** Transcript Auto-Generated**

Erwin 0:00
The best investment according to the CEO of the local Builders Association, the opportunities and risks for builders and real estate developers, the membership group attended by the who’s who and local real estate. That and more on today’s episode of The Truth about real estate show for Canadians. My name is Herman Seto host of this 300 Plus episode show since 2016. This show is ranked number 81. On business in business category on all of iTunes. Happy holidays, everyone in what a week, the Federal Reserve in the US. The folks who control interest rates in the US just announced they are holding rates, and they expect to cut three times next year. Assuming point two 5% Cut each. Each of those cuts, that’d be a three quarter of a percent. And it’s been sending the stock market soaring. And I’m a bit surprised Ron Powell is showing his hands so early in doing a complete reverse on everything else he’s been talking about, up until this point in sharing their plan for cuts. So yeah, everything they tried to fix is all being undone pretty quickly, just based on his words. Anyways, the application to real estate investors to real estate is a is that many expect housing prices to go up go up once rate cuts begin, including shark tanks Barbara Corcoran, as she believes that real estate prices will reverse as soon as the interest rates begin. I’ve included that note in the shownotes. I link to the article in the show notes and interview of shark tanks Barbara Corcoran. The implication for Canadians is their own bake candidate increased rates faster and higher than the Americans did during the last two years. So it’s natural the natural expectation that the bet candidate will cut steeper and faster than the Americans. So we should expect more than three cuts in 2024. The markets are already expecting a rate cuts about four or five rate cuts in the tune of 1.25 to 1.5% by the end of 2024. And those cuts are coming expected to start maybe as early as spring like March ish. So based on history, cause and effect, we should expect to see the market pick up the real estate market pick up an activity increase an increased housing demand pushing prices up, which is a good news, which is good news to many current real estate investors. And this is notice to anyone who’s been sitting on the sidelines who’s looking to get into the market, we’re probably at the bottom, we’re approaching the holidays, and that’s typically a great time to buy. And again, we’re looking the market is expecting rate cuts in the spring or even mid year of 2024. My clients are taking advantage by financing their acquisition of US income properties using their home equity line of credit. Since home equity lines here in Canada, their their interest is is variable because it’s based on the prime rates and with rates expect them to fall in Alright already a current hit home equity line prices, interest rates, it’s cheaper the financing is cheaper financing than going through an American lender. And as long as they can cover the interest and payments, this makes a lot of sense. Positive Cash Flow and no rent control, of course will help a lot in reducing the risk of such investments. I really can’t wait. Based on the information that’s been coming out, I really can’t wait. And also, unfortunately, the extensive amount of research I’ve done in investing in the States, I really cannot wait to sell some Ira properties here. As mentioned in the past, I might have three houses being listed the first second week of January. The timing seems appropriate to again, as mentioned shark shark tanks Barbara Corcoran saying the market is about to pivot. We can end with lots of HELOC. And I’ll have a lot more HELOC. Once I’ve sold three houses will have a strategic advantage over the Americans. This is again the Americans American banks only offer the currently at this time. They currently only offer 30 year fixed mortgages. So they are more expensive in terms of rates. So thereby, you would have to expect that American buyers will stay on the sidelines longer, which would give Canadians the flexibility and the strategic advantage of of getting in for the Americans do because why would an American want to get a new mortgage today at near peak interest rates onto more serious matters. I’d like to take a moment to reflect on the alternative humans out there being negatively affected by investing on pre construction or speculation. There have been many, I’m hearing this all over. It’s all over social media all over Reddit. I’m hearing in my circles as well. There will be many people who will be walking away from their 15% deposits on pre construction condos or houses and they’re on the hook for any additional costs and losses incurred by the builder and when they go to resell that property, in combination with a slowing economy, there’s job losses out there, pretty much all the banks are cutting of how our finance more cuts as well. And they’re supposed to be the most solid institutions that we have in Canada. In a country with massive affordability issues, someone was going to get burnt. And let’s not forget the renters who are praying to stay in their rent controlled units, as a move could be a disaster and having to pay today’s outrageous market rents. A friend of mine recently told me that his downtown Toronto condo that he’s owned for about two years ish bought pre construction, it’s a two bedroom, two bath, and he rented it out for $3,500 Plus utilities. This is in the Liberty Village, which just west of downtown Toronto, and that’s still negative cash flow. So that’s not an easy investment. For many. This list investors pretty pretty well deep pocketed. And the rent has gone up $500 over a two year period. That’s pretty rough for most tenants out there. If the federal Liberals wonder why their polling numbers are looking so bad, well, the bills come due all that spending they did all the reckless fiscal and monetary policy they’ve been doing. And also the fact that did not have the courage to force municipalities to revise their zoning to allow for higher density. And they’ve simply allowed immigration to just exceed the supply of health care, education and of course, housing. All the while the Canadian economy is shrinking in real GDP terms. The numbers are actually even worse. If you remove the economic growth from directly from immigration. If you remove immigration, we are we are actually negative four quarters in a row in terms of GDP, real GDP per capita. And housing affordability hasn’t improved that much. And it’s about to get worse, roll up page. They’re all over the news this week. As they’re forecasting Toronto housing prices to increase by 6% by the end of 2024. So price movement is going to reverse is what they’re predicting, between rate cuts and rising prices. This is why I’ve recommended to my clients to wait for a rising market. So to wait till spring to sell or later, they can hold as long as they want as long as they can to sell in order to sell and maximize their sell prices. We investors need to need all the help we can get as investment properties that have long term tenants in them. They are incredibly out of favor in today’s market. So help is on the way not help the markets improving. So that will definitely help all investors.

The housing crisis still exists, though, it’s actually gonna get worse with the lack of new development going on. There are deals out there for short term gains for those with deep pockets and strong stomachs. Like I mentioned, there are literally percussion, Washington Well, there are newly built condos and houses that are being returned to builders, you better believe those builders are motivated to let those things let those things go at deep discounts. So there is opportunity for those who can stomach it and have the deep pockets. I still believe those who create housing will, they will continue they always have and they will continue to be profitable investment businesses if executed correctly. And hence we have a very serious expert today. And our guest is Michael Cohen Williams, who is the CEO of the West End West and Home Builders Association. MC w as he’s known to his friends. It’s an acronym for his name, has spent his entire working career in planning and building it with a degree in such from Ryerson University, followed by 18 years at Ontario homebuilders association for taking on the big job as a CEO for almost the last three years at the west end Home Builders Association. I know several members of the West End homebuilders Association, that’s a mouthful. And they are a close knit active community of members with the most major players there, including folks with hundreds of millions of dollars worth of real estate. The cool part is that these crazy rich builders are very approachable and humble. In my experience. With all the development craze I’m seeing on social media, if you’re one of them, I can’t recommend enough that you check out your local nonprofit Builders Association or the Ontario Builders Association, because the prices are quite a precedent members but it’s quite low and expect high value networking. There’s a saying in Chinese. My parents always said it. And I say find the direct translation is the best things are cheap and quote high quality, which is why I’m so frugal and always on the hunt for good deals. You can connect with them CW on Twitter. I’ve given the short link it’s twitter.com/mike J CW. Again links are in the show notes. website is www dot West and HBA dossier. Mike is happy to speak to anyone interested Joining. So just reach out, tell him you heard him on this show. Please enjoy the show. Happy Holidays, folks.

Hi, Mike, thanks

Unknown Speaker 10:12
for coming on the show. Thanks for having me excited to be here.

Erwin 10:15
So what’s keeping you busy these days?

Speaker 1 10:18
The fun never stops in the housing industry. You know, I guess the market has slowed. But there’s a lot happening in terms of public policy at the municipal level, provincial level, some big federal announcements recently. And you know, despite sales, not exactly bursting at the seams, the last number of months, you know, there’s there’s a lot of stuff still under construction, there’s a lot of activity of that has

Erwin 10:44
many builders actually taking a pause in terms of building because for example, like one of my neighbors, actually one of my kids friends father works, he actually represents a whole large number of like, lumber, lumber, lumber and drywall providers. And he said they just hadn’t, they’re on pace for another record year.

Speaker 1 11:02
For some builders, things are slowing down. But you’ve got to remember to build a home. You know, it takes a while, like even a single family or a townhome, you know, that could take six months to a year. But when you’re getting into the multi residential high rise, some of these projects are literally under construction, 567 years. So even though the market has slowed in terms of new home or resale, home sales, the actual construction activity is very busy based on pretty strong years and 2020 2021 2022. In you know, things slowed down on the construction side during the pandemic, but the sales were strong coming out of that. So there was a bit of a lagging effect. So the actual construction activities very strong, which is great for our economy. There’s lots and lots of people employed in the housing sector, whether it’s books like you and I, or, you know, the people actually on site swinging the hammers, bankers, lawyers, it’s, it’s, you know, it’s the largest industry in Canada, in terms of total employment, and it’s a huge diversity of opportunities.

Erwin 12:13
Now, for listener doesn’t know who you are you this is your second, just a second time round two. So only round two,

Speaker 1 12:19
I get invited for round three, we will see how the day goes. Round two was supposed to be months ago.

Erwin 12:23
But I know that a lot of things going on. Yeah. regret taking those taking the promotion. I see for listeners benefit, like, tell us about your journey, and also your journey in the real estate industry.

Speaker 1 12:37
So I was born in 1981. Oh, you’re gonna I’m a child of the 80s. Yeah. So I went to school for urban planning in late 90s, early 2000s. So my professional background, I’m an urban planner, urbanists love city building and everything that comes with it’s a big transit nerd. So I’ve worked for when I first graduated a couple builders and then worked for the Ontario Home Builders Association for 17 years doing urban planning work related to public policy around housing, land developments, a lot of I’ll call it macro planning level policy. So rather than, you know, how do you push building exercise? Why do the planning process it’s more what’s the provincial legislative framework around our entire land use planning and development system? I moved on from that role and can’t even remember now 2020 2021 and took on the role of CEO of the West End homebuilders association. So we are a nonprofit association representing the new housing and land development industry in sort of the Hamilton Grimsby, Burlington areas, sort of the west end of the Golden Horseshoe, so to speak. We have 300 member companies, about 65 of them are home builders. And when I say builders that you know ranges from the custom builder building like a high end one or two units a year to renovators sort of doing conversions, to really niche interesting stuff. And then on the large scale stuff, the folks building towers with the cranes up in downtown Hamilton or missing middle infill or subdivisions, and then the balance of our membership is sort of the rest of the construction industry, you know, trades banks, urban planning firms, sort of the, you know, firms that produce steel, lumber yards, etc. So, our organization represents the interest of the residential and land development industry and so there’s a lot of Government Relations in AD You can see a lot of education and professional development, a lot of events, you should come to one or two of them,

Erwin 15:08
I sent I sent you guys on behalf. So

Speaker 1 15:10
yeah, lots of lots of networking events in business opportunities for people working together in the industry.

Erwin 15:17
For example, I just went along and asked her permission, username, but I sent along a client of mine, a mother son combo. She joined, she blasted those other organizations. And I said, Why not join Mike’s organization, because, you know, everyone who’s got their name on a sign along with QE W, who builds something like 300 homes, a summer type thing, or towers, like they’re all at your Meetup part of your organization. So if you want to meet the big players that go there,

Speaker 1 15:50
so if you’re involved in the industry, it’s a great way to for business networking. Even if you’re not a builder, if you’re somebody that wants to do business with a builder, whether you sell, you know, we’ve got folks that do really interesting AV equipment or technology or different products, and it’s one thing to have a store and try to sell it to a couple consumers. It’s another thing if you can sell it times 300, right, one shot to see what builder that’s installing in their home,

Erwin 16:20
or at least bounce the idea off someone who builds 300 homes a summer, like, you know, that’s a highly qualified opinion.

Speaker 1 16:27
Yeah, and I look at housing, like, home isn’t a home, like we think of maybe what a home might have been when 1960 or 1980. Like, today, in 2023, they are complex machines for living in, whether it’s the technology that’s involved in them, whether it’s, you know, some pretty sophisticated heating, ventilation, air conditioning, you know, as we’re sort of addressing climate and energy efficiency issues like these, these are very complex builds. Now, it’s not just throwing up a bunch of sticks and bricks in a roof. So there’s, there’s a lot of different companies involved in the industry, a lot of innovation. And, yeah, it’s it’s a really interesting sector to be involved in, in 2023.

Erwin 17:18
And then my standpoint is like, I’ve read many aspiring builders and developers on listening to this, and I wish them all the best because we only get out of this housing crisis. Well, not the only way. But adding supply would be a great way. And just from my experiences, observing, like people who create housing generally get ahead in life tends to be great investments.

Speaker 1 17:39
Generally, the only caution, and I know you’ve got an eager audience, it is a tough business. Oh, yeah, absolutely. It’s a high risk business and high risk community high reward. But, you know, the road is littered with those that, you know, have tried their best and tried to be innovated in and work their way through it. So it is a tough business. It’s a highly political business, which is, you know, one of the major challenges, like if you’re building a car, or a widget or a bakery, like you don’t need to go get approval every time you want to sell a muffin, or, you know, Ford doesn’t need to go get an approval every time it sells a car. So the timelines are long. For better or for worse, you do need capital, you know, land, labor, and capital are sort of the three major inputs. And in today’s interest rate environment ain’t easy. I don’t I don’t envy the position a lot of folks are in, especially when they’re highly leveraged.

Erwin 18:42
And that seems to be the formula for exam. I’m a geek at this stuff. So just observing developers that went under back in like, Oh, 708. Generally, they went under because they couldn’t support their, their, their financial obligations, generally, because they had a lot of debt.

Speaker 1 18:55
Yeah, the the industry learned, I think a lot in 8990 91. We’re going back aways, that financial, huge. Toronto housing crash. Yeah, massive in a couple of very large companies like Olympia and York and and Bradley went under. You know, I don’t think we’re going to face that kind of situation. But you know, there are companies out there and stressful situations. But the rules around bank financing have changed a lot for projects to move forward. Especially in the high rise sector, that’s probably you know, there’s a lot of risk there. And, you know, that’s, that’s not for people that are new entrants into the market, but when you’re building a 5060 storey tower, you’ve got to get into between 60 and 7370 and 80% pre sales in advance with deposits before the banks will, will finance or move forward with the construction loan. You know, loans that size are often syndicated with multiple players, sometimes not just the schedule bank, sometimes sort of mezzanine players as well. So it gets It’s complicated. There’s a very serious underwriting process. And that doesn’t say that there’s no risk to the system. It’s just, there’s a lot more safeguards and backstops. And I think due diligence than perhaps there was 30 years ago. But you know, things happen crossford went under, in 2000 22,021. And, you know, at the time they had for massive sold out projects under construction in Toronto, and these weren’t little projects. It was 80 storey tower at young and Gerard 30 storey tower at young and college 260 storey towers in, in Yorkville, like these were sold out under construction projects. So there is risk

Erwin 20:44
the pandemic them.

Speaker 1 20:47
No, they they ran into some financial trouble. Just they were over leveraged and construction costs went up significantly during the pandemic construction costs have continued to go up. Stats Canada came up with a data point earlier this summer that from 2019, beginning of the pandemic till now or I guess earlier this summer, hard construction costs are up 54%. So that’s running higher than the rate of inflation. And you know, I mentioned earlier some of these projects, you’ve got 567 year timelines. So the challenge is, if you sell a condo unit in, I don’t know, 2019 2020, it’s a huge project, you got to get here 70 80% pre sales, so it might take two years, three years to hit that, then you finally get under construction. And if you’re building a 50 6070 storey tower, it’s going to take 567 years of construction. So you’ve got to have a pro forma when you go to sales, recognizing that you’ve got a five, six or seven year runway, and costs go up, like you can lock some things into contracts, but the cost of concrete, windows, labor, etc. You’ve got to build in contingencies. And for some of these projects, that there are projects right now, I know we’re sort of more Hamilton Oakville focused here, but there are projects, be it downtown Toronto or downtown Vancouver that are very large towers that if they haven’t started construction, and they were in sales years ago, they’re not starting, they don’t they could be 100% sold out and the revenue is not enough to to build the actual tower.

Erwin 22:33
My mutual friend who introduced us to using even telling me like there are builders who are just building at a loss just to maintain their brand and to keep their people busy.

Speaker 1 22:41
Yeah, you got to some companies, you got to keep the machine rolling, so to speak. For most reputable companies you know, if they’re in real trouble, they can but for most companies they want to deliver their brand is important. The handshake the contracts important they they want to deliver for their customers, their customers are putting a lot on the line when you go into new home sales office and you want to invest in that community in that future. That That means a lot, right? So it’s, it’s a tough market right now, with the sheer volume of cost escalation, it has really put a lot of projects into a difficult place. And, you know, we’ll probably get into it more detail. But, you know, with the Bank of Canada rates. When you listen to the news, or hear people chatting about it, it’s all about mortgage rates, which which it is for the end user, whether you’re buying something new and you’re going into the bank, and you know, you want to put down a deposit and or buy a home or buy a resale home and you’re looking at you know, five point something percent or more five year mortgage rate or whatever the variable rate is now, like that’s one thing when you’re buying a million dollar home, but when you’re building a two or $300 million project, and the timelines are stretched very long, and you don’t get your revenue until you close a few years ago, you get a construction loans in the three 4% range now, eight 9% Here in the secondary markets you’re over 10% with long timelines with political uncertainty around approvals. It’s a risky business.

Erwin 24:38
So where are we at now? So actually, one thing I want to add to them is that from the consumer side, like this seems like there’s good deals available as long as you can finance it as long as you have enough cash for a down payment. Preferably more cash like 50% down but like like, like like the condo market, for example, I decal and stats and, for example, condos, the I think the September number was I think there was like five months of inventory of condo listings, which is like, well into buyers market. So there’s opportunity for people

Speaker 1 25:05
100% I think we, you know, when the market slows, right, there’s always opportunity. There are builders out there, that’s, you know, might not quite be at that 70 or 80% pre construction financing. And there, there may be deals to be had to try to, you know, they want to sell they want to get to that financing, Mark. You know, there’s some existing buildings that are I’m talking sort of the new construction rather than the resale side, you know, there’s some existing buildings that are up or under construction that have some inventory. And, you know, we’re talking about interest rates, unfortunately, there are some individuals, some folks out there that maybe over leveraged themselves that maybe bought a couple years ago, and you know, I don’t know they, they bought a six or $700,000 place, they need to pull out a $500,000 mortgage, and it’s come time to close and they can’t close. You know, they they purchased in a different environment where they thought that they’d have a 3% mortgage, not something more, and they just can’t meet the monthly carrying cost or the bank simply won’t close. So there are some individuals that perhaps are in some distress that maybe there are deals to scoop up. The assignment market, as I understand is a little hotter than normal. I know builders don’t love the assignments, but like they got to close. So I think 2024 will be interesting, because there’s a lot of condo projects that are going to be wrapping up. And the question is, is everybody gonna be able to sell I think a lot of people will close, but they’ll probably be more the probably more opportunities. And I don’t love when there’s an opportunity when somebody is in distress, but there’s probably more opportunities in the next year with some folks that can’t close is

Erwin 27:02
the unfortunate reality reality of speculators, if you didn’t have solid plans to close because someone, someone can close and they, if they put it up for rent, we will probably ever rent have a rental right away. Because the rental market is just on fire.

Speaker 1 27:16
I mean, I closed on an investment unit in July. I bought in 2019. So despite some market instability, you know, around $1,000 a square foot

Erwin 27:28
Oh my God, where is it?

Speaker 1 27:31
It’s a loft conversion. The Westin bakery Lofts at Logan in eastern awesome conversion project, shout out to Rob Cooper with the Altera they do amazing work 1000 square foot. Wow. This is the reconstruction it’s long timelines. Right. So yeah, I was actually just looking at some of the stuff last night and we basically closed almost five years to the date that we bought, like it’s a couple of months short. And you know, it’s a couple year sales program, things were slow down during the pandemic, in terms of the builder moving forward, and loft conversions are complicated. So it’s not a simple build. But yeah, we’re renting close to $5 a square foot, which is insane. But that’s, that’s the market out there. Like I say there’s pressure on the price per square foot on the new side. But on on the rental side. If you’re in Toronto, you know, Hamilton, wherever you are, like if you’re close to transit, it’s, you know, it’s just Location, location, location. And in the hot market, the last number of years, a lot of people made bets on DNC locations. And I’m sure the entry price point was different. But when the market turns, the locations hold up.

Erwin 28:58
It’s less risk. This is less record risk in general, but it may not look as good on a spreadsheet. So how so before we were recording, for example, I was asking you, I was just telling you how I was or I was on the news that landbridge mall and Hamilton there’s two towers being built 300 units like Oh, fantastic. This is the two towers, and they’re only 12 stories each. And I thought, wow, that’s like the center of Hamilton mountain. It’s like basically the commercial shopping hub. Tesla’s building, building out the service center, they’re like, that’s all great news. But like 12 stories like I thought I thought that Eric could support a lot more. Because who wouldn’t like for the malls benefit you’ve built in customers, I’d want as many as possible. And for the people who are gonna live there, there’s a mall.

Speaker 1 29:46
We’re seeing a lot more of this, this trend and I’ll get to the height in a minute. But just like in general, the planner sort of our term for this is this is gray fields, not brownfields gray fields were throat North America, you’ve got lots of either dead malls, dying malls or malls that are doing all right. But there’s a lot of parking and you know, perhaps it might be, you know, higher and best use of land to reinvest and bring in some residential, like

Erwin 30:16
our mall right here across the street. Like there’s lots of vacancy inside the mall and the parking lots humongous

Speaker 1 30:22
and you build in customers by having people living there permanently. Mostly, you know, a lot of these malls are well located either on highways on transit. So we’ve started I think, in the last 10 years, right across North American if I zero in on sort of the greater Golden Horseshoe or GTA in Hamilton area, you know, some of the first malls to do it like you you look at Yorkville on the subway in Toronto, and in the parking lots there, there’s all kinds of towers going up. So sort of the call it the locations on subway started going up first. Sure, Waze got a whole bunch of towers, Fairview mall, and the shepherd lines got a bunch of towers at Bayview mall

Erwin 31:03
surrounded by towers, right? So

Speaker 1 31:05
for the for the pension funds or real estate investment trusts and whatnot that own these, or you’ve had new kind of REITs emerge. So you know, smartcentres used to just be a mall, they, they they own malls and where the Walmarts are got a REIT. And they’re starting to look at all of their assets and looking not to sell off with condos, but to have an income stream in terms of interest terms of rental, Canadian Tire is looking into it. So you’ve got, like Loblaws is looking into it. So you’ve got I think it’s choice three. So you’ve got North American or Canadian wide companies that are looking at their land assets, especially as we’re shifting, the population is growing like crazy. And we’re shifting more and more towards intensification. And you know, I like to say a lot of the easy sites are gone

Erwin 32:02
because old fill places lots of space.

Speaker 1 32:05
I’m a Toronto transplant so the easiest Oh go now when you come out to the 905 like huge opportunity in the malls are where a lot of the opportunity is I said Hang on one

Erwin 32:16
second. So my family my dad’s practice we used to be in Market Village and we’re Mark we’re gonna be like, I know it’s not Toronto, but since the other side of steals give me grace me but

Unknown Speaker 32:27
I don’t go north of steals

Erwin 32:30
the world ends Edge of the World Go

Unknown Speaker 32:33
north of bluer but

Erwin 32:36
but they tore down that mall. And they’re building a tower in before recording us talking about the you know how in Asia for example, like every mall is generally in a tower. Right? They have like several floors, including below the grade several floors, and that’s the mall

Unknown Speaker 32:51
and the heights there are taller and what we’ll come back to Hamilton but

Erwin 32:54
but the point though, is that, would you say the easy steps taken but will we ever see that happen? Like if Sherway gardens like torn down and then replaced with a tower with Sherway gardens built within?

Speaker 1 33:05
At some point there I’m gonna get the name wrong but it’s at Richmond in John there was like the Scotiabank movie theater there that yeah, like a mall. But it’s a movie theater with a bunch of different stuff like that was only built in the late 90s. Like they’re knocking that down to build towers and build a new movie theater in the base. So cool. You got to the land values have to hit a certain point to sort of, you know, when you’ve got a parking lot, there’s a certain amount of construction costs that go in like you’re demolishing a parking lot. That’s not a large existing structure. And it’s not just the cost of bringing down the structure. It’s like what’s the what’s the current value when you look at the rents, the leases all of that so you know, one of those I don’t know, maybe not quite dead malls but malls that weren’t doing super well. If you go a couple you know we’re recording from key VW in Trafalgar you go a few exits down towards Erin Mills Parkway, there’s their Sheridan mall, massive parking lot, not a super successful mall like they’re looking at intensification, opportunities there Mississauga actually have a great location for an amplification. So Mississauga has kind of got within their urban planning structure in the long term. They’ve got five or six malls that they’re looking at, like whether it’s Sheridan mall, whether it’s I think it’s North common. And then Oh, my God, Erin Mills Town Center. They’re looking at these assets as areas to sort of intensify over the next 10 or 20 years. So we’ll come go further out, you know, talked about lime ridge and Hamilton. I mean, 12 storeys doesn’t seem like all that much. But I guess sort of the demand land value there. It’s a bit of a different equation than if you were looking at your way. Now. Maybe if they looked at it, years later, it would be different. There’s the east gate mall in Hamilton, which is going to be the last stop on the new LRT Line. They’re looking at a lot more than 12 storeys there. Great. So there’s multi Well towers being considered, but again, that’s on a future that’s going to be the anchor of a future, you know, rapid transit lines. So there’s there’s lots of puzzle pieces.

Erwin 35:10
More than 12 stories but poor libraries, Malden,

Speaker 1 35:13
small doesn’t have the LRT. Okay, I’d go taller, I want to see 50 stories 60 stories Saturday, I don’t know.

Erwin 35:23
Because that’s the only way we can really get squeezed prices down. In terms of like your skills, the scale of economy, you

Speaker 1 35:30
get obviously efficiencies when the when the land value is x and you can squeeze more units out of it, then you you bring down the land value per unit. You know, there are construction cost efficiencies when you’re stacking and you’re going taller up to a certain point, once you get to 50 or 60 stories, there’s issues around elevators, mass damper systems in terms of building sway, etc. So you start losing some of those efficiencies at a certain height. And then you’ve got to jump to a next much bigger height or, you know, eat a lot of costs.

Erwin 36:03
I was reading an article a couple of months ago, you probably saw it as well, but like, like a certain there’s a certain height until if you don’t get above it, then it doesn’t make any sense. And there’s, I believe, you know better than I would, there’s some condos where you have to take an elevator and need to get out to take another elevator even further higher. Yeah,

Speaker 1 36:22
I on a personal level, I wouldn’t love that I used to live in a 40 Something storey tower, and it was we had three elevators, it was great. But you know, once one or two elevators are down on service, or it’s moving dates, obviously complicated. So I encourage buyers out there, don’t just look at the suite, don’t just look at the location, how many elevators are there that that makes a difference in your day to day quality of life. But yeah, or in Toronto is 75 stories, I think there’s like a second elevator lobby. And there’s some buildings, you mentioned, the idea of putting a building on top of a mall, you’re seeing some buildings where, you know, you might go in at the ground level. And then you got to take an elevator to the 10th, Florida like the sky lobby, and then you change to the elevator to your unit. Or, you know, different elevators for for parking. So when you get into we’ll call it hyper intensification, which to me is sort of like the Manhattan ideation. And there’s a lot of really cool projects going up in downtown Toronto or Vancouver. But you get into some really complicated architectural and design issues when you’re on a postage size, lot. And you’ve got to have, you know, the garbage, the entrance to the parking the lobby of the mail room. All of your internal services. Yeah, development is fun.

