**Transcripts are auto-generated.

Erwin  

Hello and welcome to the truth about real estate investing show. My name is Erwin Szeto where we discuss many stories and lessons around real estate investing. So together we grow as real estate business owners towards our goals of financial peace, avoid landmines, scams and con artists. As our regular listeners know, it is not all sunshine and rainbows out there. The truth about real estate is these are tumultuous times, many novices who were over leveraged to aggressive investing with their ego, instead of what we hear teach our clients a pragmatic, measured approach, incorporating best practices we’ve developed in my nearly 20 year career as an investor, we’ve transacted over $400 million in real estate, and that’s almost entirely investment properties, that positive cash flow, it’s actually translated into among our clients, we have about 45 self made millionaire clients who’ve made that million or more in income properties. So I’ve excluded their homes here at Island real estate. We’re like financial advisors, but real estate investing focused, and I actually have clients who have made again, not only a million or more dollars, but they’ve done so conservatively, systematic, mainly with cash flow. And honestly, it’s quite boring. One of my millionaire clients reported back to me after attending one of these newer coach groups, coaching groups that are meet up where they pitched, what the pitch was to get rich quick, by buying multiple properties in a short period of time, with expensive private money, and flipping and Burr strategies and coaching, very expensive coaching, you know, easily five more than in the five figures a year. Unfortunately, it’s the same groups that are producing bankrupt clients, these groups are great at making money for themselves. Even if you have a handful of bankrupt coaching clients, I think that’s way too many. Especially when I think it’s extremely avoidable. As an insider to the investment investor community. I’m connected with some of these students, actually many of these students and coaches and former coaches, and we’ll be hosting some of them on this podcast over the next few months. So do keep in mind, though, those who did play conservative those who’ve been, you know, having cash on the sidelines or saving up for these times, folks who have great credit will be taking advantage of the increased number of failed speculators, these power of sales and distressed sellers hitting the market this spring market. Honestly, it’s our clients who have been taking advantage of this market so far. For anyone who came on our tour this past weekend, you saw the properties that our clients picked up for great deals, and will continue to do so, you know, will actually continue to build intergenerational wealth, like these other groups that are advertising, while they undergo rebranding, one of these companies recently just sold to another guru, not saying all gurus are bad, but we’re seeing some consolidation shake up in our community, especially among the coaching companies, we’re seeing changes in leadership. And, you know, straight up I mean, hearing stories that some of these groups that customers are demanding refunds, you know, 10 $30,000 on whatever they paid, because honestly, they’ve gone broke and the teachings of those courses and coaching, so anyone who wants to continue along in this journey to learn the truth about real estate investing, specifically how to actually be successful, Jerry and I will be co hosting investors meet up in Whitby, Ontario, followed by an education tour, no pressure as always, it’s a group comfortable. No, no pressure is always tour of income properties and a mastermind lunch on Saturday, March 25. This will be our first time ever hosting in Maryland meeting in the Durham Region. And if this goes well, we’ll make it a more regular occurrence. The cost is nominal. All profits go to our charity the Hamilton bash brigade to outfit poor school children with warm winter wear. Cherry will be presenting on the absolute must knows for the tax season of 2023. Sherry and her accounting team at real estate tax tips has been working away with their 500 Plus real estate clients. And they know what all the Frequently Asked Questions are and the teachings that are clients must know about. You don’t want to miss this, as there honestly is a lot of confusion around the two new tax rules from our lovely Trudeau Government. And yeah, you know, I miss it. My team and I will be giving an economic market update, followed by how to best profit from these opportunities from the Oshawa to Kingston, Ontario markets with interest rates at or near peak and a flood of tar sales coming on the market this spring. This could very well be the bottom of the market. Again, my crystal balls no better than anybody else’s. But again, we’ll go over economics and market update on Saturday 25th March 25. So yeah, no demand. So it’s no surprise for me that we’re already seen the demand is greatest in the sweet spot that we invest in specifically. And we’ve always done that since honestly started in 2005. So save the date Saturday, March 25. It is my birthday weekend, but no rest for the wicked and honestly There’s nothing I enjoy better than helping hardworking Canadians create financial stability and peace in their lives. on to this week’s show, I had no idea how many new tax rolls be investors have to deal with this year. You know, thankfully, one of the greatest wealth hacks I can I can share from my experience is to marry your accountant. I thankfully did. The underused housing tax is especially concerning as extremely new, the forms only became recently available. And I’ve spoken to many pros real estate investment pros out there who don’t understand it either. I understand it now. Thanks for doing this interview. What’s worse is the penalty is 5000 to 10,000 for not filing. In this specific underused housing tax filing applies to many, many of us in the investor community. And again, understanding is not clear. And even though many of us are excluded owners, I am an excluded owner, thus having no liability, I still have to file and if I have to file I imagine there’s many of you also who out there who have to file. I’m not an accountant, though, please speak to your accountant, I did happen to invite my lovely wife cherry Chan, CPA ca who happens to be the most in demand real estate count speaker out there to share some of the top tax changes we face in 2023. So Cherry does break down some of these tax tips on her YouTube channel as well in more detail, so make sure to subscribe to her channel along with the other honestly 10,000 YouTube subscribers, YouTube, when you go on YouTube, just search Real Estate Tax Tips. It’s actually one word real estate tax tips on YouTube. In case you’re curious, yes, cherry is still accepting new clients. That is honestly the number one question I get is cheering accepting new clients? Yes, they are accepting new clients but not for the not for 2020 twos filings. Right? Because they’re already full swing in the tax season. They’re already beyond forcing swing into tax season. So I’m not sure how much longer that is, but they’re accepting new clients admin at CC cpa.ca. Is the email address for your inquiries. Should you want to work with Cherry and her team? Again, it’s admin at CC cpa.ca. In case you’re wondering, the domain is an acronym for cherry Chan, Chartered Professional accountant.ca. Please enjoy the show. Thanks, Cherry, what’s keeping you busy these days?

Cherry  

Everything. I think the biggest thing for me is the underused Housing Tax Act, which I think is shattering the entire accounting world or at least in my business because I routinely work with people who are require based on this legislation who are required to do the filing and they just released the filing Form. And that’s why we’re like crazy ly scrambling to put the system together, put the human resources together, put everything together to make it work.

Erwin  

Ever seen the look on my clients face Justin who is an accountant as well, and he had no idea. He explained this to him what this was.

Cherry  

Yeah, it is it is a complicated thing, although the intent wasn’t to have any requirement for Canadian resident or Canadian citizen, Canadian permanent resident and Canadian citizen to do the filing because they would be most likely exempted from paying the tax, but somehow the way that the legislation is written now a lot of Canadians and a lot of Canadian corporations would be required to file the return.

Erwin  

So anyone that owns any property,

Cherry  

no so it’s only applicable to residential properties that are triplex and under and if you own a commercial property that has three units and under you may also be doing on it depending on the use of your residential portion in comparison to the commercial portion. So those would be the affected properties owner. So like single family home condos, but only residential condos, not industrial condos or commercial like this one that we’re in Yeah, those would be exempted, but it’s residential condos, semi detached house duplex triplex row houses. So townhouses. So

Erwin  

you’ve never vanilla homeowner

Cherry  

was event Nila home owner,

Erwin  

the majority of Canadians that are just regular homeowners that don’t own any investment property,

Cherry  

um, maybe maybe not. So depending on if they are an affected owner or not. That’s an affected owner. So affected owner includes a Canadian corporation private corporation, partnership to a certain extent it may also include our joint venture relationship. So for example, if you have elderly parents and your elderly parents to help them taking care of the whole house, the elderly parents say hey, I need you to I need to add your name to the title of took off my house because it helps me to handle all the affairs of the house but you don’t truly own that property. You’re just being added for the purpose of helping out the true owner is still the parents with this type of arrangement. You’re essentially acting as a trustee to own be on title in trust for your parents. And under that scenario. because you’re a trustee, you are now required to file a return. Okay,

Erwin  

so I don’t think that’s a very common case,

Cherry  

it is common because a lot of the elderly Canadians would have their kids on their primary residence house to help them.

Erwin  

Okay, that’s a whole other ball of wax that I don’t want to get into.

Cherry  

I know it doesn’t quite a fight a lot of because most people

Erwin  

will think automatically just do a power of attorney instead. But there’s benefits to both. And we’re again, so the conversation, I don’t think we need to get into that today.

Cherry  

Well, but it’s applicable as of December 31 2022. So if your title, your name is on title, December 31, then you have a filing obligation.

Erwin  

So what if, like Adam, who was on title for his home? Yeah, does he have the file?

Cherry  

Well, if he is the sole owner and sole beneficial owner of the home, he’s not acting as a trustee, then he doesn’t have to file. But for average real estate investors that you and I deal with, they do a lot of joint venture. If you’re in a joint venture relationship, you are the one that’s on title, and you have a joint venture partner that’s off title than you are all of a sudden a trustee, then you would need to do the filing. Okay. So when we trustees? Well, that’s what they say, right now, the trustee has to do the fire, whoever that’s on the legal system. But there is a second part that talks about the legislation has a second part that talked about who are the owner, if you are the trustee, you are owning the property on title, you’re the one that’s on title, and you’re only in trust for the corporation, the corporation is also the owner. So if you can be identified as an owner, because you’re a Canadian corporation that I mentioned it, which would be an effective owner, you would so the corporation would still have the filing obligation. So the corporation has it and if you’re the one on title, the individual would also has the filing obligation because the individual is acting as a trustee.

Erwin  

Okay, so trustees and corporations, is that we draw a line in the sand

Cherry  

and partnership, or partnership. Yeah. When they’re non Canadian, as well, but then we don’t have a lot of non Canadians listening to the show. So

Erwin  

yeah, now many of our clients are non Canadians. Yeah. Okay. So non Canadians, trustees, corporations, partners, partners for investment purposes, or even like wedded partners.

Cherry  

So they specify as partners in the partnership, I always like on my YouTube video, I actually mentioned the house that we kind of owned together. The one the single family townhouse that I’ve always owned, it was my primary residence in the past. Throughout the years, I’ve always reported the income and expenses on my own personal tax return. But throughout the years, we refinance that property a couple of times. And that property and through that refinancing process, the bank require your name to be added to title, you’re now a trustee. I’ve always reported that 100% income and expenses, there is no change from a tax perspective. But you’re added for the purpose of mortgage, you’re really owning it in trust for me. So all of a sudden, you have the filing obligation, because you’re on title interest for me. Now, vice versa, right? There are a lot of people couples, that one spouse, the high income spouse is on title, but then the reporting is done by the husband and wife, both both spouses together, then all of a sudden, to whoever that’s on title is now a trustee. I don’t know if that makes sense. Let now that you understand the magnitude of how crazy this UHT under US housing tax act implies.

Erwin  

That’s clear blowing up every accountants phone lines right now.

Cherry  

Really, a lot of them don’t know but the reality,

Erwin  

people are under listing, they’re gonna go they’re gonna go call a master account and what to do. Yeah, absolutely. But they’re all investors. So likely, almost all of them have to sounds like pretty much anyone who owns an investment property will have to file

Cherry  

not really no, let’s use an example. If you and I are in a joint venture together for one of our student rentals, we’re in a joint venture relationship together, both of our names are on title. And we eat we are joint venture, we’re not partnership, if we call ourselves partnership, then you have the filing obligation. But if you call yourself a joint venture, and your intention is joint venture, and you’re you demonstrate evidence that you’re operating as a joint venture, or you have a joint venture agreement sign, then there is no filing obligation, because I’m a Canadian citizen, you’re a Canadian citizen, you own 50% I own 50%

Erwin  

What is the objective of this new form?

Cherry  

So the objective funny, because this is totally what we just discussed is totally not consistent with the objective. The whole objective is to prevent foreigners to own Canadian residents and leaving it vacant, or operating it as Airbnb

Erwin  

holder on the hunt. Yes, this is the federal government.

Cherry  

This is federal government it affects Canadian wide. Okay.

Erwin  

Wow. So instead of asking you everyone who’s up anyone who’s foreign Oh, Wondering and anyone who’s offering Airbnb to to identify themselves. They’re asking everyone who is not.

Cherry  

Like, yeah, like it’s the same similar situation was like the Toronto vacant home tax, right? Like there could be a very small percentage of people who are leaving that Toronto home vacant. But they’re forcing everyone in the city of Toronto to report to the city of Toronto website that are you renting it out to someone, and on a long term basis, like, and this happens in City of Toronto happen in City of Ottawa has already been implemented for a long time in Vancouver. And then the government in British Columbia also sent out an other letter for them to do the filing. And this is on top of all of these completely different.

Erwin  

I’m sure the CRA employees love this idea.

Cherry  

Yeah, it’s crazy. I can’t even tell you how crazy it is because the form was really literally released middle of January. And the filing deadline is April 30. And throughout the last two weeks, they’ve released 13 Technical interpretation. Last two weeks. And what oh, what dates today, February 17?

Erwin  

What percentage of your clientele do you think are affected?

Cherry  

I think all of them

Erwin  

factored alive in 100%. Plus,

Cherry  

I don’t close to I don’t think it’s 100% of it by me five substantial amount will be affected

Erwin  

80%? Well, it’s 80%. That’s a lot sometimes imply

Cherry  

relationship, right? Like we wouldn’t know if it’s a husband who’s on title. And then the husband and wife are both equally reporting the income and expenses. That is really hard to identify. Right?

Erwin  

If you’re not doing their personal taxes, yeah, if

Cherry  

we do their personal taxes, even then, like it’s always been reported this way, we don’t necessarily go back to the original purchase agreement every single time. Right? How would you know?

Erwin  

So are your billings gonna go up?

Cherry  

Well, our liability is gonna go up. So for non compliance for individuals who doesn’t file and who’s required to filed and penalty is $5,000. For corporations who are required to file who and do not file, it’s the penalty is $10,000. And if you don’t file on time, they have the right to take away the exemption from the tax and the tax amount is 1% of the fair market value of your property. That sounds pretty serious. Oh, it is serious, which is why like it leaves the entire accounting world scratching our head, the whole legislation is about 89 pages long. Right. Right.

Erwin  

And you spoken to your friends in the industry as well, like, are they just as concerned as I am?

Cherry  

No, I am concerned, I think because it impacts our accounting practice so much every almost every one. I wouldn’t say almost everyone, I think 80 90% of them are affected. And we’re trying to figure out how to raise this to our clients effectively and efficiently. Because we’re also in the middle of tax season, personal tax returns, that line is also April 30. This under US housing tax form also has to be filed by April 30. And they just released the information. So we’re like scrambling to get this thing done and get the message across the most common misconception that our clients have. And they wouldn’t even open my email because it says under US Housing Tax Act, and in their mind, they said, hey, my houses are all rented. They’re not underused, and therefore I don’t need to know about this. But it’s the opposite. You just have to filing obligation, even though you’re exempted from paying the tax. And then the second misconception is that hey, like I already did the City of Toronto, or city of Ottawa or Vancouver, reporting, this is the same thing. So it doesn’t apply to me. That’s not true.

Erwin  

Most governments don’t talk to each other. Yeah, those people

Cherry  

are actually different type of filing this under US Housing Tax Act is federal, all across Canada.

Erwin  

Does the government just want to know who has Airbnbs is trying to track it? I don’t think it is. limit them.

Cherry  

I don’t think it’s Airbnb is really targeting foreigners. Fascinating. But then if they they rent out their property on a long term basis, then they will be exempted from the tax. They just need to do the filing as well. But currently, the way that we’ve seen it is that if the foreigner owned property and operated as an Airbnb, short term rental, they will have to pay the tax or leave it vacant, they would have to pay the tax versus the tax 1% of the fair market value. That’s annual, every single year.

Erwin  

That’s not cheap. How many people know about this,

Cherry  

or no, i Nobody. I think most accountants were like, I don’t know if most accountants didn’t

Erwin  

know. So we’re just being thrown under the bus. I

Cherry  

know about it because we are in this particular business. We have to know it so This useless? Well, the truth is it was announced in budget 2018. It’s effective January 1 2022, for properties that you own as at December 31. If you don’t owe it as of at December 31, you don’t have any filing obligation. So, but it’s just the form hasn’t been released until middle of January of this year. So that’s where the scrambling come in.

Erwin  

Right. Yeah. More work. Yeah. Doesn’t seem fair. No, but they released the form in the middle of tax season. Yeah,

Cherry  

exactly. And the form is not easy to understand. People likely to make mistakes. Yeah. So you’re required to try your best to fill out the form as well. If not, then they could also impose the same penalty.

Erwin  

This is great. Yeah. Instead of the CRA going after all the government stimulus money that was given way without any auditing,

Cherry  

although they are going after those two, so they’re going after the wage subsidies, they’re going after the not so much the CBO alone, but that wage subsidy, the syrup as well, they are going after those

Erwin  

didn’t know much about it as like, what are the penalties are they looking for? Everyone has to record it. First of all, everyone has reported right, all the business that the report the wage subsidy and individual sales report, Serb income

Cherry  

syrup has to be reported as income wage subsidy has to be reported as income. I don’t personally have any experience working with that wage subsidy audit, our exposure is relatively limited to it, our clientele don’t have a lot of those. So we’re not really exposed to it. So it cannot really tell you much our experience with the insurance company that we work with, who provides insurance to accounting firms clients, they’re telling us a lot of their other accounting firms are, like scratching their head, pulling hair out on going through these audits. Lovely decoy after it,

Erwin  

we should have our detailed how much how the word is questionable. The judgement was to hand up so much money and when love is gonna be last. But anyways, what else? All right. Anything else we didn’t cover? I’m talking about on this vacant home tax wherever it’s called.

Cherry  

No, it’s under US housing tax and used. It’s not vacant home tax, you get people confused. Now, one thing that I do want to mention that people have a lot of confusion, just because you don’t have to pay the tax doesn’t mean that you have no filing obligation. The penalty that I mentioned the $5,000 per individual $10,000 for a corporation, they are imposed on non filing. So even if you have no tax to pay, so using us as an example, our house,

Erwin  

well, long term and everything. Well, maybe we’re Canadian, so

Cherry  

to your exempted anyway. So you only interest for me, our Toronto townhouse, we file we do the filing, there is no tax to be paid. It’s just that you have to do the filing. Good Lord. That’s it. Like there’s no nothing to be paid because you’re Canadian. You’re owning it in transport and other Canadian. So there is no tags were exempted is just that, unfortunately, we still have to do the filing. So some people some of our clients also have joint venture partners and their joint venture partners, Comptroller is telling our client, Oh, you don’t have to file it. Look at the screenshot, you’re exempted? Well, the reality is you’re exempt. It doesn’t mean that you don’t have the filing obligation. Oh, no, no, you have the filing obligation. You just you are exempted. You just have to file an obligation.

Erwin  

Fascinating. Yes, all my clients were exempt. But there’s this but there’s all this admin work that has to be done exactly. For no reason for no reason. Oh, yeah. None of them are the part of the problem. Because

Cherry  

if you think about it, the objective of the legislation is to prevent foreigners from leaving their house vacant or their residential property vacant and does reduce the number of properties available for local Canadians to live. But now the whole legislation is written in a completely different direction, that everyone, almost everyone in our practice would be affected. Whose bill

Erwin  

is this? You said 2018. So I think that was still liberals.

Cherry  

I think we’re still liberals. So

Erwin  

I just want to know, so I know where to direct my anger. All right, that was a mouthful. Apologies to the listeners. We’ve scared and all the accountants whose phones are burning up right now.

Cherry  

Yeah, tell us about that.

Erwin  

All right, what’s the number two thing people need to know about taxes in 2023?

