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(00:01) welcome to the truth about real estate investing show for Canadians my name is Rano did you know that the city of Toronto has passed the renov eviction bylaw which comes to effect into effect next summer uh while I am all for protecting the rights of the vulnerable which means the tenants um I Still Believe In Balance uh friends of mine were in the news because they needed to upgrade all the plumbing in their apartment so ceilings had to come down in every unit on one particular floor as the buildings 50 years old so of course
(00:32) much of the infrastructure does not support modern day living or standards or code uh speaking of modern day living my friends were upgrading sweets to have on Suite laundry and dishwashers naturally plumbing and electrical upgrades would be needed and this is a good investment uh as who doesn’t want a dishwasher on sweet laundry and willing to pay for it most are uh when you increase the value uh and increase the rents of properties that improves the value of the building which is what every real estate investor
(01:04) wants to do uh but because of our immigration rates they’re growing faster than we can build uh housing rents have skyrocketed and vacancy rates are at historic lows uh inflation is driven of build costs uh so new construction landlords are in a really hard place as rents uh that they need to break even on hard costs are hardly affordable for the average Canadian uh a friend of mine from the gym was telling me how his mortgage on his new construction GTA located Bachelor siiz condo is is over $2,200 plus he has a $400 plus condo fee
(01:39) but his rent is only $2,000 not a good investment in most people’s books and 2,000 rent for a bachelor 400 foot apartment that’s a lot of money for the average Canadian uh now with anti- eviction bylaws spreading across Ontario first it was Hamilton yay my favorite then London Ontario now Toronto and I know Auto waterl are considering it and who else who else who knows who else is considering it the question begs why would a landlord renovate say Life Safety Systems need to be updated like fire safety systems such
(02:11) as sprinklers which would need Plumbing obviously fire escapes floor wall ceiling fire R of separation is complicated expensive disruptive uh you wouldn’t want to live when around in a unit when these things are being done uh Leen plaster is when Airborne is just nasty uh but they are life but these types of fire rated safety upgrades are indeed life saving so how will a l get these renov types of Renovations done without renov without with these renovation law bylaws in place now again I Believe In Balance I absolutely
(02:47) believe in protecting the vulnerable now keep in mind now with these renovation bylaws the onus is on the landlord to rehome the tenant during the renovations in a similar unit at similar rent or compensate any rent differential and if the landlord fails to do so the rents the the fines are in the hundreds per day uh so for an n11 eviction for renovation it’s really not financially feasible because in reality the landlord would have to put up the tenants in an Airbnb or hotel which again they can’t recoup that cost and so so and my
(03:24) opinion the investment hypothesis in Ontario only gets worse on the positive I just recently became a member of solo that’s an acronym for small landlords sorry small owners landlords small ownership landlords of Ontario it’s a not for-profit uh organization to lobby and support uh small Ontario landlords Provide support to landlords with tenant issues beyond the scope of what the landlord self-help center provides uh I’ve spoken to a couple of the board members interacted with members of solo on the free Facebook group and folks are
(03:55) truly helpful and there’s a lot of sad stories of LW um you can check them out at solo.com groups solo landlord just do note that they do verify their members uh there’s over 8,000 of them uh again it’s pretty helpful group it’s uh but they do have the most stringent screening I’ve seen in having to prove that one is indeed a landlord but it was pretty fast like you know I think I was approved within 12 hours no big deal now Shar and I like happy to announce that Shar and I are proud sponsor ERS starting January 1st of solo and Hope to
(04:33) support their efforts in supporting small landlords who honestly get the short end of the stick I look forward to a mutually beneficial relationship in 2025 uh and now in case you investors out there don’t want the short end of the stick uh for those interested and learning more about what I consider the best practice for investing in real estate I want to personally invite you to the to a free hybrid training event which means both in person and Via Zoom webinar I call it how Canadians can Leverage us real estate for Passive
(05:01) scalable and tax efficient income streams on Thursday November 28th towards at 7:30 p.m. for those in person 8m Eastern Standard Time For Those online here’s what you learn where to invest and capitalize on a trump government how are clients are making money on the buy executing perfect burs without leaving home diversifying to USA for better cash flow and returns in landlord rights links are in the show notes on to this show in this episode we sit down with Christine trainer from Victoria BC a seasoned real estate
(05:33) professional season is putting it lightly uh she’s navigated this industry from multiple angles she started as a pargal in mortgage enforcement SL forclosures she became an appraiser in 2002 yes ladies and gentlemen she has experiened Beyond five years like a lot of the gurus who are going bankrupt these days anyways we’re she worked for a high-end real estate developer then she bought a real estate appraisal firm bought two more with creative financing and in 2024 sold those businesses for a seven fig exit now with all this money
(06:07) and free time what’s keeping Christine busy well her current Venture is in Edmonton Alberta as a real estate developer multif family investor Christine shares a wealth of knowledge and insights so that so be be ready to be inspired for those looking to raise Capital specifically registered funds like the RSP rrsps and tfsas Christine is involved with a mutual fund trust as part of a 94 build so you want to hear her experience on that and the benefits of uh Christine shares how and why she chose to invest in how why she chose not
(06:38) to invest in tenant friendly unaffordable Victoria BC for landlord friendly Edmonton which is something pretty much every BC Ontario Quebec investor from a tenant friendly jurisdiction is considering Christina is an advocate for empowering women around investing in finances and she is the host of she builds wealth a free online community where she leads women in conversation around real estate investing uh business money and mindset she is also the creator of she builds wealth a foundational course for women in
(07:10) Building Wealth in real estate to follow Christine you can find her on Instagram at christine. trainer s trainer with a y t r a y n o r. re investing that’s one word or her website it’s a lot easier www. Christine trainer that’s CR oh that’s bad c h r i s t i n e t r a y n o r.com please enjoy the [Music] show hi Christine what’s keeping you busy these days hey irn um goodness what’s keeping me busy um besides two teenagers real estate obviously that was a one of the shortest answers ever on history of this [Laughter]
(08:04) show uh so I invited you on the show because you have a a sizable Edmonton build project going on but even before we get into that can you can you tell the listener a bit about yourself yeah absolutely so uh my background irn we won’t go too far back but um I my background was as a real estate appraiser for gosh over 20 years so I got into uh real estate appraisal and um I recently exited um so I eventually ended up buying real real estate appraisal firms and I recently exited those businesses this spring and um yeah
(08:41) so that sort of you know how I kind of got into real estate investing was just um yeah seeing all the deals coming through the office and what people were doing and what was working and what wasn’t working right and now it’s in your bio you had a seven figure exit so I imagine you did well yeah yeah yeah no I did it was it was actually really fun I um ended up buying the first company through creative Finance before I even knew what creative Finance was so I was approached by someone who was wanting to buy a company um and she wanted a
(09:11) partner um she wasn’t designated as an appraiser it was actually her mom’s company and um so she asked if I wanted to buy it and um after saying no the first time a couple years later I’d seen that something hadn’t sold and decided to jump into it and at the time you know didn’t have funds to purchase a company and um she’s like you don’t need any money and I was like how do you buy a company with no money like I never never even entered my my mind right and so end up buying it on a 0% interest um you know fiveyear term and then the company
(09:40) at the time was you know doing well enough to pay us both an awesome salary as well as pay this you know creative finance loan and that was kind of the the start of of kind of wrapping my head around okay there’s some interesting things we could do here and now again it’s from your bio so I’m not asking you anything that’s not public yeah yeah yeah so you bought out your partner you did you elaborate yeah yeah so about a year or a year and a half I can’t remember the exact time but into the purchase uh we just both kind
(10:09) of knew that it wasn’t the best fit like the working relationship wasn’t wasn’t just wasn’t really jelling I guess you could say there was nothing really negative going on but it was also just feel like okay we’re not we’re not really suited to be partners um and so we mutually agreed it was like okay who wants the company you know do you of course because it was her mom’s company it was like if you want the company awesome um um you know you can findy me out and if you want me to take over the company I’m happy to do that too so she
(10:34) had a chance to kind of mow that over and she was like yeah um I want you to take the company um and so I made her an offer and um bought her out and by that point we’d also purchased an office space so bought her out of the office space as well and um and yeah and so I was essentially on on my own and then shortly after that um someone else had approached me anaser who wanted to come work for me he was like youve got to meet my dad he’s got a company he need to sell it he needs to retire um you know I know you bought this company do
(11:03) you want to buy you that’s TR to connects you with him I was like oh sure I’ll have a conversation um and so I ended up connecting with him and um you know basically two months later um had bought his company also St of Finance um and so it was just like okay that that worked out really well and because I already had all the systems and processes in place um you know from the initial company you know it was really an easy transition to kind of just you know not close over to the other one um and then you know basically two years
(11:32) after buying that company um someone else had approached me about buying a third company and had kind of said hey I know you’ve bought these other two it was actually a group that had purchased um a company from Simon wanting to retire and um and they sort of thought it was going to be a really easy thing to run off the side of the desk kind of thing which everything else they had going on and realized there was a little bit more to it than than they wanted to take on and so they’d asked if I wanted to buy it and so I bought that third
(11:57) company so um yeah just so people hear in kind of what was going on it’s a pretty um intimate industry right like you know there’s not necessarily I mean there’s a lot of appraisers but in terms of firm owners and who’s doing what everyone kind of knows everyone so um yeah that’s kind of factory there now you living in Victoria BC uh were these all all these companies localish yeah they were all in Vancouver Island so um yeah one one was kind of Greer Victoria um all over the island and another one was in the CCH and
(12:26) Valley um sort of a pocket kind of the dunan area and then um the other one was also great Victoria so yeah all on the island amazing and then can you elaborate on creative financing like vendor takeback mortgages also 0% oh like on you mean like on the purchase of the businesses any of them even when you bought your partner out yeah so well so when I bought the first company essentially it was just um yeah vendor take back on on the purchase price um and it was a 0% interest and I think that um just came from probably
(12:59) the relation ship and um maybe not I mean I don’t really know but yeah so that was just sort of a fiveyear buyout of okay here’s the price and we’ll just pay this out monthly over five years um so that was pretty straightforward on that one and then when I bought my partner out it was basically the same thing it was like okay I’m going to pay you out and I think I paid that out over two years um so the the original yeah so again the companies were doing well right so there was enough cash flow in those businesses to pay them out so it
(13:25) was like let’s just get that done right so I agree we agreed that I would just keep paying her her regular monthly salary um until until it was paid off um so that worked out really well it was like I I still paying her but she was just wasn’t there um and that was while the initial loan was still going so I kind of had two St of Finance um bu a taxing at the same time um on the first one and then on the second one um it was so interesting so um the owner had wanted just had a specific number in mind and this is right before Co it was
(13:56) January of 2020 and when we so we were kind of negotiating like you know in the the late fall of 2019 but actually have purchased it January 1st 2020 and so he had a number in mind and you know with smaller companies it’s really like a lot of the order like the the value is attached to the work that’s coming in obviously right and if that person is no longer there you know you run the risk of those orders maybe not coming in right because that person’s going and so number mind yeah exactly right and so I was like if if it you know if you’re
(14:26) planning to he was still planning to work for a couple years and um essentially I said to him whatat about if you stay on for two years because that’s what you want to do anyways and I’ll pay you a percentage of each order that comes in right instead of your number I’ll pay a percentage if it ends up being more then then great for you um and if it ends up being less then that’s just what it is and so he agreed to that and we had a two-year um buyout and um so just every order that came through the office he got paid a percentage
(14:51) every month um and anyways in the end because things obviously went crazy during Co I ended up paying him double than what I would have paid him if I agreed to his first number um which is kind of crazy to think about but it was still a win-win right like it was still a win-win like I I would have been better off if I had taken um his number but I was like yeah I’m not sure like what if you just disappear so for me it was just that balance of of risk and um that’s what felt better to me at the time and you know hindsight who knew but
(15:20) um again you know because the work was coming in if if the real estate market hadn’t have gone crazy like it did during Co right he wouldn’t have you know he wouldn’t have been double we wouldn’t have known we couldn’t have known that market was going to go as crazy as it did right so have so many questions owners on this show uh just is a fun fact for the for the listeners benefit population of Vancouver Island is 864,000 sound right roughly yeah sounds yeah sounds about right I think VI Creator Victoria is like around under the
(15:51) 400,000 I think that’s the top my head so yeah but the island it’s pretty small sound that small but I mean compared to you know big cities now as an appraiser you know on onario was pretty Bonkers for appraisals for the last I don’t know how long it was only until we until things went sideways the last two years or so where appraisals we were having any sort of trouble with appraisals but for a good portion of my career being I’ve been I’ve been a I’ve been in a been a realtor since 2010 so almost my entire career of being
(16:25) a in real estate investing full-time with Investments is appraisal pretty much always came in whatever our clients PID for it and and with properties and at least well actually you probably you probably seen prices decline as well uh in the west as well prices have declined significantly here in the East and U so now people are ask asking this questions how come those properties are praised but anyways my bigger question is what are some of the what are some of the things you’ve seen in your career that are interest peaking yeah I mean I
(16:58) did I did see it in that sort of 070809 time period um as well because I started in the early 2000s um and so I definitely saw it with like that preconstruction uh stock where people bought property say in ‘ 06 um you know just like now people bought pre-construction property in the peak of of the market and then you know they’re not getting that appraisal done until two years later when the project is ready um and I mean the values you know depending on on price could be a CLE $100,000 um less right and of course do
(17:27) an appraise that you’re basing on current sales right and so um I think that’s always the challenge there is I will say for anyone doing pre construction um there’s only one lender um that I’ve ever seen that I know of and and I believe this to be true um and it’s RBC and they’re the only lender who um will actually so if you buy a preconstruction property say today they will order the appraisal today and they do not recheck appraisal income like you’re approved at the time’s purchase so you know I have to to sell
(17:58) preconstruction um projects as well I took a brief um break during break from appra but we would always say go to RBC right if you can get qualified with RBC because then you know you’re GNA you’re going to be good for that mortgage right if you change your job or if something happens or you know just to protect yourself so um but yeah definitely you know people and people always ask like you said how did how do they have praise because when the Market’s going up it’s easy to be kind of optimistic right things are moving prices are increasing
(18:25) um and so a lot of what we kind of saw in the 2022 and I don’t know if it the same in Ontario but the market kind of peak here in March of 2022 and you know people that bought property you know say February March during that time period and they were waiting to get those appraisals um you know and they might have gotten caught up in the hype I mean even on those two months later they were coming back to $100,000 left potentially in some cases where people had overpaid right so you know unless you’ve got that extra cash
(18:51) um people didn’t have the ability to close so definitely have seen a lot of that and the other thing we see a lot of is people you know on the appraisal side not properly plan their renovations right so people you know spending money on Bas and Suite are renovating um and you know cost overruns and then not being able to actually refine it so let’s just say you know you bought a property for a million dollars you’re spending 200,000 you know in their mind it’s going to be worth 1.
(19:18) 4 right and so that was their plan you know air close to refinance and pay off credit cards or line to credit um and and you know the biggest thing we all know is like you know crost doesn’t always equal values right so not properly mapping construction projects um is a big one too I’m guessing that’s from the more novice investors or can you can you paint broad brushes on who’s making those kind type of Errors H I wouldn’t say it’s novice or when as shocking as that sounds um yeah I mean even on new construction stuff too right I mean
(19:49) we’ve seen like people that have done you know probably built like you know 20 new 20 stuff builds you know they’re actually Builders um you know and and cost overruns not getting handled properly or not getting their financing sorted um you know I think people just a lot of people just don’t do their homework right it’s like I did this before it wasn’t a big deal right but markets change all the time lender requirements change all the time so just because something worked last year right with your financing doesn’t mean it’s
(20:14) going to work this year you know um so yeah I think it’s I wouldn’t say it’s notices you’d be surprised y yeah that’s that makes sense uh I have a friend good friend at uh one of the home builders associations in Ontario and it it it’s the medium it’s medium and the small size developers Builders who are are really hurting it’s the it’s the large absolutely large ones with deep Deep Pockets who can pull land for cash that are sitting pretty at least they not stressing yeah totally like they’re they’re fine right but if
(20:47) you’re relying on those um you know pre-sales or that that financing um to to move forward it can be definitely be a challenge this is why I’ve stayed out of it largely guess yeah I’m I’m very risk adversed with my with my real estate and uh portfolio but uh you are a developer it’s not a bad thing I think I think kind of the point of the show is also like I meant for this to be a buffet right yeah everyone can learn from people in all different walks of life specifically real estate investing this is real estate investing show yeah yeah
(21:18) and then people my intention is for people to take take a deep look at my guest and also themselves to understand who they are and what they’re capable of yeah and if they can do what what our guests do right so that’s why you’re on yeah I love you are developing and again you but you also have a wealth of what sorry you like you have like a 20y year career in appraisals yeah I did get my I think was a couple years ago got my 20 year like P or whatever they send you in certificate like how could it be 20 years I still
(21:48) feel like I’m 25 right like how like how is that even possible but um two major Cycles two major Cycles yeah 100% you’ve seen the worst have seen the worst for sure SE want be developer totally it’s like if that doesn’t mean but I think that’s a good thing right you need to see what can happen right abely The Bad The Good the Bad and the Ugly right and and be aware of the risks and and challenges that can can happen with whatever you’re getting into so I think that that you know having been on the real estate appraisal
(22:19) side you know seeing you know lots of foreclosures come through the office where people are having challenges um you know that’s also equi me to feel confident in in moving forward in the decision um that I’m making yes you are you have a much more you can make a much more educated decision than myself that’s too what’s a good investment what’s not well I wouldn’t go that far but it’s also just um yeah I think it’s and I also think too it’s not getting caught up in the hype right like I think that that’s what that’s the biggest
(22:47) thing that happens right is when you’re in a cycle where things are hot and everything’s moving and everything gets caught up in the hype and you know buying frenzies and you know paying for properties and you know you’ve got to be able to look at things I think with a longterm you right of you know are you going to be happy with this is this is this purchase going to make sense over the long term right um because you know if you’re in a situation where you need to refinance for some reason and you bought at the peak of the market you
(23:10) know you’re you’re not going to be able to right so it’s like does your plan make sense with with what you’re doing oh and by the way I checked RPC stock after what you mentioned and they’re doing just fine yeah so the market seems to be okay with what they’re doing totally and you know what’s funny like I’ve had a lot of mortgage brokers who I mean because obviously most of my clients were mortgage brokers right Banks mortgage brokers credit unions and they would all try to tell their clients like oh yeah you can actually um you you know you can
(23:39) qualify for this you can get you pre-qualified but they’re always running checks you know at at the end right and that’s so people run into trouble and so I’m honestly here doing anything preconstruction um talk to RBC a mortgage specialist there who does these types of deals I’ve got someone I can recommend um if if anyone needs and um it’s incredible right because you protect yourself so so yeah even with their lending practices they do seem to be doing okay which is a good thing all the condo P out there I’m
(24:05) surprised more people didn’t go to our BC I don’t know if it’s a thing that’s not well known I I honestly don’t know yeah it’s like like nobody knows no one’s heard of RBC before kind of right like that’s that’s where I would go we only have what five big Banks well yeah and I think the other thing too is they’re not accessible right to the broker town right they’re only like like Brokers can access RBC right so that’s probably one piece to yes thankfully a lot of my friends who are in the broker channel will tell you
(24:36) what’s best for you yeah yeah yeah and that’s not always true with all everyone that’s piding commissions all right so let’s talk about developments what what what spurred the interest into being a developer so so tell us about the journey to becoming a developer and yeah let’s start there yeah yeah yeah well I feel like I always knew that I wanted to shift into I mean I’ve always been invested in real estate um you know I bought my first condo when I was 19 um it was a foreclosure um you know I I bought a property that was a development
(25:07) site I think in my early 20s I didn’t hold it long enough but I still doubled my money like little little things that um but I always knew I want to shift into it in a bigger way and I think um it wasn’t really until things had kind of slowed down after the peak of of March of 2022 that I was like okay I think it’s time like I think I can actually create space in my life to uh really explore this a little bit further in the way that I want to because I was always really you know I was busy with appraisals right running free firms um I
(25:34) got a family as well and so it just felt like um I didn’t want to just jump jump into things without actually having the proper knowledge and education I I felt like I knew I knew you know I had a pretty good Baseline and knew a lot um but I knew I didn’t want to jump into uh doing developments on Vancouver Island um for a few different reasons I mean it’s an appreciation Market here and I do invest here and it’s an incredible place to live and invest um but I knew that I wanted to i’ always kind of had my eye in Alberta um and Edmonton
(26:00) specifically and so i’ kind of been following that market and so um when it kind of had this time and the space um yeah I just kind of started diving into it a little in a little bit of a bigger way and I ended up hiring a um a real estate Co so I end up sing someone to that knew Alberta and new new construction that I felt could fill in the Gap right like with the know I had could fill in the gaps and help me um kind of get get on my way so that was sort of the first thing that I did and that was really invaluable
(26:29) um in terms of getting getting the right information to feel comfortable moving ahead so and then also opening the doors to contact right contacts and assist to projects and and things like that um and so yeah so I yeah just sort of Dove Dove all in and um yeah here we are so I’ve got I think at the moment I’ve four yeah four projects actively under construction and then um I’m also working on a 94 unit equipment building project um as well that’s a mouthful and then you had so little to say when I asked what was keeping you
(27:03) busy well I said real estate investing I said real estate investing and teenagers I real estate investing three words yeah yeah real estate in they cover four projects in their construction and a 94 unit building all in three all in three words yeah I mean do you car a shout out your coach yeah I know I’d love to so I end up hiring Russell westcot um and I think he’s been on your show um and I think only three times he might be up there with the totally so I ended up doing some research just on sort of the market that
(27:39) I was looking at and who was kind of doing what and and um had kind of been doing it for a while right there’s a lot of coaches out there that I think are you know incredible and it’s just about finding the right fit so I did actually jump on quite a few calls and interviews of people and just to check but just just personality I think was a big thing too um and I just really jobed with with Russell and so got to work um and uh yeah was able to kind of fairly quickly after uh starting to work with him you know was able to kind of acquire my
(28:07) first deadening property and and just you know started building from there that’s amazing and before we’re recording I mentioned that how so many people don’t comparison shop yeah you did say that yeah I think it’s important I think I think you need to why not like we’re investors first of all which is partly about comparison shopping for Investments where will my money work work the hardest and no different or will get the greatest return on your investment for your coaching dollars your education dollars totally and I
(28:35) think it’s like if you’re if you’re considering on like it’s like learning anything right like you know if you want to learn I don’t know Spanish for example right or whatever you tennis like you’re going to you want to learn how do you learn who do you want to learn from what’s their experience do you je with that person right um you know and so those were all big things for me to consider and and I think you know the funds that you’re going to spend you know in working with a qualified coach to learn the specific
(28:58) thing that you’re wanting to learn is going to be you know it it’s going to come back to you like I don’t even know thousandfold right by investing in the right education for where you’re whether it’s investing or something else you know it just F TRS your your you know your end result I guess you could say can agree more um there’s all these newer organizations that are charging between 20 to 35,000 or more and but there’s some of the best coaches don’t work for an organization they have their own like the Elizabeth Kelly the Russell
(29:32) westcotts like Quinton dusa used to coach Julie broad from from the Nao used to coach and she in my opinion she was the best before she retired out of Nyo okay no I’ve never yeah but she since moved she I believe she’s mostly in La now but um okay yeah my point though is that for low five figures somewhere over 10 grand you could have pretty much any of these coaches on a one-on-one basis versus folks joining organizations that charge a lot more and the coach that you get will have nowhere near the experience of one of these folks that I
(30:05) just named well that’s exactly it and I think there’s a time and a place for everything right like I think some of the larger organizations do offer that like connection with other you know investors and like there’s other there’s other reasons maybe to join you know those types of groups but from a coaching perspective I mean I couldn’t agree more right like you’re going to get placed with a coach who you know may not have experience in what you’re trying to achieve and what you’re trying to invest in and also you know what is
(30:30) the training that that coach has gone through how long have they’ve been a coach how long have they’ve been a real estate investor right like a lot of the organizations you know they’re essentially if you’re in their Community you can become some coach right and and you might not necessarily have a lot of experience as an investor right so yeah I think it’s really important for you people to just kind of flush out what they’re looking to to learn and and see who’s out there right like you know until you start listening to podcasts
(30:53) and Googling and asking around who who’s doing what where um right then you come get a Vibe for who we might want to reach out to and then see if they’re a good fit you know I look at everything almost at an Roi perspective let me try a lower price thing first before I go after the biggest price thing yeah totally for sure I agree so tell me tell me about these projects you have um like for the listener benefit like paint me a picture what what what are these projects that that you have under construction yeah so um I’ve got so at
(31:27) the moment I’ve got two six units in filds um so those are essentially um you know older houses you know kind of like one level older Bungalows that were torn down sort of one previously one small single family home usually around a th000 square feet um and essentially what’s being built there now is a duplex if you picture a duplex uh twostory duplex with a basement and the basement have seat and then um a detached garage with two sleets above so in Edmonton everything’s got um rear Lane access so it’s really conducive
(32:00) to the detox garages the we right really unlik Victoria R Island right that model doesn’t really work because you don’t have access um to the back but um yeah so two projects like that one’s going to be complete actually next month um which is exciting and the other one is just starting construction and um yeah so that’s those two and then I’ve also got two 10un um construction projects as well happening yeah I can see a little bit of so that’s my latest 10 unit um what you thought there oh let’s PA you there folks I I’m
(32:36) I’m on Christine’s um Instagram page right now uh so let’s promote show your Instagram page christine. trer with a y. R investing we’re looking yeah this looks serious what what was on this property before did you tear something down or was this an empty lot on the one that we’re looking at right now win yeah so that’s my yeah okay so that’s a six units that’s the garage Suite um that you’re looking at right now um okay so on the six unit project that’s a garage enormous how many square feets this garage Suite uh the garage I think it’s
(33:24) about just under 600 yeah that’s the garage Suite that looks very nice nice yeah and the not the 10 unit that’s also under construction so um so I can break it down for you so the so the six units they typically have like older homes on them so like sort of a th000 foot two-bedroom Bungalow kind of thing right that hasn’t been modernized um and so they’re essentially replacing you know what was one unit with six units um and then I’ve got two 10 units under construction as well so the one that you saw of about the beginning of that video
(33:53) and the one that you paused on there now they two separate projects um that’s the site of our 94 units so I kind of just Little up a tour of of the stuff that we’re working on but um the 10 units so I’ve started investing in a neighborhood in Edmonton I don’t know if you’ve heard of it or when or if any of your listeners have but it’s called blackbord so essentially it’s um yeah it’s the site of the old municipal airport in Edmonton and um it’s basically the same size as Downtown Edmonton um it’s going to be home to
(34:23) 30,000 people on completion and it’s about 10 15% built out right now um it’s I think it’s 536 acres is the total site and um entally it’s owned by the city of Edmonton and um yeah it’s it’s one best new in Canada for 2023 and it’s all you know green and environmental and it’s a public bu community so upon completion it’s going to have all the schools um all of the you know spop Services Etc um yeah you can see it there youle photos that’s the original um air traffic control tower is it staying trffic control tower yeah staying isn’t that
(35:06) hilarious it’s part of the part of the development yeah but um yeah so all sustainable um you know geothermal heating and and like I said one best seing in Canada for 2023 so it’s it’s pretty neat and um it’s yeah like I said what 10 15% built out right now but um it’s sort of this upand coming incoming area and we’ll be home to 30,000 residents on completion so I kindy of equate it to it’s it’s kind of one of those areas there’s a couple areas that come to mind for anyone that knows in island or I don’t know if you do wi and
(35:36) and I can’t speak to anything in Ontario but there was these two developments in on V Island one was the old Gravel Pit in cwood um and is now Royal Bay and um the other one is is West Coast um and they’re both you know and they’re both sort of in the Westport area of of Victoria and when people started building in there and the development started happening this kind of back in 2006 everyone was like who would want to live there you know like it’s you know there’s nothing there yet and why would you want to invest there in places are
(36:06) expenses and you know kind of that that mentality and now it’s like you know those two areas are like one of the places to be right and so anyone that purchased there you know obviously years and years ago um now it’s like this is where everyone wants to be so it’s um I kind of feel like like blord has kind of the same vibe in terms of Remington um but I mean it’s got the new LRT station that just opened there um it’s Lally 10 minutes to downtown um no no no it’s it’s and it’s literally the same size if you look at what the
(36:38) size of the city of Edmonton is um this is literally you know the same size and so I brought um yeah two 10un buildings um under construction there right now and I’m and I’m yeah pretty excited about what this new um commic exp to the new communities are are usually a hit because then Community is kind of on the same level yeah as in there’s no like eyes sore properties yeah like everything around you is going to be brand new and and it attracts you know a specific type of person that wants to kind of live there
(37:12) right people with money yeah exactly who people with money want to live among right exactly right and so whether that’s you know you’re looking at that from a tenant perspective right I mean that’s the kind of tenant that you want right is is I love you know building sort of A1 Properties that are going to attract a really nice um Quality tenants you can see how big it is sorry the 94 unit project is is in is in blatchford or they all in blatchford or well no so my six unit info because info because this is the new community the
(37:44) infills aren’t in Blackford um but my two 10un buildings and the 94 unit Department building are in Blackford as well so yeah three of them are there and they’re essentially um you can kind of from where you’re if you’re standing there you can see them all um at the same time difficult yeah so it’s um it’s exciting and and they’ve got um some of the and it’s an area where you know because it’s owned by the city of Edon they’ve got sort of a builder list um where they release land right and um you got to be on that list to be able to
(38:15) acquire s um and some of the builders in there are selling them to investors as pages right where you can buy a specific um you know Pro multif family project and some of them are selling them off individually is that your plan are you’re planning for long-term rental hold yeah these ones are planned as long-term rental yeah so that actually is footage um a flashboard as well sorry are these yours no that’s um I B so the one the the 10 unit they saw this is the same Builder um but uh yeah know that was just some footage from
(38:53) when I was there cool yeah so it’s a cool thought I mean yeah I think k I love I love the new construction and the turnkey opportunities um I think they’re just yeah you really do get a nice Quality quality tenant for sure and and in great areas and and I’ve got an investing principal I think a lot of people have this but you know I won’t invest in anything that I wouldn’t live in myself so I don’t live in Edmonton I have no intentions in living in Edmonton but is it in an area and is it a product that I would be you know happy to move into
(39:24) with my family right if I was going to live there um and I know that that’s not everyone’s philosophy and it’s not necessarily the right philosophy but it is one of mine that I have to be able to um yeah have have a quality project that I feel good about right philosophies like that example I’ve had rentals well I’ve had student rentals right so My Philosophy is like at that age and if I was a student would I live there right okay okay you’ve got a on it right at that age when I live there yes okay yeah I that demographic and that
(39:55) income bracket when I live there yeah yeah yeah okay that’s good actually too I like that I feel like I could get behind that as well you you like Victoria I like Oakville like they’re they’re generally nicer areas but we can afford to be here that’s why we’re where we are yeah yeah totally right and um yeah I mean I love Edmonton I don’t have any reason to live there um and that’s the thing it’s like you know I think adminon seems to be I know there’s a lot of places in Canada but as far as sort of a bigger city in Canada it is kind of one
(40:28) of those places where you can you know it can be professionally managed um and the numbers still work right so it’s it’s not a situation where you know I mean I know someone who’s investing in edtion and they live here and they’re flying back and forth you know every couple weeks to deal with issues at properties and you know that’s not really how I rule right it’s got to be proportionally managed and and taken care of so yeah it’s a fun SP for for for the listeners benefit who doesn’t know how to get in into a project like this how
(40:59) did you get into it um well I would say I mean I’m gonna I’m G to uh I’ve got to credit Russell with that right I mean I essentially you know started working with him so I’d say find a coach or Mentor that um that you’re wanting to work with and and what you’re looking to specifically achieve through working with that person um and essentially he was able to connect me with people that were putting these types of projects and Deals together um and so I just sort of ran with it and now you anything that I do is buil on
(41:29) relationships right and so um you know and now now in a situation where it’s like you know in terms of acquiring projects and and properties um you know because I built up those relationships um I’m able to kind of continue to work with that group and um you know have to S of the stuff that they have going on so I think it’s all about people right it’s all about connecting with the right people right people is the key is the key word yeah connecting with the right people right um yeah and I think you know I like the turnkey model um I like
(42:00) the fact that you know through relationships I mean Russell’s been doing stepan Adon for 25 years he’s been working with a group for you know 20 years they’ve been working with builders for 10 years you know the same Builders and so to be able to kind of toop into that and have access to that without you know me having to go yes I could go hire a builder right I know people that you know hire a builder from ad mention but guess what if you’re not there who’s managing us right if you’re not on site and advention every day who’s managing
(42:26) your construction site right um I think that’s where sometimes for for me the appetite for risk is you know to what you said earlier you know I need to be able to sleep at night I need to be able to know that you know I do work with um private investors so I need to you know be able to feel comfortable with the information I’m sharing with them um and so it’s through those relationships that I can do that right because I’m getting updates on projects I’m getting you know video tours regular updates and I had to ad mention you know
(42:51) fairly regularly too um to check on things and and anytime I’ve you know popped there everything’s been exactly as what I was told right there hasn’t been any surprises but I think you do run the risk where you know if I just call up a builder right and I intend to go build a house on at slot you know am I going to be able to trust that everything’s taking along I I don’t know maybe but I feel like there’s more risk for me I think you can quantify risk based on your work experience yeah but but you know what like I know people that are doing that
(43:24) and and I also feel like there’s there’s just more more risk and and I like to kind of drisk you know any situation um as much as possible yeah drisk I think that language has been used more often in the last two years five last 10 yeah at the conference you were telling me about about the the return math like that’s that got you interested can you share about the Returns on your investment that make that made you interested in being an investor in Edmonton oh yeah yeah um okay so I don’t have anything open on my screen right
(43:53) now but essentially sort of kind of looking at the info um at the inso projects so we’ll start with those because those are kind of the smaller ones so sort of the six units um and I know a lot of people on on sort of the similar sites are doing eight um and you can do Eights on similar sites so if we’re talking six or eights you know we’ve all probably heard DHC mli select financing and um you know that’s where you can get up to and just de clear up to 95% loans to Value um you’re not always going to be guaranteed that
(44:22) you’re getting 95% um even if the building or the project does qualify because there is some underwriter discription that um plays into that but yeah essentially to be able to get into a project um and on some of the deals that I’m doing essentially it’s a 5% deposit and you can either structure it to do completion financing or construction financing so in the construction financing um you know you’re able to include a lot of your costs like your soft costs related to you know that project um and so you’re really into the deal you know for very
(44:54) little right um on the end of the day um so on on the first one I did it’s done as construction financing and I think I’ve got about a 90 $90,000 development management Fe that’s coming back on that um and so that’s going to be direct um pay back to to my ancestors um and so I don’t have the numbers on that to tell you exactly you know how much we we’ll be into that project for but you know it’s it’s going to be less than it’s it’s going to be less than 5% based on how the numbers are working out um and so that’s pretty incredible and the only
(45:28) reason I’m appra I would never say again I’ve seemen to many things on the appraisal side to know that this is not a good um situation but you know you hear 95% financing and it’s like oh God that just doesn’t sound like a good option but because there’s already equity on these projects right so for example if they’re being purchased around the 1.
