do you know wants to fight over property on MLS or realtor.ca?

Georges
And I wouldn’t have gotten a VTB if it was an MLS deal. Most likely?

Erwin
Yeah. Yeah. That’s the wild part. Yeah. For me, I always try to list everything on realtor.ca. I don’t know.

Georges
I didn’t ask him any questions.

Erwin
Of course not. To deal. Yeah. Yeah. What some? I’m always I’m always it’s I think it’s funny. Why. Yeah, there’s pluses and minuses, because if you put on realtor.ca You’re gonna have a wave of people going through that those four townhouses? Yeah. So were they all rented?

Georges
Yep. They’re all rented.

Erwin
Okay. Yeah. I don’t know if people appreciate how hard it is to show property that is rented. Yeah, that’s right. The tenant has no motivation to allow people in

Georges
Actually not during a pandemic or during whatever, right. Like, yeah.

Erwin
We have a high incidence of properties that were trying to sell attendance, high innocence, they already have COVID. And they can’t allow showings.

Georges
So I find some tenants say that, like, there is one tenant I had in my building every single time I’d see him. He says, no, no, don’t come close of COVID. And this was like, you know, every couple of weeks had seen him. I think part of it was lying, because he didn’t want anyone to enter his unit. But whatever.

Erwin
Yeah. Having tenants does not actually help resale value. No. But yeah, it sucks to hold a property that’s not as vacant. Yeah. So why did you choose these areas to invest? What markets are you looking to expand in now? You mentioned Hamilton, St. Catharines? Niagara, welland?

Georges
Yeah, just Yeah, well, in St. Catharines. And Hamilton, those are the three areas I don’t really think I’m going to go anywhere else. I don’t want to. If I have to funk driven out for whatever reason, then yes. But yeah, those are the areas I like and really well into was introduced to me by another investor. A few years ago, he bought an apartment building there. And he bought it for like a million bucks. It was 21 units. So that was my first introduction to Welland. And I went to see this building. I’m like, wow, this is nice. This is like I can see this area kind of growing. I understand that it’s close to whatever this and that and, and then, yeah, I started exploring opportunities.

Erwin
A million bucks is hilarious.

Georges
I know, for 21 units crazy.

Erwin
How’s it? Is there any way? It’s not under over $2 million?

Georges
I don’t know. So it’s got to be probably a 3 million I would guess.

Erwin
That’s pretty good.

Georges
Yeah. And this was, I think, around 2017, that he bought it.

Erwin
Oh, during the correction in 2017.

Georges
I don’t know if it was an off market deal as well. So yeah, I don’t know. I don’t remember. But the correction was mostly for like residential homes. Right? Because it was the first time buyer. They hadn’t they had put in the stress test. Right. Yeah.

Erwin
It doesn’t take much to spook the market. Because neither of those things bothered us. Yeah. So actually looked back. And as a business, we actually did left way less transactions after the fair housing plan came into effect. And the stress test, even though really didn’t change anything for 99% of our clientele. Right. They just got spooked.

Georges
Yeah. And it also kind of could trigger some people to sell. Like, we have some clients now because of this interest rate hike, which was almost nothing, point two, five, and this lady calls us and she’s like, I think it’s time for me to sell this. I’m kind of worried that this interest rates going to impact the market. Okay, that’s interesting that like that tiny thing caused some people to sell their homes. But yeah

Erwin
We’re seeing some softness now. Yeah. So I’ve told our clients if you have plans to sell them in 12 months, next 12 months, this would be the time Yeah, right. Just in case we have to 2017 is it’ll take some time for the market to recover. So for anyone who’s buying holding long term like I am, yeah, yeah. Holding stuff for my kids, right. Like, I plan on holding stuff for like over 10 years. So this doesn’t faze me. You’re not selling anything. Yeah, yeah. But if anyone, like for example, I have a client who has a flip. I’m like pushing them. Get it. Get it ready. Yeah.

Georges
Yeah, that makes sense. or maybe for some people who are downsizing it could make sense. capitalise on the market now and yeah.