Cherry  

I mean, 2023 is a huge change year there is something coming up in the pipeline. There is something that’s already effective. As of now, the biggest thing is anti flipping rule. And the flipping rule is effective January 1 2023. If you own a particular residential property again under 365 days, and you sell it within three years is exactly five days after you purchase it, then the profit that you make are automatically deemed business income. Now a lot of people would have to miss understanding that when you purchase a property, and when you resell the property, you either do not need to pay tax if you moved into the property or you pay capital gains tax on it, when I talked about capital gains tax is 50% taxable. So people are under the misconception that it’s either tax free if you lived in it before, or it’s only 50% taxable. So if you make $100,000, only $50,000 is being taxed, and you pay maybe $25,000 of tax now, but the reality is that there are certain rules that it has always been around those rules, those considerations CIA would look at to determine whether the sale of a property is considered capital in nature or business. If it is business, then 100% of the profit that you make is considered income. Whereas if it is capital in nature, then you will then go into Hey, did you live in the property before? Or are you using it as a long term rental, then the sale would then be considered capital in nature and 50% taxable if you’ve lived in the property for the entire duration of ownership, then 100% of it would be likely tax exempt. So those are the original rule. Now CLA over since 2015, they’ve put a taskforce together, they put extra effort to audit people in the real estate sector in Ontario, as well as in BC, they’ve since recover over a billion dollars in Ontario billion dollars in MPC as well. And a large number of audit is evolving around people flipping properties or claiming that they move into the property and then claim primary residence exemption and not pay tax on the sale of the property. Meanwhile, they’re really operating a flipping business. So they’re trying to target those people, the way that they have always been targeting those people is by looking at transactions that happened 365 days or less within the purchase day. Now, those are low hanging fruits, because the consideration that they’ve gone through they would go through is that how often do you do the trading? How long would you have owned the property for the shorter the duration of ownership, and the more frequently you purchase and sell the residential property, the more likely you are viewed by court that you are doing a business rather than doing a capital long term investment transaction. And so they’ve always tried to target the low hanging fruit. And the low hanging fruit is under ownership duration under 365 days. But that’s not enough, the government decided, hey, this is not enough. CIA want to make it even easier. If you now they impose this rule, under 365 days, for sure all the profit is called business income. Unless you fall under one of the exemption the exemption would be like someone joining your family leaving your family if you pass away, you get fired, or there’s personal safety, there are a bunch of other exclusions to this all sound reasonable, yeah. Now, but then I’m giving you an example. If you move into your property, you own this particular property, and you really find that it’s, it’s a lemon to work with, and you uncover a bunch of issues that you didn’t know. But then someone walked in and say, Hey, I am interested in buying your property for a profit, you’re like, Well, like I wanted to get rid of it as much as soon as possible. Your original intent is really to, you know, buy it, and then rent it out. Now all of a sudden, someone come along, within 365 days, you sell this salad to this person, then 100% of the profit that you make would be taxable. Now another example is that if you were to purchase a property, and you move into the property, now, I don’t know how you prove personal safety, maybe it’s not personal safety. Let’s say you move into the property and you’re like, wow, my neighbour really stink, or my neighbour smokes a lot. And I hate that smell. And I need to sell this property because my neighbor’s smokes. And I can’t tolerate it’s not quite personal safety, you don’t have documentation to prove it. And there’s no it doesn’t fall under any of the exclusion. That unless you get fire or you’re getting married, then all of a sudden, if you start you were to sell within 365 days, the profit that you make from the sale of the property would then be considered 100%. Taxable, or fringe case but yeah, yeah. So those would be the situation that could potentially get caught under this rule that would be legitimately for other reasons, right? I want

Erwin  

to find a lot of construction condo investors good caught in the anti flipping anything.

Cherry  

So that’s an other new rule that came out actually last year, May 7 2022. So they talk a little bit about pre construction, not necessarily condo pre construction home when this new anti flipping rule also got introduced. They also clarify with the condo pre construction condo assignment sale for anyone who purchases the commit to purchase the pre construction home and decide to sell that contract. So, yeah, within 365 days after you purchase a property, after you purchase the you enter into the agreement of purchase and sale because when you enter into the agreement of purchase and sale on to purchase a pre construction home, it could take a couple of years or 6789 years before it materialise. But if you you resell that contract, within 365 days, after you enter into the agreement of purchase and sale, then the profit that you make would that be considered 100% taxable majority of the clients would not be doing that. Now. But then on the other hand, if you close the property and brand new home, and within 365 days you sell it, because you know like with condos, especially like before you close the property you already take possession of the property, you are renting it essentially. So the moment that you close the property, you may want to sell it already. But the reality is, if you sell it within 365 days, the transaction happened in 2023. Onwards, then you’re caught under the same rule as well.

Erwin  

And then what about assignment fees? Is there HST on that?

Cherry  

Yes. So I did a great YouTube video. I have to I have to promote myself.

Erwin  

flagging your YouTube Oh, no. No.

Cherry  

Tax Tips. Yeah. youtube.com/real Estate Tax Tips,

Erwin  

What can they search to find? The trustee is on assignment.

Cherry  

So you should cherish him. And then it’s there. Okay, it’s assignment and HST and everything. So essentially, the rule came into play may 7 2022. What it means is that any assignment fees assignment deal, assignment fees that you earned, for transactions that close after May 7 HSC, is applicable regardless of your intention. So HST will be taking charge on the assignment fees in the past before May 7, HST would be applicable. If you are not using it as your prime your original intent was not to use it as your primary residence. So it’s fuzzy. Now, May 7 2022 onwards, assignment fee, assignment fees would be applicable.

Erwin  

No different than realtor commissions, though. It’s just duplicate. Yeah. So that’s sucks. I’m sure a lot of people who are holding the construction on assignment

Cherry  

fees only.

Erwin  

Yeah, but I imagine they’re all not happy about that. Well,

Cherry  

before me seven CL A’s position is that the deposit reimbursement by the buyer of your assignment deal would also be subject to HST. That was the position in the past, but may 7 and onward. They said, Hey, you’re a pay HST on a deposit. So therefore, no HST on that amount. So they clarify their position, which is beneficial to people. It’s just before it was confusing.

Erwin  

All right. What about anti flipping? What if you’re the anti flipping world? What if you’re flipping within the using a corporation?

Cherry  

So if you flip your houses within a corporation, and you’re really conducting a flipping business, the profit that you make is 12.2%. In Ontario, 100% of it is taxable, but you’re only subject to small business tax. Right?

Erwin  

So the majority of mice, my professional flipping clients, they’re using corporations to begin with, to begin with, so they’re just nothing really changes for them.

Cherry  

Yeah, so that’s why some in the accounting world some people are arguing that hey, like the rules have already been in place forever. It’s just that now they just make it a slash like a clear draw something in the in the sense a 365 days and last for sure, you’re flipping I don’t care, but they are only targeting people who make a profit. If you have a loss, because last year is a situation is a little different. The market is still not going up, back up yet. If you incur a loss and it is within 365 days, you cannot just call it a business loss. You still have to go through the original criteria. How often do you do the tray? If you are do you have insider knowledge? What’s your intention, they still look at the old criteria to make sure that you fall under the business because capital loss is not as beneficial as business loss.

Erwin  

So it says this one flipper taxes any home flipper tax is beneficial for people who are buying to live and it actually sounds beneficial to my professional flipping clients that business laws know the fact that there will likely be less competition flips,

Cherry  

oh, it was so it’s really targeting people who are abusing the rule to begin with. Right. So

Erwin  

they’re probably amateurs as well. If they’re not flipping within a corporation, they don’t really they’re not really in the business of it. They’re just

Cherry  

dabbling into it. Yes, yes. Yes, absolutely.

Erwin  

Okay. No problem with that. I think, I think, wow, that that empty flipping tax got a lot of heat in the community. That really doesn’t affect many.

Cherry  

It doesn’t like a lot of our clients and our community. Yeah.

Erwin  

Well, I know a lot of people out there do these things like the flip whatever. And claim they lived in it. Yeah. No, it’s great for them. Terrible for everyone else down the line.

Cherry  

Yeah, absolutely. And they’re really trying to talk to those people. Okay.

Erwin  

No problem with that. All right, what else we got? This should be a Halloween show.

Cherry  

So there’s the new trust reporting rule that come is coming into play. Okay, never heard of this one. So this trust reporting role before you shut down this whole podcast, listen to me. It’s coming down. And it’s applicable for this fiscal year 2023 calendar year, and the legislation was released December, and it was supposed to be effective last year. And obviously, they didn’t get it down. And I guess the UHT is already a huge headache for CRA so they allow the postpone and delay for this trust rule. So this trust rules specifically called out bear trust T to file a T three trust return. Okay, what does that mean in plain English. So in plain English, if you the people that we identified as acting as trustee, owning the property in Transport Corporation, you’re on title owning your cooperation is owning a property in trust for you personally, because it happens a lot as well in the real estate investment while you own a property in trust for a joint venture relationship. That is, you don’t call it a trust, it’s not registered trust, per se, it was bad trust arrangement, these big house arrangement now has to be reported by CL to CLE. Oh, starting next year, is applicable this year. So this is pretty common. Yeah, so the same with the under US housing tax act that trust, the same trust relationship would have been identified by this new truss reporting role, and we all have to report it.

Erwin  

So what should investors do? What are the supplies? So

Cherry  

using our townhouse as an example, you are now owning it in trust for me, because you’re on title for mortgage, and you’re owning it in trust for me. So you would have to file a trust return as for next year, and report that trust relationship, even though you have nothing to do with the property, you’re really on title for mortgage purpose. So UHT is one and then trust reporting in second. Now, what can investor do? Now, since you’re still on title in our example, as of this moment, you’re still on title. So you still have the reporting requirement, the trust reporting rule is applicable to any ownership that happened during the year. It’s not as at December 31, at least based on the current legislation. So essentially, there is nothing you can do, the only way that you can get away from it is for future years. So in the current year, you will try to get away from this trust relationship. Maybe in our particular example, we will try to remove your name from title that’s going to help eliminate a future filing obligation, but not for this current year. For 2023. You still have the following, although realistic,

Erwin  

is that though? Hmm. Because I was added for mortgage for mortgage purposes. Yep. So how rational likelihood would I be removed?

Cherry  

I don’t know. It’s a conversation that you need to have with your bank. Right? So this is one example. A lot of our clients have the properties owning interest for the cooperation that they all, it’s all often to get around. Because it’s harder to get financing,

Erwin  

or just started, just for point of clarification, folks, it for the listeners benefit. If you have no idea what we’re talking about on this specific point, likely doesn’t doesn’t affect you. If you know what we’re talking about, this likely affects you.

Cherry  

So if you own the property and trust for the corporation, now, this is applicable to any trust relationship, not just residential properties. We’re talking about all properties now. So you purchase a property in trust for a corporation and your corporation report all the income and expenses, you’re acting as a bear trustee, then you need to file that return.

Erwin  

Interesting. So it’s a rich person problem. I don’t generally just throw that out there. What what is the objective of this of this reporting rule?

Cherry  

I guess there are a lot of people who are owning properties and they are not really reporting who the true owners are.

Erwin  

Oh, since the government just wants to wants more visibility into who owns what. Yes. Yes. Getting more into our business.

Cherry  

Yes. They should know. And it’s just that they now want it You, if you had a family trust setup, you would already have been filing that family trust return on an annual basis is all these bad trustee agreement behind the scenes that nobody knows. Right?

Erwin  

Yes. Here’s the thing keep, keep asking for more information from us. Because remember, I forget what year it was enter you remember, when? Because only a few years ago CRA asked how much we made when we sell our home? Correct? Yeah, that was only a few years

Cherry  

ago. 2017. Okay. Long as I

Erwin  

remember. And so they Yeah, they just keep seeing the ask for more. Yep. Interesting. That rule

Cherry  

came into play because people are using the primary residence exemption.

Erwin  

Know what I’m talking about. We’re using government wants to know how much we’re making something when we sell

Cherry  

our home. So yeah, actually, they don’t know how much you’re making. Until we report it. They only you only report a sale price. You’re willing to purchase price.

Erwin  

Okay. They can look at land titles.

Cherry  

Yes. But they don’t. If they are really trying to get that information. They could just ask for it. I’m surprised that they’re not. Yeah. Interesting. Certain situation they do if you don’t live in it, and it’s not your primary residence the entire time, then they may. Okay. All right.

Erwin  

We’re running out of time on this Halloween Special. joking about Halloween special it is March February 19. As we’re recording, is there anything else that investors need to absolutely know for new tax changes in 2023? I don’t

Cherry  

think there are many there’s like a couple of minor one. I don’t even know if you need to know like it’s off, particularly for investor for first time homebuyer you are, there’s the introduction of the first time homebuyer savings account. It works kind of similar to like an RSP, a hybrid of RSP and TFSA. The contribution to the F HSA account is tax deductible. So similar to RSP. If you withdraw from the F HSA account for the purpose of buying your first home, then you would be able to withdraw it tax free. So all the income that you get from it, the investment return, together with the withdrawal would be tax free, assuming you’re withdrawing it for the purpose of buying your first home.

Erwin  

So money going in is that is it a tax shelter?

Cherry  

Yeah. Attached tax deductible. So like RSP contribution? Oh, interesting. But money coming out is not added to your income, assuming you use the money to buy a first to buy your first home.

Erwin  

Is this something that parents can do for their kids?

Cherry  

So annual maximum contribution is about $1,000. Lifetime lifetime contribution is $40,000. It’s not very significant. No, it isn’t. But it is something that you could potentially take advantage of. So that’s F HSA, they haven’t really officially introduced it and allow the institution or the trustee. When I say trustee, it’s really the the bank that holds these F HSA RSP account the register account for you. They haven’t allowed that to be opened yet. But it will be sometime this year.

Erwin  

Right before the lifetime amount. I don’t even know if that covers the double land transfer tax in Toronto. Yeah,

Cherry  

exactly. But just saying.

Erwin  

Neil, Justin Trudeau saving us off

Cherry  

first year is $1,000 only. So thank you, Justin. And then another thing is the multi generational home tax credit. I think it’s for renovation, if you’re putting a suite in your house for your family member to live in. I think there is a multi generational tax credit available, I think you can get back up to $7,500. You need to have receipts. And there’s a criteria that you need to meet. In terms of the suite setup, it needs to have its own kitchen, as well as bathroom as well as the second place. Second, check makes it safe. The second exit.

Erwin  

sounds very much like our typical basement. Apartment strategy.

Cherry  

Yeah, but except that you do need someone to live in there for you to get the $7,500 to be a family member. I think so. Okay.

Erwin  

Can you remind us again, how our tax credit works? Because it doesn’t come off the top of your income? Where does it come off from the bottom? So after all the deductions, then they

Cherry  

know so it’s calculated really based on the lowest marginal tax rate. It is a refundable amount, though. So 7500 is the maximum you can get from CLA, which covers us up to I think about $50,000 of renovation expense.

Erwin  

Okay, I’m trying to create with some $500 of tax credit guests even a duplex conversion 50,000 probably pays me about apparently pays for like my basement egress window.

Cherry  

It is better than not having it and plus, it’s not meant for investment property per se Right. Like it’s for you to live with your mom, elderly mom or with your elderly aunt.

Erwin  

Firstly, thank you, Justin Trudeau for saving us You know if they could just, you know, figure out some less red tape that probably be a lot more effective than this. All right. That’s all. That’s all the tolerance we have for this Halloween Special. Again, I’m joking folks is February 19. As we’re recording Chair, thank you so much for doing this. I think we’ll probably have to have you back in a few weeks if you can manage it during tax season to tell us whatever else we need to look out for.

Cherry  

Yeah, wish us luck. I wish all the accountants out there luck as well. accounting firm, public accounting firm and

Erwin  

all the spouses of accountants.

Cherry  

Good luck everyone.

Erwin  

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

To Listen:

**Transcripts are auto-generated.

Erwin  

Hello and welcome to the truth about real estate investing show the ranks number 81 on Apple iTunes in the business category. Thanks to you, our 17 listeners again, thank you so much. Thank you to all of you who’ve been leaving five star reviews on iTunes, liking and sharing wherever we post as that really helps the algorithms across the board either iTunes or Facebook or Instagram or it makes it the show more visible and in turn, we may help more everyday Canadians learn about what actually works in real estate investing, no get rich quick schemes, but rather get rich slow, as low as little risk and effort as possible. We do have guests that successfully flip and we have many side hustle real estate investors who will make great money at their jobs, which happens to be the highest and best use of their time. Not everyone has to be a full time flipper to make great money. The whole point of the show is to introduce you to investors with repeatable results who are willing to share their losses as well. A lesson I’ve learned along my journey and told to me by my one of my mentors is to not believe anyone who never loses because if they’re willing to lie about never losing, but what else are they willing to lie about? Speaking of losses, sadly, a developer in Vancouver a midsize developer, coral Mandel properties Limited is making headlines filing for bankruptcy protection from its $7 million in debts across 16 major development projects, I’m told that’s about 2000 condo apartments across those 16 developments, and most of its unfinished, and the cause is rising interest rates. The cause for these financial troubles is rising interest rates, and then in turn debt service costs from the article they cannot raise more capital or debt. And then add to that red tape and delays due to COVID. And working with the City of Vancouver as well. Even though chief the chief operating officer of the company Coromandel properties is a former city, Vancouver city, Vancouver counsellor. So even though they had you know, inside track on how to make things go make my things more smooth. Unfortunately, the developer still is failing, I have a link to the article to the Vancouver Sun in the shownotes. But hopefully this all works out. I’m never want to celebrate other people’s losses. I’m generally just a cheerleader for everyone to be successful, happy and healthy. Anyways, hopefully this all works out, including the condo buyers who put down deposits. Hopefully those those monies are returned in a timely manner. But again, we’re talking about early bankruptcy here, it could be some time until they get their money back. from a market perspective. Again, that’s 2000 units, that’s a whole bunch of supply that will be delayed for who knows how long while at the same time that demand from immigration is only accelerating, including work visas specific network justice, work visas, but visas for international students that sometimes gets missed in the whole immigration number. We still have other folks coming to Canada about another 400,000 or so visas, mostly International School students that are also coming as well who also need a roof over their head. And will you know, they’ll require health care as well. So extract Vancouver housing prices to be even less affordable. Very sad news. This is what happens when NIMBYs folks who push hard for not my backyard policies. And at the same time developers who take on too much debt. As mentioned before on the show, I personally won’t invest in any development that is debt financed. construction loans are fine. For my level of tolerance. I’m not saying that’s fine for everyone. For the projects I invest in Yes, there are construction loans, which to me is a normal business practice, as construction loans are not given unless the pre sale thresholds are met. But other than that, I wouldn’t touch any investment. That’s the sort of this sort of large syndicated mortgages. Anyways, sadly, I anticipate there, there will be other smaller mid sized developers that will fail. As in this as it’s early, it’s still early. Sadly, this is a win for the NIMBYs, as you know less housing is being built, which is exactly what they want. This is terrible news for the investors that were involved. And that would be condo owners who were working to, you know, move into their new homes. And of course, the lenders involved the creditors of the $700 million on the positive, or Chanda created 150,000 new jobs in January, that is 10 times greater than expected pushing unemployment even lower into historical lows. The macro news still generally points to a soft landing in terms of the economy, but we can use do have a lot of debt and which is why the Bank of Canada is pausing interest rate increases on the micro level. I just interviewed today my lawyer friend who’s a Mississauga lawyer. He’s currently working on 32 Power of sale files. And he’s a sole source practitioner office as in, he’s the only lawyer in the office 32 Power sales. I imagine if you extrapolate that across all the real estate lawyers that are out there, it’s probably getting to be a pretty big number of power sales that are coming onto the market. Also, again, on the micro level, a friend of mine is a certified financial planner at the bank who works with a financial planner, and counts 200 households among her clients. And so I asked her are her clients, are they worried about a recession? No. I asked her, Are your clients worried about their jobs? She said yes. Why? Because they work in technology in the tech sector, specifically, Amazon, a company called Amazon. Maybe you’ve heard of it, only only that individuals worried about their job. But the bigger concern, the more widespread concern is how her clients are feeling overworked, due to being understaffed, overworked and understaffed. For a major housing correction, we need higher rates, like maths, like we need mostre, expensive interest rates, and massive unemployment. So far, we’re missing the ladder, and time will tell what happens. On a personal note, cheering I just returned from three days and three nights, together with my brother, my cousins, families in Blue Mountain. For those who don’t know, it’s for those who are outside Ontario. It is a it is our biggest public to ski ski resort in Ontario. It’s really, really big. In terms of like development, how many restaurants and stores they got and how many houses have been built around it. It’s crazy. I am really ashamed or old, or out of shape and old as my legs were toast about in the first day. And then the day two, which was the next day after was pretty bad. I think I’m getting all the soreness now. It’s been a few days now. My kids are doing great. Now they’re skiing. They’re seven and nine years old. The kids have very little trouble keeping up their old man. And pretty much we wait together at the bottom but each run while we wait for cherry who’s much more cautious skier. She’s getting cherries giving her money worth money’s worth by covering all the real estate of each run. This is now your three my kids having having hard lessons and part of being part of ski camps. And it’s the investments really paid off. The kids did not fall once over two days, versus I fell while unloading from the chairlift after getting tangled up with with my cousin. My ski gets caught in a snowboard binding. So I fell on the ground in front of the chairlift a chairlift operator to slow down the whole system. You’re welcome everyone. I’m that guy who’s slowing down everyone’s ski day. We all had a great time over food, great food and drink all the second cousins so my cousins and my brother, their kids, they all go along with my great with my kids and each other. They even rolled around in the snow hopping in and out of the hot tub. unknowingly. This generation is doing what really popular Cold Therapy folks that are that I see everyone’s doing on my on my social media. People do an ice baths. Yeah, my kids are doing the same thing rolling around the snow, hot and cold. You know, popping into the hot tub. Yeah, so they’re following a trend that they don’t even know that’s trim. Did I mention we got a quote unquote great deal on the five bedroom cottage that we were renting off of Airbnb? Only 750 per night. Note that we that we were staying Monday Tuesday Wednesday nights so off peak off peak means $750 night it’s unbelievable what moneymakers times rentals can be 115 per night does not get you towels or bed sheets. Those are $25 more per bed. But whatever at least that we didn’t take. We didn’t have to take our garbage which in my experience the last three Airbnb is a state that that was a requirement otherwise you get in trouble or they give you less than five stars. That actually happened to me one property, we left the garbage expecting to pay the $35 penalty. They didn’t charge the penalty. Instead they gave us some less they gave us I think three stars. So for all you Airbnb operators out there, please know that is my pet peeve. Don’t make me take my garbage with me. I’d much rather pay a fee or not pay it off.