(45:49) 67 range um but they’re appraising at 1.93 1.94 you know you’ve already got some good equity on these um in the deal so you’re not really financing at 95% if that makes sense you know what I mean like you’ve already got Equity there so that’s why the 95% financing you know in my mind is is totally different than if you’re doing a straight up purchase of a residential home you know for a million bucks and your mortgage is 950,000 plus your see Cs and you’re already overleveraged right at the beginning if you were to make de so um so yeah so that’s kind of what the breakdown is um
(46:21) on on like a for example and these aren’t subjective appraisals can can you talk to while you’re the perfect person ask how do they appraise these properties how do they appraise the after repair value is the lingo build value yeah well it’s completion value right so to be clear my yeah so for me as an a phaser I’ve got my CRA designation just to be clear for your listening so residential um and I never ended up getting my a so when I got into appraisal this is before the days that you actually needed a University degree I don’t have a
(46:51) University degree um and you could get into the anaer with just you know going through the program um but never did get my ACI because that would have involved getting a University degree and then and then getting um certification for commercial um but on these six plexes so it’s based all based on numbers it’s all based on the income right so um the appraiser that we work with in Edmonton essentially they know that we’re going for the CC financing and so they will kind of mirror what cc is looking for in their appraisal in terms of the numbers
(47:21) that they seeming to be wanting to use and how they want the project to be Quantified um so it’s all based on you know vacancy basically income and expenses right and um so I mean they’ll look at the rents and you know of course they ask us what do you think it’s going to rent for we give them our performance but they’re doing their homework to say okay is this actually going to rent for this what are the comparables um showing for rental and all of that from their database and so yeah I mean it’s it’s absolutely coming from a third party um
(47:48) appraiser just based on numbers right and what what the Market’s doing and and do they have comparable sales to compare to or people selling these um they do so they’re using primarily the income approach on it which is which is again one of the benefits of you know um doing commercial financing versus residential right so for residential everything’s based on comparables right um so your your house is only going to be worth you know what the house in the neighborhood sold for down the street or you know without
(48:18) knowing all the details around that um but on Commercial it’s based on the numbers right so it’s essentially a business right to become as business sustain itself based on the expenses and the income and um so these ones I mean I think the answer is yes right so they do take a look at um comparable sales but primarily um it’s based on the Inc and then there are like commercial buyers for these properties yeah Oh you mean on the flip side like if it’s a long-term Buy and Hold yeah because yeah well I mean investors I would say other investors
(48:54) are re or yeah I would for sure like I think a lot of people investing in Edmonton right now are investing in these types of six and eight unit infills for sure if you talk to like investor um like Edmonton investors this seem to kind of be a sweet spot Alberta yeah yeah I mean it does seem that way and I think for good reason though right like I feel like it’s like you know I don’t think people are necessarily getting caught up in the hype I think there’s a lot of Market fundamentals um that are really strong
(49:22) as to why um you know Alberto is having a moment right now which is a separate uh topic but yeah I think investor clients um you’ve also got the option depending on how you structure these um you can have them on one title or you can have them on two separate titles right so um and and with the CXC financing there is a 10-year Covenant if you are going for the M Source financing um but it is assumable right so if you were to sell the property assumable too yeah so you can actually yeah so um you are able to sell them within that you
(49:52) know in less than 10 years um if someone’s going to you know take that on right but yeah yeah yeah right so um so you’re not necessar like you can sell them within the 10year piece or timeline I should say Facebook profile oh yeah yeah yeah move around so that’s kind of the six units and then and then for the 10 units um those were done as straight up purchases and so for an example um you know the first one that that you saw when you were looking at I that was um not the one that was a drive with the one that was at framing stage um that
(50:30) was purchased in December for 2.82 two million and the appraisal came back before I remove conditions at 3.5 million so you know you’re you’re almost a $700,000 um difference between your purchase price and your appraise value so there’s some good Equity right in terms of um in terms of buying these projects right and and the builders you know they like to do these deals because they’re not not dealing with Realtors they’re not dealing with so they it’s a guaranteed sale right they’re kind of more in that build and sale model um and
(51:04) so essentially on those it’s like a 5% deposit and then nothing’s P till completion right so they’re funding the bills as well which is pretty incredible right so if you were to ask people I don’t know what it’s like in Ontario but if you were to ask people in Victoria like hey um if I give you you know 5% if I give you $150,000 do you want to go build this project for me and I’ll pay you when you’re done like they’re G to slam the door in your face right like they’re going to be like are you crazy um but in Edmonton it just it’s a
(51:30) different kind mentality there’s a lot of bigger con and I would say companies like my senses there’s companies and they’re just construction companies whereas here for example and I think it’s like just in Ontario in a lot of cases everyone wants to be a builder developer right they don’t just want to be a a builder right they don’t want to kind of share in that that win of like you know if they knew that the property is actually worth if they wouldn’t want to sell it you know um whereas in Edon fluence kind of just were were a home
(51:57) builder like they’ve already built their margins in so they’re already happy with the purchase price that you’re paying right they’ve made the money that they wanted to make on this deal so yeah there’s some really neat opportunities an interesting point some of the big players are just builders for example triell which is one of our biggest condo Builders here is just a builder they’re not really a developer they may be called a developer but they when they buy something they’re building it within like a few years right it’s
(52:23) not it’s not like you’re huge builders that you know who’ve owned the land for the last 30 years that’s like a that’s that’s a large scale developer and then we have the smaller folks today that are trying to do both yeah it’s not the easiest thing to do no and I think it depends on your business model right How They Se with things what their goals are but um but yeah there’s definitely been some attractive opportunities um in Edenton and I think I think it’s going to continue for the n a little bit for sure and my conversation with Russell it’s
(52:53) way easier sounds way easier to execute out in admon that it is pretty much anywhere else in the country anyone’s listening wants to challenge me on that I’m happy to hear it yeah well and I think it’s because the numbers work right like um the numbers make sense and I think you know the lenders we can see that people are moving to Edmonton right it’s one of the fastest population growth in the world happening right now and because the city is pro development right they they want to double their population in the next
(53:21) 20 years which is crazy right so going from one I think it’s 1.3 million to 2.6 million in 20 years is pretty wanted right so they’re building up infrastructure they want everything contained in inside the circle which is the Anthony H that goes around the city um to avoid Urban spra so they’ve got some pretty clear um goals that they want to hit and so I think it’s making it attractive for you know private investors to kind of come in um during this period in time and and create some some housing to support the city
(53:48) schools for the listener’s benefit can you explain why you can could you make this happen on Vancouver Island could you do the same type of investment I know the answer but I think for the best benefit they should hear it from you yeah um I’m gonna say no the answer is no you cannot do this on Vancouver Island or it’s not like Vancouver Island doesn’t need the housing no I think so yeah exactly so I think um it it’s all to do with and I might not be using the right teral but the the housing prices right so van of Island for example and
(54:19) like a lot of other markets are are appreciation markets right so Edmonton you know you’re going to get some appreciation but you’re going to get crash the numbers don’t work on them to a simple answer right so um what you’re going to get for rent you know I think the average house price is 1.4 million in Greater Victoria so you know that’s going to be averaged right and it’s never worked right so what was happening here is people would buy a house and to be able to cash flow if you’re an investor you would add you know one or
(54:44) two illegal sweets um and maybe maybe you’d Break Even I’m not condoning that to be clear but that was we would be what was happening for properties to just break even um and so a lot of developers here actually like a lot of build here is not happening so when you go if you drive around Vancouver Island or Victoria it feels like I’m going to say deadsville right from a from a construction perspective when you get off the plane in Edmonton every everywhere you turn it’s like Construction Construction Construction
(55:11) Construction it’s completely a different environment and it’s because the numbers work um and because the housing prices are so much more affordable um that’s why the numbers work yeah I don’t know if that makes sense but for the listeners benefit the average bace of a home in Edmonton area for last month was 440,000 ver you’re saying greater Victorious 1.
(55:36) 4 million yeah right and you can see here what you’ve got open ear is a 12% year increase right and then a detached is an average of 553,000 so still like 60% less than Victoria yeah and another thing that’s so interesting is is Alberta does have some of the highest they’ve got some of the most affordable housing prices but some of the highest incomes right so when you have a conversation and and perspective is everything right so if you have a conversation with someone in Victoria they’re like oh it’s expensive
(56:11) here if you have a conversation with someone in Edmonton they’re like I can’t believe how expensive it is here the housing prices are through the roof right but they could be making more money than someone in Victoria right and I think it’s just what people get used to like it’s you know the same thing like Toronto Vancouver um it’s what you get used to I don’t know if that makes sense but it’s like your housing prices are through the roof I mean what like it’s crazy right but that’s perception in advention right is that housing
(56:35) prices are crazy because they’re still the 20th most affordable city in Canada so I think that there’s just so much more room for prices to increase right like while we’re seeing rents come down for example in Vancouver and Toronto and Victoria which are like really expensive markets um I think rents in the last year in EV have gone up on average 17% that’s not the norm but that’s what’s happened in the last year right so um yeah it’s an interesting Market to dig into for anyone that’s you know considering it definitely interesting that I hear it
(57:05) all the time everyone thinks real estate prices are crazy no matter the context and I showed you my host in Texas which is a lot less than these prices yeah oh totally like hold on I’ve got something for you yeah it’s it’s fascinating right it really is fascinating of what what different perspectives are on different you know markets and situations and now you’re currently pursuing your mortgage broker license uh and I asked if I could ask you about specifically because there’s a lot of people out there looking to improve their cash flow
(57:40) situations their their active earnings can you can you elaborate while you’re getting your mortgage license yeah so um someone recently said so we were chatting and we’re Real Estate Investors we’re always chatting with active income and business and real estate investing and what we’re all up to and someone recently um said hey have you ever thought of getting your mortgage broker’s license and I was like what no like why would I do that you know I had never entered my mind um and I actually used to get ask that question
(58:07) quite a bit of why am I not a realtor why am I not a mortgage broker when I was an appraiser right people like why why are you an appraiser and not doing this that I hadn’t thought about in a long time and um I was like no I I haven’t why why would I get that and they’re like well think about the deals that you’re currently done in the last year you know how much have you paid in broker fees and I kind of did the math and they’re like that there’s a big chunk of your active income you know if if it’s something you want to look into
(58:32) um and then you know so I started kind of looking at the numbers and digging into it and processing it and really thinking about you know is this going to add value to you know my current um you know relationships and Partnerships like you know is that going to add value to what I’m currently working on and um you know I do work with some great broker Partners right now but I think um I think there’s definitely value of bringing things I say like inh house but having a bit more you know control over the process and being a little more
(58:59) intimate with the process um in terms of the investor relationships that I have so so yeah I just decided okay why not um and so I’m currently in the process of getting licensed I I just you know I’ve been away in Century so I’ve been back for a week well it’ll be a Week Tonight on the date that we’re recording this but um I as soon as I got back I registered for the course um in Ontario and I’ll be writing my exam this week and um you know licensing I think takes two to four weeks something like that but um but yeah and then my plan is to
(59:31) get licensed in you know once that’s established to get licensed in Al on DC as well um so yeah so I I was there when you had that conversation I wasn’t I wasn’t overhearing actually did over here some of it but just to show just to demonstrate to The Listener what an action take you you are that conversation was 2 and a half weeks ago right yeah and you’ve taken action on it yeah and I was was away in sanini for a week so I couldn’t I didn’t I decided not to take ason alls away but reasonable reasonable yes I gave myself
(1:00:03) a week um well way but yeah I came back and it was just yeah and I think too like I mean to be fair when I mean I was a real estate appraiser for 20 years so you know I’m a real estate investor so you know going through the course you know was not that challenging right because I’ve been in this world for a long time so for someone who’s new um you know it might take them a little bit longer which is totally fine I think they give you six months to complete the course you do it at your own pace um and then you can you can write the exam but
(1:00:31) yeah I’m excited I think it’s going to bring um even more value to to my partners right um you know with having that appraisal background now bringing the broker piece um into it and be being able to help other Real Estate Investors right like I think I’ve got sort of a an intimate knowledge of of you know with my own projects and and the appraisal backgrounds I think I bring a little bit of a different perspective um you know to the people that I’m working with so it translate U really nice be another another
(1:00:57) that yeah there nothing else you can just do your own deals and save a whole ton of money well exactly right I mean why not because I’m already intimate with my own deals anyways right so um and my understanding is there’s a disclosure requirment of course um but that’s not that’s not a barrier to doing your own stuff so be interesting to see how that plays out but yeah I’m excited cool now what’s next for you in your journey I know you have involvement with the with the mft what’s that stand for again uh mutual fund trust so yeah
(1:01:30) so I so currently we didn’t touch on this but we’ll touch on it if we have another minute um so I’ve also got a 94 unit apartment building that um we’re in the process of onboarding investors for now and and we will be submitting for our DP which is our development firm at any day and um so my my partners on that project own an mft which is a mutual fund trust and so we have partnered uh with their MF to allow investors to use uh registered funds so RPS tfsas um that L that type of thing um to invest in in real estate and in this 94
(1:02:05) unit kind of building so I would say that’s probably the biggest thing that I’m working on right now the other four projects that I have actively under construction are all really just kind of ticking along right um but this one um you know we’re actively working on getting all the pieces um dialed in and complete for that and it’s it’s F to offer a project where people can actually um invest their registered funds m um because think a lot of people a lot of the conversations that we’re having anyways are you know people are
(1:02:31) you know have to registered funds with you know one of the banks or somewhere and they don’t even open the mail right and when they do open the mail to read the statements they realize oh boy this is like not a very good return um and they love to continue to expand their real estate investing that don’t necessarily want to be active or maybe don’t have the cast you know kicking around um and so that’s been great to be able to offer that but I would say that’s my my next kind of biggest thing that I’m focusing on and then and then
(1:02:57) the bigger picture is to um sort of formalize I’m formalize going maybe a weird word but kind of just yeah I’d like to I’m I’m working on um creating a real estate investing s and um yeah not sure what that looks like exactly yet but that’s kind of part of a bigger Vision that I’m actively working on and um yeah calling in my bizy I’m going to say um of um yeah of of someone that I’m going to create with I don’t know who that is yet um but it is on the vision board and um yeah that’s kind of what I’m working on and among everything else
(1:03:34) super cool and with the mutual fund trust what is you’re offering investors is it Equity is it yes mortgages is it what is it no no no yeah so anything that we do is is equity so essentially um anyone who invests in the 94 unit apartment building is an owner of the building so you do get equity in in the building um and you know it’s it’s obviously the more that you invest the more Equity that you have so it depends on what your investment is on that particular project irn um it’s a $7,000 minimum investment
(1:04:06) um and that’s to keep us on side with Securities um commission rules and requirements um in terms of what the cital raises and the amount of investors that we can onboard um so yeah so it’s it’s equity in the building so you are an owner of the apartment building and um it’s a longer term hold for something like that is you know you’re kind of in that five to seven year um C window right when you add your construction uh timeline um the construction and then your your five your hold to tie in with your yourage how long do you think it’ll take
(1:04:38) to get built um it’s about a two-e construction period That’s not sound bad and this is a highrise no so it’s a low so it’s a lowrise four story uh building 94 units don’t see any of those onar perlex well land is land you well you know there’s no different Victoria Victoria land is crazy expensive yeah yeah so you’re going You’re Going vertical yeah yeah yeah no the land prices are are it’s a different world in in admington orone just put it that way in terms of uh you know prices and construction costs and and anything that
(1:05:19) um that I’m doing one the other things that I should touch on is any any project that I’m doing in on boarding inves for is you know there’s always going to be equity on on the buy and so you know on the 94 unit building for example I don’t have the numbers open in front I think it’s about $4 a half million dollar of equity um on the buy that’s available to sh Anders so um I mean it’s just kind of creating that and then what’s the exit how how are the um how’s the funds available to pay out investors yeah so that’ll either be on
(1:05:55) at the end of the fiveyear hold period that’ll either be on sale or on refinance so even though you can’t technically I’m going to use the word refinance it technically would be a sale like but it could if we were going to hang on to the project it could be a sale to a new ownership group so a call it to refinance you have to structure it as a sale um so we’ve got a couple options um there and I think given the location of the building um the fet of you know brand new construction um I think there’s going to be a lot of um
(1:06:24) you know possibilities not for someone that INSP and are the 94 units are the individual title like could you sell them off piece by piece um they are uh let me get this right because who’ve been working through this um they are individual well we’re not sorry we have’t made that decision yet um they we’ve not made that decision yet but I think they they are structured so that they could be sold off individually or if we don’t um do that at the beginning everything is going to be set so that we can do that basically just getting the Str plan done
(1:06:58) um but we’re reviewing sort of the tation um and different components as to what makes the most sense but um but the long and the short answer is yes that’s likely a possibility but again when you’re under the state financing you’ve got that 10year Covenant right to be able to get the financing so you wouldn’t be able to sell them all for 10 years individually individually individually yeah yeah not not the cleanest cut there has to be decision made yeah exactly it’s nice that you have the choice because all these things
(1:07:31) are difficult here in Ontario yeah yeah yeah yeah funny that we have different lingo as well across Canada you call it strata we call it condo oh yeah I didn’t really think about that but you’re right actually they essentially mean the same thing yeah we have Pondo boards you have what do you call it strata boards strata Council strata Council yeah You’ think it’ be the same we’re in the same country like why wouldn’t they just standardize it you know so we’re talking about the same thing different countries I get but provinces you’d
(1:08:04) think it would all be the same I’d never thought about that before but you’re so right there are different terminologies I’ll chat gbt with the differences later yeah yeah it wouldn’t find out let me know conceptually they seem the same the tax handling is always different as well but then you yeah you have layers complexity not the easiest yeah let me know what you decide because yeah as well all right how do you how you doing for time we’re at a time but how you doing for time I’m I’m I’m good you’re good I’m good yeah yeah CH gpg says I
(1:08:39) should ask you you you seem to have a strong work life balance especially with your passion for spending time your lake house we didn’t talk about your lake house that you bought no oh my God that’s a story for another time I the best manifestation story behind that that’s right go ahead how do you manage balancing your high-paced real estate career with personal time for family and hobbies like you mentioned you have teenagers how don’t bance the time I feel like it’s always been family first for me always like kids kids first and
(1:09:12) so it’s like in my calendar everything goes you know the school soccer games the non-school soccer games the dance recitals um it all just kind of goes into the calendar and and when when you are an entrepreneur in Earth I feel like you’ve got ultimate flexibility right like even when you have a lot of things on the go you’ve got control over your time which you don’t have when you’re in a 9 to5 right so some days it’s like this is happening I need to at 2 o’clock I’m done I got to go school pick up and and we’re off for the afternoon I’m not
(1:09:39) back till 6 and maybe I’ve got a couple things I’ve got to you know deal with that evening right that I need to off my desk um so I just kind of feel like for me every day is different like I don’t kind of jump into a into a specific routine um I was very regimented and routined for like a long time and um you know I just sort of thought wasn’t really working that well for me so I like the freedom to just go with the flow in a way um and Summers I mean Summers we live up at the lake um so we just basically spend two months up there
(1:10:06) and all the friends and family are over all the time and um so that’s our you know family family 10 247 for sure amazing all right any final thoughts you want to share I know you’re you’re big on found uh for helping out women as well any final thoughts in general you want to share Before I Let You Go yeah yeah yeah um let me think about that um yeah I do to touch on that I do love I do run a free community online called she build love um for women that want to learn about real estate investing and um we did a chat about like tomorrow we’ve
(1:10:40) got some coming in to chat about um you know investing in the US and what that looks like um you know we’ve got someone coming in to chat about joint mentors in two weeks right like just different different people coming in chat about different things um and so I just love that because there were so many women in my world that sort of felt like real estate investing wasn’t for them and wasn’t possible so I love just sharing yeah like I think it’s just this this sort of misconception that it feels like it’s more complicated than it is maybe
(1:11:05) not that it’s easy but um it is available to everyone and I love being able to share um that and information with women that are interested in up exploring it so um yeah that’s something that we do um Wednesdays uh 10: a.m. PST 1 pm EST um and replays are available on not so that’s just sort of a fun um fun a de that I work on to and um yeah I would just say yeah if anyone wants to chat about Edmonton um or new construction Edmonton I loveing real estate in obviously um andon because my market so yeah and like always open for
(1:11:40) conversations or sharing information amazing thanks so much for doing this yeah thank you okay can I ask you one question before we before we go and Jo know have you been to swis La recently I not that I Haven been on my mind but uh okay inside joke but you know yeah just wish La just yeah just bonded over that at the conference but uh yeah well thanks for having me on when it’s been so fun and um yeah we’ll stay in touch amazing thanks so much for doing this yeah thanks take care bye all right friends that wraps up
(1:12:20) another episode of the truth about real estate investing show for Canadians hope you got as much out of this one as I did remember that whether you’re just starting out or a seasoned investor there’s always something new to learn and it’s always about building that practical knowledge base that gets you closer to Financial Freedom if you found value today please do us a favor and leave us a review or a rating share this episode with a friend or better yet join our community of Real Estate Investors who are taking action and making moves
(1:12:45) and hey if there’s a topic you want us to cover or have uh there’s a certain guest you’d like us to have on the show drop me a line my DMs are open on social media reply to this email that this have arrived on I’m not hard to find uh you know we’re all about getting you the unfiltered truth to help you on your journey thanks again for tuning in and we’ll see you in the next episode until then stay Smart Stay curious and keep building that future catch you later

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** Transcript Auto-Generated**

(00:00) a trump election win implications on investing in Canada and the US proud dad moment how a mechanic from Montreal 30 years 33 years old bought a burr buy renovate rent refinance repeat property in Memphis Tennessee from a home all list and more on this week’s truth about real estate investing show how are y’all this is Win CTO here your H podcast host and producer since 2016 there’s been over 300 past episodes of the show and you wouldn’t believe it my gu today’s guest has listened to every one of those episodes um anyways uh uh as always I
(00:36) won’t comment on politics because uh I believe politics talking about politics are like arguments there are no 100% winners because even if you win an argument or who you voted for wins you have likely damaged the relationship with a person you’re arguing with or those who voted for the other party while I do believe both Trump and Harris had positives in their policies both had absolute negatives and I feel really sorry for those who feel hurt by the by the election outcome uh where I do choose to focus my attention to energy
(01:07) is how I may help my community of Canadian Real Estate Investors uh including especially my clients and how uh and many have asked me my opinion onction on the election results and there of course implications on Canadians investing in the USA the overall investment landscape for for the Canadian everyday real estate invester has not changed the US economy is the Envy in of the world in its productivity and growth if anything that will accelerate under a business friendly environment versus the raising taxes policy that was heavily
(01:37) featured heavily in the Democrats uh election promises uh we yet share uh the easiest way to build a portfolio of fully managed us rental properties we focus on business and landl friendly States so those are generally red States some of them are actually under Democratic control and actually uh they’ve all pretty much all flipped uh there are yeah uh there’s a lot more of them that are now red States um so some were borderline now they’ve actually gone more red more Republican so our investments should actually
(02:10) perform better uh Trump has promised to bring back uh to America even more jobs in manufacturing by applying tariffs to Imports which will only see increased demand uh for our rental properties already that are already located near domestic manufacturing uh because they’re in business in landl Friendly states which is pretty much where all the manufacturing all the growth of manufacturing new investment exists for example share recently expanded to a GE geography to North Carolina specifically a deal in Greensborough North Carolina
(02:42) where Toyota is investing a historic $ 13.9 billion to create 5,000 manufacturing jobs this is the world’s largest automotive manufacturer the first ever Toyota battery plant in America for hybrids and eeve this is the first ever for Toyota so again this is one of the biggest if not the biggest investment in North Carolina state’s history now speaking to the real estate deal this is a seller leas back deal as in the seller will not well sorry the seller will be staying to rent the property so for the landlord there’s no
(03:14) upfront vacancy uh and the investor can defer some of the initial renov Renovations while locking in today’s price a when since the market is expected to go up as interest rates are expected to be cut further and possibly more accelerated under this new government regime uh the investment property is a single family detached house four bedroom 2 and a half bathroom it’s over 2300 square ft built in 2012 for $252,000 I haven’t done the math yet so I’m actually going to break open my calculator is I use calculators because
(03:47) I’m not that good at math so that’s $252,000 divided by 23 uh 2,349 ft that’s $17 per square foot for a house that comes with land yes that’s American dollars uh now there are expected Renovations of $38,000 this is a bur project the projected rent is 2,190 plus utilities estimated appreciation on this property now I don’t know why people say this but one of the objections I always hear about America is that there’s no appreciation well again this properties located in somewhere business friendly landlord friendly with historic amounts of
(04:29) investment going nearby to createit 5,000 new manufacturing jobs so the estimated appreciation for this property is 4% and if for those who know cap rates so those who are at least an intermediate level of real estate investor you know what a cap rate is the uh net operating income divided by the price of the property plus capex 5.
(04:52) 6% now find me something like this 5.6% with uh with all the benefits of being in a landlord friendly area so that so landlord friendly rules and regulations rank control where non-paying tenants can be evicted in 30 to 60 days find me that in Canada right and also we got appreciation and upside uh so I got the full details in in the show notes uh and if you’re interested in seeing the numbers on this deal just simply go to I win.
(05:20) Shar sfr.fr dcom in my 20-year experience of being a landlord I do believe it is in every Canadian’s best interest to be a real estate investor first of all because it’s uh I’ve never seen uh so many people who weren’t Rich become rich in in this asset class in any asset class other than real estate at the same rate of success and to diversify to the us as uh as because there’s cash flow and landl friendly benefits uh shared deals to me should be every Canadian’s Baseline to compare against their future Investments whoever to whoever owns this
(05:55) property in North Carolina is likely to be a winner and again um that only improves with a trump Victory again it’s not an endorsement of President Trump it’s this is just what this again I’m just talking about implications to Real Estate Investors uh unfortunately a trump government is not good for the Canadian economy uh I know somebody disagree with that if you want to disagree like go ahead go argue with the uh the way that that our Canadian dollar is going right now uh but fortunately for us our dollar is fairing better than
(06:26) than the Euro so um we’re doing better than Mexico China uh basically rest basically better we’re doing better than the rest of the world since we’re already major trading partners and we’re so intertwined with the Americans uh for the Canadian real estate investor um yes the decline in the Canadian dollar hurts but again we’re investing in red Republican states our mortgages and rents and expenses uh our cash flow are on all US dollars so again earning US dollar cash flow beats not earning cash flow which is common
(06:59) for Canan investors Canan local Canadian real local Canadians investing in local real estate uh or significant negative cash flow and uh still a US investment property is better than a Canadian investment property please don’t take my word for it do your own research I’ve actually included a nice summary of mine research using the latest version of chat gbt 4.
(07:26) 0 whatever that letter is anyways I have a screen capture of it in my um in my show notes and I posted it on my Facebook I simply asked chat jbt assume you are a real estate professional um does any town or city in Canada rank ahead of the top 100 American towns or cities factor in mortgage financing how Canadians have to have to personally qualify versus Americans they use debt service coverage ratio mortgages include economic fundamentals and landlord friendliness because AI can be a bit a little bit verbose I asked it to answer in 10 words or less
(08:00) chat gbt’s response no Canadian city surpasses the top 100 US cities in these factors can we can we can we stop the debate now I asked Google’s Gemini uh as well for those who know and follow uh Google was a was a major donor of the Democrats anyways so I asked the exact same question of Google’s chat gbt sorry Google’s Gemini hopefully Google didn’t hear that get mad at me anyways uh so Google Gemini’s response no Canadian C cities generally lag behind top US cities and investment potential so again can we end the debate
(08:42) which is a better investment USA versus Canadian real estate now if you’re interested in learning more about us investing and where to get started I’m offering a free training hybrid format for the first time ever as in we’ll have folks here in person in my office we only have room for about 40 people 20 40 people in person and we’re in Oakville and also will be online uh via Zoom webinar the evening of Thursday November 28th doors at 7:30 uh and for refreshments and networking and my presentation will begin at 800m sharp
(09:13) this will last for probably just over an hour um I’ll probably present for about 1550 minutes and then take questions for 10 20 minutes uh networking will likely continue on in person afterwards as always I believe in giving value and investment education uh because the world needs more of it um and I believe investment education should be as accessible as possible hence this event is free and accessible in person or online so if you can’t be here in person obviously in person is better uh because you’ll be able to speak to me in person
(09:42) live uh and again but if you’re not close by or your schedule doesn’t permit we’re available online so if you have internet you can join uh every 10d will have factual tangible actionable information and takeaways like every episode of the show uh but obviously obviously we’re going to get a lot more more specific there’s nothing that I enjoy better than helping out the underdog become rich helping rich people get richer is great I love my rich clients they do a lot more volume and they’re easy to work with but helping
(10:14) young lower or middle class hardworking people who aren’t yet Rich become rich that’s honestly what gets me out of bed along with sticking to the government here in Canada uh because they’ve honestly they’ve honestly been pretty rude to us uh they’ve been let it pretty known they’ve let it be pretty well known they don’t want us here and how better way than to send a message that we landlords won’t take it anymore than to exit here in Canada and pay less tax to our Municipal provincial and federal governments who’ve made it again they’ve
(10:43) made it all known they don’t want us here at least in my experience in the markets that I operate in now uh just look at New Brunswick they just had a provincial election I generally don’t follow provincial politics uh outside of Ontario uh but they just sent their conservative government walking after six balance budgets out of eight they’re being replaced by liberal government who will be implementing rent control of 3% next year uh apologies to the new to all those who ran up to new Bruns recently for in Chase of cash flow uh we in
(11:15) Ontario haven’t had a balanced budget since 2018 and we’re projecting a a debt of in the world in Ontario again if you want to get ahead in life real estate investing is still the way to go and on November 28th I’ll be teaching Canadians how to leverage us real estate investing for Passive scalable and tax efficient income streams again this will be highly tactical uh it won’t be that funny I’m not it won’t be emotional we won’t talk about like how to 10x whatever in your life or setting goal setting we’re going
(11:53) to talk about hard facts this is not selling coaching mentorship courses joint ventures raising other people’s money or creating a second job for yourself and taking time away from your family nor is this getting rich quick and my experience this is about getting rich slowly with the highest probability of success as possible and passively as possible I’ve helped over 45 clients of mine already make a million more investing in real estate and can’t wait to help even more Canadians especially from canans all over the world
(12:23) previously all pretty much all my clients are from the GTA so I’m really excited to be able to help out more Canadians uh link to register is in the show notes so and I hope to see you there um now please allow me a proud parent moment as i’ like to share with you my 17 listeners uh who I consider my friends and again every time if each of you see me in public and say hello um it’s it’s an honor it is an honor to meet you all and it’s an honor that you’re listening to the show um Cherry I uh you probably all know uh we invest heavily into our
(12:55) kids both our time and money and time uh to to ensure that they’re happy well-rounded and prepared for the real world uh they work hard and my son’s uh standardized test came just came back and like his older sister he scored in the 99th percentile and so he’s going to be tested to see if he’s gft gifted like his older sister is uh now already the test results are extremely rare and to have two gifted children which is not confirmed yet but if we do this is something extremely rare um I know many people uh see how cherry and I
(13:30) raise our kids and and think it’s not normal uh but these results give me great joy and Vindication that our parenting is working uh but we’re not resting on our Laurels and we’re not letting our kids Le rest on their Laurels either we teach our kids every day that hard work Trump’s Talent when talent doesn’t work hard and we’ll continue to do so uh my fellow parents know uh and for those who don’t have kids yet this is my experience um but I don’t know what it is but kids the kids have brought me more joy than anything
(13:59) else in life and I like to keep that going uh which is why I don’t want my real estate to take more time time of my own away from from them from them because selfishly I enjoy being around them hence uh my efforts to pacify my real estate portfolio by selling off close to half of it half of our local local real estate uh portfolio here in Southwestern Ontario and trading it for um honestly better cash flow properties in the states uh where I can afford quality High quality institutional grade Property Management versus it’s way more
(14:33) challenging to cash flow here locally uh and the reality is uh way more Canan investors are their own property managers and they even do their own bookkeeping which is something I don’t want to do in the states uh a long long time client of mine just shared with me last week that she has called the cops on her property manager in small town Canada the property manager is ghosting her and they have her rent money uh so my point is yes cap rates yields cash flow they are better and higher and small in in small town Canada uh but to
(15:06) find Quality Property Management And Trades is way harder than major centers so if things go sideways and the property is far from you I I I I feel bad for these investors but enough about me on to this week’s show this week we have an everyday blue collor Canadian real estate investor He’s 33 years old his name is Shane he’s from Montreal Quebec Canada and he just bought his first investment property and he’s executed beautifully on a burr in Suburban Memphis Tennessee without leaving home the arv the after repair
(15:40) value is substantially higher than projected and the rent came in almost 10% higher than projected as well so his numbers are phenomenal he’s actually he’s actually uh for those who know cap rates he’s a 7.9 on a single family home single family detached home uh Shane is the youngest client of mine by far for for the past years I don’t know how long I have to go back to find a client of this age and I cannot wait to have even younger clients um so I’m personally excited to be part of Shane’s journey to become a successful investor and for him