Erwin 37:45
So then to know your question, I’m sure that listeners probably pissed at me for not asking you earlier. So where are the opportunities? So for example, I get I get new developer builders always asking like, I’m interested in buying land lots of land and sit on it or build something on it, is that something once you get into these days, I

Speaker 1 38:03
wouldn’t recommend buying and sitting on land with the political dynamic. You know, the provincial government reversed a bunch of Boundary Expansion things recently, and we’ll see what happens with that. But that’s, that’s an extremely, extremely risky and politically fraught, exercise that can literally take decades, I’m not joking, like decades, so So to move forward to new piles of cash, then you have to be very, very well capitalized and be prepared to lose it all or, you know, I, I know, people in the industry where individual projects aren’t like a decade, it’s like their career spans, you know, a 25 or 30 year project to bring a raw piece of land and actually deliver keys to, to that buyer. But to go back to your original question on sort of, where are the opportunities and you know, if you’re not super well capitalized, and building a tower, or buying land, to me, it’s all missing middle housing, sort of that niche infill products, which, you know, on a personal level, I just find more exciting, like it’s cool kind of neighborhood level, trying to find opportunities, be it buy something existing that can be either renovated, retrofitted, come down and split up and put in a multi small multiplex in whether it’s in the 905 and in more suburban context, or whether it’s somewhere, you know, in an urbanizing corridor, like the LRT or the future LRT corridor in Hamilton, there’s so much you know, I find it cool infilled design like there’s there’s a lot of opportunity there. And I think that’s what people are hungry for right like most people are renters all that stuff. Yeah, buildings are first time buyers like In the so called American or Canadian dream that you’re going to go to school, work hard, get a good job and get that house with the white picket fence, like, most people don’t have the ability to buy a $2 million dollar place. And most people also don’t want to drive to Sarnia or own sound to be able to afford something that’s maybe not at that, you know, million and a half, 2 million price point. So what I find interesting about the missing middle is you’re not necessarily in a tiny condo unit shoebox in the sky, you can have an interesting design, you can still be in touch with the community because you’re on the first second or third or fourth level. You know, even if you’re higher up you’re still at the treetops, you’re still looking at the window with the squirrels running around and can see people on the street you know, opportunities to have mixed use and beds and retailing it I think that’s that’s the future we were chatting before the show about like other jurisdictions like our our future in this region in areas probably going to look a lot more like Europe and you know, maybe on the Manhattan as Asian component a little more like Asia, but you know, I don’t think all of Hamilton or Oakville is going to be skyscrapers, it’s going to be more of this infill kind of stuff.

Erwin 41:16
Well, I support like, like cities wanting to maintain character, because then you kind of lose, you kind of lose everything if you if you get rid of a character and like historic buildings, and lots of parts of Ontario and Canada have, you know, houses that were built in the 1920s and earlier, so I don’t think anyone wants to see that go away. Now, so say you’re a beginner investor, what kind of missing middle infill project would you like to sink your teeth into?

Speaker 1 41:43
I think there’s two distinct routes. You can go with sort of the renovation conversion, buy in, you know, so there’s been some legislative zoning regulatory changes in Ontario that we used to have something called exclusionary zoning where this was North America wide were basically wide swaths of, you know, everywhere from San Francisco to Vancouver to Toronto to Hamilton, Oakville, Mississauga. wide swaths of land were only single family homes were allowed. You couldn’t, you couldn’t even put a secondary suite in, you couldn’t make it a semi detached. You couldn’t buy and split a lot and put in a semi or a townhome. It was it was singles only. And it sort of excluded all other highs and typologies. I think as the housing crisis has gotten worse and worse and worse, and young people simply can’t aspire to ever afford to live in the neighborhoods that you know, a lot of them grew up in. There’s been a lot of pressure politically to sort of, I’ll call it open up zoning to be a little more permissive. And we’re not talking about putting up towers or mid rise in existing communities, it’s maintaining the character with something, you know, planners, often called gentle density or invisible density, like, if you’re walking down the street, you’re not really going to notice the difference between a three story infill little apartment with six units and a two story single family home next to a semi like a lot of our historic neighborhoods in Hamilton or Toronto, or Vancouver, or Montreal or a whole mix of stuff, it’s it only became like, after the advent of the automobile in sort of the post war suburbs that we got into this weird pattern of like only single family homes, and massive expansion suburbs. So that’s where I think the opportunity is either on the conversion side of buying an existing single and got it or renovate it and put in you know, split it up into two or three units, or put in a secondary suite in the basement or or sort of a laneway house in the back or above the garage. So then you’ve got the opportunity there to to have a couple units in terms of an income stream, and most importantly, rather than one family living there, now you’ve got two or three families living there. They’re utilizing the existing infrastructure. And you think about neighborhoods, like how do you have a cool neighborhood with a independent coffee shop on the corner, a cool bar down the road or, you know, an independent grocery, you need customers, you need people. So I think there’s an opportunity across a lot of the suburbs for some intensification, where you’re increasing the population and existing areas, which increases opportunities for all kinds of other businesses. And I guess the other path instead of conversion is, you know, you buy a property, you knock it down and you either sever to build a couple small properties or yet, you know, you take that single family home and put in a tiny townhouse or a little multiplex where there are four units.

Erwin 44:57
So I get this like a friend of mine just came on the show And he didn’t know his name is Mackenzie he lives in Calgary. Yeah, she bought a house a single family home on a 60 by 100 lot. It’s gonna tear down this Calgary, he’s gonna tear down build a town sorry for townhouses on it. All of them were basement suites. So they can have eight units on what was a single family home lot.

Speaker 1 45:20
And that’s what we got to do. Like our population is growing like crazy. And we need opportunities everywhere. So we say we need to build up in and out and up means a hell of a lot taller towers than we’ve had before. And we’re, you know, the GTA has got more cranes in the skyline than any other jurisdiction in North America, which is healthy, but our population is growing so fast, it’s not enough. It’s not really affordable, you need to grow out with some strategically located urban boundary expansions for new communities that are built differently than the kinds of communities that we built in the past. You and I were chatting before the show, like if you go to Trafalgar, and Dundas in North Oakville like, those are new communities. And they’re being built densities, far higher than any of the suburbs that were built in the 70s 80s, or 90s. And then the last is we need to grow in so that’s in our existing communities. And that’s the opportunity for the missing middle or your example of the single family lot that became four townhomes and in the basement suites, so you go from one unit, eight units, not incredible. If we could repeat that. And it doesn’t always have to be one, eight, it could be one to two, one to three, one to four. But from coast to coast across Canada, there are massive opportunities. And these are, you know, strategically located and existing communities that have services have character have a vibe, places people want to live,

Erwin 46:42
when the aid gets really tasty for an investor, though, you’re getting more people to step up, when the returns are there, then more people will do it. Right. And like free, like I know how difficult it is to get things done. Like I used to live in Burlington, Burlington, and we won’t get into how tough it is getting things built there. But like, for example, I was looking to East Austin, where prices are incredibly affordable. And those neighborhoods have reputations for being extremely developer friendly. So would you consider investing further away, out of home, out of your home city,

Speaker 1 47:13
I’m not super familiar with the US market. So I’m not the right person to ask. But, you know, obviously having a diverse portfolios useful i On a personal level, I like to be able to see feel touch. My real like real estate, to me is it’s real estate, it’s real. Like I like it as an investment vehicle in terms of it being a tangible asset, and I manage my own assets and know our tenants and, you know, there’s a different kind of comfort level there. But you know, when you mentioned it being so much easier in Austin versus here, I think a lot of the reason we’re in this housing crisis is the level of bureaucracy the level of control I mentioned earlier, everything’s a political approval like, but

Erwin 48:01
isn’t it by design, because it is a democracy, it is the the voters generally do not want density in their backyards.

Speaker 1 48:08
100% agree, but that’s why we need to change, we need to come at things from a perspective of housing abundance. Maybe not every investor would like to hear that because I think one of the reasons why housing has been so lucrative isn’t an investment is it’s the opposite of housing, abundance, we have a system of deliberately constrained supply, and our democratic institutions have led to that. So we have a bizarre system where existing residents and neighbors seem to get a veto over who comes to their neighborhood. And to me that’s fundamentally wrong. Especially in a growing society, and it’s, you know, the local interest is different than the public interest, and the greater good and our greater good and a lot of that local interest. And, and I’ll get slammed for saying this, but a lot of it’s like, a particular demographic, you go to any public meeting, where there’s, you know, I don’t know, a six storey mid rise being proposed in an existing neighborhood like go to that public meeting and the demographics pretty similar, right.

Erwin 49:14
What’s the local homeowners?

Speaker 1 49:15
Yeah, a lot of old white people who have money

Erwin 49:19
that’s just who lives there though. Yeah, versus like in a in a more fair and more fair argument would be the future tense should be there as well but they don’t know they’re the future home occupants.

Speaker 1 49:31
Nobody speaks for the future residents nobody speaks for the young folks or the new immigrants or the those that are international students and permanent you know, non permanent residents

Erwin 49:44
they’re not giving up voting booths they’re not at the at these meetings they’re not the not mostly as charged at the locals are.

Speaker 1 49:52
And you know, I’m still gonna vote to the locals in that, you know, people fear change, and for better or for worse development, housing, our industry is all about change. But if a candidate is going to be successful in the future, this might be one of the biggest issues, if not the biggest issue that we’re facing as a country, that young people are screwed. Like, you can go to school, you can get a good job like good luck.

Erwin 50:22
You’re screwed. Unless you average parents. Yeah, yeah,

Speaker 1 50:25
if you can’t afford a house, if you tried richer parents, that’s, that’s not really what we should be be building as a as a country. And, you know, we’ve had some, we’ve got some very successful post secondary institutions where we’ve got like, the best and the brightest from all around the world are coming here. And they’re coming here to learn, and they can’t afford, afford to stay or find suitable accommodation. So we’re educating them, and then they’re, they’re gonna leave or young people are gonna leave. And, you know, our growth, growth is a good thing to have. But we have so much growth, that we’re not keeping up on housing and infrastructure. And we need to fundamentally change how we approach housing, and it’s, it’s politically uncomfortable politicians. You know, they’re listening to the existing residents, and those existing residents typically are well housed and the plight of the 26 year old doesn’t matter to them.

Erwin 51:23
I’ll never forget help a neighbor association was fighting these new student residents next to McMaster University, saying they thought it was too tall, six storeys, or whatever. height this is exactly what you should want densification of students in one area, so they stayed out of your neighborhoods, otherwise,

Speaker 1 51:40
but they fought back to build throughout the neighborhood. I mean,

Erwin 51:44
yeah, like, what was in their best interest? You

Speaker 1 51:47
move right next to a university and don’t like students like, okay, but

Erwin 51:52
didn’t you fight the building that’s going to house all the students? Right, you should be encouraged No, build up to 20 stories, build up the 50 stories, I want all the students in the neighborhood, they can all live in that building. This

Speaker 1 52:01
is why in my view, the provincial and federal governments need to be a lot more assertive, because the municipal governments, you know, councillors are beholden in, you know, MPs and MPs are elected to but they’re a little more distant from the day to day cut and thrust of neighborhood politics. You know, your average local councillor, the stuff they’re hearing about is development and housing issues, or I don’t know, the snowplow didn’t come this morning, or people don’t like people parking on the street, like it’s very neighborhood driven constituents and issues, and they’re extremely responsive to the development issues. And we need to find more ways of getting to a yes. And the easy answer is often no. Or it’s Yes, after a whole series of compromises. And you know, the number of buildings that have been built in this area, all through the GTA and Golden Horseshoe where, you know, I don’t know what’s proposed at 20. storeys, it goes through two years of planning process and negotiation with the neighborhood and counselor, and oh, you know, they chop off three or four stories, and somehow that’s the success. Oh, we got it down to 16 stories success, everybody’s happy. It’s sort of like, well, the developer, a builder was willing to go for 20, we just lost four stories, maybe that’s 40 units of housing that we could have had. Now, we don’t have? Well, you multiply that over hundreds and hundreds of projects over the course of a decade, like we flushed 10s of 1000s of units down the toilet over negotiations in church basements, because somebody doesn’t want to shadow on their tomato plant for a few hours a day. Like what what’s our priority here? And

Erwin 53:42
then we forego all those property taxes as well, the city collected? Yeah, and

Speaker 1 53:46
everybody that owns property right now knows, like, there’s so much pressure on our municipal budgets with inflation and property taxes, like the best solution is as assessment growth, and that’s new housing. And yeah, all of those, all of those, I guess, invisible or ghost floors that never got built, those would have been a lot of property taxes.

Erwin 54:11
And now we’re now I don’t know where it’s going to end up. But in the news, the proposed tax increase for Hamilton was 14% for next year. So here’s your here’s the tax bills come to be paid now. And also as Bill 23 is also basically we have to subsidize developers to build Oh, I’m gonna push back

Speaker 1 54:29
on you on that. One is Bill 23. In the municipalities had been very good at blaming. They don’t want to take responsibility for their own problems. So they want to find a boogeyman so they blame the province and blame developers Bill 23 did make some changes to the development charges act. It does not make any changes to the development charges that private sector for profit Builders pay for anything they build beyond a couple $100 taken off on on community housing. Everything else is full freight. They have removed Oops development charges from affordable housing projects. So if Habitat for Humanity, the YWCA or another nonprofit builder shows up to build below market, nonprofit housing. There are no development charges. Now philosophically, I wonder like, Why the hell were they playing development charges to begin with? Like, should we be full freight and taxing housing for the most vulnerable like that that should be where the government’s trying

Erwin 55:27
to help out because they stopped building houses. So you need to subsidize someone instead? Yeah. So

Speaker 1 55:31
that the changes in Bill 23 are entirely focused on nonprofit affordable housing. There are some reductions on purpose built rental, which we’re hardly building any of any way. And it’s things like, I think it’s like a 25% reduction on three bedroom units will like that’s the stuff that we, you know, we should be designing our tax system in a way that tries to encourage certain things. But in the current environment, like we tax housing, like cigarettes and booze, it’s like a syntax. If you buy a new house 25% of that straight up taxes, straight up taxes. So you wonder why we’re in this mess, like at the average costs, you know, I’m just gonna use round numbers. If the average cost of a new house or new townhome somewhere is a million bucks 250 of that taxes. That is insane. And that’s

Erwin 56:22
all the taxes combined all the taxes together. Yeah.

Speaker 1 56:25
So you’ve got the federal government’s got the GST, so that’s 5% right there that there were rebates structured for homes between 350 and 450. But good luck finding a house for under 350,000. You’ve got the provincial share of the HST, which is 8%. You subtract a $24,000. HST new home tax credit, but that’s, you know, nothing in the grand scheme of things. So you got the 5% plus 8%. So you’re at 13%. Right there. You got about 2% land transfer tax there, you’ve got a you’ve hit 15%. There’s all kinds of other smaller fees and charges that go to the province. So you’re already at 15 16%. And then you’ve got development charges, which are massive, they can be over 100,000 a door in some jurisdictions. You get to the smaller units like apartments, cottony a one bedroom, two bedroom condos, like depending on which municipality you’re in, you’re still over 5060 $70,000 for those. And then beyond the development charges, there are community benefits charges. In low rise, you have Parkland dedication, we need parks, so I don’t have a problem with that, per se, they take 5% of the land on a low rise project. But on a high rise projects, they take cash in lieu. So there’s some municipalities that that’s 20,000 $30,000 right there. So yeah, things we need, like parks, but like it adds up. And then all of the permit fees, planning fees. So that’s the straight up taxes, they easily hit the 25% there. And then in terms of the total tax envelope, like all of the workers and trades on site, they’re all paying WSIB they’re all paying income taxes. And of course, the company itself is paying corporate taxes. So yeah, you have about 25% Straight up taxes on the purchase price, and then there’s other layers of tax embedded in so you’re probably easily over 30% Evil builders. Yes, the evil builders that are generating massive amounts of tax revenue for our provincial and federal governments, building new communities, putting a lot of risk on the line to build a product we desperately need, and it’s taxed as if it’s booze or cigarettes.

Erwin 58:49
I still think the municipalities have screwed up and not. Because because they’ve blocked develop so much development made it so difficult that the bills come to do. That’s just how I look physically look at it from an outsider’s point of view. And also don’t understand why it felt like the new bill never came due for the pandemic. Like for example, let’s take Toronto, for example, that the TTC was still operating well, while no revenue was coming in. I’m not surprised don’t blame things like that, you know, bills 23 under the bus.

Speaker 1 59:17
I mean that the whole transit system is a whole other conversation like we need transit for cities to run.

Erwin 59:21
We do but let’s just be honest about where the expenses are coming from. Yeah, but Bill can do well, they’ll

Speaker 1 59:26
defend central province help there but I think you’ve raised it right like the bills come due for the pandemic and part of the increases in the lack of development is a lack of development. So

Erwin 59:37
there’s a lack of property taxes and when it comes to development

Speaker 1 59:40
in municipalities don’t have enough different revenue tools. And it’s either you know, it’s basically property taxes or like the the thrusts so much on the backs of development and one of the reasons why you mentioned Austin earlier like most jurisdictions, the United States don’t have development charges in any way shape or form like we do they they got it Some different kinds of impact fees. But Ontario is pretty unique in it being around 25% is tax, you don’t get that American jurisdictions, you don’t get that across much of the rest of the Canada except for sort of the the Lower Mainland in Vancouver is also a very, very high tax environment. But you go to Alberta or the Maritimes yeah, there’s development charges, but they they don’t have the scale of taxation that we do. So we’ve dug ourselves a pretty deep hole that we’re in this housing crisis, we need to build more, are planning systems broken? And we tax the hell out of new development? But I don’t have any there’s no silver bullet, there’s no easy answer, because, frankly, municipalities do need a lot of this revenue. Back in the day, the Feds in the province put more money into growth related infrastructure than they do now. Everything has been downloaded to municipalities and effectively municipalities have then downloaded it onto the private sector. And then the private sector, like our builders aren’t paying the development charges, it gets embedded in the cost of the housing. So you’re young first time homebuyer or the investor who’s listening, you’re paying for all of that infrastructure, not upfront, you’re then embedding it into your 25 year mortgage, and you’re paying the amortization on that infrastructure, growth related infrastructure. So it’s, it’s the homebuyers and the investors that are paying for all of this embedded in their mortgages, it’s pretty painful.

Erwin 1:01:33
Because the CANS been kicked down the road, and someone’s gonna have to pay for it, somebody’s got to pay for it. And now the next generation is really gonna pay for it. Yeah,

Speaker 1 1:01:42
and we talked earlier about like the escalating cost of construction, that it’s running higher than inflation. Well, let’s not just build a house or build a tower or like for municipalities, building a bridge, building a road, building a sewer, building a library. Construction costs are up across the board in terms of the material hard construction costs. And sorry,

Erwin 1:02:06
can you break that down, like how is labor materials compared to pre pandemic, for example,

Speaker 1 1:02:11
there was a study I mentioned earlier of the, I think, the top 11 municipalities in Canada, and they said that the hard construction costs were up to 34%, since the beginning of 2019, just before the pandemic, you know, I can tell people that costs are starting to use a little bit. sales activity has slowed, there’s still a lot of stuff under construction, but there’s not a lot of new stuffs, starting construction. So demand is starting to ease off. So there there is a light at the end of the tunnel in terms of some of those costs, starting to ease up and talking to some builders, when they’re looking at go forward contracts. It’s not quite as bad as it was before. There’s a little more competition. But you know, we still have labor shortages. It’s it’s not all bad things are getting better. But we need to build a hell of a lot more with the population coming. So this if things are easing, that’s great. But like the long term arc, we we’ve got, we’ve got issues.

Erwin 1:03:18
Where do you see prices going? It’s November 2023. Right now,

Speaker 1 1:03:23
I don’t know I don’t have a crystal ball. I mean, I I think as long as interest rates remain elevated, probably pretty sideways. If we actually have another 25 basis point increase, like I could see them dropping a little bit. It’s funny. So there are two different markets, the resale and new. On the resale side, there’s more room for stuff to drop, because if somebody needs to sell their house, they’re going to sell their house. And there’s lots of people that don’t need to sell. But you know, there are divorces, deaths, people moving jobs, like there’s always people that need to sell, and if they need to sell they’ll drop the price. Whereas on the new construction side, the cost of land is the cost of land. Labor may be easing a little bit, but not significantly. And they still need contingencies in we just talked about the cost of materials. And then of course, we just finished the conversation on taxes like I don’t think the City of Hamilton or Toronto or Oakville and Mississauga are going to massively cut development charges. The province and the Feds don’t sound like they’re going to massively cut GST or HST or land transfer tax, although the beds and provinces have reduced or eliminated GST on purpose built rental, which is an absolute game changer in terms of making those performance work, so that there are positive things happening, but it makes it more difficult on the new site to actually cut prices. So they just they just won’t watch. So that there are projects sitting on the sidelines that are probably ready to go but if they can’t If the revenue can’t cover the expenses and costs, they just won’t

Erwin 1:05:04
launch. So they’re ready to go in terms of they have their approvals, they just haven’t started selling them yet. It’s that

Speaker 1 1:05:09
or where they’ve started selling them and sales aren’t really going anywhere, and they’re not going to cut their

Erwin 1:05:15
prices. Right. So, so they’re willing to wait, oh, wait, I

Speaker 1 1:05:20
mean, you may see a tiny bit of easing off, but you’re not going to see big price cuts,

Erwin 1:05:25
what are the laws in the way just like strong capitalization, strong cash positions, I

Speaker 1 1:05:30
mean, if somebody’s in trouble, then then they may be willing to to cut prices. But the the other component here is like a builder or developer, like it’s not 100% capitalized themselves, like they’ve got partners and financing and the banks, right, like the banks, you know, you’ve got your term sheet, the banks aren’t going to move forward on a construction loan if the project’s not viable. And if you start slashing revenue, in an environment where the banks are getting even more conservative, because they’ve seen where prices and costs have gone up over the last number of years, they want to see a contingency. And of course, there’s the higher interest rate environment. So there’s, there’s a, there’s a profit squeeze. But then there’s also a squeeze on the financing side, because, like, money’s not as liquid as it was before, like people everybody’s tightening up. So to me, that just means on the new side, I don’t see prices coming down. But as I said, on the resale side, yeah, they could ease up a little bit. Like, I’m hopeful, and I’m sure all your listeners are hopeful that the Bank of Canada will start easing up at some point in 2024, I don’t think it’s going to happen early 2024. But whenever it does happen, I think you’ll see a lot more optimism in the market, because once once they start cutting, they’re probably not going to turn around and start going up again. So that’s sort of an indication of the long term, you know, I don’t think we’re ever going to get back to where we were at the depths of pandemic, we’re basically like it was the lowest it could possibly be. But you know, as we ease up a little bit, I think more buyers will come back into the market, there’ll be more optimism and things will start moving again.

Erwin 1:07:17
Because that’s the funny thing is we are housing crisis. But there were in a buyer’s market, though.

Speaker 1 1:07:24
But that’s the long term problem is that the population is still growing, people are still coming. So we’re in a weird spot right now. Because when you start like,

Erwin 1:07:35
well, the people coming in aren’t allowed to buy either, because we have foreign buyer taxes, but they

Speaker 1 1:07:39
need a place to live. So whether it’s investors buying and they can rent. So investors environment now. There’s still a lot of housing completions happening right now, by virtue of the stuff that started construction before. So there’s a lagging impact. So if in 2023, and 2024, and maybe 22, you know, we’re not starting a lot of new projects, that doesn’t really start showing up in sort of supply deficiencies for two or three years later, as to when they’ll be complete. So if things have slowed down this year, or next year, it’s the issue is two or three years down the road, when there’s a lack of completions, there’s a lack of stuff coming on. And that’ll be potentially, when the markets going gangbusters again, because interest rates have come down more people are buying, we still have the population growth. But in that very moment, there’s not going to be a lot of new stuff coming onto the

Erwin 1:08:29
market. And then we’re back to Hunger Games for housing. sad state of affairs. So we already mentioned that you don’t see prices really coming down for for new construction. So there’s no technological, major advances that will cause deflation. And in real estate, unlike that YouTube, I told you about, I saw with the 3d printing of houses.

Speaker 1 1:08:49
So one of the biggest, I think bolts of the industry that I’m in is we had productivity is an issue. We have a serious lack of skilled trades. We’ve got wave of retirements, like a if anybody goes to a new construction site, you’d be surprised by the average age if you walk around. It’s not a bunch of young guys.

Erwin 1:09:11
Oh, they’re near retirement, then. Yeah,

Speaker 1 1:09:12
there’s a lot of folks near retirement, we, the government’s done better. There’s there are more new entrants coming in now than there were before. There’s a lot more people in the apprentice ship system. But there’s such a gap, especially with retirements coming so one of the biggest issues our industry faces is we’ve got to improve productivity. We need fewer people to do more. And one of the biggest ways that we can do that is more technology shifting more towards modular pre production. If you look at other jurisdictions in Asia, in Europe, there’s a lot more modular factory built housing and I don’t necessarily mean the whole house is built in the factory. I mean, you know, you’re building a mid rise or a high rise there may be like wall assembly components that come in on the back of a flatbed. Truck and then there are assembled so I was in a plant in Sweden back in 2017. And it was amazing, it was looking at these these wall assemblies where, you know, they could tell me there’s exactly 36 nails and the precision is within like, a couple millimeters. And you know, there’s seven layers to the wall in terms of all of the insulation vapor barrier or whatever. And rather than being assembled outdoors, like we do here in the winter, while the winds howling, right, like, it’s, it’s built in a factory environment, just like we build cars, and then it shows up on site. And it’s kind of like, I don’t know assembled like Lego or mechanical, versus each piece by itself. Any

Erwin 1:10:39
idea how much cost savings are in such a model,

Speaker 1 1:10:42
you probably pick up costs somewhere, you probably lose costs somewhere. So I don’t have an exact figure for you, I think that the main eye opening component is the productivity and less manpower required. Let’s go towards the automation. So there’s, there’s cost savings there in two ways. It’s the productivity in the labor power, but there’s also speed these these projects are able to be built faster. You know, one thing that’s has you know, it hasn’t taken off in Canada yet but there are some mid rises being built out of like mass timber wood versus concrete and because the time it takes concrete to cure and all of that you can build a mid rise wood building faster than you can build a mid rise concrete building, but there’s, you know, other credit and logical issues there. Right, but

Erwin 1:11:37
it’s also fire retardant. YouTube, that

Speaker 1 1:11:39
one as well. Yeah, the mass timber like people sort of think, oh, it’s wood, it’s gonna burn for like a match. It doesn’t it’s like these, these mass timber is sort of cross laminated timber, you know, their burn rates. Some of them when in tests lasts longer than steel, like the steel will melt before. Like, these wood columns are thick, like they will char and harden.