Erwin  

All of this can of course be avoided by just staying in a hotel which was my frustration with Airbnb in the inconsistencies among how they’re operated. staying in a hotel will likely be my preference when we travel without kids. By the way pro tip for travelling with gratuities escalating and being automatically added to restaurant bills when we were in Florida. Last month. We instead of we had dinner at a restaurant again, it wasn’t that all that healthy. French fries came with everything. It operated very much like a takeout place. They automatically added each 18% gratuity. After that experience. I said hey, let’s just go to Whole Foods which was around the corner. So we dined at Whole Foods on their prepared foods. So everyone ate healthier. You got exactly what they want. And everyone’s got to pick out what they wanted, including portion size. And generally it’s quite healthy, high quality and fast. This was way cheaper than dining at the restaurant. And I’m least my dad jokes of telling the kids and chair that we were slumming it at Whole Foods, which never fails to deliver eye rolls and handshakes. That works on my friends as well. Please try it yourself and let me know how it goes. Let your friends know that you’re slumming it eating at Whole Foods. onto this week’s show, we have Todd Pierce. Returning to the show. He is a math teacher in kindergarten to grade 12 math consultant at his local school district in Windsor, Ontario. He’s co founded an online learning business for math professional development, tal actively invest in real estate for value in cash flow. Stockton, asked me to stocks and option trades. And he partners to co own North Shore properties that holds 30 units in and around Windsor, Ontario. Please pay attention to how Kyle and partner Matt divide up responsibilities as they come to the table with complementary skills. In my studying of some now failed business partnerships. A couple of them the two co founders, the main drivers of the business had very similar skills instead of complementing. So why have they partnered from the beginning? I do not know. Kyle is currently on unpaid leave from teaching to pursue the these above businesses, investing ventures, and CO hosting the investment Teacher Podcast. We get very detailed on Kyle’s most recent acquisition of an eight Plex and the vendor financing in terms. We also talk more detailed about how to teach kids about how investing works. So I’m planning on rolling out those the the recommendations from Kyle and I recommend that you have listened to it as well, please enjoy the show. Hi, cow, well, what’s keeping you busy these days?

Kyle  

Well, too much is keeping me busy. I’m actually in the first week of leave of absence from work, were actually a bit of a long story, my wife and I actually applied to teach at a school in the Netherlands. And we had both applied for these leaves of absence. And things were going along really well. And we ended up not getting the position. So I thought hey, I’ve already got a leave of absence, why not just you know, kind of do some of my passion projects, which I know we’ve chatted about, you know, previously still knee deep in math, you know, math education world and all the fun that goes goes along with that. And then of course, all the other pieces that keep us busy. The kids sports investing, real estate, all of those pieces. So it’s, it’s been busy, but it’s exactly the way I love living life, which is busy and active. So here we are.

Erwin  

Excellent. I think you’re probably the first people to talk about leave of absence. So can you explain for the listener doesn’t know what a leave of absence is? Can you explain it?

Kyle  

Yeah, this is actually it’s kind of a it’s kind of a crazy concept, because it’s not available in very many industries. But something that, you know, we are blessed to have is the opportunity to apply in certain education contexts where you can apply to take some time away from your from your work, and ultimately the board can decide, you know, yes or no, or, you know, get back in and you know, if there’s enough in terms of human capital, if there’s enough occasional teachers on the supply list and all of those things, then sometimes they say, Yeah, go for it. So it’s been, you know, a bit of a blessing that they were open to this idea. And I’m, I’m just going to try to make the most of it, hopefully do some of these passion projects, like I said, with the extra time. Super cool.

Erwin  

So you are a teacher with the public school board.

Kyle  

That is correct. Yeah, public board here in Windsor Essex. And yeah, it’s amazing. The crazy part is it’s like I love my job. And, you know, stepping away from it has actually been really, you know, more of a mindset shift. You know, it’s like kind of a bit of FOMO, right, where you step away from something you love, like, if you imagine, I know, I know you are when and Sherry enjoy the work you’re doing. Like, if you could just imagine that you just stepped away from it, and sort of entrusted someone else to come in the person who’s in, you know, filling in for my role is an amazing person, I totally trust, you know, the great work they’re going to do, but you sort of, you know, you feel like it’s your it’s like your baby, you know, you’ve you’ve worked so hard for it and my role as a consultant with the district. There’s so many projects that you have your hands involved in and you want to see them through. So this has been definitely challenging from a mindset perspective, but I think it’s also good from like, a just a personal growth perspective to you know, sort of step back and maybe get rid of that hero syndrome like hey, the world will go on without you and, you know, and hopefully I can I can make some some noise, you know, doing some other things at the same time here.

Erwin  

Right. And my own experience, I took a sabbatical back in Oh or nine or 20 or 2010 ish. My employment allowed for that. Two weeks paid. And the other two weeks you decide whether or not you want to take unpaid or use your vacation, got to get out. And we were allowed four weeks uninterrupted sabbatical. And that’s when I made my I was like my discovery to see if I want to be in real estate full time. Love it. So that was four weeks paid again, I was going back to a job. Are you being paid during your leave? Or? Yeah,

Kyle  

so this leave would be unpaid. Completely unpaid? Yeah, definitely. Definitely. So that’s how long how long is it? Technically right now it is until September. So, you know, we’re taking, like taking a real step away here, you know, to kind of kind of play think things through you know, there’s, there’s also pieces to like, for the longest time, I know, I want to go back to the classroom as well. And, again, something that sort of stopped me from doing that is again, I enjoy the role I have now and part of it is like Am I okay, stepping away from it. So again, it’s a bit of a an experiment similar to yours. Your four week experiment feels a lot smaller. And like, you know, how many sleepless nights did you have when you’re, you know, trying to make

Erwin  

so many emotions still working?

Kyle  

That is incredible. That seven

Erwin  

months, seven months? No income? You’re saying?

Kyle  

Yep. So my wife is going to be working during this time. Okay. You know, luckily, long

Erwin  

vacation. That’s

Kyle  

it? Yeah, exactly. Luckily, you know, we’ve positioned ourselves to be okay. Without that, and, you know, I have my, you know, side hustle, and, you know, some real estate and other things that are, you know, helping to support that. But, but ultimately, yeah, it’s some time, part of it’s just to say, I did it, you know, and to be able to say, you know, there was this time that I did this thing, and I’ve kept myself extremely busy. I know, it’s only week one, but I haven’t stopped and I’m exhausted at night. So, you know, I’m feeling good about it so far asked me in a couple months when the lack of paycheck is starting to get to me. We’ll, we’ll see how we’re doing back then. Or further down the road, but hopefully, hopefully, still feeling positively about it,

Erwin  

or carry on what Jimmy Butler helped keep me going was also I took my RRSPs out, right, because then because my income has collapsed, right? So it’s just my own path. And also I want it for real estate investing as well. So if I was gonna take my RSPs out, that was the time to do it. Sorry, I forgot to mention I resigned when I got back from sabbatical. That’s why I’m here. Now. I no longer you are. There you are. There’s no ei nothing,

Kyle  

nothing there. Nothing. And actually, now that you say that, I should probably look into that. But I think because it’s voluntary. It’s probably Yeah, it’s probably no but I’m gonna write that down to look it up. Because I’m like, hey, if it is available, then it’s probably not a bad idea.

Erwin  

You’re not paid into it. Money. Yeah, exactly.

Kyle  

Give me some of it back. You know, so definitely one to to look at for

Erwin  

sure. And then what else has enabled you to do this? Would you say you’ve lived rather frugal deliver like a massive home like already you live in Windsor, you’ve lived there for quite some time. So it’s not nearly as expensive like the GTA totally. If you’ve tried like an ancient car type stuff I used

Kyle  

to I used to now my mind is less ancient, but for a very long time. Like I’m I am definitely a more frugal person I don’t enjoy like actually spending money actually, this like bothers me it’s probably something I need to work on. Like my relationship with money. I don’t like spending with it or spending it unless it’s on something that actually generates money as I’m sure you can relate and many people who are listening but you know, we actually live we’re blessed. We live in a beautiful home that we built built back in 2016. So before things kind of got completely crazy, but ultimately Yeah, I would say you know, we’ve been I guess blessed to live in a part of Ontario receiving a good pay for you know, living in this area at the price point you know, that homes were at like when I bought my first home I bought it was a it was a power of sale so there was a lot wrong with it that we had to do and put our you know, rolled up our sleeves but I believe the closing price on this home which was about a 15 to 18 year old ranch of about, call it 1800 square feet in a subdivision just outside of Windsor. And I want to say the closing price was like 172 or something like that when we bought it. So you know, the price point is probably comical for anyone who’s living in GTA since you know since they were born, even but the price point was obviously much much lower. I now realise you know, every property I’ve ever sold. I wish I didn’t because that same property is about 10 minutes, you know, five minutes up the road from me. And you know, it probably is going for more like 550 but even 550 to a lot of People who are listening are probably shaking their heads thinking, why am I, you know, in the Golden Horseshoe when I could be in Windsor with Kyle? Right?

Erwin  

Yeah, cuz, you know, your mortgage like was like 150 versus someone’s mortgage would be today there to buy that same property, we’d be like over 400, probably,

Kyle  

totally, totally. Yeah. And I was in a GREP returns the mortgage sighs Yeah, and I was really what got me into real estate back in 2011, as we discussed, the last time I was on, you know, was the fact that I was aggressively paying down a small mortgage as well, right. So that, you know, obviously helped. And then I guess, having the, I’ll say, the luck to land on these real estate books and these methods of, you know, taking that dead equity and doing something with it allowed me to kind of enter into the market, and then, you know, the rest is history. So, you know, in order to get into this home, you know, we did have to, I say we did have to, I felt more comfortable selling our Florida property that we had to sort of help us with the build and just sort of help everyone sleep better at night, knowing that, you know, the bills, were going to get paid, and you know, the the house would be completed. So the actual mortgage would come through, because as you know, if you’re building on your own, we own the property. And you’re building on your own that, you know, sometimes lenders can can be pretty, pretty difficult with the drawers and things like that when you’re trying to do it yourself without a builder.

Erwin  

So Kyle, for anyone who doesn’t know your story back in was it Oh, nine that you bought an investment property in Florida?

Kyle  

I think the actual first property the Florida property would have been 2011. So and again, Mark was ruined, right? Yeah, it was, it was still way down there. And actually, when you actually look at things, too, and this is maybe, you know, to provide people with context, who may be just entering into the investing world, you know, after post 2008, when you look at the housing market, comparatively to the stock market. So like the end of Oh, eight, and in 209, there was a lot of, you know, kind of like what’s going on in the markets right now, where there’s lots of these, like, bear market bounces, and like right now we’re like ripping, you know, above the downward trend, which, you know, don’t get me wrong. I’m like, Ooh, maybe, you know, maybe things are looking

Erwin  

for listeners benefit for context. We’re recording this show every second, I think we’ve had like five huge positive weeks in a row for the NASDAQ. Right, yes.

Kyle  

But as a reminder, going back going back to the the last time, or I think it was maybe the tech bubble, you know, there was a similar occurrence, and then it dumped about 40 or 50%. From there. So not saying that’s gonna happen, but it is something for us to maybe be aware of, because, you know, raising the rates by only a quarter percent shouldn’t be a situation where everyone’s like, rejoicing, it’s, it’s less harsh than 50 basis points. But at the end of the day, there’s really, you know, not not to mention that more and more companies are like, they’re trimming the fat, like, there’s a lot of, of challenges out there. So, you know, food for thought. But anyway, my point being is that when you look at the market, and you look at what happens in the stock market, that’s obviously much, it’s much faster, the effects happen quickly, right? rips up that rips down quickly. But the housing market is more gradual. So when you actually look at what happened to the housing market, it wasn’t like right in 2008 2009, where it hit the bottom, it just kept going down for the next couple of years. So when you came in, and like 2010 2011, you know, you were kind of like in a place like it hadn’t, you know, it didn’t really start like the uptrend yet. So there was still like this fear in your mind that, you know, could it continue to go down for me, I was like, well, it’s worth the risk. At this point. I had no skin in the game in the US side of things. So that’s when when I dove in was in that 2011 year and then the very next year, I purchased the Arizona property and actually, my wife was pregnant with our daughter Talia, and we purchased that home while we were in Vegas, bought a property in Arizona, so she’s waddling around and we were just like in Vegas for no reason just to say we did it. And you know, we met a notary and signed it in the Luxor hotel, like at the bar, like, I felt like such a baller it was

Erwin  

sorry, did you buy a property without seeing it?

Kyle  

I did. I did. But But I will tell you this that property which I still have today, the one thing I will say is that, you know, I would say an asset I have is my creative thinking so back then, you know, picture yourself like over 10 years ago, I had a realtor, an amazing realtor who went around and would go to properties for me and basically take me and record a video on like a crappy cellphone way back then. And you know, take me through and like bring me right up to the wall where like, you know, where the hole in the wall was or you know, all the different things and you know, we had this inspector that if it was serious consideration, I’d pay for the inspection to get the full report all of those things, and I was gonna go check it out. And then something came up and I was just sort of like, I guess I won’t. And it was only $70,000 at the time. So I was like, I’m gonna go for it. And it was a home that was built in 2006. So it was like a home that was built in, like near the end of their bubble, right, right before it burst. So it was like, you know, in great condition and in a gated community and really, having had my experience with our Florida property, which was in a gated community. I was like, I’m willing to go for this and, you know, we pulled the trigger and got to look like ballers for at least 15 minutes in the Luxor Hotel.

Erwin  

Sorry, you sit, you still have the property what still happen. What’s it worth today? What do you rent? Well, I

Kyle  

can tell you what it was worth. I’ll tell you what it’s worth today in a second. But I’ll tell you what it was worth like four months ago, according to Zillow, Zillow told me that it was worth about 410,000. But, but just like this past week, Zillow told me it’s worth like 340,000. So you know, that’s soul crushing. But at the end of the day, we have a tenant in there it’s cashflow positive, as you can imagine, and you know, part of you thinks Hey, should I have, you know, shoulda, woulda coulda type thing. But at the same time, you know, I always I always second guess like, whenever I’m thinking about selling, especially a property or real estate property, I always think, what am I going to do with the money then? Because then you have this money, and then you’re sort of like, well, now I need to go buy something to make money with it. But I had something that was making money with it. So maybe I should just keep it over there. So that’s maybe something for you to think about. Whenever you’re in the mood to panic, sell something. So I’m just sort of hanging on to that one, and letting it cash flow and do its thing. And, you know, over time, it’ll the ups and downs, I’m sure will be mostly up instead of down.

Erwin  

And then how did you finance these were the downpayment come from? Because these American properties are not easy. I see stuff on social media, people are saying it’s easy. As far as I know what it ain’t easy.

Kyle  

No, no. And back then, like back, you know, when you’re coming out of the financial crisis, basically, was a housing issue that caused all of this right over leveraged lending issue? Oh, yeah, totally, not really lend more. Yeah, totally. So my, my first Florida property was home equity line of credit. You know, as I mentioned, I was I was essentially like, creating all this dead equity in my home. And we go through this idea about debt equity on on a new podcast, we’ll talk about that later. But this debt equity is just building up and I realised I’m like, it’s, it’s not earning me anything extra, you know, like, my home is gonna either rise in value or fall in value, regardless of how big my mortgage is. So I went and got that home equity line of credit, and then, you know, managed to purchase that Florida property, you know, with that line of credit, and then I just aggressively instead of paying down my mortgage aggressively, I just started paying down my Home Equity Line aggressively so that I could open up more access to capital for another purchase. And that’s when the The Arizona property happened. Except for that one, I was able to get a mortgage, but it was very challenging, I will put it that way. So it was, you know, I was thrifted very well, in order to get the mortgage that we had pulled for that one. And it was only for like, you know, 50 60,000, right. So it’s definitely hard. I’m sure it’s maybe easier now in the US. But I think it’s still not the easiest thing to do, especially if it’s an investment property. If it’s a second home, I think it’s a different scenario as well. So that’s something for people to think about. So I

Erwin  

just want to just want to reiterate, for the listener, you were able to use your home equity line to basically write a check for the entire value of the Florida property. Yes, exactly. So there is no mortgage, there was no qualification process for now, in terms of from a bank. And I

Kyle  

guess, the only qualification process you have is to get your home equity line. So you know, you’d have to with your neighbourhood bank, your big bank or your credit union, whatever it is, who typically they already know who you are, if you know you’ve got a mortgage with them. And you know, they do that drive by appraisal, typically, unless there’s any sort of challenge like nowadays, I’m guessing that they probably Yeah, be a little bit a little bit more explicit, simply because housing market has gone up so much and is now sort of, you know, wavering a little bit so they’re probably going to make sure that there isn’t enough equity in that home but but it’s definitely a great strategy. It’s something that I’ve I’ve advocated to a number of people who I’ve worked with and have asked for advice around how do you get into real estate investing and it’s like if if you’re able to release some of that equity in your home and if your cash flow now like not dependent on the property, but if your cash flow from your job or however you earn income, if it can be covered by that. That is where I think you are in a Safe Place, right where you can feel comfortable that it’s like worst case, worst case, worst case scenario, you are able to cover that, you know, interest only payment or hopefully more than the interest only payment. And then the cash flow from the property is quote unquote bonus, like you take that cash flow and you use it to aggressively pay down the line of credit. But I would never advocate for someone to borrow against their primary residence, put themselves in a situation where if that cash flow isn’t as I anticipating or projecting that they feel strapped for cash. So it’s, it’s almost like you want to make sure that you’re still, you know, conservatively approaching this, but again, when I say that a lot of people are like, that’s, it’s not conservative to leverage the equity in their home, right, if that’s all they have. So be very cautious. And just make sure that you’re over planning for what to do in all of those very, very unrealistic on probabilistic scenarios of not being able to rent the home or something along those lines.

Erwin  

That’s a great disclaimer. And just like cheering myself, we make good incomes, likely you and your wife make good incomes, so multiple streams of income to be able to cover anything that goes wrong.

Kyle  

Yeah, and you’ve been seeing this message a lot, or when on the show, I’ve got to say, and I appreciate it is just this idea of like going slow, and you’ve referenced, you know, coaches and consultants and things that have, you know, suggested to people to like, go do like five flips, or, you know, do all these different things happening, like, take it slow, and make sure that, you know, you get one success, you know, like get one rolling, we’ll call it right, because, you know, you’ll never hit success for many, many years. Right, you won’t see what the end results gonna be for a very long time. But if you can get those wheels rolling, where you feel like that systematic and you kind of are in the routine, then you start looking, you can still look at properties, you can still you know, kind of sniff around, but you know, wait to pull the trigger, so that you’re not, you know, you’re not putting yourself in over your head without realising it just kind of get under control, feel good about it. For me, I waited too long to kind of get in after I bought that second property. But you know, it was like four years after that, when I started our local real estate holding company with with my good friend and colleague, Matt Bigley, who I think you chatted with recently.

Erwin  

He’ll be on the show soon.