(16:12) to become a successful investor and to Mentor him in scaling up not just so that he has a large portfolio but to have Financial Peace of Mind this is his story uh again uh Shane’s listened to all 350 episodes or so of the show and if you do enjoy the show like Shane did and would like to you know see more your friends fellow Canadians who who want to invest in real estate be successful like Shane especially those who can’t afford to get into the Canadian Market or want diversification please share this show
(16:41) with them and uh please enjoy the [Music] show hi Shan what’s keeping you busy these days uh the usual you know um usual day today now I’m getting prepared for the winter so Riz the house and stuff like that but just your average Joe stuff you know yeah so for the for context for listener you are an average everyday investor is that fair yeah that’s correct on the younger side especially for canadi you’re on the definitely on the younger site um so Shane I didn’t know until until we got on this call so you’ve apparently
(17:24) you’ve listened to every episode of this podcast yes I I know that might sound crazy but like yeah so this so how it went down is I uh got introduced I was looking doing some research right and how I can invest um in Canada how I can build up wealth and stuff like that and then I looked into towards the real estate aspect right so I’m like thinking okay what are the tax implications right so I stumbled on your wife’s uh YouTube channel and then you came along on whenever ch one of their episodes right so oh this is interesting guy you know
(18:03) and then after I I found out he had a podcast I I started to be really interested in podcast so on my daily drives I would listen to your podcast but like your pocket was so Advanced that I couldn’t start it in the middle right I so in my head I was like let me start at the beginning maybe there there’s some gems I could catch up on and then yeah that’s how I stumble on some other of your co-workers or F so that’s well over 300 hours of content yeah yeah you got a lot of time but to you know when you’re driving back
(18:40) and forth from work and it’s like 30 40 minutes so that’s almost a podcast right there you know uh so Shane um as I mentioned again for the context with listener you are uh my first Canadian uh client to invest with share uh and purchase of property in the states and just to shake things up as well I’ve had I’ve had requests from listeners to have an everyday person on the show because we do you know you’ve listened to the show we’ve had some like serious Heavy Hitters on the show oh yeah folks doing like hot building
(19:09) high-rise buildings or you know uh folks with like a hundred Airbnb Properties or 50 Airbnb properties right this massive scale um but but you are young can you share how old you how old you are yeah so I’m 33 right now actually yeah 33 uh start starting to feel the AES Cains but uh you know but that’s I guess that’s T somewhat with my job and uh this life in general I guess wait till you’re my age so uh what what sparked your interest in in real estate investing yeah so um look I was listening to a lot of people’s like
(19:50) podcasts or like audio books or whatever and a lot of them started like um well the first they make the first Millions through real estate right so that’s where really spark my interest and then okay I was like okay let me look at the Canadian Market try to understand try to make see if the numbers make sense right and as as it was going on I’m like wow uh it’s really difficult to make you know either Break Even or make just a little bit of profit cash flow you know then so I had to find different ways a different way to make that drun happen
(20:30) and then uh what what made you decide on buying in the US and that’s and that’s your first investment property right the your yeah so states exactly so this is my first purchase my my personal purchase but um my mother right um I technically I I lived in the states briefly when I was a young kid so um Florida Florida was the main State I lived in um my mom uh purchased a property there in like 2008 2009 at the crash so she got a really good deal in Florida right and so I understand a bit of the market and understand that it’s
(21:11) cheaper cheaper entry level right so when I stumbl on your podcast with Andrew Kim and them I was like oh yeah this is great so I already know the prices compared to Canada it’s cheaper it’s just that like how can I do it pH like not can’t do it physically but how try to get in there and have someone manage it and uh look after it for me so so definitely it shook my Intrigue it was intriguing for me how much research did you do besides listening to over 300 hours of my podcast um it’s hard to say I do I do like randomly maybe I’m just like if I
(21:52) have some extra time is Rite on Google try to make the numbers work um you know um it’s hard to say but I would say quite a bit um right but like like I said uh share made it made more simple for me to uh to uh proceed what did the deals look like locally so local to you is Montreal K back yeah so Montreal yeah so depends um in Montreal there it’s it’s coming up in prices so like for example if you’re looking for uh let’s say a duplex and stuff like that we’re talking about now currently now we’re talking about $800 to maybe a
(22:33) million dollars now uh for a duplex um that’s a lot that’s that’s more than yeah now now yeah now it’s caught up like crazy before you used to be more affordable maybe I I would say back in 2011 you could get like a duplex triplex in the 500s and you can make it work right but um yeah everything skyrocketed with the you know the co and all that the interest rate being low a lot of people um felt like they had more purchasing power so definitely uh shot up the prices right how much would a do do you know how much a duplex would rent
(23:14) for that that sells for oh great question yeah so I would say a duplex currently now you could probably get uh maybe 1,800 to maybe 2200 deping on the side yeah depending on the size yeah that’s not very good yeah it depends it really depend also the location probably would also be a factor right so yeah it’s it’s kind of tough and as you know yourself at the increases annually it’s not that great as well so oh what’s your um you’re limited in your increases yeah definitely so uh increase I believe it’s like 3% 5% or something
(23:59) like that 5% so it’s not that great is it really oh I had no idea honestly our conservative government proudly announces that the that at 2.5 rent rent increase allowed in Ontario is the lowest across Ontario Oh my God so I’m just Google R oh Google rent Quebec rent increase oh gee you can read French right yeah yeah yeah speak friends yeah hang on I’m trying to find it no problem 4% 4% is the suggestion from tribunal administer lalal yeah 4% that’s that beats the pants off a two and a half yeah now you bought in Memphis Tennessee
(24:56) so what’s what’s the What’s the allowable renting increase in Tennessee uh up up to your discre basically you you’re not really not really capped right wherever makes sense right so that’s that’s amazing so it makes sense how he chose Tennessee so why why did you choose Memphis Tennessee the location of your first investment property um we did just a bunch of research and stuff of that and uh as you know share has different categories of of like properties right so for my first one I want to just try out and get more
(25:32) cash flow so that’s like a SE type property so what we did is we just did a global search and we found an off Market deal that matched Aline with M my cres and uh it happened to be Memphis Tennessee uh which is pretty cool because I’m a basketball fan I’m a fan of Memphis uh Grizzlies so I’m like why not man that that’s a perfect place why not let’s start there uh so your your your property is on the company website oh fantastic I think you know that right oh it’s hard to including the address do you mind to share it yeah sure no
(26:14) problem I’m literally so for folks who are watching on on YouTube I’m literally showing it on the screen now now what was the pro what was the process like so uh how are you inform how you informed that this property was available for for purchase by you yeah so basically I was going back and forth with tmri um he he was like looking through my crer and whatnot and this uh this property actually was uh off market so uh so off Market at I believe the price was 90k which is fantastic you know fantastic deal so I’m like okay yeah let’s let’s
(26:54) do that and uh all in all with titles and fees and all that stuff it came up to 105 said and done and then uh we decided to do some renovations to Spruce it up a little bit and then put it back on the market yeah so like you’re handy U because you are a mechanic by trade so are you flying down there to do the renovations no no no sir no yeah they all took care for me everything was in a detail list um some stuff that we didn’t have to do right away so that’s why the renovation costs were lower than expect but um yeah everything turned out pretty
(27:36) well it didn’t take that too long it took maybe within a month or two everything was ready to go what was the scope of the renovation yeah so Bas yeah basically um like painting cabinets uh fixing like mailboxes um dry F cracks filling the cracks minor stuff like cosme stuff like that okay and then what was the budget for that yeah originally the budget was we were spending about 12K 15K but in the end we we only spend about $9,000 which is fantastic I think you can do that over here in can for that yeah because on the productive Financial it
(28:18) was actually 25 is there is there more Renovations planned after the tenant moves out for example or probably yeah probably in theut or was it just conservative estimate well maybe in future we’ll do some stuff to uh to to update it uplift it even more but yeah I’m pretty sure that those numbers were conservative um just in case any major um you find anything major you know once you open a wall or once you do something you never know right so you need 105,000 to close because you yeah that’s not including a That’s not including a
(28:55) mortgage uh 9,000 for your renovation and then the projected rent was originally 1,00 I believe yeah so the so that was the projected rent but uh we have fantastic uh management so we actually got additional $100 on the rent which is fantastic right so I was happy about that happy to hear that so all in the house was 105,000 including closing costs plus another of $9,000 for renovation so gee my my math is really bad 114,000 yeah yeah 114,000 yeah 114,000 uh is includes your closing costs and your capital expenditure with
(29:36) your renovation and your rent is 1,200 a month correct right so how you feeling I’m pretty ecstatic man really happy feel blessed man your cash flow is very significant then especially for for 114,000 investment yeah I surprised I was not expecting that but hey I’m not going to complain and and now what’s the plan now post renovation you have the tenant what’s the plan now yeah so um we’re looking to refinance right uh well some of the equity in the house and then move on to another potential property um hopefully maybe in the b b type class to
(30:25) just diversify a little bit um in a different state most likely yeah oh okay do do you have your eyes set on any particular Market uh not in particular we’re we’re looking at different places like Alabama Kansas um North Carolina Georgia maybe so I’m open to whatever makes sense basically and that’s what I found as my initial challenge with the States was uh you know me right I I like economics and you know job growth and all those things that drive real estate prices uh in migration immigration all sort things and there’s just so many
(31:05) markets that fit a buy criteria like a yes to buying in that area definely and and yeah so actually before we’re recording we’re discussing I was showing you what that query I did on Chach chbt I’ll just show it quickly on on here as well so yeah you’ve done a fair amount of research as well so for the listeners benefit I’ll read out the query I asked chat gbt which provinces or territory in Canada would you rank ahead of the top 10 US states for long-term residential real estate investing question question mark factor
(31:39) in how income properties in Canada must be personally qualified for versus in the US it’s that service coverage ratio mortgages and then there’s a respon there long response again that’s on my screen but if we go down to skip it right to the conclusion in short while Ontario BC and Alberta offer unique benefits they don’t hold up as effect itively against the top US states when facturing and debt service coverage ratio financing and other Pro investor advantages so like I was joking around before like that’s let mic drop yeah the
(32:11) debate’s over were the best place to Canada versus us for long-term residential real estate investing yeah so so you you’re you’ve now had a taste for it you ever going to buy a local investment property again ever most likely not most thing Chang it but I highly doubt it yeah have you told your friends and family about what you’re doing in the states what do they think yes I spoke to my aunt my aunt is more into this kind of stuff and she she lived in the states uh for 10 years in La so she’s familiar with the what goes on over there so I
(32:48) spoke to my aunt and a few of my friends as well I’m trying to get them on trying to bring them with me which I think is Noble because I I made the joke before like friends don’t let friends invest in substandard Investments correct yeah definitely actually do you know how how long say say a tenant in Montreal doesn’t pay you how long until you can resolve that issue yeah so I think it’s similar to Ontario I was reading into the forums and the Facebook groups I think some of them are like up to a year or bit more than a year to get
(33:24) a resolve from the government or the the agencies that are place for that so that’s crazy imagine someone not paying you for a year or more that has to hurt well just think about yourself could you survive no uh yeah definitely wouldn’t be able to survive I definitely have to get like two three jobs just to support that probably yeah when when people get into investment that’s a side hustle for it to be passive and then you’re saying you have to get several their jobs in order to support their tenant not paying your
(34:00) rent that sounds an awful alternative yeah definitely something you don’t want you worse enemies for sure uh and then how did you set up so you’re Canadian right you have right right so how did you how did you how were you able to own a US property Yeah so basically with the the share team we set up um my LC LLC and also we set up a lip so um that was pretty pretty much hands off I talked with Sher and they sent me over the documents and I just filled it out and Bam I had my business uh LC and LP ready to go and uh to purchase uh properties
(34:47) in the states pretty simless what kind of financing options are you seeing to refinance your Memphis property yeah so uh currently right now it’s kind of um we’re looking at just like 7 7% or maybe High sixes to refinance um some are able to you could buy down with a certain amount of money that’s that’s one of your options um yeah so that’s pretty much what we’re seeing right now maybe it will change I know that uh us is breaking down the rates as well so hopefully later on it comes down but that’s what we’re seeing currently yeah
(35:25) because we’re in the middle of a rate cutting cycle in the states as well just like Canada right so are you just are you just going to be patient and wait it out or just G to bite the and take one of these rates oh yeah definitely uh definitely we’re GNA see because right um the right it’s the right opportunity come it’s better to be in than to wait and for the right opportunity and then you know it’s better to be in like like you said Real Estate is like a long-term game right so once you better to get in early wait you you have
(35:59) another chance to refinance to go down to another lower rate so as long as the deal makes sense now what was was there a piece of advice or moment from the podcast that you found especially valuable that you know like was a catalyst for you to start investing a good question um I this a majority of your like your your guest speakers or whatever just say um basically just just take a chance you know basically take a chance and and see where it’s going to lead you because like you don’t won’t be like 20 years later and figure out oh man that the
(36:41) property I looked at you know 20 years ago look how much had it has grown and I had the opportunity to jump in and you know have a regret you know sometimes the biggest reward it’s the biggest chances you take in life right so that’s that’s what that’s why I gain a lot from your guest speakers and and I said why not I’m young let me try it if it works it works if it doesn’t I still have time to Pivot right I remember 10 years ago I was at a real estate networking dinner and I was sitting between two gentlemen that were
(37:15) one was probably high in his upper 60s one was in his 70s and they’re like they’re they’re chatting we’re on a conversation together and he there one was saying I wish I started 5 years earlier the other guy said I wish I started 10 years earlier and then they both look at each other and they look at me I wish I started when I was your age and they pointed at me for sure I would been close to your age at that time so I don’t know if you realize but there’s a whole bunch of Real Estate Investors who would love to have been
(37:43) your age when they got started for sure I believe you had somewh younger than me too I me personally I wish I started at his age too so you know the cycle continues well that’s the thing it’s Jo you’re probably referring to jok stanza because I think he was 26 when we started working with him and and then I’ll even I even poke him as well and I said if you were getting into the market today how would you do it because it’s so much more expensive than it was five years ago even yes right so for for listeners looking to
(38:20) start their Journey especially Canan eyeing at us Investments what would you be your what would you be your biggest piece of advice to them good question um just do it man like like Nik says just do it just get into it um do all your research yeah see if it makes sense for you at first reach out to people uh like your your guest guest um guest speakers and uh ask some questions you know ask questions figure out see alliance with you and then go from there that’s that’s that’s what I’ll tell your your speakers what was it like for you to be
(39:04) you know living in Montreal and there’s a renovation going on at your property in Memphis how how how are you made aware of updates yeah so uh basically you it’s pretty s simple they send me emails progress photos um before and afters um it be constant in the loop So within a week or so every week or two weeks I get update where we at um if there’s any hiccups or anything like that MH and then uh destimated time now all the renovations be done so it was pretty relaxed I didn’t feel any stress pretty seamless yeah uh question have you run the
(39:48) numbers after you refinance the property what your cash flow would be good question actually I haven’t no I actually haven’t uh actually haven’t I’ll run it later and I’ll and I’ll actually I’ll ask Demitri for it and then I’ll present I’ll share I’ll share it in the show notes folks as long as you’re okay with that I’ll send it to you first how’s that that’s right k j the right guy to go to I’m not the I’m not the so that’s better yeah so for the listeners benefit Demitri is the chief investment officer of share uh like
(40:18) Shane how did you know again you’re in Montreal right uh Dimitri you’ve never met him in person how did you how did you feel comfortable with this purchase just just having like talks with him on the phone uh you know it’s very very easy to talk to like um he asked me my input what what am I looking for what’s my future what’s my plans in the future and stuff like that and like from that conversation I felt really comfortable and then uh we went you know week by week we talk on the phone and uh talk about strategies talk
(40:54) about different uh Avenues we could go and then over that time it Fel it felt he so I had 100% confidence in Demetri and what he’s going to provide for me fabulous and you could understand what he’s talking about because because when I first met Demitri like he thought you know I have some real estate experience right right but he’s used to working with like pension plans so folks with like massive like you know lots of letters behind their names they have NBAs they have cfas some of them probably CPAs as well like like he’s
(41:28) used to talking to folks who you know have millions upon millions of or even billions to place so but you felt comfortable talking to him yeah I Fel I felt comfortable talking to him but for sure if there was like some uh some terms I didn’t understand cat GPT was there to rescue me or or uh I have to do my own research and like try to retain the information you know fais when he sends me the your pro fer I’m going to stick it in the chat gbt as well there you go you know D it down to like a you know fiveyear
(42:01) old to be like that because I’m pretty sure most everyday Canadians would be would like your deal I would like your deal sure for sure oh have you had it praed yet you haven’t but like sh Shar can run the numbers they can take a good guess what your property is worth now do you actually know yeah I think uh on the website it said about it’s probably worth 136,000 maybe now with the renovations estimate okay 136,000 that’s an improvement of $22,000 that’s it’s funny because I was having a conversation with a friend I have lots
(42:44) of friends I don’t have a lot of friends I lie he was chirping me like saying you you like as much as you know what’s going on in the world I don’t see why you’re adding more Bitcoin to your portfolio and like yes I’d love to have more Bitcoin but I can’t get these equity uplifts in gold or Bitcoin like I can in real estate just like you did from the comfort of your home in Montreal you got an equity uplift of $22,000 yeah that’s fantastic did it and you’re definitely and like on the website your property is a seven cap but
(43:23) which is not which is understated because you got more rent and your renovation was smaller so again I can’t wait to see what the what the what the uh the updated financials look like but holy cow what a deal especially in her first property yeah pretty much struck gold right now it’s pretty awesome appreciate so we just had our us investing Workshop a weekend or two ago and literally I had a gentleman in my office he paid $900,000 for a two-bedroom condo uh it’s it’s facing the lake on it’s it’s GTA West and he originally and uh he
(44:02) originally priced it r at 2900 he couldn’t get it so it kept coming down for two-bedroom he got like 2400 2400 rent on a brand new condo that was Lake facing that he paid $900,000 for and he’s not a chump either he’s a realtor I believe he’s a realtor he’s not a chump so he’s negative on hard cost he’s negative 2,000 a month right so if he has a vacancy or repair it’s way worse than 2,000 a month right yeah definitely oh I wouldn’t want to be in those shoes man that that that would hurt me that oh man Depression was
(44:35) set on me on that point yeah like you have to put up like to put up money that much capital for a $900,000 condo and then have it take money from your pocket every month 2,000 bucks yeah the wife w’t be happy for sure that’s for sure brother you have a wife no no not yet not yet at least not yet not yet not yet so looking five 10 years out where do you see your portfolio in your financial goals and how does Real Estate fit into your overall Vision yeah definitely so uh my my my plan is to grow at least maybe try to
(45:13) get at least one or two a year um ideally probably set up to 10 and see how how how it goes from there um definitely the more the better mhm I won’t complain about that but definitely my goal is to uh to get a good amount to cover my expenses and uh have my primary job being my secondary job you know what I mean so that’s that’s the goal and and do you get a pension at your work yeah I get a pension I work for the federal so we have a government pension you got a decent one it’s pretty it’s pretty good I kind of come complain it’s uh the F
(45:52) benefit so it’s pretty good fantastic fantastic just because I had previous guess who’s RCMP and I don’t I don’t for federal pensions that’s I think it’s on the on the lower end of quality so really I’m no expert but it doesn’t for for people in the line of business who get shot at can’t believe aention yeah from that aspect okay yeah you’re right you’re right their life is on the line yeah I’m not in those shoes but yeah even if they don’t get shot at I if you if I compare it to like a teacher pension or like a federal
(46:26) employee like someone who works for federal government like like CR CMP I don’t think they they don’t get the same pension as like a someone I know with a desk job in Ottawa you know what I mean but uh yeah I’m no expert but it doesn’t seem fair oh they’re deserv more they’re definitely deserving it more for sure I would say that too you know and and then when you Vision your portfolio um what cities and states do you think you’re in yeah so hopefully a little bit everywhere so um like Kansas uh Alabama Georgia maybe Texas like like yourself
(47:05) we’ll see how that goes um yeah those maybe those main those areas and see uh there’s any opportunity elsewhere as well yeah so why do you choose the the geographic diversification because when if you were if you invested locally right would you do the same would you have like one in Montreal one in Toronto one in I don’t know ashaa one in bernabe British Columbia why why why do you envision why do you envision uh economic sorry Geographic diversity well just uh for protection right you don’t even know what what’s in
(47:44) store for in the future right so just having um properties in different states it’s kind of like a shelter just in case one is performing well one isn’t performing as well there’s Renovations here there’s a big issue here you just have overall a good comfort zone and then how would you execute this you’re going to fly down to each of these markets and you know meet wholesalers meet property managers Realtors you know oh that’s that’s why I got share man they they got my back you know so that they’re they very verse in multiple
(48:18) Estates so if anything Lins with my uh idea or my uh criteria just shoot me a an email and uh go from there you’re a young guy once you once and you’re handy too want to just fly down and uh be your own investor uh that’s that’s a lot of work that’s a lot of work uh a lot of times you know I don’t think I have that much time on my hands unfortunately but um yeah why why why why would I do that if I have share on my team they they got my back they proven to me for my first property that they’re capable doing what
(48:58) they say they’re they’re able to do and I have M confidence in them right and so when you’re when you’re talking to your friends and family like you’re you’re telling to telling them to go share or you’re telling them to go book a plane ticket and interview a bunch of Realtors and wholesalers and proper managers or no I’m definitely telling them if hey you want a peace of mind you want have your my IDs hey share is the way to go man share is the way to go you’ll sleep easy at night yeah like when you mentioned earlier
(49:33) like even in Montreal it can take you a year to to deal with the non-payment of rent issue with a tenant like that’s I think people lose a lot of sleep oh definitely lot of sleep and they could go crazy you know you never know what could happen especially if it’s like a property that has maybe sentimental value people people could uh you know change change on you you know not it’s not good it’s not good you should be able to receive you know and if you’re providing you should be able to receive right at the same time so it’s just one
(50:09) for any plans to go visit any of these properties uh not necessarily but maybe I’ll go see the city myself and maybe pass by and say just to see how how it looks but no not not no uh no plans in the future currently right now so awesome yeah I’d like I’ve never been to graceand which is just outside Memphis so I’d like to one day yeah definitely all right Shane thanks so much for doing this do do you have any final thoughts you want to share with the listener again you listened to over 300 episodes of the show what what are
(50:44) some parting thoughts um I’ll leave the mic to you oh my gosh no pressure on me okay so basically um from all the episodes I like listen to the main one is this just just try it do your research first obviously do your du diligence but um just take the leap leap of faith and see how it goes because um it could be turn into an opportunity that changes your life and changes your family life and the the generations to come so that’s that’s my that’s my advice I will add I don’t know how much faith is needed when research is easier
(51:23) than ever that’s that’s for sure you have chat TP chat TPT uh it’s pretty easy just put whatever you you’re thinking yeah it gives you the your results what are some prompts you think people could use in chat GPT if they wanted to do research into real estate investing okay yeah so like probably some some of the terms like major terms like cap raate stuff like that something that Average Joe wouldn’t know right so like how I do it it’s like I say okay chat GPT explain this to me like a 5-year-old or a 10year old you know and
(52:00) they use maybe the piggy bank explanation and stuff like that so so for a common person like me it’s simpler to to understand and retain the information so stuff like that like it makes makes your life much easier to understand yeah I plan on uh like project Prof foras projected financials aren’t that available actually they’re somewhat available actually no they’re not for for uh again because I I’m on I’m on a lot of emails as well so I get I get projected financials for a lot of properties and then you’ve seen the way
(52:33) Shar does them they’re they’re incredibly detailed and transparent so I actually plan on having get to having to finish off a project proper projector Financial Prof fora for for like local properties and just feeding it to chbt and like you tell me what’s better I think I think the everyday investor can do that as well like you want an unbiased As Good As It Gets unbiased uh opinion on what the best investment is AI chat GPT is it exactly yeah exactly that’s how I did also um with the my refinancing options as well so like add one or two options
(53:12) I’m like okay let put this in chat and it breaks it down the comparison what is what is Advantage for this option and what is Advantage for this option and the dises between the two so yeah it’s pretty simple you just have to put it in and read read the what it gives you and you could go based off on that so definitely easier that’s super cool do you find any of your friends and family and people your age are they using are they using chat gbt um I’ll would say more people my age are younger are using ja gbt the older
(53:47) people some of they’re not tech savvy unfortunately but um oh yeah I I definitely see people around my age are younger definitely definitely younger they all they’re all over there you know the technology so they they probably know more than me I was actually planning on doing a chat an interview with chat gbt on Canada versus USA for investing if you want unbiased you know because list just need to understand like I’ve covered this before in one of my other talks like the chbt has passed the bar exam in the states it it passed
(54:24) uh I think it was Wharton’s NBA School so Wharton is a top five top five easily top five business school within the US right it’s it’s uh and it keeps getting better it’s it’s just scary how good it is and and uh and this is why I warn uh folks who who are have businesses in in anything especially on well for my show I talk to I’ll mention it for like real estate agents and and mortgage agents and Brokers and whatnot especially they’re focused on investors like technology is coming for everyone’s job right not your job your
(55:04) hands on but oh yeah for at least for now who knows the robots they have some robots out there that you know nah not not yet okay you know everything I’ve seen like anything to do with like repairs and maintenance like that’s so far down the line for robots that’s just way too hard right like robots can do new because it’s all it’s the same thing over and over again right we already see that in automotive manufacturing right it’s already it’s already largely robots but uh for for any sort of like maintenance yeah well you tell me you’re
(55:38) in the shop not me right but just just say can you see a robot like replacing your toilet at home you’re right not at least not yet maybe in the future who knows but currently no I it’s just so far down the line like so yeah all right Shane thanks so much for doing this oh man it’s been honor this is awesome to be on your podcast man I’m a fan I’ve been listening you know as you know from the beginning and I’m I’m really humbled to be on this podcast be one of your guest speakers thank you thank you very much and Shane
(56:15) just throw it back to you it’s it’s it’s always been my honor to host this show and help people especially the everyday investor especially younger folk like you who don’t come from a pile of money or they don’t have a pile of money right like uh like I I I tell friends and family if you want to get rich you need to be in real estate right and for and from my experience I’ve never seen an easier asset class or strategy for people who don’t have money to get money right obviously they have like you I’m guessing you worked and save worked
(56:53) and saved and that’s how you were able to afford the investment is that fair yeah so yeah majority is worked and Sav but also like um I have received money also from family so um from the most part yeah my blood heart blood Harden s tears all that stuff um I I work two three Jaws that’s nothing new to me I slow down a little bit but that that’s that’s that’s my that’s my how I get down you know so so yeah so trying to offset that with the real estate and in my experience I don’t see a better way to do it Jan again thanks for so much for
(57:37) doing this thanks for thanks for being my first US Canadian client by us that’s awesome man thank you very much for having me we’ll talk soon [Music] home all right friends that wraps up another episode of the truth about real estate investing show for Canadians hope you got as much out of this one as I did remember that whether you’re just starting out or a seasoned investor there’s always something new to learn and it’s always about building that practical knowledge base that gets you closer to Financial Freedom if you found
(58:06) value today please do us a favor and leave us a review or a rating share this episode with a friend or better yet join our community of Real Estate Investors who are taking action and making moves and hey if there’s a topic you want us to cover or have uh there’s a certain guest you’d like us to have on the show dropped me a line my DMs are open on social media reply to this email that this have arrived on I’m not hard to find uh you know we’re all about getting you the unfiltered truth to help you on your journey thanks again for tuning in
(58:33) and we’ll see you at in the next episode until then stay Smart Stay curious and keep building that future catch you later

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** Transcript Auto-Generated**

(00:00) sorry to condo investors Ottawa rocks that’s where I’m a least fan farewell golf season all listen more on the truth about real estate investing for Canadians greetings investors my name is ran cedo landlord of 40 plus different properties through my career since 2005 realtor since 2010 and together with my team at I real estate we have helped investors transact on close to half a billion investment properties among my clients are 45 Millionaires and multi millionaires and accounting we help them achieve uh this through education and
(00:30) coaching and I get paid because we’re realtor anyways uh that was all hold in Ontario but until around last year uh the writing’s been in neon letters on the wall cash flow is no longer an option for the everyday investor governments of all level let it be known we are not welcome here in the opportunity for better cash flow diversification in the USA and avoiding the LTB or rtb if you’re BC was available along with scalable mortgages in the USA thanks to technology advancements it’s crazy how technolog is making life better anyways
(01:06) sadly we’re uh we’re slowing down many many what’s slowing down many many canans investing in the south is they’re holding pre and new construction condos some of them are houses as well but uh yeah they’re all pretty tough the options aren’t great for those who are holding those types of properties especially those who lost their jobs uh I had a new new condo investor share with me this just this past weekend he owns a beautiful 300t brand new condo with the lake view uh the property is into GTA and it’s south of south of Lake
(01:38) Shore and has beautiful views he paid $900,000 for it which sounds about right and it only rents for $2,400 it’s outside of downtown so apparently the rents aren’t as good after multiple attempts to redtive over higher prices his original asking price was over $2,800 I believe he said uh and and cut cut down to 2400 is what he’s getting now so after hard costs which means mortgage taxes insurance and condo fees of course he is negative $2,000 a month and that’s before you factor in any sort of vacancy leasing fees bad
(02:14) debt repairs and maintenance so in reality his negative cash flow is significantly much more now not all being real estates are bad I hope this just the show is the truth about real estate investing however it’s harder to find those markets and investors who can execute a quality investment deal if you listen to Andrew hines’s final podcast I recommend that you do I’m experiencing the same thing he is I’ve invited gers onto my show and it’s crickets uh not all of them but for many of them it’s crickets only to find out later there
(02:44) through the news or the graine that some of them are having financial troubles uh even though some of those gurus out there um I I have friends with them on social media uh anyways uh they’re still out there raising capital for their projects or they’re borrowing in hard money loans AKA private borrowing private lending they’re selling courses and coaching Etc they’re running meetups and and speed networking whatevers and they’re turning down exposure on my podcast this is the truth about real estate invest show so what you 17
(03:16) listeners uh faithful listeners thank you for all of you as well uh what you may not know is that before we do record I do ask guests if they’re okay to discuss losses uh both what’s in the news and not in the news I also uh do reference checks on guests of the show uh by contacting people unsolicited like they’re not providing me reference checks I actually don’t even ask for reference checks I’ve been around long enough to know who does business with who uh if nothing else I know people in the in pretty much every real estate
(03:44) market for investment I can just simply dial one of them up and they’ll take my call or return my call anyways uh so I simply contact people in the same markets as them or people I know have done business with them either as a lender borrower as a contractor what have you and uh anyone who’s engaged with business with them and ask them for a reference check as they are potential guest in my show uh most people know how protective I am of my reputation and of my 17 listeners there’s no reason to put you in front of harm that’s not what the
(04:13) show is about if you are out there reference checking folks uh like a coach or you want to invest with somebody whatever feel free to check them out check out if they’ve been on the show before now being on the show is not an endorsement by any means nor is it a condemnation that they haven’t been on the show uh we we are not perfect I am not perfect uh I’ve lost money too uh anyone who says they haven’t lost money is lying to you and there are those people out there who who coach and and raise money and say they’ve never lost
(04:41) money anyways uh I’ve actually added we’ve actually added show into show notes of some past guests of the show who are being sued or are bankrupt or going bankrupt or in the news so we’ put those links in the show notes uh and I digress so if you know good people that that you think should be on the show encourage them to come on the show or recommend reach out and recommend them yourself I’m always happy to interview good people who are good investors who know how to protect their client’s best interests if nothing else I really enjoy
(05:11) shining a light on the good people in this industry in order to nothing if nothing else we can cut out the bad operators speaking of good people who has nothing to sell you today it’s always fun to have a non-real estate professional in the on the show today’s guest is my good friend and past client Adam Johnson ready for it he’s got a lot of letters behind his name CPA CA you know those are the accounting designations this is one that’s not so common cbv for chartered business evaluator and CFA chartered financial
(05:42) analyst so uh Adam who at the time was my youngest client at the and we talk about that he didn’t have as many letters beond his name at that time and he’s not your average CPA uh so as mentioned he is a Charter Business valuator and Charter financial analyst making him one of less than 100 people people in Canada with all three designations he even ranked number one in the country on his Charter Business valuator exam uh but really sets him apart is his hands-on experience with one of Canada’s biggest investment Banks
(06:12) Banks Banks they say that right Banks where he analiz stocks and work directly with Equity Traders so these are people who make money dealing with stocks uh investor money big investor money which prepared him nicely for a long career uh in business valuations now Adam’s expanding his investing to the US after Ontario deals made no longer made sense uh and he’s the founder of synthesis valuations he’s he opened that business quite a while ago and he’ll detail that in the interview uh where he provides top tier evaluation reports for
(06:43) everything from mergers to shareholder disputes not we recorded this episode on September 17th so that was before the most recent pair of hurricanes Helen in Milton that devastated Florida the deadliest Helen was the deadliest for uh hurricane to make landfall in Katrina since 2005 uh each each uh the combined damage from the two hurricanes is hundred billion that’s $50 billion each for context uh for context that major storm that passed through Toronto in the summer had uh it caused 1 billion in damage so between
(07:20) these two hurricanes that’s a 100 times more damage my thoughts and well wishes are with Florida I’ve linked I obviously sourced all my resources so I’ve links in the show notes on the article to back up the $50 billion damages per uh per hurricane uh for your business valuation needs Adam’s website is synthesis valuations.
(07:44) com now what’s someone with so much stock in business valuation skill doing being so overweighted in real estate investing let’s ask Adam please enjoy the [Music] show hi Adam what’s keeping you busy these days well I think before I came out here I was working on a couple of different valuation files for a few companies that I’m valuing but also getting caught up on some news that I think actually is pertinent to uh many of your audience members who are Real Estate Investors or looking to be Real Estate Investors because we’re on a sort of interesting news day recording
(08:29) this September 17th where new inflation data just came in mhm and we also got the news about extending amortizations to 30 years for all firsttime home buyers in Canada and raising the insurable limit right yes for insured mortgages from one1 million to $1.5 million so there’s actually a couple of headlines I was digesting before I was on my way out here and then you know come from the context of someone who looks at the states like $1.