Erwin 1:12:03
I think I saw it on your Twitter, either you are you or someone else. We’re conversing about it on Twitter. And that’s where I learned about mass timber.

Speaker 1 1:12:10
It’s pretty like it’s taken off big time in Europe, especially in Scandinavia, we’ve got some mass timber stuff going up here, not not as much as I thought there would be when the the building code was changed in 2015 or 2016. There’s some more code changes coming. But yeah, there’s there’s a handful of projects in the Toronto waterfront, there was a demonstration project in Vancouver at UBC, that’s actually 18 floors. Couple in the waterfront and Grimsby. So they’re here in there, it hasn’t taken off in a massive way. But there are a number of companies that do build mass timber.

Erwin 1:12:42
Super cool. And I circle back to the membership like what what is a member? Because I think everyone, I’m cheap. So naturally, I would go to a nonprofit to see what I can learn who I can network with at least try it out. Right? Like, well, how much is the membership at Western homeowners, homeowners association, for

Speaker 1 1:12:59
a builder, it’s around $2,000, an associate member, which is a non builder, I’m not going to have the exact number, it’s somewhere around 14 or $1,500. And that all year, for the year, and it also, we’re a three tier association. So with that fee, you automatically become a member of the Ontario Home Builders Association, and the Canadian Home Builders Association. And there’s all kinds of benefits there networking opportunities, same as a gym membership, it’s not much. Yeah, it’s an integrated network, from coast to coast from St. John’s, Newfoundland, right out to right out to Vancouver Island.

Erwin 1:13:36
And again, like all the biggest players will be there. All of

Speaker 1 1:13:40
the biggest companies are there in terms of those building, building our cities, building our communities. And as I said, it’s not just the builders, it’s, you know, the lumber yards, the financial institutions, there’s tons of small independent businesses, because they find it’s a great way to you know, rather than spending all your money on advertising into the, you know, this the sea and hoping somebody sees you, it’s very targeted, you join an association, you know, it’s kind of like a chamber of commerce, right? You join an association, you target a potential, particular client base, and you get out there and you network, and you show your product off and get some business.

Erwin 1:14:21
So I don’t like giving advice, but shouldn’t everyone who’s considering being a builder or developer be a part of their local Builders Association?

Speaker 1 1:14:30
I wouldn’t say everyone. I think ethical, strong business practices are critical. And look, there are some people out there that have a different way of doing business and we don’t want them as part of our membership.

Erwin 1:14:42
I assume they’re good people that listen to the show, so they’re likely good people. All

Speaker 1 1:14:46
right. Well, for all your listeners. Check out just Google West End Home Builders Association. If you’re in the Hamilton area, if you’re in a different area, check out the Ontario Home Builders Association. And you know, though there’ll be a list thing there of, you know, the London Kingston wherever you are there is a local chapter.

Erwin 1:15:05
And then how if someone wants to join, What’s the process like? Do they get a free month or anything like that or everyone’s

Speaker 1 1:15:11
different. So for us in in the Hamilton area, we have full membership deal going on right now, since the beginning of November. If you join now you can become a member now, but you don’t pay your fee until 2024. And you basically you pay the 2020 for a year and you get the rest of this year for free once we got lots of events, we got our president’s gala coming up in a week, AGM where we’ve got some great guest speakers and economists coming. Couple of networking socials, we also do a lot of professional development. So those that are interested in building in the building science, like there are some pretty major building code changes coming up. And rather than reading about them or YouTubing about them, we’ve got some of the top like instructors in the country coming in for like detailed hands on course around some of the technical building science changes to the building code.

Erwin 1:16:04
You just had Dr. Mike Moffitt on as well as the past guys. Yeah,

Speaker 1 1:16:07
it does. So we did a really cool research project. I’ve done two or three now with Mike Moffett. So we had an event in the spring where he was our keynote speaker and ran through a lot of his research like he’s, he’s awesome. So, you know, it’s a networking event, but includes a lot of good information. So we’re all about information, professional development, education, a diversity of events. I mean, tonight, we literally have an under 40 pub crawl. So I don’t know how educational it’ll be. But, you know, there’ll be 5060 young entrepreneurs out and what better way of making business contacts or socializing, you know, over a beer at a pub somewhere. So we try to capture a variety of different opportunities and options. And look, if your social network is your business network, you’re probably doing pretty well.

Erwin 1:17:00
That’s awesome. That’s super awesome. Everyone should check it out. Thank you for like, 1450 a year. That’s, that’s really cheap. Compared to that, because I see like masterminds or whatnot being offered.

Unknown Speaker 1:17:13
I don’t think anybody should hike my fees. But

Erwin 1:17:16
yeah, fine. It’s still it’ll be a shadow of what like these masterminds cost, like 10,000 a year. Mike, we’re running out of time. Anything else you want to share that I haven’t asked?

Speaker 1 1:17:27
No, I mean, I hear a lot of pessimism out there about the market and where short term rates but yeah, it’s short term. I you know, the great thing about real estate is it’s real there. There are ups and downs. It is a cyclical market. You Canada is the place to be right that the population here is growing so fast that it’s causing challenges. But I think the long term arc for real estate investment for housing for land development, it’s a solid business to be in,

Erwin 1:18:01
because you don’t see anyone not. But developers are still buying land, like people are still accumulating stuff.

Speaker 1 1:18:09
It’s Mark Twain once said buy land, they don’t make any more of it. Yeah,

Erwin 1:18:12
you went I don’t know if you knew about Ontario. So fast here?

Speaker 1 1:18:18
Well, you know, sorry, the latest population estimates, I got my one stat here, Canada’s population grew by 1.1 5 million from July 22 to July 23. It’s the biggest jump and all of the g7. Our population growth rate is 2.9%. Like, I don’t think we’re going to maintain this level. But like, if we stay at that level, we will literally double in population in the next 25 years. So, you know, we’re we’re well on our way, you know, from the 40 million to 50 million to 60 million and and, you know, whole country is growing, but it’s places like the greater Golden Horseshoe Vancouver that, you know, we’re going to be superstar international cities in terms of just dynamic global cities.

Erwin 1:19:04
Any idea what our growth rates going to be going forward? Because I think there seems to be rumblings that the people in general are not happy with the with the growth rate it is and you’re seeing it with the government as well.

Speaker 1 1:19:14
I certainly support growth, we need growth, we need the labor, because we’re not having babies. Yeah, and the rest of the world to grow, you know, we got to remain competitive. That being said, I think there is fraying of the social fabric. And I think a lot of that has to do with the cost of housing. People want safe, secure housing.

Erwin 1:19:38
Affordable, affordable.

Speaker 1 1:19:41
Attainable, I use the word attainable versus affordable for your average middle class family like that sort of the nest egg and the idea of being able to buy a home and that could be a condo townhome, like whatever in and you know, that is sort of the nest egg of sort of Growing your equity and being able to retire and provide for your family and and that’s kind of been broken in the last five to 10 years. And I worry in the long run if Canada keeps growing at this pace, and if we don’t figure out this housing issue. You know, I don’t want to get too political. But I just think we’re seeing a lot more polarization in our society right now. That would, that could get worse, probably worse. If, if more and more people are left behind in housing is the key ingredient to a stable society,

Erwin 1:20:39
who’s most pissed off and who tends to protest young people? And they should be rightfully positi? They

Speaker 1 1:20:44
should, because they should be pissed off. I think I’ve said it a couple times, like you can, you can work hard, you can do all the right things, and you’re in your early 30s. And still living in mom and dad’s basement or, you know, with crappy roommates and an overcrowded plate like, that’s some Yeah, that would make me angry to

Erwin 1:21:05
Mike’s. Thanks so much for doing this. Thanks for the time. Thank you for watching. If you want to learn how to invest in real estate from scratch, my team teaches beginners how to use the number one investment strategy that I personally use in a virtual free training class every month, go to investor training.ca/youtube. To register for our next class. That link is also in the description as well. I publish at least two to three videos a week here. So subscribe if you want to keep learning from seasoned investors, like myself, my 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 r

** Transcript Auto-Generated**

Erwin 0:13
Hello and welcome to the truth about real estate investing Show.

Erwin 0:18
Today can

Unknown Speaker 0:22
a veteran investor, property manager and realtor buying a canadapost franchise? Yes, you heard that right. This is things we do to avoid long term rentals and grief as investors after owning a six Plex student rentals rent own house hacking, what is veteran Tim’s next investment? All this and more on the truth about real estate investing show for Canadians. I’m your host, I’m your host Erwin Seto. Me hail from Hong Kong and China. After a wonderful 10 days in Tokyo and Osaka in eating everything from grilled chicken hearts to fresh tuna belly to fry your own by Goobie. Beef. I think we just had a lot at least I did have what I think was the 10 best days of eating wildlife.

Unknown Speaker 1:07
memorable trip to funny enough that the most expensive attraction that we attended Universal Studios, Japan. So we’re hanging out at Hogwarts with Harry and Hermione, Ron, and also Super Mario World.

Unknown Speaker 1:24
That was not their favorite part of the trip.

Unknown Speaker 1:27
Instead, it was one of the cheapest things that we did, which was feeding hand feeding wild deer would the deer would bow to us and they happen to be the messengers of gods.

Unknown Speaker 1:39
To feed the wild deer I think it cost us about $18 and total of food and the kids couldn’t get enough of it.

Unknown Speaker 1:47
On the food scene, and the kids are normally car monsters. They love the bread, noodles and rice until they try Japanese Wagyu beef. Our kids are not picky eater. You’re picky eaters. So they’ll try anything, which is great. However, the downside is when they tasted by Goobie beef, we had to share with them

Unknown Speaker 2:08
for those foodies scoring at home. Well my Kasei anomic assay Wagyu beef Dinner for One, which included five less like typically less expensive cuts of beef, like short rib, shame.

Unknown Speaker 2:26
What else? Again, no dog has no usually lower category. But they had incredible marbling that cost about $26. Canadian and we shared it. If you haven’t been to Japan, FYI, the Yen is on sale. So everything when traveling to Japan is on sale. Do yourself a favor, book yourself a trip. It’s bucket list level, if you need tips or anything like that just reach out. If nothing you reach out, I’ll put together a document on what I recommend for a trip.

Unknown Speaker 2:59
And before I get started on this show,

Unknown Speaker 3:02
about real estate, I think I’m gonna talk a little bit about real estate.

Unknown Speaker 3:07
Again, I’m here in Hong Kong, and this is the least affordable city in the world. And real estate still nuts, even after a significant fall in prices. I’m grateful to be staying in last place. But it’s so different from back home. My home, you know I live in a detached home.

Unknown Speaker 3:27
Here in Hong Kong, we’re staying in the equivalent of barrier Barrie, Ontario, which is you know, far north of Ontario of the City of Toronto.

Unknown Speaker 3:36
We are on we are on the last stop that public transit goes to.

Unknown Speaker 3:41
In this we’re staying in a two bed, one bath. I think it’s around 600 square feet condo, and it’s worth about 1.2 million Canadian. And that’s after

Unknown Speaker 3:53
about a 20% correction after the protests and also COVID

Unknown Speaker 4:00
Hong Kong and is different in that it did not experience meteoric rise and real estate prices like we did have North America because again, they had civil unrest government locking down on rights here. And yeah, I own extended family members share with me how their rent dropped on a condo again here in Hong Kong. The rent dropped 11% between tenants. And there was a five month vacancy period between tenants. No, no, there was no renovation for those back home. And they you know, like in Vancouver or Toronto areas that you can see rates are under 1%. So no one’s experiencing five month vacancy unless you’re doing something wrong.

Unknown Speaker 4:48
And guess what? In 823 square foot condo rentals for 823 square feet. Keep in mind the average two bedroom in Deltona, Vancouver, downtown Vancouver

Unknown Speaker 5:00
over Toronto is about 35,000 to 37,000. Again, obtaining knowledge for the average two bedroom in Vancouver or Toronto,

Unknown Speaker 5:10
do you have a number in mind?

Unknown Speaker 5:13
The new rent for this 823 square foot condo is just over 6200 Canadian dollars per month

Unknown Speaker 5:23
on a condo that will be worth around 1.5 million. Again, real estate over here is nuts are cheering I look into some to invest in real estate here in Hong Kong or Japan. No, we have no plan to invest here. It’s just so unaffordable. The minimum capital to invest here is just so high. The financing rules here require down payments at 50%.

Unknown Speaker 5:47
And for that amount, I could own a house, I could pay cash for a house in the states that comes with land. And it’d be in a good area in a Top 10 Top 10 town and they would cashflow better than here in Canada, their cash flow better than here in Canada. After that the Chinese government restricts the amount of capital allowed to leave the country. So Chinese so Chinese citizens are forced to invest locally, which they have excessively, which has caused an artificial bubble for Chinese real estate. So for me, there’s just too much risk. I’m generally quite risk averse. So

Unknown Speaker 6:25
as much as we are enjoying your stay here is December, and I’m dressed in shorts and a T shirt on over eating like pigs as I like to do while it’s mostly me over indulging in comfort food like dimsum we’re on a current streak of three days in a row of having Chinese brunch. Because Dems

Unknown Speaker 6:45
have been popping pineapple buttons with fake slices of butter. Food is wonderful over here and relatively inexpensive because there’s no sales tax and tips are much smaller.

Unknown Speaker 6:57
We’re enjoying our stay. But I’m reminded that there is no, there’s nowhere just like there’s no perfect place to live. There is no perfect investment either. I do literally love where I live, I’m home, we’re not moving away. And I’m talking about a lot of other places in us investing. But we’re not leaving our home west of Toronto. The schools are great. My friends, family clients are all great. We love our house with a pool and a view.

Unknown Speaker 7:23
But there’s so much that I don’t like about what’s happening in our country, the amount of debt, the exploitation of international students are understaffed healthcare system. If you read the newspapers, I do have the new mo that the sunshine list was published,

Unknown Speaker 7:39
which contains

Unknown Speaker 7:41
public servants who make over 6 million who make it the incomes of the six figures. And it was full of nurses making over 200,000 Thanks to working obscene number of overtime hours.

Unknown Speaker 7:53
And that’s because of our nursing shortages. So we’re in we’re already in crisis mode over there. And then yeah, to that we are in a housing crisis. I just read if you haven’t read it, I recommend that you do. December’s Maclean’s magazine, where the cover story is details how tenant unions have successfully organized rent strikes. So there’s hundreds and hundreds of people in Toronto with the support of the Toronto mayor, and they’re not paying rent. And it’s just the low end rental buildings either. Even newer buildings were were a one bedroom were written for over $2,400. They have over 550 tenants striking as well as their building was built after 2018. So they don’t have rent control. And they’re not happy about having to pay market rents either.

Unknown Speaker 8:40
The rest of the striking tenants do have rent control, and they’re protesting landlord tenant approved, landlord tenant board approved above guideline rent increases for capital costs, like roof replacements, balconies. But the tents don’t want to pay for those renovations. And they’re complaining that contractors are allowed slow and disruptive to their enjoyment of their property. Welcome to living through a renovation.

Unknown Speaker 9:04
There is no way that this ends well. With no rain coming in. They’re going to scare the private sector remember investing in building purpose built rentals

Unknown Speaker 9:15
and there’s no money for maintenance. If the landlords are smart, or say like they are, they’re gonna report the rents that hence credit rent, like I recommend to all my clients that they use landlord credit bureau. So what a landlord can rent report, a tenants rent to the Equifax and pretends not paying rent, then they take a pretty big hits to their credit, because rent is typically a tenants largest expense. Someone has to pay to maintain the building and all costs have risen, replacements brutal out there. I can again I don’t see how this ends well. I certainly don’t see how this motivates the private sector to build more rentals or for more local investors, mom and pop investors to get into the market

Unknown Speaker 10:00
In the US, whoever in many of the hot markets during COVID where they don’t have rent control, they overbuilt purpose built rentals and rents are coming down.

Unknown Speaker 10:09
I shared a screen capture from a tweet from Jay Parsons. If you don’t follow Jay Parsons on Twitter, I suggest you do. He posts a lot of great information on multifamily in the States.

Unknown Speaker 10:24
From the 2024 realtor.com forecast, report, it states that new home builders have also overbilled, so there’s pressure on prices to come down in the States. See what happens when people can actually build stuff and then prices come down, which is what we want during Canada.

Unknown Speaker 10:44
highlighted in the report also is that Austin, Texas is expected to lead the country in price declines and negative 14% and I’m excited to buy in invest in one of the best cities in what I consider in the world for investment based on economic fundamentals at discounted prices. I’ve already booked my flight to to Austin for January. Austin is a four hour flight away for Torontonians just the Calgary is, but I prefer warm weather golf and comedy. The best comedy club in the US is actually owned by Joe Rogan and it’s located in Austin. More important to real estate is that is high paying jobs.

Unknown Speaker 11:25
Elon Musk has already brought 10,000 jobs to Austin via Tesla and SpaceX. So that’s old news. New news is Samsung is building a $42 billion microchip manufacturing plant near Austin that will directly employ 4500 people. If you are a real estate investor, all the jobs. And I’ve done my research, I can’t find many of these types of jobs careers in Canada, outside of like Austin and St. Thomas, Ontario. But again, I can get a house in Austin cheaper than I can in Windsor. And the economic fundamentals do not align. And there’s

Unknown Speaker 12:04
so many good paying jobs in warmer weather climate with no state tax will attract a lot of people and that will drive up house prices and rents.

Unknown Speaker 12:14
And there’s no landlord tenant board. In my opinion, that will be a formula for successful real estate investing. And again, their developer friendly in Texas. So first off, I need to solve some interesting properties to raise some cash and then I’ll Bendel hit the MLS the first week of January, which is the ideal time to sell student rentals.

Unknown Speaker 12:34
When students when students get frustrated with limited supply of rentals,

Unknown Speaker 12:38
limited supply and limited quantity, supply quality housing,

Unknown Speaker 12:43
and also how rents in my market are the $100 a room, the math will make a lot of sense to buy instead of rent, or the more savvy deep pocketed parents. So that’s why I’m timing to be selling in January instead of waiting for the spring. My pre listing inspections are done repairs and renovations have started, cleaners are lined up and I can’t wait to invest down south where investors are wanted.

Unknown Speaker 13:07
And also for improved cash flow. When I was touring Atlanta, a typical investment property there, a house with three bedrooms and two full bathrooms was around three and 1000 and rents for 2000 Plus utilities per month.

Unknown Speaker 13:21
So for those more savvy with numbers, the gross rent yield is just about 8%. And that beats most investments here in Canada without having to shell out hundreds of hundreds of 1000s of dollars. No major renovations like a basement or in order to develop a property.

Unknown Speaker 13:39
This is how we’re going to make real estate investing great again, if you’re interested in learning more about how to invest in the US the tax implications Corporation setup. I mean seeing working best who will answer all those questions on Saturday January 13. At our Ireland offices in Oakville, Italy. So we’re also simulcast simultaneously broadcast via zoom so if you can’t make it in person, so for example, if you live in BC or Alberta, Quebec, you can just tune in via zoom. We’ll have about 40 seats in person and they tend they will sell at the first the fastest details are in our newsletter, email newsletter and in the show notes, while the link to register there. onto this week’s show. We have my old friend Tim Hall. We’ve been associates at Rockstar real estate and coaching investors since 2011. Together, Tim has done several joint ventures and rent to own an apartment building rentals. Tim has his own property management company for condos to duplexes from Toronto to Hamilton to Kitchener Waterloo. In his newest venture cashflow play, Tim acquired a private off market canadapost franchise and he is approaching one year of ownership. And he has drastically raise revenues. And he’s here to share how he’s done it, why he’s done it, what his next investment is, and how he did it, considering the fact that he’s managed to stay married.

Unknown Speaker 14:58
Probably having three

Unknown Speaker 15:00
Have kids and two dogs to follow Tim, check them out Instagram underscore Tim Hong underscore, or you can email him at Tim at infinity well.ca Please enjoy the show

Unknown Speaker 15:19
Tim, what’s keeping you busy these days? A

Unknown Speaker 15:22
quite a bit of stuff. running multiple businesses doing real estate. Property Management. Last year we bought a canadapost store just down the street from here. So three kids as well. Two dogs. Yeah. Two dogs, right. I remember. Yep. The dogs. Yeah.

Unknown Speaker 15:43
Three kids weren’t enough needed a second dog. Apparently chaos. Once it calmed down after the kids. It’s just you add a layer of chaos. And it just makes things better, I guess.

Unknown Speaker 15:55
Do you just like, do you just like a lot going on? Yeah, that it seems like when there’s less stuff to do when say for example, the kids go sleep at the inlaws or my parents, then it’s just like, Ah, it’s just relaxing.

Unknown Speaker 16:10
Because that last dog wasn’t even like a regular dog. It’s a pup, you got a puppy. It’s got a puppy. That was like a birthday impulse purchase by accident by accidentally

Unknown Speaker 16:22
dropping off the one original dog at the breeder and they don’t start from for boarding. And they had puppies. And they’re like, Oh, that’s so cute. Who said was the who was the dog? The kids? Are you guys? Us? Me and Kirsten. Oh, okay.

Unknown Speaker 16:38
We’re looking at it. So.

Unknown Speaker 16:41
Alright, I don’t even know where to start. Because you said a mouthful.

Unknown Speaker 16:46
Let’s start start the start the canadapost. Okay.

Unknown Speaker 16:49
Once what do you what do you mean, you bought a Canada Post. So last year,

Unknown Speaker 16:55
my wife didn’t really want to want to change of scenery from her current place. And I was always looking for, oh, I always look for some opportunities and stuff like that I’ve always wanted to own kind of like my own business. Originally, it was always a restaurant. But restaurants very, very difficult margin wise and to open and to run in the hours. It didn’t make sense at this time in our life stage. So we were looking around and found this Canada posts. So it’s just off a doorbell and North service road. So it’s authorized canadapost outlet. It also sells greeting cards like your your Hallmark greeting cards, birthday cards, wedding cards and stuff like that. And he’s on card. We’ve added a card and a lottery as well. So we looked into it kind of saw the numbers actually fairly cheap because the owner previous owner has been there the so the store has been there for 20 plus years in that Plaza.

Unknown Speaker 17:52
The current owner was probably there for 10 1015 years, they’re getting tired.

Unknown Speaker 17:57
Lot of inventory missing from the store, half the shelves were empty, found out that they were driving from North York to Oakville every day. So opening at 930 leaving at seven o’clock at night that drivers go to it’s very, very tiring. And they were a little bit older a couple. So they just wanted to sell. And I was looking at it as almost an investment property like real estate where we go in, increase the sales, and then potentially either hire out hours because its owner operator right now or flip it as a business. So throughout the past year, we’ve been adding new stuff to sell new inventory. We’ve been working with other local artists selling on consignment. So artists that have been selling off Etsy or Amazon, they’ve come in and put their artwork or handmade jewelry handmade cards out. And then we just sell it on consignment for them, give them a little bit of a store shelf to showcase their product. And it’s kind of a win win for everybody because I don’t have to buy wholesale for inventory. And they have a place to show they don’t have to rent space or anything like that. We’ve added passport photos over the past year, adding more inventory. And based on kind of the Canada Post sales from January to September. Looks like we’ve increased sales about 15% so far.

Unknown Speaker 19:22
Increased Google rankings were the highest ranked Canada Post in Oakville right now. So if you search Canada Post Oakville were one of the highest rank ones there. So when we took over it was like 1.2 stars. We’re just over four stars right now. It got down that bad a Yeah, it was pretty bad. So like if you’re looking at it, you’re looking at a distressed house essentially. So it’s a distressed business seller was wasn’t motivated anymore to stay there. They were lacking inventory, they are lacking customer service. And those things are an easy fix. Essentially, it’s like cosmetic pinked renovation. So it’s an easy fix.

Unknown Speaker 20:00
All right. And so the goal is, by the end of this year, I’ll have better numbers because the biggest thing was wrapping my head around. When you order inventory, you order it, you get it, but then you don’t pay for it, usually 3060 days down the road. So the cash flow is up and down. So that that was one of the more difficult parts to kind of figure out and kind of understand what’s going on on that one.

Unknown Speaker 20:25
And you’re happy with the purchase? So far? Yeah, not too bad. So far.

Unknown Speaker 20:29
In terms of we have our we’ve already refinanced it. So we’ve kind of we burned the store, essentially. So we don’t have any money in it took all original funds out. So then just slowly paying back the refinance loan now. And then, again, we’ll see by the end of this year, either hire out more hours, or maybe flip it middle of next year. How’s the current financing Merck? Is it like, is it like BDC, or something like that went through BDC is actually from BDC. It was actually a very, very simple online, just submit because of an existing business, just submitted some existing numbers. They were okay with everything you didn’t meet with anyone from

Unknown Speaker 21:13
interest is high. Interest is high interest, low percent, right. But it’s, it’s an unsecured so it’s kind of like a line of credit, essentially.

Unknown Speaker 21:23
10% is like secondary, like, second mortgage money. Yes, that’s actually secured on something Yes, unsecured.

Unknown Speaker 21:31
It’s unsecured. We’ve met with a couple banks as well, but they want to evaluate the loan based on

Unknown Speaker 21:40
inventory and what you would potentially sell it at. So it was harder to get through a traditional, like, a bank loan versus BDC was actually very easy to work with. So it was all online. Yeah. That’s crazy, literally never have met with any we like the like the numbers, you just input them, you’d have to upload documents or corporate status asked for like monthly sales. That’s it, and just keep it in. No one reviewed. No.

Unknown Speaker 22:13
accounting stuff. And I was like, I don’t have it because we were only were we we were only six months. And we never did accounting yet for it. So they looked at the business looked at this. And I’m like, Okay, sure. Here’s 12%.

Unknown Speaker 22:26
I’ll take it any day.

Unknown Speaker 22:28
Easy money.

Unknown Speaker 22:30
Obviously, the store the profit of the store movie goes down, because you have to pay back that loan. But it’s all again, deductible interest and stuff like that. What’s the term of the loan? Like? Is it like a 10? year, five year? So you’ll be paid off in five years?

Unknown Speaker 22:45
Then you have a free and clear asset? Yeah.

Unknown Speaker 22:48
That you have no money in? Correct? Yeah.

Unknown Speaker 22:52
That generates income on a monthly daily basis as essentially, it’s not so bad. And then again, we’ve increased the inventory, probably about five times as much as the previous owner. So it was still a little bit to go as it takes some time. We didn’t want to throw a whole bunch of money into the store. Like we didn’t want to do a full paint or like renovate the shelves and the floor plans or anything like that. We just kept the existing business. And just improved customer service improved, here and there. And slowly. We’re hearing customers come back saying thank goodness that you took over the store, from the previous owner. Always good signs, though. Yeah. Because I’ve hung out with you. And I’m like, people, you have like a relationship with your customers. Yeah. And I would want one thing I was hearing. I don’t remember who said it, but it was just treating your customers like family is like they’ll always come back.

Unknown Speaker 23:44
Some customers, not the greatest, don’t listen to some of the rules and some of the questions to deal with. But just gotta be patient with most of them. Some of those ones. Yeah. What kind of target returns were you looking for? When you’re like qualifying the business?