Kyle  

Okay, there you go. We came together, and we started buying properties in this area. And, you know, that’s sort of where we spend most of our time in the real estate world. Now, not to say that there aren’t other deals in the US. But again, local is, it’s definitely easier, right? You can feel more confident in the area. And, you know, just kind of knowing that you can drive to the property, even if you’re not self managing is, is something that I like nowadays, especially with two young children, a busy family and lots of things going on all the time.

Erwin  

Right, understand your point, it’s a much safer, easier investment when you can be an insider. Yes, exactly. Exactly how to be an insider in Florida and in Arizona and in Vegas.

Kyle  

Totally, totally. I know that, like the lions, you know, the whole, you know, other side of the tracks scenario is is not as common in Canada, especially in smaller Canadian cities, but like, there is those nuances to every part of every city, every town, every county, that you just want to have sort of a feel like you want to know sort of like what’s going on in that area. And what’s typical, and yeah, we feel really comfortable in this area. We’ve seen some stuff kind of heading towards Chatham way or heading, you know, a little bit further closer to London. But, you know, part of us now we sort of put it through a filter and just say if if it’s going to take too much work too much effort on our part to feel as confident as we do here, then maybe it’s just not for us. Maybe it’s for somebody else, right? He’s he’s really eager to learn that area. But for us, we’ve looked in Chatham, we’ve looked in some other places. But again, it’s like unless you live there, unless you’re there all the time. You always wonder what you don’t know, right?

Erwin  

For me, the opportunity has to be a no brainer for me to go outside my area of operation. Only totally mentioned, like rocks on the tracks. Like it made me think about, there’s a there’s a handful of streets in this one neighbourhood where there’s groundwater that runs underneath those houses. So all those foundations are compromised. And not everyone knows. But I know that. I know that because my home inspector has a structural engineer who told me that not everyone will know this. Right? Totally. And then like there’s certain neighbourhoods in St. Catharines, where it’s, it’s high clay soil, so the drainage is terrible. So then you’ll find a lot of busted foundations. So you got to know these things are like in Branford there’s many neighbourhoods that are in the floodplain. So you cannot legally sweep those basements, things like that. Like every neighbourhood every market has have their own nuances that you need to know. So that no one can pull the wool over your eyes?

Kyle  

Well, I think you’re articulating as well, why why joint ventures happen as well, like a lot of people struggle with that, especially people who have invested in themselves? Or like, why would anyone want to get involved in a joint venture. And the reality is that is it takes a lot of time to feel comfortable. For me that first property in Florida, I spent over a year of every single night, you know, this is pre kids, every single night researching and looking at every neighbourhood, and we travelled there, and we, you know, and I’m happy that I did all of those things. Like I gained many skills. And there’s people who are listening, who might be the same people, right, who are listening to podcasts and doing all of those things. Class paralysis. Yeah, there’s so many other people out there who they’re just like, right away, they’re like, Oh, I’m not gonna do that. And right there, those are, you know, those are the ideal people for a potential like joint venture opportunity for, you know, for both the, you know, the person who brings the knowledge and the skills and then the person who maybe is loving their salary job and just doesn’t have time or doesn’t have an interest to do all of that extra work. They’re like, I don’t want to go check out the clay samples with or when, you know, tonight, after work, I want to go do something else, right. But you and I were totally into it, right? Get the galoshes and let’s

Erwin  

go, I’m a geek. To know, everything meets me too.

Kyle  

I’m like, if there’s an opportunity to learn, I’m all over it, you know, and oftentimes, you know, some people look at a scenario as a waste of time, like look at a property and they’re disappointed when it wasn’t like they expected I’m like, okay, but I learned something about it. And I’m like, you know, you make note of, you know, a property like this, maybe next time, I don’t go to view it or, you know, there’s something about it that you can you can learn from and it will help you with your process moving forward.

Erwin  

Right. One of the things I did your mathematical is I saw a lot of houses. I don’t think within those four weeks, but pretty quickly, I saw 100 houses, lately spent at least 15 minutes on property on site, walking around, invest into the house, look into the basement. So then once you have once you’ve seen 100 properties, you realise what the top 20% looks like. And now I focus my attention on only acquiring I’m only paying attention to this 20% Then I’m looking for the top 20% of the top 20%. So I’m really looking to look at 4% of the market 8020 rule, right? And then take it to another level down to 4%. Right? Yeah, absolutely. 20%, top 20% of the top 20%. Right now down to 4%. And then that makes screen property a lot easier. actually avoid a lot of issues. You know, what neighbourhoods Do you want that sort of things? So Kyle, we talked about, we talked a lot about Florida and Arizona, but you’re choosing to focus on your local area. Actually, you’re just in the suburbs of Windsor?

Kyle  

Yeah, like I live out in a town called Belle River, which is about you know, 2025 minutes outside of Windsor. So not too far. But, you know, close enough to call Windsor home for sure.

Erwin  

So you’re investing in Bill River, are you investing in Windsor, a little bit

Kyle  

of everything. And actually, like one of our specialties, I’ll be honest with our property holding company has actually been focusing on the smaller towns outside of Windsor. And, you know, some of the benefit is like, again, we know the area, which is great, we avoid sort of the city, maybe challenges, right? You know, there’s lots going on inside the city. So we go to small towns, like Belle River, for example, right up the road from me up, you know, literally, like 500 metres from me, we own six little cottages that, you know, we found this was our first purchase as as a holding Corp. This was back in 2016. And, you know, this seller was selling privately and you know, as we do with every deal, we got pretty creative learned about the seller and trying to figure out like, what is it that they want? What do they need? Like, why are they selling? And how do we help each other sort of, you know, satisfy each other’s needs. And, you know, we’re able to arrange that. So we, you know, have that there. We know obviously, our town, Matt lives out in Kingsville we’ve got a couple duplexes out in Kingsville, which is, you know, in a wonderful town, anyone who’s listening and wants to come down to this area staying, you know, in Kingsville, and wine country is is an amazing, amazing experience. And then now actually this coming week, we have a joint venture with a an investor who we’ve picked up a nine unit building in a town called Essex, which is sort of halfway between Bell River and Kingsville. So for us, small town is kind of like our niche, it’s quiet, you know, it’s easy, I say easy, like Nothing’s easy, but you know, it’s it’s easier. It’s like not complicated, and not complex. So that’s sort of been where, you know, our niche is and then you know, if you go into Windsor, the neighbourhoods you want tend to be much higher price points, just because it’s like you’re getting a Better neighbourhoods, then maybe another neighbourhood within the city limits. Whereas here we get all these nice little neighbourhoods, inside little towns that investors from Toronto may never have heard about. Right. So it sort of keeps the price point a little bit further down. So maybe a little bit better on the cash flow side as well.

Erwin  

Right. So your part of the strategy is to stay away from where everybody else is where all the hype is. Yeah,

Kyle  

I mean, it’s all honestly, it’s like, not that we necessarily, like stay away, we still know what’s out there. But it’s like, we’re just we’re like, that’s just not for us. You know, like, and we’re not willing, especially these past couple of years, you know, we were kind of getting frustrated that we didn’t buy anything over the past couple of years, just because we’re like, we’re not gonna go into a bidding war for an investment property to basically prove to everyone else in the world that we were the biggest sucker. You know, that’s kind of the way I looked at it. It’s different if it’s your personal residence, and so on as followers.

Erwin  

Like when you mail to Kyle,

Kyle  

yeah, when you really think about it, you get 20 offers on a property, right, and it’s an investment property. And basically, what you’re saying is like, I want to make sure that I pay the most possible money for this investment, because nobody else in the world so far wants it for this price. Like, that’s basically what you’re saying. And so we started just never did it. We threw some offers in on properties, but we weren’t gonna get serious about, you know, trying to outbid anyone were like, No, the time will come, there will be opportunities, we’re just gonna have to keep searching. And this latest one, you know, ended up being a pretty good deal. So

Erwin  

we’re excited about it. And you’ve lived in Windsor for quite some time.

Kyle  

Yeah, yeah. I’ve been here. I lived in Pickering when I was young. And then when my parents had had met my, my mom, and my stepdad met, we moved here when I was young grade two. So I’ve been here all my life, other side of Windsor in LaSalle, another great town. And, yeah, I love the area, we’re close to Detroit. And, you know, we get a lot of the big city, sort of, you know, excitement. So bands come to town, you know, you get to go over there the leafs come to town, we just hop over and you’re there in 35 minutes and have a great time. And then you just come back across the border, and we’re back in little town Windsor.

Erwin  

Right. And so you have the advantage, since you’re local, you live there, there’s advantages over the town investor.

Kyle  

Oh, for sure. For sure. I don’t like and again, this is again, not living there. But I couldn’t imagine trying to invest in the GTA, just to me, it just seems so challenging, just from a cash flow perspective. I know rents are higher, but especially these past couple of years, it really, you know, I would look at properties. And you know, I’m on different email lists and things just to sort of learn as I go. But I really liked the simplicity, like you’re not gonna get the appreciation that we got over the past couple of years here in Windsor ongoing, but we know it’s, it’s a strong enough market. And if you’re cash flowing well enough, and you know, the area, then you know, you’ve got a pretty solid investment, as long as you’re not in it for some sort of short term gain, where you’re just looking to do a quick flip. As long as you’ve got a long term horizon, you’re in a in a really great position.

Erwin  

Don’t forget, our federal government thinks that investments are so good. It’s worth it to leave your houses or houses vacant. So, you know, if you put down enough cash, the investment will make sense. Yeah, exactly. There’s a lot of them out there. Yeah. I don’t know anyone personally. On a witch hunt for these places. A lot of them out there. For sure. For sure. Kyle, what else is filling your time while you’re on absence?

Kyle  

Well, we’ve got lots I mean, like I said, I am I’m so passionate about this math education thing I’ve been for a really long time, wanting to you know, write a book, and I’ve had an outline, I’ve done all of those things. So I’m going to continue hacking away on those little projects. And, you know, those are like the passion projects that I really, really enjoy. But then on the other side of things, too, just recently myself, Matt, who is my real estate partner and now realtor here in Windsor, former teacher and my other math co worker co Hustler, I suppose John, or we now have a podcast called The invested teacher podcasts. And, you know, we’ve all been teachers or are currently teachers, Matt, having moved on to real estate similar to your scenario with your your sabbatical that you took and he sort of took his exit and he’s into that world now. And we come together every week to chat on on the podcast about investing. We tend to focus on real estate, but we do talk about some of the other aspects. We talk about the stock market and investing there. We talk about some whole life insurance pieces. We’re going to be going deeper in over the next few episodes on that as well. But yeah, it’s been awesome. It’s been such a great uptake from the community, not only educators but other people who are in we would Hot, like typically salaried positions, people who are, you know, kind of busy, oftentimes, maybe have like a pension and they haven’t really thought much about, you know, investing because they maybe haven’t felt the need to. And people are coming out of the woodwork and reaching out and saying how much you’re enjoying it. So we’re having a blast. And, you know, we look to continue doing that over this time as well.

Erwin  

So I’m going a bit backwards. Can you tell me what you’re seeing right now in the Windsor market, because for example, here, entry level investment grade properties that we always focus on starter starter category, there’s anything that we’re interested in looking at, or showing our clients with multiple offers on it got 349 offers, or what are you seeing anything similar in Windsor, every second,

Kyle  

not a tonne of multiples. But even for example, Matt had a property he was personally selling, and him and another partner, you know, they were selling it, they received multiples on it. But it’s not like multiples, like where it’s going all the way above, you know, way above ask. So you’re still getting in the entry level market, you’re still getting activity there, for sure. I just saw some stats come out. For this past month in the past, you know, for January, the numbers did bump, you know, by like, I think 30 I think it was 30 grand or something for average home price. So even though we you know, sort of took a bit of a dive, it kind of popped there for a little bit. So who knows if that’ll keep up. So, you know, if you’re looking for like single family entry level homes, I think there’s still enough competition where you’re not seeing the action is with more of your like higher end. So luxury homes, of course, are sitting a whole lot longer. Some investment properties are but to be honest, not too many, because I think, I really think it’s like it’s a different clientele who, you know, are in the investment space. So you know, there’s still a lot of action, we haven’t seen the price per door come down a whole lot with the investment properties, but you’re just seeing some properties set maybe a little longer than they were over the past couple of years.

Erwin  

Right? Well, you mentioned that you just recently bought a nine unit, have you been looking to buy some small Maltese this whole time during during this correction?

Kyle  

Yeah, we are always on the lookout. And with this particular property, we really liked it, the location being one in a small town was really tidy, it’s probably going to be the nicest building in our portfolio. To be honest, back when we started, we were sort of, you know, we look for the, you know, the ugly ducklings that are out there that nobody else wanted. And you know, we’d get them for a good price. But then at with that comes lots of added capital ongoing until you know, you’ve you’ve completely sort of fixed it up and are able to refi it. So with this property, it’s actually in like great shape. The seller, you know, had it up for a while since the spring. And they had a couple offers that were accepted and conditional and then fell through for financing and other other reasons. And we just kept on it with the selling agent. And we were trying to be super super, you know, creative. I remember back, you know, we were at at Cedar Point, it’s kind of like Canada’s Wonderland, but for Windsor eighths, who go to, you know, Ohio instead of to Toronto to go on the on all the rides. And I’m standing in line, having a conversation via text with this agent. That was back in August. And you know, we were on the phone all day, every day for a good couple of weeks, and just couldn’t get it together. And then finally, they came back to us a couple months after and said, hey, the latest offer, you know, fell through and we made it work. So, you know, we got some really favourable terms that are favourable on both sides, we figured out what the sellers wanted, and what they needed, like why they were selling, like, what’s their goal. And once we knew that goal, we were able to come up with something that made both sides like made it make sense for both sides. So that one’s going to be a JV deal. And our investors really excited about it as well. And we’re extremely excited about it to to add such an awesome building to the portfolio.

Erwin  

What about the negotiation of the offer that made attractive to the seller? And then what for yourselves?

Kyle  

Yeah, for us, you know, we obviously want the tough part in real estate, and really in anything is it comes down to price, everyone gets fixated on price. So what I tried to do, and this is maybe the math background that you know comes in, but also a little bit of the creativity as I try to figure out okay, so if you were to get that money, like what are you going to do with it? And for them, they just wanted to put it into some sort of safe investment. They were just done. They had reached an age of retirement, and they just want it to be done with the like, I think as you get older, you just don’t want any concerns like not that it was causing them any problems but they just didn’t want to own a rental property any longer. And, you know,

Erwin  

get the money into a GIC or something. Well, exactly, exactly. So

Kyle  

they were basically looking to cash out and they were making a significant amount In terms of the, you know, sweat equity that had grown and ghost equity, whatever you want to call it just from appreciation that they were just going to take that and put it into something super safe to just spit out a really easy fixed return. I said, Well, you know, what, why don’t we pay you that? And guess what, imagine a world where if we don’t follow through, that you get to take back your property. And you know, when they started to get the wheels turning about this going, like, wait a second, the asset we know it’s ours, you know, we own it right now. We’ve owned it for 20 years. So they know everything about this thing, they put nothing but love and care into this thing, can we find a price that would work where instead of us going to the bank, we go to you. So we looked at a vendor take back and we got really creative, to make sure the numbers work, because I said, I don’t care what the price on paper is, what I need are for these numbers to make sense, which is how much money is going to be coming out of this property. And you know, what, I propose some different various scenarios, which you know, I won’t dig into here, we were able to come to terms and essentially meet in the middle so that everybody was happy. And really, at the end of the day, they’ve got a better situation than, say, a GIC. Because it’s like, it’s backed against something that ultimately they get to take back. Plus keep, you know, the down payment, if, you know, if we weren’t to follow through on on our side of things,

Erwin  

right, they get the security of the property versus believing the government’s gonna pay them back. Exactly. Yeah,

Kyle  

exactly. Yeah, it’s worked so far, but who knows?

Erwin  

Can you share what the terms were on the b2b, it was

Kyle  

a really, it was really good terms, we managed to get 3% interest only for five years. And that was, and it was on 70% loan to value. So we were able to really make this work. And also, you know, we talked about, you know, the turbulent markets, and the uncertainty of interest rates, and all of these things. That allowed us also to bring the price point up, which, you know, we had conversations as well around, like, I’m like, actually, it probably makes sense for the price point to go down and us to pay more interest, but you know, whatever, we don’t need to talk about that. But they were happy with that. And they were happy to sort of, quote unquote, move on. And like when you actually look at the numbers on their front, on their end, you know, they’re going, like we could pay off this mortgage that they had on it. And they could essentially do better in terms of cash flow than they were doing, having owned the property, at least given the numbers that they were working with, right. So it’s like, at the end of the day, it’s like, we made it we exactly completely passive, where they lose out is they don’t get any sort of appreciation potential, right. So I mean, that that’s what you’re losing in this exchange. But you know, when you when I’m turning 40, this year, and they’re, you know, turning 65, it’s like, we have very different, you know, sort of needs and wants for why this investment. So, again, being creative and having experience to be able to have these conversations and go okay, well, just because we can’t see eye to eye right now, maybe there’s an opportunity for us to work together. And essentially make sure that everybody gets what they wanted in the long run, right. And that really worked well, for this particular deal.

Erwin  

In my experience, the challenge of btps often is the selling agent, they have to understand btvs themselves, usually folks in the commercial world, it’s not a problem. If they have a regular residential realtor, usually, it’s not something that they’ve ever covered before. So it’s really hard to have those conversations, were you speaking directly with the seller? Or were you going to their agent,

Kyle  

and that was the challenge, I had proposed a number of times to get the actual sellers to the table, and we’d all be there. Matt was our representation on the buying side. So you know, that’s always a benefit as well. So I spoke with the selling agent quite a bit to ensure that there was clarity there, we did a lot of three way calls. So I’m, you know, involved in that whole process, but we never had access to the actual seller. And I, I wonder, I wonder if this could have happened a whole lot sooner. Had that been the case. So as I mentioned, it was on since spring, you know, we kick tires in, you know, in June, and then by August, you know, we had been through the property and all of this process had happened, but it’s again, no, no blame here, anything like that. But I do wonder, we all sat down and just had an open conversation. You know, like everyone’s cards are on the table. Like, I’m all about being transparent. Like we’re not trying to pull the wool over anyone’s eyes, we want to tell you exactly what we’re trying to do. And if you tell us more about what you want to do, then that gives us something to work with. So we can maybe make this thing happen and you know, I think in real estate that’s one thing Matt brings to the real estate world is he’s super creative. He He also is like really good at reading people and trying to sort of get to the bottom of like, okay, what do we really want here? So you know him and I work really well in that in that capacity. So it’s really great that now He’s on our team instead of us working through an agent, like we used to have to do a number of years ago when we first began.

Erwin  

Alright, yeah, again, if the agents not well versed in this way more challenging versus if it was my listing, I would involve my clients, my sellers, lawyer and accountant, all at the same time, and discussion with the with the buyer, if I felt comfortable with my seller being there. Yeah, for sure. So that so we can all be on the same page and my client when the seller can get professional advice from both a tax perspective, and from a legal perspective, is there is there VTB safe, and also tax implications, which are generally very favourable of giving? vendor take back mortgages? For sure. For sure.

Kyle  

Yeah. And I think as well, like you knowing what you know, also just frames it differently for the seller to even consider setting up a meeting like that, because like, if you can’t articulate to the, to your seller, why this might be a good conversation to have, right. If you’re not fully clear yourself. They they might just be a be opposed to it right away. So yeah.

Erwin  

If I’m representing the seller, I’m trying to get more money from you. Which I’ll be able to get with it. But the VTB

Kyle  

totally, totally. Yeah. maximise for everyone, right?

Erwin  

I mean, it’s a win win for my client. Exactly. Exactly. I mean, that’s a way for you guys to get the deal done. Yep. Keep your financing costs low. For sure. For sure. One good story. Yeah. Yeah.

Kyle  

Yeah, one of many one of many, for sure.

Erwin  

Interesting, because actually, this actually brings up a good point, like, you know, probably like two years ago, wouldn’t there be multiple offers on this thing? Probably some of these offers firm.