(08:58) 5 million and because I say to friends all the time who are who who you know like talking about real estate a lot of nice cities in the States you can buy Mansion for a million you can buy 4,000 foot house for a million or less than a million or less than a million yes but like it’s crazy everything’s crazy actually I just wanted to check what the bond prices were doing with the inflation rate yeah just tell tell talk about the inflation rate so you can fact check me on this spot but I believe inflation came in at 2% which is the lowest that’s been since
(09:31) early 2021 before inflation started to spike um a little bit softer than what I think most Bank economists were expecting or at least the average of Bank economists um and I think that will be welcome news for anyone hoping that interest rates set by the Bank of Canada will continue to Tren Trend downward excuse me yeah it’s interesting the bond rat’s actually up today Bond rates are up today oh I am surprised to hear that they must corrected the last few days the last few days they were down and then actually came up well I don’t
(10:05) know how much of that would be influenced as well by sort of Canadian Bond Traders having to figure out what the Federal Reserve is going to do because they have a big decision happening tomorrow as well um so that might have played into it as well and funny enough the Dollar’s flat today so it looks like the market kind of looks like they kind of knew this was coming interesting good well good job market now I having you on the show cuz you are a valuation expert that’s a very few words to describe your actual impressive history experience
(10:45) level tell tell us a bit about yourself sure so I run a Consulting advisory firm called synthesis valuations and quite simply I am in the business of valuing businesses um you can think about it in simple terms like that um as Real Estate Investors I think we’re all familiar with real estate appraisers and the work that they do you want to go buy a house or evaluate a property they give you an appraisal report they look at comparables um really valuing a business is sort of built on a lot of the same principles but the key difference is
(11:21) there’s a lot less uniformity among how businesses look right I mean um a pharmaceutical company with an early stage of drug is going to be valued differently than a manufacturing business and it’s going to be valued differently than you know a holding company with a that portfolio of Investments and so as business valuators we are trying to look at different data points and try to triangulate how much is something is worth um when we’re not in the context of a publicly traded stock and we don’t have a good indicator of
(12:00) you know what someone would be willing to pay for a business or a piece of business yeah because we Rec reconnected because um my wife asked uh to refer you to a client of ours and it was a a very small business with not a lot of Revenue so I can’t imagine it’s easy an easy job yeah I mean it’s not easy it’s interesting which is why I love doing it um but it’s certainly not easy but just some of the situations that you might see come across my desk right you’ve got transfers of businesses maybe that small business that you were talking about um
(12:40) being handed down from one generation to the Next Generation Um a tax accountant or a lawyer maybe Cherry wants to execute some sort of um tax plan to sort of be most tax efficient the Canada Revenue Agency is going to want to understand what the fair market value of the shares of that company was at that point in time let’s say you’re a partner in a business not publicly traded and one shareholder or one partner wants to buy the other out um they may on friendly terms engage to retain someone like me or there might actually be um a
(13:17) contractual clause in their shareholders agreement saying that they need to retain someone like me in the event that one is going to buy out the other’s interest divorces these get messy but where you have have a family business a privately owned business in many cases that forms part of the family assets or the family property that needs to be divided for Equalization um you will often excuse me see someone like me get involved to sort of establish what the fair market value is for that purpose and then lastly this is probably more applicable
(13:55) to public companies but there are many cases just for counting financial reporting requirements where a company who maybe has a subsidiary company or has completed a business acquisition of some sort and they need to look at the fair value of the assets they have acquired I do a lot of work in that space as well I’m a geek so I like this hearing all this stuff and just for for the customer for the listeners benefit like your background is you have your chared your ca um actually you have other designations don’t you there’s a few
(14:29) letterss yeah you have a CFA as well so you’ve spent a career in school cbv what’s the acronym for so so let’s just run through those quickly so yeah okay so I’m a chartered professional accountant um which I’m sure many of the listeners on this podcast are familiar with what CPA do an accountant yeah an accountant right um that said I don’t do typical public accounting work right I don’t I don’t even do my own tax return so don’t ask me for tax advice plus you have cherry for that that um I then sort of moved on
(15:02) to become a chartered financial analyst or CFA and that’s the designation that you would probably most commonly see used in the world of investment analysis and by that I mean making decisions to buy or sell stocks or bonds uh most equity research analysts working on Bay Street um investment analysts W streight investment analysts working for our Pension funds A lot of them would have that designation and that’s actually what I did for a couple of years was work on a team that put buy sell and hold recommendations on um our universe of
(15:41) stocks that we covered and then lastly the cbv that you asked about that stands for chartered business valuator which really I would argue is sort of the core um professional credential that’s widely recognized by Canadian courts Canadian accounting firms and the CR when it comes to some sort of business interest that needs to be valued in sort of a a notional or theoretical setting MH and you worked at one of Canada’s largest investment Banks so you know investing in valuation quite well I like to think I did yes right and then how
(16:19) did you decide to allocate your Investment Portfolio all stocks all real estate so I guess you could say I sort of believe in all of the above strategy when it comes to what our portfolio should look like I mean I I have stocks and Equity ETFs I have Bond ETFs I have actually some private credit that well simple I think it is offers um all of the things you would typically see in a tfsa or or an RSP or just non-registered Investments but I guess sort of early on in my career and we’re talking 15 years ago um I went down the real estate Road and
(17:03) if we if we looked at my balance sheet right now one could probably argue that I’m a little bit overweight real estate perhaps a lot overweight real estate but um I’m sure on this podcast that’s not gonna that’s not gonna cause too many um eyebrows to be raised I I’ll also add to that you know of the people I know who did really well financially with their investment portfolios it’s over overwhelming the real estate people maybe this is just who I’m surrounded by but yeah yeah no I mean I think I was biased towards real estate right maybe
(17:38) even as early as University you know I read all the books that most Real Estate Investors go on to read I read Rich Dad Poor Dad I read um Don Campbell’s book for Canadians specifically and so I think I was always sort of my mindset was skewed towards owning some rental properties eventually um but then I graduated in 2009 which was an interesting time um for real estate and obviously real estate fell very much out of favor after we were in the midst of a financial crisis and the US housing market had just suffered its most catastrophic
(18:20) losses quite possibly ever I’m not sure you can that’s I’m sure it’s up there yeah yeah and so you know when I was fresh at a university I had the opportunity to buy a condo downtown Toronto and really it was just sort of an easy decision for me when I looked at the cost to rent versus the cost to own just even as my primary residence we’re not even talking rental properties at this point in time it was about the same so would I rather rent for that price or would I rather own for that price and start deleveraging over
(18:55) time and paying off my mortgage over time m i chose to own and that’s sort of where it all started I there’s so many questions I want to ask cuz again we’ve qualified you as an expert in valuation I feel like I’m in a witness stand in court now yes you are this is a this is a contestes I mean that’s that’s what they say when they qualify people as experts at would you do the same deal today the same deal to purchase that first condo but at today’s prices though at today’s September 17th 2024 no um or at least it would be very difficult to
(19:36) do um the math looks very different right I mean I still own that condo so let’s actually just take it as an example because it’s real numbers I mean I paid $290,000 for that condo in 2009 I think the last bank appraisal that I did in 2021 when I did a refi on it mhm came in at $690 mhm I think when I bought it in 2009 sort of the the prevailing rent or maybe the cost to own would have been something like $15 or $1,600 a month and right now the rent on it is $2,800 and that’s what current the current residents are paying yeah which
(20:25) is actually at Market because that just turned over in April but I don’t have a a calculator in front of me but I think we can conclusively say that to buy a condo for $690,000 putting really using any sort of Leverage or any sort of debt um you would have to put a lot of equity into that to make that work even if you had the equity though would you do the deal doesn’t make sense financially no I mean if we talk about I mean we can debate about whether we should be using the term cap rate for a small Toronto condo
(21:04) but for your listeners cap rate just meaning like you know the net operating income I as the property owner am taking from that property dividing it by the value let’s do the math right now oh I already have your rent yeld 4. so 2800 right but but you need to dedu condo fees too right I’ve done similar numbers already I yeah so if it’s cons ative your cap rates around two and a half yeah that sounds I was going to say between two and three um that sounds about right to me so I’m not going to dispute that that sounds in the
(21:37) ballpark so why why would you buy a 2 and a half% cap rate condo in Toronto um when you could literally buy a GIC right now or a Government Bond that yields more than that there’s really only one logical reason and you would you would do that um which is if you really feel strongly about using that condo as a hedge against future price inflation which would have to be driven by pretty strong belief that prices are going to continue to appreciate in Toronto after they’ve just had probably their best run um you know
(22:23) up until about 2022 in a very long uh period of time so yes there there’s a good mathematical argument that I should just actually sell that condo and move on um put my Equity elsewhere I decided to keep it really as a matter of convenience I would say right it’s there it had zero vacancy turnover uh or sorry zero days of vacancy when it turned over um in April I can walk to it if an issue comes up so I can actually self-manage that one but if if we were just looking at Raw numbers it would not be MH a great
(23:02) return on investment so tell me about the states you’re investing in the States now why decision to do all that like you’re already like you do quite well sure your comfortable living tal yeah no okay so I guess what did I buy in the states and I guess I’m going to back up here again another 12 or 15 years so I bought that first condo in Toronto um a couple of years later was actually right before I was working in that job analyzing stocks uh renewable energy stocks I was subscribing to we had these things called magazines back then they
(23:45) were like hard copied magazines and I you’re still a young guy too talking about way back when when we had magazines I know but so I subscribed to this magazine called Canadian real estate wealth magazine and I read this article about this guy who dubbed himself Mr Hamilton jerk um and he was sort of explaining at that time and we’re talking fall of 2011 I think it was the investment thesis for Hamilton and I was actually finally at that point ready to buy you know a true rental property not just one that I lived in
(24:23) but one that I was going to buy and rent out purely as an investment and I made a cold call to Mr Hamilton we went out one Saturday I think looked at three listings in Hamilton and that same weekend I put in an offer to buy one of them so that was in 2000 that closed in January 2012 remember what we paid for it I should $1,000 for a semi detached house in a you know modest but reasonably nice um called the sack yeah on the mountain yeah the mountain yet I still have that property as well and so that’s sort of
(25:01) what gave rise to investing in the US was I didn’t really do a whole lot in Canada between that uh purchase in 2012 onward in part because oh at least you did well I did well um and I was also really at that point CU that post is 600,000 today probably something like that yeah nice triple yeah exactly um I had been you know thinking about starting my own business which I did in 2016 I remember that conversation right and so at that point my focus became on making sure I had enough liquidity to start a business which is at odds with
(25:41) real estate investing but I what I will say about that nice house in Hamilton is that it it’s the gift that keeps on giving I mean I refinanced it in 2015 to take a little bit of equity out which gave me a bit of liquidity buffer to actually start that business right sort of allow me to take that risk um yeah your investment property financed your your new business in a way yeah and then if we fast forward to 2020 when the pandemic started that’s sort of when the idea of actually investing in the states took hold for a couple of reasons M um
(26:19) one like everyone I was stuck at home um in in what I guess was a new Prime newish primary residence um downtown Toronto when I turned that first condo into a rental and I was I found myself you know spending an inordinate amount of time on Zillow searching through listings in different markets different cities sort of as like a virtual Escape when it was really difficult to travel right or or pretty much impossible to travel and then that’s sort of when the you know the wheels started turning I could very quickly just look
(26:59) at certain rent to price ratios in different markets and then I thought about it and to your point about cap rate that we were talking about earlier at this point that first condo in Toronto was close to being paid off or or you know almost paid off the Hamilton Mountain House had a pretty modest mortgage even after the refinancing and so I had access to quite a bit of equity on which my return was really not that great right like just on a pure cash on on market value of equity perspective and so I I thought more
(27:39) seriously about actually taking some of that equity and putting it South of the Border and it wasn’t really that much of a leap for me because you know at this point i’ had been used to managing a manager managing a property manager that is in Hamilton um I’d learned a few things about you know the challenges that come along with owning real estate as a direct investment uh and really to me managing that manager um from you know a thousand miles away wasn’t really that much more daunting than managing the manager and
(28:26) Hamilton other than understanding and giving myself a good understanding of the crossb nuances between Canada and us which there are several is that a hard you are an accountant oh I mean it it took me some time to get there but yes I was able to get to the point of comfort to actually take the leap so in June of 2021 I bought my first property in the US which was a A Beautiful 2006 bill build 1827 Square ft um three bed two bath house in a pretty nice subdivision didn’t need a lot of work in Fort Worth Texas oh or work okay so Dallas’s
(29:18) neighbor yeah yeah it’s sort of a forgotten sister city um it was a little bit obviously 2021 was a super hot Market in most places in North America just because of where rates were I mean if you were in American you could get a 30-year fixed mortgage for 2 or 3% um prices were shooting up I think I actually bit on seven houses before I bought this one oh was that hot eh and and Fort Worth was a little bit cooler than Dallas interesting and so still got the numbers to work but I pulled the trigger on that and it gave me me
(29:58) relatively few headaches and so I kept going with a couple of more can I ask you how much you paid for the hose so that was $292,000 us okay just to repeat though for listener’s benefit 2006 Build 8 1,827 foot three bedroom two bath now I thing about American houses their bathrooms are big yeah they are I think this had like a nice Soaker tub in it right and double syn yes yeah so so a six-piece bathroom I believe so yes yeah I actually was clarifying that with my home inspector the other day like oh yeah I have a six-piece bathroom in my
(30:36) rental property I don’t have that in any of my houses yeah no it’s not something you’re going to see here right but I mean land prices in Fort Worth are also a lot lower than they are given that you’ve got this geographically unconstrained land mass on which you can build whereas we have you know natural barriers here right we have the green bell we have the lake um there’s we have to build up obviously and and not out in the same way that they do in in the Dallas for Worth Metroplex yeah can I ask what your rent
(31:13) is so it actually just turned over as well as of August 29th but I believe it was at 2300 so the same tenants actually stayed there for three years MH and good yeah and took I looked at the move or move out inspection photos took really good care of it fantastic and so it started out lower than that like it wasn’t 23003 years ago but we did gradually get it up there and then was a b was it pretty effortless pretty painless that one was pretty effortless right so it does I mean it’s part of an HOA some HOAs are
(31:54) more annoying than others as I’ve uh found right so condominium board yeah yeah yeah exactly so it’s still like a it’s it’s a detached house but you’re still subject to sort of the rules around how to keep your lawn looking what type of shrub you can have I don’t think this HOA the rules are quite so stringent um there is another HOA that I dealt with that is much more of a pain to deal with in that respect but um there’s an easy workaround for that which is don’t buy a house that’s part of an HOA but this one was yeah of of
(32:29) the four us properties that I have this has been the most headache free for sure very nice yeah we we’ve had issues in Hamilton for example the condos uh I don’t know if we’re if invest us investors are being just targeted but they were just heavy-handed like um just how immediately the the uh enforcement notes came for like putting your recycling garbage bin back mhm yes right just uh yeah it seems heavy-handed anyways so the US investment been going well yeah I mean it’s I’ve done four now they all are very different well two of
(33:05) them are the same but I characterize them as being different and it’s sort of with each one I’ve embraced a little bit more risk and we can sort of talk about the consequences of some of that risk but let’s talk about it um one of them is in Florida is not two are in Florida so let’s back up and and get to the journey of how I ended up in Florida so after you know for that very first one I was sort of just in my mind dipping my toes in right um and then I sorry done quite well 2200 on a 292 property yeah it it
(33:40) was a solid buy um I didn’t I didn’t get a screaming deal on it like I think the bank appraisal yeah I had to fight for it I think the bank appraisal came in at 295 so maybe I walked in with who $2500 in um built-in Equity or something but that was dipping my toes in right I wanted to really try this experiment I put in very little of my own money because I used Equity from a heok I think on the Hamilton Mountain has is my down payment 30% and got 70% loan of value from a US lender and so it was really a 100% debt
(34:20) financed deal um and after it went okay maybe about six months later I I decided to dip my toes in again stuck with the same Market um this time it was a little bit more of a risky Buy in that it came from a wholesaler actually um but again it was a similar story different city Denton Texas which is a little bit more to the Northwest home to University of North Texas that was a 2300 square foot for bed 2 and 1 half bath um built into 2007 was actually a little bit I’m going to say less nice on the inside than the first one just I think
(35:07) it had been an investment property for longer the owner I think was just tired landlord Adam can you bring up can you bring up um Denton Texas on the on the screen I’m a visual person yeah sure it’s trouble so we have two Adams in here t y just like it sounds Texas for the benefit we are U we do have a screen and we post this on YouTube as well so shout out to our YouTube channel real estate that’s name oh wow that’s pretty holy cow that looks like nice can you click on the map Adam not even airport wow what is this
(35:56) building here I actually wait have you been there I’ve been I’ve been to I’ve been to the house I haven’t been to this building wow so the key the key to this house the reason the reason for the buy was the school district it was located in in Denton and yeah so your Greater Dallas Fort Worth it’s still yeah still commutable distance to DFW but to the north yeah yeah um but it is sort of a city and it’s a small City in its own right um but Americans are all about their school districts right and so I did actually sort of vet this and
(36:35) research this and talked to a couple people that this was a quite desirable School District as was the first one actually interesting yeah because I was looking North as well like mckin and up to Sherman as well right so I’ve I’ve actually I went to Sherman last year on a a property tour where a company with um sort of marketing new builds but yeah I’ve never shman is uh depends what you’re buying I guess dep what you’re buying like just for my my target was to stay under 300 the more under 300 the better but it’s really hard to find a new build
(37:12) around like under that oh yeah no I agree with that and so this second one in Denton was I had to go a little bit above 300 because in that second six months of 2021 prices continued to go up um so I think that that one was about 3 316 was what I paid for that one mhm and what’s it renting for it is currently renting for 202 which 2200 which is actually down a little bit from the first one and I think it was really a time of year effect um unfortunately the previous tenants decided to sort of leave late fall I
(37:58) sort of missed a good chunk of the rental market and so I was willing to concede a little bit to get somebody in there um last January but still compared when you when you take that rent to price ratio um compare it to what we see Canada up here it’s a different story that said I will say this about Texas I do think those were two decent buys um I like Texas or say Texas as a whole Dallas for worth um attracted me for you know a number of reasons right the rental price ratio we talked about um it’s the number two choice of reats for
(38:38) markets right yeah I mean Invitation Homes which owns 84,000 houses in the US has I I actually was looking at this this morning out of curiosity I looked at their data for the last eight quarters they were net buyers um in the Dallas area so that gave me some peace of mind um Diversified economy like when I went to Texas I did not want a Houston which to me just seemed a little bit too exposed to um oil and gas and also a bit more exposed to hurricanes as well MH you know DFW we’re gonna get to Florida we’ll get to Florida right um
(39:19) DFW its economy is a bit more Diversified right like I think it’s something like 20 of the um 500 companies are headquartered somewhere in the Metroplex and it’s across Industries right you’ve got American Airlines Southwest Airlines AT&T I believe there there Texas Instruments um messen I believe is there if I’m not mistaken and so it just it made a lot more sense but the one thing Sor just add to that outside of tal you won’t find that in Canada right in terms of economic diversification or even just that many that number of forun 500 head
(40:01) offices oh yeah 100% um and actually if we’re talking about Toronto as a financial Capital um one interesting read I had in the Wall Street Journal recently is that JP Morgan Chase now employs more people in the state of Texas than it does in the state of New York um they’ve moved another camp or opening another campus there and so gfw is actually sort of becoming a regional Financial Hub in its own right so those are all the things I like about DFW so you’re using your valuation skills to make sure you have a
(40:37) good investment yeah I think that’s I think that’s more actually just real estate fundamental Common Sense yeah I I don’t think that takes evaluator to figure that part out where the evaluator cab comes in would be the thing I don’t like about Texas and I’m sure you found this after owning a place in San Antonio is the property taxes yeah mine’s like 5,000 what your so on that $292,000 house in Fort Worth the 2024 tax bill was $8,400 cuz one other thing that I found and and for context that is more than I pay on my primary residents in Toronto
(41:15) which I paid more than a million dollars for last year and what I found is that compared to impac in Ontario where I think we actually take it for granted and we get a little bit lucky mhm they take a very long time for tax appraised values to catch up to Market Val right yeah forever the tarant county property assessor and tax collector and the Denton County property assessor and tax collector I can say with some hindsight and certainty are very fast to recalibrate those two things so seems like sounds like it’s annual yeah and so
(41:56) they see that the property has changed changed hands for $292,000 in 2021 they’re not giving you the benefit of the doubt that it was you know last impac assessed in 2020 for something well below that they’re going to actually look at the property records see that that transaction took place and Market to that and so that that is unfortunately just one of the things about Texas as a whole and certain other states but wait are you you going to fight it prices have come down have they not I could probably protest that one in
(42:34) um tarant County if I really wanted to um the Denton County one I think is probably closer to being right in my opinion because I think I think the tant county the Fort Worth one I think was tax appraised for 370 which I don’t think it would sell for right now I think it would be more like 350 345 so I don’t know what do the maap 345 over 370 time 8,400 is that worth my time fighting some tax assessor maybe maybe not much time I’ll get to it so shar’s actually gonna fight on my behalf for mine sorry sh Shar is gonna fight on
(43:13) yeah I mean if you if you’ve got somebody to do it for you then I would say sure go do do it for me but I but I make my living selling my time too so for a lot of money well yeah I I I know what I know what a unit of my time is worth and I haven’t gotten around defending my Taran County property taxes may just poke your pm and see if they provide that service I don’t believe they do I have a pretty Bare Bones PM in DFW if I’m being honest I mean they do um eviction protection they’ve done a pretty decent job on the Fort Worth
(43:50) one the the Denton one I just say as I said about an HOA that’s a bit more aggressive that would be the one in Denton um so I have to get them sort of more involved to remind the residents to bring in the trash bins just like you said and you know I think they have somebody sort of driving around the streets every day just to take a look at things like that so it is the dent one’s more annoying overall than the for worth one um even though it’s was probably might have actually been yeah it would have been a lower price per
(44:26) square foot to buy um so that was late 2021 oh sorry I just want to get some context actually your your prices are still going up even though you bought you had to fight for your property interesting I mean the party was still going on when I got in in 2021 right um they didn’t I don’t think they really peaked until mid 2022 when Central Bank interest rates and so both sides of the Border started going up um so in that sense time did a little bit of work for me in probably the six to 12 months um between when I bought those and when
(45:10) sort of the peak happened and and prices started retreating a little bit right but you’re up like 60 Grand on a 292 property yeah and it didn’t it didn’t take that long to get there now you must be pretty happy then I I was pretty happy with that one yeah you know Le less happy with the dent one but very happy with the first one cuz it was it was still when things were going up um and I sort of knew that I had a I I could see right after losing it on seven properties before that but also be trying to be careful and prudent
(45:42) not to overpay um that the the legs of the party probably still had a little bit more to go before the music stopped so to speak is the same property manager between the two properties yes yes so that’s nice at least you can consolidate that way it’s one conversation rather than two agreed and the you know obviously being in a big metro area like that you’ve got access to a lot of property managers should you feel the need to change make a change and that was one thing I kept in mind as well when I was looking at where to buy first
(46:21) was I wanted access to a slew of property managers which in a huge metro area like that is obviously not an issue that’s one of the big differences between the States and Canada is uh property manager met property management companies in the states actually have resale values actually you’re the perfect person to comment on that because that’s what I hear based what I’m seeing like I hear about private Equity firms putting money into property management companies in the states I don’t know if I’ll see that here in Canada ever not not anyone I
(46:56) know in the community oh you just mean in terms of like the significance of property management as a sort of sub industry in the United States it just seems to be a viable business versus uh it’s just you don’t really see anyone scale here locally because it’s there’s not enough cash flow and it’s too difficult to tenant profile tenant relationship business relationship with your customer yeah now as as a business valuator I would actually say that a property management business is pretty challenging right you’ve got M unless
(47:27) can get that growth that unit growth it is all about scale right you’ve got razor thin margins and so I think to do it well in the 21st century um the firms that are able to be competitive in pricing right having a pretty good technology platform that’s like a gien that’s table stakes and just figuring out how to sort of deploy a limited number of Human Resources MH across a a broad geography so in fact it’s a different company that I use in Texas and in Florida two different companies but both of them operate in several Metro areas
(48:08) and you might be talking to somebody on say an accounting question or a property maintenance question and if they’re just coordinating something behind the scenes they might not even be in that same Metro um which has its pros and its cons but I understand that having having sort of looked under the hood and seeing financial statements of a property management company and also just using some commercial common sense it is a very difficult business to make money in and you don’t really get to the point of profitability until you get
(48:43) hundreds if not thousands right of units do you know how many houses under management your property management company has I know it’s not yours but the one that you’re yeah no we I’d actually be curious to look that up I mean I know the the one in Texas probably does at least a thousand um and that’s a good number just in Texas are they just in Texas no I’m saying like they they’d have to do at least a thousand across a few Metro areas I don’t know how many they have in Dallas Fort Worth hundreds in Dallas Fort Worth for sure I don’t
(49:16) know whether they cross that threshold just in Dallas for worth um and then the Florida company I was actually down there last week to meet the maintenance and and also sort of turn it into a you know somewhat of a time away for fun her team had just in the cape CR Fort Myers area um 300 herself and I think she had a counterpart who probably did another 200 so I think they had a bit 500 which makes me think this company in Dallas W worth I would not be surprised if they got well over a thousand in Dallas worth
(49:57) right this this is all interesting CU we haven’t actually talked about this off camera so this is all this is all I’m learning here too and hopefully the lessener is getting benefit from this as well uh the smallest property manager that we’ll use at share is uh 3,000 houses in that City okay yeah so you know when when we’re talking about property manager we’re talking about different scales and context so you know a PM company with 3,000 houses under management that City it’s probably worth something right oh as a business yeah I
(50:25) mean if you’ve scaled to having that many let’s call them contracts because that’s I guess really what they are month-to Monon contracts recurring income yeah we we you know in business valuation speak if we were looking through this or at this through the lens of uh accounting standards and a business combination we probably say that there is some commercial Goodwill associated with those contracts or those customer relationships so I agree I mean it’s different than just one person who manages you know a dozen or two dozen units on their own
(51:05) for individual investors which are all you know all over the place but um I I agree with you that there are a lot of like I was sort of overwhelmed by choice when I was interviewing property managers and in DFW because there were just a lot interesting and then how is that were they were they like wanting your business or were they like yeah I mean they because here’s so different no they they were like the one company had a full-time like business development manager whose job it was to bring in okay business so yeah they they were
(51:44) aggressive and wanting clients right yeah because you’re property manager do they have such such such roles in divisions between responsibilities yeah no he he was a full and you know he pitched himself as I’m an investor too right like he talked about his his units that he owned and how they manage him so it was very much the at least perception that they were trying to sell of we’re investors too we’re not just managers but wow they had they had a person just in business development oh yeah again I’d have never seen this in a
(52:20) local like the no I mean this team yeah like would it surprise me if they had 3,000 units under management like the sort of threshold you look for no it wouldn’t because to support that sort of headcount you would need to be there I think but even like your Florida PM 2 300 houses under management yeah like unheard of well and and that’s that’s in a relatively smaller metro area too right that’s for Myers which is somewhere I think between half a million and a million people depending on where you set the boundaries
(52:57) is it that many I didn’t even know that Fort Myers yeah okay you want to talk about Florida yeah let’s talk about Florida so you know let’s sort of fast forward to 2022 okay so after the the Texas after after Denton which was December 2021 um I was having a little bit of fun with this and it was Omron happened is that right that would be that would be just Fort Meers if you okay if you Google um Cape C Fort Meers MSA okay so Fort Meers is 96,000 population as of 2022 I thought it was that sounds low to me but again cuz
(53:39) you’re all looking at [Laughter] tourists are we are we going to find the population of uh so it looks like 760,000 yes that that sounds about right to me yeah that’s actually pretty big it’s grown a lot over the years um which I think has been a help and a hindrance at the same time but if we fast forward to 2022 um you know I had these two single family rentals they were still even at those prices still fairly hard to cash flow just because I was basically buying them with 100% debt right um so that was more of a capital structure
(54:29) not advising anyone to do these things no that that was more of a capital structure issue than that they would have cash flowed if I actually put the 30% down in cash yes um so I was sort of actually let’s dig into that so why why why would you do that then why would I do that okay so in business valuations we have this concept called a firm’s optimal capital structure right um I like this show well it’s like I’ll take myself back to fourth year strategy class in University where we had to play this computer simulation game and one of the
(55:06) things we had to control as the you know fictitious executive management team was how much debt the company was was taking on and there’s sort of this concept in in financial Theory right that there’s sort of a a graph that’s like a semi a vertical semicircle um in that there’s benefit to adding debt to a business to a certain extent if you’re trying to maximize value for shareholders right um Deb you’re the shareholder in this case yeah yeah I was yeah shareholder my my own little real estate portfolio but even if we apply
(55:47) that principle to business debt is cheaper right in a theoretical sense it is quote cheap cheaper to borrow from the bank than it is to get somebody to invest equity in a business typically because Equity comes with a higher risk right the bank would get repaid first in the event that a business or a property goes belly up and then investors are left holding whatever’s left over so Equity investors typically demand a higher rate of return than a debt lender would MH so you’ve got that element you’ve got the fact that interest on debt for a
(56:30) business or for a rental property is tax deductible so that makes the debt even cheaper and as long as you can you know use debt as a practical tool without using too much of it there’s sort of an optimal point where a business can service its debt use that capital to grow but not overburden itself with too much debt such that you know making Debt Service payments comes at the expense of investing into growth projects or anything else right and so when I when I S just pause you there like what you just explained there is
(57:14) what how pretty much all of our clients got ahead and made millions or multi-millions in real estate and at the same time this there’s this current group of investors who went well past that uh they were they weren’t borrowing cheap money from the bank they were borrowing money from private individuals along with lender fees and much higher interest rates no exactly right there there’s a sweep spot where you can use it responsibly and enhance your returns as an equity investor yeah Sweet Spot enhance your returns yes yes
(57:45) that’s that’s sort of what I think a textbook would say um and yes I had used debt right 12 or 15 years before when I bought that hair on the mountain or when I bought that condo in Toronto most of it was paid off a good chunk of it was paid off and so I had two properties and I I suspect your listeners may be um familiar with the concept of loan to value right they should if they’ve ever gotten a mortgage before right so right at this point because of how much the Toronto condo from 2009 and the Hamilton house from 200 12 had
(58:28) appreciated and the debt balance had gone down over those 12 or 15 years because your tenant was paying your mortgage essentially I now had a very low loan to value ratio on those two properties your mortgage is very small Rel in relation to the current value of the property correct like they were probably worth around that time let’s say one point three million and I probably had combined mortgages of 200,000 right and so what what’s my loan to value on that we can pull out of our phone I think your Equity was 1.1 that’s
(59:13) my mind went well there’s that too but but what was that Equity doing at the time not it was sitting there it was kind of idle so what my loan to value ratio would have been 15% the business valuator and me knew that I could afford to if I looked at the portfolio as a whole and that’s how I looked at it as opposed to a property by property basis I could probably afford to lever up and add some debt if I wanted to grow right if I wanted just to sit back and maximize my quote cash flow then I should have sold and bought properties in cash but at
(59:50) this point I’m still working I hope to be working for a good number of years yet and have a decent amount of sort of career Runway ahead of me and wasn’t necessarily relying on real estate for cash flow just yet my mind sort of shifted more to how can I use this equity and grow REM me again how old were you when we met 28 I was 24 when we met in 2011 so yeah okay now I remember now because you held the record of our youngest client for quite some time I guess I was knocked off my drown at some point yeah then jokan got you I
(1:00:28) think it was 21 or 22 oh yeah that would do it so yeah 22 was the Toronto condo and then I think 24 was the first true rental and then a good sort of decade of nothing and then 35 sort of realizing well this Equity is sitting there MH my business my valuation business was more at a point where I felt more comfortable adding a bit more financial risk to my real estate investing sort of lined up with the timing of when I started looking in the states and that’s sort of why I decided to add as much debt as I did your
(1:01:11) journey to uh buying at least for the states actually most of our clients were very similar very tiny mortgages on their principal residences that’s why they felt comfortable Levering up so just to provide the listener context on who in reality who the everyday investor really is almost nobody has cash um almost everyone’s using or using existing or creating new home equity lines to to invest yeah responsible way to do it yeah no like but Equity can be used as a powerful tool if we think about that Hamilton Mountain House it gave me
(1:01:45) liquidity when I needed M to start a business right I at least had the foresite to refinance that before I quit my job to start my business credit yeah had you know you had income toal when I was lendable um but then I dialed it back for several years while I was building that business because believe it or not building a business from scratch is actually kind of hard and the first couple years weren’t necessarily as rosy as I would have liked but then I got to a point where I felt comfortable adding more leverage to the
(1:02:25) real estate portfolio mhm to grow that let’s call it $1.3 million of asset value into something bigger um so that hopefully down the road that will provide a you know a good piece of the foundation of the whole Investment Portfolio when you go when I go back to your original question of how do I choose to allocate my money um I’m now probably back to being overweight real estate MH compared to what most CF would probably tell me to do but what would a cfp tell you to do well I mean I think most a lot of cfps think more in
(1:03:04) the world of build an 8020 or 6040 portfolio of equities and fixed income and call it a day which isn’t wrong there’s benefits to doing that it’s more liquid it’s less risky it takes takes zero effort um but I also think you know it’s it’s more volid and you can’t use any leverage to do it that way yeah I’ve mentioned it many times a show uh without leverage real estate’s not that great an investment no and you’ve probably said this but I’ll just repeat it yeah please the expert right I mean sure what if if the
(1:03:46) average uh price appreciation for houses longterm is 2% I’m just making up a number I actually don’t know what it is 2% and you know a a 7030 Equity Bond portfolio can get you 7% you should go for the 7% right no not necessarily if you were buying a a a house in cash and earning 2% on that like if you bought that $690,000 condo today with cash then it probably doesn’t make um a great investment out of the gate but if you’re buying a property with some leverage with let’s say 25% down I don’t know what terms your us borrowers are getting
(1:04:45) or your Canadians um borro in the US are getting right now but let’s say 25 or 30% down that 2% asset appreciation so long as the cash that the property is cash flow break even that 2% asset appreciation would therefore be 8% Equity appreciation because you only put in 25% so 2% Time 4 is 8% I think that’s where a lot of people get mixed up reading articles in the financial press of you know real estate isn’t a great investment agree if you’re adding no leverage to the mix um and you’re just accepting that 2% price appreciation and
(1:05:34) getting no cash flow and and and and let me show you something ad can you Google dig capitalist $100 asset that should find me what I want visual visual capitalist yeah that’s the first one then keep searching for add $100 to it $100 you need dollar sign so I love this chart you already blocked four on this page alone so there a stock market scroll down atam okay so $100 becomes I want to go to go to Real Estate because we’re talking about real estate yeah so uh Cas index says that over a from 1970 to 2023 the US home
(1:06:23) prices have grown 5 and a half% so the average house in the USA average so you and I don’t like being average we’d like to beat it but even if we got an average return of 5 and a half% on the property are you happy Adam if I can use some leverage and turn that 5 and a half% going do something higher 100% leverage but yeah yes yes are you me I would be ecstatic yeah no I mean I am but my time Horizon in in that is very long term right I mean there’s this expression I heard once and I think it’s worth repeating you don’t day trade real
(1:07:05) estate oh expensive right transaction and so when you’re gonna buy it your time Horizon has to be long enough to be worth it MH well the REITs their time Horizon is 10 years right the the typical read is they’ll sell the property after 10 years but their time R is high Horizon’s 10 years yeah this ain’t no flipping this ain’t no you know not even five we’re talking about 10 year right so the mentality of big money big big capitalist money it’s very different than the everyday investor other than you and I 10 years
(1:07:41) is no problem for me no and it’s not for me either I mean so I’m Now 37 so when I went back to the deciding to build more my portfolio again I was 35 34 when I bought that first place in Fort Worth and again I I I think that time’s sort of going to hopefully do the heavy lifting for me on those properties in the same way that time did most of the heavy lifting for me um in 2009 and 2012 now are my expectations as high as what they were in hindsight of how the cond in Toronto and the house on Hamilton Mountain were formed from
(1:08:30) 20094 we had historic runs no and so you know I think people just need to be careful and and calibrate their expectations for what’s normal because you know that was not normal 20 yeah 2009 to 202022 so basically I’m going to call it most of my adult life um we saw interest rates move in Only One Direction down we saw real estate prices in Canada and I guess after it recovered in the US move in Only One Direction which was up and I think a lot of people sort of fell into the belief that that was going to sustain itself for the the long run and
(1:09:14) then when higher interest rates kicked in in 2022 the party finally stopped and the music finally stopped at the party sort of like I feared that it would in 2021 but had a little bit of confidence just sort of seeing all the buying activity um that it would continue for a little bit longer and I could at least sort of get into a sound Market um without grossly overpaying and then letting time do its work from that point forward yeah CU again 53e sample here 5 and a half% price increases over over that period
(1:09:48) every year on average on average right yeah no I’ll take that I’ll take that all day I’ll take that um in part also because I think you’ve probably heard this analogy too right I can’t remember where I read it so um apologies to whatever author I’m I’m not attributing this to right now correctly but if you think about real estate investing right um how did this author describe it you’ve got sort of it’s like it’s like a three course meal cash flows or appetizer very hard you know harder to get mortgage pay down principal pay down
(1:10:26) deleveraging whatever you want to call it is the main course just sort of the hold buying and holding the holding is generally what sets people up for success and then appreciation is like the dessert so um if you can buy a property and get 5 and a half% appreciation over a 25 30 year period while that property is being paid off then you’re going after yeah after 25 or 30 years you’re going to be quite quite pleased with that decision I even think back to the days of that Hamilton Mountain House I looked at it more from
(1:11:05) the perspective of and I I didn’t even even though I worked in evaluations at the time I didn’t sit down to actually calculate what my break even rate of return would need to be but if you put 20% down on a house and it breaks even for 30 years or whatever my amortisation was at the time and it pays for itself after those 30 years even if the property doesn’t appreciate I have just increased my invested Capital by a five times right free and cleed offset yeah and then at that point it’s cash flowing so you know it it was sort of a
(1:11:50) fairly easy decision with enough time Horizon to look forward to can we talk about Florida in Florida well we can talk about Florida yeah so I had avoided Florida for the longest time like when I when I was picking my first US real estate investment I ended up in Texas obviously um there were quite literally dozens if not hundreds of markets that you could choose from in the United States right that was actually the hardest part at the beginning was like oh where am I going to start looking because that influences a lot of other
(1:12:28) things like getting financing Property Management like we talked about where to create your limited partnership yeah understanding Market rents whatever I had avoided Florida because of when I bought my first US property which we now know was in the uh Dallas Fort Worth Metroplex I had considered Florida at that point which was 2021 I mean I had some familiarity from going to Florida most March breaks um my aunt and uncle were snowbirds who wintered in in Southwest Florida but I had you know the the phobia or the fear of a hurricane
(1:13:14) hitting my property and uh you know I believe that climate change is real and the number of hurricanes that hit Florida particularly the gulf coast is real and buying a property that was in the potential path of a hurricane was just a bit more risk than I wanted to stomach and so that’s sort of why another reason why I started in Dallas Fort Worth was it hadn’t been quite as prone to extreme weather events in the last several years as the State of Florida had been what was frustrating trading was despite all of the reasons
(1:13:58) not to invest in Florida people continue to move there and you know the party’s still sort of going on to a degree um I think I read projections recently from the state of Florida suggesting population growth of something like 320,000 people per year between 2024 and 2028 um and so in a way it was almost like this is a crowded trade but I almost feel some sort of need to follow the crowd to a degree um and part of it also too is for Canadian borrowers investing in the US one thing you will find is that financing can be a
(1:14:52) bit of a roadblock a bit of a challenge and where I own my two properties in Florida um I was able to work with a great sort of small Community Bank who really did not care about the fact that I was a Canadian without a Us credit score and they’ve been fantastic to work with so everything sort of lined up and then I was also looking for a little just bit of diversification in terms of asset class right I mean in in Dallas Fort Worth I had two fairly nice excuse me single family houses um Florida sort of gave me an opportunity
(1:15:35) to I guess we can say diversify into more true you know multif family in the form of a duplex and then also a seven unit um sort of small apartment building as well which really was underwritten more like a commercial property and a commercial property is actually arguably easier for a business valuator to Value because it’s just a function of net operating income and uh the prevailing cap rate though this was in 2022 when interest rates were already starting to move upward so trying to really nail down what what the stabilized cap rate should
(1:16:21) be was a bit more of a challenge so were you there before before un or after un just before so I yeah so this is my fears of investing in Florida came to fruition um and uh the seven the seven unit building would have closed in May the duplex which was sort of opportunistic and unexpected but it was a listing that I found on Zillow managed by the same management company that was managing the seven unit and long story short was being sold by a guy who had been he he he was a this this is a great story cuz I found I went online saw who
(1:17:02) the owner was but their motivations were for selling and it was a personal trainer and fitness coach who sold nutritional supplements um but I believe that it was concluded that some of his supplements included ingredients that were not totally 100% legal and so in the words of the selling realtor when I called her up one Friday afternoon oh yeah they put him in The Slammer but he’s out now in case you’re wondering and I was like well I wasn’t actually but we H disclosure but yeah but we hammered at a deal that
(1:17:43) closed on September 15th of 2022 and hurricane Ian I believe was maybe 10 to 14 days right after that oh my God and you know at oh yeah it was a slap in the face um and it looked like it was going to go north hit closer to Tampa but at the very last minute took a turn East and um Cape Coral Fort Meers got the brunch of it and I certainly was not spared and all of that but I mean it was a sort of validation of my concern in the first place of the RIS associated with Florida so that last that hit trono and miss
(1:18:26) Saga that was I think it’s approaching a billion in Damages hurricane Ian for context was $13 billion worth of damage yes I believe it was the third most expensive storm in US history and the most expensive storm in Florida’s history H yeah and then how’ that affect your properties so both of them needed new roofs that was the main damage like neither of them are in um flood zones so that that wasn’t the issue it was more wind than water was the problem and for the you know the seven unit building it ended up not
(1:19:09) being the end of the world because when I bought that property um the roof was sort of on its last legs and I was planning I’d already underwritten that I would have to replace that one in the near term and I was actually able to get a little bit of insurance proceeds um that I probably wouldn’t have otherwise gotten on that one to do so but the other the duplex from the inspection I was not anticipating to have to um replace it out of the gate but I did as much of a journey as it was to negotiate with insurance companies in
(1:19:50) one of the most litigious states in America um ended up walking away a little bit out of pocket but not totally scarred I think the I think the bigger long-term issue for Florida and other states prone to naal n natural disasters is just how is the insurance Market going to play out I mean Florida has had a bit of an insurance Price crisis over for the past two years since Ian and that owners insurance premiums have doubled or or tripled in some cases right is that your experience it was my experience that the seven
(1:20:35) unit policy probably close to Triple but that’s not really an Apples to Apples comparison Because the actual coverage expansion increased after we put on that new roof but it was certainly like it it was a huge increase and now I say you know Texas I don’t like the property taxes Florida I don’t like the insurance so pick your poison which one’s worse or find a state that doesn’t have either as a problem yeah that’s why that’s why I’m looking at Kansas City Missouri property tax my property tax on the property I was
(1:21:11) looking at was like, 1500 right or how big of a h how valuable of a house uh 1,200 foot Bungalow um 152,000 sounds pretty good to me yeah off Market rents for 1300 yeah purchase price 152 yeah so you’re almost at that 1% Ru there is a small rental probably like 20 um but again I really like the economic fundamentals of Kansas City Missouri but 5.