Unknown Speaker 23:59
No expectations, actually, in terms of probably looking at it, it was probably not the right way to go at it to begin with. It kind of just looked at it. I was like, the numbers look like it’s good. It looks like it kind of at least breaks even it might make a little bit of money based on what they reported. Because what they reported one is that they didn’t even kind of let me know how things are reported. So canadapost was reported differently versus

Unknown Speaker 24:27
their greeting card sales, for example. And how they reported their greeting cards, kales was through the old your cash register, little receipt slip and they printed it out. It was like a foot and a half long and I’m like, I was like what is this? Cash sales and stuff like that. So even the Canada Post side is that how it works is

Unknown Speaker 24:49
they’ll though you make the sale but canadapost takes a portion of it. So you make a percentage essentially kinda and then there’s no franchise fees or anything like that. And so you

Unknown Speaker 25:00
but you do. Once you make the sale, for example, you sell $100 worth of stamps Canada Post, post takes x amount the following day. So you collect $100 from the customer, Canada Post takes their percentage the following day from your bank account. So didn’t realize how that worked at the very beginning when looking at the original number, so no, essentially no expectations going into it, probably not the right way to do it. But based on what I saw it look like the numbers at least broke even I’m like, if it breaks even, okay, that’s good enough, or we can do something with it. It’s definitely risky to do it. But I wouldn’t say it wasn’t calculated. Did your typical sat outside the store for an hour? See how many people counted how many people go in? Went into it multiple times as a customer before actually making an offer and stuff like that? Does she know your know at that time? No, she didn’t. When we’re walking, I wanted to go buy lottery tickets did the mailing just to see what you’re like a secret shopper for yourself?

Unknown Speaker 25:57
And then just after do that, just sitting outside the store for an hour just counting the customers going in and out of it. Okay, so just to see. And then where’d the money come from to buy the business? Just cash

Unknown Speaker 26:10
from bitcoins proceeds from the

Unknown Speaker 26:13
real estate proceeds like savings and checkings. Yeah, so it wasn’t in terms of the business itself. It’s, it was cheap, I would say.

Unknown Speaker 26:24
Because it included some inventory. But it was it was cheap. Because a couple of reasons I want a listener to extract from your story is there’s a whole lot of people trying to avoid long term tenants in Ontario, and you have a lot of experience with long term term hold tenancy properties in Ontario. And here are buying a business and there’s a lot of people interested in buying businesses these days. Because that’s there’s there’s opportunity there with rates high. A lot of people have don’t have legacy plans where like, like, for example, the seller, this business likely had kids. Yep. Probably didn’t want the business. Yeah. Right. Yeah. They didn’t want the business at all. Yeah. And they were in uniform. I think they were both in university, or

Unknown Speaker 27:05
not even that like probably mid 20s, maybe out of university. Just in either finishing, or just that would I don’t remember off the top of my head. Yeah, it’d be one nothing to do with the business day one. And like literally the day, so we took over just turning the October 31. Last year, the day of closing, the the lady just gave me the keys and left, left everything in the store. She just took her personal belongings haven’t seen her since her husband came by a couple of times just to pick up everything. They left everything they didn’t want her dog they just wanted to go on. Right. So first couple months was pretty crazy. I don’t know what to do. I didn’t know if half the mail would actually get to where it was going.

Unknown Speaker 27:44
Did three intense days of training. And that’s it. And then just thrown into the fire here because I’ve been monitoring listings not nearly as deeply as you did just just out of curiosity. But that seems to be the seems to be the trend is there’s

Unknown Speaker 28:01
a lot of people up there and age, who don’t have some family to take it over. They don’t have something to sell a property to the business to they don’t have staff to sell it to. And I see there’s lots of listings. And the funny thing is almost all of them are offering seller financing. Yeah, I think like 80% of them are immediately offered seller financing as a as an investor into a business. That’s actually great.

Unknown Speaker 28:26
That’s great to do. And then those are the businesses that you want to jump into kind of those ones that have been around for a while the seller is retiring or they don’t want it and there’s ways to make it increase in terms of sales, whether that be customer service, automation, technology, anything that would increase sales, like systems anything. Yeah. existing customer base. Yeah. Right. It’s easier to get it because

Unknown Speaker 28:54
I find so many people just like they want to do everything themselves. Like there’s nothing wrong with walking into a situation that’s turnkey. Yeah. We’re doing an ill it’s turnkey. But in this case, yeah, we are doing everything ourselves or throwing a lot of hours in there right now. But it is what it is what’s kind of planned. And then once we kind of get the numbers and we can start hiring out, then I can if I if not putting that many hours into it, then I treat it as just a cash flowing investment. That’s it. So then what’s the what’s the next phase? I think you mentioned, the next phase is to hire. Yeah, by the end of the year, we’ll figure out I’ll have better numbers because it’ll be a full true calendar year for as this will be stabilized the number Yeah, and then we’ll have we have all the inventory already stocked up so we’re not kind of paying for the inventory anymore. It’s just kind of the replenishment, then I’ll have a better idea of who we can hire and how many and how many hours that I can kind of take off and start doing other stuff again, very, very, very, because you’re not busy enough. Not busy enough now.

Unknown Speaker 29:52
It’s my understanding is you got back into property management. Yeah. So me and my business partner decided this. This earlier this

Unknown Speaker 30:00
Here, to kind of jump back into it, we kind of figured out what the systems that we needed properly

Unknown Speaker 30:08
to make sure that our one our time is spent well, like previously, when we were doing it, we had up to about, I think 50 doors. And we sold off a block of those doors back in 2018, I think it was 2019. So it’s been three, four years, just because we were busy with our other stuff. And we didn’t want to grow that business anymore. And but now in that time, we were taking money transfers from tenants. So everybody was sending me EMTs. And then I was manually entering them in. So we use a property software called Bill Diem, I find it really good actually.

Unknown Speaker 30:45
But payout to owners, we couldn’t be empty all the owners because there’s limits on the EMTs. So we use a third party called Pluto. So everything was manual at that time. And it just made it very time consuming the first couple days of the month, just collecting all the payments, making sure all the owners were paid correctly, and no mistakes and stuff like that. But now we’ve set it up that every all the tenants pay through direct deposit through the software, and then all the owners are paid directly through the software as well. So they get direct deposit to Oh, that’s fantastic, is that through building them everything’s through building and right now. So we set up proper business accounts a little bit annoying to set everything up. But it’s now saved ours the first couple months. And then in terms of like maintenance, my business partner will take care of all the maintenance stuff. So when maintenance request comes in, we’ll deal with the tenant, outsource it to either our third party, either handyman that we have on file or contractors or whoever we need, get it all done coordinate with a tenant, a lot of the times we asked we actually tell the tenant here, here’s our contact for handyman.

Unknown Speaker 31:55
Reach out to them coordinate a time to fix it, get it done, and they’ll invoice us. So we are not the middleman in that one. If they say it’s an important thing, they’ll contact that they’ll they’ll answer and they’ll reach out to the contractor, if it’s not as important than that they won’t. And we kind of kind of gauge the seriousness of the issue or the maintenance request. So for example, if something’s like, oh,

Unknown Speaker 32:24
I don’t know, the, the dryer doesn’t seem to be like it’s drying properly. Okay, here’s our appliance guy, reach out to them, book them in, and they, they’ll come over and take a look. And then once they do the fix, they’ll invoice us. But they don’t reach out to the dryer guy. That means it’s the maintenance request was never actually urgent. It might, it might be drying, but it might not be drying to their standards or whatnot. But it wasn’t urgent enough to actually get something done. Obviously, if it’s a flood or something, we will get it done right away. But if it’s something like something like that something smaller, we’ll get them to kind of coordinate and kind of we kind of gauge, okay, if it’s actually an urgent request, or if it’s more of a the want something interesting. And then how big do you plan on growing this business?

Unknown Speaker 33:12
Right now, I think we’re all we’re about just under a third back to about 32 or 30 doors right now. So we’re looking to double it by next year. And then we’ll kind of go from there. We don’t want it to go to too crazy. It’s still I would still consider it almost a not really a side project. But an extra stream of income for both of us that we had the system is now in place that we don’t need to put any as many hours into it. We have a leasing party as well, that will help us do the leasing. We do the final vet in terms of the tenant as well. So in terms of me before, where I was going out to do the showings and stuff like that, I don’t have to spend as much hours as that I just meet the final tenant, do the final yes or no on that one, too. I’ll still meet the muscle, get the final say and then. But then, again, spending less hours. And what I’ve learned even from the past year from the store is finding ways to either automate systemize use technology to make things easier. So take that concept and apply it to the property management business at the same time. And then listen to other property managers that have been doing it for a long time and take bits and pieces from what they’re doing and what other tenants don’t like from what I’m hearing that and then apply to it because some of the tenants that I put in, probably about four years ago, when we sold our book of business, those tenants were still there when I took over when I message them back. Hey, hey, it’s Tim. I don’t know if you remember me, but I was managing the property before and multiple of them said Thank God you’re back. The previous the other property management was a gong show. So that was still around that previous PM. They’re still around. Yeah, but I don’t know that I don’t know how they’re doing. So the easiest method uses business, not the easiest business if you’re I

Unknown Speaker 35:00
They were trying to grow very quickly, but they didn’t have the systems in place. So we are growing slowly with the systems in place right now. So we’re taking on clients here and there in the Kitchener Hamilton area, and then

Unknown Speaker 35:12
condos within the GTA.

Unknown Speaker 35:18
And then what other pieces of technology are you implementing to make this easier are using like single key, for example, like the screen or using front lobby or anything like that? Yeah. So with, it’ll be kind of single key to use for tenant screening and reports. I forget the name. There’s also bank, one that we actually look at for bank transactions. So we can tell if they say they have no pet, but we see them on a monthly basis, go to the pet store, and then we kind of know that they have a pet. So there’s, I forget what the name of that one is. But yeah, technology like that to make the screening easier. Reports, easier income, check, employment check, verification, first and last, everything like that. References, realistically, I’ll talk to previous

Unknown Speaker 36:03
see if I can talk to the like this. Not the existing landlord, but the previous one before that.

Unknown Speaker 36:10
Any existing landlord, and any reference isn’t typically going to give you a bad reference, if they’re willing, if that tenant is willing and eager to even think of it as if you’re an employee, right? You’re not if somebody asked for a reference, you’re not going to put a reference down, that, you know that they’re going to say bad stuff to it. So calling references is I’d rather do with third party checks, social media checks, call the business to see if they’re actually like, employed their HR checks and stuff like that.

Unknown Speaker 36:40
Fantastic. Yeah. And if they call me and my rents are like $1,000 below market, you better believe I’m motivated.

Unknown Speaker 36:48
Or not, you’re like, Oh, is there no issues? No, there’s no issues whatsoever. They’ve paid rent on time. They’re a little bit dirty, but they paid rent on time. But they’re so yeah, so there’s so for that one. Yeah, we’ve dealt with over the years, a bad tenants. Majority are good, though. Like the majority are very good. Sometimes you do with deal with the bad ones that for whatever reason, maybe a couple months in something happens, separation from boyfriend, girlfriend or family member or whatnot. And then just it goes down the rails and then that’s where you get the landlord tenant board. And that becomes an issue. Now here is the delays that we’re dealing with, which is difficult for an investor, manageable if you know what you’re getting yourself into. But it is difficult, because the delays are seven, eight months or longer. How often does so say the tents have a marital breakup? Or boyfriend girlfriend they break up? And? And do they actually get to landlord tenant board? Sorry, what gets them to land on a temporary did not pay rent because they can’t afford it? Yeah, so either a non payment of rent, and then they don’t leave? Or if for example, it was you were selling the property and buyer was coming in and you were actually moving in or even if you were actually legitimately moving in to the property and they dispute it saying that they don’t believe you are disputing the move in. It depends. I think it happens more obviously in, in multi families. Just because it’s it seems less likely that an investor or somebody would that we move into a triplex for example, there is definitely possibility but it’s less likely. So what problems are so stiff? Yeah. So once they dispute it is doesn’t matter if it’s if they’re going to lose, right? That’s about seven, eight months, there’s going to it’s going to the LTV hearing, minimum seven, eight months, barely disputing to stall and or be a pain or they can’t find a place or they actually truly don’t believe the investors moving in could be a number of reasons. So we had a investor sell their house last year, October 2022. And the tenant was in there. Good tenant, single mom actually had a bunch of kids. It was an immigrant family that’s been in there for four or five years. So we worked with a family or a company to put them in always paid rent a lot a little bit more where the wear and tear than normal just because of the kids

Unknown Speaker 39:07
sold it October 2022 gave them the proper notice. They were supposed to leave end of December 2022.

Unknown Speaker 39:15
They didn’t leave prior to that we filed for the landlord tenant board hearing, just because we knew that they might give us a potential issue. We didn’t get the hearing till June of 2023. So this year.

Unknown Speaker 39:29
So the six mil hyphal. From the day that they were supposed to leave six months, got the hearing they didn’t show up, didn’t get the court order for another six weeks. So another month that half mid July, got the court order. Day after they were supposed to be leaving then they didn’t leave when to the sheriff to go file for sheriff waited another four weeks for the sheriff to get them out. And I told the Luckily somebody was actually helping them out at that time. And they paid rent through the whole time. So that’s a good that’s a good thing. They just didn’t want to move

Unknown Speaker 40:00
Have they there was a communication barrier. We tried to get them a translator but kind of fell through didn’t really work. The so they just did that they didn’t want to move. That’s it. And then they didn’t realize what was happening until they until the very end. And I told them, I was like, I don’t want to get in a situation where the sheriff comes, and all the things you want you all the kids around the house on the street, and legitimately you are going to be kicked out because we have to change the locks. So I kept on explain to them, they actually got some help. And luckily they left the day before Sheriff came.

Unknown Speaker 40:30
No, no issues, locks changed. And then the buyer closed, the buyer came along with us for the ride for almost a year essentially, who was buyer was this just a buyer that was planning to move into the property. But this wasn’t clear. And not the buyer, the client, the seller was our client, our client so and close the property timber this year. So pretty much 11 months from the original offer accepted offer. They were out again, luckily the tenants paid rent through the whole time. No issues there. Luckily, luckily, yeah. So when I’ve heard stories where tenants aren’t, aren’t paying and stuff like that, and not the greatest way to deal with it, it’s more about communicating from what I’ve learned is just communicating with the tenants. And just understanding where they’re coming from trying to get them out. A lot of people want to do with called Cash for Keys. I don’t actually like that term. So I’m starting as of today, and most people have heard me on our meetings and stuff. Call it a

Unknown Speaker 41:30
loan agreement, compensation for cooperation. That’s what we should call it as it landlords. Don’t call a Cash for Keys. I’m paying for your moving expenses. Yeah, call it there. You’re compensating them for cooperating with you. That’s it. And it’s a move out agreement as well. Yeah, we should say that the term the Cash for Keys, it’s just it’s a bad stigma for us as landlords and then for tenants, they’ll use it against us.

Unknown Speaker 41:56
So I don’t like I don’t I never use that term with my tenants. I’ve never used it with a tenant. Yeah. So I’m paying your moving expenses and it’s causing some people trouble some people will on the agreement when they sign like an 11 on the separate agreement where it says Cash for Keys. Oh, they don’t.

Unknown Speaker 42:11
Don’t do that. Small little move out agreement. Call it compensation for cooperation. Something just be expensive. Yeah. Yeah. But yeah, this is disruptive. Like

Unknown Speaker 42:23
it’s a nice thing to do not pay your moving expenses and maybe your first and last month’s rent or something like that. So majority of tenants are good, like

Unknown Speaker 42:32
most the most we’ve had to pay a couple months out in terms of rent out. Never had to deal with a tenant that wanted a lot of money. I’ve had situations where they start where they say they want a lot of money, but it never happens that they actually get looks a lot like 10 or 20,000

Unknown Speaker 42:49
the highest one we just saw was 18,000

Unknown Speaker 42:54
and they ended up getting their last month’s deposit returned to them

Unknown Speaker 43:00
you have to know how to negotiate to

Unknown Speaker 43:05
speaking negotiation bill this isn’t just happened overnight like you’ve been around like you’ve been around real estate a long time. Do you kind of like that give us an abbreviated version of your real estate investor and coach journey. But guess who knows house hacking before I was house hacking back in 2005 when I was downtown Toronto working corporate living in a two bedroom condo two plus den I was living in the master and renting out the sunroom and the and the other bedroom in the sunroom too cold there was too like it’s fun French doors. Yeah, thanks we call it so two sets of French doors on it and windows and then privacy screen on the French doors. So

Unknown Speaker 43:47
it’s nice sunlight in it

Unknown Speaker 43:51
and then oh I do remember what you were getting. Remember you’re getting read 600 bucks a room I think

Unknown Speaker 43:58
yeah, yeah, these days these days is ridiculous. I’m probably this room now easily, like 1200 1200 right now. has doubled. Yeah, it’s just sad state of affairs rent rates. And then after that, got my first real like straight rent actually, I think I believe his rent to own property in 2008 2009 I think it was oh, good timing. Yeah, not bad. And then what was what was your kitchen? Of course, yeah, that makes sense. And then over the next I think three to four years ended up getting a couple more street rentals

Unknown Speaker 44:33
jumped into a six unit building in Hamilton and then officially licensed back in 2011. Okay, about your turn. Okay. That’s an 11 I think and then did a full time I guess investor coaching in 2013. Starting so been seen it seen it seen it all essentially.

Unknown Speaker 44:56
It is a Yeah, you are ambitious and yes. 16

Unknown Speaker 45:00
That building on Main Street, and it was a nice location because you overly were looking for looking good right across from gage Park location like so the idea was right, the timing.

Unknown Speaker 45:11
Not right for our US, for example, and so me my JV partner jumped into it.

Unknown Speaker 45:16
I think we bought it for 350. I think at that time 350,004 66 unit building. Obviously the idea with any multifamily is go in renovate while there’s vacancies increase the rent, but at that time, it was 2010. So what’s that 13 years from Holy crap, that’s quite a while. So 13 years, Hamilton Main Street East across from gage park, you can kind of figure out what the tenant profile was at that time. So went through it model building two old building purpose built six unit building, two bedrooms, one bathroom and each of the units. So great building in general, but a lot of maintenance stuff like deferred maintenance. Yeah, just wait, did the previous owners do anything? Any serious capex capital expenditure a little bit, but no, no, not a lot. It doesn’t you need to do like the roof. Originally, Windows a boiler? Well, we didn’t touch any of that stuff. Because it was too expensive for

Unknown Speaker 46:11
the next guy. When we were when we originally bought it. We were looking to cashflow about 1000 1200 bucks a month.

Unknown Speaker 46:19
Yeah, it was negative about that much. So after all the good learning experience for that one. So after all, everything, we held it for four years. And at that time, it was one of my JV partners was going back to school to get his MBA. So he’s like, I don’t I’m not working anymore. So I don’t have any more salary to help compensate any of this. Yeah, I can’t handle the negative cash flow. So we ended up selling it. So it went up in value. I think we sold over 450 500 I don’t remember exact number. But after all the money that we put in for renovations, tenant issues, dealing with everything we actually ended up with net negative about 30,000.

Unknown Speaker 47:00
Negative 30 Yeah, so we lost 30,000. So if you’re negative cash flow, yeah, so we made money on the sale, but after everything in counting for all the expenses over the past four years, we ended up losing both 30,000 or and with all those headaches that went with it. Yeah, because you’re dealing six six tenant six problems. So multifamily for me, not one. I don’t manage any of them. And right now I don’t want to manage that’s why we’re keeping to single families condos and duplexes that most and for me to own I don’t want to deal with I have enough problems. Three kids and two dogs enough issues at home. I remember that property because we went through it with I think one person that locked himself in you can not get in like he failed to show there was there was like two very loud dogs that I’m not too sure what’s very angry dogs or dogs. They are all smoking and the other thing I think of it but jority of the tents were home during the day, which is usually a red flag. Yeah, so a lot of them might have they don’t work jobs or ODSP and stuff like that. Some non payments of rents not a lot surprisingly more of a maintenance stuff and then complaints so like one guy was the guy on the top floor I remember specifically he he ran water for like days straight and our water yeah been locked himself in Yeah, our water bill came up to like, I don’t know that month probably like 900 plus oh my god for that. And we got like a letter saying why is the water so high and stuff like that. But he’s not the smartest tenants. You should have ran hot water. Right. So we just ran the Goldwater. But yeah, just dealing with that stuff. I’m like yeah, I don’t want I’ve dealt with it don’t want to keep right now in my stage of investing is just simple. Yeah, it’s just simple single family or condos. Even though the condos might not cashflow just long term simple. I have one downtown that’s negative cash flow. But I look at it 10 years from now. Like it’s owning something downtown New York, downtown Toronto, like could use it for school potentially for the kids. I do have a JV partners on that one so they could use it for their kids. We’re okay in terms of where something’s like I like simple right now, after dealing with everything, it’s just simple. So your your journey and also towards like heading towards simple is quite common. Normally people are aging who’ve been around for a while, versus like there’s so many like new course grads who like rah rah rah and we go buy apartment building. You got to do Cash for Keys for all 12 tenants and going through you know, each unit no 25 $30,000 renovations and you know, you’re gonna do a strategic repositioning, I think we call it and then in 510 years, that has been cashflow. Yeah.

Unknown Speaker 49:44
Yeah, I get that. We find that like, obviously, the more complex the deal, the more money you’re more likely to make from it. But I’m okay right now with kind of just simple, small,

Unknown Speaker 49:57
small kind of single bait single singles and double

Unknown Speaker 50:00
See here and there in terms of that I don’t need a home run investment right now. So so how do you deal with capital for those those bigger projects? You need? You need some deep pockets. Right? Well, you need some deep pockets for even single single family property duplexes in order to make a cash flow. Yeah, right. Yeah. So are you is like, if you’re buying a property today, what would it be? And how much we would you be putting down?

Unknown Speaker 50:25
Obviously, you want to boy, if you’re putting your standard 20% down? Probably.

Unknown Speaker 50:30
Because you’re buying, say, let’s say you’re buying a duplex for 800,000, whether it be Hamilton or Kitchener?

Unknown Speaker 50:36
That mortgage payment by itself at the interest rates that we’re at now, it’s probably forgot four grand by itself. Right? Right, right. And you’re only probably going to be only getting about 4000 in rent, right? Let’s say, get market 25 2000 or something like so 4000 to 4500. But you also add in your property taxes, your insurance, any utilities, and if you borrow that he’ll like your down payment from your HELOC, then your your you got payments on that. So getting to a cash flow stage, now, it’s much harder than when we were buying in 2008 2009. Those were those are the good days, it’s under 200 grand. Yeah, it was great, and much, much, much looser mortgage rules and stuff like that now for your amortizations. Now you’re buying Yeah, now you have to put more down. So you might not be running, you might be thinking, Oh, I’m gonna but I have, I have multiple I have 20% down, but I can buy four or five properties. But the numbers don’t work in terms of cash flow. So instead of putting 20% out, you might put 40% down on one property to get a cash flow. And if there is ways you might have heard some banks have 40, year amortizations. But you might have to ask for those ones.

Unknown Speaker 51:47
Everywhere. principal residence is way they pushed it away out, trying to keep my payments steady. Yeah. So it’s, it’s it’s very, it’s tougher, definitely right now to invest in the cities that we are investing in right now. Still possible, you just got to kind of change the strategy, change your expectations a little bit. Because once interest rates kind of calmed down a little bit, hopefully, then the cash flow will be there a little bit more. And it’s not like many investors are going to be living off cash flow. Like before, when we were investing at the very beginning, people were like, Oh, I’m gonna have 10 cash flowing properties at 1000 bucks a month, I’ll have off $10,000 a month in cash flow. We’re not even close right now. Not even so you’re gonna branch off the equity. Yeah, you’re drunk on the equity, you’re looking for longer term appreciation, mortgage pay down. And a lot of the investors that we are actually, again, they’re offloading right now to do money, take money off the table that they’ve done for, they’ve held it for five, six years. Okay, let’s put an extra 200 grand in our pocket, right now pay down some debt, pay down some debt, they might travel. But again, it’s a safety net. It’s it’s liquid assets now instead of something tied up.

Unknown Speaker 52:59
So it is a

Unknown Speaker 53:02
because a friend of mine was pointing out to me how we’re, we’re we’re pretty much 2021 prices again, November 2023. Right now, we’re our prices are back to 2021. But rates and tight like the overnight lending rate, and you can’t always like point to five. Right? We’re like five now. So we are several times higher in interest rates, but we’re the same price. Yeah. So and most of the smart money thinks there’s gonna be a cut sometime mid next year, early next year crossing fingers crossing the years. And also at the same time, just for the listeners benefit from those who are newer banks typically offered that their best discounts for the spring market, right to compete for all the volume of business that’s going to come for the spring market. And then it’ll be an interesting spring market.

Unknown Speaker 53:48
My guess is we may be at the bottom now, or it may even past it, because fixed rate fixed rate mortgages are coming down. Right? Because the because the expectation mortgage rate expectations the way they’re going

Unknown Speaker 54:00
permission, no one thinks they’re gonna be another increase here in Canada or in the US. So fixed rates are already coming down both here and in the US. So that will that will that will stimulate the real estate market. And then the spring will be another one. But also I get the sense in from speaking to clients is that many people are waiting for the spring to sell. So we may see a lot of inventory. So then we’ll see which where we end up if the there’s enough buyers out there to absorb the sellers. Yeah, I think we’re sitting about three to four months inventory across most of the cities that we’re looking at. So it’s still a buttered split. It’s yeah, it’s all new construction condominium versus like on the on the ground starter home. Yeah. All right. So we’re gonna see if rates stay kind of steady or come down, the buyers are going to feel more confident come back into the market. And then with the immigration that we’re seeing now in like, I don’t know, they were making numbers. I don’t know. It’s just hundreds of 1000s. So there’s not enough there’s not enough homes. They’ll never build enough homes faster.

Unknown Speaker 55:00
stuff, even if they have the immigration number, it’ll still be like the Harper level immigration number, which was a historic high. Right. So it’s still humongous. And we made lots of money back then.

Unknown Speaker 55:13
So it’s, it’s, it’ll be, I think it’ll be kind of stalled out for now for until the end of the year, just because typical Christmas holiday season for real estate is always typically slower and banks aren’t aren’t promoting aren’t passing on the savings rate in December, it’s the December announcement will kind of dictate where things are going, I think. So if we have two announcements in a row where rates are held, then I think we’re in the right direction. It’ll be interesting to like,

Unknown Speaker 55:42
cuz, even just like in the spring, this year, when the Bank of Canada went, Macklin said they were holding the market went nuts. Yeah. And then it raised in July, was it? Yeah, and then it raised the coolant. Like we said, we weren’t raised just kidding. Just kidding. Sucks to be y’all. You go. Yeah. But damn.

Unknown Speaker 56:00
Bad, fascinating times.