Kyle  

Yeah, and this is where like, for us, I think we definitely knew like the market was softening, like, so in the spring last year. And I know, in Toronto, I think Toronto was a little ahead of us on the market softening, or maybe was the opposite. But yeah, last spring, things started to slow down a little bit, you know, obviously, all the talk and, you know, rates and all those things, were starting to sort of, you know, bubble. So we had waited. And once we noticed the property was still up past, you know, the offer date, then we kind of came in, and one thing that we do notice is that if you get a building that isn’t purpose built with multi units, so it’s kind of like that nine unit is kind of approaching some of your more, you know, higher higher roller investors and like, oftentimes, they’re gonna go straight, they’re gonna go straight to purpose built. So purpose built was still selling like, like hotcakes, there was one in particular that Matt had listed, and it was a 12 unit. And at the price point that the seller want, like, we liked the building, we were like, this would be a great building, but we only want it for this. We know the seller thinks they’re gonna get this. And we were sort of like, I don’t think it’s going to happen. Well, guess what somebody came in. And you know, and they scooped it. And it was like, it was like nobody’s business. This one isn’t purpose built originally. But it’s been really well done with all separate metres and everything, and it’s really well cared for. So I think it got some attention. But it didn’t get as much attention as it could have had it been purpose built and hadn’t been advertised as such. So it sat a little longer. And yeah, and we were, like I said, we were, you know, pretty, pretty resilient, too, you know, and just kept pushing on it. And out came a positive result doesn’t always happen that way. But at least you know, at least you know, you gave it your all

Erwin  

right, that this market is also in favour in your favour. To be able to get this deal done with favourable terms. Totally, just two years ago, you’d be screwed to be like six offers for? Exactly. They’re never there never return your call? Yeah, for sure. For sure.

Kyle  

I know, I know, the tables that the tables have turned, I know, the sellers have taken a little bit longer to kind of believe agents and you know, in that, but, you know, I’m hoping it’s not going to be a long, long ago, but, you know, there’s still a little bit I think of, of rocky times, you know, over the next little bit anyway,

Erwin  

so can you paint a mental picture of this property? You mentioned it’s not purpose built? Is it like, like a two desert like two structures? Like what is it? Yeah, it was

Kyle  

actually originally a single family. And then there was a building built sort of off around it. So the single family home is the largest unit and it’s actually really, you know, really well done inside and then the rest, the rest of the structure is essentially purpose built. So for the most part, it is purpose built, but, you know, it’s got this sort of like, you know, unique sort of, sort of look to it, I suppose, but in really great shape. It’s walking distance to like the main street in the town, and you know, right across the street from the post office, and you know, near the Home Hardware, like grocery stores across the street, like so it’s, it’s in a great spot. And you know, the rents are, are definitely under rent right now, which is again, when if we can cashflow with under market rents, that’s fantastic. And we have three of the tenants three of the nine have inclusive, inclusive utilities, despite the fact that there are three, you know, they have separate metres for the utilities. So there is a lot of upside there. So it’s like to cashflow with also that upside sort of built in, for us is like a really, you know, it’s a good position to be in whether you do Cash for Keys at some point, or, you know, whatever you need to do. You know, it’s nice to come in and not be anticipating cash flow in the future, but rather cash flowing, and then being able to pump those numbers up over time.

Erwin  

Now in turn strategy, are you just taking like taking what’s been gone coming your way? For example, this nine unit building or any of your other properties? Are you just doing long term rental? Or are you doing short term rental, midterm rental,

Kyle  

we are all longterm. I know, Matt’s had, you know, an Airbnb, and, you know, he’s learned a tonne doing it, he’s, he’s done well with it. But for us, it’s like, almost too active to you know, to sort of replicate that repeatedly. We’ve also done a number of flips, but I would argue, you know, for us anyway, it like feels like a lot of work and a lot of risk to in terms of you know, how many things can go wrong. So like we look at will buy with the intent to hold typically. And now that might be a property that does need some love, like we have a 10 unit building and another town that’s a little further out, and it needs lots of love. And we give it that love just little bits at a time. So you know, one unit at a time, we sort of flip you know, and a bump the rents a little bit, so we bought that one in the spring of 2020. And it has turned out to be an awesome building. Lots of again, little, you know, little fixing along the way, which requires capital. So we’re totally all in for that. But we’re in no rush to sort of, you know, try to get it done in five months or six months, and then flip it again. And all of those things we just find like it’s a lot of work. And we we just aren’t interested in it. So we try to go more of the the buy and hold strategy for the most part. I

Erwin  

love it. I love it. I always love hearing other people’s investors journey. It sounds like you were you guys were quite aggressive active at the beginning. And now you’re settling into long term boring, low effort.

Kyle  

Oh, yeah. Well, you think of all the mistakes you make, too, you know, there’s one in particular we bought and like now, again, it would have been a home run regardless because of what the market did. But, you know, it took all my gosh, what we thought was going to be a three month renovation and what was quoted as a three, you know, it turned out it just seemed like it was never ending. And we ended up you know, turning that that property over for a profit. But again, even after that, we’re like, God, do we want to do this again, and then another opportunity shows up? So then we do it. And then you know, it’s like nine months later, you’re like, why did we do that? Again, you know, that’s not, it’s not our specialty. And I think that’s really what it comes down to is that, you know, something I noticed on your show and other shows around real estate and investing is like you have to find your your niche, you know, you have to find what works for you your personality. And, you know, I think for us, it’s like we enjoy, we enjoy, obviously property hunting and all of those things. What we don’t enjoy is like a renovation that feels like it’s never going to end. And you know, like we don’t want to be for men I think is really what it comes down to. So we would much rather you know if it’s a one time thing, so we keep it and we can you know, grow it and cashflow from it. Totally we’re game but if the sole intent is just kind of flip it and put it back out there. Just not our thing, at least at this time in life. Who knows what happens down the road.

Erwin  

Recently, I had a gentleman named Avery birch on my show. So he he’s young. I don’t even think it’s 30 yet, so he has a 100. Airbnb rent arbitrage properties. definitely sounds like a nightmare to you.

Kyle  

I think I listened to that episode. Yes, yes, that was so cool. But like and I actually when I listened to that episode, I was like, wow, that’s like genius. And then I like thought I get excited, right? I’m like, wow, this is so cool. And then I’m like, Jason, I do not want to do that, you know, like I like that would have to have like a tonne of upside there and um, you know, good for someone who wants to be in that but I’m like that is so not that’s not going to be me. Or at least if it is me, I’m probably going to drop the ball. You know, because I’m just not I’m just not going to be in that part day to day for sure.

Erwin  

This is the point of the show is I want to it’s kind of like a buffet. I want to show people their options. And I want to have guests on who proved that strategy works, they can repeat it. It’s It’s whatever the risk top left risk level is, and we discuss what the risk levels are. And then folks can choose for themselves. There’s no right or wrong. Everyone’s gonna find their own journey. Absolutely. Absolutely. I agree. Super cool. All right. Hopefully I find my compound interest back.

Kyle  

My favourite. Isn’t your favourite bit? Is it? Totally

Erwin  

nerds? Yeah, it

Kyle  

totally is totally is Yeah. What do you want to know about compound interest?

Erwin  

let’s reiterate. Because I guess for myself who naturally, naturally, you know, my parents worked with numbers. Math was a really important skill set to have in my household when my parents forced on me. And then just being able to DBT Senate math, and then understanding compound interest. Like to me naturally, it does not make sense to be to spend so much money. When I know I can make money. With money, the return on investing money, the utility from that is greater than me spending on something frivolous. For example, I mentioned it in another podcast, I used to drive a Honda Accord a used Honda Accord for the longest time, right? I mean, even early days when I was a realtor, but based on what I was doing, I needed a nicer car. So I did eventually get into a BMW, but that BMW certainly give me return because my sales increased significantly once I started driving a BMW. Right, right. Right. So the car cost like triple what my card costs, but there was a return. My point though, is that if I had a regular day job, I would not be driving a brand new car ever. Yeah, I would not be leasing a brand new car ever. Totally. I’d be driving something very modest. That’s reliable. They have low maintenance costs and great resale value.

Kyle  

i We definitely aligned in that regard. Because like even back when so you know, thinking about the the Florida and Arizona property, I was driving a diesel Jetta. And you know, it was a 2003. So if you picture you know, 2011 2012, like we’re talking about, you know, going on a 10 year old, but I kept it until it was like 14 or 15 years old diesel Jetta. So at the time diesel was like comparable to you know, that the cost of gas, you know, get 1000, you know, kilometres a tank, all of those wonderful things. And yeah, just like, just like you’re saying, it’s like every, you know, something we chatted about on our investment teacher podcast recently was this idea that, like, you, basically, you’re making a choice with money, money is a tool. And when you think that money, and you realise that you can either make money with that money, or you can help someone else make money with your money, and like, if you kind of break it down in those two ways, it really kind of opens the door to this, you know, compound interest, you know, conversation, for example, but when I, when I go, and I purchased that brand new car, and it doesn’t actually serve me in a way like you describe to make me money. I’m just making BMW money there, you know, and I’m losing money, but,

Erwin  

and you’re leasing company and insurance company, hopefully, and the gas company.

Kyle  

Totally. And you know, you have all the conversations about, you know, well, why are you doing it, like you should be able to, hey, if you get joy out of it, and that’s like what you’re about amazing, amazing that most people have a hard time really articulating what they get happiness out of like, they want happiness out of everything. So it’s like, if you’re a car person, great, be a car person, but maybe don’t be a house person. If your house person, you know, don’t let an essay house like your primary residence, right. So it’s like, whatever you choose to be all about. Because you say or claim it, it gives you happiness. I’m all for it. But you know, I just think a lot of people say those things, but they don’t actually, like give them much thought. And they just, they just do what everyone else is doing. It’s whatever the herd is doing. So I’m not a car person like you. Like, you know, you’re you did it for a reason. I have a truck now it’s a newer truck, simply because it’s not the best high end truck. But because I love boating, so we have a boat, and I need to move the boat around some people like trailers, you know, hey, if you want to go out on all out on your trailer, great, but maybe don’t go all out on you know, vacations to other places, right? So it’s just choices and then you know, the more conscious and intentional you are about that, the easier it becomes to kind of go down this other path and go okay, now I have more of this stuff that I can then try to go and figure out how am I going to use this as a tool to grow right and build that that compound interest snowball?

Erwin  

Alright, so how do you get kids interested in compound interest? Which is actually a good way to to educate even adults too?

Kyle  

Yeah, yeah, I think one of the things that, you know, we discussed it briefly the last time I was on, you know, this whole I think I mentioned the 20 to one ratio, you know, for every $20 My kids keep at the end of the month, I’ll give them $1. Right. And that’s compound interest at work that kids don’t know it, but and again, anyone who’s quick with math, like 20 to one is like, oh my gosh, that’s like five for every $100 I That’s 5% a month, not a smart investor move on my part. But I did it intentionally because the more dramatic you can make the pattern and the shrinking of the time, if you can make the time shrink all the way down, that’s another piece. So for example, in the classroom, what we do, and I can’t remember if we talked about this or not, but I did talk about it with the guys on invested teacher was, you know, I used to mention to students, I’d say, Listen, if you What would you rather have? Would you rather have $10,000 now, or I’ll give you a penny today, I will give you a penny doubled tomorrow, and we’ll just keep doubling so on like the third day, I’m going to double that two cents to four cents, like which would you rather have, we’ll do that for a whole month, what would you rather have, and like a lot of kids are gonna be like, I’ll just take the $10,000 like pen, you know, they do it, like for 10 days in a row. And they see like pennies. You know, that’s like only a few bucks, it’s not even a big deal. But it’s like later in the month that they start to see like this compounding really happens. So if you can make it extreme. And if you can shorten the time span, because the problem is, and this is the problem I think adults have, when you stretch out the time horizons so much. And then you you also make it less dramatic, because like when you do penny a day double that’s 200% per day. So that’s dramatic. Like that’s dramatic growth. And the time horizon is only over 30 days, instead of 30 years, right or 60 years, or whatever your time horizon is, it’s harder to recognise the pattern over that long period of time with a really small growth number, which is why interest rates don’t seem all that bad up front. But when you can do that, when you do this penny a day example or my 20 to one ratio, or, you know, my colleague, John or his daughters are older now. He has a spreadsheet. So he does 12% a year. And they do one

Erwin  

for age appropriateness, how old are they are

Kyle  

they would be grade grade seven, his twins are grade seven, his oldest daughter is in grade nine. So my kids are grade five and grade three. So the younger they are the more Concrete Mathematics research would suggest. So for me, I kept it not in a in an account, we just opened accounts for our kids because they were begging for them because all their friends have accounts. And we had jars because I wanted them to have bills, not only for counting, but also they can pull it out and they can see $20 Bill, I’m gonna give you a loonie for that $20 bill a loonie for this $20 bill. And oh, well, here’s $100 bill from your birthday from so and so, you know how much is that going to be. So all kinds of things you can do there, but they see it and they see it growing. And that really helps. And then with his daughters are a little older, they can be a little more abstract, they look at the spreadsheet, and he’s got a spreadsheet that will show the compound interest at a percent per month. And it’s like, even if they don’t add anything to it, they see that it’s like wow, every single day, I think he actually even has like a daily version if they want to see that. But from the monthly version, you see, it’s like wow, my money is doing nothing. And it’s just growing. And it’s like just to get that, you know that understanding. And of course, you’ll have the conversation and say, hey, 12% might be difficult for you to do unless you want to get into private investing, which we can or private lending, which we can talk about later as you’re older. But in reality, though, when kids see that, it’s like, wow, keeping money is more beneficial than just seeing a number on an Account screen, that it actually can do something and that, hey, I imagine a world where maybe just the interest I earn on this money or whatever that return is that cash flow on that money would actually pay for some of the things I want to do. And I’m not getting to that seed capital, I’m not getting to that principal amount that’s going to like just continue to print money for me. And that that’s something that I don’t think we do enough of in school and I I’ll be honest, I feel like most educators actually don’t have that knowledge to be able to share, right? If you don’t know it yourself, if you’re not comfortable and confident with it yourself, it’s really hard to try to help more students understand as well. So it’s definitely an area that I think’s of utmost importance for our kids.

Erwin  

Love this case. So I have some geeky questions. Like the term what gets measured what gets done, but how do John’s daughters see the spreadsheet? Is he printing it or? Good?

Kyle  

Good question. I think it’s to be honest knowing him I don’t know the answer, but I’m gonna guess it’s probably just a Google sheet that he has shared with them. And I’m guessing they’re you know, they’re able to hop in there and kind of look at an almost like the other piece too is like encouraging them to like, play with it and kind of go like what would happen if stress right and let them play with those things. And I don’t know if he’s had this conversation but at some point I’m sure it would come John’s a math teacher, he’ll probably say like, Hey, imagine if the rates this or imagine if you’re compounding instead of monthly, like what happens if it’s daily, like you start to see, oh my gosh, like the more often you compound like this is something you might do in a grade, you know, 10 or 11 class and it’s like, you know, these kids are seeing it in a different light because it’s not just something to do and check off the list. It’s like, they’re kind of living the experience. So definitely something worth doing.

Erwin  

Right. I explained to him what my returns are in real estate and they’ll understand why I do it.

Kyle  

Yeah, exactly. Exactly. Imagine getting the three the three ways to grow your wealth from real estate, you know, instead of just this cash flow over here. You got these other things working to

Erwin  

super cool. Yeah, we just got a bunch of we’re not bonds we have some money for Chinese New Year. It’s funny with my kids because my daughter is not money centric at all. So I don’t want to give her money. She won’t shovel the driveway for money. My son will mean like three bucks. We are winners. So then at least with him I’m we’re able to quantify what something costs in terms of driveways shovelled early. I love that. I want a donut. Okay, don’t get caught is the equivalent of you shovelling the driveway? Is it worth it? Right? No. So no.

Kyle  

Honestly, and again, once again, I feel like most adults don’t have that perspective, right? Like, when you especially I look at car payments is an easy one to pick on, especially like leases, you know, like these expensive leases, like, your lease payment is like $600 a month? Or maybe it’s more now, I don’t know, but $600 a month, it’s like, how often are you actually in your car? And you know, how happy are you when you’re in the car? Right? And is that really worth it to you or imagine it’s like, imagine if you could retire earlier. Because you chose not to buy that car or that more, you know, an expensive car, whatever it might be. And when you when you do that, that’s, you know, we call it proportional reasoning, right? This idea of being able to actually think about two quantities changing in tandem. Now this is kind of maybe going a little too deep for the audience. But really, it is an area where most kids fall off the rails in mathematics. So it’s like students who are able to understand proportional relationships and proportional reasoning, they tend to be able to continue on down that path. But for those who struggle there, and they think additively instead of multiplicatively, that is a major sort of, we’ll call it like a GET OFF spot for kids in mathematics. So if you’re like that person who never got math, quote, unquote, like, that may be that sort of land where you sort of fell away. But when you can quantify that, hey, every you know, driveway is worth this many dollars. And now you can say, how many driveways does it take you to buy that over there, you’ve now got these different varying quantities that are all going to scale in tandem. It’s like every driveway, the dollars go up, and I gotta get to, essentially, you’re solving proportions, but you’re doing it through reasoning instead of sort of like an algorithm or a calculator. And that’s a massive skill that the younger students are able to do those things and it can be easy numbers doesn’t have to be hard numbers. But just to know how numbers work, and then having like some sort of understanding of the magnitude of number is so important for them to be able to see their financial future, you know, and be successful with trying to invest.

Erwin  

I’m just cheeping along with that Dona

Kyle  

Natrum mention it’s horrible for you. And the kids are gonna stay up all night, but either way,

Erwin  

and how I get out of having giving the kids a dog is I explained to them, I think it costs over $100 a month to feed a dog. So I explained to that is how many driveways Is that worth? Yeah, totally. When you tell it the kid that or get to walk the dog, they never say no to that. I find I find that this money equation? They say no. No, that’s interesting. Yeah, because they can like they can tie how much effort it is to how much or cost to feed the dog. No. Is that worth it to your kids? Yeah, yeah, totally. Totally. I love it. Kyle, thanks so much for doing this. Where Can folks folks share your podcast? where can folks learn about the math educators stuff that you’re doing?

Kyle  

Oh yeah, for sure. The the invested Teacher Podcast is on all podcast platforms. So go check it out. Hit that subscribe button as you know Erwin a super helpful for for people to find out about the show. Invested teacher.com is where you can find out more about you know what we’re all up to and the different projects we have going on. We’ve even got some some goodies there that you can grab like an investor starter blueprint. And on the math sides. We are at make math moments.com make math moments.com And I I’m telling you, you know, we love the work we do there. And we love the work we’re doing with the invested teachers. So it just feels like such a good mix. And hopefully some friends in your audience will find some use to either one or the other. And hopefully, we’ll bring some communities together here.

Erwin  

Thank you, Matt. Sorry. Thank you, Kyle. I was gonna call you, Matt. Because I was thinking about, I was thinking about Matt, question for you. You have two partners in these ventures, and they’re the same partners in your investment business. Yeah. So

Kyle  

actually, Matt and I are the CO owners of our holding Corp for the real estate. And then John and I are the CO owners of our McMath moments Corp, got it. And John does some investing with Matt and I, he’s done some jayvees In the past, and, and now that we’re doing this invested teacher thing, you know, more and more, I’m sure that, you know, will, will be taken on more and more projects as a as a trio. But we also have other jayvees that, that come in get involved as well. So exciting times ahead, that’s for sure.

Erwin  

Excellent. in these in these difficult times of real estate, that’s actually I’ve seen it out there where partnerships are falling apart. How do you define your role versus Matt’s role? Oh, yeah,

Kyle  

great, great question. I mean, I’m definitely the analysis guy, I’m sort of the, the yea or nay as to whether we go deeper with a deal. Matt is great at you know, he’s a relationship builder. I mean, not not to say that I am not, but he’s out there. He’s in the world, now that he’s a realtor as well, makes it super easy. So he’s talking with everybody and, you know, typically getting us access to some pretty, pretty awesome opportunities for us to explore. And then I kind of run the numbers, I grind through it, I, you know, let people know, when the numbers that are being advertised maybe aren’t so realistic or exciting, versus when they are and and then kind of together, we put our heads, you know, to put the deal together, and we’re definitely a great fit on that on that front.

Erwin  

So that’s pretty good deal together. What about the day to day operations? Yeah, as a property manager, when he was more the contractor type?