(1:21:41) 9% cap rate so that factors in insurance and uh and property tax no I mean that’s about as probably about as good as you’re going to do on a single family house I would think I mean I more for the we have clients getting sevens in the Memphis Tennessee interesting okay bit older house though it’s like 1950s house or 1960s so a bit older um but yeah yeah very good so uh would you do these Florida properties again um I go back and forth on that one right I mean there’s there’s obvious reasons to say no I would never want to do it again but there also some
(1:22:20) reasons to say it was a good learning experience um I developed a very good relationship with this Community Bank um I was able to on the on the seven unit one right it was actually both of them really treated more like a commercial loan and so it was actually a pretty easy approval process I’ve got fairly low rate fixed term debt um for some time it’s being amortized over 20 year period so a good chunk of principle has already been paid down and I guess you know I’m still looking at everything from a portfolio
(1:23:07) wide picture and that over time this will hopefully deleverage um free up Equity or just continue to Del leverage to get to the point that that rental income or a portion of it turns into free cash flow I mean the one thing that the Florida properties got me that the Texas and and certainly the Ontario properties did not was the best rent to price ratio so I mean if we look across the portfolio now I was just doing quick map before I came here gross runs across you know 13 units in separate properties in three
(1:23:57) states or provinces are about 28,000 Canadian now a good chunk of that is in US dollar so that number is going to go up and down with the exchange rate but if I can just sort of let these ride um and pay themselves down that’s $336,000 a year in Gross rents in today’s dollars if I can optimize operating expenses to be about 50% of that then what’s that $168,000 a year I would be quite happy with that if we can just eventually get them paid off over the next you know 15 20 25 years and what do you think you planning
(1:24:45) on any future Investments what do you think your next investment will be I actually think right now my my most rational move is to just sort of wait sit back Del leverage right when when I talked about optimal capital structure earlier I went from having arguably not enough debt on the portfolio in 2021 whatever that was to some might argue the upper boundary of enough or perhaps even too much much so I think you know well the the Curious side of me loves looking at properties looking at new markets going on Zillow um the rational CPA side of my
(1:25:40) brain says probably the best move at this point is to just throw some excess cash flow at a couple of the uh the loans under underpinning everything and freeing up Equity freeing up cash flow um because at this point do I really need to take on that much more risk in my life um the answer is probably not to get to my goals but it all depends on what what every individual’s goals are right I mean um I sort of have an idea in my mind of what I would like my portfolio to be in say the next 15 or so years I can probably cut it off at this point and
(1:26:34) just let the Loans pay down maybe accelerate the pay down of some of them and continue to allocate other money to stocks and bonds as a traditional investing approach as well um but we’ll see ask me in a couple of years and see if I stick to that because I think I probably said that in 202 22 and look what happened I know it’s not exciting for the listeners benefit is though because we have lots of guests who come on and just grow and grow grow and grow but then you know there’s a whole bunch of people losing their shirts because they
(1:27:06) grew into areas during a bad time to grow um now my question would be if you were in buy mode MH where would you invest so because I haven’t been in buy mode for a couple of years now on either oh yeah either side of the Border I don’t know that I’m the best person um to really even give an opinion on this but I guess I can give my my 10 cent or two cent opinion but I mean if we just think at a high level for your listeners particularly looking at the US you’ve got the midwestern markets like the like the St Louis or sorry was
(1:27:48) the Kansas City or St Louis say Kansas City Missouri the Carolina yeah right so you got Kansas City St Louis other Midwestern Market markets are probably going to have better cap rates higher cash flow out of the gate do they have as much appreciation potential as a DFW I honestly don’t know the answer to that question just because I haven’t researched those markets enough to really know um obviously Texas I already talked about I do think the economic fundamentals are there but the property taxes unfortunately just kill the numbers on a
(1:28:27) lot of deals M Florida I’m in no rush to uh deploy any more money into after the you know the somewhat scarring experience the Carolinas have actually been interesting to me because just from very anecdotal small sample sizes when I look at you know rent to price ratios on Zillow while I’m lying on the couch it seems like Charlotte for example North Carolina would be a market that would take a lot of boxes for me and you could probably make a deal work um what I don’t know is just well I I haven’t done enough
(1:29:07) research really on it to happy to share mine with you sorry I happy to share mine with you okay well I’ll you you can share yours in a minute but you know you’re still gonna get a little bit of the the hurricane risk I suppose but not nearly to the extent that Florida would so that’s probably my my piece on the Carolina so I I I think Charlotte could be a viable option if I were to get back in the game but who knows when that’ll be and what will have changed but what what’s your thesis on the Carolina yeah because I was like deal in Savannah and
(1:29:39) the insurance wasn’t that bad I that’s Coastal right so a lot of the Carolinas are coastal as well uh then if you are looking at the Carolinas then you probably want to look near where Toyota is building their next Plant it’s A14 billion investment probably create somewhere around 5,000 or 8,000 new manufacturing jobs so anyone who knows like Honda and Alliston or like Toyota and Cambridge knows what that what that did to their markets wock Ontario what part of what what city is that in I have it in my spreadsheet yeah happy to share it with
(1:30:10) you later um and then OIC the company that manufactures OIC has a $4 billion investment and I think also in North Carolina uh 4 billion investment to create 1,000 manufacturing jobs and uh I’ve heard good things about it um the the weight loss drug yes oh you’re not well no I wasn’t sure if you’re were like I’ve heard good things about the drug itself yeah or the the manufacturing facility where they’re making it I I just the way it came out was kind of entertaining though this is not my field um but again I I have friends in the in the training
(1:30:49) space with patients and apparently it works well and uh you know you offer weight loss in anywhere in North America it’s and it’s if it works there’s a very high uptake on it in the United States anecdotally I believe um and I mean the commercials are catchy right so I had no idea what it was but man they had a lot of money I think they had Super Bowl commercials for probably yeah right uh but then to my point you don’t see this investment in Canada you don’t see an automotive manufacturer putting up 14 billion you don’t see a drug
(1:31:21) manufacturer putting up 4 billion right and those two alone are in the Carolinas okay yeah no that would be intriguing for sure yeah yeah all right any any final thoughts for The Listener like you’re still a young guy and a lot of our listeners are around your age yeah no I think I guess if I were just to sort of summarize some of the things that I’ve some of the themes that we’ve touched on today first one would be time right whether we’re valuing a stock or we’re valuing an OP or we’re thinking about investing in real estate or we’re
(1:31:57) thinking about investing in the form of a small business I would argue that time is actually probably one of the most if not the most variables that can set us up for Success right you know as I said before I let time do a lot of the heavy lifting um in my own real estate investing I hope to continue to be able to do that to your point on age and so you know there’s that saying when you’re investing in stocks time in the market is more important than trying to time the market and I think the same is also true in real estate as well so
(1:32:46) you know regardless of which asset class you’re you’re looking at the longer your time Horizon statistically speaking the better your chances of success so that would be one um number two I probably sound like a broken record but that business valuation concept of of optimal capital structure um thinking about debt as a tool that can be used responsibly to grow I mean I I certainly would not be in the position that I’m in had I not taken advantage of debt when it was relatively inexpensive and I mean I get that we’re sort of at a
(1:33:39) in a completely different era now and things are harder and maybe that means that buying with less Leverage is is the more prudent option than it was you know say two three four years ago but at some point you can calibrate things to make the math work um and and if you’re in a financial position where you have sort of enough cushion to absorb any blows that come your way like a hurricane in Florida for example for example um you’re obviously in a much better spot and so there there is a reason that I hit the pause button
(1:34:22) for about 10 years before I I got back into things a third would be I guess if you’re going to well invest in anything really but invest in real estate invest in stocks being willing to sort of embrace risk and give yourself permission to make some mistakes if you buy a property um I don’t care if it’s the best property the worst property what I can guarantee you is you will probably look back at some point in your investing career and say oh I made a mistake here and if you beat yourself up over it um you’re just sort of diminishing your
(1:35:08) chances of long-term success and I I’ll give you an example here one being that Hamilton Mountain House I think it was not too long maybe a year in the roof on that one went I mean we’ve done the inspection I thought it would hold up for maybe another five years or so but sometimes inspections things don’t according to things don’t go according to plan even compared to an inspection and so it sucked I mean that probably killed the cash flow on that property for that yearh and having come from you know an academic in then a corporate environment
(1:35:49) where we were sort of rewarded for Perfection and for not making mistakes it took me a bit of time to embrace more of a risk mindset and live through that and say okay well this didn’t work out according to plan is it going to kill me in the long term and after I was able to get over that psychological hurdle and think back to that first variable I mentioned which is time I realized a little bit of short-term pain doesn’t change the game plan and that’s how I’m looking at Florida as well right now right if I had if I had looked at that
(1:36:36) new roof in 2013 for the Hamilton Mountain House and let that deterred me from investing and I simply said oh you know on a cash onh basis this year was rough so I’m just going to sell the mountainous and redeploy by the the capital into stocks I’m quite confident I would be kicking myself in 2024 now I I’m not expecting that the next 11 years are going to be like the past 11 years but I do think that having some willingness to make mistakes and learn from them was something that I sort of had to learn um as an otherwise
(1:37:20) fairly perfectionist type person young at the time yeah and and I guess that sort of leads into my last Point too which is just having realistic expectations for people getting started I mean if you’re buying your first investment property in 2024 and you’re listening to this and then 2034 rolls around and you look at that house or that whatever piece of property that you bought and it hasn’t doubled or tripled in value you should not consider consider that a failed investment right the Tailwinds that we had as we’ve
(1:37:58) discussed for the past 15 years or at least as long as I’ve been owning property you know it’s easy to say oh of course this worked out because you bought in 20 2009 or 2012 and you would be right like it it makes it look easier than it actually is real estate investing has some hard moments to it and so I would just encourage people starting to invest to sort of level set their expectations and give themselves enough time so that they can achieve that five and a half percent sort of long run and it truly needs to
(1:38:39) be long run in order to have a a good likelihood of achieving that chart before if you work at the stock number mhm which is the big performer mhm it works out to just over 10 a half% right including dividends for the S&P 500 okay so like Leverage example leverage example of Leverage real estate would beat that W easily yeah you’d be in probably the low 20% range may maybe less than that if you’re a Canadian buying in the US and only getting 30 or sorry 70% loaned value but yeah somewhere what 22% maybe even 25% if you’re lucky 18% if
(1:39:28) you’re not using as much leverage which would probably be the case in today’s environment for uh for us property certainly but we’re also not including mortgage pay down right or cash flow exactly that’s yeah that this is just the dessert piece that I talked about earlier the dessert piece which we’re very happy to consume yeah it’s taste to dessert but oh yeah as you eat your cookie it’s what makes us rich right all right Adam thanks so much for doing this it’s been I think I’ve been bugging you for a while to come on this show I think you
(1:40:02) have no this was fun um it was good to be here hopefully the audience can take something away from this um but I I genuinely am a student of this stuff and love talking about this sort of stuff so it’s been fun where can people follow your journey should we give them your website yeah I mean yeah yeah you you can sort of find my contact info on my webite it’s synthesis valuations.
(1:40:36) com I don’t know if you have show notes or something you can put that in we’ll put in the show notes yeah and then you can also find me on LinkedIn as well if they just search Adam R Johnson they’ll find you Adam N Johnson in fact I think if you go to linkedin.com and Johnson see what pops up no not the English English football player he looks just like it he’s also a convicted felon I believe oh is that a problem at the airport no well no I have an exess carard but 3100 Adam Johnson’s in LinkedIn try try doing Adam Johnson um CA CFA CBB oh yeah those are unique
(1:41:30) identifiers there you go look at all those letters I love the links in the short notes I’m Johnson CPA CA cbv CFA that’s so you’ve proven you’re smart I hope so and then yeah like I guess you just don’t well both in but done well both in real estate and business if you say so sure yeah I don’t know the numbers but you would no I mean I I’m sort of happy with what I have built right I mean real estate investing sort of one piece of it running my Consulting advisory business is the other piece of it um but I think between
(1:42:20) the two I can hopefully over the long term you know build my own destiny and that was sort of the Catalyst for all of it right yeah including quitting your day job and I remember the day you told me you you’re quitting your day job and yeah that was eight years ago that was eight years ago and it’s been a fun eight years and that’s why I was wanting to pull you on the show like real estate gave you the freedom give you the working capital to take that leap it did yeah in that sense that mountain has has been the gift that
(1:42:48) has continued to give because it funded the creation of the valuation firm and it continued to fund the the US purchases down the road so lucky perhaps yes but there’s that saying I’d rather be lucky than good any day of the week and if you can be lucky and also try to be good make smart decisions um take some lumps but still try to minimize your mistakes then that’s sort of the the best case scenario I prefer the definition of luck being the intersection between opportunity and being prepared something like that yes
(1:43:33) all right we’ll leave it there thanks so much for doing this Adam you’re very welcome good to see you thank you for watching if you want to learn how to invest in real estate from scratch my team teaches beginners how to use the number one investment strategy that I personally use in a virtual free training class every month go to investor training.
(1:43:54) com also in the description as well I publish at least two to three videos a week here so subscribe if you want to keep learning from seasoned investors like myself and my guest and if you’re just starting out feel free to ask questions and comment below and I do the best to answer each of those comments and questions myself again if you’re ready to learn the nitty-gritty about real estate investing from a professional investor register for our next virtual class that’s at investor training.com

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** Transcript Auto-Generated**

(00:00) rainy in Canada’s population growth rents are flat across the country in Canada as international student interest has cratered how does that affect your investment hypothesis short-term rentals part two with experts Spencer and Ashley quote Mary sooner have more kids ignore the cost says Uber catalist Kevin nor uh big announcement and so much more on this week’s episode of the truth about real estate investing for Canadians my name is Rano your host and producer since 2016 and 300 plus episodes later all an hour long or more
(00:34) uh thank you to my listeners and for the kind words you’ve shared and thank you for the updates and your personal truths around your own real estate investing uh I appreciate that anytime someone tells me a story about uh how their Investments are going that helps develop the investment hypothesis of myself in this show uh in some Sumit related I did not know that so many of my fellow podcasters are no longer releasing new episodes uh many of them are my friends and there are some I believe who should stop a simple Google of the names of
(01:06) folks who borrowed tens and hundreds of millions and are going bankrupt uh that alone will let you know uh who gave them their platform and promoted them and some of them even earned Commissions in helping them sell what are now uh defunct Investments uh always I always follow the money understand how folks make their money um I’m always very happy to explain how I make money in real estate uh both as an investor and in doing business development for real estate for example I am a realtor in Ontario and I am and have another announcement to
(01:36) explain the US stuff so I always fact that into your screening process of who to trust and what investments you should be investing in I review many many many deals all the time uh now onto the news did you know that the FrontRunner to become our next prime minister of Canada said he would reduce population growth to match growth of new homes built and factor in health care access and jobs makes a lot of sense now I’m not here to discuss politics I just look at the trends from the polling data Pier po looks like a clear clear
(02:07) favor to be our next prime minister looking like a majority so again all I’m doing is trying to factor in where where things are going and how that should affect my investing because why I don’t really care to discuss politics with anyone I’m more interested in what this means for my clients and my business and my investments of course I always have the uh Source sources Linked In My Show notes again this was an article from the CBC uh again Link in the show notes uh now a couple problems uh housing starts across
(02:37) Canada are way down as building and development costs are extremely high it is real estate winter a lot of people are not buying all interest rates are still remain high new construction sales are low as the market needs time to digest these historic number of new construction condos and historic number of listings especially the small condos uh which could take you know one and a half two years per Benjamin tall de deputy chief Economist for CIBC uh I’ve again I’ve posted some uh charts if you don’t follow Dr M Moffet
(03:09) on Twitter I can’t recommend that you do enough uh because again he posts brilliant graphs and data and commentary on housing markets uh and of course things like International students housing starts anyways again I’ve got a link to show notes on some posts from Dr M Moffett uh for example Toronto Toronto housing starts this past year are are they’re above 2021 and 2022 but uh yeah I don’t think anyone’s confident that will last for very long uh not with uh sales being quite low especially in new construction sales being quite low
(03:45) across Canada now combine that with Flat runs across Canada as demand from International students have cratered again I posted a um a snap a screenshot of a post by Dr Mike Moffett uh from early September how international student reforms the federal government have made earlier this year have provided substantial rent relief uh we did not see rent spikes across Canada uh rents are actually quite flat over the last 12 months from August 2023 to August 2024 and so if you’re not familiar with that happened the federal government
(04:20) wants a 35% 35% reduction in the number of international students and uh the stat that I’ve seen is that applications are down 45% so uh um yeah the Global Mail is reporting how Google searches of student housing near universities in watero Hamilton and Kingston are down 46 to 55% so we’re seeing data points that that several data points that reflect a declining interest significantly reduced interest by International students um so personally my investment hypothesis is forever changing uh I’m constantly learning and uh that shaped my own
(04:57) experience and what I hear from Real Estate experts like real ones and I’m always looking at what they’re doing with their own money my hypothesis is focused on cash flow long-term growth in rents and prices if if that was news to anyone for the local investor knowing that rents are flat and in the current market again this is current market all we can ever do is understand what’s in the current market and make predictions with what we have to predict with and reduced demand from International students and immigrants
(05:27) what do you think will happen to your cash flow uh your rent growth and appreciation over the long term right I still have a number of properties in Ontario Canada so I’m concerned I’m concerned if lowering interest rates and lack of Supply will will be enough to push my prices up because yes i’ absolutely love prices to go up and rents to go up in Canada especially in Ontario where my properties are um however with economic and immigration landscape the way it is should a Canadian investor invest their Hardware earn money into local markets I
(05:57) personally know I would not deploy more Capital into long-term rentals at least were in the in the markets I invest in Ontario now on the other hand legal short-term rentals in hotels that’s another matter uh as a small airb operators get squeezed out by governments um they’re incredibly out of favor even though they cause very little disturbance to long-term rental markets anyways this is exactly why we have experts in Ashley and Ashley and Spencer back on the show but before we get to them can you believe Kevin ear said take
(06:28) my advice get married sooner have more kids family is everything that’s what it’s all about do you agree and now I’m just quoting exact the exact post on Kevin’s Uh Kevin rers on his social media page specifically his LinkedIn again I’ve post a link to his LinkedIn uh on sorry his his Instagram his Instagram anyways again I posted the the link to his Instagram in the show notes Uh Kevin explains how he wishes he would have spent more time with his kids when they were young and I couldn’t agree more I’ve interviewed hundreds of successful
(07:02) entrepreneurs and investors almost all of them would agree with Kevin in how parents will can never get back those wonderful years of development while kids are still young my decision to make my portfolio more Passive by delegating to share U who ass managing my Assets in the US free me up to do more to spend more time doing what I enjoy which is my work including this podcast and helping hardworking communs their towards their on their Journey towards Financial Peace and uh when I’m not working I love to spend time with my wife and my kids my
(07:33) kids are a lot of fun at the age that they’re at they still think I’m cool and they laugh at my jokes all the while with my real estate portfolio especially in the states uh I’m still a direct owner uh which is what I consider and what I consider the best asset class which is real estate cash flowing real estate while maintaining 100% control while someone else does all the heavy lifting for me uh shares business is exactly what I envisioned for my own Professional Services as a realtor and guing my clients as a coach because I always
(08:01) wanted them to have uh as easy as possible real estate investing as operational easy as possible and to be as passive as possible in Ontario but that’s just not possible in this market landscape with affordability being so bad when so many people can’t even afford to cash flow enough to afford a proper manager uh then you add to that rank control so then your your cash flow doesn’t ever get better while inflation just gets worse and of course tenants have all the rights in Ontario and uh that’s what I’m hearing from my
(08:31) BC friends as well um now I’ve got the big news to share that I’m incredibly excited about as you know my real estate Journey started way back in 2005 when I became a novice landlord and then I got serious in 2008 when it worked out really well uh that’s when I began formally learning about real estate investing treating like a business and since then I’ve always had my eye on landlord friendly USA economic fundamentally in landlord rights it always made a lot of sense there’s better cash flow more stable tenant laws
(09:00) as in like in favor of the landlord Etc but the challenges of getting financing building a power team I could trust finding the right deals IM managing properties from across the border just kept me from jumping into that market well I’m thrilled to announce that I’ve recently taken on a new role as head of Business Development for in Canada for share this partnership is a GameChanger for anyone looking to invest in the US market like I have always wanted to do like I am doing now uh I bought a house in San Antonio Texas just recently
(09:27) shares limitated all my hurdles that once help me back financing we have the contacts one of them just emailed me today they have now they have now signed 4,500 lenders ready to lend to Canadians deal sourcing including including off Market check ongoing Property Management we at share can handle it all with share I get to be a passive us landlord uh I’ve been a landlord for 20 years so I have plenty of experience I’ve own over 40 properties personally I don’t enjoy it and will gladly pay someone else to do it while I get to go while I still
(09:59) get to remain a direct investor uh with 100% ownership and full control 100% of the equities mine I the pay fees it’s dream contr true for me as a nerdy investor I think you all know I’m a really nerdy investor I’ve comparison shopped so many deals over this even just this podcast of well over 300 interviews again I get to keep 100% of the equity and that’s exactly how my 45 past clients made uh the ones who made a million or more in investing in real estate they had control 100% of the equity they gave none none of that
(10:30) control or Equity up so if you ever been interested in us real estate investing now is the time to take a serious look uh if you’ve been waiting for the perfect moment to invest in the US but didn’t know where to start this is probably it the best place to start is uh my website i. Shar sfr.fr Day morning we have limited seats in person and they always sell out so check it out buy if you want to come in person make sure you buy a ticket ASAP again they always sell out if you if the $30 entry fee is too much for you I’m
(11:09) offering another free training event in late November obviously it won’t be nearly as in-depth and detailed as the US investing Workshop but at least it’s free and that’ll be in late November the writing’s on the wall I don’t see much of a future for everyday investing in Canada when deals are that we’re finding at share are just simply better on to this spe show uh a topic that I’m a big fan of indirectly we’re talking about avoiding long-term rentals in tenant friendly provinces like Ontario hence we have Spencer and Ashley
(11:38) Giles back for round two if you don’t already know vacation rentals are a business 247 businesses uh for some airb managers Airbnb managers like Spencer and Ashley who are are pretty for forward about that uh so they’re back to share more we’re going to dig deeper into the strategy because last time we only had an hour this time we’re back to dig to go you know level two get more into the details of the strategy including operating and owning airb bees in the US their management portfolio consists of over 50 properties some of
(12:09) them are their own the vast majority are for clients and they’re are quite spread out uh they’re all over they’re all in great markets across Ontario and Upstate New York which they more recently expanded to just the last few years so they have a lot of diverse experience to share they have a l they have a lot of experience to pull from in terms of what the best practices are and I always love learning from people who know their stuff who are doing it who put their own money into it and yeah my experience was
(12:37) the people you want to learn from just to follow Ashley and Spencer their website is I sure said Spencer and ashley.com Spencer ashley.com and their Instagram is also Spencer and Ashley on Instagram please enjoy the show [Music] about yourselves sure so we’re Spencer and Ashley Ashley and Spencer will go either way um we are Canadian Real Estate Investors uh predominantly in the short-term rental market we have a short-term rental management company which is travelux so we co-host basically for owners in the short-term
(13:17) rental space and then we also own a couple short-term rentals in Niagara and a little bit in Upstate New York very cool and then your Instagram handle is literally Spencer and Ashley yes very easy yes very easy Adam doesn’t follow you but this is Adam’s account it’s not my account so so again so we you’ve been on this show before so we’re here for like a part two to expand on everything um uh before we recording we talked about like the three levels of being in short-term rentals can you explain what that is I
(13:50) don’t think everyone definitely not understands that there’s definitely like multiple ways that you can get involved and there’s just different ways that you can go about it obviously the purchasing of it and you know doing everything with your capital in where you’re acquiring a property and then turning it into short-term rentals you know that’s one then there’s the Arbitrage model which is where you’re going to landlords so you don’t actually own the property you’re going to landlords and getting them to agree to letting you kind of
(14:15) suit on Airbnb or other vacation rental platforms so you know you’re you’re usually putting your your smaller down payment of rent first and last maybe security deposit and then the cost of furniture so it’s a good way for people to get in and um get their skin in the game for a lot less money and then there’s the management side which is the one that we we do we don’t do any Arbitrage at the moment uh and that is just giving out our expertise and time to investors so the investors are buying the property they’re Furnishing it
(14:45) they’re putting all the capital in and then they’re essentially handing the keys over to us to run it for a management fee um so it’s very little Capital involved for us as the management um but they’re getting more of like a hands-off experience right they’re getting the revenue management they’re getting the the cleaners the complete operation system our expertise without having for them to to kind of dive in and um get their hands dirty there so for the novice’s exper uh per for for their knowledge so what’s the
(15:14) day-to-day for your for your client then for our client uh we try to make it hands-off as possible so they typically come to us when they’re they have a property it may be furnished it may not be we kind of help them with like our supply list this is what you need to get to the property so they have to do upfront work on getting the house furnished and um getting all the supplies there and we help we have resources and like an onboarding specialist who we helps guide them and then once the property goes live like we
(15:42) like to make it very hands-off some owners like to be a little bit more Hands-On like they want to know about maintenance items or about supplies needed but we have some owners who we speak to every 3 four months and they get sent their money every month with a detailed statement breaking down all the income coming in all the expenses and they obviously get the diff difference they see our management percentage coming off the top as well and they get the money directly into their account every single month so it kind of depends
(16:11) on the owner itself and that’s why we actually as a company have an owner Avatar so we’re going after working with certain types of people because it makes our lives a lot easier when they see us as the subject matter experts and they let us do our job for them mhm yeah tell us about tell us about your avatar so yeah explain what an avatar is and then tell us about who that is sure so an avatar would be someone that you’re looking to either work with or um just like either personalities or like someone you’re trying to Target to to
(16:41) work with that you’re you’re looking for like an overall profile of a person so for us with our owners it’s more investor investor mindset um who want to be more hands-off so someone who typically is in like maybe different areas of real estate and just want to get into airbnbs but don’t want to run it themselves see that property as an investment property to make money and not like a vacation home or a second home because they’re not as emotionally attached to it because when our owners are emotionally attached they tend to be
(17:09) a lot more involved uh and that just allows us to be able to do pricing the way that we need to do it getting the supplies there that we need to do just getting approval for any bigger items that may be needed and otherwise they trust us to run it to have a five-star review and make them the most amount of money because the way that our model is is the more money we make our owners the more money we make right so then someone who wants to use the the property as well that’s not your client we’re okay with that to an extent like obviously
(17:39) you have high seasons and low seasons and you know you have Gap fills and calendars so like you know we definitely don’t recommend our clients to rent out their place on like to use it themselves on like a long weekend because you know a lot of the times we’ll say like hey you know this is your property and you can do what you want but just know that you’re giving up you know $1,000 to $1,500 a night when you’re going to stay here so so it’s that we we’ll always try like not try to talk them a lot of but well certain properties certain
(18:04) properties are less but like you know again I’m talking about like kind of like our our our higher-end portfolio ones where we’ve had people say like hey you know what’s the opportunity cost here and we’ll tell them and most of the time they’re like yeah okay we’ll pick at different time so you know the the benefits of owning a vacation rental and we even get to benefit this with our especially our ones in elville is you can go down and use it but we as owners are more last minute cuz it’s so close we’re basically saying hey if it’s not
(18:31) booked by tomorrow we’re going to go tomorrow we’ll just block it off for two days it’s a week it’s a week day it’s you know not as big opportunity cost versus blocking a weekend during the middle of ski season is like a no-o zone for us because I know that’s thousands of dollars that we’re missing out on and you know I’d much rather have that towards the investment than to go down and and ski a 60-second hill now you uh we you touched on Rental rent rental Arbitrage that’s the term yeah can you explain uh why you don’t do
(19:02) it like I just see like for a while I saw quite a bit of marketing on selling courses and businesses that that did that yeah I mean there’s it’s not that we don’t like it I I think it’s actually a great opportunity if if you can get involved it’s just we kind of naturally gravitated towards the management we found it was a little bit easier to to scale and and and to move with um essentially you’re just you got to convince the landlord that you’re going to be doing this you can’t you can’t lie to them and say I’m going to rent it and
(19:32) then all of a sudden they find out it’s on it’s on A or B and B um you know we just found it more appealing that instead of having to risk putting money out with rent first and last month and and Furnishing it you know why don’t we just manage it have our clients put all the Furnishing in and then they they you know they do the entire investment with our guidance of course and you know really kind of make the same amount of well it’s a higher return really but it’s same amount of cash flow if you want to look at it um like I said
(20:06) nothing that we you know we we’ve even looked at doing Arbitrage especially like down in the states we still like the model it’s just we’ve always gravitated towards the management side and the scalability for management is faster as well like you can take on 10 clients all at one time whereas it’s a little harder for someone to find like 10 units and have the income and being able to furnish all 10 units at one time and get that all set up whereas our overhead for the company and for management especially as you start out
(20:35) is very very low so you can take on all of that business all at one time yeah and like obviously like anything there’s regulation changes you know if you’re in a specific building that originally allows it and then the HOA votes against it and you know now you’re stuck with all this furniture that you you might have to get storage for like those are all things that we kind of factor in as well um but I mean that’s you know that really only happens to people that don’t do the research and they buy in something where they don’t realize that
(21:02) hey like this could happen and they get stuck with it you know the people that do really well in the Arbitrage they do their homework and a lot of the times they’re getting all their money back in six months six to 12 months anyway so they’re really you know after that first year they’re they’re in it with essentially no money attached to that and they’re making good cash flow so you know there really isn’t like the best way to do it it’s really what you’re comfortable with if you’re good with negotiating with landlords and getting
(21:27) them to you know like you lease it and you can get a good rent that’s fine I mean yeah you’re still dealing with the landlords but on the management side you know it’s I wouldn’t say like there’s definitely downfalls to that too now you’re dealing with like you said owners and people that can be emotionally attached to the property um and that’s why our Avatar is straight investors that are looking for an Roi and they’re not as emotionally attached to it because we say like hey you should add this they’ll do it right and they see
(21:53) the return in it and we make sure to highlight it like hey you added this hot tub last year January the year before you didn’t have it you know you made Seven Grand this past January I just want to congratulate you cuz you you went over 10 right like I know there’s more track records and other things that come involved but I guarantee you that hot was a big factor right and just showing them that like hey you know you trusted Us in making that purchase and here’s the ROI that kind of backs that now the next time we we we go and say
(22:19) hey you should add this they won’t they won’t question it so that’s kind of the Avatar that we’re looking for the people that will see the value at and they’re okay to reinvest back into the property as well yeah we we were just this past weekend where we rented my friends rented a a farmhouse in AIA I’m I just stayed and book it but then literally my buddy that we’re driving up with is asking is there a hot tub and I was like I’m okay that there’s not a hot tub because we got a really cheap room rate perfect yeah so you know uh but
(22:49) yeah it seems to be a good thing to do to hot tubs now I want to talk about the like the darker side of of this business uh like there’s many reason like I’m an extremely risk verse anyone who this show knows I’m extremely risk adverse I I have a million reasons not to do anything and they’re all not always rude in reality that’s why we have experts on the show like yourselves to talk to it uh like for example like a like the cottage that we go to uh that our friends own this past Christmas they had the the septic was
(23:19) backing up right and so the owner had to go drive up and he’s pulling animal fat and feminine hygiene products out of the out of the whatever on Christmas yeah this is not my idea of fun because how do you even find someone to work on Christmas to deal with something like that yeah I don’t know how much you have to pay someone to deal with that at that point if there was guests there I would be like I will pay you triple cuz it’s always has to do you’re in Hospitality right like you’ve kind of left real estate we say this all
(23:48) the time once you get into short-term rentals you’re in Hospitality hospitality is 24/7 7 days a week there are no days off if a guest messages you at 10:00 at night you should answer like if a guest messages you at 7:00 in the morning you should answer on weekends on holidays especially on holidays and weekends right so um yeah and sometimes you have to be the one if you’re the owner of the property to go and fix the problem because a guest is there and that is definitely a big downside and finding trades to even go and do it that
(24:18) you trust has been can be very difficult in certain areas yeah forone says that uh airbnbs and vacation rentals are passive income it’s completely false it’s not it’s a lot of work right it is it’s like we get joy in it because we get a lot of families that come down and it’s it’s how you make that guest feel when they show up to the property like we do a lot of like surprise gifts and kind of try to go one step over and above like if they’re down celebrating like a birthday or something we’ll we’ll deliver cakes with their name on it a
(24:46) bottle of champagne like small things like that where they don’t expect it so the second they show up to the property they’re like wow you know and and creating very unique properties where they’re creating memories with their families like that’s kind of what we’re trying to portray to all of our guests but the dark side of it is that when it things go south and they’re having a bad experience like it’s it’s not only a lot of work in a pain but it also feels bad right like you feel horrible I generally feel horrible when someone does not have
(25:13) the experience that we try to give them so yeah like I said we’ll do whatever it takes to to try to turn that around because I guess you know maybe it’s just the human nature in us but we travel a lot and we go on vacations and we know how important that is to us so when someone else isn’t having that great experience that we want to try to portray you know we kind of put ourselves in that shoes and I guess that is kind of the dark side because there’s a lot of days where we just like we we we get brought into that right we feel
(25:41) that like hey now we’re having a bad day because they’re having a bad day and when you have 50 plus properties there’s a lot more things that go wrong and can go wrong so it’s hard to kind of detach yourself from that without not caring and the things that go wrong like to go wrong when you’re out for dinner at a family event at the movies you know New Year’s Eve New Year’s Eve you know that’s when they tend to go wrong and you have to get on the phone you have to you have to deal with it but I think having a strong team is crucial for any
(26:13) short-term rental investor and I love that I love that you say it what I find is with novices they don’t want to know what a strong team looks like that’s fair like before we were recording I was talking about my friend who you know who works in Tech sales in Toronto and her partner failed her including their team so she’s up there on weekends on her hands and knees refinishing the deck and trying to figure out how this make the creen the the pool go back to clear versus this screen right now MH like I can’t imagine what your well the reviews
(26:42) are pretty bad on the yeah it’s the scorecard can you imagine like what your reviews would be if you’re pool screen I would stop renting I would stop renting eventually your listing will get suspended if you have enough enough of those bad reviews right 4.1 is pretty low isn’t it for every 4.2 is usually in suspension range so they’re probably very close to Airbnb saying get your together you have we’re going to give you a few other chances but if this continues to go this way they will suspend your listing and you have to
(27:10) appeal it and it usually blocks your dates for a few weeks and it can get messy right so you have to usually nip that in the butt that’s why I said like if you are going to hire someone to manage your property you there’s there’s a few things that you want to ask them about on how they run their operations like I’m a big Revenue management pricing person so ask them about their pricing strategy do they have an extensive pricing strategy do they know what they’re talking about are they looking at lead time which means how far
(27:35) in advance that average guest is booking um for that each specific month what kind of discount strategies do they do in high and low season like those are things that I would ask if we were to hire it but also what does your operations accountability look like you know how do you work with your cleaners how do you hold them accountable how do you ensure that they get the place set up so the pool’s not green when your guests show up how do you you know how do you hold them accountable to that right are you just trusting them do you
(28:00) have a system in place you know good management companies will have answers to all of those things um obviously everyone’s human things are you know things can break and things can fall apart mistakes can happen but you know that’s another question I would ask is you know how do you handle a bad review or a bad situation with a guest and just making sure that if you are going to pay someone cuz you’re usually going to pay anywhere from 18 to 25 plus perc of gross rents with management um you want to make sure that they’re adding value
(28:30) that they’re going to bring you in more money than if you were to run it yourself right um but you’re not a miracle worker no no and you probably could have bajillions of clients if you service like Moka and karthas now actually made the point that you want your your the ideal client and it sounds like probably the more successful investor separates personal use from business mhm so can you explain why you’re not in MCO are you in cors we are in cors yeah we’ve got over 10 properties there and growing quite quickly but um so it sounds like you can
(29:05) build a business in corus not so much mccoa we’re not saying we can’t build a mccoa I think what I said before maybe it’s harder well we’re looking for one key thing one person yeah so we just said we don’t like we have very strict rules for who we work with but we hold ourselves to a very high standard as well right so and the people we work with and the skills that we bring to theable and we can’t if we’re Spencer and I aren’t phally in that location we need another us who is there who can be the boots on the ground and run it properly
(29:37) like we would love to we get people all the time like on Instagram being like hey I’m in this area I’d love for you to manage it and like I really appreciate that but we don’t have any of our systems set up up there and it would be irresponsible of us to just say yes let’s just do it for the money knowing that we’re not 100% confident that we could give our best best service without properly going through the due diligence of finding our territory manager who’s our boots on the ground of finding and vetting and testing out cleaners because
(30:08) cleaners are integral to the business right there’s cleaners who clean just for the money and there’s cleaners who clean and care about the property who will spend the extra time or say hey your pool’s green I’m going to stay until it’s fixed or I know a guy who can help you and they’re so invested and that’s what we want is people who have vested interest in the property without having ownership because they care and we will pay more for that and I find a lot of novices will be like what’s the cheapest cleaner that I can find and
(30:36) then they get upset when their cleaning reviews aren’t great or their house is being isn’t being taken care of properly well they’re not reliable typically not reliable well that’s the worst then you have someone showing up to a property not clean or not clean properly this is Hotel standard clean right and we have very like Spencer already said it we keep we hold them accountable and we’re very strict with them but we also pay a premium like we’re not paying $50 at clean we’re paying almost over $200 for some of these people per clean right