Unknown Speaker 56:03
But yeah, if you don’t want like, there’s opportunity now, but

Unknown Speaker 56:07
it’s just advisable that you’re using it, you’d have higher cash down payments, yeah, high cash down payment, run the numbers properly, whether you’re using HELOC or not, but yeah, you’re not the days of looking for $1,000 cash flowing duplexes. Now, it’s it’s difficult, because the great investments like there’s the great the best opportunities I see right now are there’s there’s a whole lot of groups that are that are having to fire sale power of sale. still seems to be a lot of buyers for like apartment buildings, though. So I’m not in that space. I’ll have a friend on the show soon enough to ask, like, what are the apartment living spaces. But for example, this past weekend, and I was telling you before we were recording, like a song was selling a duplex and Hilton turn T sold for 740 which is like, probably 25,000 less than any of us thought it would sell for. So there’s those very motivated sellers out there. Yeah, but even 740 Like, you’re still gonna have a fair amount of cash and we’re gonna make that thing cashflow. Yeah, right. And also, the point I should add is, it was a tenant to property, which hurts sale value, which is anything with a tenant right now definitely is moving slower. One because one, buyers don’t want to deal with him. And they and investors do know about the landlord tenant board delay. So if there is a delay getting into the property or vacant property, they know that deal might be squashed just because of that tenant.

Unknown Speaker 57:33
We’re not even sure if that was an investor buy was buying okay, because it could be a homeowner, yeah, even a homeowner can try to move into it. They if the tenant doesn’t leave, they can’t close the property. Or if they do close it, they’re dealing with that tenant and the LTV themselves. What’s your current what’s your experience with selling a tented property versus a non non tenant property so it can be vacant or the or regular homeowner lives, they’re much easier obviously, because the with the tenants, if they’re cooperative, then it’s easier, but you still want to give them the 24 hour notice. You still have to let them know the whole process of okay, this is initially okay, then we’re going to take pictures I’ve had tenants say they don’t want pictures because of their personal belongings. I’ve had tenants cover all over the walls with bedsheets because they didn’t want pictures in it, they covered everything on the kitchen. Because they didn’t want pictures of it a little bit ridiculous.

Unknown Speaker 58:27
But like, that’s up to them, we can’t force them to say

Unknown Speaker 58:33
we have to take pictures of your your photos or your personal belongings if they want to cover that’s fine, we just have to work around it, but it’s not ideal. And then for showing purposes of other potential buyers that are coming in, the harder you make it to for them to view the property. For example, if I see a property on the listing right now, and the buyer wants to see it, say it’s say it’s five o’clock right now and you want to see it tomorrow at 11. You can’t see that tenant of property unless that tenant is a very cooperative one. So you have to give your proper 24 hour notice. So you might you might lose that buyer right away because they can’t get in. So with a tenant property, it’s much more difficult. Obviously, you set the expectations with the tenant first to make it as easy as possible. So most of the ones that were that have listed right now,

Unknown Speaker 59:18
all the tenants are pretty good. We still have to give the 24 hour notice. But some are even okay with short notice where an agent was in the area and they message over as I want to show this property. In the next couple hours. I text the tenant and they’re like, Hey, sorry, last minute, can this agent short? They’re like, Yeah, that’s fine. That’s okay. So as long as you set the expectation with the tenant first, I think it’s a good thing. And if you’re coming in as an agent and you know the rules and discuss it with the tenant and tell them the whole kind of the process of it. They’re kind of at ease. You’re not the property manager, you’re not the landlord you’re coming in as a third party, a knowledgeable third party that you want to make sure that they’re comfortable. In help in kind of even though there is a sale in

Unknown Speaker 1:00:00
what their rights are as well. So again, most are good. There’s only a whole theory, a few here or there that will dispute it on purpose, or maybe not like, by accent like the family that we had dealt with. There’s just kind of a miscommunication. Part of the challenge, though, is that a lot of sellers and agents aren’t familiar with working with tenants. They aren’t, especially if they’re not landlords. Yep. Because we’ve seen it. We’ve seen them in the the LTV

Unknown Speaker 1:00:29
who are deservingly there in the LTV, because it tends are complaining about them. Yeah. Because they don’t follow rules and whatnot. Yeah.

Unknown Speaker 1:00:36
So kind of a difficult question. But like, say it would say just an average property that’s tenanted, how much longer would it take to sell? And how much do you think a discount would apply? For a tenanted property versus a homeowner occupied or vacant? timewise? I would probably say, at least a few weeks right now, a few more weeks to sell to sell. Yeah, dollar wise, it’s hard. I’d have to run some numbers on kind of the properties. But you’re probably especially if it’s going to be a like a duplex, for example, single family not as much just because there’s one unit, it’s one unit, more than likely, it’s going to be a homeowner buying it. So they’re going to be moving in, you might have a little bit discount because of the wear and tear or something of the property itself. Yeah, but interfer like a duplex, you’re probably looking at, I don’t know, 2530 grand, probably at least compared to an empty one. Right? Just because it’s the rents might be low, and it’s going to be more about the math thing versus the tenants itself. It’s like if the rents if they’ve been in there for a few years, and the rents are low, not as many investors are going to be buying and then for sure, because I’ve spoken to many Realtors around the city around around

Unknown Speaker 1:01:45
like us, like it’d be do a lot of Hamilton PwC Guelph, what? Bring it forward? So I’ve spoken to many of our counterparts in the city and around the city as well. Yeah. And it seems to be pretty consistent that, like the best practice is to, you know, let the tenant know, you’re selling given time to leave, and then you have a chance to clean up the property a bit in order to maximize your sale price. Yep. 100%. Yeah, yeah. Some don’t want to go that route some investors, because once the property is empty, then they’re carrying costs, they don’t have anybody covering their carrying costs. So it’s kind of a catch 22 on something like that. What you want to do is like, Do you want a higher sale price and a faster sale? Because it’s empty? But you are going to be having monthly Hyperion costs when it is empty? Or do you want to sell it with the tenant where you might get a lower price? Or it might take longer?

Unknown Speaker 1:02:38
So it’s up to the investor and how the math works out for them essentially.

Unknown Speaker 1:02:43
What would you do?

Unknown Speaker 1:02:45
If it was your property? You have a tenant? Do you have a tentative would you sell it as is? Or would you try to wait for the winter that are gone?

Unknown Speaker 1:02:53
Or do your move? Do your moving agreement? Yeah.

Unknown Speaker 1:02:58
It’ll depend on the tenant first, ideally, you want them to leave first, I would want them to leave, it’s just much easier to show much easier to coordinate and stuff like that.

Unknown Speaker 1:03:09
And like you said, it’s kind of a business case by case for, for example, my students, student rentals are generally much easier to own Yep. And they’re generally much more cooperative as well. Like they have less of like, family belongings in the house, it’s usually much more like business. The rooms are much more business.

Unknown Speaker 1:03:27
Like just like, what they need to live away from home. So they’re not nearly as protective or private. About their stuff. Yeah, they don’t care as much. They don’t care as much.

Unknown Speaker 1:03:38
But we were talking before the different recording, because we know many of our clients are planning to sell in the spring.

Unknown Speaker 1:03:45
Should they not? Shouldn’t be, shouldn’t they be letting the tenant know what their plans are now? Yeah, you definitely like, like, I was just talking to a couple JV partners on our condo actually this morning that we’re probably planning to offload next year. So we’ll probably just give the heads up to the tenant now just saying, Hey, we’re actually looking to sell the unit next year.

Unknown Speaker 1:04:07
This is the two scenarios. If it’s an owner occupied, you’re gonna be given 60 day notice once we finalize the deal, and you’re going to have to move out, you’ll get one month’s compensation because of that, but you will have to move out. The second option is that you an investor buys it and they assume your lease but because it’s a condo more than likely is going to be owner operator, like a own buyer that’s going to be moving in and then position it to them potentially saying so if you don’t want to go through the kind of the uncertainty of when we’re actually going to sell it. If you want to move out at the end of this year or say end of January, we’re more than happy no no penalties or anything like that. Then get them to sign out sign like mutual release form. And then in 11 form and then do the move out agreement things and 11

Unknown Speaker 1:04:57
and 11 mutual release Yeah.

Unknown Speaker 1:05:00
So starting out with talking to them, obviously. But you might not listen again, it’s, it’s okay to listen now. But I would say in the next first two weeks of December, it gets a little bit trickier just because the market is not going really quite yet squarely quiet. And then you start listening early next year.

Unknown Speaker 1:05:19
Because we’ve seen spring, you see early next year, we’ve seen spring market start as early as February. Yep. Especially if the weather was good. Yeah. And there was like, Yeah, after that, like the the economics look good, for example. So there’s a rate cut in like March, February, March. I don’t think it’d be that early. But it could be actually. Then yeah, we’ll see. We’ll see crazy activity. Yep. For sure. Well, it’s the idea of the buyers are more confident. So they’ll come back into the market? Because they know that they’re getting in.

Unknown Speaker 1:05:48
They’re getting probably at the bottom of the market. Yeah, yeah. And within real estate, we’ve saw the highs and 2022. Like, we know that duplex will eventually sell for a million, but you can buy for 750. Now. And you know, again, it might come back down a little bit. But there is going to be kind of a price floor for that property that everybody thinks it’s a good deal. Because if you go around looking at those but same bungalows, right now, if if I told you you could buy one for 500,000, how many investors are going to put up their hand right away for that property? There’s that price floor for for those types of houses no matter what. So we know where the value could go. And will it get there? Yes, probably. But we just don’t know the timeframe over yet. It could be two three years. Could be Yeah, it could be longer, because he’s not bad at all. Yeah, it’s not bad at all. Make 30% or more than 30% 30% to three years appreciation. Yeah. But again, someone’s got to have the cash and the confidence to do so. Yep. And that’s what I meant. Like, there is opportunity locally, it’s just not

Unknown Speaker 1:06:50
it built, it takes a lot of capital, you have to be able to inherit, you’ll be able to be comfortable inheriting tenants. Right? Not cash flowing much. And they know you’re gonna try to minimize your risk with dealing with the right tenants, obviously. So proper screening and stuff like that, if you are assuming tenants a little bit more difficult. But if you’re buying a property, and then you’re renting it out, then spend a little bit more time to get the proper tenant versus somebody in there quickly, as well. Yeah. Because my experience has been that most people do not screen tenants as diligently as we do. So when you inherit, it’s usually, well, some of the stories that I read off of the Facebook groups. I was like, how did you get this tenant in there in the first place? My worst hand ever was inherited. Yeah. I know the feeling. Yeah.

Unknown Speaker 1:07:42
So we talked about journey, you’ve done a lot of things. Like you’re wearing a whole hat. Yeah. FX trading? What what in what does that led you to? Like, what are your lessons from that? Like you said, now you’re doing simple was FX trading simple.

Unknown Speaker 1:08:00
I think you make whatever you do, you kind of

Unknown Speaker 1:08:03
make it how you want essentially. So like I’ve done like, I’ve tried

Unknown Speaker 1:08:10
Amazon arbitrate arbitration and stuff like that. We’re all but buy toys from Toys R Us in like Walmart and flip on Amazon 30% profit. And so like it works, like all of it works is just finding something that you like to do that fits with your lifestyle. And that can change over the years. Yeah, so FX was before back in 2018 2019 fairly aggressive with it in terms of how I trade. Now it’s just simple. So not as much trading anymore. The market changed who changed the rules was the big one rules changed the types of brokers that you are working with change for leverage stuff. So you could do with like, I’m not I gotten what is it non regulated broker before I think you still can, but it’s much harder, like with getting your money in and out and stuff like that. So things change that will kind of make it easier for you and what you want to do yourself. So for me like even Yeah, even trading wise, it’s just simple for like, crypto stuff. I was trading it before. And then the market went crazy because of the drops and stuff like that. So I was like, Okay, go to hold just now I’m just huddling, just holding just by no trading on the on the crypto stuff at all.

Unknown Speaker 1:09:21
Same thing with FX and kind of simple. Kind of keep things simple. Don’t have to worry about it as much over me. Right. So like, I don’t like to use term regrets because I think there’s way to learn. But I think you’ve kind of explained that like the six plus lost money. Yes. You probably wouldn’t want to do that again.

Unknown Speaker 1:09:43
Oh, and also you?

Unknown Speaker 1:09:45
Somebody sent me I forget how long ago with next six months. You said your next property you buy will be a single family home. Yep. It’s in then for the listener. They’re probably like shaking your head like why would you buy a single family home like you can’t make any money doing that?

Unknown Speaker 1:09:59
Yeah, it’s not

Unknown Speaker 1:10:00
For the cash flow, like I want to basically I just want breakeven, essentially, and maybe negative My threat personal threshold is about $300. Negative a month is where I would want to cap off at.

Unknown Speaker 1:10:10
But again, it’s just keeping things simple. I don’t want to deal with two tenants. For the duplex, I certainly want to duplex personally. Yeah, so it just wants single family. Long term, long term buy and hold, essentially,

Unknown Speaker 1:10:25
in the cities that I would want, like, again, I prefer Kitchener Waterloo just because born and raised there. So I do I do want to get back into that market for the next one. And just might take some a little bit of time just for the numbers to work out. So what are you buying like apartment condo? You’re buying a detached three bedroom? What do you buy? Ideally would be the next one would probably be just a detached starter family. Like, like our what we’ve originally purchased back in 2008 2009. That’s for a lot more money. Yeah, that’s where a lot more money. Alright, so hang on this for you. Let’s work through this. So how much would that property be right? Right now?

Unknown Speaker 1:11:00
You’re probably looking at a decent ones. 757 50. So you can buy a duplex for that, but you don’t want your

Unknown Speaker 1:11:09
Okay, that’s gonna be on the high I guess. The higher end you’ll probably find something the 650s but 750 Let’s just we can work with that number. Okay, and then what would you rent for? But probably both, let’s say 3000 a month. 3k per month? And how much do you think you’d put down to get to like 300 bucks a month? You’re probably looking at, I would say 35%? Down? Minimum. Invest cash, right? I mean,

Unknown Speaker 1:11:34
ideally, yeah. Like assume it’s cash savings or whatever you want to pull it from? Yeah, right. And then we’re gonna gonna burn this thing.

Unknown Speaker 1:11:43
Ideally, I don’t want to I don’t know. I don’t want to burn like I just want turnkey for me. It’s I wonder if you’re gonna buy a renovated property. Yeah, okay. You know, you only want to renovate it. I don’t even want to renovate anymore. I don’t have time to renovate it. Even though I could get it the team to renovate I don’t want to I don’t want to time right now. She just got rid of a dog. You maybe have more time. I’m kidding. I’m

Unknown Speaker 1:12:01
sleeping gate open.

Unknown Speaker 1:12:03
Kitty has a terrible joke. Terrible. Better when?

Unknown Speaker 1:12:08
So that’s what you want to do now? Yo, because uh, because uh, you know, Monty, we welcome him on to

Unknown Speaker 1:12:14
those condos. He even said to me, he even down we’re leaving a condo vacant. Just so not to deal with tenant stuff. Yeah. And just sell it. Yeah. Right. That’s so wild. How, how we have I always find it fascinating because that’s part of the point of the show. Jupiter real estate investing. We’re not here to Shell glitz and glamour and rainbows and shoves blow smoke up your ass. We’re going to tell you like what it really is. And you’ve been on this journey. You’ve done the hard stuff. You’ve done like the hardest on us to the point about the six Plex that I’ve been bringing up was is a tough tenant profile. Yeah. And a building had, like, had like minimal maintenance done to it through its life. Yeah. So it was difficult property. But the area was wonderful. Yeah, it was we were probably what, five years ahead of our time on that one that, again, if we had the if we had deeper pockets, it would have been a great investment. But at that time, just again, this gage park

Unknown Speaker 1:13:08
right about you walk across the street from Main Street. It’s huge park. Yeah, because gage Park was even like Toronto magazine or something. It was like the best place for Torontonians to go live yet for affordability and whatnot. Right.

Unknown Speaker 1:13:20
So

Unknown Speaker 1:13:22
so it gives goodbye many levels. But yeah, just difficult tenant profile. Yeah.

Unknown Speaker 1:13:27
And also, the other thing I’ve been bringing up as

Unknown Speaker 1:13:30
ODSP disability is not indexed to inflation. And that was always like a rule of thumb that that I’ve used, right. I’ve tried to like No, no, that wasn’t your plan to go in to get ODSP. Yeah. But people need to consider these things when they’re buying an apartment building or buying any property. If you have tenants who are who are indexed to inflation, their income is indexed to inflation. How you ever gonna raise rents? Yeah, right. Now we really know what inflation feels like these days. Yeah, back then. And when it was 2%, we didn’t feel so much. Yeah. But But yeah, it’s a good learning lesson for deferred. But for the listener, yeah. It’s more complex. The property like there is more money to be made on it in the future. But you just have to deal with a lot of stuff. Also, depends what you pay for. Yes. Because we track the property because it’s sold at least twice since you’ve owned it. Yeah, I think the last one was, I think 1.1 I think it was, might have been higher. Excuse me. So they paid like almost triple what you paid. And it’s been 10 Year 10, almost 10 years old. Kind of makes sense. Whenever when we know the tenants are still there.

Unknown Speaker 1:14:35
Maybe the main floor would

Unknown Speaker 1:14:38
be the main floor.

Unknown Speaker 1:14:41
So yeah, my point is it’d be tough to make money at that is because you didn’t do the rent. You didn’t do the roof or the boiler No, we just saw sold it before we sold it before we could actually figure it out. Let’s because it was like around that time it was like the roof was like, I think it was like a quote for like 20 30,000 because it’s a flat roof and you’re doing the whole

Unknown Speaker 1:15:00
I think you’re doing the whole roof because there was like patches in there and but like we got that one corner like, nope.

Unknown Speaker 1:15:06
Because they might give him imagine what it costs today because inflation Yeah, I’m sure it’s more than gotta be at least double that now probably Yeah. Crazy. So interesting. Tim sort of hog the conversation at least guiding it. Anything else you want to talk about?

Unknown Speaker 1:15:24
Specific? I don’t know, I think we covered we covered everything for now.

Unknown Speaker 1:15:29
Yeah.

Unknown Speaker 1:15:31
It cracks me up that you can buy bitcoin through Canada Post.

Unknown Speaker 1:15:36
Yeah, so you can’t Well you’re you’re paying a bill through bull bitcoin is you set up an account with bull Bitcoin? And basically, it’s non KYC. So you don’t have to put any of your information in other than the ERC. 20. No, your client, your client don’t have to disclose anything. Yeah, so you can only buy a maximum of $999.99. But you bring in a QR code and it will scan it you pay cash or debit? And essentially it’s a bill payment, and you’ll get your bull Bitcoin account funded and then you can buy Bitcoin that way, right to your right to your wallet. They don’t cuz custodian, custodian, sorry, still do custodial your Bitcoin? Oh, yeah, don’t hold it. It’s on an exchange. So you have it right away. So I bought some like, two days ago.

Unknown Speaker 1:16:23
What’s your strategy with Bitcoin is long term savings, like long term savings, I found out that

Unknown Speaker 1:16:31
you can actually pay bills with your through bull Bitcoin, right now. So I’m actually thinking of putting more money into Bitcoin. And when my bill comes up, use it to

Unknown Speaker 1:16:42
pay for my bills. Interesting, long term, like, I’m not that smart, but very smart people that I know, have seemed to be jumping into that space where even bigger hedge fund companies are like, black with black rock. Block ones, I don’t know. Blackstone? Yeah, those ones are they’re talking about ETFs. So of that type of money is talking about Bitcoin, you know, something’s happening there. So it’s jumping into those long term saving, I don’t know what the value would be later on. Hopefully, I can retire in a couple years with it. And we’ll go from there. And I don’t have to do anything as of as much. What’s canadapost involvement is just because just because they’re just there’s a bill payment? Yeah, so canadapost uses a third party or bill payment company to and you’re not really buying Bitcoin, but you’re paying a bill. That bill is invoiced from both Bitcoin where the money goes towards. So essentially, but you can just call it like, yeah, you’re buying Bitcoin from Canada Post, essentially, it’s kind of funny, that this kind of posts that they promote this, no, it’s not promoted. Because it’s like a bit, it’s that third party payment is used, actually across a lot of different people as well. So you can even go pay your taxes at Canada Post. So you’ll have your CRA, you’ll print a QR code, bring that QR code and scan it and make a payment. So it’s kind of the same concept there. But with another company called Bitcoin. Fabulous, you

Unknown Speaker 1:18:16
know, you guys manage student rentals.

Unknown Speaker 1:18:19
Some here and there. Not a lot. No, no, you went to Waterloo, Waterloo students for their fine there. Okay, deal with Jessie I’m trying to keep things simple in terms of the management side as well. Just don’t want to deal with that many tenants in one building because you’re essentially you can break it up to new rooms like a duplex, you can count as like your two doors, two units. So it’s like two extra properties that you’re managing versus one single one. So just keeping it simple. It’s still a big story these days because because you can turn over the students on some regularity. So again, you have a chance to raise your market rents to market yeah, I’ve never had issues with students either for non payment I’ve never taken a student to like LTV at all. So as an investment always always good I think

Unknown Speaker 1:19:05
so what’s what cities what students what cities will you manage for students in

Unknown Speaker 1:19:10
Hamilton and Waterloo Kitchener Waterloo area Yeah, so I’m still on the West End. Yeah, right. So I mean, smack Mohawk College Mohawk Yeah, it’s on the map. Go to college. Is our console in Hamilton No, no in

Unknown Speaker 1:19:23
there all the all three are in the same area. Yeah. But they’re in terms of like those there’s less and less student rentals in Waterloo because they built so many condos there.

Unknown Speaker 1:19:33
That’s actually good. That’s actually a good

Unknown Speaker 1:19:36
a good thing to share. Because we’ve had experience we’ve had quite a client purchase one not not for us, not through us and we advised against How’d that work out? They sold it but I think they broke even so for those ones that purpose built student rental condos if you got in very early right at the beginning. It kind of made sense because the for the first two years because you’re

Unknown Speaker 1:20:00
The incentive was always two years free maintenance two years free rental guaranteed rentals. So your two years were fine. But it’s the exit strategy right now is that a one bedroom or a two bedroom condo is selling for 500 or less, I think not even 500. I looked at one like 450, for example, plus the condo fees of $400. But they’re renting over 2500. So as an investor, as a true investor, that you don’t have kids going there, you’re not going to be buying that

Unknown Speaker 1:20:31
your only buyer profile will be parents that want their kids to be in university.

Unknown Speaker 1:20:38
So you’ve just limited your your your exit strategy to pretty much a couple potential types of buyers. Because as you and me to go invest, we’re not going to be investing into a student rental condo that doesn’t cash flow, it doesn’t make sense for us whatsoever. So the only people that are buying those condos after clients are selling is that their kids are going to the university for the next two, three years. And even then I was out this past weekend with one, they have two, two kids go into University of Waterloo, they’re from Vancouver. And I told them I was like, Yes, this is the closest up to the university, you’re walking distance, everything all of many of these are close. It’s great. But your exit strategy is going to be very, very difficult after like you’re not you’re already there to sell potentially at a loss maybe. Or you might even break even if you’re lucky, right? So not the worst compared to paying rent. Not the worst, not the worst. But if they have the funds, which they are qualified to do, oh, why don’t you go get a detector or even a semi detached or even a condo townhouse is even better than a condo student rental apartment that you can rent four or five rooms to and your exit strategy chair is much wider in terms of your buyer pool. So just deposit seconds because we I think we need to elaborate that this is market specific. Because Waterloo has like when I saw the plan, I was like shocked how many how many apartment buildings or a building? Yeah, there’s gonna be a surplus I think of after all of them get built out. There’s gonna be a surplus. building more still. Yeah, they’re still building. Yeah, they had the original the Phase One was too many years. There’s a lot still.

Unknown Speaker 1:22:12
Who’s buying all these things? Like all the houses that used to be on the side streets when I was going to university, they’re all of them are torn down. Yeah, building the condo townhouses. And I think it’s similar across the different cities like I’ve seen condos, the student purpose built student rentals be in London and queens, like not as many in Hamilton Actually, no, they’re not Hamilton. But for those other cities, it’s same strategy is that make sure you know what your exit strategy is? Like getting in the first two years? Yeah, great. After that. They might be a gong show. So So why Why can’t just regular people live in these condo? You can. But why would you like if you’re young?

Unknown Speaker 1:22:52
If you’re a young professional, so you’ve graduated, and you’ve spent three, four years in these places. And now you’re working at let’s say, in your Waterloo and you’re working, you got a job. You had a nice job at Google, for example, do you want and you’re getting paid a good amount probably close to six figures probably even coming out a university at Google. Is do you want to be living with 500 students from first year up to fourth year for fifth year? Is it rowdy? Is it dirty?

Unknown Speaker 1:23:19
I wouldn’t say it’s a I would say it’s dirty or the maintenance fees will typically go faster from what I what I know because just think of your own student rental that you have six students and multiply that by 100 When you have 500 students in the same condo building, right? So it’s just that idea that not as many singles if you even if you young couple that are married you’re not going to be moving into that one you’re probably going to go down to the downtown core or you can get a condo a little bit more but it’s it’s it’s more classy, I guess. Yeah, just the amenities will be more targeted to you versus being near the university which you probably don’t really care Yeah, you might have you might have a cost yours you security there. I don’t even know if these student rental ones have like gyms or anything. I’m not even too sure. I don’t even remember off the top of my head but well, their students they can always go to the school. Yeah. Now what happened to like the real estate values around those condos like the houses like did like these Waterloo student rental condos, they wipe out the student rental market for the houses. No, there’s a lot of people that want to the renters like the students renting the Yeah, they still want the houses because we find that the they want to rent in groups similar to like Hamilton, where there’s a group of five group of six after first second first year. They want to hang out with their friends. Well, the cost is cheaper. The cost is going to be cheaper because that two bedroom condo is renting for 20. Let’s say 2500. That’s 1250 per room essentially, right? Where a house you’re probably paying eight to 1000 Wow, rents. Wow, rents. There’s still that much pressure on rents. Yeah, there’s still pressure. There’s still demand, but because when you’re Wow, most of our investors are providing good homes, like they’re nicer than your typical student rental. So we’re getting told

Unknown Speaker 1:25:00
rents for them.

Unknown Speaker 1:25:02
So and they’re willing to pay if it’s clean if it’s it’s still close to the universities and stuff like that. And these are licensed four or five bedroom licensed. Yeah. Waterloo has licensing, which is annoying. But if you buy one today and do a conversion, can you get a six bedroom or there’s restriction, you’d have to do like a three and a three or a four and a four. The top unit bottom, you can’t get back. You can’t get back. You can’t. You’ve got the bias, an existing six, you’d have to buy licensed five plus or more. Yeah. And then the transferable though, like, it’s not Trent, the license isn’t transferable. But you can apply based on the previous license criteria, essentially. So if it was a five unit, like a five room license, you can’t get that five license anymore, I don’t believe but because it was done before you can still apply for it. It’s kind of like grandfathered in. But you’re not. It’s not a transfer of the actual license itself. Yeah. How much is the how much to get to get licensed? And what’s the ongoing three to 600 bucks a year? Yeah. Plus, every few years, you have to do an H back

Unknown Speaker 1:26:09
inspection as well as the ESA inspection as well.

Unknown Speaker 1:26:13
Yeah, even if you don’t do anything to the ESA or a track, you start to get inspected. Yep. It’s just a waste of money. Yeah. Yeah, it’s a money grab for this. And it’s a complaint based system where once you’re licensed, be like if the city doesn’t go around checking this the rentals, right? So only if somebody complains about it to the city, will they come out? So once your license doesn’t really matter at that time, I’ve seen a lot of licensed rentals that look like how did this get licensed? Right but they still have to upkeep the H back and they do but we’ve heard of stories where if you know an H back or ESA electric master electrician, they just sign off on it.