Erwin
Or even the refi is done now. Yeah. Right. Like, take advantage of this. The worst seller’s market I’ve ever seen. Yeah, get your reifies now get your appraisals done now at these all time all time all time highs.

Georges
Yeah. Crazy Crazy

Erwin
And be ready for in case it does dip has metadata available for sure. George, anything else you want to cover?

Georges
I don’t think so.

Erwin
You don’t ever look.

Georges
I don’t have a book. No, I have a podcast.

Erwin
And it’s called the well off podcast.

Georges
You’ve been on it.

Erwin
Thank you for having me on.

Georges
Yeah, my pleasure.

Erwin
Hopefully people aren’t worse off for having listened.

Georges
I doubt it.

Erwin
Where can people find it? Welloffpodcast.ca, Spotify, Apple podcasts

Georges
Would you recommend Realtors do so what is your goal with the podcast?

Erwin
Actually, I really just want to like motivate people and and help them improve their lives by investing not just sitting on the sidelines.

Georges
So you think people should still get in? Interest rates are going up? Absolutely. Absolutely get in. If you can get in you won’t regret it and 5,10 years.

Erwin
Do you have a lot of people that challenge you on that opinion?

Georges
No, not really.

Erwin
Yeah, even newbies?

Georges
Okay. Yeah, sorry. I shouldn’t say that. I think some people, they create these excuses for themselves. Like I’m not going to invest now. I’m just gonna wait because I think the markets gonna dip. I think there’s gonna be a correction, I’m just gonna win. That I don’t know, they wait a long time. And by that point we’ve made how much in equity and cash flow and all these things. So I just don’t think it’s a good strategy to just sit and wait.

Erwin
The reason why I mentioned that. When I look back at our stats for 2017. A lot of people did not buy the dip. Right? They actually waited to the market recovered. We sold way more properties till after the recovery was done. Yeah. Right. So all this dip buying in reality people say it. They don’t actually do it. Right. That’s true. That’s true. True. Oh, we’re gonna wait for the dip. We for the dip. The dip comes. And you find another reason to wait. Yeah. Then they get cold feet. Not not. Like, I understand. No one knows what the bottom is. Yeah. But my point is, they don’t do it.

Georges
Because you start building a habit of waiting. And then, you know, the people who are buying they build a habit of buying. So they’re buying before the dip they’re buying during the dip. They’re buying after the dip. And they’re just their portfolio is growing.

Erwin
I have no interest in showing off to anyone. Yeah, I bought two houses in 2017 in the fall near the bottom of the dip. Yeah, right. In the pandemic. We bought two houses last year, like well into a dip. Yeah. Very well for us. So even in the stock world we teach I teach people that you need to exercise that muscle of buying dips. Even if just one share. Soon as soon your favourite. You have an iPhone, you have an Android or an iPhone, iPhone. So you’d like apple?

Georges
I do.

Erwin
So my suggestion to someone would be buy one share of Apple during this dip. Yeah. All right. If you don’t if you start that still doesn’t make you feel comfortable. Do it on paper. Yeah. Right. So then you you build that muscle. And then at least you’re not waiting. Yeah, right. build that muscle being an action taker. Yep. And then then look back. How did it go? How did it feel? You regret it? Are you happy with it? And then learn from that move forward? Yeah, for sure. Yeah, I want to buy some bitcoin this week. We’ll see if I regret or not. Yeah. Adam Bitcoin time. Oh, yeah. This is not a financial advice, folks. Please. This is just our experience and some really idiotic ideas. If you’re licenced, or licenced, George and I are licenced in real estate. We didn’t talk about real estate all day. So you’re not you’re not capital raising at all?

Georges
Yeah, yeah. I am. Like these townhomes. They have individual titles. So I was able to get separate partners for each nice. I have one left that I don’t have a partner on. But I have the three of them with our partners.

Erwin
Fantastic. Yeah, they have to be happy.

Georges
Yeah. Well, I think it’s pretty good deal.