(31:03) plus garbage removal plus uh pool maintenance if needed right you need someone who’s maintenance who’s able to go around at a moment’s any moment’s time like we’ve had um AC units at 8 9:00 at night cut out in the middle of July recently and we’ve had a guy there within half an hour mhm he doesn’t work for us he’s just a contractor but we pay him well to do this I just want to emphasize the point point that you brought up is like you need to separate investment from living from use like for and again I find it often comes with
(31:37) with novices um and again it’s just really just lack of Education I very common I get people calling me asking for they want Florida and then I’m like have you Googled Florida Insurance yeah right and then once they do and then like okay now once you’ve done that Google yeah Florida 30-year-old condos right because because the a Condo building collapsed back in 202 killing 98 people which Miami uh I forget which it was a Cal City I for which one but like I just can’t believe that happened in America that that a building
(32:12) collapsed my point is that um separate recreational use from investment MH because with with a different lenss it tells you different things I love Florida I’ll go to Florida I’ll go rent I love M skoka Cottages but them I won’t buy one right I’m glad to pay thousands of dollars that we do for a week so that I don’t have to deal with the maintenance and um I’m not in that business and my experience is similar to yours that it’s hard to build a team in certain areas definitely and that’s what I’m trying to extract from you with
(32:44) being experts is if if you uh you know for for listener if they want to get into this business strategy go to areas where you can build teams yes 100% And typically we start if someone’s starting out in this business like we always say start out where you are like in your own backyard or somewhere close to you or an area you know really well because you’re there and you can have a bit of control until you kind of get it together and you know what you’re doing yeah learn the business exactly and we do like working with owners even with investors
(33:13) it we don’t mind that they want to go use the property from time to time like Spencer said because we want them to have pride of ownership we want them to see this as an investment but be proud to be like hey I’m coming during the week in October which isn’t as like High season um and I’m bringing my friends CU I can’t wait to show them the property because if they have pride of ownership they will invest back into it they will maintain it because we don’t have ownership in this property we can say hey you need to do X Y and Z but they
(33:41) could say no yeah even our JV Partners that’s like part of it it’s like yes it’s like you know what you might be giving up 1% or 2% on your cash on cash return but you get to go down and use this thing you know obviously we’ll we’ll we’ll we’ll steer them away from those weekends but if they go down with friends like it is that emotion that like hey we we created this unique space this this really cool thing that people come down and use and love and it makes money MH can we show some pictures uh yeah uh we have to
(34:10) go I don’t know if it would be on our uh on our feed do we have uh anything on our Instagram be more so yeah cuz I I think I’ve seen well like this one here the middle one that’s from the balcony of our one in N Lakes one of our uh with a JV partner so yeah this is off the master the master suite um this is what people wake up to in the morning right and it is like you know something small but like again these are like the things people go out there with a coffee in the morning and the sun rises just to the left of myself which
(34:45) also overlooks Vineyards so you go out there early enough it’s it’s quite a peaceful morning and that’s why we love these properties in Niger and the lake where you you’re not staring at houses you’re staring at Vineyards right right yeah it’s totally different feel when you have a coffee on a porch staring at a Vineyard than and we don’t typically stay at that property it makes it does really well and we use it very much as an investment and we live like 20 minutes away but just experiencing that uh I was like I
(35:14) am so proud of this house and I’m so excited that other people get to experience this very cool and it it financially does really well what’s so what’s like a weekend how do you guys July and August are definitely your highest um we’re we’re over 1,500 a night on the weekends over a th000 during the week um that we’re getting like this this property here it brings in um over 150,000 gross a year that’ss about 65 to 70 a year the last three years it’s done in and around that um we’re we’re going to make some additions to that property I think
(35:51) though to uh is it yours yeah so we’re well it’s a JV so we’re we’re yeah so we we have ownership in it um but again we the way we had it is they were the the money partner we were the operations so we took care of a lot of like the renovations and getting it ready and we do we run everything so what kind of additions are you planning well uh there’s two things that we want to do uh that we’re back and forth the the main one is we want to do a sport court pickle ball specifically it is like a super popular sport and our guest avatar
(36:22) for this property is 40 plus year old couples a lot of families that we get um because it is a higher nightly rate that’s typically the the guest that we’ve seen come through in this space and we know that you know 40 plus year old people they love the sport of pickleball but also families love being able to have that activity on this property because a lot of people do spend a lot of time at this property because it has the hot tubs the saunas The Vineyards it’s got a nice outdoor patio um so spending a lot of time on
(36:52) site yeah like they’re coming there to be immersed in The Vineyards right yes they’re going to Wineries and they’re going into Old Town haager in the lake but they’re also spending a lot of time here in the mornings and coming back here for dinners and um just taking in the scenery because they’re paying for that right that’s what’s kind of nice about creating these types of places is like you know this isn’t a place where people are dropping their bags off and leaving like we’re creating an experience that they’re going to hang
(37:15) out at so you know the the pickle ball Sport Court we want to do like a basketball in there as well um just that gives that little extra uh influence for people but also you know they’ll get to enjoy it a lot more as well and uniqueness but we do there nothing like it yeah we do have a barn there that’s pretty worn out that we’re considering turning into like some sort of games room hangout space it’s got like one of those um sliding door garage doors that we want to do like a glass one with a pad that overlooks The Vineyards so
(37:46) that’s probably three to yeah three to five your play yeah we we think the the sport card will definitely bring in uh a higher Roi but the nice thing about that and what really excites me is there’s no data on it right we can’t really put uh an exact marker and how much more it will bring in but that’s what excites me about it because no one else has it is that like you know I know that it’s going to bring in more money but what excites me is that no one else is going to have something like that so how much
(38:15) is the exciting part this will be interesting to follow uh before we recording uh we were talking about how uh a lot of people are on the news for the wrong reasons um I’ve I’ve talked about it many times one one of the lessons from the financial crisis was whoever went under usually was because they couldn’t support their debt right U and then in today’s news it’s people generally hard money loans and they can’t support it now so my question to you was uh how do you finance a short-term rental it’s a lot tougher in Canada now
(38:50) um most lenders won’t touch short-term rentals I know someone like the B and C lenders will I I know that they’re talking about ch changing that like I said we’ve moved more into the states for that reason cuz they’re a little bit more accommodating when it comes to short-term rentals um but yeah that that is the challenge when you are purchasing now is you need to be upfront with the mortgage lender on what this property is going to be I know there’s a lot of people that will say you know what I’m thinking of moving in here and then they
(39:20) change their mind but again that’s that is not something we would recommend doing because if they do find out you can get in a lot of trouble for that um so that is the the Big Challenge I’d say in in Canada right now but um I would just say talk to your mortgage broker see what you can do before you uh before you purchase anything if you are going to go that route right cuz for me financing drives a lot of my decision- making for for investing um like I’ve I’m self-employed and I’m capped here in Canada and everyone runs into a cap
(39:52) versus in the states it seems to be much there’s way more options mm uh so what what would the what would financing look like in the states well yeah a lot better so for for our allocate bill on better well yeah CU that’s the thing like these these ones weren’t necessarily they were value ads but we were never going to go in and refinance and pull money out they were more value ads in terms of they were vacation rental value ads so we we we updated the outside we created more like unique things we weren’t doing kitchens
(40:23) and bathrooms and bedrooms that kind of stuff where it was really going to increase the value of the property it was going to increase the the value of the income that it brings in um so for yeah for that because we bought it in 2020 and 2021 when interest rates were super low uh we got like 2.2 and 2.59 but the beauty of it was it’s 30 years it’s not five advertised it’s it’s 30 years so we we have that rate for as long as the property exists right so that’s what we like cuz it’s predictable but that sounds like a that’s very cheap
(40:56) in any context yeah that it’s not like that now like you know your your interest rates are triple that but at the same time you have the ability to lock that in for 30 years so if rates do come down or you’re happy with something you have the ability to do that so I know a lot of people now like the exciting time the exciting thing about that is interest rates are higher yes the numbers might not look as good on paper right now you know for talking just vacation rentals this is really any investment but if you can make sense of
(41:26) the numbers and still provide some cash flow and still be comfortable with the rates now and maybe even going up 1 or 2% like obviously you want to hedge both sides of it if for whatever reason it does come down a lot of the times that means value will go up you can pull some money out if you want to refinance or you can just lock in a better rate and improve your cash flow position so you know a lot of people are getting scared away from the rates right now but we’re looking especially into the states for this because I personally we personally
(41:53) see a lot of opportunity and uh in that where it’s like yeah okay you’re not bringing in $5,000 of cash flow every single month but you have the ability to add value add to the property increase amenities on that side of it but also if rates do come down you know there’s there’s definitely a very big win scenario there and short-term rentals are very funny in the sense that um in your typical like when you’re going through the numbers to see if you want to purchase a property as a real estate investor there are some airbnbs or short
(42:23) ter rentals that won’t pencil the way that you want them to pencil like on paper but we know based on our experience that we can look like this is in a great location location is huge right we can put in some money because this is a long-term play like I’m not expecting to get insane cash on cash return after year one short-term rentals is a long-term play um and you know you can bring those those numbers up with different amenities adding into the property we reinvest thousands tens of thousands back into these properties
(42:54) every single year because you need to keep up with competition around but if you had looked at some of these properties and looked at the numbers I don’t know if many people would have really bought them if they didn’t know how to get these up to what others in the area were doing yeah the one property we looked at in elville recently oh no no no this is like the one we ended up buying um you originally we were going to do it with someone else and they’re very well-known investor in the area and like they just you know we
(43:22) showed them the numbers that existed but we were saying like hey like the good news is there’s a ton of opport people don’t know how to take photos in Aliceville they don’t know how to Market it they do not know how to price right and there’s a lot of missing amenities that we can add to really bring this up but it’s hard to just say that because I guess yes it is speculative because you are being the leader in that industry but we’ve seen how that has impacted other areas where people have already done that so we tried to bring that data
(43:49) to it but it I see how that will scare even the most seasoned investors away because it does seem speculative but sure enough we still bought that property and end up being like a very very good investment because of that but there is that risk of like you know we were 99% confident that it was going to bring it but there is because there’s no data in that area supporting it you know I can see how it would scare a lot of people away right but the price point is a lot less risks than yeah that too right you’re not buying a $1.5 million
(44:17) property you know your 5600 Grand right like it’s it’s more feasible there and to your financing question I know we didn’t really touch on that in elville because it’s so close to the Border we were able to get 80% LTV So 20% down um you know there was a little bit more fees involved but um yeah we were able to to only have to put 20% down because they do the crossb banking so rbcd for example oh you still got Canadian mortgage yeah from Canadian bank but they’re us division they were able to use your Canadian credit because there’s
(44:47) a lot of Canadians that have invested down there was so low yeah can you scale that though like whose credit are they using your America your Canadian credit yeah you can only do that when you’re I think you’re close to the board like we weren’t able to do that down in Florida but once you have property and you’re on tile in the US then you can get your ittin anyways which is basically a tax identification number and then you can start getting more favorable rates in other areas of the US using that too funny I think there’s more Canadians in
(45:14) Florida than anywhere I know they’re tracking the Border rather than like where the Canadians are I think Florida wanted yeah 75% LTV cuz we had no we had a property in a contract I mean the rate was higher though the rate was higher than if you were obviously a US citizen with an SSN and you know um it was 75% but then they wanted a $110,000 fee as well yeah the fee was higher back end fee it’s definitely you know it’s more skin in the game for a Canadian still versus if you’re you know if you have a really if you have a credit record or
(45:47) somehow get a Social Security number and have you know good built-in credit down there they’re definitely a lot more aggressive and you can also do that with uh Us credit cards like start getting into uh you guys know this game abely like yes from the points and Miles side of course but even outside of that if you start getting into us then you start building Us credit history and then they will give you a tax identification number and then you can start using that to actually purchase properties at a more favorable rate yeah so you don’t need to
(46:13) just purchase to get it and you can do that you know there’s it’s a bit of a work workaround but you can get that without having an itin or an SSN like you can get a Us credit card you need a an address and stuff in the states of course but you can get creative if you have friends that live down there just get it sent to there and you have to open a bank account but you’re you can open a bank account easily um do you have any pictures of the elville property on your IG know we probably do if you just keep scrolling I’d have to take a look but
(46:43) uh I don’t actually remember I know I know we do eventually I just don’t know how how far down you’re going to have to go you guys talk about it more often uh I don’t know we do talk about it maybe just not like all the time and we love like the travel side of it so you’re going to see a lot of that on our feed this is why we do it right because we want to be able to go experience these things we learn a lot when we travel we stay at a lot of nice five-star hotels and we we get a lot of hospitality tricks from that but
(47:13) do we have like a our personal Investments we did that we talked about that is it in that one though or no I just there there is there is a I want to see if we have it on here sure if we do 56 Grand oh 13 129 grand these are Big rent numbers we would have profiled our our elil ones when we rid the games room yeah that would have been October of last year but yeah so before we were recording we were talking about like what’s your next property can we talk more about elville like how do you like how do you get into it what what does
(47:57) the property look like so yeah the the the challenge I wouldn’t say the CH well it is a challenge with elville is that it’s a small town and there’s not a ton of Supply that’s on the market but they have tons of visitors don’t they tons of visitors it’s a it’s a tourist town so like that’s what we like about it is that the reason why we’re bullish there is because majority of their businesses the restaurants I want look at how many visitors they get cuz I’m sure it’s an obscene number yeah well it’s especially
(48:27) it’s a weekend town right you get a lot of people from you know Buffalo area Canadians especially and then you get a lot of people from like Ohio like anywhere Canadians tons of Canadians it’s not far now it’s not far at all for someone for the west and tono it’s almost the same as going to Blue Mountain in terms of commute I’d say it’s pretty close once you get over the Buffalo border you’re about an hour an hour away so yeah it’s it’s not super far but like we love it because it is a tourist town and more than likely not again going back to
(49:00) the regulations they’re going to be in favor of it I know they’re talking about um bringing in more of a a policy for it because right now there’s the Village area and that’s pretty strict uh in terms of getting a license but it’s like a specific very very detailed outlined on their on their U City website of like what zoning that is and then all like the medium density and lower density zones which again outlines it with the streets it’s very you know cut and PAC are areas that you are allowed to operate in um without like you don’t
(49:31) need a license in those areas they just allow you to do it what I think they’re going to probably move to and they’re talking about but again it’s probably going to be a while from now is putting more of a a licensing program in place and the main reason is just to make sure that operators are doing their job and not just renting it to bad guests right because I think in any community that is the main concern is that you know if you have two residents living beside an Airbnb that person’s mismanaging it and
(49:58) there’s parties and they’re they’re up till 2: in the morning you know create creating noise and garbage and all of that that’s what really makes the headlines in the news about airbnbs right they don’t highlight the tens of thousands of families that come to the area and go to bed at 10:00 and leave the place in better condition than when they got there literally so I think it’s good that they’re looking to do stuff like that but um yeah that’s that’s elegant fing a nutshell so Holiday Valley gets 1.5 million visits yeah the
(50:28) ski resort itself that’s it yeah and they have they have a private one there as well a lot of members called called hont that’s where we haven’t found it yet but that’s where the the one that we we purchased is on it’s literally a 30 second walk to the the ski left yeah so tell me uh like paint The Listener a picture of what your next property would be like in elville or just in general in general because if you’re going to put your money into it I’m sure people will be interested I I they always say like don’t listen to what people are saying
(50:59) follow what their money’s doing yeah that makes sense um I think we still love on the lake like even the the property that we were looking at before that’s a variable mortgage and it’s still done very very well and that was an over million dollar purchase price um I think you need to really Target municipalities like Spencer was was just saying who need tourism to thrive that’s your elville on the lake like they have they big hotels cannot go into on the lake because they have to be historic buildings can’t be built over a
(51:29) certain height yeah but it’s really low height too very low height so they need short ter rentals they send us like thank you letters for operating every single year the city’s easy to work with and operate in um the purchase prices are high but we still find that that it works and then on the elville side like I feel like we would do both because elville is our offseason right so El’s High season is nagar life’s uh slow season and we like having a little bit of boat right CU you get the ski town and so they’ll never get rid of
(51:59) short-term rentals because they need people to come and stay and ski because that’s their High season um but I think the location in these places makes is really where it’s at you can’t go into nag Lake and find a subdivision and find the cheapest house and be like I’m in nagr the Lake I should crush it because people want to see what they came to nagr Lake for which is Vineyards so you want property they want Farmhouse they want country mhm and that’s what our properties would would give them we wouldn’t find something in a subdivision
(52:25) and then on the elville side they want to see like mountains and ski chalet and lots of wood inside you know that typical ski chalet Vibe close the Mountain close to the mountain that kind of thing yeah like we’re definitely big quality over quantity people I I would much rather have something that you know you are very proud of when you step in like every time we go to both elville properties because they’re both different properties where one’s got more more land but it like it’s got two if you want to call them Hills they’re
(52:55) mountains but they’re not mountains uh on both sides when you walk there you look right it’s just the Big Valley and you look left it’s The Big Valley and there’s a little creek that runs in the background so it’s very peaceful more tranquil versus you know our other one that’s right on the ski hill same thing it looks up at a mountain but you’re also in a great you’re in a much closer proximity yes you have neighbors left and right but you still have the views you do have that you step in there and you go wow and that’s kind of what our
(53:21) next property will be like is you know something where you have proximity to two things like ski sounds speech whatever it may be but also creates that unique experience of like there’s views there’s amenities on the property that you know people get to come and enjoy that you would be proud of when you get to go and visit and when you vacation my first time to elville I thought it was a I had no idea what to expect but like my context is like today’s Blue Mountain it’s but much much much smaller like it’s like two two blocks is the downtown
(53:54) but it’s so cute when you we were just there and you walk down there and you’re like this is such a cute town they really have it done up nicely with all the flowers all the little shops like people love that stuff I’m surprised no big private equity’s gone in and try to repeat something like a Blue Mountain there if it did your summer business would explode there’s a hotel going up apparently now um but again like not everyone want wants to stay in a hotel they want to stay in a chalet right like there’s always going to be that market
(54:20) for it and our homes sleep anywhere between 8 and 12 right and those people want to be they don’t want their individual homes they want to have dinners together they want to be in the hot tub together they want to be around the fire pit together right and no Hotel will ever take that away my friends are like that too like even when we still toay at Blue Mountain we Brenton arban B but more my point was like when you have a big Village there’s so much to do and then that attracts so many more people someone told me that Blue Mountain
(54:48) attracts more more visitors in the summer than the winter and that just blew my mind yeah that’s what we like about alil because it’s not just one High season like even the summer we had a very very good summer because again there’s there’s there’s hiking trails big mountain biking trails in that area so a lot of people come down for that but just being in that little town there’s lots of shops patios restaurants um they have they have a good golf course you would love it amazing gol yeah it’s very very difficult but it’s
(55:15) uh yeah really nice golf course right it’s got everything that a summer vacation town you know should have really because i’ I’ve talked to people about again our cotage country here in can in ont is like crazy expensive mhm cuz I I have some friends who are already saying they’re going to look in the states for a cottage and this kind of seems like competing with you but so please get get into get into um um I want can what do the property look like like tell me more about this target property that you have in mind in
(55:47) elville yeah I mean I I would I definitely would want to say something where it’s like more of a chalet Vibe but we we would say we probably do a hybrid between the two so like the first one that we got the more expensive one that’s right on the private Hill is 100% sh it’s beautiful right like you walk in it’s you know just under 3,000 square fet um oh that’s big yeah it’s it’s it’s it’s a good size um how much did you pay for that one 525 we got yeah I was listed at 589 we got it for 525 but that back in 2021
(56:18) price has gone up a little bit since then not crazy appreciation in elville but there there there is some but um wasn’t Callingwood that’d be a small fortune yeah it would be that’s what we’re saying we kind of joke this would be 2 million in Callingwood just given the fact that you can walk to the ski lift it’s right there so you see my point why more canans would be look into this for Cottages yeah especially if you’re going to use it it’s a it’s a I mean it’s US dollars but even then still it’s it’s quite reasonable property
(56:47) taxes are high there right I think that one were over 10 grand or actually right around 10 105 a year for that one and you get nothing for it you still have to do private garbage snow removal all of that um holy Hannah okay so yeah that they that’s probably why it keeps prices down too yeah for sure um but then our other property this is more in the country and this is the one that has the detach garage we turn into a games room it’s got the fire pit cuz you know the the first one is on a hill so it’s a big
(57:15) slant and you know putting in a fire pit there would be very difficult so on the second story balcony we’ve got the luxury Lounge set with a gas fire table so you can still be outside and take in the views and have the fire but we’d want to I would say probably try to find something in the Middle where it’s a little bit nicer on the inside shall like the first one but with a bit of property with views right um even if it’s just outside of town that’s fine cuz the other one is about a f- minute drive outside of elville versus this
(57:44) one’s right in it um s i just paolog you there does your company have a website that with pictures of these uh yeah I mean should we go to the Airbnb ad yeah we can go to the we can go we can go to that um how do I get it to you guys um we can Google if you just go to Al if you just like go to airb and Google Al bille you can go to our profile from there we’ll find the property oh for the listeners benefit we we do Post these to YouTube as well so we actually have the a big screen in our background where we’re going to look at this
(58:12) stuff you know we try to try to be like Joe Rogan once no I love I love it but yeah I would say what definitely an in between we like we see the ones that do really well there to have that the a little bit of land saunas fire pits elville is that what we do for where you have to search El I would just search like any week too because we’re pretty booked you’re not going to find it if you search uh e l i e l l i oh two L’s they there then you can just hit um yeah like flexible do a week yeah just hit search you’re good
(58:54) there all right it might be faster if we go right to um how’s this sorted actually while we’re in here how does how does well this you’re searching you’re searching any week so it’s going to give you um what’s available yeah it’s going to give you the majority of the properties that are available if you just want to I think these are important things for people to know I have no idea so cuz that’s that’s the thing too and like for your pricing strategies that like if you are searching for a specific date like I
(59:24) said if you if you have dates that aren’t available and guest are searching for that date you’re never going to be found right so you do want to be putting in a little bit more of an aggressive pricing strategy to to show up ideally on the first page right here we’re just searching for for any week so might make sense to go on the map here um so go kind of like right in this left side so see where Al Bill see go left of it yeah right see where that gray patch is zoom in on that there it is that’s the property so yeah you can click in on
(1:00:02) that so this is the the first one that we bought that’s right on the hill um oh wow that’s sub 3,000 square fet I think it’s like 20 2,800 gee this is nice so yeah we’ve done some recent updates to it but the nice thing about this is it was a previous Canadian owner so most of this came furnished so we worked that into the mortgage as well but we we’ve recently we redid the floor and the kitchen and the dining room but like we add things like this espresso machines coffee the kitchen was like that already pretty much minus the floor we we redid
(1:00:34) the floor and obviously we upgraded we added some we’re big water we big water snobs so we added like an RO system in there because it makes coffee better and the water’s safe to drink there it’s just people don’t always want to have to buy bottled water when they go in so and there’s still gorgeous some updates that we can make we redid that shower not intentionally the previous one was leaking m yeah that’s is the TRU about real estate investing stuff breaks and costs money but I mean really like what it is is
(1:01:03) like the back of the PAAD here like when when you’re out there you’ve got your hot tub and this and you’re overlooking kind of this view that’s that’s awesome it’s very peaceful and that’s that’s kind of what we want to try to do like not just a subdivision right you want to have views and how big is the lot it looks like there’s nobody nearby oh no there is it’s just cuz it’s on such a slant I don’t know the total size love that’ll give you a better indication of it there uh that one photo on the left like you can see you’ve got a property
(1:01:29) right right to our left and there is one to the right as well it’s just kind of hidden by trees what about back neighbor uh there well it’s more like way down that’s the only that’s like the the thing it’s like you kind of look on top of their house just because it is on the hill and the thing with this property is there’s so many levels there’s like six levels to it it’s like three or four steps down three or four steps down three or four steps down it just keeps going lots of stairs this is super cool and this was your first Venture
(1:01:57) this was yeah this is the first one we we bought and then we purchased another one in Aliceville probably like a month later this that’s outside this is probably the one we’re the most proud of um most proud of like getting people to come by like our friends and stuff if we go down for a couple days during the week but the other one that we have is the more profitable like net they’re both very profitable but the other one was just like actually if you so go back to the listing it’ll be faster like click on that like oh yeah
(1:02:25) click on the click on this picture again go back into the listing no no oh it go through your profile right yeah sorry go back to that where you just were go back to the property atam and then click on the uh click into that operators and then scroll down slightly see where it says let click on the logo at click on the logo again and scroll down all right now we’ll find the other ones um so you can view all oh you have a lot of listings you can go to view all listings it might be faster most most of these are management clients so like see where
(1:03:04) it says view all listings uh below that you manage that many mhm how What’s the total of properties you manage uh just under 50 just under 50 now but okay we have a bunch going live try to find the other El these are all like really pretty like there’s no subdivision houses there’s a couple but yeah we try to stay away from them oh yeah I see one there yeah yeah yeah okay so stay away from subdivision hoses I mean it’s it depends if you get the right deal on it it can make sense but again you’re dealing with neighbors
(1:03:37) and all of that it there’s more there’s more variables when it comes to that it’s probably going to be there on the on the right side there entire we got to redo the photos on this one I just remember that so this is the one we did with the games room um again this property we purchased for 240,000 um furnished as well and then that you can see the games in there on the top right this was just an empty garage space it was already insulated it had heat pumps in there so it was just like a a skeleton it was but it was already fully serviced
(1:04:11) electrical and it had the heat pump so air and air and heat so all we did was we hired a a a design company to to come up with this design and uh we did the work ourselves we went down and I’m never doing that paint job again but sa to say we we we did that ourselves and uh really all we added was you know the TV the pool table the basketball game you know some furniture and table eh you trust that with your guess honestly that wasn’t a very expensive pool table I think it was like a $600 pool table but you wanted something that was like the
(1:04:43) center of attention and you you I didn’t want to you didn’t want to leave it like open and I think that’s what the design company said as well um but yeah there’s there’s damage claims for everything so if it ever does come to that our cleaners are pretty good to replace some of the pool cues but that’s people just drop them like they put them up and they fall over who knows yeah it’s weird yeah so this one isn’t as like aesthetically pleasing on the inside like the other one I feel like a super Chalet they have like the
(1:05:12) wood the wood everywhere on the like very Chalet Vibes which I love this one is like an old converted Schoolhouse so it’s cute but it’s more in the country so you get way more of like a not winter so like spring summer fall crowd and because our covering costs on are so low cuz we bought it for a little over 200,000 it still brings in a couple thousand dollars every weekend all the time and then more in the winter so our our cash on Cas and then especially when we added this games room our um cash on cash on that is just really skyrocketed
(1:05:47) like this is the most profitable home in our portfolio that we own so when did you want more of them yeah that’s why I say we probably do a hybrid between the two but if you look looked at it it wouldn’t pencil the way that I feel like others would pencil if that makes sense well we were when we ran the numbers on this we were running a projections of like hey if this does like 40 Grand a year this makes like close to 800 bucks a month if it does 50 Grand a year we’re very happy and it’s going to do over six
(1:06:11) figures this year because of the garage right and the garage cost us so you’re double very happy yes good return that’s kind of what we looked at but penciling it didn’t do that because there wasn’t a lot of there wasn’t a lot of you know comps per se we like this games room did not exist in alic bille so we’re like you know are we throwing 10 grand at a wall and hoping it sticks probably not but there was 10 grand but I couldn’t go to investor with like hard numbers and being like look if you invest 10 grand
(1:06:37) into this games room here’s what it’s going to return we didn’t know but yeah but when you pencil the next one you have you should have a lot more confidence exactly and there’s also a lot of issues with that house because it’s in the country there was like a whole bunch of like animal issues it’s right beside a cow farm so we didn’t know if that would really impact the reviews or so we had to put a lot of time and effort into this property that we did not and money and that we did not have to put into the other one but now
(1:07:03) that we’ve spent all the money up front we got it all to where it needs to go and it has been pretty good since then C far people love it actually they’re like my kids like cuz they they can walk over and there’s like cows right on the fence you say your kids no not our kids I said kids like cuz we get a lot of families that come here right because like the you know the outdoor space the games room brings in a lot of families and uh yeah like originally were like oh there’s like a farm here but the luckily the smells it doesn’t really smell um
(1:07:31) and and and the kids love it cuz they get to go over and see the cows and yeah it’s just it’s a different it’s completely different from the other one cuz on paper I want a portfolio of these 100% yeah like we were scared because again both of these we purchased sight on scene um because this was during covid we couldn’t get there so we’re running the numbers we had people doing Facetime videos walkthroughs and you know it basically got to the point where it’s like even if they did on the lower side it was still safe so we were okay
(1:08:00) with that but when we went out to see this the first time we’re like oh no what did we what did we buy but again we just like I said did a lot of work to the backyard and you know updated a few things on the inside and yeah slowly but surely it started uh becoming quite profitable and you did one at a time no no that would make sense but no no this was months apart probably like two or three months part that’s not too bad yeah you get for a for a short- term rental when you couldn’t get down there um through 2020 in 2021 when we were
(1:08:35) flying from Toronto to Washington back to Buffalo so we could rent a car so we can go over there like it it was excuse me that’s how You’ get there yeah yeah yeah or like we were on a tail end of a trip back and into turkey and we landed in Boston we’re like why would we go back to Canada we might as well just book a domestic flight to Buffalo and go to the property so we’re all jet legged and whatever and go and do like 3 4 days of work really quick and right you got done though yeah it’s pretty amazing no so so
(1:09:07) say today I want to get into a deal like this let’s use this as a sample deal uh what What’s financing look like it’ still be again if you’re Canadian you can there’s a few mortgage brokers like TD and RBC and then I think First National is a good one as well um where they’ll be able to look at your Canadian credit don’t quote me on this one I’m still positive you can get 80% LTB So 20% down obviously you got to do the conversion you your US Dollars now on a declared student on declared Airbnb you can correct g i you can’t get that in
(1:09:40) Canada probably Canadian Banks yeah yeah probably probably not again like it’s been a we haven’t inquired one here um in two or three years so again that might have changed um but when we were down there you know we disclose everything this is what we’re doing same thing with insurance you have to tell them what this is going to be for what’s Insurance on these is it’s a the short-term Insurance short-term rental insurance commercial commercial insurance so like a Hospitality some sort of hospitality recreational business insurance policy
(1:10:11) yeah like you’ve got like at least 2 million liability and you know uh loss of rent those types of things right if you have like an issue and you have to cancel bookings for whatever reason because you have a flood or so it’s a business insurance yeah it’s it’s not it’s not your home owner occupied insurance it it’s probably double what you would pay for home insurance if not it’s not bad consider the liability exposure but it’s it’s really not that bad like you know some some people pay more for internet and cable you know if you get
(1:10:37) like the really souped up version it’s it’s worth it that’s for sure interesting um but yeah I would say like something in between these two would be our next one like cuz if you know if you scroll maybe down to the bottom like it gives the one picture gives you a pretty good view of like the garage like if you go all all the way to the bottom uh keep going sorry up a bit more my like right here cuz like on that side you still look into what do you want to call it the hills the mountains but then behind it has it as well so like when you’re at
(1:11:06) the property you’re kind of surrounded by this so it’s just like very peaceful and we really like that aspect of it no neighbors um but the problem is Like Houses like these don’t go for sale every week right you kind of got to keep an eye on it and try to scoop it up when you can but also there’s certain areas here that are flood more flood plane prone due to the runoff so you do want to make sure that you’re not in the hot spot there uh so yeah there and then obviously with the zoning you want to make sure that you’re good like this
(1:11:34) area is fine but um if you’re going to be more so near the ski hills there’s certain areas and communities that don’t allow it so big Lookout there like definitely like what I did is I just called the um the city before we bought these and even though it had a pretty detailed and they told me the very detailed zoning map I’m like here’s the address here’s what I want to buy like is this in the zone zoning like can you confirm that and they did they’re like yeah your medium density you’re good to go I’m like okay cuz I didn’t want any
(1:12:00) surprises didn’t want to we didn’t want to close on it and then find out that we can’t do it so I would always recommend doing that in any municipality if they have like some sort yeah a downside to uh elil is finding trades is very very difficult and very expensive y worse than here oh yes oh jeez get worse they they they gou you I mean here’s the thing you can you’ll find someone eventually cuz there’s other neighboring larger cities but it’s not like you’re going to call and get three quotes and you’re going to be happy with one of
(1:12:33) them the year eight plus quotes until you find someone that can do it and even then it’s like are they reliable is are they going to show up it’s because the nature of the majority of people that own here their second and third homes they know that hey we’re going to charge a premium if you want this work done it’s it’s small enough where it’s people can do that I imagine it’s much like that in our Cottage countries too yeah yeah mokas I can’t I’m assuming is the same everyone that I know that owns there brings their
(1:13:04) trade people in from the city to to do work and pay them a premium because it’s still cheaper right yeah my friends do that and then well what big cities are close by uh well Springville I mean when I say big it’s called to Walmart um that’s Big T yeah so like Springville is probably half an hour away and then I’m going to butcher it but it’s either Olen or oen that’s oen they’ve got that’s that was the famous Home Depot runs that we made but they’re all about half half an hour half an hour away they’ve got a
(1:13:32) Subway there so it’s good um but yeah that’s the there there’s two pretty big big towns about uh and then Buffalo is what an hour yeah an hour away you know we running out of time we still didn’t talk about travel rewards might need a part three part three yeah just on that again we’re running out a time any fin final thoughts you want to share with the guests listeners well we can leave a cliffhanger because all of the when we do these projects we also get a few first and business class flights out of them so stay tuned for part
(1:14:02) three and then you guys have you I I see on your website you offer what’s your website first of all it’s Spencer ashley.com yeah very creative maybe rebranding the Ashley and Spencer who knows yeah and then you can get you guys have courses you have some free giveaway stuff there there as well no sometimes we do um free webinars which we’ll I think we’ll be doing one soon cuz we’ve actually gotten a lot of uh people asking how we keep our cleaners like accountable and stuff so we’ll be probably doing a free webinar on that uh
(1:14:36) Spencer did like a three-hour pricing um paid pricing webinar I guess or a course Workshop that he that we’re selling and that’s like 3 hours in depth of exactly all the things that he does for our short-term rental pricing which I think was like an insane value because that’s everything you’ve learned over years and years and years for like a couple hundred bucks and then we do what you see here is um obviously private one-on-one consultation calls just basically about anything uh yeah but that’s about it we will be doing
(1:15:08) probably some sort of mentorship more than like a course uh more on the management side and that would be upcoming probably next six months or so and you’re looking for more clients to probably manager for oh yeah that like we’re open to to JVS as well but again we’re very specific on who we work with we’re quality over quantity and you know we need to like the people we work with as well that’s that’s that’s very important so we’re uh you know it’s a marathon not a Sprint got to got to enjoy it too yeah life is short mhm very
(1:15:38) cool any final final words for The Listener against a scary time for many people M yeah I I think short-term rentals are still a very viable option I know some people don’t believe that I think we’ve said this before but um you have to be in the top 10% of properties and then you’ll see the the profits I think that we see like we reinvest quite often if you’re a CNB property or if this is a like Last Resort and you’re half-assing it you are not going to do well um you get into short-term rentals intentionally not because selling won’t
(1:16:11) work renting won’t work and whatever right um yeah but still a very big viable option it’s just a big business and and then on the co-host side you don’t really need money to get into short-term rentals you can start by co-hosting for for a percentage of gross rents the way that we did and then we’ve built an entire business that’s our entire lifestyle from that so very cool and then what’s next for you guys sounds like you might expand buy another property yeah I mean want expand to or we are looking at uh acquiring I think
(1:16:41) you know nag the lake and and elville would be probably the the two we keep an eye on the most um but obviously open to other markets the management business we are expanding more into the states so that’s going to be our big push in the next 365 um obviously we’re expanding in Canada too like mscok is still on our list we just need that person that wants to work with us that can be the boots on the ground and you person’s listening yeah exactly you never know a lot of them are realtors too because we get get
(1:17:07) them a lot of representation too that’s kind of we find that goes hand in hand like our guy and cor this is a real estate agent and he’s got his own vacation rental so he’s got his own skin in the game so it was a perfect fit for us um remind our listeners What markets do you service so we are south Ontario so basically Burlington down we are are in the GTA now recently so we do cover basically all the GTA what areas allow it but it has to be pretty unique property I imagine unique property and being able to do it yeah like if you’re
(1:17:36) in a condo they have to allow it and it’s got to be a primary there’s a ton of restrictions but still doable cores uh we service that we are in Norfolk County so sorry where’s Norfolk Simco area more like Lake Erie yeah Simco Dunville um over that area it’s it’s like little Cottage Country down that way it’s a nice spot out there it actually is really really nice yeah then we are also in BC so we service like the mainland and the island and El elville and soon hopefully maybe California but we’ll see mhm any part of
(1:18:17) California where’s Kevin going uh La Huntington Beach like that those kind of areas around there so one of our just moved down there nice yeah not bad free place to say we go down it’s a big decision to move there because it ain’t cheap no no no no no but I mean we’re we’re we’re so preliminary on that haven’t really dove into the markets too much I know from like an acquiring standpoint it’s it’s from what we’ve heard from investors down there it’s it looks a little rough but we’ll see you need boots on ground all right
(1:18:50) well thank you so much for coming in thanks for having us appreciate it thank you thank you for watching if you want to learn how to invest in real estate from scratch my team teaches beginners how to use the number one investment strategy that I personally use in a virtual free training class every month go to investor training.