Unknown Speaker 1:26:55
Right?

Unknown Speaker 1:26:57
Fascinating, right? Yeah, Timmy I know you gotta go thanks so much for doing this. Where can people where can people reach out if they want to get a property manager or like guy but ours are been there? I’ve been telling our clients if they want to sell in spring they need to talk to you like ASAP Yeah. Where can people get emails the best?

Unknown Speaker 1:27:14
Tim at infinity wealth dossier. I think that’s our website. Yeah.

Unknown Speaker 1:27:19
And then and then what you want to share your Tiktok your Instagram for the Canada Post store, Instagram, it would be card and party’s a store. So card. I think it’s just there’s hyphens in there somewhere. But search up card and party Oakville, Instagram should pop up tick, tick tock might pop up. We just post cards of the day that are funny, essentially. Some are inappropriate, but just posting for fun here and they’re fantastic. Thanks so much, Tim. Thanks for having this. Thanks. Alright.

Unknown Speaker 1:27:50
Thank you for watching. If you want to learn how to invest in real estate from scratch, my team teaches beginners how to use the number one investment strategy that I personally use in a virtual free training class every month. Go to investor training.ca/youtube To register for our next class. Then links also in the description as well. I publish at least two to three videos a week here. So subscribe if you want to keep learning from seasoned investors like myself, my guess? And if you’re just starting out, feel free to ask questions in comment below. And I’ll do my 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 at that investor training.ca/youtube Thanks again for watching. See you in the next video.

** Transcript Auto-Generated**

Unknown Speaker 0:00
How work can easily invest in Florida real estate? How short term rentals earn double that of long term rentals not just for ROI but our O L or turn on life and more on this in this week’s episode of The Truth about real estate investing show for Canadians. My name is Erwin Seto full time realtor of the year to investors proud Canadian but but no. For you the listener, at least half of you who responded to our survey, you’d like to learn more about how Canadians may invest in the USA 91 91% of you wanted a webinar workshop 50% of you mentioned specifically you want to learn more about Florida, which is why

Unknown Speaker 0:38
and why not since there’s no state tax. It’s the home of Mickey Mouse and the sun is always shining there. I’m joking.

Unknown Speaker 0:46
Except when the hurricanes but don’t worry. I’m asking today’s guest expert and Ryan pool with over 20 years experience living in investing in Florida. asked me about hurricanes and insurance to before we get to learning about Florida. I’d like to say thank you to everyone who has come by and said hi, when you see me in public, I ran into one of our 17 listeners at Costco and we were discussing sadly how he’s getting his butt kicked in Sudbury, hence the selling and I told him the numbers look much better and the sunbelt states of the USA, no snow, no frozen pipes

Unknown Speaker 1:16
and whatever Sunbury so I can’t even imagine how cold things get to the plug in their cars there. I’m sorry, I’m so ignorant. There’s no rent control and Sunbelt stays nor LTB Hinze. Hence he booked a call with me. I’m always happy to book a call with any one of our 17 listeners and 350 past clients.

Unknown Speaker 1:36
Others are and to run into we’re at the Ontario landlord wash conference in Cambridge hosted by the lovely Kaley Andrea Taylor and rod.

Unknown Speaker 1:45
People came up to me and thanked me for being a source of news entirely revelant Rev. revelant. Relevant relevant to the Canadian real estate investor. I was speaking to one another investor who’s owed 175,000 in one private mortgage gone wrong. Unfortunately, they invested in the wrong investor who is the leader and host of the wrong networking group.

Unknown Speaker 2:08
You can probably see read between the lines if you know who I’m talking about. I told her literally I knew they were they were trouble. He was trouble. They were trouble. Because I personally knew one of the earlier victims, Tom Sullivan, who detailed his experience of loss on my podcast back in 2019. Tom Sullivan, Google, it shows my real estate investing show, it’ll tell you exactly what happened without naming names. Because nobody here wants to get sued, especially me. Due Diligence. So often would have saved so many investors a lot of money and stress. I just got off the phone with a client who’s in the middle of suing another person. Someone completely unrelated.

Unknown Speaker 2:46
From a very large key real estate network. Yeah, so yeah, so someone else is suing someone else over private money that’s not being paid. I know different. I have PTSD from cars come from con artists, which has simply fueled my analysis paralysis, and my forever search for the truth. For example, the YouTube algorithm suggested for me a video fact checking my favorite geopolitics analyst Peters I hand and one of my favorite gurus, Bridgewater founder, Ray Dalio.

Unknown Speaker 3:20
The channel is called money and macro. And I’ve been

Unknown Speaker 3:25
sorry, I’ve been watched it already. And it’s been awesome. I do love staying informed and learning about economics, austerity, why rich countries are not having enough babies. Japan’s rocky economic history. Remember, Japan was expected to surpass the US and Stearns up economy, but it didn’t. They’ve actually done quite poorly.

Unknown Speaker 3:45
Not that bad. I still think they’re what the fourth largest economy in the world. Point is I’m looking to learn. So I may leverage the lessons from history to make better investment decisions going forward into the future. Based on my research, it’s showing that the US will remain a top superpower in the world, if not the number one top hyper super mega power in the world. The US dollar is going nowhere, in like my lifetime, probably my kids lifetime as well as the world reserve currency. And combined with my experience of being on a landlord in Ontario, I’ve decided to deploy my capital south of the border, as the US government is investing heavily heavily in bringing manufacturing back to the USA. Some some stats are saying that the USA will double their manufacturing and within five years, even if it’s within 10 years, you know, their economy is gonna grow. There’s gonna cause more inflation and then and then of course their their dollar will appreciate. I think most Canadians I think most people in the world can appreciate. But you need more US dollars. You shouldn’t worry everyone should diversify at least a little bit to US dollars over their home currency because I don’t know of anyone outside of North America who would prefer to be paid in Canadian dollars over US dollars. Anyways, so yeah, yeah.

Unknown Speaker 5:01
We’re talking about in, we’re talking about 1000s and 1000s of jobs being being created in the USA, for manufacturing.

Unknown Speaker 5:10
And in a lot of these jobs or six figure jobs, and then also appreciate that a lot of these jobs will create four to five spin off jobs, you know, plumbers, dentists, waitresses, all the spin off businesses that go to support these 1000s and 1000s of new jobs. So we’re talking about 10s of 1000s of new jobs with each of these new manufacturing plants opening up in the States. For example, did you know that the world’s largest contract chip manufacturer chip maker, which is based in Taiwan TSMC. So Taiwan semiconductor manufacturing home is investing $40 billion in a chip manufacturing facility in Phoenix, Arizona. Doesn’t that sound lovely? Guess what? The price of a house and the average price of a home in Phoenix Arizona is the same as Calgary, Ontario. I love Calgary I love Albertans are such lovely people. But honestly, I’d rather visit Phoenix, Arizona then go to Calgary, and, and TSMC is they will be creating, creating 4500 manufacturing jobs 4500. And this is why all governments want manufacturing in their backyard. Because again, it brings off those additional four to five spin off jobs. So that could be another 16,000 jobs on the conservative side, talking 20,000 new jobs, just from one just from one employer. And this is Phoenix, Arizona, we’re talking about this is one of the fastest growing cities in the world already gives. It’s the it’s the recreational area, recreational property area for California. Right. So again, you know, anyways, whatever. So let’s flip back to Canada. Toyota, the world’s largest car manufacturer is looking for funds to build an Eevee batteries or car manufacturing in Cambridge, Ontario. But unfortunately, Cambridge average real estate is $800,000 per home, that’s Canadian dollars. So that’s a lot more, that’s probably about a third more than a house in Phoenix.

Unknown Speaker 7:09
Unfortunately, the arguments are out of funds, the Americans can simply just hit hit harder, they have much deeper pockets than Canada. Hence Toyota will be looking to Michigan, North Carolina or Texas. Follow the money my 17 listeners where there are 1000s upon 1000s of high paying manufacturing jobs, humans will move there to make more money for lifestyle and affordable and affordable housing costs.

Unknown Speaker 7:33
For example, I can buy a suburban three bedroom, two full bath, two car garage and most top towns

Unknown Speaker 7:39
and most top towns and sunbelt states in the suburbs, top 10 towns for about the same price that we pay for a home in Edmonton, Alberta. Again, I love Albertans I think you’re all lovely people.

Unknown Speaker 7:52
But I’d much rather visit the Sunbelt of the USA including Texas. You know, Alberta friends say Alberta is the Texas of Canada.

Unknown Speaker 8:02
I’m just gonna go to Texas. And of course, yes, the taxes and the rules are all much better in Alberta and Ontario BC this goes without saying. But again, if I’m going to fly, brother fly, so

Unknown Speaker 8:17
yeah, straight up. For me to fly to Calgary is the same it takes me to fly to Dallas. So

Unknown Speaker 8:22
I’ll choose I’ll choose warmer weather. Anyways, I also appreciate that it’s a it’s a buyers market right now and most of the top 10 towns in in sunbelt states. Also they have way larger populations with more diversified economies, and the vet. So to me the investment decision is pretty easy. The entire province of Alberta, the entire province of Alberta is 4.4 million. Right? I know that that number is a few years old, but just to be fair, the same The same year, good or Dallas eight area, so just one city, Greater Dallas area 7.6 million. So one city is bigger than the entire province of Alberta, right from from my research, the top landlord friendly sunbelt states and cities in the States.

Unknown Speaker 9:08
And then when you combine the fact that we can get commercial style mortgage financing, which is way easier than I’m used to getting, I know I’m often having to cough up financial reports for four or five, six different corporations when I get a mortgage, mortgage people hate me. Versus I just need to come up with a down payment. I rents need to cover my expenses and I can get a mortgage in the States. To me it just makes way so much more sense. And then for the listener, I’m not telling you what to do. But I do believe it’s in your best interest to at least get educated on what options are available in the USA before buying your next investment property. Especially if you’re considering buying in BC Ontario. We here at The Truth about real estate investing and we’ll be offering deeper dives. And we’re doing more so at our I O and meetings we’ll be discussing. By the time this comes out well November November meeting will pass

Unknown Speaker 10:00
asked where we’re gonna be talking about investing in long term rentals in Florida, Texas, Atlanta, upstate New York.

Unknown Speaker 10:08
And we’re talking and then we have Darwin zero flew, who is the owner, founder of Pinnacle wealth brokers, and he’s invested in hundreds of acres and recreational property in Canada. So there’s still lots of great opportunity in Canada. But you’ll notice that we’re, we’re talking less about long term rentals in Ontario or BC. And also in January, we’re talking about January, we’ll have a wonderful meeting as a friend of mine who has has been who’s part of starlight investments in the underwrote. And he may part of the team that managed 20,000 units. So he’ll be sharing how he analyzes markets and properties, and they’ll be in January. Understand we regionally kind of shut down in December. It seems everyone has better things to do to celebrate the holidays and, and talking about real estate. We also have Victoria Clooney coming up on this show, she’ll be sharing how she grosses six figures she generates over $600,000 per month in short term rental money from her motel in Nova Scotia, Canada. So that is real estate, but it’s short term. There’s the long term tenants see a theme here. owning real estate is absolutely still a must for anyone who wants to defend or grow their wealth. But ideally, again, avoid those investments where rent control or a dysfunctional landlord tenant board is involved. Right. You know, there’s there’s many people in Ontario BC who have not received rent for months or well over a year. So always consider that that baby at risk, worst case scenario, so try to avoid that if possible. onto this week’s show. Our guest is basically a Canadian as he grew up in Minnesota, near the border with with Manitoba. Ryan grew up north. And he actually were so where he lived was actually north of the vast majority of where I’ve Ontarians I believe he’s actually in line with basically Thunder Bay, which is in like north of over 90% of Ontarians so he knows hockey he knows snow he knows blackflies and cold winters that he smartened up he moved to Florida, and participated in some roller coaster markets, including the financial crisis and the housing market crash of 2007 2009. Around we’ll share his experience and how he made a killing back then. Ryan is well beyond just being a realtor. He is the founder and CEO of real trade Inc, which is like a Facebook marketplace for real estate professionals. And so anyone anyone around real estate, so it can be trades people Hey new people, fence people, home inspectors, appraisers, real estate lawyers, realtors, of course. They also house host real estate listings, which is a smart diversification of play for any American realtor who wants to keep control of the listings versus the Zillow and Redfin that just rebrand all listings with their own agents. Anyways, on the Florida real estate side, Ryan recounts how he made money buying bad mortgages from the banks for pennies on the dollar back in 2009. And beyond. He talks about the current market inventory and demand situation, short term or hybrid rentals. Hybrid rental being a split between mid term and short term rental for example, rent midterm will be like a six month and then the rest of the time can be short term rental. This is a this is a new term for me. So Ryan explains what hybrid rentals are sounds fantastic. We talked about hurricane insurance and the changes to construction based on hurricanes based on changes to the code building code. So you want to make sure you pay attention to what year where things really improved, to make property safer for hurricanes. And we talked about landlord tenant laws and tax benefits. And we spend quite a bit of time on what’s fun to do in South Florida. Again, 30% of survey survey respondents asked specifically specifically for Florida, I think you know, we’re here for the people. And I give you Brian Poole. Please enjoy the show.

Unknown Speaker 13:48
Hi, Ryan, what’s keeping you busy these days? Hey, everyone, thanks for having me on. Man is here in the trenches with real estate. You know, I have my own clients, obviously, that I’ve been servicing. You know, for years, a lot of investors and obviously staying busy with real trade we’ve now launched we’ve been a little over two years, and we’re growing every single day of 1000s of users, not only agents but other service providers like lenders, title companies, attorneys and a lot of buyers and sellers using the platform so it’s it’s full on in the trenches, real estate 24/7 for this guy. And so you’re a realtor and an investor but obviously we’re other other hats you have your own real estate tech startup as well. Yep, that’s in the your dad.

Unknown Speaker 14:30
But

Unknown Speaker 14:31
I want to mention that I have a seven year old son and I’m actually coaching him in baseball. So six, seven and eight year olds is my weekends right with them. So but it’s so fulfilling. You know, I enjoy it. I know you have children too, and it’s very rewarding. If you’re selling yourself short, such as baseball, I see scuba diving, deep sea fishing and all these other. Yeah, and now he enjoys the outdoors like his dad. Ironically right now you spend a lot of time in the boat

Unknown Speaker 15:00
As you know, I’m a big sportsman. So I love you know, fishing. I’m a big free diver and spear fisherman and we do a lot of hunting here in South Florida too. You know, we got some actually a lot of public land here in Florida to do hunting. So turkeys, deer, wild hogs, we do all that fun stuff too. So

Unknown Speaker 15:18
telling us spearfishing, that sounds hard.

Unknown Speaker 15:22
Get stuck. That spirit goes that far. Yeah, the cost range. And you’re sneaky. You’re sneaking up on fish. Yeah. And I do a free diving too, because it’s actually

Unknown Speaker 15:32
the best day. You don’t have an air supply. Yeah, so you’re holding your breath. Right. And, you know, it’s actually one of the best things that I did is I took a free diving class about Gosh, it must have been about 15 years ago now and really teaches the techniques of breathing, getting your heart rate down, you’re kicking the right, you know, masks and fins to use. And that’s amazing, you know, once you learn it, and I used to scuba dive before it was like, wow, why was I having these big scuba tanks and having to fill them up and spend all this money in production? Yeah, yeah, it’s a big production and freediving you just jump in and you’re out there enjoying the ocean. And then spearfishing, which you have a spear gun, so it’s it’s you actually use big rubber bands that actually propel the actual spirit forward. And yeah, you have to get pretty close, you know, you can’t shoot really far underwater. But one thing about Florida is, you know, we’re very lucky here and so far, because we have really clear water. So it’s, it’s, you know, it’s it’s very rewarding to be able to see the, the fish that like from the top when you’re like 80 feet of water and dive down and haunt him as you’re going down. And then you’re getting great exercise, right? And then you get to come home with dinner. I mean, how much fun. But if you can see them, they can see you these really fish.

Unknown Speaker 16:43
Some of them are there. I mean, some of the fish obviously are smarter than the others. But yeah, you have some techniques where you try come right directly right on top of them, you know, and they have camo wetsuits or when so if you didn’t have camo wetsuit so that they break up your outline so they don’t see you is is is easily and then you use what are called flashers, which are actually like distractors were kind of their seeming shiny things in the water that are floating along with you. And they come and check them out. So it distracts a little bit so you can dive down and get a shot at them.

Unknown Speaker 17:16
It’s one of my biggest passions. And I mean, that’s one thing about Florida. There’s just so many cool things to do here and enjoy. And you know, it’s a great lifestyle. So I said before we’re recording the viewers degrees this morning. That’s 32 Fahrenheit. Is that right? Yeah, yeah, okay. Yeah, yeah. And I was out biking this morning. So I was up at 430 I had my bike on the road at 530. Yeah, it was beautiful. was like 72 degrees this morning.

Unknown Speaker 17:44
Right that 2020? Yes. Yes. Yeah. Yeah. And little Christmas in the air, which is perfect. So just got it’s so nice to ride around, rode about 30 miles this morning. Just beautiful. We’re very lucky. Like literally like, in the next couple of weeks that the full humidity will break and it’s just like someone turned a light on and it’s just beautiful weather now then until like almost through June.

Unknown Speaker 18:09
So this is why so

Unknown Speaker 18:12
listeners benefit. We sent out a survey what people want to know more about but us investing. Half respondents said they want specifically named Florida. So I immediately reached out to you, Ryan, because you’ve been in Florida for how long? You’ve been doing what I’ve been doing Florida real estate how long?

Unknown Speaker 18:29
2025 years, 25 years. Okay, I’ve had been active full time in real estate for 25 years, activist Natalie an agent partners in a brokerage owned a real estate asset management company. My own investment properties. Yeah, I’ve been living that for 25 years, I was way ahead of the curve. You know, obviously, we had this big migration after COVID. And during COVID It’s just I mean, it’s been phenomenal Florida, especially the last three years, you know, of the quality of people moving down the reasons people are moving down. I used to be for a lot of people were retirement right looking for second homes, or retiring. But now you know, you have a big migration of I mean, we’re getting people from California, New York that are actually moving here to headquarter, their business and actually raise families and all those good things. So they’re bringing a lot of that culture and you know, that expertise right from their different industries here and this is incredibly now West Palm now, you know, we’re becoming known as The Wall Street of the South. I’m actually looking, I’m looking at my office of my office window here are when looking at this big office building. And Goldman Sachs just took a whole floor out of that. So there, they have a big headquarters here. Ken Griffin, I don’t know if you heard about that. One of the biggest real estate plays in the world. He’s building huge estate here in Palm Beach, big hedge fund, you know, guy there estimating by the time he’s done $1 billion piece of real estate residential scuze me What is it a baseball park? What is

Unknown Speaker 19:59
it

Unknown Speaker 20:00
actually a big ocean fronts like he actually took about five different properties or wind and bottom over the last about 10 to 12 years and he’s combined them now to one huge oceanfront estate

Unknown Speaker 20:13
and then you’re gonna be estimate what his plans once these done right building is his home there it’s going to be worth close to a billion billion dollars

Unknown Speaker 20:22
you know

Unknown Speaker 20:28
do you say no to another a friend of mine, you know, you know, you know,

Unknown Speaker 20:33
have just listed a property to he took it off and then he’s probably gonna be putting it back on but a $250 million home on Palm Beach

Unknown Speaker 20:40
$250 million company golf course. It’s

Unknown Speaker 20:45
like its own little island. Even though it’s connected to Palm Beach Island with a bridge they said, you know, it’s its own island but yeah, yeah, there’s right down here. The Thick of It Real Estate. You know, luckily I moved right here in Palm Beach County, as we know, where Donald Trump has his Mar Lago

Unknown Speaker 21:03
are right here in Palm Beach actually by by his place this morning. You ever golf there?

Unknown Speaker 21:10
Well, he doesn’t have any golf course there at Mar a Lago, but he has, he owns you know, he owns like four different courses here in South Florida. Oh, I’m sorry. What is Mar a Lago? I thought there was a golf course there it actually Mar a Lago is like a beach club. So it’s actually on the ocean right Mar a Lago was on the ocean and it goes from the owning the ocean to the intercoastal you gotta come down here and I’ll bring you by that we can not only good drive by it, but the cool thing is, is see it from the boat because it goes to the intercoastal and then we can go around and see it from the ocean side and see as beach clubs so interesting, because I’m confused because like the news was always saying, Trump’s at Mar a Lago when I was they showed footage of him golfing.

Unknown Speaker 21:46
He’s got his golf club here in West Palm Beach, too, right? The Trump International Golf Club right here, which is just back over the bridge and then on the mainland, but you know, Mar Lago itself is on Palm Beach Island. Fascinating. Is that whether you hosted a live tour event, we’re getting we’re getting really sad.

Unknown Speaker 22:03
Anyways, another golf course down in Miami, right? He has a has a golf course turned. I think it’s Turnberry that he owns down in Miami

Unknown Speaker 22:11
that they had the big live tournament, which was a big shake up here because you know, I don’t know if you knew this, but there’s tons of pro golfers. golfers. Oh, yeah. I mean, yeah, I mean, you know, Jack has his home right here in Palm Beach Gardens North palm area. I mean, Greg Well, the young guys like no yeah, like Justin Thomas and his good buddy. Get names right now.

Unknown Speaker 22:34
Yeah, yeah. Jordan speed. Yeah, they all have homes here. You know, Tiger Woods just built his big expensive course their private course up there and hope sound and a lot of them you know, golf there. I mean,

Unknown Speaker 22:46
I used to golfer or you know what I mean? And I got out of it. Now. Now golf stands for Game over. Let’s fish.

Unknown Speaker 22:55
You know, I joke that my golf game and my bowling score. We’re about the same about 100. And I just couldn’t take it anymore.

Unknown Speaker 23:08
Oh, so let’s talk about give us a market overview are things now so for? For anyone who’s new to meeting Brian reading around for the first time? I think we might have picked up a listener to be on 17 listeners now. So this is your third time back on the show? I think it is. Yes. And last time you were telling me because that we’ve focused a lot on how now is different than back in. Oh 7209 during the financial crisis. Let’s touch on that. Like let’s touch on that like rootlets Can you like you lived through it? You were you were doing everything you were an asset manager you were an investor you were real. You weren’t sure you had ownership in a brokerage? Like through a period that wasn’t the world that it was ended and you were like Ground Zero pretty much for like real estate devastation. What was it like then what’s it like now?

Unknown Speaker 23:58
Yeah, well then you know obviously you know there was a big reasons for the crisis back in oh eight right it was the mortgages you know there was they had a point where I remember in oh eight you know right at the peak right before the crash end of oh seven beginning of oh eight I remember you know there were teachers buying second homes within 10 miles of their own home with no money down on a you know, a negative am loan where they were cash flowing from the start because it was a negative am and I was like wow, how could this last this much longer and it wasn’t too much longer after that you know, the things crash because you know everybody had was highly leveraged right with their loans and you know all of a sudden the prices you know sudden started to fall you know, especially right what’s what’s negative and is that where you you get paid money when you close? No the negative and means that you’re not paying anything towards the principal so it’s actually adds on to the principal every single month. Oh, interest only Yeah. Oh, yeah. Okay, negative amortization. So actually, you’re

Unknown Speaker 25:00
It goes higher every year your balance every every, every single month, you know, and I was alone, no money down. No money down. You know?

Unknown Speaker 25:12
I know it was, it was incredible. And there was, you know, obviously these lenders got creative at the peak with that product when the prices got so high, and they were created that product. And that’s when I kind of knew, you know, things weren’t, you know, myself looking that great. And, yeah, and then we obviously had the crisis. And, you know, everybody overnight, you know, sudden their homes were worth half of what they paid for or less, you know, and it just happened so fast. And I remember sitting there in real estate, and I was stressed out about bout it, I had a lot of clients, I’m like, man, what are we going to do? And one of my good friends bill, by now you’re at very forward thinking real estate guy said, you know, this thing’s has to shake out some way, like you’re gonna have all these foreclosures, you know, how’s this gonna work out? And we’re sitting there, then one day, you know how to how to listen, I had a basically hedge fund Call, call me and say, Hey, can you do a BPO for this property we have, and you might get the listing, and I just, you know, my sense to start speaking to him, and I asked him, like, what are you doing? He’s like, Oh, we’re a hedge fund, and we’re buying non performing loans, you know, and we just need to know what this property be worth, if we got it back and start with a BPO. A broker price opinion,

Unknown Speaker 26:21
comparative market analysis, I guess? Yeah, yeah, we called CMAs, comparative market, that’s when all of a sudden, like a light went off, I was like, wow, this is how it’s gonna work out is these big hedge funds are going to go and buy these loans. From all these banks, these regional banks, and they’re going to buy them at big discounts are going to, you know, get them back. And then they’re going to, you know, do whatever, whether they rent them, or they sell them, well, they’re all wanting to sell them. So they would go to the borrower’s, they bought these notes, let’s say to us, for instance, like a note for, you know, $300,000, the house, you know, the mortgage was, well, the house now is worth, let’s say, a buck 50 or less, maybe 100,000. Well, they were buying the notes for like 10 cents to 15 cents on the dollar. So they were buying the loans for like 30 to 40 grand, you know, and then they would go to the borrower and go, Hey, you know, we’re the new mortgage holder, you can either a make your payments of 300 to 300,000, on the loan at this interest rate. Or if you want, you haven’t paid in six months, we could make this whole thing go away, you could sign the property to his deed in lieu of foreclosure, will give you a full forgiveness of debt, no deficiency, and just like the walkway, like this thing never happened. And that’s what they did, or when they did that. And a lot of times, they would give them cash for keys. So they even give them five grand to buy a new plate, you know, to go rent a new place. So they’re forgiving the entire mortgage and giving them money. gave him money, or one. Because you gotta remember, they got the notes at like, 3040 grand, and the house is, you know, somewhere between 100 and 150,000. Right. And the note is the mortgage like they are now. They’re now the lender. There the lender? Yeah, yeah. So they were like either a, okay, bring current, you have all these, you know, late fees, and your house is worth, you know, X amount half of what you paid for it. And they couldn’t do that, which almost no one could write. But I was wondering, like, how is this thing gonna shake out? Like, how is it like, you have all these people that are going to be in foreclosure, and no one wants to pay on their house? Right? Because there’s worth half of what they paid for it? Well, that’s how it worked out. And, yeah, so I got relationships with these hedge funds that were buying these loans. And then it just grew into that. And the one one time, or when I had 250 million under management, just myself, you know, that I was helping these banks, you know, through that hole for these hedge funds through that whole process? And sorry, the 250 million is that the value of the properties is that yeah, well, that was the value to buy the notes. Yeah, that they were buying notes under under management, you know, that they were buying the notes, and then seeing them through foreclosure than liquidating the disposing of the assets. Right, right. Yeah. Do you still do this? Now? So that’s that dried up, unfortunately, which does not mean it’s a good thing. It was a sign the economy, you know, was progressing, right. And it just got way more competitive. The hedge funds got out. And now loans, you know, the way the market is right now they’re trading at like, you know, face value, right.