Erwin
May I ask did you based on? So did you have to sell it to them? Or before the deal closes? They got put on title type thing?

Georges
Oh, it’s a VTB. So okay. Yeah. So like, I’m on title and the owners trusting me. Right. So I’m not gonna start like swapping names and doing this and that. So yeah, we just have a co venture agreement.

Erwin
Got it. Yeah. And then for that CO venture did did the price go up for each individual unit? Or did you just give them a deal at the same? Yeah, the same that as a sweetheart deal.

Georges
I got a pretty decent deal on and two, I think like there’s a decent discount on on the properties.

Erwin
So these properties built up equity on day one. Yeah. They made money on the buy. Yeah, it’s pretty sweetheart deal. Because I bet you most deals like this do not happen like that.

Georges
Yeah. I never even thought about increasing the price on our agreement. That’d be pretty smart. Actually.

Erwin
I’ve ruined George for everyone. Oh, I bring I bring it up because other passive investments I’ve looked at, that’s what they do. Yeah. Right. All the power to them. Like, I’m a bit of a capitalist as well. If you can do it, why not? Yeah. Right. So, you know, make your money. So you have money for rainy days. Yes, there will be other there’ll be other rainy days going forward. Yeah, for sure. And yeah, you bear lots of risk. Yeah. Do you on the BTB? Right. So you’re bearing lots of risk. Cool. George, something to think about? Thanks. I always want to allow my guests to have some time to share what it’s like to have an open mic. Yeah. That’s the first time I’ve called it that. Any other final thoughts? Maybe something for beginners? Maybe something for people afraid of? Anything?

Georges
Beginners, don’t overthink? You’re not going to have all the answers. You’re never going to have all the answers. We talked about this earlier. Every single purchase I’ve made so far. I felt have never felt like I was 100%. Ready. So if you’re gonna wait for that time, it’s probably too late. So just go just go for it. Do something. Don’t wait.

Erwin
So I have this habit of always thinking overpaid on every single deal. Yeah. And so as a team, we do a well over 100 deals every year. I think we overpaid for all of them. Yes. It’s It’s laughable. But you know.

Georges
I feel that way too. Yeah. And then I look like we bought a place in September at the time I thought. I was like, oh, man, I kind of think we overpaid for this. It’s gone off like 300 grand since then. Did so I don’t think we overpaid anymore.

Erwin
Yeah, we’re paying around 840 For duplexes last fall. And they’re all over a million now. Yeah, very between 1.1 1.2 Yeah. Right. So yeah. I thought, well, I can’t go any higher. I’m not saying people should chase prestigious appreciation. But I do think there’s a chance of a dip, there could be a great opportunity. And that can be the life like since 2017. It’s been five years. Yeah. Right. Who knows when the next opportunity to buy is. So this, you know, I’m preparing our clientele and our team. But you know, this could be the next buying opportunity and buying opportunity for the next person the next 10 years. 5,10 years. Right? It’s true. Because immigration ain’t going nowhere, right. can’t build nothing.

Georges
Yeah, it’s not like the supply is increasing. At a very slow rate.

Erwin
I actually saw this I went to a presentation this week. So it was never explained to me this way. I actually don’t know why I didn’t know this number. But we have over 1 million job vacancies in Canada. How do you fill that? Right. And so you have no option but immigration? Sure. Right. So yeah. So then if we know we have to have immigration to fill these job vacancies, and we know the government, what the government’s plans are, where these people are going to live, right? Crazy. Yeah. Magic grandpa saw you now forming all these hard assets?

Georges
Yeah, I don’t know what he would think. I don’t know. I know my parents are happy.

Erwin
That’s pretty awesome. Yeah. This is not like didn’t go through a lot to get here.

Georges
Yeah, for sure. My life was a lot easier than theirs. That’s for sure.

Erwin
Pretty cool. All right, George, thanks for doing this.

Georges
Thank you appreciate the time and you have me on.

Erwin
Don’t be a stranger.

Georges
All right, cool.

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 from 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 register 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.