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** Transcript Auto-Generated**

(00:00) summer hard 2024 complete as in like enjoy that summer we’re back to school we’re back to learning about investing is anyone investing in long-term rentals anymore Alberta folks I know I know you love it but is anyone else in Ontario investing in long-term rentals we’ll talk about what we’ve been learning what we what we will be learning at the real estate resilience Summit Business Edition all this and more on this week’s truth about real estate investing show for Canadians I’m your producer and host Irwin CTO
(00:29) since 2016 and we are back we are finally back we’ve taken a few weeks off uh Busy Doing summering summering Hard spending time with the kids enjoying what little summer we have in Canada the Bank of Canada just made the third consecutive rate cut of .25% after what has been the quietest summer of real estate in my career um I’ve been land since 2005 been I’ve been an investor specialist realtor since 2010 I’m a real estate geek I check how Sigma often just like everybody else does I like to know what’s going on in my
(01:02) neighborhood I like to know what’s going on in the neighborhoods where I own property and where my clients own property whatnot for anyone who’s in real estate who’s a friend of mine knows I don’t shut up about real estate uh so if you are a real estate investor you know we always have much to talk about and I have many questions to ask anyways the market has spoken from my uh understanding rental properties uh as investments in Ontario are really out of favor the most I’ve ever seen in my my career and that’s across the board I
(01:33) have friends with very nice apartment buildings for sale receiving no showings I’m seeing the most lopsided investor imbalance of listing selling versus buying all the balance is on the listing selling side folks have property is listed and they’re selling them or they’re not there are very little buyers out there what little buyers out there that I’m seeing uh from the more sophisticated investor Community what I’m seeing is they’re buying mostly student rentals because uh University students naturally turn themselves over
(02:04) uh and then my point to what I was asking earlier is anyone investing in long-term rentals anymore in Alberta lots of them uh rest of the Canada not so much it seems the listings of rental properties locally has never been this slow again in my experience uh in the once popular with investor uh in the markets that were once popular with investors and and for apartment buildings uh now we’re going to be talking about Elizabeth Kelly’s uh real estate resilience Summit Business Edition and it couldn’t have come at a better time as canadi
(02:33) investors have never had a harder time of finding opportunities I have this discussion almost every day as I take calls from Canadians all across the country who tell me they can’t find opportunity I was having dinner with a coach recently who informed me that it’s been months since she’s seen a deal that’s worth putting her own money into on the flip side we had Sher uh Sher is a tech enabled asset manager who in my experience makes bill building a fully managed rental portfolio the easiest I’ve ever seen fortunately or
(03:05) unfortunately uh that can only happen in the USA thanks to the size of their economy which is the fastest growing in the G7 combined with low taxes and landlord friendliness uh I was literally telling my little cousin about a deal I was reviewing Kansas City uh he’s actually looking to invest uh he’s in real estate invest he’s in real estate his dad my uncle was a really big time broker before he retired uh last a couple years ago point is he knows a deal when he sees one and he’s my family so I everyone takes care of their family
(03:38) don’t they anyways back to the deal an off-market 1,200 ft Bungalow three bedroom one bathroom built in the 1950s most investors across Canada know this is your typical property so you typical investment property because this is the type of property of folks Target for uh basement spe conversions now um in Ontario in the popular markets for uh basement spe conversions that type of house a 1,200 foot Bungalow but cost around 600 somewhere in the high 600s to low 700s and Target investor markets like a Hamilton an ashaa Barry K Wu
(04:16) Cambridge and I know folks in Alberta do look for the same type of property as well for their for their mortgage helpers and same with folks in BC anyways back to this Kansas City uh deal in Missouri the price from the wholesaler so there’s no Realtors involved price from the wholesaler including their fee is $152,000 that’s American dollars um yeah $152,000 including the wholesale fee renovation quote on to bring the property up to being rent ready from the property manager is $220,000 projected rent $1,300 per month
(04:50) plus utilities for Canadian investors who’ve been around a while uh what like we’ve turned back the clock over 10 years on what these numbers look like uh we would we would get these types of numbers back somewhere around 13 14 years ago back in Hamilton for example which is where most of my experience is uh for cap gr for capitalization rate for those who understand commercial real estate we’re talking about a 5.
(05:13) 9% cap rate on a single family home and it’s not a very expensive property so you don’t have to come over with to pocket that much in order to do this deal I have a thirdparty home inspection report uh from a home inspector uh I have a renovation quote extremely detailed from the prodct manager uh and personally uh I can I have the Comfort level that I can do the deal do this deal from the comfort of my home I’ve personally attended a 100 home inspections for my own clients I I have enough comfort with uh home construction anyways this type
(05:47) of deal can be done as a pass as an operationally passive side hustle uh the the only thing that keeps this property investment from being uh fully passive is that the investor still has to deal with their own mortgages which is the way you want things to be you want to be in control if you don’t believe me just read the news and look at who’s losing their shirts who’s going bankrupt who’s owing 30 million to 100100 million whatever anyways all those folks have lost control I am a bit of a control freak when it comes to my investments
(06:22) anyways I do think it’s wonderful that uh my developer friends folks who do flips I think it’s all wonderful uh I personally I’m happy when I see people successful as long as not as long as they’re not hurting anyone uh but personally I don’t want to invest that kind of that much time and effort uh into those types of strategies I was literally speaking to uh a new a new friend of mine at the golf course who does uh he does kitchens and bathrooms uh so he works for folks investors who do flips in Oakville Ontario so I can’t
(06:55) even imagine the type of capital these folks are throwing around on million2 million prop proper doing flips and then like the realtor fees and and the rental budgets like holy cow anyways uh also again myself being risk adverse I personally would not choose a strategy where the uh financing uh Lynch pin is the cmhc a government institution um who has been known to change their mind from time to time for for those strategies uh I’ll have experts in those fields again I have no experience in that field of getting cmhc or or mli select and stuff
(07:28) like that but I’ll have I’ll have happily have experts in those fields as guests of my show like upcoming guest bestselling co-author Russell Wescott who’s from BC but invest in emont and he’s building he’s developing small multifamilies all the time brand new ones and the numbers sound fantastic but he also invests a lot more time money and effort than I’m willing to do uh especially being out Market anyways there’s no right or wrong in real estate uh it’s really just what fits you for for the best now I did say there’s no right or wrong
(07:59) real estate but there is a wrong losing money that is wrong I’m not saying never lose money most investors well sorry every investor who’s been around for a while has lost money on a deal or two or three or four what’s more important is over the long run they make money makes sense right now I’ll read you a quote from one of my newer clients who I’ve been trying to help coach out of a jam that they got themselves into before they ever met me this is what they wrote me this week quote hey heroin just wanted to let you
(08:28) know that every day I’m great for your wisdom and my private uh about my private lens I ignored red flags and I didn’t act fast enough so things are still quite painful but we would have been wiped out if you hadn’t shared your concerns with me thank you beyond words end quote also this week I’m I’ve been uh congratulating one of my longtime clients who helped uh who he helped uh sell their income property in the GTA and realiz over $500,000 in capital gains which everyone knows is tax better than lending interest uh you know
(09:00) interest that you earn on lending money anyways it it should be no surprise that the long-term real estate investor is winning even in this market maybe they didn’t make as much money if they sold out the peak but anyone like is anyone upset over a $500,000 plus Capital game anyways uh and and uh what I was going with is that going forward I fully expect my clients and I to translate our success uh that we’ve done in Ontario to being to landlord friendly USA my only hope is to to reach is to reach out and educate as many people as possible so
(09:38) they can be successful like my long-term clients uh speaking of Education I’m offering a free webinar uh a real estate 101 investing on September 17th 800 p.m. Eastern Standard Time anyone new to real estate investing or new to us investing should attend this so if you have friends or family interested in investing uh they need they need to attend this so they can at least compare uh any and all opportunities that they review against what a single family host uh rental property and land friendly USA can do like the property I just
(10:09) mentioned in Kansas City Missouri uh for a retail investment as an investment that an everyday investor can do I have yet to see a comparable property in Canada for a retail investment that an everyday investor can do again operationally passive uh I reveal deals all the time and on and and again my experience it’s really tough to beat shar’s offering for a fully managed uh for fully for being fully managed from acquisition to ongoing management to disposition and when compared to any condo or duplex in Canada there really
(10:42) is no comparison especially if it’s in Ontario BC or Quebec where landlords have little rights on to this week’s show award-winning investor coach speaker educator and proud entrepreneur my old friend Elizabeth Kelly uh we’re we’re old friends because she likes to tell it like it is Elizabeth shares about her wins and losses and real estate she’s been an active leader in the community for nearly 20 years and she’s here to tell us about how we Canadians uh how we Canadian Real Estate Investors can be resilient what she sees
(11:10) for our Collective Futures in real estate and she’s hosting the third annual real estate resilience a business edition of The Summit on September 28th and 29th uh that’s a Saturday and Sunday myself and Sher are proud sponsors of the summit I will be joining an expert panel on USA investing with friend of the show Glenn Southerland um I’m really honored to be uh uh really honored to be that Glenn and I are sharing a panel together uh and uh many of us consider many folks out there consider us the the leading voices on this subject and very
(11:44) grateful for the opportunity uh my wife the lovely Cherry Chan will be a speaker as well and I’m super excited for the other speakers on that are that they have planned and again uh this is business Summit this is a business Edition Summit but there are like uh the gentleman from Hawaii really interested in hearing what he has to say about real estate investing cuz he’s got a lovely portfolio in Hawaii anyways and a very sizable one too on today again so on today’s show Elizabeth shares her personal Journey from Mega real estate investor to uh
(12:13) entrepreneur adjacent to real estate the the challenges of affordability for investing in local markets even after learning the hard way back in 2010 where she where she and EMT her husband EMT bought over a 100 plus units and struggles with systems and operations this is why you need to be resilient you be to take that and what you’ll learn at the summit will be larg around systems and operations so that you can Thrive with these types of uh business businesses and portfolios anyways uh any and all investors should give this
(12:47) episode a listening to learn how to both win in real estate and avoid losing in which in my humble opinion is another way of winning for more information on the real estate resilience Summit go to real EST State resilience. CA please enjoy the [Music] show hi Elizabeth what’s keeping you busy these days not too much I’m actually taking some time off and enjoying the summer I’m uh I’m loving things how about you what are you up to trying to do the little same but it’s really busy so I kind of don’t want to take too much time off like while the
(13:25) iron’s hot you got some ex shining right which is funny it’s not that’s not the same for most of the community no it’s it’s been really quiet for Real Estate Investors surprisingly quiet Facebook’s quiet social media in general is quiet but even people taking action has been really quiet mortgage brokers are reporting it’s quiet Realtors everyone across the board investors are quiet these days what do you think they’re up to I think they all see a lot of what I see a lot of lack of investor interest uh just to give data points for example
(14:03) uh like we’re seeing vacant duplexes in Hamilton just sit which would never happen in the last 10 years this is the first time ever really uh so we used to think that vacant would would be marketable enough um but it’s not and a friend of mine posted about his kiter research showing that a tenanted property sells for $60,000 less than a tenanted property it also of days on Market from like 20 like 20 something days to sell for a non-ed property versus like 50 plus days to sell for tendent to property so that tells me the market is
(14:43) not uh interested in investment property even house hacking so my original investment theory of duplexes would be a wonderful liquid asset as as liquid as it gets for Real Estate thinking that people would always want a host hack is proven incorrect correct in this current market so what’s what’s an investor agent or mortgage person to do when investor appetite has dried up and that’s a small stuff like I think we’re we we both know lots of apartment building owners who have very slow movement uh on refinance or for
(15:19) sale of their apartment buildings so it’s it’s slow I and I don’t so I had a rent to own uh a couple of weeks ago that was a ailable and I’ve always had a lineup of people I’ve never ever had a challenge finding an investor and this run to own this was a little guy this was a mortgage of$ 450 $600 and some dollars a month in cash flow like it was a great little opportunity and I was willing to be the active partner take care of everything just come in qualify for the mortgage bring in 80k and it was a struggle just bringing
(15:54) 8K that’s it that’s it it was a struggle it was not I’ve never had so many conversations and people so nervous about taking action and I think it’s because there’s so much money that’s tied up or missing or that people aren’t confident that they’re going to get back uh right now that it just money isn’t turning over the way that it did for years and if you’ve been investing I mean you know you look at the lifespan of an investor most people think well I’ve been investing for 10 years I’m you know I’m one of the the ogs here but the
(16:29) last 15 years were a Heyday for investors and the the the downside always comes calling at some point yeah and seems we’re there doesn’t help that uh you know a lot of people are looking at interest rate renewal interest sorry mortgage renewals on their homes as well so I think the broader markets affected as well it’s it’s definitely interesting out there yeah I mean to me it means that we should be focusing on cash flow which we should always be focusing on but if you’re struggling right now with a situation where you’re not positively
(17:02) cash flowing on your investment properties I believe that it’s a great opportunity to get out there and look for cash flow from another means and what do you mean by that or or look for a different investment strategy like right now for me my apartment buildings I’ve had I’ve been socked with a couple of big bills I had a a big Plumbing bill that I had to deal with and then I had a big roof repair that I had to deal with and um you know that kind of took a good ch of my cash flow the last little while but the one the
(17:33) one investment that’s continued to grow for me has been my commercial building where I do short-term rentals and I don’t have to deal with the residential tency act I don’t have to deal with um some of the challenges of the long-term um you know when when you’re providing housing for people versus somewhere for them to come and stay for a little while while they’re in town to work it’s a a very different game and you know if things get quiet then I focus more on marketing I’ve listed some units on Airbnb as a way to increase the
(18:05) traffic in the building and have more people find out about us before they come to town and I just feel like it’s given me my control back and that’s one of my most important things the reason why I fell in love with real estate was I could buy a single family home and I could turn it into a duplex and I could force the value and then I could refinance and pull it out and and go somewhere and do it again and be able to provide homes two people that were affordable and it just it doesn’t feel it doesn’t have the same feeling anymore
(18:35) that it used to and I came through 2008 so I know what it’s like to go through a downturn this one feels heavier to me though do you see that too I think it’ll naturally be heavier because where affordability is now just because the the run up over the last 10 15 well honestly since the since 2008 we’ve been on a s serious Bull Run yeah so I don’t know how people get into the market now just because the numbers are so big now some some clarifying questions from what you just mentioned you mentioned commercial
(19:04) property so that means uh that’s a multif family right no so we have it used to be a Senior’s home in Kirkland Lake okay we bought it in I want to say 2012 it was 2012 and it had been vacant for 10 years so we worked on it and we kind of got it back up and running a lot of the plumbing was broken just issues all over the place the heating system wasn’t working and we took the spaces and we converted them into rooms so before Co we had a dance studio in there and we had a restaurant uh the hair salon is still there we’re exploring our
(19:42) options with doing other things I looked at um self storage for a while I thought that would be great I think our Market is kind of capped out for Self Storage so I’m looking for some other options but right now my bread and butter for the business is people coming to Kirkland Lake who need somewhere to stay you know for a couple of weeks or a couple of months while they’re in town working and it’s worked out so well we we have shared kitchens so people don’t have to eat fast food all the time we are a more cost-effective option than a
(20:13) hotel so people are thrilled they come and stay with us we provide housekeeping weekly housekeeping and you know Wi-Fi and parking are included so we’re kind of an all-in-one building and it works for us it works for the community it’s it’s really we identified the opportunity from analyzing the need and I think that’s often lost on Real Estate Investors because I think partly is that you know what you’re talking about is not really an investment it’s a business like I treat my invest my Investment Portfolio as a
(20:43) business I came to the decision to be a real estate investor as a business you know doing SWAT analysis strengths weaknesses opportunities threats like you know you have something that’s in high demand it’s going to generally perform well that’s that’s what business is now again like here you’ve identified business opportunity and and my point is again like many people forget that like it’s this and this was not this doesn’t sound passive at all yeah and I I don’t know that people forget it so much as when people are new
(21:14) to investing they just don’t realize it you know it becomes it becomes you know you’re focused on the concept of you know learning leverage and you know I can take the equity in my home and I can use this to generate money and they don’t realize hey guess now you have to learn Taxation and accounting now you need to learn bookkeeping and HR and you need to you know know the residential tency act inside and out you need to know how to vet people for your power team like people a a lot of people really think I mean this is touted as
(21:47) passive and especially when you’re starting out it’s not passive it’s very active yeah and then uh can you make this passive Can you hire someone to take up the day-to-day or you already done that well I do I mean with my property management company I had I don’t know I think I had 15 staff at my B bits at my biggest but then you’re just managing people I’ve done my job it’s not the easiest no if anyone thinks law is tough look at look at the employment law it’s yep it’s pretty in my experience employment law is
(22:31) generally favors the employee no different than tenant law it’s generally favoring the tenant yeah and this isn’t to say that people shouldn’t invest in real estate I think what I think what I’d like people to understand is that this is a challenging time to invest which doesn’t mean you shouldn’t and quite honestly you know there is a lot of wisdom in the saying that you know do the opposite of what people are doing so if people aren’t investing right now there are definitely some tremendous offers like there’s a house up the
(22:57) street for us that was list for almost 1.3 it finally sold at 1.01 they got a steal that house is definitely worth more than that but then there’s other people there’s someone just down the street who bought a bought a house for 1.1 and then they now have it listed for rent for 3350 a month that’s it 3350 that’s it that sounds low yeah 1.
(23:25) 1 for 3350 like there’s no way they’re making money there’s no way so if that your investment model you need to rethink it they got to flip that thing soon I don’t know I don’t know what the thought was behind it I haven’t met the the buyers but um it’s important to know your numbers and understand what you’re signing up for and there are definitely deals out there right now there are definitely people who are motivated because stuff is sitting but you have to have a plan and you have to know you’re getting into a business so you need that
(23:56) business plan for how you’re going to make money and how you’re going to make things work so the general Trend what I’m noticing is from guests on the show and this is not a popular opinion among Realtors and mortgage people is so many people are getting away from long-term tenants when it comes to Canada generally BC Ontario Quebec I don’t know much about the other provinces uh is what are you seeing I me like you know for context I think everyone knows you you have a lot of past coaching clients you’re you’re one of the best
(24:31) known coaches in the business what are you seeing on your clientele are are is is my observation do you see similar things I do I think it’s important that if you’re going to go if you’re going to move away from long-term tenants you need to understand the repercussions of that so you need to understand that financing is definitely more challenging to obtain um it definitely the theory is it gives you more control I think it does because I have both I have both and I have a problem right now in one of my apartment buildings and
(25:03) I don’t know what’s going on with the tenant upstairs but there I don’t know if it’s mental health or if it’s you know something else but continuing ongoing disturbances and I have other tenants who are threatening to leave my hands are tied there’s really not much I can do I mean I can ask them to continue to call the cops when there’s issues but the cops don’t want to deal with it um there’s not much I can do I I just I have a very disruptive tend and who’s causing issues with for everyone else in the building and there’s no there’s no
(25:33) consequences for that and as a landlord I would shy away right now from larger buildings because the smaller ones from a property management perspective I tend to have a lot less issues in my smaller buildings because there’s just less shared space there’s less crossover there’s less common areas again that’ll be an unpopular opinion among many realtor and mortgage people I know I’m okay with being unpopular I don’t need to be liked by everyone I’m talking from 20 years as an investor and 15 years as a large scale
(26:07) property manager I find that my smaller buildings typically present less issues yeah so so when people ask me why I’m back in the single family that’s exactly why I have no tenant conflict yeah when there’s poop outside on the lawn you know exactly whose dog it belongs to right like it’s not a you know tenants all pointing the finger at each other it’s literally like you’re the only person with access to this property so it’s you yeah at had a tenant who uh has anxiety issues so he he’d regularly smoke weed in the back
(26:39) corner of the property and then upstairs tend complain like what do you want me to do he’s exercising his human right yeah yeah it’s it’s his right he can do what he wants yeah and but the point point is if if it’s only only one tenant there’s no one complaining and I think that’s another thing that beginners forget about is that they for they they don’t know what experienced investors know is that your typically your top problem is endent conflict yeah absolutely and you can’t I mean everybody’s on their best behavior
(27:09) when they’re applying that’s really the only time when you have any control over who is who is going to be in your unit and I think people get really fixated on the numbers and it’s you know go big or go home and I want this size apartment building and this scale and I want to grow to this and it’s it’s okay to be smaller and to say one building year for 10 years is going to change the trajectory of my life for me and my kids and it’s okay to sell you know if you’re in a situation where you’ve got some other stuff going on you know maybe
(27:40) your mortgages payments have gone up and you know it’s it’s you’re really being squeezed it’s okay to turn around and sell so that you have the capital to be able to withstand the downtimes the idea is not to become a property hoarder the idea is to have these little picky banks that you can access if you need to in the future when the going gets tough MH there’s no shame in selling yeah something got lost along the way like the current generation of investors like folks who started like within the last five years they they
(28:10) were not their goal was well beyond one biling per year can you talk to that because you you’ve had to pick up the pieces for a lot of these folks who belong to Guru groups I picked up the pieces from us too my my husband and I fell victim to that mentality in 2010 I don’t always we must have bought hundred and some units that year um and it just you grow so quickly and there’s so much going on that you can’t that you can’t keep up with it you can’t create the systems and processes you can’t find the people to help you
(28:46) sustain that and the cracks start to show I mean you can’t like I don’t know are we allowed to talk about live stuff ongoing stuff sure so are we allowed to are we allowed to talk about the the whole um I don’t know if you want to pause the recording and verify but are we allowed to talk about like the Dylan sudor situation and how that happened it’s up to you because it’s you have your own stories because you’ve transacted with them yeah but I think looking at it from the outside and I I don’t know these people all I know is that they bought a
(29:19) couple of buildings from us but what I found when it comes to investors is that systems and processes tell the story so if the systems and processes are not in place then it is indicative of what’s going on in the rest of the operation so if someone buys a building and it takes them 120 days or 90 days to pick up keys and tenants are calling and saying you know it’s been two months and I still don’t know where I’m paying my rent to and you know we’re drowning in snow here and there’s no there’s no one who’s plowing um you know the the heat’s
(29:57) off we’re getting disconnection not notices on the utilities like if you start to see stuff like that it means that there’s systems and processes lacking on building turnover and that probably indicates that there’s other issues that are happening as well yeah like I said there there’s smoke there’s fire sorry Elizabeth can you back up a little bit uh yeah so from your portfolio uh Dylan bought properties from your from properties of for sale of yours yeah a couple of our multis and what year was this 2022 okay so not that long long ago and
(30:30) then you tenants were reaching out to you past so not your no longer your tenants but know managing for them did did he keep you on to to manage them or he he he transitioned to no we we actually wanted to um I was happy to keep managing them because we had good relationships with the tenants we knew the buildings we knew he didn’t have anybody local in town um just to back that up as well you started your own property management company in Kirkland Lake cuz they you couldn’t find a PM either yeah we if you can’t find one how
(31:04) is he finding one well he was bringing his people in from outside like I think someone was I think uh there was someone in Timmons that he was using to manage like exer how far apart of these these cities Timmons is like an hour and 15 and again I’m just I’m trying to piece things together right like I’m I don’t I don’t know these people I don’t have their phone numbers I’m just is trying to piece together from what I saw uh from an external perspective an hour 50 per Google Maps as of right now 140 kilometers Timmons to Kirkland Lake all
(31:41) right sorry I interrupt continue that’s okay um so when you start to see things like that then you start to I mean there are times where as a business you grow very quickly and it can be challenging to keep up with your systems and processes it can be Challen in to make sure that you have the right people in place and I see it a lot with my clients who are realtors my clients who are mortgage brokers where the volume of business has to grow to a critical mass before you have the financial capacity to take on another
(32:12) staff person to take some of that load off so typically the customer service that your business is providing will suffer during that time so it’s hard to tell from the outside whether that’s what’s happening or whether it’s legitimately um hey you know we don’t have any of the infrastructure in place that needs to be there to manage all of that and growing very quickly and aggressively there’s a whole process that should happen when you buy a building there’s a ton of admin with changing all the accounts over setting
(32:42) everything up getting all the tenants uploaded into your systems and processes your software everything else so it’s not the kind of thing unless you have a big team it’s not going to happen quickly and easily so when you see people acquiring multiple buildings a month they either need need to have a really strong team or there’s the potential in the future for things to be a little bit bumpy MH yeah so you and I already saw cracks in that business before they ever made the news yeah and then noever reference checked
(33:15) with you or I I I don’t know that people and this is part of the thing like at some point I think as humans we make decisions based on our emotion and I find myself doing it you know I I looked at this rent to own and there were there were some some things that I you know kind of raised little red flags for me but I wanted to do this really badly I wanted to do this rent to own and I was I said to myself you know no matter what I’m an experienced investor I can handle this you know if if things don’t go according
(33:49) to plan I’ve got Plan B C D E and F and I’m like but wait a second just because you can handle it doesn’t mean that you should ignore those little warning signs those little red flags and I think sometimes as new investors that’s what we tend to do we get a little emotional you know we we like people we see what people are doing we get excited about it and then we fail to step back and say you know if I was doing proper due diligence on someone what should I be doing it would make sense if I was investing in a building I
(34:25) would contact somebody independently to do an appraisal an independent realtor uh an in I’d have you know somebody at least hey drive by the building and tell me that it’s there and I’m not putting anybody at fault who has invested money with someone based on trust like I’m not trying to I’m not trying to hurt people when they’re already down but I think as a community we need to do a better job of asking the tough questions and as borers which I am we need to do a better job of saying I expect you to ask me
(34:57) this question here’s full transparency this is what’s this is what it is like my commercial building I don’t have traditional financing on it an appraisal is $20,000 so I have continued to work with people who I know and care about and I have private money on my building I’ve owned it for 10 years most people could and should not do that but that’s what works for me I like working with people who I know and who I trust yeah but you have a lot more qualifying criteria to build trust then unfortunately the folks are
(35:35) out of a lot of money yeah I mean there there’s a lot going on in the world of real estate right now and um I I think we need to do a better job as investors of protecting ourselves by asking the right questions and I wish there were more of the big companies and the big organizations teaching people that that’s stuff out there it is I I feel I feel for new investors because it’s not like I mean when we started in 2005 I started I didn’t we just social media wasn’t a thing like we didn’t know then what we knew now there wasn’t this you know
(36:13) communication around the world there wasn’t this you know when you learn things you you had learned it the hard way or you had done the research or I mean now we can just we have instant access to a ton of information but now we have no way to verify on the flip side though like for example there’s a coach who’s failing out there who’s well promoted by by their Network like I I saw her deals years ago and I knew that was doomed to fail again I I think I don’t know what it is um yeah I don’t know what it is I think
(36:50) I think there’s a lot of people who can’t qualify a deal so then you got to think what are they paying all that money for for coaching if they don’t know how to qualify a deal yeah but I I think sometimes again people you know you you’re on social media and you see someone and they look like they’re successful or they look like they’re doing really well or they’re talking about how amazing they are and people go yeah okay I want to believe that I think most humans fundamentally want to believe the good in people they don’t want to believe
(37:19) that they’re going to hire someone who’s not going to teach them what they need to know about how to run their business and I think that kind of takes me to where I’m heading now which which is I want my control back MH I I I’m tired of giving away my power to everybody else and I want my control back what are you doing to get your control back I’m I’m still going to be coaching on real estate for people who want to learn but I want to focus as well on people who want to start active businesses people who want to generate
(37:52) income people who want to say you know what I don’t want to work here forever I want to transition out of my job um you know maybe I want to go on maternity leave and I want to have a side hustle so that I don’t have to go back afterwards um people who say I I know this or I can do this and all I need to do is tell people about it and then I’ll have the opportunity to be able to take charge of my income yeah wa wait till you come to Yo and I’ll introduce you someone to my friends who bought businesses it’s uh
(38:24) it’s lifechanging for many it’s a lot of money too for not to say it’s easy or that everyone makes it but man the people who make it and I’m not talking about people like I love and I admire people who want to buy businesses I’m talking about people who have a love they have a passion they have a vision and they just don’t know how to start you know they have a transferable skill set that would be really in demand but you know right now they’re trading the security of in theory anyways going into into to the office for two weeks and getting a
(38:59) paycheck at the end of it for the freedom of being able to um to work as and when needed so right now my in-laws they’re um they’re in their they’re 85 now and unfortunately their health is declining it’s declining really rapidly and we have multiple doctor’s appointments a week we get calls from them where we need to drop everything and go over and I looked to my husband I go could you imagine if we worked for somebody else and you and I were both at offices and we couldn’t be there it would be it would be heartbreaking I
(39:30) mean how many people are there who want to be there more for their families and don’t have the capacity to do that because they’re stuck somewhere that they don’t even necessarily want to be so I want to help those people a lot of people looking for help I think a lot of people just don’t even know where to start the whole buying a business so sorry you you’re but even starting a business both are complicated I actually think that they can be but I like to keep things really simple like I don’t I think we we don’t have to make
(39:58) it complicated at least initially you know once we kind of figure out the landscape you know what we’re offering where it would fit is there a need for it like there’s a lot of due diligence you should do before you even start a business and I don’t think people realize that you need to make sure that there’s a market that there’s demand that you have the right skill set there’s a lot of analysis to do even before you say okay I’m starting this business and yet you buy your domain yeah it’s like valuations for
(40:27) example is so different compared to real estate like when we’re when we’re looking at businesses to buy it’s so different and I’m having these conversations almost every week or so just friends who are looking at businesses just to evaluate their own businesses or looking to acquire businesses it is so different valuing a business compared to any piece of real estate yeah so what is it that you have seen in your experience that are the number one drivers of valuation for a business uh for example like Professional Services and recurring
(40:57) recurring revenues like if you’re a professional service that has significant recurring revenues like an accounting firm your valuation is so much higher and you have so many more buyers right which makes a lot of sense and that’s how Cherry structures her hers right where there’s a monthly there’s a monthly fee and that drives the value of the business regular curring income you know in their line of on the line of business people need to file the taxes every year so that’s people generally have to you know do it
(41:26) every year uh but then there’s like hair cutting businesses where people need to get the haircut every you know 3 weeks two months whatever that the recurring income but a lot of people can do that business so the barrier of Entry are very low so then so then that your valuation is completely different for a business like that yeah and it’s interesting because I think a lot of businesses waste money on marketing when if they put a little more time and energy into making sure their existing clients were happy yeah and converting
(41:55) that the marketing budget into a loyalty typ type program I think that they would have a lot more returning clients and a lot more happy people so they wouldn’t need to spend as much time marketing and recruiting new people yeah retention is generally I think everyone knows retention is retaining a client is cheaper than acquiring a new client uh now we kind of touched on this just briefly what start starting new starting a new business versus buying what are your thoughts I I have I mean I haven’t bought a business myself personally my
(42:26) preference is always to start fresh I feel like when you buy businesses I mean you’re buying potential problems you’re buying liabilities but you’re paying for not having to be part of that initial growth phase which is can be some really heavy lifting I personally absolutely love that feeling of seeing a vision and a plan come to fruition I find it energizing and exciting so many of my clients have done it you know they’ve started rent to own companies they’ve started property management companies um and so seeing them you know do their
(42:57) first deal it’s it’s part of it’s like real estate it’s adjacent to real estate but it’s you can create that ongoing sustainable income through you know Property Management fees and and some of the other different um the different investment models that they’ve chosen but I don’t know I I have an affinity for starting my own because I have these visions and these ideas in my head that I want to make happen and I don’t know that I would see the same thing if I was buying business tell me what you love about buying though because you you
(43:30) prefer to buy versus start don’t you that’s largely a strategic decision though no different than real estate it’s real estate winter it’s business buying winter as well a lot of people don’t have cash and credit so when when like being strategic means doing what the opposite of what everyone else is doing like you said so there’s a lot of people selling businesses but there’s like no buyers and a lot of these businesses don’t have uh don’t have plans for the Next Generation typically the kids don’t want it yes right so you have a glut of
(44:01) Sellers and if you can be a buyer then you can make a lot more you can negotiate a lot more for example like uh like Victoria who was Clooney was on the show they did a share purchase right so she bought the shares of the company so she assumes everything the employment contracts any contracts they have the debt everything but again if you’re able to negotiate you can just buy the assets and you can buy the assets for example for 10 on the dollar and not assume any of the debt and that’s I’d always prefer if I was going to buy I think I’d always
(44:34) prefer to buy a business that had real estate as part of it like I wouldn’t want to buy a business that was renting a space I would want to buy you’re buying something Ontario if you’re buying something in the Golden Horseshoe you’re paying through the nose for that piece of property and maybe and again it’s Case by case like for example if it’s office space you may not want it strategically office space is is is a very weak position in the current market or or retail depending on where for example I had a friend call me looking for a referral
(45:04) for a leasing agent for retail in Hamilton I’m like I think the vacancy for retail in Hamilton like 50% so you that may not be the piece of real estate you want but for example if you’re industrial there’s a good chance you might want it right but Industrial in Ontario Golden Horseshoe would be a lot of money so it’s not the easiest decision and pretty much I think every business owner in the industrial would want their real estate State they not may not be able to afford it yeah I think it’s easier to start
(45:33) businesses that are service-based because the startup costs are so much lower like you’re talking about retail or you’re talking about um retail and you know some of the industrial stuff there’s a lot of costs involved because you need the inventory whereas you know it it costs a few thousand dollars to start a property management company or um you know to become a mortgage broker and start your own business that way it doesn’t require the the heavy Capital that some of the other types of businesses do yeah again I think it’s Case by case
(46:05) and it depends like for example Wade um Wade was on my show Wade Graham he he was like that was years ago when he bought his float can War business float you know those float tanks and he shared how he paid Pennies on the dollar like I think like 15 cents say it’s like 15 cents on a dollar for the equipment right and he negotiated a seller seller seller takeback mortgage MH so out of the profits of the company he was able to pay off his loan right and again he only bought the assets he assumed nothing else just the lease and
(46:36) now he just recently announced he bought the bu bought the building he was in good for him so again it’s Case by case uh and again if what it’s largely strategic like for example for someone who like really wants a restaurant or a gym personally if it was me I would wait to buy a failed one you know because then you can take over their brand equity right you can buy all their equipment for like cents like 30 cents on the dollar for example right rather than starting new and again it’s Case by case depends on what people
(47:06) are interested in for business right sometimes that client list for example is worth a lot of money right maybe it’s worth a lot of money to you not worth a lot to someone else so again strategic right but starting up yeah it’s something well you know you’re starting up with no systems and operations that’s tricky too it is but I find that there’s a lot that you can replicate so for example I have a full Suite of of documents if someone wants to start a property management company that I share with my clients so it gives them a foundation of
(47:38) systems and processes um but you can take that and you can use that I find as long as you have an aptitude for starting systems and processes then it doesn’t really matter what you’re applying it to you’re just going to do it anyways yeah like I find even Evan and I are working on renovating our house and you know I take the same systems some processes okay we’re going to use Google keep we’ve got it each day of the week and we’re going to go in and we’re going to put in what we’re going to do and we have a running list of all
(48:04) the tasks that need to be done and you know if we have more time in a day and we finished all our things on our to-do list then we’re going to go down to our running list and pick something and move it up I use that same system and process in all of my businesses and I use the same transferable skills yeah but you’re out there how many people have that skill set how many people want to put in that that kind of effort too for example all these people who invested passively quote unquote passively into into private