Unknown Speaker 29:18
Okay, so not any yeah, there’s not much money to be made in the note, but you can get you can, I mean, don’t get me wrong, you can hunt and find some good deals, but like, huge, like bulk deals, which those, you know, hedge funds needed to make the returns thereafter. Yeah, that doesn’t exist. Like, you see, when you say bulk deals, how many markets? That’s the thing. It was an interesting business or when because, you know, basically, these hedge funds were were bidding on these big portfolios of loans. So they were, you know, buying 100 200 loans at a time. So, yeah, and the average investor right, like let’s see, if you were a note investor at that time, like, even bid on those those those loans would be very difficult because they were only traded in a couple of different trading.

Unknown Speaker 30:00
rooms on Wall Street that have access to them, right? Ironically, it was some of it like, you know, Bear Stearns, guys that started these funds buying the notes. Guys that had run up on the other side got it coming back on that side was Wall Street guys are pretty sharp, you know? And so yeah, so it was like, you know, it was kind of a, you know, say like an old boys network, but there was only just a few people that were bidding on those loans. And, yeah, there was all these regional banks, right, that were just like, hey, we can’t even we don’t even have the manpower to see these foreclosures through, you know, we can’t spend this much money on an attorney’s to go through the foreclosure. So they just wanted to get those loans off their books.

Unknown Speaker 30:39
No wonder everyone hates Wall Street.

Unknown Speaker 30:42
It is It was incredible. But anyway, so that worked through right, I did that. And we service these these funds. And not only were they buying loans, and then they started buying other distressed assets, like short sales and foreclosures as well. Right. And but yeah, that just got competitive. And then I, you know, obviously got back into general real estate, and did that and worked for some developers selling some new construction on that came back. And then, but then I saw the writing on the wall with tech, right? I’m like, Man, I have to get into tech. That’s where the industry is going. And then, like I said a little over two years ago started real trade. Tell us tell us, what was the cause? It’s not just by doing this hack, you’re trying to solve a problem? What is the problem you’re trying to solve with real trade? Yeah, so the big problem is, you know, as an industry insider, right as an agent, you know, the way that Zillow basically these large portals like Zillow, realtor.com Trulia, I’m not exactly sure how it all works in Canada, but they here in the States, you know, us agents work really hard to get our listings for properties for sale. It’s usually personal relationships, right? Usually you have to meet your client on the golf courses, take him out to dinner, which is fun, which I enjoy, but a lot of work and time and money and effort. And then you have to pay money. So you get the property ready for sale, you sign a listing agreement, and then you have to pay money to your local MLS boards, just for the right to offer that property for sale. It’s not cheap, it’s expensive, okay, then you upload that data, the photos that the properties for sale, you offer the cooperating agreement to the other broker, the buyer’s broker and you put a property on the market, right? Well, the crazy thing is the MLS boards, then take that data, and then they sell it or give it to these online portals, like Zillow realtor.com. But here’s the crazy thing is they actually covered the listing agent. They don’t let the public know who they are, right. And then they make the agents now bid against ourselves, for the right to talk to buyers and sellers offer own data. So

Unknown Speaker 32:37
that was a huge problem. Because number one, the agents aren’t getting the best data, right? They’re not getting the best information. And it’s in basically agents, it’s almost impossible to build an online presence of anything lasting, because you can’t through these online marketplace where everybody’s going something like well, what if there was a different way to do this? You know what?

Unknown Speaker 32:55
Exactly that they can protect their brand and build an online business. And then the the buyers and sellers can go directly to the agents that they want, whether they want to go direct listing agent or find their own buyer’s agent. Right. So that’s pretty much the impetus, the problem we wanted to solve. In the public Joey my experience is public generally doesn’t know when they’ve been does that happens here to not know they’re sold as I need. It’s like a piece of red meat or when you know, they’re sold as lead in Zillow, everything gets baked in the price, right? Because think about it like the ages now we’re spending more money to talk to more buyers and sellers to Zillow, so they gotta charge more commissions. You know, it’s, it’s all gets passed on at the end of the day to the end consumer. So yeah, I wanted to solve that and then not to save all the other periphery businesses, right that you need in a real estate transaction. You’re gonna need lenders you’re gonna need inspectors, appraisers, contractors, like there was nowhere dangerous, you know, all those great business refers. I was like, wow, there’s no place for the public or the agents to network with these service providers. Right real estate, it’s just so fractured. And I said, you know, what if there was a way for everybody getting connected, so that’s what we did is we created an online marketplace, a different model than Zillow. And we merge it with a social media component. So I tell everybody, Zillow, different ways. LinkedIn for everybody looking with real estate. Yeah, yeah. So we got lenders there. I mean, you know, we got Scott Dillingham with with Glen city just signed up which he’s helps a lot of foreign buyers especially Canadians down here in the US, he’s on there and then like I said, we got great attorneys that you’re gonna need right title companies that can handle foreign transactions we have out on there and then of course agents like myself is on there obviously our way that specializes in helping with foreign investors. So yeah, it’s it’s pretty exciting. And you know, we want went from zero to now we got 1000s of users, you know, from all over the world using the platform and you know, 1000s of agents and other service providers on there, too. That’s amazing. Like your you got a business that supports your community. Yeah, yeah, I’m pretty good. As you know, real estate. At the end of the day, it’s still like

Unknown Speaker 35:00
Yeah, relationship business, right. So you make those little tweaks online, right? You make those little connections online. And then you get to know that person in real life right and speak on the phone. So to remember, kind of like the kindling on real trade is you can find those connections, and then build those relationships on your own later on. Yeah, I always tell people in real estate,

Unknown Speaker 35:20
or what brokers they work with, I’m like, I don’t even know. I’m working with this individual.

Unknown Speaker 35:26
You know, at the end of the day, I tell them, Don’t get hung up on brokerages. It really comes to that personal agent. Yeah. Same with the lenders, you know, same thing, right? It’s it’s that personal, you know, service that they’re gonna give to you and then expertise, right, that they know that market, they know what’s happening and can put you in some areas, right, that have some growth potential.

Unknown Speaker 35:47
And now, how is the Florida market today? So we’re recording this on Halloween? I know I love it. You want to get it? For Atlanta, I should have dressed up. And then we have cultural distance differences between Canada the US? Yes. Do Halloween, trick or treat and all that? Oh, yeah. I got my son or what I’m bringing them trick or treating tonight. He’s actually going to be a dinosaur with a cowboy riding them. They’re crazy. They have like this blow of dinosaur and then he.

Unknown Speaker 36:12
Yeah, I’ll post the pictures on social media. Oh, definitely. You’ll see that. I love Halloween. I love people posting pictures of the kids in their Halloween costume.

Unknown Speaker 36:22
Celebrate there too, right.

Unknown Speaker 36:25
My son My son is Pikachu. My daughter some sort of which.

Unknown Speaker 36:30
I love it. Yeah, they look really ridiculous standing next to each other. Because my daughter is more like a not nice looking like a mean looking witch not like a Yeah, like a cartoon, which

Unknown Speaker 36:42
is cool. She said lady devil. I don’t know. Whatever.

Unknown Speaker 36:48
The kids love it. I mean, you know what? Truth be told I eat some of that Halloween candy myself. So

Unknown Speaker 36:53
my son brings I might take some away when he’s not looking for the stash it to the side.

Unknown Speaker 36:59
So

Unknown Speaker 37:01
it is Halloween? What’s What’s the state of the market in in Florida right now. Specifically West Palm. So ya know, I can I can speak to all of Florida plastic, fantastic food, and then also West Palm in particular areas, you know, South Florida, right. So right now the home prices here, I’m actually looking right now from September of last year are up 3% over last year, up over last year, which is one of the you know, a great indicator of South Florida. And yeah, at the same time, the number of homes, you know, Rose that’s overall condos and in homes, homes, Rose 4.1. And then the number of homes sale Rose 3.2%. So, I think that’s one thing that here, you know, Irwin, that I want to speak to that, and I’m sure it’s similar probably in your market, too. But um, you know, our inventory, right still remains low. And there’s, I think a couple of indicators to on that, which makes it challenging, right? Because there’s a lot of buyers out there going to cost the markets gonna crash, you know, the prices are going to come down and things are gonna happen because the interest rates are higher. But the reality is, you know, there’s a lot of a lot of owners in our homes right now, that locked in low interest rates. Right, especially COVID explain that, because I didn’t even understand that either, like mortgages in the US are locked for locked in for 30 years, as in the rate is locked for 30 years. Yeah, yeah. So because it’s, you know, it’s, it’s completely different here about 30% of danger. So do variable. So floating debt 70% A lot of investors during COVID. I said, Listen, the interest rates were got down in the twos, like leverage that for 30 years, lock it in for 30 years, you know, if the interest rates go up, and he’s price go up, you guys are gonna be golden. Right? And, you know, some did took advantage. Some didn’t like, Oh, we’re gonna wait, we don’t know what’s gonna happen with COVID. Right? And obviously, we had a huge spike from COVID. But like, yeah, so what happens is it those buyers, and the people that refinance, so the cool thing here, the states that we have here, when it is like you can refinance out of that loan anytime you want. Right, most of them don’t have a prepayment penalty. So, you know, there was people sitting on probably like 6% loans, you know, maybe six and a half before COVID. And then once COVID happened and the prices just when the loan, you know, rates went way down down into the twos. He said, Hey, why don’t I reply, like this, that makes total sense, no penalty,

Unknown Speaker 39:26
no penalty, I can pull out some equity. You know, what we’ve been talking about doing a pool in the backyard, I can pull out some equity and you know, my, my mortgage payments gonna be less and I got a new pool, right? So that’s what everybody did or like, like in the stats are about 75 80% of home owners did that here in Florida that had mortgages, right? They refinance them. So you’re at a point now where all these people did that, right. They believe they’re sitting on these low interest rates. So they’re sitting there in the Feds thinking, Oh, we’re gonna sit on the market by putting up these higher interest rates, but it’s actually here in Florida. It’s kept

Unknown Speaker 40:00
It’s kind of had the opposite effect, because now no one wants to no one wants to sell because, hey, they’re gonna have to go buy a home at a 7% interest rate, you know, they’re gonna have to pay higher property tax, right? Because the property values went up. So there’s a bunch of underlying currents there of why the the market is still increasing in Florida, and I think will continue to as well. Yeah, I wish we had that here. I

Unknown Speaker 40:24
wish more people took that one, too. It’s like rental rates are so great to see like, even like, wow, I am stuck in this low interest rate, rather than then selling that I could rent this home out, which are rental rates, whether it’s, you know, long term or short term right now, or are really well, too. So like the returns are just incredible for a lot of those people that purchased. Tell me about telling me what do you think is an ideal investment property? And then give me give me the numbers on it?

Unknown Speaker 40:51
Yeah, so I just, you know, I did a webinar on this.

Unknown Speaker 40:54
You know, what, two weeks ago, I think this is a big thing, right? Like, we all love ROI, right? Return on Investment. But like, you know, one thing I think for Canadian investors, where I’ve been speaking to a lot of them is they have what’s called ROI well, which is the return on life. So I think it’s something that you can that you get a great return on that you can get investment property, start building equity and get a return on your rental. But you can also use, right that you can come down here and use yourself. And while it would solve that problem, you know, in the advantageous would be, you know, like a short term rental property, like an Airbnb type property, right, that you can rent out, and you could come and use for a couple of weeks a year and have a good return. So that’s what I’ve been seeing investors doing here. And I know there’s a lot of things out there that you know, short term rentals aren’t what they were, you know, a couple years ago, but here’s what we have here in South Florida, particular in Palm Beach County. Okay, is we have a, we have a very, you know, low hotel,

Unknown Speaker 41:50
basically supply, right, like here in West Palm, I’m looking here in downtown, there’s just a handful of hotels downtown, you know, people can come here and rent a hotel. So where are they gonna go? Well, they still want to come down here and vacation. And that’s why the short term rental market here is still very hot, still some great vacancy rates, right? That they’re getting. So like, you know, let’s say, You’re, we’re in West Palm Beach, okay, and everybody has Palm Beach islands, right across the way, and we’re Donald Trump players, and we’re talking multi multimillion dollar homes, well, you can still purchase a single family home here, near downtown West Palm Beach, in that three to $400,000 range, right? So let’s see the first three to $4,000 range. And you could have an average, right, have a short term rental, you know, rate of, you know, five to $6,000 a month that you would have on that home. Now, you’d have you’re caring. So that’s a short term rental money, especially long term rent, not long term, long term rental rate, it’s going to be your short term rental rate is going to be about double right of what your long term rental rate. So you’re probably looking on long term rate probably around, you know, 2500 to 3000, maybe $3,500 a month, if you really make the property really nice on a rehab. But yeah, so you’re talking considerable. So think about that, those numbers for a second, right? So you have that, then you have your real estate tax, which are usually going to be you know, around 2% of the, you know, assessed value. Now, the assessed value isn’t exactly the same as the sales price, which I want people to understand they take the whole neighborhood, they back out your closing cost and real estate commissions and stuff from the, from the sale, because they’re not going to tax you on that number, right. So it’s not exactly the same as the sales price. So you have about, you know, I would say about 70% of your sales price. And then at 2% is kind of a good, a good equation to use. And then you have your, your, your insurance, right that you have on home. Now, it depends on the home, your insurance, or when I want to people know, like different homes have different insurance, whether they’re into like a higher risk flood area, the type of construction, the type of the roof, you know, what kind of plumbing it has, you know, those those insurance underwriters look at a number of factors when they insure but I would typically I would say like on a, you know, on a, let’s say, like a three to $400,000 purchase, you’re probably talking anywhere like you know, 3000 You know, maybe $4,000 a year, you would factor in that. Has it gone up? Does that and we talked about before like is west palm is generally spared from hurricanes.

Unknown Speaker 44:30
How

Unknown Speaker 44:32
we haven’t had a major hurricane hit here since like, you know, the early 1900s. Right, knock on wood, you know, but um, you know, as far as the West Coast, obviously, they’ve they’ve gotten a little bit more, you know, Hurricane action there too, but ironically, when I did the webinar, right with this insurance, big insurance

Unknown Speaker 44:51
broker, you know, one reason for the high cost and insurance here that affects like everywhere, I’m sure different places in the country is like the inch

Unknown Speaker 45:00
You’re right. So you have like different insurers here for home insurance here in Florida. Well, they actually buy insurance too. So they’ll actually go get reinsured by another larger company. Now it’s these larger companies now, like the Lloyd’s of London’s of the world, large global insurance companies, where these regional insurers are getting their insurance. Well, their prices have gone up too. And they’re looking at the forest fires in Canada, they’re looking at the flooding in Europe, like they’re looking at all these different factors, right? When they’re doing that, so it’s not all just localized as well. So it’s there’s a bunch of moving parts that go into it, but it has gone up, you know, the insurance here in South Florida has gone up anywhere from you know, 40 to 60%. You know, what period of time over the last year.

Unknown Speaker 45:47
Last year, I know, but I will say this, like, you can’t just you know, keep going up at that number, right, there’s going to be a market and they’ll just be more people moving the market. Now we do have what’s called Citizens insurance, which is kind of like a cooperative, that a lot of people buy into where they get a more purchasing power on their insurance. A lot a lot of people use for that as well. And so there’s going to be different options. And I spoke to the insurance agent, and he predicted that the insurance prices will come down, you know, back down over time. But he said it probably stay flat here for the next couple years. And he could see things coming back down. That’s good to hear. Because now I know a lot of people still like Florida. Yeah, 50% of our survey respondents wanted to hear about Florida. I mean, want to have insurance right now, if you’re looking at a condo, you know, white knight, one nice thing about condos, right? Is they have they have their own insurance that the whole building basically chips into so it’s a little cheaper. And it’s in your it’s in your HOA fees, right? Your structural insurance, which is your homeowners association fees, which you pay every month to maintain the property and buy insurance. And usually they include, you know, different things like

Unknown Speaker 46:57
you know, cable and stuff with that as well, because they get a like a group rate on cable and internet and things like that. For listeners. For the listeners benefit Hoa is a homeowner association fees, we call them condominium views here. Yes. I think it’s exactly the same. Is there? Is there a particular age of building that you’re kind of looking for? Because I understand codes change have changed through time and codes have changed to you know, so. So the buildings are built appropriate for hurricanes? Yep, yep. So a lot of things changed in Hurricane Andrew 1990 to kind of keep that in mind is a lot of the codes in Florida changed at that time. Right. So that was the one that hit, you know, south in the upper keys down by homestead. That was a 1992. And a lot of things changed with that. So I would say you know, if you’re looking for like quality construction after that time, they changed a lot. And now, you know, the quality construction even since the 2000s had been really, really great, early 2000s When you started getting a 70s and 80s. Kind of I mean, everybody remember what happened with Surfside, you know, that condo that collapsed in Miami? I was big tragedy. That was a few years ago now. You know, 100 people died. Turns out like they were saying like, you know, there was a defect in the quality construction of why that building failed. You know, the way they they built the pool and the underlying foundation of the condos why that fell.

Unknown Speaker 48:24
It was specific to that builder wasn’t not because I don’t believe the other area condos had that same issues. It was that one builder, you know, they had issues. Now they know that the local in the state government did pass a regulation called regulation for D, where they’re now if any condos are 25 years or older. If there’s closer the coast for 30 years and older, they have to go through what’s called a structural integrity test. So you know, it’s actually needs to be done by certified Florida engineer architect, and it’s basically a study now that all condos have to go through to make sure that this doesn’t happen again.

Unknown Speaker 49:01
You know, and if there is issues, then they’re going to have to address them. Right. I mean, so. Yeah.

Unknown Speaker 49:08
So Brian, what what areas do you like for investment? We’ve mentioned West Palm several times. Can Can you listen to know where it is in relation to like the, you know, we’re all Canadians go like Orlando, Fort Lauderdale. Where is it in relation to this?

Unknown Speaker 49:25
I really like West Palm Beach, you know, in relation to other areas in Florida is okay, we’re about a little over an hour car ride north of Miami. So I’d say we’re about you know, you know, 45 to 50 minutes north of Fort Lauderdale, right is West Palm Beach. And the thing is, here’s just a less population density, but we have the same exact weather as Miami Fort Lauderdale, which is a beautiful South Florida weather. Now if you go just north of here, Erwin, let’s say up to like, you know, Stuart, a little north of there. It’s a different wetter weather pattern. We’ll get a little bit cooler in the winter and the

Unknown Speaker 50:00
The ocean water isn’t quite as nice. One thing that’s really advantageous here, which I love is the big outdoorsman. And fisherman is the Gulf Stream, which is like a warm river current, the ocean follows the east coast of Florida. And this is actually where the closest that comes to shore is right here, West Palm Beach. That’s where we get those beautiful, like I was mentioning, like 100 foot visibility days, and then it kind of bounces off West Palm and starts to go off shore. So that affects the weather, right? You have that warmer water where that air is coming over. And that’s what’s bringing that South Florida, you know, temperatures, right. So I’m saying you’re getting all the benefits of Florida, all the great weather, but without the big population density and craziness, which is Miami in Fort Lauderdale, which I love going down there. Right, we have the bright line, high speed train now, which we spoke about in the last podcast, which, you know, I can be down to downtown Miami Brickell in an hour and a high speed train and have a beer or cocktail and food while I’m going down there. Right. So and then come up here to beautiful West Palm, which is, you know, like I said, that now is becoming known as like, you know, the billionaires and millionaires, you know, here that are moving here, and just have a really nice quality of life. They all want to play with the prices here like West Palm compared to like, in Miami, or like, you know, considerably less right because you just have a higher density density down in Miami than you do, you know, in in West Palm, right? So, so you mentioned like a single family home near downtown’s. Like three to 400,000 How much would that be?

Unknown Speaker 51:33
Most be closer to Miami. Yeah, so that would be like, you know, probably six to 700,000 Maybe more. Maybe 800,000.

Unknown Speaker 51:43
If you want to be like near downtown Miami, you know, Miami area.

Unknown Speaker 51:48
Obviously too loud for me. Yeah, I mean, mine is fun, like for a day or two. But to live there, the traffic’s tough. That’s another thing in West Palm two that we’re getting here. You know, like, remember, we’re getting a lot of northeast, you know, people moving here, California and we’re getting foreign, some foreign, you know, buyers that are buying to move here too, as well. But we have a lot of people from South Florida that want to come up here, right escape the craziness. So we’re getting to kind of from different directions. So that’s why I’m saying you know, as far as on the equity side of why I’m more bullish on West Palm and I am in Fort Lauderdale Miami is because of that because we have more room for growth. Last time I stayed in Miami is where they’re over the weekend. And the noise was from like, you know, like 2am people revving their Lamborghinis and other supercars

Unknown Speaker 52:38
you know, you’re in some kind of conference going on like the Bitcoin conference or something like that. No, I wasn’t that wasn’t on that at that time. But yeah, just just the flex cars that you see there. It’s not like like in big cities where I’m used to like in Toronto for example, I’m used to hearing sirens in Miami it’s $300,000 cars

Unknown Speaker 53:00
like I said, I mean I like Miami like I said but in small doses so it’s just nice to be able to go down there and experience it and and come up with this beautiful you know relaxing area which is you know, West Palm Beach area Palm Beach County. I want to speak to to like there’s different areas Palm Beach County so you have like you know, West Palm which is like our metropolitan area right where we have all these you know, the great culture we have, you know, great museums here like we would have in any metropolitan area, but then we have a lot of outline smaller cities, like Palm Beach Gardens, Jupiter you know Boca Raton Delray Beach which are you know, it’s kind of neat each each city Each area has its like little flavor right of what they kind of, you know, like Jupiter’s more known as more of like a fishing area right in a watersports area. Yep. And like golf courses are to believe it’s sort of in Jupiter, Florida. A lot of them a lot of golf court actually, all Palm Beach County is one of the highest density golf courses, you know, in the United States are on like, per area of number of golf courses. It’s, it’s a lot. You know, it’s a lot. And then, you know, like Delray Beach is this very kind of hip, like, art, kind of, you know, a lot of art festivals, a lot of artists in the area, kind of like bohemian style. So you have all these different kind of cultures and all these little cities that are very close together. And then you have downtown West Palm Beach, that’s anchoring them right. But then I want to speak to this as he’s crossed the bridge, and then you come to Palm Beach Island. Well, that is its own entity. That is like, you know, you’re stepping back in time to some kind of European, you know, very wealthy area, where we have these beautiful estate homes and bowtique shopping and all these great, you know, world class restaurants.

Unknown Speaker 54:49
And that’s all right here. It’s not like you’re like you have to drive some you know, some far destination to get to Palm Beach Island. You know, it’s literally across the bridge.

Unknown Speaker 55:00
So so for Kenyans coming down to visit you how many are? How many are buying purely for investment? Are they? Are they doing mixed use, like return on life? Like you’re saying?

Unknown Speaker 55:09
I would say I would say about 70 80% of them are doing the return of life type investment that I’ve that I’ve been working with. Yep. I have I sell a lot to just strictly investors. I mean, I’ve closed or within the last two months about about four different multifamily projects, right, that have investors that have closed, you know, multifamily properties, which, you know, that market has continued to be, you know, you know, I’m still bullish on the multifamily, you know, multifamily market down here, but the rents that that my clients are getting are just incredible on an annual basis, and, you know, to become popular here to like six month rentals as well. So it’s kind of like a hybrid in between short term and long term, your six month rentals, you know, you can kind of thread the needle in between the short term rental price and in a yearly yearly lease. Interesting people. Yeah, doing six month rentals. And then another big rental option here, because you have all these corporations now, right, that are moving here, headquartered in like Goldman Sachs and Citadel and these other large funds, well, they need corporate housing. Right, so there’s just this big need for corporate housing, you know, down here, where you have a corporation that will show rent a unit out, right, and they just want to be able to sublease it to their other corporate, you know, their, their clients, right, that need that need space? furnished? Yeah, they need to furnish. Yeah, so I have clients that are doing that. Another great rental option two is, you know, renting to the health, health industry, healthcare industry, nurses, there’s actually platforms, now I just spoke to them and have that they just made a profile on real trade called Red Door, where they specialize in just getting traveling nurses and nursing staff into, you know, into properties, and you could list your property on with them. And then, you know, the professional nursing staff, you know, that’s going to be rented and their numbers are higher than you could get on a, you know, on a on a yearly lease kind of in between like a, you know, a short term, you know, rental or, you know, a long term rental. So, there’s a lot of options, you know, that, you know, that people can use as far as rental strategies, you know, that, that the big thing is the exit strategy, you know, we’re still projected here, you know, anywhere from I mean, just very conservative in a run, like, you know, five, you know, 5% growth, like, like, set even last this since September. We’ve been at like, 4%, you know, which is incredible, which is bonkers. Because like here, most of Canada, things are slowed down significantly, unless you’re in Calgary.

Unknown Speaker 57:41
Because, yeah, because their housing is much more affordable compared to Ontario or BC. Like I mentioned before, before, you know, a sub a townhouse in the suburbs is 800 grand in the Greater Toronto Area, versus like, it’s a pretty big house in Calgary. Yep. So things a little bit nutty here. Yeah, we talked about like, yeah, you know, to help me understand a little bit the Toronto market. I know you obviously you have the lake, right, that’s pinning you in a green area, right, that comes kind of comes over the top of you from urban sprawl. Yeah. Urban sprawl. So, which, ironically, you know, kind of what we have here, we obviously have the ocean right here in West Palm. But then if we go just further west, and we get into

Unknown Speaker 58:23
Everglades, I mean, you’re not gonna be draining that, you know, I mean, there’s big environmental thing. You know, Everglades is great. I mean, it is, if you ever been there visited the amount of wildlife and seen it in person is incredible. It’s beautiful. It’s beautiful, right? So they’re not going to so we’re kind of like same similar swap, it’s probably hard to develop,

Unknown Speaker 58:42
or develop well, they drained, they did drain some of it, they at one time tried to now they’re turning it back into more wetlands. So there’s like big huge, you know, projects that are going on for that actually. Super cool. And then I think, I don’t know how much you’re familiar with, with the the headwinds we have here and can’t nontariff specifically, like we have about eight months data hearing for non payment of rent, for example.

Unknown Speaker 59:08
Yeah, we have rent control, we can only raise our rents.

Unknown Speaker 59:12
I was speaking to a couple of investors that I had, and they said Ryan like, yeah, we can only raise our rental a certain percent percent, three and a half percent apiece. Does that make sense? Yeah, I said to people all the time, like, you know, Ryan, you’re a smart guy, but Max salary increase is two and a half percent. Yeah. Here’s the contract Sign up now.

Unknown Speaker 59:32
That doesn’t keep up with inflation.