Kyle  

Yeah, for some time, that is the way it went, we actually have some outside management now as well. So that handles some of those pieces. So some of the things that we don’t enjoy. But ultimately, yeah, so I handled essentially all the finances, the books, organising the books, the, you know, working with the accountant, so, you know, cherry and I would get along. And then Matt is on the other end, he’s typically, you know, working directly with the property manager that we have dealing with any of the, you know, the bigger contracting jobs, like he’s usually getting, you know, getting those quotes together and doing some of that work. So, yeah, we definitely have sort of our niche, so that we’re not overlapping. We’re not sort of, you know, doing double duty. And, and that’s really helpful. So we, we believe in that clockwork system, where, you know, we want to make sure there’s, you know, an integrator, and there’s a visionary there. And, you know, we both have a bit of both of those skills, but we tried to ensure that, you know, that we don’t try to repeat the same jobs over and over again, for redundancy purposes.

Erwin  

Amazing. Excellent. Thanks again. Anything else? Any final words you want to share?

Kyle  

Oh, hey, keep up the great work. Again, I’m guessing that you’re at 19. Listeners, I think you got to 18 listeners the last time I was on, and hopefully maybe one more now. But no, I really appreciate the work you do. And you know, I hear from so many people that Well, I found out the last time I was on how many people do listen to your show that I knew that I never knew listen to your show. So there you go. And yeah, it’s it’s great work. And yeah, I really appreciate you bringing the community together.

Erwin  

Amazing. All right. Better job. Congrats on your success.

Kyle  

Hey, thank you, you too. And let’s stay in touch. Come on down to Windsor, my friend will will show you around.

Erwin  

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

To Listen:

**Transcripts are auto-generated.

Erwin  

Hello, and welcome to the truth about real estate investing show for Canadians the last show that could in what started as a six episode experiment back in 2016. After blogging every week for about five years prior to that we pivoted to podcasting. I used to ask guests if they prefer tea or coffee and what they have for breakfast, I was picking up their morning routine along with another 88 or so prepare to questions to now only have a handful of pre prepared questions. Actually, there’s only a little one question that’s pre prepared. My favourite icebreaking question. Now this icebreaking questions wonderful for almost any sort of networking event. Wonderful for anyone you’re meeting for the first time? What’s keeping you busy these days? The point of the question is for the person you’re asking is to choose whatever they want to share with you that’s going on in their, in their lives, saved my guests by just choose which way they want the direction of the conversation to go. So what’s keeping me busy these days is all the strategy calls I’ve been doing with attendees of the wealth hacker conference, who purchased the half an hour call. Yes, a lot of those calls went well over 30 minutes. Yeah, anyways, next, I’ll be offering those same strategy calls to all my past clients. Yes, past clients, you got an email from me on January, Tuesday 24th. That is just for clients only, I’ll be doing the same strategy calls for them that I’ve been doing for folks who paid me good money for at our hacker conference anyways, in general, I find a lot of investors are just stuff and they’re not sure what to do next are quite unsure of their next decisions, whether it is to sell an existing property or whether it’s time to buy by getting into the investment into the market for their next investment property, or some of those first investment property. In general, I’m finding a lack of confidence, which is fine. There’s a lot of cons out there. And often they’re by overly competent shysters who lack experience and know how, what’s worse is some of them are some of those coaches are setting up their clients for failure. And honestly, it’s even worse if they’re charging like 10 $30,000. To do so. That would be called a negative return on investment. To avoid failure. We’ve always taught our clients to reduce their risks by investing in one property at a time. We guide them through the cash flow analysis, the execution of acquiring, renovating, renting and sometimes refinancing 99% of our clients net, maybe 98% of our clients complete one property at a time to ensure a winning portfolio of investment properties. I would call that boring, systematic, proven predictable, low risk and profitable just the way I like it. We have a significant amount of data backing up our investment strategy. You know, again, we have been we’ve been working with clients since 2010. I’ve been investing myself since 2005. It’s a anyone has been investing for that long. Generally, you’ve done quite well. Once you’ve been through things smart. We have over 45 self made real estate investor millionaires among our clients that we help them acquire property for and our goal is to get that number up to 200 in the next few years. And after the investing. All this talk about investing these are one adult Boy, this past Saturday, I attended a long overdue, actually I helped organise it and I long overdue that guys night out. But not what is it guys, these are my real estate. This was a real estate mastermind of sorts, as we had. For example, we have Charles Wah with us. He is an award winning land developer. He’s on the board actually of the West End Builders Association, they’ll adapt so he’s a builder and developer is quite successful in real estate. He’s made a lot of money. And he trained the leading authority in renovating additions. And he’s been the consultant on my basement apartments, all of my basement apartments and the vast majority of our clients basement apartments and now carrying forward garden suites. Roger who I think owns at least some of the properties at this time. It’s hard to keep track because he’s a flip some you hold some so it’s hard to nail down what his exact number of current Holdings is. But he’s transacted on quite a few properties with his own name on stuff so active investor anyways, there was a tonne of real estate knowledge out out and about downtown Toronto on Saturday night, Enjoying dinner, actually two dinners, the ones that five and again at night. It’s typically said typically breakfast, whatever two meals were at or had within seven hours, a couple of averages. rusher even received an offer on one of his properties while we’re eating our first dinner. He had to deal with it later on in the evening while we were having drinks at another bar. Hopefully you also out there have a great group of real estate friends. If you don’t, I cannot impress upon you enough that you need to have your friends in real estate. It’s great to be able to share and chat about war stories. I advise one of my clients recently who’s newer in real estate to always be looking to expand your circle of real estate friends to include those with more skills and experience in yourself and more than those that you spend the five people that you spend the most time with. You should always be trying to grow, improve your network, and, for example, this one client, she’s telling me that her coach, not me, but someone else had five years experiences. She thought that was a lot. And I said, you know, you know a lot of my friends have more than 10 years experience. So I said, you can very easily find some friends make some friends, I have more than 10 years experience. Anyways, speaking of investors with knowledge and experience this week, we have Mackenzie Wilson of single key. If you haven’t heard a single key, they are the tent credit and background checking reporting, background check reporting service that recently acquired neighbourly, I think when neighbourly just a few years ago, nobody was dominant. But now stick with us now consume them. Actually, single keys actually made a lot of headway in the last little while, they’re actually extremely popular in my circles, a lot of people are already using them. And also, quick side note, you’re so lucky, you know, at the run credit checks the way I used to having to do on paper, having to try to read these things on their Equifax reports at the time and all these codes. Anyways, McKenzie is a very diligent investor from Calgary, Alberta. He shares how he went from oil rigs in a very nice IT job at tell us what they came with a pension and left it all behind to start an online business and real estate. That didn’t go so well. But he survived. He still owns this history duplexes in Calgary, that cashflow, and he works now works at single key as a director. As you’ll soon tell, McKenzie is a diligent landlord, likely one of the most diligent I’ve ever met and he loves to help other landlords in Alberta, as he’s always sharing and educating his peer group of 4200 Alberta landlords. On today’s show, we talked about the difference between commercial a bit of an update on commercial real estate and Calgary and how residential is doing, they’re actually performing quite differently. The difference between investing in Calgary versus Edmonton talk about the rental market in Edmonton. Of course, you’re talking about tenant screening, of course, as it used to be a great fear of McKinsey’s I guess is more like an unknown for McKinsey when he first went become a realtor. Sorry, landlord, but he’s kind of mastered that subject now. And how appropriate that it is that he now has his day job at Singularity. And one huge nugget in the show is I actually asked McKenzie, if I was a beginner investor, what should I buy in Calgary? And his pro tip is a really good one. Please enjoy the show. Mackenzie, what’s keeping you busy these days?

MacKenzie  

Hey, Erin, man, thank you for having me on your podcast. This is an honour and what’s keeping me busy these days, continual self improvement, I’ve been able to take the day job from where I’ve been Telecom in the past and the oil and gas into directly relates to real estate now becoming a director of content and community building at single key, the italic constant changes, by the way, so I’ll probably be different tomorrow. But having this focused in always, and I’m not gonna lie, someone told me how hard parenting was. And I really knew what the challenge was raising a three year old and a six year old currently at I don’t know if I would have done it, but man, is it ever rewarding and I wouldn’t change anything but, you know, life Life in the fast lane of what we do

Erwin  

these days. Can you help? Can I ask hold you hold your patience and ask my guests that?

MacKenzie  

Oh, cool. I’m 38 Oh, yeah. Okay. Oh, perfect. I appreciate that. The lack of here in the green the beard. I always have a 10 year bandage on was good in high school. Not good anymore.

Erwin  

McKenzie, you’re coming from telecom recover from going out to name your employer.

MacKenzie  

Yeah. Oh, yeah, for sure. Tell us I mean, so Baris, I’m from Calgary. I got two diplomas both from state so technical institute one was a business administration major in management came back two years later, and oh seven graduate in oh nine with Network Information Technology Diploma, focusing in network and so essentially, I had a job where I log into these devices routers and switches that ran the internet literally the backbone some of their size or the size of the deep freezers and you know, a card and washing machine be worth 50 to 100 grand in the box be worth half a million dollars. And that was generally my job for nine years except I had a three year sabbatical where I moved into sales at TELUS got laid off had an opportunity to come back from the operation side took a package because as most of my I’ve ever seen at that point my wife bought a an RV or travel trailer which is one of my major passions is camping and all that and this actually recently got a camper van but last worked in the oil patch. So basically I went from bashing keyboards and having it fingers to sling and slips and drilling, drilling holes and roughneck and on rigs up in northern Alberta and BC.

Erwin  

You went from white collar it to as bluesy and get on the rig. Yeah, working on the rig.

MacKenzie  

Yeah, so I tried it once and I was 18 I lasted like, three months and then I got I don’t know what I started school or Something I don’t remember why I left to be honest with you didn’t last long. And then in 2007, I think I was twice I’m 20. I went back in the rigs for a winter made a tonne of money, was smart about it, kept it and then I travelled with my now wife. For almost two months, we did a Southeast Asia trip. And then I parlayed that into his 35 day 1000 kilometre truck and trailer chip, starting in Quincy, Washington going down the west coast and the one on one into California, San Francisco. I had a buddy who had just quit tell us and got an an engineering job at Facebook, to the Facebook campus. And I was like, Oh, my God, this is completely eye opening.

Erwin  

It looks like basically, Disney from an oil patch to Disney. Yeah, sorry, Mackenzie, for an ignorant Ontarian. Like myself, can you explain what like your typical day was working on the oil patch? All right. So you have

MacKenzie  

depends on the rotations, my role was 14 days on seven days off. But on your days off, you had to get yourself back to start your 14 day rotation. So I would drive from Calgary, up to between Dawson Creek and Fort St. John DC, which, if I’m remembering correctly is both 16 or 14 hour drive. In the winter, though it could easily go up to 18. or longer if the roads are really bad. I usually sleep halfway. So I basically had to have like three to four days off. Do you think that the travel days on both sides, and then did that for a winter and so a typical day is be discharged on nights for the first seven days from 7pm to 7am. And then depending on the rigging up, or, I mean, I was on the double. So we typically drill a hole from getting on site to completion leaving to the next site would typically be around 14 to 21 days to drill a hole from start to finish. Before they could put a service regarding actually haven’t produced whatever the the product was. Can I ask what someone makes doing this? Yeah, so I think it’s actually posted on the Canadian drillers Association, her I forget the exact acronym, but I think at that time I was 23 or 24 bucks an hour. But you have to remember, the last four hours of every shift is a time and a half. And then when you get to a certain number of hours a week, anything after that is overtime. And that’s where you really make your money. And that you can make a lot of money quickly. It’s not easy work by any means. But if you’re willing to go hard and do it. So I mean, there’s a good for work ethic. But I also know that and it’s well said you typically, you know you are of your five or seven closest peers, you know who you hang around with? And I certainly believed that to be true. And so it wasn’t a forever gig. Oh, like that? A? Yeah, there’s really good people that for sure. But then you could also get people that are just completely driven by money and perhaps don’t have the best that I use in life. And when you get a few of them and you’re working in and remote locations, they don’t really see anyone else. And yeah, it can be certainly challenging. I mean, if you keep your wits, and we work hard. I mean, I was I mean to give this context, I bounced around between a half dozen crews before I finally landed one that I had the ability to work the rest of winter with and yeah, it can be quite a little tight knit culture if you don’t fit in, right. And these jobs are still available today. Yeah, they’re still drilling actually, you know, since COVID. And then with the whole demand drop in the oil patch game, our patch is very volatile, people will come to Alberta, they love it, they get high paying jobs. And then they experience a recession or decline or the drop in the demand. And a lot of people don’t like it, and they leave and we have the cycle of people coming and going. But I’m sorry, what was the original question or not where we’re going?

Erwin  

If there’s still jobs in this field, because I’m trying to get there is all this talking about recession, whatnot. It’s in the headlines every day, for example, Microsoft just announced laying off I don’t know how many people 10,000. But I think that’s like 6%

MacKenzie  

It’s not a Yeah, 10,000 rolls, but yeah, so there are positions. Oh, sorry.

Erwin  

Let me just finish that thought my point was that headlines, they’d love using gross numbers, rather than percentages, because 6% of Microsoft is not that huge of a cut in the middle of the first totally absolute over relative all day long. Yeah, Amazon’s cutting another 18,000. Again, it’s concerned they’ve like, I don’t know, they’ve grown so much in the last three years. These are very small numbers. And it’s unfortunate for anyone to lose their job. What I’m trying to get to as though is that I’m consistently hearing from all my friends in more blue collar areas, who or their executives of companies who have blue collar staff. And what I’m hearing consistently is they still can’t find enough people to fill those jobs.

MacKenzie  

To add on to that so on the radio today, I typically try to catch the news and I drop off my kids at school and I do the morning drop off for school and daycare and they I’m the president of the residential construction association for Alberta or my bid for Calgary. Don’t quote me on that said they’re short 5000 full time. Would you call it? Red tape, Red Seal. Okay, carpenters, plumbers, electricians, all that kind of stuff to build homes. Alberta needs 5000 full time positions right now, trying to keep up with the demand to build housing, our supplies lock in our demand right now we’re finally growing something that you guys have been generally called the normal growth in Ontario for I don’t know how many years now. It’s always been a different picture. But yeah,

Erwin  

since like, 1990.

MacKenzie  

I don’t know how long Yeah. And the macro economics aren’t changing, right? It’s not going away. Yeah. So thing. Yeah.

Erwin  

So many years ago, and what my point is that all of us recession talk, it still sounds at the end of the day, anyone who wants a job can have a job within a week or two.

MacKenzie  

And if you are really there’s that scene work harder, not smarter. But there’s a, say a fine line of having good work ethic. And, you know, having some ability or talent to go with that, if you’ve got me got one of those two strong labour if you have a good mix of those, you should have no problem finding employment.

Erwin  

And also good or bad thing. I have friends who who hire out of India. Alright. And my understanding is that way their wage growth is going skyrocketing. I could totally see that. Because already many companies are have been outsourced. In India, they’re looking to outsource even more.

MacKenzie  

Oh, yeah. Tell us that huge industry initiatives around that since 2009. And we’re in Philippines as well. And yeah, I can totally see that.

Erwin  

So all those wages are going up. So it seems to be a mixed bag. Because again, I hear people having challenges here hiring people. And then we’re in this mix right now. But with like with hybrid at home work for not, for example, Disney announced that they want their first staff back four days a week, my cousin in the federal government in Ottawa, they’re mandating to three days back in the office week, right? So we’ll see. We’ll see. It’s a few interesting times.

MacKenzie  

Very much when you think about that play in commercial real estate we’ve had with our oil and gas recession, going through the mid 2015. To right into we got the bottom of our trough right, finally levelled out stabilise and then we hit COVID. And so I don’t know currently what the numbers that but over the preceding years, we’ve been in around 25 to 33%, we’ve basically been there, one out of the three major towers downtown Calgary were completely vacant for Office. So there’s been initiatives to convert them into residential, some not for profits for for shelters, and I think things are on there. And, and then trust, we’re trying to also always diversify out here in Alberta, which is good, but at the same time, too. I think the advertised timelines to phase out. Fossil fuels are so far unrealistic, it’s not even funny. So we could go into that too. And we can talk about it’d be very angry conversation and real estate career journey. So yeah,

Erwin  

I do want to ask, actually, about the commercial vacancy or any investors getting into it buying vacant commercial and converting to residential for profit?

MacKenzie  

I don’t know because it’s a wider discussion that’s

Erwin  

going to have to happen. Like for example, here locally, have you heard of cocheco? They’re like Rogers to like, okay, country. Yeah, their head office is completely vacant. It’s actually available for rent or buy believe, right? It’s absolutely insane. It’s a huge piece of like, probably Class A commercial

MacKenzie  

telco. You know, as far as telcos and some error areas, we’re probably pretty advanced. I’ve always had a work from home hybrid model from 2009, from when I came out of state and started there as a contractor to now working there full time, and it became permanent over COVID, which, unfortunately, I didn’t like because I did appreciate the ability to get into the office as more productive since having kids I found being in the office was actually better for me. But anyways, it’s that’s something that’s always been there. So a lot of our office space is super vacant, they got rid of the corporate tower in Calgary, and it’s all who rents it now. Oil and gas, but where I worked in was core infrastructure, so we could never get rid of the building. But we had empty floors upon empty floors, and some had been renovated since like the 90s. It was a little bit of nostalgia walk into some of these floors. Yeah. Cool. Creepy.

Erwin  

That’s a little bit like the like the shining, you know?

MacKenzie  

Yeah, it was, is different is different. But, you know, I worked with really, really good people. That’s why I stayed as long as I did at TELUS because I have amazing teams. There’s about a half dozen of us that that supported all facets of the backbone period with other telco providers and like, incredibly smart folks, and I still I always knew when I got into through that was never for everything because I couldn’t Excel to be at the level they operate at and from, from a technical perspective, so I always knew I had to switch. And funny you mentioned Rich Dad, Poor Dad, you took the training, it was one of my two catalysts that got me into real estate was was reading the book, which I imagine probably is for most people of my age group.

Erwin  

I think we’re about eight out of 10 people I know who are real estate investors who read the book, I think somewhere around there. Yeah. Why don’t I have another look, people that read it. This is the logical with the takeaways, the action items, the evil asset

MacKenzie  

over time that you directly own, and if it burns down, still has value that increases and appreciate. It’s, I think it’s phenomenal offsets while we’re talking.

Erwin  

But let’s bring it to the beginning, then. Because it sounds like you’re quite successful in your career. And not

MacKenzie  

that, you know, I was always stable and had job security, which I’ve always been very appreciative of. Yes.

Erwin  

And correct me if I’m wrong, you were union and pension as well, while you’re telling us?

MacKenzie  

No, most of the time I was managed professional, meaning that I was non union, I had a brief union role when I came back to tell us after I worked in the oil patch, just to get me back in the house, but then I went, I went back to manage professional. So does anyone get pension? And those? Yeah, definitely. There’s they still have a pension, which obviously is not as common these days. It’s even exist. So yes. Yeah, no great job security. And now that I’ve left TELUS been there so long, and I’m seeing when I tried to buy my own benefits, and go to Blue Cross this past year in 2022, and I was like, Wow, man, was I ever lucky and felt that I did not realise the quality of what we had. And,

Erwin  

yes, the grass is not always greener on the other side. No, you know, all the nice, you know, now you have kids to have dental and I plan Z. And

MacKenzie  

I said, this morning, for my oldest, two teeth pulled I feel for the guy, but like, Yeah, wow, that’s not cheap.

Erwin  

Let me tell you that. How much was it? Oh,

MacKenzie  

so I’m paying out of pocket where before, also to cover everything. And I may have a small little bill at the end. And now it’s like, I hope like this covers the percent or whatever it might be. So yeah, so start from the beginning. So yeah,

Erwin  

so what at what point at what point did you start? Did you get into real estate investing?