(48:35) mortgages right they just they just wanted passive they didn’t necessarily want a business but again that’s not your clientele well I mean I do teach private lending but I teach a lot about due diligence on private lending like I I really want to know what other assets are back there I mean I assume when I do private lending I assume I’m not going to get my money back and I work from that basic premise I don’t I’m not there going I’m going to get you know $1,500 a month this is going to be great I assume that I’m not
(49:05) going to get it back so I’m already making sure that if you know plan a doesn’t happen what’s Plan B well plan B is you know I’m secured over here and again I’m not I don’t do prom notes I don’t do unsecured lending but I’m already saying you know what happens if the market drops and my you know the the value that I believed was there when I closed is not there what are my other options and opportun unities who are these people I mean I think sometimes we get sucked in by saying oh this person has a big presence
(49:35) on social media so they must be good without actually saying hey can you show me a statement that shows me you know what properties you have in your name or what your net worth is or you know what your taxes are sometimes when you ask the right questions and somebody gets angry then that can be as much of an indicator I remember there’s somebody who was part of a a failed company um a very publicly failed company and someone went to her and asked uh for financial statements and I remember how angry she got at them and she said if you need to
(50:10) ask for financial statements then I’m not let then I don’t want to borrow your money and uh you need to go and find somewhere else because that’s not how I operate and they were so upset and they were like oh I did something wrong and I’m like you did something right yeah because then the business went under it’s like when landlords are screening tenants and they refuse to fill a credit report like that’s a good thing yeah when people self- select themselves out of your world yeah don’t don’t believe it’s because you did
(50:43) something wrong I mean it might be but maybe it’s not maybe it’s the universe looking out for you crazy so what else do you like about what else are you thinking about for getting control back uh well that’s why so uh I’ve invited uh Victoria Clooney and Megan hubner to co-host the real estate resilience Summit with me this year and part of the reason that I selected these two wonderful ladies is because they have the same vision that I do that people want to learn more about how to make better choices and whether we like it or
(51:22) not quite honestly a lot of the times we do follow what’s going on in the US maybe not politically but when it comes to you know um businesses and investing and there’s some amazing people out there like Cody Sanchez talking about how to buy businesses and how to find Value and that kind of stuff so we have gone one step further this year with the summit and we have included some speakers from us some of these people they’ve never spoken in Canada before so the information that we’re hearing is new and it’s you know what’s up and
(51:55) coming in the world of not just real estate but investing in general in being an entrepreneur in starting a business or buying a business or revamping a business um most of it being real estate adjacent but I really think you know much like you have identified the issues with investing in Canada and you’ve pivoted to the US I think there’s going to be a lot of pivots coming and I think that there are opportunities I mean I have clients who are looking at buying properties in Spain and portug Portugal um you know
(52:29) buying in the US buying in Costa Rica Mexico I think the internet has given us the opportunity to be able to identify places outside of just our own little niche here and it’s exciting to meet other people and see what they’re up to and look for the opportunities that potentially we can earn income and take control of our future MH yes I’m kind of sick of what we deal with Ontario landlords yeah and I I mean I don’t like I don’t like dumping on Ontario you know honestly I’m grateful I’m here you know it’s just a fluke that I ended up being
(53:08) born to my parents and you know they were in Canada and you know like I I still consider myself lucky to be here in Canada but that doesn’t necessarily mean that it’s the place where it’s the best for me to be in charge of my future I’ll also qualify that with just with the assets that you and I have purchased over our time and also the time we were born generally our generation’s done very well and I M admit that completely which is why when people say are you are you moving to the states like then when they ask me that
(53:42) and my answer I want to share it here publicly is I don’t have to because I made the right decisions along the way to play this game right so I can afford to live here chairing I can afford to live here our businesses operate here I don’t have to go but if I was 20 years old old knowing what I know and no kids I’d be doing everything I could to leave this leave this country that’s just me right but I don’t know that us is the answer either to be perfectly honest because not saying it is I mean the US to me right now is kind
(54:12) of a scary place like my husband travels a lot he spends a lot of time in the US and you know he was talking about um one of the hotels he stayed I think it was in West Virginia and there were like there was huge fences around the hotel and like armed guards MH in a hotel in the US I mean when he goes to Egypt there’s armed guards at the pyramids yeah they’re not around the hotels yeah yeah yeah like the US has some some and they’re so divided I I don’t think I don’t know that the US is is the answer either it’s a big country though it is a
(54:50) big country and quite honestly I would like to just go in the middle of nowhere and be left alone to do my thing that would make me really happy and you could buy land a lot cheaper like that in the States you i’ had discussions about it you could probably buy 200 Acres so you would have to deal with any people and you probably pay like less than half a million for it yeah absolutely yeah land land is so cheap I mean you know I look at the the parcels of property we’d like to buy and we’re well into Northern Ontario to be
(55:17) able to buy the size of land that we’d like to buy yeah and the black flats will heat you eat you for half the year or the polar BS I’m kidding about the polar bears yeah there is no perfect and I I say that I’ve been seeing that regularly as well uh I it’s it’s my belief like if you can afford it I think two homes is the ideal right one one place to live during our Winters when it’s warm or it’s warmer if that’s your preference but you know I was watching the surfing the Olympics over the weekend I’m like that looks so hard I’d rather
(55:47) snowboard than drink salt water and Get Smoked by waves so so again point is there’s no perfect uh I do believe just me person that we’ll probably end up snowb biring somewhere else for the winters and and still returning to Canada for the for our summers which are absolutely lovely here yeah I mean I look at you know Europe and Spain and some of the some of the countries over there and their food is so much healthier it’s so much less processed their lifestyles are so much healthier um their populations you know
(56:19) live longer with less health issues I mean I look at that and I go what are we doing over here we’ve got all the money and we’ve got lots more Independence than a lot of other countries and yet these are some of the issues that we’re we’re having you know we got the terrific obesity rates and all the other health issues that we’ve got yeah when just living just when I was in Moka we were averaging well over 10,000 St steps just staying at the YMCA Camp because it a hike wherever you went it was a hike so yeah I I think Seth
(56:55) Ferguson has the right answer he’s one of the the people I’ve talked to and and done podcasts with and he’s on his treadmill the entire day genius just walking away on his treadmill I think that’s I think that’s the way to go for those of us who are stuck in in offices and on Zoom for most of the day he spent a lot of time in Florida and Texas [Laughter] too but it’s it’s about creating that life that we want right and I think sometimes there’s what we think we want and then there’s what we need I think you need to explore a lot of
(57:28) that too and part of it Al is you need the money to do it right for anyone yeah yeah I don’t need to go into like money is the source of all evil we’re trying to give some people something good to listen to irn We don’t want to make everybody cry I think most people listen to the show realize that that’s not the truth but money for some like money money money will amplify people’s personalities if they were evil to start with giving them more money will make them more evil right if you’re a good person armed with more money then you
(58:01) tend to do more good things right at least that’s how I like to think I find my husband is a my husband’s a pretty cynical person and he always says to me follow the money and I at first I was like that sounds so that sounds so cold but the more I talk to people who are struggling and the more they tell me who they who they’ve spoken to you’re gonna stand up now are you the more I talk to people who you know they’ve asked they’ve gone to people asking for advice and the advice that’s been given has been self-serving
(58:37) because it’s you know they they’re wondering about their insurance policy so they talk to their insurance broker and their insurance broker tells them they need more Insurance because it benefits the broker for them to buy more insurance so that’s just an example but it’s really hard for people to find out right now who to trust and I think ultimately what that means is you need to go inwards and you need to make sure that you are cultivating a voice of your own that is independent of everything else around you that is independent of
(59:04) other people’s opinions that is independent of other people’s you know you can go to people and you can um seek to learn from their experiences but recognize that just because somebody did something and it turned out this way there’s no guarantees that it’s going to turn out that way for you too I think it’s important to know who you are as a person and what you’re really looking for and the only way you find that is by going inwards you don’t find that from outward stuff I’ll disagree when all these people were running to NE Brunswick I
(59:34) called you I did not look inward I don’t have an answer why all these people go to NE brunwick I’m going to go to the most OG NE Brunswick investor I know and call Elizabeth and then I had you on the show right immediately after talk about it right but I think that you if you had gone inwards I think there was enough you went inwards enough to realize that that might not be the answer yes it didn’t they didn’t didn’t pass the sniff test to run the new exactly so there was an initial something that happened there in that
(1:00:08) process for you that you said I’m not comfortable with this I’m not happy with this now I’m going to reach out and get an external I’m going to talk to somebody and I think that as investors we have gotten bad at doing that and we become so focused on missing out so focused on opportunity is passing Us by that we do not listen to those red flags that our guts throw up that you know they they our guts are telling us something and we try and stuff that down and bury it and there’s a difference between analysis paralysis
(1:00:43) and legitimate red flags and I think that’s where reaching out to somebody can help you differentiate between them yeah I have this friend who’s who who has who has Capital to deploy and he and he looking he’s looking for bigger stuff right and like the deals he was showing me he was looking at and he was like this doesn’t feel right this doesn’t feel right like that’s fine you can be patient you don’t have to deploy your Capital right like versus like now is a good time to deploy so my point to him was there’s no rush wait for the deal
(1:01:17) you’re in no hurry right and I think that’s and to your point like fomo investing like so many people are afraid of missing this wage and I’m not I’m guilty of it too my timing of buying cryptos was horrible that’s why I’m negative the fact that I’m negative on my crypto tells people a lot about how bad my timing was uh but again my point is um but they were small bites my point though is that I made small bites right versus there are some folks who invested their life savings into some of these gurus for for
(1:01:52) fomo and now now that money is gone it’s crazy out there yeah and I think diversity is something that we’re not counting on as well you know if you have $50,000 with the world the way that it is you can buy a little bit of gold and silver you can do a little bit of you know like Addie for example invest in real estate in a smaller capacity you can invest in some businesses in a smaller capacity and you can give things a try and see what works and then analyze what works and Le a little more into that there is nothing that says
(1:02:29) that in order to invest in real estate you need to have a million dollars and you need to go out and buy a big building right yeah I’ll just throw it there that I only need I only needed 76,000 us to closeing my house in San Antonio right yeah and then for context that’s why when people ask me should I do a duplex conversion or garden Suite well those both cost way more money than me just buying a house in the states yeah yeah yeah again you don’t need a lot of money to do it you don’t need to do everything and yeah I’m sure you’re
(1:03:04) gonna cover this all the real estate Brazilian Summit what are you g to cover first of all it’s a three-day event is it not 4 day it’s two days it’s two days we found the first year was three days and people were like I’m exhausted how am I supposed to go back to work so we brought it down to two days it’s um 100% virtual we have a fantastic platform so even if you can’t make a session in real time you can go back and watch it uh there’s for 30 days everything is still live on the platform it allows you to connect and network unlike anything I’ve
(1:03:39) ever seen so you can go in and connect with the speakers and we are so honored that you are going to be one of our speakers talking about you know your transition into investing in the US some of your key learnings uh and what you need to know and start thinking about when you’re investing in other markets um and so let me see what are the other benefits oh we do uh speed networking so you’ll have the opportunity to connect with people this will be of course people are now attending across Canada and the US so you’ll have the
(1:04:09) opportunity to build your network potentially find Partners find investors learn from people who are doing the types of deals and the types of things that you want to do so you can connect with them live on the platform we have a speaker Expo so all the speakers who are joining us are going to have gifts for all of our um all of our attendees and then you’ll be able to connect live with them as well and take advantage of the opportunity to actually connect with some of these people and like I said some of these some of our speakers
(1:04:37) they’re us-based you know even if you message them on social media you probably wouldn’t get a response whereas in the summit it’s a more intimate group it’s smaller and it’s really about what do we need to know as entrepreneurs how do we buy a business how do we invest in business how do we grow a business uh we focused a lot this year on financials because we want people to understand how to do proper due diligence so we have cherry who’s going to be on talking about of course taxation we have David RoR t on talking about how to actually
(1:05:08) run a profitable real estate business you know when do you get paid how do you know it’s okay to pay yourself um and then we just have it’s it’s business and real estate mixed so if you are someone who wants to learn how to run a real EST estate business a real estate adjacent business how to invest in a business buy a business this is 100% the best place to spend two days it’s the last weekend in September uh regular tickets right now are I think they’re 247 and then VIP is 297 but with the VIP ticket you get three accountability
(1:05:47) sessions with Victoria Megan and myself as well well that’s good value and we’re working on an extra special bonus for the VIPs possibly an inperson component for the inperson VIPs it could be we’re talking about that we’re talking about it and I have to say that’s tremendous value that you’re offering thank you it’s I wanted to be able to provide and this has always been my vision with the summit as well even when Corey and I have done it the last couple of years I want to provide people with high quality information for an
(1:06:23) affordable price uh that they might not have been able to do otherwise because I don’t want cost to be a barrier and I don’t want people to think that they have to have tens of thousands of dollars to learn how to do things properly so at the end you know this is not a big sales pitch these speakers are not paid to be here at the end they get a couple of minutes to say hey I have you know this option if you want to connect with me or if you want to buy something but the vast majority of the presentations from each speaker is
(1:06:52) quality information and content it’s not sales and you vetted each of these vendors each and speakers oh absolutely like we literally start with hundreds of potential people at the beginning of the year and we spend a ton of time talking to people and saying what information do you want right now what do you need what is missing from the marketplace right now what questions do you have and then every single year we curate and cultivate the content of the summit to be the questions that people are asking and we’re finding more and more people
(1:07:21) right now are frustrated with real estate they’re chasing their taals they can’t find deals where the numbers actually work and make sense so a lot of us are pivoting to this idea of how do I generate income not just from Real Estate not just by buying a property but how can we create something like I have with my commercial building where I can use real estate to make money to actually drive income yeah people like deals are out there people just work way harder to find them you you do and so this is where networking comes in right absolutely
(1:07:59) and then uh you and I were talking before we recording about how people are going quiet as well and people were messaging me about it as well because I posted something on my DM on my uh Instagram stories last night about I think a lot of people are gonna a lot of people real estate professionals will struggle in Canada yes especially if they sell real estate Investments y it’s um I think it’s a space that is it’s become a tough place to be I think people are lacking energy I think people are feeling kind of down
(1:08:31) and they’re feeling scared I mean there are some people out there who are just doing their own thing and rocking it and I have you know so much admiration for them um and I think that there’s a portion of the population that are having a really hard time right now and I’m happy to support those people yeah like again my several my past guests are doing fantastic so I don’t want to be all Gloom Doom and Gloom like I just had Marty and uh man uh Amanda and Marty Gordon on my show they’re doing great I just had uh Kelly Caldwell
(1:09:01) on my show she’s doing greator Clooney right I had uh Spencer and Ashley like there are ways to be fine at this but I think one of the things that makes them all um what the commonality between all of them is that they didn’t try to go crazy scale at the beginning yeah or all really absolutely and I think you know I don’t know all of your guests really well but I look at the people you named and they all have a business component to what they’re doing Victoria 100% is is business focused so it’s not just about I’m
(1:09:44) buying an apartment building and sitting on it like a chicken with an egg and waiting for it to hatch yeah she’s getting I’m sorry go ahead yeah it’s I’m actively involved I’m figuring out at the very least if I was buying an apartment building right now I’d have short mid and long-term rentals in there I’d have the three different types of income so that I had control over at least portion a portion of the building yeah it’s scary out there but in order to do that you need to have a team right you don’t want to
(1:10:10) be in there cleaning every Friday afternoon when someone leaves so you need to know how to build a team and back you’re back to your systems and processes to build an effective business yes and then again I categorize that as active business active investing so I kind of think investors have been sold a bill of goods with the idea that that it’s passive yeah like let’s call it what it really is yeah I I have challenges with that I I like to say as passive as it gets because that’s closer to a proper description uh for depending like what I
(1:10:47) do like with my duplexes in Hamilton for example it’s as passive as it gets no I’m not doing anything really that active but I still have to check in on it once in a while once once every quarter or six months or dealing with talking to tenants talking to property managers yeah so I am you have to know at the very least you have to know what your property manager doing to be able to see if they’re doing a good job are they worth the money are they taking care of your property yeah I’d love to get you to weigh in on do you think if
(1:11:23) the government changes over at the next election do you think they’re going to do away with the increase in the capital gains on the sale of properties so are people better off holding off if they’re thinking about selling right now are they better off holding off to see that’s what I’m doing because with the whole capital rate inclusion thing there are some good things to it but I generally think it’s bad because the way the system is was set up was for everyone to invest in real estate it was just a no brainer to that
(1:11:57) everyone invests in real estate including your principal residents because it’s taxfree the downside of that is all these wonderful companies that are starting up how do they raise Capital when they’re competing with the real estate market and then now with this capital rate inclusion why not the distinction between real estate versus investing in a Canadian business why are you punishing people from investing in a Canadian business right why why is it not a distinction you government taxes are generally incent incented to for you to
(1:12:31) do the right thing what is the best for society and the best thing for society is that we people like you and I who have Capital invest in small businesses but why would we when we’re taxed at the same rate as our real estate with these new with the new inclusion rates right so I don’t know what this government is thinking I’m going to guess the conservatives will do something to fix some of these things to to make it more um make it do more of the things it’s intended to do right stop making real estate the best investment there is in
(1:13:05) Canada and and to do more to support small business in Canada yeah that would be a really nice thing to see I think yeah it just makes sense right because by supporting small business that means more investment stay will stay here in Canada when we grow homegrown more of our own businesses and then we create more employ employment right and what do you think is going to happen in the real estate market in the next couple years I think it has no choice but to go up with the way things are with the with the immigration I think the number I saw was
(1:13:37) we had 200,000 new Canadians in the first six months of this year maybe not new Canadians but we have two 200,000 new people in the country so and I think the number was we had 36,000 new housing completions and they’re primarily Apartments so all those so the imbalance is still there uh but the continue problem will be just negative cash flow inflation’s really harming landlords um I don’t see how that uh how that self-corrects to make the market the way it used to be in terms of investor appetite I don’t know how it
(1:14:15) improves and especially when you throw out my messaging about investing in the states I don’t see how logically an investor would choose a comp or duplex in Canada over an income property in the states just purely logic to me yeah absolutely how tough is it to get your money back up across the border uh haven’t done it myself personally uh like I said one of the best wealth hacks anyone can ever do is marry their accountant so that’s more her problem um but again end of the day uh the overall tax implication is um my tax is
(1:14:54) the same there is no tax saving while I remain a Canadian so as long as you’re willing to pay tax you can you can have your money um but the way it is right now again based on my situation I’m probably just going to leave the money there and my intention is to grow the portfolio love it yeah and again I’m in I’m in the states almost a once a quarter now so if I’m GNA spend the money I’ll just spend it when I’m there good for you well congratulations on closing on your first property in the US yeah fun this I can’t wait to share more
(1:15:26) it it was incredibly easy compared to anything ever done before yeah and I think that’s the way things are going I think being away from long long-term rentals makes a lot of sense in almost across Canada U cash flows matters more than ever since capital gains are being taxed more so I might as well earn cash flow instead focus more on cash flow uh remove yourself from risk from from land low tener board so generally that means getting away for long-term rentals so yeah I keep thinking the government’s going to wake up and realize that this
(1:16:00) is what’s happening that landlords are leaving on mass I don’t based on legislation and Taxation it’s what they want and generally I find when you go against the government you’re generally going to be in trouble so just go with the government get a government job get a federal government job or invest elsewhere that’s what the government wants based on taxation for my experience for where I invest like Ontario is is dug forward conservative government yet we pay yet our rental increase allowed rental increases 2 and a half% the lowest in
(1:16:39) the country and our conservative government and that’s the maximum that can be that it can be that it can be because they put a cap on it yeah it’s cap on it and that’s the lowest in the country for allowable rent increase and that’s in a conservative but and again and we have a liberal government and and uh Toronto has an NDP mayor uh and it’s not so it’s not political we have problems everywhere but across the board doesn’t seem like they like landlords I agree with that yeah so so again I think naturally it makes sense
(1:17:12) to divest from long long-term rentals in Ontario largely in other places as well uh you know I was talking to a developer just before this call and like I wish you all the luck developer because we need more housing here but he too is looking to is long-term rentals here in Ontario and diversified to the states so again and that’s a real estate professional with 10 years experience so I think it’s just going to be the continued Trend within our community interesting well perhaps that will translate into some opportunities for
(1:17:40) newer younger people who want to take over and do some some management here in Ontario and um for those of us who want to go in other directions I’m so excited for the summit yeah yeah and that’s what I love about your summit is there’s lots of options out there it’s just people need to know who to listen to there are no as far as we know there’s no speakers who are going bankrupt on your stage and taking down all their investor money with them oh so sad out there no I I I try really hard to make sure that people are walking the talk
(1:18:16) and um that they have a tremendous amount of Integrity MH and then just very simple like uh just from observation anyone who started investing before last five years generally have done quite well and they’re still just fine yeah so it’s not all doom and gluma folks out there there’s actually lots of positives out there it’s just you know that’ll saying you are the average of the five people you hang out with and and like a client of mine I told her like because she was in one of these communities with a lot of lot of
(1:18:48) folks who are bankrupt I said you need to network with people outside of that Network yes right yeah you you need other opinions other perspectives other ideas you you need to spend time with people who are doing things the right way and you know what slow and steady it’s not sexy but slow and steady is not a bad thing in real estate like we need to bring back the popularity of one or two properties a year um you know making sure that you complete your renovation project and you are repositioned before you move on to your next one like that’s
(1:19:24) what’s killing people that’s what what’s killing some of the really big people is they’re buying too many projects they’re trying to execute too many things at once they’ve got too many Renos going on then the government changes the the criteria for being able to refinance and then they’re getting stuck with the money with the with the high cost money and a lot of that money is hard money some of these investors have hard money loans they call it private money I don’t know why how we ever got away from the term hard money hard money loans but
(1:19:50) they are hard money loans yeah all right well oh wait do we where can people learn more about the real estate uh resilience Summit I think it’s can I give you the email address and you can post it in the show notes I want to double check I just had a brain Gap it’s real estat resilience. CA but there’s um the website and then of course we are on uh Facebook and Instagram as well and we would absolutely love to have you join us if you can’t make it for the whole weekend you can go back and watch the recordings
(1:20:23) for the next 30 days on the platform if you are a VIP you will be given lifetime access to the recordings and of course all the contact information for all the speakers and then all the free gifts as well yeah real estate resilience. CA September Saturday September 28th 10 oh the West Coast people will appreciate that 10:30 a.m.
(1:20:48) eastern time start yeah we did it specifically for those West Coast people including Megan hubner who is a West Coast or was a West Coast person I’ve done so many events at like 9:00 a.m. on Saturdays and my vancouverite followers do not appreciate no no we 6 a.m on a Saturday we love our West Coast people so we want to make sure we include them yes because they have many of their own challenges as well yeah I’ve seen how much how expensive it is to develop I forget which city I was I was watching on on on social media the gentleman was
(1:21:22) sharing how how deals don’t pencil they they’re looking to build 1,200 units of rental purpose built rental housing and they’re going through how difficult it is based on the costs uh largely they’re talking about development charges yeah they talking about 10 20,000 per unit for development charges well I was where was I was I reading anyways um 30% of the cost of building is taxes and fees and those are all being passed on directly to the buyers so if the government waved some of the taxes and fees even a 15% drop in the
(1:22:00) new housing would make it much more affordable they to me is Bonkers when the government’s at least the municipal government collects property taxes after it’s built like you have this ongoing Revenue stream why do you have to gouge them up upfront as well yeah like you and I investors there’s so much we will do and invest to have that recurring stream of Revenue so much anyways oh you have Daniel F speaking that’s super cool yes he’s gonna talk about what he sees coming up for the next uh for the next little
(1:22:37) bit fantastic David RoR I don’t know him he wrote um um oh my goodness profit first for Real Estate Investors that’s his book I haven’t read that one I’ve read profit first yes so he he creat one specifically for obviously Real Estate Investors so he’s going to talk about how we should be allocating our money and um how to know like how to run numbers that’s super cool yeah because I really like the profit first book Cher live by it yeah all my accounts are set up that way so that that’s a great endorsement then if Cherry’s if cherry the
(1:23:18) accountant the expert accountant for Real Estate Investors loves what he said and what he’s written then having him on I think will be exciting um Daniel Kong is from Hawaii and he’s going to come on and talking talk about how he was able to leave his job he does flipping and wholesaling um uh uh Janelle Wilson who is going to be sort of our first um external speaker um she is going to be talking about Section 8 Housing and basically how she has built a tremendous business with Section 8 housing in the US fabulous but
(1:23:52) it’s available through share as well yes yeah absolutely but she’s talking about how to take adversity and turn it into opportunity which I think is a really important message for a lot of people right now because we faced a lot of adversity and how do we find the opportunity in that I’m a big fan of Glenn southernland as well I love his tell it like it is hilarious we thought you and Glenn would be amazing to share because you guys are both really real you you both share like this is where you know I’ve struggled this is where it’s been hard
(1:24:30) um this is what I’ve learned and that’s what we really want the summit to be is not the The razzled Dazzle this is not sales this is not marketing this is not this is really what you need to hear what you need to know yeah when Glenn was on my show he was very Frank about how challenging it his business is you how he earns his his Equity split of the deals yeah yeah he’s he’s been around a long time too he’s got a lot of Integrity too I think fabulous yeah he keeps it real he’s pretty OB he’s pretty transparent
(1:25:04) like he he’s pretty transparent on the show like this is my loss rate like this this is and that’s how it is and my thing is when people if anyone ever tells you they never lose money they either haven’t been in business long enough or they’re lying yeah I have um a client who’s a really successful flipper he does really well in addition to his other um investment models and he did eight flips last year and he said he didn’t make money on every single one of them but what happened was that the volume was high enough that overall he did
(1:25:36) really well but he said you know if I had only done one or two flips then I could have been underwater but it was because I had the higher volume that I um that I did so well yeah and part of that’s being resilient exactly right it’s it’s knowing that there are no guarantees that everything will turn out the way that you think it will or the way that you hope it will so you’ve got to have a couple of backup plans in your pocket yeah you have to have the resiliency to keep going because there will be losers and your financial plans have to account
(1:26:08) for account for losers is this the Melissa missa ker that is but she is everline social is what you’re looking for is her company got it yeah so she’s going to talk about marketing and how to um how to Brand ourselves how to communicate with people what’s working in the world of marketing right now because even if we’re not using marketing to attract new people into our world the reality is as an investor it’s a source of credibility and if you are not online and people can’t look you up and they can’t do their research then
(1:26:42) unfortunately you are um you don’t necessarily have the credibility that people are looking for take take a look at Janelle Wilson There session two she’s the one who’s doing the um section eight stuff she’s doing some really cool stuff that’s her yep that’s her fabulous yeah have friends with the law Section 8 hoses she’s I admire her so much she’s another one who’s just like tells it like it is I think we need more honesty in our world right now you know I talk so for those who don’t know like Elizabeth and I talk a
(1:27:25) lot in the background that that I’m sure many people would love to be privy to our conversations but yeah and part of the reality is out there is that those who pay for stages get it right those who pay to for to be on other people’s platform often they’re either they’re paying for it or they’re giving up percentage of the sales so they’re paying for it not always necessarily of the best people making it on the people stages other stages not this one which if that’s your business model that’s fine but I think there needs to
(1:27:57) be a little bit of transparency about it too oh my my she does auctions that’s amazing she’s got some really cool stories oh sorry for the listeners benefit I’m I’m sharing my screen actually on Janelle Wilson’s Instagram and and pictured is what looks like a bunch of roses that are boarded up and there’s literally a a a Power Shovel bulldozer on the front lawn of one of the properties for the folks who don’t know we do we do share the recordings on on um on YouTube so you can check us out there as well if you want to see it
(1:28:38) follow along with the visuals anyone else cover do you have time for this it’s like we just we forgot about Michael ponie like we don’t talk about him anymore who who can forget about Michael he brings so much value but everybody knows Michael Bethany laflam is another one that you might want to look at again these are people who are really crushing it in the US and I feel like we can learn a lot from them so let’s bring them to the Canadian audience let’s learn from them conscious wealth Creator she do some really cool things
(1:29:09) with sorry how do you how do you know these folks um some of these are Victoria some of these are people that I follow on um social media and I learned from them and then Victoria from her time as uh with invest her she helped to organize uh the national International invest her uh event amazing so she met a lot of these fantastic women like Bethany amazing anyone else we should profile you have time do you talk about I have time Mandy McAllister is another one Mandy buy oh I love it buying your business we should convince you
(1:29:57) oh seems like it’s a popular name there’s an actress named Annie mallister oh yes gobundance I think is her gobundance yeah interesting I think she yeah she’s official Mandy mallister oh super cool gobundance women because I’ve heard of gobundance uh for men not that it’s called that it’s just called gobundance of course and what’s she going to talk about um she’s going to talk about valuing businesses finding opportunities um what you need to know to start thinking about buying a business fantastic and again she’s American yes
(1:30:43) she’s American super cool so we’re both 5050 in terms of um in terms of split between Canadians and us um oh I like that set piece of Mind as your highest goal then organize your life around it I think I’m finally doing that yeah because you and I talk about it as well uh anecdotally I I I noticed that Health uh among my real estate friends and entrepreneur friends is is lower than that of uh my 9 to-5 friends yeah so while it looks sexy to be a real estate investor and an entrepreneur underneath a covers generally they have much more stressful
(1:31:27) lives yeah it’s funny because July um I committed to walking at least 10,000 steps a day love it and there were only two days where I missed one day I had a migraine and one day I was on the road and traveling but I feel different my body feels different literally after 30 days of hitting 10,000 steps a day that’s it are you doing that first thing or just all through the day um I generally do one walk in the morning and if it’s a shorter walk then I’ll do another one after dinner and uh now I’m putting in strength training as well I bought an X3
(1:32:06) system at the encouragement of one of my clients who has a health and wellness business so I will be starting to do that as of this week later this week what X3 sorry what’s that the X3 system so I’m not an expert on it but it is super cool because it literally takes you 10 minutes a day and it is it works with your body to um so one day is push one day is pull and it’s with bands a bar and bands love it and again it’s yeah that’s it I don’t even know how to pronounce the guy’s name but it’s super science-based and it’s about muscle
(1:32:53) fatigue with less damage to your joints I’m all about less damage to my joints is it John jaquish jaish I don’t know how you pronounce it I’ll post the little URL in the show notes but this is this is part of the power of networking right is that you know through networking I found Megan and Victoria to do the summit with and then through networking we found and vetted all of our speakers and through networking so Rachel Oliver introduced me to my client who has the cryo U therapy business which I’ve started
(1:33:30) focusing on my health and well-being with him he’s the one who actually recommended this to me and the cryotherapy that I’ve been doing has been amazing to help with my arthritis in my hips and it’s all all the positive changes that I’ve made have been as a result of the people that I’m spending time with at my networking you are the average of The Five People You spend the most time with absolutely and I betet those people with you and [Laughter] Christian absolutely this has been such a pleasure irn it is always so nice to
(1:34:10) connect with you and it’s interesting to hear that our Journeys are sort of you know we’re are even though we’re focusing we help people in different ways and we’re focusing on different things independently we’ve sort of ended up at the same place yeah boo longterm rentals I think my husband would have told you he was there about five years ago but you know yeah and then slow and boring it’s okay it’s funny because I’ve been criticized for calling things boring let’s just call it one property at a time one property a year can change your
(1:34:48) life yes remind yourself of that a and a vacant property per year will will change your life as to as well for the wrong ways so don’t forget that folks vacancy to me is like poison to a portfolio I I despise it and you feel the same I don’t know it depends I mean I’m certainly uh I’m heading to the landlord tenant board in a couple of weeks yeah yeah so there’s bad vacancy yeah there are times where I’m very grateful to have a vacant property in all honesty yes yes I’m my my lowest paying rent tenant is is is uh giving up his unit so
(1:35:27) I’m grateful for that vacancy as well yes there is good vacancy but uh systemic V vacancy not good and I I feel very fortunate that you know having been around as long as I have and having been to the landl tenant board I’m comfortable representing myself but I know that for a lot of investors they would have endured months and months of non-payment of rent the potential damages and then they’d have to go out and spend at least $800 hiring a paralal to represent them at the landlord tant board MH oh it’s sad I already know there’s a
(1:36:00) pargal on the other side I’ve already been given it that from the community legal help so I mean they they have a paralal they they have all the legal advice they need and I mean I prepared my my document uh my evidence and it was 160 Pages this is the one that’s disruptive to the other tenants no this is a different one this is one who’s actually out of the unit already and she brought a was a T2 where she’s saying that we ignored her and we didn’t do any maintenance or anything so 160 pages of all the back and forth the conversations
(1:36:35) the um the work orders the maintenance requests the um please stop harassing our staff when they’re in the property uh yeah that’s August 22nd so what does she want you have nothing to do but she’s already out of the unit what does she want just wants money she’s just how much how much that that this is worth it uh I think she’s asking for I don’t know let’s say $3,000 or something yeah be kidding me because she gets free legal aid that’s why and this doesn’t happen friendly USA I’ve already sent an email to the
(1:37:16) paralal and told them all the mistakes with all the documentation that was filed including that her husband’s name is nowhere on the lease he’s not a tenant he’s not someone that we recognize that she has sent all the documentation to the property management company and not to the legal owner of the building despite knowing who the legal own owner of the building is as per the lease the rent increases um I’ve Cent her documentation of all of the um complaints that she made and where we finally had to say to her you’re not allowed to be in the
(1:37:47) premises when we’re there completing work repairs because your harassment of our staff has been so bad MH um um and they have not withdrawn the the thing so they’re actually taking up time at the landlord in tended board somebody else with a valid issue could be heard because all that’s going to happen is I’m going to go on the 22nd and the uh the members going to look at it and say this is not a valid document the the information on it is completely incorrect you’ve named the wrong parties you don’t even have the owner of the
(1:38:17) property here like this is not valid my word but and that would save everybody time go I love the system I don’t know I’ll just show up with popcorn that’s all over zoom over zoom and and quite frankly up north we were over Zoom long before Co so crazy times one last time real estat resilience. CA thank you we’re so looking forward to having you and Glenn and everyone else join us last weekend of September it’s truly going to be life-changing yep Saturday September 28th and Sunday 29th see you all there 100% virtual so I’ll
(1:39:00) see you there too and affordable thanks again Elizabeth thanks for coming on thank you irn always great to see you take care thank you for watching if you want to learn how to invest in real estate from scratch my team teaches beginners how to use the number one investment strategy that I personally use in a virtual free training class every month go to investor training.
(1:39:24) com I publish at least two to three videos a week here so subscribe if you want to keep learning from seasoned investors like myself and my guests and if you’re just starting out feel free to ask questions and comment below and I do the best to answer each of those comments and questions myself again if you’re ready to learn the nitty-gritty about real estate investing from a professional investor register for our next virtual class that’s at investor tr.com

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