Unknown Speaker 59:36
Which is why we’re losing money. We are losing money. Yeah, yeah. No, I mean, yeah, we don’t have that there. I mean, that’s one beautiful thing is like, you know, we saw rental increases and we’re still seeing them, you know, rental increases, you know, especially the last you know, obviously, since COVID. But even now, like, I’m seeing me get ready or when we’re seeing here not like, like in super high end areas, but I’m

Unknown Speaker 1:00:00
Scenes studios like, like Lake Worth Beach, which I have a lot of investors by now, which just south of west palm right? Studios going for, like, you know, 2020 $200 a month on an annual lease, and then you know those things furnished, right during the season, you’re looking at, you know, four to 5000, you know, dollars a month for, you know, seasonal rentals. So,

Unknown Speaker 1:00:22
you know, little studios or small, you know, this one that I just did that just, you know, my client is rented out, we’re talking like four or 500 square feet. Oh, okay, a little bachelor, we come back to our apartments here. But, and that’s the thing is like, you know, they’re just not, you know, the rent rental inventories is really low here as well. So, you know, people want to be down here for the season, or just need just a place and you’re young professional. That’s kind of what the market is now, right now. Big news up here as well. For example, British Columbia just came out with an Airbnb ban, basically outside your own home, or municipalities under 10,000. Population. I know New York City did something similar. I use New York City in New York State. I’m not American, and I don’t follow it that closely. Yeah, I heard New York City, New York City, and then anything on the horizon for Florida. last poem. We I mean, me, they tried to ban short term rentals here, like in this market, especially in West Palm. I mean, there might be a few areas in Miami, like, you know, I know in South Beach, like you know, the homes there. They, they’ve never been able to do short term rental there. That’s kind of, but it’s like an art car and just although it’s an HOA or is that the government? No, that’s the local minimums municipality, they’re in that area, in South Beach, but like, here in West Palm, they’d be shooting themselves in the foot because there’s just not enough hotels for the people to stay. So like all the commerce of all the people here on vacation, spending money here. It just wouldn’t make sense. I know, you know, like, I know, the mayor here in West Palm. Personally, you know, he’s, he works a lot with this, you know, accelerator that I’m involved with the real trade went through called 1909. And yeah, they they’re very pro development and no real estate restrictions. So say,

Unknown Speaker 1:02:06
as I mentioned, to just get a hearing, to dispute a non payment of rent is eight months. And hear up here in Ontario. What if I say I’m your tenant, I stopped paying rent.

Unknown Speaker 1:02:17
What’s what’s what’s next? And I refuse to pay rent. So if your legal plans to catch up? Yeah, so if you’re late, you know, if you’re, let’s say you’re late two weeks, you can put a notice, okay, on their door, right to vacate in 30 days, right? And then if they do nothing, right, they sit there and then you have to evict them. So another 30 days, so it’s 60 days, 60 days to evict, and there are like the sheriff shown up at the door, Tino? Yeah, we don’t we definitely in Florida, we’re very pro business. Right here in Florida, obviously, a lot of great things want to say about DeSantis. You know, he’s made a lot of, you know, a lot of pass a lot of laws and done a lot of things for business. And especially when it comes to real estate, we have no rent controls. You know, if you have to evict someone, it’s a pretty easy process. Difficult.

Unknown Speaker 1:03:07
Yeah, we have a lot of things in place for that.

Unknown Speaker 1:03:11
And the sheriff that’s, that’s less law enforcement. It’s not a specific. Okay. Yeah, cuz we have, we have, we have sheriffs here. But that’s not law enforcement there. This is specific. I don’t even know why. I don’t know why we need to have different levels of law enforcement. Yeah, we have property rights here and an Ontario and Canada.

Unknown Speaker 1:03:31
Very pro property rights, especially here in Florida. I mean, you know, we have a great, you know, I don’t know how it works in Canada, but we have, you know, homestead laws here in Florida, right, where you can homestead your home as your primary residence. Right. And your tat, your real estate taxes can only increase 3% a year. That’s it, right? And then also, you know, if you ever get sued, like, that’s your homestead, right, and they can’t go after your own personal asset. So that’s why you see a lot of celebrities, right, that come to Florida, and they’ll put a bunch of money into real estate, and then they’ll homestead it, right? Because, you know, everybody’s going after them to get sued. So and then there’s obviously other tax advantages as well of, you know, investing in real estate here, especially the depreciation side of it, you can depreciate the asset, and you can wait it on the first two years. So, basically, you’re paying no, no taxes on your rental income, especially for the first couple. Right? So you’re able to use the depreciation which is a paper loss paper expense to deduct against your income in the first two years. Do you know how much it’s like 50% or like or what is it?

Unknown Speaker 1:04:33
That’s what I think 50 percents like what do you do for like laptop piece technology house is a little bit different.

Unknown Speaker 1:04:39
I think it’s like almost all of it, like, you know, like

Unknown Speaker 1:04:45
all of it. Yeah, there’s another reason to that actually, in each asset class has its different formula of like, you know, like there’s one big reason a lot of investors they buy these like self storage. You know, facilities is like they have

Unknown Speaker 1:05:00
Huge like, right off that they could have depreciation because the way they’re built, you know, the corrugated metal and they need replacement and so many years. So you see all these investors that do these storage facilities, fill them up, keep them for like two or three years, right, and then sell them and then go to the next one. And they just keep doing that. Right? Flow. I know it. And we have this too. And I don’t know if they have this in Canada. But one thing that we did do well here, which a lot of investors are talking about, the advantage of is, we have

Unknown Speaker 1:05:33
what are called opportunity zones. So these are areas that have been designated, okay to invest in real estates, that if you buy real estate, they’re right, in these different designated areas, the kind of like up and coming transition areas or lower income areas.

Unknown Speaker 1:05:49
You keep it for 10 years, or when you don’t pay any, any capital gains tax.

Unknown Speaker 1:05:55
So, yeah, so we’ll have a lot of investors now that are like, you know, they have these big, you know, like, they might have these, this, this delayed taxes, where they’ve been 1030, wanting these properties for years, or one, and they’ll then 1031, finally into an opportunity zone where they found an asset they really wanted, now they’re keeping that asset, and then they won’t won’t, you know, won’t realize any taxes at the end of 10 years, at least section in the these these areas. And they’re they’re not all section eight, you know, there’s definitely some section area areas in them. But yeah, I’m a very aware of opportunity zones. There’s a big area just north of West Palm here called Northwood, there’s some different areas down so wonderful. Yeah, it’s great. And it really revitalizes areas. I see it happening. You want to bring money in in an area. Yeah, development, like new development, like they’re building multifamily new development, you build a rentiers is a pretty hot market right now to you know, where they’re, you know, build the rent, you know, where they’re building, you know, properties just to rent out. So, yeah, they’re going to enter these areas in gentrifying ruin. Can I get your opinion on Section Eight? Do you like it? dislike it? It’s okay. Well, I’ve had, I’ve had clients Oh, yeah, no, I’ve had clients over the years that have had section eight rentals. I mean, the nice thing is, obviously, you get your rent every month. But one thing that, you know, because it’s subsidized, right, that you’re going to do it, but one thing that they do sexually does do is they go in on their own and check on the tenants, right? To make sure that they’re, you know, keeping the properties up into a certain standard. And it’s not, you know, turning it into, you know, something that’s unhealthy, right. So they have own people checking on the property to make sure that they’re taking care of of your asset, which is one nice thing of Section eight. And then they have a model right of every service what size you know, home or condo or apartment that you own if what you can rent it for so

Unknown Speaker 1:07:44
no sexually rentals, I actually from the clients that I’ve had over the years, they were fine with them. They said, You know, they weren’t saying super positive things about it. But they weren’t saying too many negative things about it. Interesting. It’s usually like what qualifies for like single mothers, single mothers in section A,

Unknown Speaker 1:08:01
for the listeners benefit, can you can you share our section eight is like we don’t have, which is funny, because we’re supposed to be the socialist country. But we have nothing like this. As far as I know. It’s it’s actually I mean, it makes it affordable, especially manage if you’re single mother and you’re trying to pay rent right now, you know, it can be super expensive, because the rent prices are higher. So basically what it is it’s yeah, it’s government subsidized housing, you know, where any investor can go in and offer their property into this marketplace that section eight, right? And then section eight goes out, okay, and has these tenants that they have to qualify in a certain income? Like I said, usually single mothers making X amount of money usually up to under a certain amount of money. Yeah, well, below the average. Yeah, yeah. Well below the average. And then section eight goes, you know, the book, okay. We will pay the rents, okay, on your home, at this rate that we’ve said, this tenant is going to move in here, okay, they’re gonna sign they’re gonna sign a lease, they have to, you know, keep it up to a certain standard matter of fact, we’re going to check to make sure that they’re keeping up to a certain standard. And usually what they do, ironically, is they do have sometimes depends on you know, the tenant where the tenant might pay like 100 or 200 a month on their own to sometimes to to just help them kind of start to pay rent and get used to that so

Unknown Speaker 1:09:18
yeah, and just for listeners benefit the government subsidizing the rent they don’t it’s not their property, it’s the investors property. Investors property. Yeah, you’re guaranteed to read I mean, the US government’s gonna be paying

Unknown Speaker 1:09:31
that not the tenant

Unknown Speaker 1:09:33
again,

Unknown Speaker 1:09:35
if listening list any listeners out there and knows the program that somewhere here, like, please let me know. But as far as I know, there isn’t. Yeah. Yeah. No, I mean, it’s like, you know, obviously it’s lower, you know, it’s, you know, lower income, you know, candidates right. And usually the properties that kind of make sense for these for that type of investment are usually like you know, your, your, you know, more transition areas like you’re getting

Unknown Speaker 1:10:00
these zones, right? That those deals make sense. It’s gotta be with the rents affordable. This is reality.

Unknown Speaker 1:10:06
It’s, it’s pretty, you know, like I said, I’ve had invested I haven’t heard anything like bad about them that they’ve been happy with him. There’s some that that’s all they do. You know, there’s investors that that’s all they do is sectioning. Rentals. I’ve spoken to some investors, some investment advice is to light up when you talk about Section Eight. It’s, especially if you’re going into an opportunity zone or when, like, if you’re going into an opportunity zone, right, and you’d have a section eight property and like I said, in 10 years, and you decide to exit that, if you’ve had a great return all those 10 years now, you don’t have to pay any kind of capital gains tax.

Unknown Speaker 1:10:40
It’s pretty advantageous. Yeah. This is why people want to jump their citizenship and

Unknown Speaker 1:10:48
invest in American real estate. Now we’re, we got a lot of great things to like I said, as far as on the state level as well, right. As far as like headquarter, your business here, we have no state income tax, you know, in Florida. So like, you’re thinking like, wow, like you have no state income tax, which is benefit for you. But what of all the other people in the United States that want to take advantage of that, too. And that’s why we’re seeing this big influx, like I said, have a have a net migration to Florida when versus all these other states that we’re seeing here in South Florida?

Unknown Speaker 1:11:18
Amazing, Ryan? Yeah, I had another question. But I figured it was. But so I’ll just flip back to Airbnb.

Unknown Speaker 1:11:25
When you’re when you’re networking with a new investor, like setting expectations around an entry level investment property, what do they need to know? What do they need to know if they’re going to buy a $300,000 house? Or an Airbnb? Like, do they have to go buy the towels and like, be on call to get ready to, you know, change bedsheets? Like, what? what’s the, what’s the expectation for a new investor? So the nice thing is, which I have in my network, and we have some real treat, we have, you know, the short term property rental management companies, right, that can handle everything, you know, they can handle the booking the property maintenance, the towels, the toothbrushes, you know, all those types of things, you know, as far as that and they’re gonna normally charge, you know, anywhere from 15 to 25%, I’d say the average is probably about 20%, you know, that they’re going to charge. Now, if you do like a kind of a hybrid model, right, which we discussed, obviously, wouldn’t have to pay those large, you know, those large fees, there’s other property management companies, if you did like a, you know, six month rental or maybe like a four month or whatever, they’re going to charge a lot less like 10% or less. So, you know, there’s different you know, there’s different options, depending on what what your goals are, right? If what your returns, you know, what they want to be? Ever since the pandemic, I never had spoken to so many people that are interested in spending the winters in Florida, and it’s usually Florida to talk about, I can’t I’m actually stretching my head to think about when I want to have a named another state. I mean, you don’t name like Texas, right? Like, oh, I want to go to Texas and spend the winter there. You know, it can get cold in Texas, right. And they, you know, the quality, like I said of life here as far as like your outdoor activities on the ocean, right? The golfing like it’s perfect.

Unknown Speaker 1:13:07
To say, you know, remember I grew up in northern Minnesota. It’s like it’s perfect. Yeah, northern Minnesota. So help. Sorry. I wanted to touch on this earlier. How far to drive to get the Winnipeg from where you were living? Yeah, it was only like an hour. So I was right up at the border. Yeah. Went to the northern border of Minnesota is where I grew up.

Unknown Speaker 1:13:26
What’s the name of the city?

Unknown Speaker 1:13:30
Thief River Falls, the falls. They spelled pH i e. F River Falls, Minnesota

Unknown Speaker 1:13:41
Northwest like yeah, one of the most desolate areas. Well, you everybody knows that movie Fargo right. Hey, Fargo was like an hour away right? So it was like Winnipeg or Fargo we go to Winnipeg up there because that’s where the party was. Not Fargo is Yeah, no, not Fargo.

Unknown Speaker 1:14:00
ROA. That’s hilarious. Okay, so for example, okay, I might again I’m very Wow, wow, you’re really north. By up there. You’re already down. Thunder Bay. Yeah, we’re way up there. Yeah, we’re like if you look at where it’s at, you’re a big hockey town. I grew up playing hockey all that good. So that’s why I get with Canadian so well or when you know I know the culture very well. You know

Unknown Speaker 1:14:25
that’s that’s crazy. You’re uh yeah, I never looked at the map Yeah, the border the southern border from Manitoba is north of with Thunder Bay. So your your very north you know cold I definitely know like I said that’s why you know, I was way ahead of the curve like I said, I’ve been here 25 years right so

Unknown Speaker 1:14:43
yeah, and I mean Florida to like it’s just you know, West Palm I we speak into that because I’m in real estate here but you know, I spend time down the Florida Keys and you know, you can drive down to Key West and everybody knows Jimmy Buffett right? And in Margaritaville and all that cool lifestyle and the keys we got that whole area of South Florida. It’s not that far.

Unknown Speaker 1:15:00
Here, I can drive down to Key West, I can be dominant, like a little over four hours down and enjoy that beautiful drive all the way down and being like, like you’re in the Caribbean. So there’s just so many great things that are happening here. Of course, you have the huge Miami scene. Now to I don’t know if I tell you this, because this is new since last time was on the podcast, the high speed train runs to Orlando. So you can take how new is that? How old? Is that? Something really new. That’s really new. Yeah, no, that’s within the last like, few months that they finished that leg. I know. We were speaking last time that they were building it. So now we want to go to Disney World, right? Two hours. Two hours? Yes. Like, how long is the drive? Like two hours? You can train it instead? Just relax. Do the high speed train right and just relax the whole way there. Bro. How much is it? How much is the how much is a train?

Unknown Speaker 1:15:51
Yeah, for Miami, it can be as little as 20 bucks. That’s it. When he box. Like you can’t even park your car or wind down there for that. The same scene like by the headache, it just doesn’t make sense. For me. I haven’t drove to Miami and in three years, like, I’ll just go down there to go right down to Brickell downtown, and then just take an Uber, you know, anywhere else I want to go for fun, you can go over to, you know, over to South Beach for like an $8 Uber ride. Like it just doesn’t. Doesn’t make sense. Right? So it’s infrastructure improvement, that sort of be there’s big infrastructure improvements here, you know, that we’re having having here too, you know, and obviously, we got like, you know, everybody knows we got cruise ships, like, you know, we got like a little short cruise out of West Palm, actually is called Margaritaville cruise line. Jimmy Buffett was invested in that hack of an entrepreneur, if you ever want to read a cool history about entrepreneurs, because I know a lot of entrepreneurs, Jimmy Buffett, man, he took literally that one song Margaritaville and turned it into a billion dollar empire. Yeah, it was at Margaritaville. And every like carnival ship is a carnival I forget what ship it is. Which cruise? Yeah, and this was actually zone it’s called the Margaritaville cruise ship. And you can check at least out of your West Palm, but it’s just a fun short trip brings you the Bahamas, right? It’s just a couple nights that you go over there, which is a cool little cruise because right from the port of Palm Beach, which is my point is like you have all these things to do around here. You know, you have so much so many activities and fun stuff to do that you need lots of activities. He’s you’re not locked up for half the year, because you’re trying to avoid the winter. Because I’m just trying to kill you

Unknown Speaker 1:17:24
know it. I know everyone so yeah, so it’s, ya know, it’s the quality of life. Like I said, ROI. Well, everybody talks, you know, ROI, which is great. But the return on life, that lifestyle? Yes. At the end of the day, you know, at the end of the day, it’s just so rewarding. So many, you know, you know, great things, enjoying, I call it r o g return on grief. I need a lot of return for my grief. And my grief is too high these days.

Unknown Speaker 1:17:52
With Frank control and landlord tenant board and yeah, so I

Unknown Speaker 1:17:58
think that why did they make it harder to like invest in real estate that does I mean, if you want to, like, you know, grow an economy right to to to create wealth for your basically, you know, your constituents, right, your voters, real estate’s like one of the best ways to do it, you know, you think you want people to have access to that you think sorry, but

Unknown Speaker 1:18:17
yeah, we don’t, we don’t like to do things for the rich people here. That’s why we don’t have any rich people, and they just keep leaving.

Unknown Speaker 1:18:28
I don’t understand that capital is mobile.

Unknown Speaker 1:18:31
We have so many we have that’s what I could say about here. Like we have the rich people that are moving here. Yeah, expertise, right. They’re bringing their connections, they’re bringing their network, right. So it’s just Florida in general, especially south Florida on this side. That’s why I’m so bullish on it. Like it’s like, have some of the highest quality, smartest minds, you know, in the United States that are moving here. You know, these big, big entrepreneurs, you know.

Unknown Speaker 1:18:59
Right, any final thoughts? We’re running out of time?

Unknown Speaker 1:19:02
Yeah. No, I mean, I would just say this, you know, I want to kind of get this out there. Because, you know, I’ve worked with Canadian investors, you know, over the years, obviously, had some great success. Some have had, you know, is you know, real estate’s when these things is like, you got to take some risk, you know, and I’ve seen a lot of some Canadian investors I’ve worked with that have sat on the sidelines, maybe looking for the perfect time, right to do it, or, you know, looking for like, the perfect deal. And, you know, there’s never like a perfect deal, right or perfect time, you’re going to have to take some risk, but I will tell you this Irwin, for any investor that I’ve seen, that’s bought and held a property for over five to six years, I haven’t had one that say, Wow, I regretted doing that, you know, some, you know, all of that I’ve had, you know, had been you know, very happy with their their real estate investment, especially, you know, in the last 15 years, you know, it’s um,

Unknown Speaker 1:19:55
any like what would have to change in Florida that’s gonna like totally, drastically do that. I mean, we’re gonna have

Unknown Speaker 1:20:00
Like a big of a sudden, you know, Florida is it like a great area to be because it’s, you know, tools down or something like that. I mean, I can’t imagine that it’s it’s still, you know, people are coming down here to enjoy, you know, everything we spoke about about the weather and the lifestyle and all the activities, I mean, that’s always going to be here. Same with all that, like, we’re not going to switch up all these tax advantages, these pro business things that have worked for Florida, like that’s not going to get switched up. So

Unknown Speaker 1:20:30
it’s worked out patricians are still in human capital from California and New York. My point about capital being being mobile, it is, like, it’s a real thing, or when, like, we’re bringing all this talent here, you know, and it’s just going to become more and more valuable, right? And it’s gonna they’re gonna tell more and more people and that’s, that’s what’s happening love, just, you know, see you down here when, you know, I’ll make it eventually, I need to sell some houses first. Socialist control me.

Unknown Speaker 1:20:56
And that’s my point is I feel like very much I’ve lost control, which is like the last thing any entrepreneur wants. Right? Well, let me tell you a funny story. And this is a fellow entrepreneur that I met here when building real trade and, you know, successful entrepreneur, but he was down in, in South America, down in Brazil, right. And he was an entrepreneur worked super, super hard building his business. And all of a sudden, the currency went down to nothing, right. And the sudden the government changed his rules. Like, literally overnight, they got a new government in there. He’s like, Ryan, I had to literally start over 35 years old, with all the wealth that I had created in 25. Because the first thing I did is I got out of there, I gotta move to the United States. And he goes, I had to start over. But here then I was seeing him 15 years later, you know, he was like, 50 years old, and he built another awesome business. And he sold is doing well.

Unknown Speaker 1:21:52
Ryan, it was a question I’ve had to ask around legal structure. How are how are Canadians buying properties in Florida? destroyed a credit card? Come with a personal check? No, no lending? No, you know, a lot of some of the VA and in fact, a lot of the investors I have speaking with lenders, right, some of some paid cash, right, some of them have paid cash.

Unknown Speaker 1:22:13
I will say this, like, you know, we have a network, some great lenders, you know, Scott Dillingham with Len City, it was awesome. You know, he’s on real trade now. So obviously, they can reach out to him they’re right.

Unknown Speaker 1:22:25
You know, the rates are, you know, the rates obviously fluctuate with the market, but he has a number of products that he can offer them. And then as far as the MCN legal structure, that’s something that he can help with, right, that’s going to because there’s different ways to structure it based on you know, the tax advantages, right. So he can have different ways that they can speak to that, and then obviously, that the, the lending institutions would want to see right that they can. So definitely like, what Scott, is that lens city will handhold you through this? Yeah, they can definitely handhold you through that. Right. So I mean, the investor, I had a lot of cash buyers that have purchased, you know, they purchased under LLCs. And different things to

Unknown Speaker 1:23:02
you know, which are,

Unknown Speaker 1:23:04
basically create LLC is here, I’m sure it’s similar in the United States in Canada, right. So each state, you can register your LLC in that state, and that becomes an entity that you can then purchase assets through right and protect, you know, through the LLC. And there’s different ways you can do it, though you can set up a trust, then and then put the LLC in a trust. And, you know, there’s a bunch of different ways that you can do it. Definitely speak to your wife. Yeah, yeah, it’s something to your wife, right? She can, she can practice this here in Canada.

Unknown Speaker 1:23:35
ever wants to speak to an accountant, it’s, it’s, we have some great as everyone’s situation is different, right? Because I don’t have cash. So I’m going to tell you to talk to the accountant lawyer that doesn’t deal with just cash buying.

Unknown Speaker 1:23:48
We got some great attorneys on real trade, too, that can help in some great title companies that we have to make sure, you know, all the I’s and dots are, you know, across data. And so, all that good stuff. Fantastic. Where can people find real real trade? Yeah, I can go to you can just Google real trade, it’s gonna be the first one that shows up, but the URL is actually real trade.io. So you can find it there, I would implore you to check it out. You know, as far as like, you can look for properties for sale, right? Or rent, you could look for property for sale or rent, get a good idea in the market. And the cool thing is you can connect with real estate professionals. I’m on there every single day. So you’ll definitely see me and connect with me on there. But you’ll see Scott Scott with Glen city on there.

Unknown Speaker 1:24:29
You know, you see a lot of other real estate professionals on there as well, whether an inspectors, appraisers, contractors, any of those types other real estate agents on there, too, as well.

Unknown Speaker 1:24:40
You can always get a hold of me, you know,

Unknown Speaker 1:24:43
I’m wondering now I’m like, oh, there’s a listing here. 17 says, l left st one. That’s one of my listings.

Unknown Speaker 1:24:54
Because I see your picture on it now. Of course got

Unknown Speaker 1:24:59
it

Unknown Speaker 1:25:00
But yeah, one bit like 680 square foot. 2007 50. American. That’s about what we get for 680 square feet in Toronto. Yeah, they’re getting that that’s I’m saying like,

Unknown Speaker 1:25:12
this is like this real That’s it. That’s a multifamily investor bought. I just put that on the market. I’m actually got a lease.

Unknown Speaker 1:25:19
I know it’s acute. That cool. That’s in Lake Worth beach Irwin. That’s just south of downtown West Palm. Super cool. House. Yeah, back in the 20s. Yeah, you got a great deal on that was so just kind of highlight that ones. That was four units, right that he got for 800,000. It’s one bedroom, and then three studios. And yeah, he’s gonna get about $2,000 a month annual for the studios. And then for the one bedroom, he’ll probably get about 2700 for the one bedroom on an annual basis. So that would be 246

Unknown Speaker 1:25:55
That’s pretty good. Yeah, most loving 11,000 You know, almost 11,000 a month. You know, which is a, you know, an $800,000 purchase. Didn’t get much renovation? Nothing. He bought it just like that with fully furnished and everything. I got a good deal on that one. He’s super, super happy with that asset. This is a ground floor unit. You’re all grounded? Yeah, they’re all Yeah. So you have kind of like a single family. home up in the front one bedroom then you have a studio and then two more studios and another building the back. And a nice patio in the back. Yeah, the colors are the colors or Florida.

Unknown Speaker 1:26:33
light blues. I’m always doing deals like that, like on a personal level obviously to you know, working with investors that I’ve had over the years and you know, happy helping your, your, you know, your friends or your clients or when let’s build wealth in America. You know, say what you want, you know, 75% of us millionaires are when made in real estate. Still the best wealth generate I know we love you know, in America stocks and crypto and all these other alternative investments. But real estate’s been one of the best. Yeah, it’s part of a diversified portfolio. Yeah, I’m working people get a hold of you. So yeah, you can go and register on real trade. I’ll see you there. And then also, you can just email me at Ryan pool at real trade.io More than happy there. You could connect with me on Facebook. We’re friends or one and I get to see all his cool posts with I love your grilling out, by the way in your bar.

Unknown Speaker 1:27:27
I mean, I look at your posts, and I’m like, Man, I’m hungry. It’s good. You’re you’re grilling and barbecue game is top notch. Yeah, but I feel like I have like a week or two left to

Unknown Speaker 1:27:38
stop.

Unknown Speaker 1:27:40
Something to eat the barbecue your round.

Unknown Speaker 1:27:44
To the theater gets you. No, I’m kidding. I’m gonna come back for you. Ryan, thanks so much for doing this happy Halloween. You too. You too are one it’s been great. Thanks, man. Thank you for watching. If you want to learn how to invest in real estate from scratch, my team teaches beginners how to use the number one investment strategy that I personally use in a virtual free training class every month. Go to investor training.ca/youtube To register for our next class. Then links also in the description as well. I publish at least two to three videos a week here. So subscribe if you want to keep learning from seasoned investors like myself 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 training.ca/youtube. Thanks again for watching. See you in the next video.

** Transcript Auto-Generated**

** Transcript Auto-Generated**

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

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

Erwin 0:56
But our commercial, for example,

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Unknown Speaker 20:01
and they have more time

Unknown Speaker 20:04
with your time.

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

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

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

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

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

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

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

Unknown Speaker 23:48
know.

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

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

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

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

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

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

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

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

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

Unknown Speaker 27:56
interesting.

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

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

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

Unknown Speaker 29:30
around the

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

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

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

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

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

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

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

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

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

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

Unknown Speaker 32:06
could be more in Ontario.

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

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

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

Unknown Speaker 33:23
an exception.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Unknown Speaker 49:11
From me,

Unknown Speaker 49:14
gladly.

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

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

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

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

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

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

Unknown Speaker 51:25
That’s our average.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Unknown Speaker 58:12
not

Unknown Speaker 58:16
interested in lending.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Unknown Speaker 1:03:55
ch MICU.

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

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

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

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

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

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

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

Unknown Speaker 1:06:32
Yeah.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Unknown Speaker 1:14:59
Everyone I speak to

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Unknown Speaker 1:23:32
So

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

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

Unknown Speaker 1:23:55
wants to shoot.

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