MacKenzie  

Yeah, I had intentionally and unintentionally so I actually rented out the second time, I went back to school, my parents moved, and I stayed in that house and I rented out room by room while I was at seat. And I didn’t like it. I wanted nothing to do with it. Other than I wanted to stay in that house, because I had really good access to transit to get to sate. Or you stayed in your parents home to my parents home, they bought an acreage outside the city, I rented it out, my dad wanted to keep it and rent it. My mom’s like, now I want nothing to do with this wasn’t comfortable with it. And so once I was done using it for schooling, they sold it. And that would been in 20, mid to late 2000s. And then I intentionally got into real estate, you know what the cause was becoming apparent. My wife and I were pregnant. We had just got married, and I realised I had to not live six months in advance and plan only six months in the future, like holy cow or use more provocative words. I have another life that depends on me. And it was a complete paradigm and mind shift. And so I needed to start figuring out this, this nest egg and wanting to have a, you know, stable and secure future for my kids. So I took calles had blog, it was kind of three, Rich Dad, Poor Dad read that book. At that same time. My mom had just joined ki Speier and took me to a buyers event in Toronto, I had no idea what’s going on. It seems super cool. In hindsight 2020, looking back, it was very salesy, and a lot of value but it was the exposure to this community of people trying to better themselves and the like minded individuals that I really fit off of. And then the third thing was I discovered this podcast called tales from the trenches by a gentleman named Barry McGuire, who’s a very well known real estate lawyer up in Edmonton. In fact, just to get this guy credibility he’s been I hacked in are a full time lawyer in real estate longer than I’ve been alive. I think he’s that I do the math now. He’s got been it’s been 45 years of full time real estate, not including the education, everything else to get there. So and he really loves teaching and he’s very good at the creative side of the business, which is learned a lot just listen to his podcast. So then so we bought our primary house, which is where so currently today, and now we talked off the air talking about how there’s this expectation and training that people can buy, they they say, Hey, you can buy this will train you how to invest in real estate, you can quit your day job tomorrow and just go full time. And so I bought this house thinking it’d be a stepping stone I’d be out in two to three years and I renewed my five year is my first five year renewal on the mortgage. That would have been in 2020 21 and we’re still here right now. And you know, it’s just food for thought on that mark. But I bought this house in 2016 we legalised the He’s been sweet as a mortgage helper for the first three to four years. And then we took it over, because we needed more space with our second kid. And we had gotten a little bit stronger position. And then my wife also realised she likes to work as well. We’re both like that we both tried doing this at home parenting, which is a was very challenging. And we found it’s okay to be happy with what does work and boys, I’m rambling, I’m gonna wrap this up on my thought here. And then 2017 is when I joined rain. And I had found another, I had found a couple of buddies, we started a monthly meet up to because I wanted more of what rain was offering with those monthly member meet up meetings, and they had the presentations and I just, I knew when I got into this business, I knew nothing. I wanted to be around people and rub shoulders and learn from the more experienced individuals I had the scars and the lessons learned I had made the mistakes and I wanted to absorb that. And I did a bunch of online training how to screen tests, because I knew right away if I could figure out screen tests, the rest of the business can be easy and learn on I can learn that on my own. But I was super nervous about that part because it scared me so much to have a tan destroy a house or go into default to mortgages and be financially ruined. Like that was my biggest fear. And it still is something that even to this day, where I would definitely more well off financially, I need not to worry as much and it’s something I’m trying to work on. And finances has always been a big big sticking point for me that I try not to focus on negativity speaking negatively.

Erwin  

Click comment on the on the worry part, I find my experience. They worry investors are like stable investors. They don’t go big. They don’t get big. Like some of the ambitious folks like our people know my guests. Let my listeners know like, you know who I’m talking about on my shows someone like the big thinkers, receive highly confident people. But then some of these people too big do that. So let’s competent, you’ll go too fast, and they will crash and burn and declare bankruptcy and they’re living in their parents basement.

MacKenzie  

I’ve been around long enough. I’ve seen those stories.

Erwin  

They were not worried investor. So it’s not the worst thing. Maybe you’re worried investor.

MacKenzie  

Yeah, but you don’t want to control you a bit. I mean, so I’ve gotten a lot better. And so then a big thing to like 2016 and once I had my kids, I realised I wanted to just generally be better be more productive. So I started a big and I’m selling it right now. I’m very big on self improvement, self development, wherever you want to call it. Reading books, you know who not hell by Dan Sullivan. We’re talking about off air, one of my favourite books, and doing masterminds now I attended more than one one. And then so weird journey. I always thought I was gonna own a bunch of doors 10 or 20s single family detached homes fully paid off. I thought that was kind of like my end goal. Right? Well, it was my end goal I got into real estate.

Erwin  

Sorry, sorry. My kids just pause you there. When you sit you mentioned 2017 is a key year how many properties around that time did you have

MacKenzie  

so if we measure them by door, I had my primary one and then I picked up on my second and third properties that I bought that are all now legally Sweden. So I got the six doors right next door. So three properties all duplexes for first six doors. Yeah, are bungalows with the legal basement suite are two of them. Fabulous.

Erwin  

It didn’t Calgary offer some subsidy around basement apartments.

MacKenzie  

So folks, folks always listening to this, there’s still golden opportunity mind just supplies is super low right now. And even in the entry level segment, there’s multi bids going on. But a golden opportunity is

Erwin  

sort of traffic. As you’re saying today. There’s still multiple offers.

MacKenzie  

Yeah, we have that. So this is really weird, like, so I’m not really when it actually makes a lot of sense. We look at the macro numbers. But I was just talking to a couple of my realtor friends that I always like to get what’s going on. She’s like, anything entry level now to get into the market with qualification and a lot of stuff is a five to $600,000 house here in Calgary. I’m sure there’s could be some cheaper ones. But generally, that’s entry level now and Calgary. And she said everything’s got multiple offers, but you go to like that second upgrade kind of mid tier house, not to the high end. And like just crickets nothing going on. It’s like that 700,000 price point. So yeah, it’s just interesting to see on the market. So that’s one reason why I’ve always loved single families is because not only a single family, there are entry level products that I own. The exit strategy is really clean. And really I should build a seller’s property and cash out within 30 days if it’s priced appropriately, should move right no problem. And the fact that I have a mortgage helper in the basement helped me that I have even a bigger selection of folks, our customers too, that could qualify and buy my property. So I like that. But I don’t have to

Erwin  

finance a higher amount because you have more income In the house, whoever’s qualifying for the mortgage automatically has more income from the rent.

MacKenzie  

Yeah, it obviously varies by institution exactly what that number is. But you have a bit more, I think.

Erwin  

I haven’t heard of a financial institution who won’t count that rent

MacKenzie  

might not give you 100% of it. Like it depends, right? Like some some say it has to be they only count 80%. Because they take the other 20% covers, like taxes and utilities and insurance and stuff. That’s very expensive. Yeah, you typically don’t get 100%. But you add, I mean, that’s huge, right? For a lot of people. And so I like that. And that’s always been my primary investment strategy. So I haven’t gone into small multifamily or anything like that, because the exit strategy is much more complex, a little bit much longer, much easier to very, you need an investor type buyer, which is just generally a smaller demographic, especially compared to mainstream

Erwin  

McKenzie, you’re not going to be able to sell a 60 course on this way you invest. I mean, you need some we need to talk some big numbers and 200 doors, you know, Alberta. That’s, that’s what it’s funny. It’s when people are talking about Ontario. Code Alberta, by 200. Doors, this one building?

MacKenzie  

Yeah, yeah. So I got in

Erwin  

Sorry, I just pause, just pause you for a moment when she’s mentioned about the entry level being on fire. And the level the tear above for housing being slower, and a need gets even slower, the higher up you go. And we see the same thing here in Ontario, which is why I actually tell my clients, you know, if you’re looking to trade up, now’s the time to do it. Right? Yeah, like your home, either rented, or sell your entry level home, and then trade up into something that you probably get some value out of. Right, you’re gonna get some value when you’re buying now versus if you’re gonna try to buy once interest rates start getting cut. Right?

MacKenzie  

Absolutely. And I’d say a contributor to that. Is these interest rates, right? Yeah, absolutely.

Erwin  

Cool. And that includes condos here, like here in Ontario condos. Didn’t not all of them are going up, but there haven’t fallen nearly as much as like a $2 million detached home prices are really different

MacKenzie  

here. Yeah, yeah. That’s super interesting. Okay. Prices are crazy.

Erwin  

Like, you know, a million dollar house in Calgary is probably over two here.

MacKenzie  

It doesn’t even compare. You guys are crazy. Crazy. Not that some time to spin over and turtle with with being single key. And you can come to your guys’s conferences and hear how you guys talk number like it’s different. I just then I mean, like, I know, we’ve talked about this a few times that we’ve met up talking about the macro economics at play. And I always attribute legislation that governs the RTA and Residential Tenancy Act across the different provinces is it’s like a it’s either an accelerator or restrictor, right? If it’s not, and legislation has to be, really, ideally, it has to be well balanced, that benefits both parties equally, to want to participate in that transaction. And I’m talking homeowners rent and to renters. And if legislation favours one side or the other, less people participate in that transaction, therefore, there’s less supply available and actually affects everyone overall, negatively. So I look at Calgary or Alberta. And it’s like, we’re good. It’s very well balanced. So I would attribute to be like having a really big straw and slurping on the Slurpee, it’s easy. You can just pull through it, it just goes whereas your legislations like taking a brown little coffee straw for mixing coffee, and trying to drink a milkshake or Slurpee or something you’re not going to get like it’s just it’s very restrictive. So then overall, you have this massively unbalanced market. I would love to really do to commence or commission on an official proper survey, that that’s typically correct to actually get an accurate picture of how many people no longer participate over the last 15 years or however long you guys had the time. Time. Yes. Like, I think it’s so understated that there’s a huge supply sitting on the line. So everyone like oh, we need to add more supply need to build more. And that’s true, we definitely need more supply across all the promises. But it’s not only building more is participation supply, probably willing to participate in the market that people have. And if they had better balanced legislation, more people would be in there. And generally, when we talk about small mom and pop landlords, the type of products we own ours, you know, single family basement suites, perhaps even renting out rooms really fit the mode of affordable housing, that’s the type of housing that actually has the lowest price point. And because I don’t operate at scales of economy, I’m always very price sensitive and competitive compared to a boardwalk or whatever big multifamily company down out east you guys have. They sit on 100 vacant properties. They’re going to demand an extra two to 300 bucks a month because they can’t they have the the operating down. What do I know if I take one or two months vacancy? I might as well have already dropped it two to 300 bucks and had it rented from day one by the nature of how we operate. We have to be competitive. So The major supplier of affordable housing and that definition is I hate using that word because it’s, it means so many different things to so many different people. Really, Mom and Pop landlords are the biggest player of the closest thing to affordable housing, that’s the better way to put it. And there was a CH MC,

Erwin  

or the society’s whose benefits most from Mom and Pop supplier of housing

MacKenzie  

100%. And there, there are a tonne of studies from the Canadian housing and mortgage corporation. So the one about the price difference between small and big landlords, they estimated and I think this is actually a very conservative number, I’m confident it’s higher than in reality, the estimate is like a 12% difference. And I’m sure it’s like 15% or more, because I can just anecdotally speaking from my experience, what I was charging for similar units, and to what they are. So that’s one thing, and I almost had another point I want to go with, oh, and then the market share when we look at the actual supplies in the rental stock. I know we talked about so you’re gonna probably know the answer. But I’m gonna ask you and always it’s your podcast, or what do you think when you look at our whole available rental housing stock, the percentage of market share that small mom and pop owners have versus any large multifamily players?

Erwin  

I’ve seen the stat a couple times, it’s actually a lot higher than I think most people think at least what caught me off guard how big it was, I don’t know 60 70%.

MacKenzie  

Your bank? It varies by province. But that’s 65% and 70% is what I’ve seen. And there’s not really an official study that captures it well, because when you look at the substance, the Canadian mortgage housing Corporation’s numbers, they identify Mom and Pop owners as secondary supply. And because it’s not easy to aggregate or survey or get a good feel on those numbers, they don’t include it in their studies, which is like, hey, so if the entire markets 100%. And we can only really survey efficiently the multifamily players, we’re going to call that the whole market.

Erwin  

And really like just when they do CMHC, the property managers of the largest apartment buildings not on pop, right. It’s easy, the large aggregator of data, not you and I

MacKenzie  

know know exactly. So the average landlord, I’d say across Canada, from what we’ve seen been at silky, owns around two and a half doors. Seems she just came with another Oracle knows that can I just did a rest of the least kind of trying to quantify as to they say most people only own two properties, the primary and one of the property. So

Erwin  

sorry, he said again, CMHC saying there’s the average how many of you

MacKenzie  

know it was Stats Canada, and they only looked at three provinces Ontario, BC and I think it was Nova Scotia. They said majority of orders, people who own multiple properties. So multi property owners actually only own two properties. Primary residence plus either a recreational or one rental is typically what it was. And so then we’ve got these legislation, plays and Policy and Public Policy coming out saying hey, you know, for example, I was an NDP townhall in Alberta in as the first one over zoom in October last year. I’ve been September in the fall. And they I heard a lot of really challenging stories that people are going through. And I guess on the side on the sidebar, I will understand believe that everyone should have a roof over their head. I believe that’s right, that you had your basic needs need to be covered food, water, air shelter, 100%. But when people define affordable housing is perhaps, you know, what does that really mean? And so does that mean it’s a 2500 square foot two story house with walk in ensuite bathrooms, you know, propane hookup on the deck with a hot water hot tub? Does that mean it’s only a you know, two bedroom condo? Or maybe it’s a batch or a studio apartment where there’s no bedroom? Or is it a bed down to local shelter with shared amenities like, and we haven’t even gotten to the plateau for the hundreds of 1000s of needs in the healthcare side. And we’re talking about society, which means everyone and just look at how many unique needs there are out there. It’s, um, the word affordable housing is unfortunately used a lot. And like I said before, it means different things to different people. And there’s a bit of an expectation that affordable housing should probably be, perhaps when these more expensive types of housing, which doesn’t quite work. But I mean, I’m a huge proponent and supporter of making sure everyone’s got a place to sleep at night. Because if you get your basic needs covered, then you can really excel through, you know, Maslow’s pyramid of needs, where it’s got physiological at the base layer, and then as you get up, you can do more you can get more intellectual and contribute back to society. Everyone needs that basically are covered and I believe that that’s everyone’s right to have that. The challenge is is now where do we draw the line? Can we draw the line but I listened to a really interesting podcast. It’s called The Future of it’s run by ATB financial, which is the Crown Corporation in Alberta. Credit Union. I don’t know if it’s still crown, I think stolen by the government. Anyways, Todd hearse is one of them. Is it their senior columnist? Okay, good. You know his To host and it was my number. And he had an awesome guest on and I’m forgetting, I think his first name was Richard, I can’t remember his last name. But Richard ran the this foundation, the end homelessness, and he started Alberta, but now he’s doing Canada wide. And they talked about the story where in Manhattan technically ended homelessness. And he define homelessness as less than three people living on the street for over a period of I think it’s like two weeks or a week, don’t quote me on the exact definition, but something like that. And what they did, they had treated almost this like it was a natural disaster that had a they had a pop up emergency kind of control centre. And what they were doing was they were trying to get as close to real time data points on every individual living on the street, their unique mental and health care. And if they had any unique needs, which unfortunately, people that fall into that segment typically have, you know, special or pre existing health conditions and mental challenges that require additional care and support requirements. And so what they are doing is by aggregating in near real time, many data points on individuals that are in homelessness, they’re starting to see trends that they could craft solutions to find ways to get these people off the street permanently. And they said, and this totally makes sense. And I have to say, Great, there’s someone that is living homelessness that bought dances, with the police and with hospitals, costs the taxpayers more than money and resources they tie up, then paying 30,000 Like it was in the hundreds and hundreds of 1000s.

Erwin  

So putting these people in the hospital, then really expensive. Yeah, so it’s

MacKenzie  

funny in a permanent solution with government money for these high needy individuals that have complex health and mental challenges, give them a better quality life. And they actually end up causing costing the taxpayers a whole lot less. But he said, Richard said that they you know, part of the strategy is you have to have data in near real time. And you need enough of it to paint a really good picture of this person’s needs to architect that solution that they need, because everyone, there’s just so many unique needs and housing needs that come up accordingly with it. So and I guess the one thing to take away, he’s like, Well, and the other thing, too, it shouldn’t be on the private individual to, to wear this burden. And I would have to say I agree with that, because my sister’s a nurse, and I see what she’s taken to learn all that and, and she’s a general LPN, let alone an RN, or someone that specialises in the 10s of 1000s of unique healthcare needs out there. You can’t expect an individual to provide that kind of care in a private rental residence. But society is kind of pushing that way. And some of the public policy is more forgiving, unfortunately, than actually doing good in the end. Whether or not they’re sorry, I got off my soapbox, you’d let me get on top of that one. And it’s a I get going and rant a bit. Yeah. And the story

Erwin  

is new to me. I googled it if I’m on CBC, and most people hate the CBC, but at least report. At least they report the news on this article. But yeah, I can’t wait to dig into it.

MacKenzie  

Yeah, dig into it, unfortunately. So that was in the summer. Last year, they solved it. And then I heard another article came out in the fall saying that

Erwin  

was October dated October 3, this article, they

MacKenzie  

now have a homeless problem again, but I mean, the fact that it’s so minimal for a decent sized Canadian city, they’re doing something right. So super cool stuff.

Erwin  

It looks like it got higher after anything I’ll dig into anyways. Yeah, fascinating, fascinating subject. If this applies to real estate investing before the ignorant Ontarian Can you explain to me we’re friends, Mackenzie, I can’t fly to Calgary. I say hey, Mackenzie, I want to buy myself a property. What what what should I get into?

MacKenzie  

Well, it depends like, what’s your needs? Like? What’s your risk tolerance? What’s your duration of hold period? And yeah, okay.

Erwin  

This for me by for 10 years. Okay. Sure. Like if revisions do not scare me at all, I should prefer to renovate.

MacKenzie  

Okay. Well, right now in Calgary. Speaking of times, we’re speaking early 2023 In January, to the end of this year, and I forget exactly what it is the city of Calgary extended their programme to Godfather or give you NSC to get a legal suite built up to there’s two standards one’s a lot less in terms of cost and really what you need there’s the building code and fire code, I always get them mixed up. But right now instead of going to the more stringent standard, they will grant God farther you and allow you to qualify at the lower standard which will save you a tonne of money. So the big takeaways are if you don’t have to put a secondary heat source in which if your drywall and ran ductwork and put a second first and that’s already 10s of 1000s of dollars that’s

Erwin  

your standard code is secondary furnace. So you so if you’re doing a full two code duplex as yet you have to have two furnaces.

MacKenzie  

Yep, separate heat. sources for each rental fully self contained. Interconnected smoke alarms proper size egress windows for fire fire fire to enter the property with a Scotty air pack on their back. And there’s a few other things too and then parking requirements and so on so forth but, but right now it’s

Erwin  

okay, so for a permitted legal basement apartment suite I need how much parking

MacKenzie  

do I need in Calgary? Typically, it’s I haven’t looked at this over two years. It’s I think it’s to two spots upstairs. And an additional spot downstairs.

Erwin  

Totally hanging.

MacKenzie  

Yeah, I have to be on the lot itself. Now. I think that’s relaxed a bit because that’s when I first started because now they added into the fold last year as well. So here’s another diamond in the rough semi detached dwellings can now get their suites legalised

Erwin  

nice nice and Hamilton this did away with all parking and parking here.

MacKenzie  

Oh, man, that’s way better. Yeah,

Erwin  

that’s that’s good. We have one winner.

MacKenzie  

Yeah, there you go. I think it’s far less too but yeah, that’s kind of our sad

Erwin  

two furnaces. Do you need to cooling sir sources?

MacKenzie  

Well, AC is optional, right? I mean, no, you don’t need to cooling but it has to have proper ventilation. So if you do baseboard heats, then you need a HRV or air air recovery ventilation unit or whatever it is. Here really, yeah. So if you’re doing net new this is what you get, including the bill your built your that’s a lot of money to put in to put on the RV. That’s why there’s a great opportunity right now if you can buy the right property, it has good bones, you know if if it’s got the right size of Windows, if you’ve got the power panel and a common area, and a common access area, instead of sitting in the bedroom in the basement suite, you can access ideally, you can access the utility room without going in the basement suite. You can find good layouts like that and the way they qualify and I forget the exact copy I want to say it’s like March 2017 or 2018 Wherever the cut off the end. Can you go to city calgary.ca final the exact information

Erwin  

we are not fire inspectors nor building Jordans. Please go Calgary, Calgary. exact details.

MacKenzie  

Yeah. But we’re trying to catch up to Edmonton Edmonton has been ahead of us on the legal suite page, or move in either decade at this and in terms of their like bylaws. And they did blanketed secondary suites across the whole city, long as you just met these minimum requirements, parking, needs, sources, whatever, you can do it all. And it’s awesome. So we’re trying to get there to

Erwin  

get started because it just surprise you. They’re at a friend of mine who lives in Hamilton invest in Edmonton. He actually mentioned to me it took him about five months to rent out his basement in Edmonton. So that’s a massive win for So Ashley started to give context. I believe he rented for well under $1,000 for a brand new two bedroom, basement apartment just outside the city of Edmonton. My point being is what you’re saying like it’s Edmonton has done a great job with their basement apartment bylaws and zoning enforcement all sorts of things. Yeah. Which is wonderful for the tenants, not so great first landlords.

MacKenzie  

So let me give you context on that. And that’s I’ve talked about this, and this is going back to legislation and rent controls and all that stuff. So you’re across Canada, it’s by province, that legislation that governments or industry, in Alberta with the most balanced jurisdiction, we don’t have any rent controls in the sense that you can’t raise rent more, more than once every 365 days. But you can raise it to wherever you want. Now, I’ll set up the caveat, if you do a very predatory rent increase, and you go into the RTR TDRS, which is our lower form of tribunal for mediation, or you go to the courts, they’ll throw that out, like if you go call 1000 bucks, just arbitrarily speaking, you double to 2000 or 1800. And you’re well above market rates, they’re gonna, they’re gonna throw that out. But I mean, within reason, whatever current market rates are for your

Erwin  

product, doesn’t they’re gonna say you can’t do that. Yes.

MacKenzie  

So So yes, on the legislation on paper, we you can raise rent to technically anything you want. In reality, it’s got to be within reason with what the current market rates are, which 99% of people that’s fine. But there’s I’ve seen cases that read the results of of hearings where they’ve thrown that kind of stuff out. And so I mean, so we’re, I wanted to paint this picture is, you see rent controls in Ontario and BC, where I’m sure you’ve had these conversations, lots on how they actually artificially push, push rents up because it part of the problem too, with rent controls is is also in both BC and in your guys’s province in Ontario, when a tenant moves in, they don’t have to move on until they actually have to, they want to move out. Were in Alberta, each party if it’s a fixed term, it is a fixed term, meaning that when that term is over, that lease is done, they have to move out. And I think that’s a huge kind of component to it. But let me get back to the story. So we got well balanced legislation. And then I looked at the rents last year, and I saw this was super interesting. And this is my kind of my prediction or my reading. And what I’m seeing is rents went up across the country everywhere because of inflation, right? We’re dealing with inflationary period that we’re in all the trends without Between two major cities of all the major cities in Canada, you know, only one city was substantially lower than everybody else. Now, why would that be? And I’ll give you one guess it’s an Alberta and it’s either Edmonton or Calgary, which do you think has lower rents?

Erwin  

Edmonton actually had really low rents as well for free period of time? No.

MacKenzie  

Yeah, no, but so when our rents went up last year and started Edmonton, I’d say I’m to basically stay at at the rate of inflation. That’s what they increased by. We almost doubled them for where our average rates rent rates were. And the reason why is a restriction on supply. Edmonton had their that are getting their decade ahead. They had their blanketed wide legal secondary suite, and they had a more affordable housing. So really, the supply has always been very well bounced in that city. And it hasn’t risen sharply. It has here in Calgary, where we’re having a challenge meeting supply needs. So what I wanted to highlight there, though, is because we had the best legislation in the country on a provincial standard, that allows more people wanting to participate in take, participate in that transaction, we got more people coming in to supply the market, as demand was going up to need it, which is great. That’s what you want to get to keep prints competitive. And then you’ve got the next restriction that’s gonna go going on for the provincial level is access and zoning hot, where can I build supply? How easy can I build supply and hands down Edmonton is Wall Pass Calgary for that, what they’ve done with their bylaws, and zoning and secondary suites and all that. So they’ve had a huge amount of supply, they have knowing that supply, a lot of that supply is very entry level very, again, talking about we talked earlier about affordable housing, the basement suites, all those kinds of things where they’re just typically less desirable that they come in and lower rent. And so I mean, if all things being equal CALGreen, Hampton should had a very similar increase in their rents from an economical perspective. But because of those things we just talked about, they are able to meet their own demands, and their rent said a lot more stable and only increase what inflation was going, where everyone’s experiencing with interest rates, mortgages, increase in insurance and so on and other costs that drive drive rents.

Erwin  

That’s good news for buyers and tenants? No, that’s not what I want to hear as a investor, investor owner as an existing investor owner.

MacKenzie  

Yeah. But it’s still a good thing because your cost in terms

Erwin  

of Edmonton, like from what you’re telling me, I’d rather own an investor, right, as a business operator by product, I want to be in short supply. Just like Apple, right, they’re always sold out of stuff.

MacKenzie  

I’d rather just have stable, ongoing slow growing rents, but you know what Don Campbell’s always preached, I’d be okay to empty because then your cost to get into products is also a lot cheaper, a lot cheaper, whereas we have older Bylaw and zoning and building code that you have to adhere to at a lot higher cost point to get in. So it depends. I mean, depends your buying power and what your numbers aren’t. Well, that looks right, right. It’s not it’s

Erwin  

not too bad. Yes. Yeah. Different price point. Different budgets.

MacKenzie  

Yeah. And you know what, but you look at the growth there. Their appreciation is very modelled very similar to to Calgary. And it really is the major cities in Alberta. And I liked the two major cities in the sense that were more of a balanced market when you compare the roller coasters of a single industry, small city or town in Alberta. So I’m talking about oil driven Grand Prairie, Fort McMurray, things like that, like when they make money and things are booming. They spike it’s a roller coaster up and then just as fast as you go up, you’ll come down. You tie into a major city like Calgary, Edmonton, and we’ve got post secondary agriculture in multiple industries driving the local needs of the housing stock. So if one industry takes a kick in and is going down, you might have a bit of a decrease in supply or rent, but you’re not riding the roller coaster of a single driven industry around or city.

Erwin  

Jared hope is a past guest of the show. He shared that you’ve never go outside Edmonton again. You wouldn’t have as an he wouldn’t go to a small town Alberta again, because I think a lot of people got whacked and they have like Fort McMurray, for example. So I want to continue with this Calgary grandfather suite example for listeners benefit at least here in Ontario, there’s so little you have to do if your units grandfathered, for example. My information is outdated. Please go to your fire department and ask for them, ask them how the laws are enforced. But when I attended a presentation from the Hamilton fire inspector, he gave a presentation to realtors. So for we understand fire code from legal nonconforming property, and at the time, it was very simple. We didn’t have to change separation between units. We didn’t do anything like that was grandfathered. The requirements were so little actually no fire escapes that was required. But for duplexes, typically there’s no fire escape. It’s just egress. The big thing really was it was really simple as an ESA natural Safety Authority certificate on your house. That was like the only not even difficult thing I needed to grant for fire code compliance for a Legal non conforming apartment

MacKenzie  

typically, with the fire department come by inspect a property give you this ESA

Erwin  

lets electricians do it. Okay. That’s again, that’s this presentation was like five years ago. Yeah, all my apartments all my apartments or permits, so I don’t do that I won’t go through that stuff anymore. But like what you’re saying is, yeah, yeah not have to put in an H vac system or an ARV system.

MacKenzie  

It’s also to get grandfathered, there has to be pre existing prior to March of, again, I check your numbers as well, I think it’s 2017 or 2018. I can’t remember. And to prove that the way they’re doing them. So here’s some pro tips. You look at expired listings, dimensioned by the law suite or legal suite, you look at their products using the basement suite when they’re the manufacturer dates on pvc piping in the back of drywall, to give you a rough idea of when that suite was built. And if you could find some documentation, that’s how you could qualify for this grandfather programme. And yeah, it’s absolutely huge, because if you’re trying to legalise a basement suite after the fact, it’s pre existing, you’re probably just better off to buy an undeveloped basement suite wherever the undeveloped basement where everything’s open, and start from scratch. Because you’re ripping up drywall, you’re running ductwork, you’re printing a second furnace, and you’re separated from the upstairs ductwork. During your cold air returns. It’s a tonne of money,

Erwin  

your architect fees permits vacancy during the construction period. Yeah, this is a great pro tip Mackenzie. Yeah. 100%.

MacKenzie  

And I haven’t done it in a while. Yeah, so I mean, that’s the diamond the rough right now and in categories that if you can find some of these properties, and then they added in semi detached only licensee only and it’s drink COVID Or just before COVID Man Time flies. But yeah, so I mean, that’s the other opportunity right now too. So there’s a lot Yeah, well property to get in and do it right. So I mean, the big takeaway is that your properties have to have is proper size, egress windows in every bedroom, and you’re connected smoke detectors. However, you can do that to be hardwired for power. There’s a set out there that works they talk on their own proprietary wireless network that will interconnect between the upstairs and downstairs suite get to have a fire separation between floors. So that can either be done by drywall and proper button taken I think has to be five eighths to protect drywall. Again, check your local bylaws or get to put a fire sprinkler in to the basement in the utility room where you can’t really reasonably separated with drywall because it’s just the you know, the shapes of pipes and all that stuff and it’s a very challenging space to drywall out.

Erwin  

So my favourite, it’s much cheaper than having to drywall and also

MacKenzie  

messy it’s one afternoons visit for three to four hours I plugged it in and then you get your certificate.

Erwin  

So just for just for the listeners benefit if you drywall, then that means anything behind the drywall, you can no longer access as well. So if you need to do any more maintenance repairs, let’s all drywall it off. It’s not good.

MacKenzie  

Which is like right up beside the ductwork on your furnace, AC, it’s just not a very good solution. And then

Erwin  

it gets more expensive, the versus the sprinkler head 100% It’s probably

MacKenzie  

three 3x more expensive. The other takeaway night is you need to have at least three quarter inch water feed off the main some homes in Calgary are only fed by a half inch. So like you hoped. You can’t you can’t build it see why not? That’s a big, expensive kachel is making sure that water line that you tied into is fed by three quarter inch feed.

Erwin  

Sorry, and will previous owner affidavit work to prove the unit existed for grandfathering. I wouldn’t see why not. I haven’t tried it personally, the ones I bought had expired listings going back to the early 2000s and 2010s. Just in Ontario, our government usually wants a bit more that was preferred over what was in the listing or versus even what’s what the property is taxed as. Yes. Yeah. And like the way the for the listeners benefit. every jurisdiction is different. So municipal, we’re talking to local level. So like, local enforces, so base offence by

MacKenzie  

law. Right. You know, so I mean, coming back to. Exactly. So. Yeah, I mean, yeah, I mean, and like just to kind of like I really want to I want to wrap up this kind of like journey because I think it’s I’ve taken that as you said, every time you talk to an investor, they take something very, very unique. So I pivoted I haven’t bought more properties. I did try to do the fundraising the JV thing I felt that was super challenging and awkward kind of talking about the money, but I’m good at tech and can’t build and process so so I started a company with two other guys we did meetups local meetups monthly, and we’re trying to build education and a bunch of other things. We realised quickly all great individuals, we just had very different ways of executing the business plan and we didn’t agrees we went our separate ways. So after that point, I started a YouTube channel and I think even till today, I’m still the only one had a YouTube channel called find great tenants as the only YouTube channel dedicated to finding intense because I knew how important that was. And this is about the same time I had that conversation with At rain Diamond Award winner, and I found out that I was doing things differently. So one thing led to another, I built a bunch of videos on YouTube, and style called girdle on our community, folks, if you want to look and find on YouTube, that I joined a Facebook group, I shared one of my tip videos, and I got kicked out within like six hours before I woke up, I was out of the group. And that’s actually the group that I run now. So fortunate enough that the gentleman was right at the time. Chris noble saw value I posted, he went and messaged me and we had a phone call I got in the week later. And then two weeks later, I said, Hey, Chris, let’s have a talk show about landlording. Because there’s just so many nuances in the business. And later that yours is 2020. In the summer, he gave me the group again, getting full control. And that was I was completely grateful for that. And then so I did that on the side. And I tried. I built a couple of courses and sold some here and there just only on tenant screening because that’s what I knew very, very well and some other kind of tech related daily operational stuff. And then Okay, on that. Then this summer, I tried launched in a paid membership, and I crashed and burn. I think they got tough skin because people were very, very willing to share their comments generally

Erwin  

good and bad. And someone tried to monetize that group.

MacKenzie  

Yeah, I tried it. I wanted to provide more value I wanted to so here’s what I have. I tried offering a paid membership, kind of like the rain model, but more just landlording because there’s a tonne of investing groups out there. I mean, you guys have got Welltok are you looking at every every major city or province there’s a dozen investing groups, because investing is cool, it’s sexy. But when you talk about alone, and we’re like the ugly, ugly stepchild, the black sheep in the room where no one wants to talk about landlording

Erwin  

operations, that’s someone else’s job. Legionaries here,

MacKenzie  

toilets isn’t broken toilets. And tenants complained at two in the morning, I want nothing of that. So. So I focused on that I was like, if I can figure out this and make this pinpoint easier for people to have something figured out. Then so. So we got some sponsors that came in in the Facebook group and actually single view was my first sponsor, I was a huge advocate of them, they get really good, comprehensive reports when when picking that tenant. And I’ve always said, tenant selection, most of your work is done up front, like 90% of it. If you find the right tenant, you do your proper due diligence, check your checks and stuff, and they’re a good fit, then the rest of the that 10 seat until they move out is generally really smooth sailing, other than just keeping maintenance and repairs up on the property. But man, if you pick that wrong person, and you got that perfect property, beside the GO train, downtown Toronto, whatever, it could add everything you need to really easily read up, if you put the tenant in, it doesn’t pay, you’re still making $0 a month, you’re losing money, you’re going through stress, and you’re probably not gonna stick around this game, because it’s a very uncomfortable, stressful ride to fix those kind of problems. So it’s absolutely critical to get the right tenant in the beginning.

Erwin  

So then the follow on question is, you’re a big fan of single key. And then how did you join single key?

MacKenzie  

Yeah, so I have been trying to provide provide additional value with the space

Erwin  

that we should probably explain what single key does get. And it might even help you tell me again, that you’re in person from from looking outside looking in. So for example, a lot of my community is familiar with neighbourly right? And now, are you wondering the same.

MacKenzie  

There’s so much that happened last year, we acquired neighbourly in the fall. So neighbourly is single key.

Erwin  

Name going forward. A single key, though, is single,

MacKenzie  

we combined it into a single key brand. So I think our competitive firms our claim to fame that really helped me as an as an investor was, we have an online application that is tenant driven, meaning they fill out all the information, because previously to do a proper credit check to get all the information you need to make an informed decision. And I can talk about how to read a credit report because there’s a lots of mistakes and, and myths and assumptions that I want to be clear on that that that’s, that’s an entire conversation on its own. But the silky gave the ability for tense to fill in that information, because previously for use on LinkedIn verification services, or some of these other places, you’d have to go and punch all the information in. And then you basically pay 20 or $30 for the click. And hopefully, you’ll make a typo, or you’re trying to read the print. I mean, at this time, I was still still doing paper applications and reading people’s printing. And I would blow 25 bucks on a click because but he didn’t spell his name right or change his birthdate or whatever. But now they have to input their information online. It’s clean, you got a very comprehensive PDF. And the difference to that the credit portion of our report is on the typical person’s like five to seven pages. And you see all their financial history that trade lines and this is a were, you know, the credit score itself is great as a starting point is a quick kind of test. But it’s only an instant snapshot in time, it does not give you an idea of how they’ve been a stewardship of their finances. So if you’ve got something that’s gone through a major life event, like a divorce or a job loss, and their credit score is not the best, or it’s questionable, you’ll see that when you look through the financial history, because you’ll see a bunch of missed payments and the 3069 day buckets, laid buckets, any narrower or negative within like a three to six month timeframe. But if you see someone that’s got genuinely late payments across the board, like a checkerboard pattern from day one to now or five years, they’re just generally not very good at managing their finances. That’s the people you want to stay with. But you get someone that’s got a lower credit score, but have been very good up to a certain point in the life. And there’s a very valid reason with a good job loss for divorce. And that explains why they’ve had a rough patch. But previously before that didn’t good. That’s a great person to get into your rental property, they’ll probably be very thankful and have even a long term tenant because you’ve given the chance. So that’s why you can’t just take a credit score on the face value.

Erwin  

That’s a mouthful.

MacKenzie  

It was I do talk a lot. Let’s give you a breath here.

Erwin  

Yeah. Appreciate this service as well. I find especially the younger generation is completely open to this. Yeah, yeah. Which is actually probably a screening thing.

MacKenzie  

There’s always a bit of a demographic out there that think credit checks are too invasive to rental property. Yeah, I want to rent to them. That’s fine and to use their own but we’re renting out six figure assets as collateral just like a bank does a personal line of credit, as a car dealership, or lease or sell your brand new car, we now are ya fitting $1 cell phone with the $200 plan a month or not even 100 on plan on Monday to Live plan, check checks. So we basically have given the mom and pop landlord the same tools of the trade, that other institutions that lend out high value assets used to qualify individuals, and rightfully so. And newer tenants actually, like a younger demographic of the people that have no problem isn’t simply appreciate because I as an individual don’t get or receive the sin number of the tenant, it’s all managed to the same grade security that online banks use to manage your online banking, we do the same thing at seal key to protect that personal information. So it’s actually treats the tenants a lot better, you’re not given a lot of your company information directly to the landlord. Now granted, we still we still see a lot of that, but things like the cin number aren’t shared with us. But you can still get the information across the qualify for the rental. So it’s a it’s a very smooth platform. It’s online, it takes like 10 minutes to fill out an application. And we’re bringing in and now we’ve got rent collection. So it’s pre authorised debit the same way you’d pay your utility bill have a checking account, we can collect rent for free up to three transactions a month. So if you’ve got three leases, do it for free through us. You don’t have to follow up with forgetful tax. free. It’s free right now. Yeah, it’s kind of like a lawsuit. It’s a way to get in and use our ecosystem. And then something I wish we had back in the day when I first started is a rent guarantee, which is it’s kind of like insurance, but essentially, as it sounds will guarantee your rent up to the first fall months or $60,000, whichever comes first, we’ll cover about $10,000 in tenant damage and vandalism. And should worst case be that you need to evict this individual have to go down that path will cover up to $1,500 in legal fees typically covers most evictions. And that same thing, and that’s yeah, I mean, this is my sales pitch guy. So what will stop the sales part from here but, and that’s either depending if you pay monthly or you pay annually, the premium, it’s either four and a half or 5% of the gross rent. But you know, I think it’s a really good product. If you’re brand new, you want to sleep at night and not be stressful and stay in this game for a long time. It’s a great must have product or if you are in a more higher risk jurisdiction like the BCS and the Ontario’s where there’s rent controls and the eviction time is crazy, like half a year or more. And if you sue me you don’t make any mistakes on all your paperwork and you execute perfectly on the eviction process. If you make any mistake, you just doubled from eight months to 16 months which I don’t know I don’t know how someone survives loan to mortgages, insurance everything utility bills and have tried to evict someone that in that kind of timeframe is just it’s not fair to anyone it’s not fair to the landlord and certainly not fair to the tents that they’re living in in a subpar unhealthy not to, you know, the provincial health regulations or property they have an unresponsive landlord it affects both parties negatively.

Erwin  

So it deserves highlighting rental guarantee covers 10k of damages 12 months of rent $1,500 for legal fees

MacKenzie  

or legal yet legal eviction costs and conviction costs. Yeah, the rent coverage is 60,000 or 12 months, whichever comes first. Yeah,

Erwin  

we’re selling I believe we have a discount for my clients, my clients. So apologies listeners, but McKenzie was tough negotiator. They will only offer a discount to my clients.

MacKenzie  

Yeah. And you’re one of our exclusive providers. So talk to her and he’s got a little bit different taken those numbers for you. I’ll let him do his marketing on that side. But he’s got a a discount offered on what we just talked about. So yes, for the

Erwin  

listeners benefit realtor definition customer is everyone basically, I talked to client is someone who’s actually signed a contract or agreement with me. It’s very clear line drawn the same who my client is. So another benefit of being my client. Okay, I’ll stop selling.

MacKenzie  

No, that’s good. Yeah. So like, I love how you asked. I mean, I mean, I’ve been trying to wrap up my entire podcast or my venture. But so then I tried this year, 2022 was a big year, I quit my tails job of nine years in a row, the focus on trying to offer a premium to your membership, and still maintain the free thing. And I was also trying to move the Facebook group off Facebook, because I’m on Facebook’s territory, it’s their thing. And I know at some point, it will change and I will lose access to the 4000 plus members that we’ve built up today. That’s one another reason to get off it. But anyways, I had my mistake here was when I tried launched it in July, I had offered I had simplified it, I only offered a premium membership for the intentional investor, the landlord, which was a minority, I call him like 35% of my of my membership is people like you, me that want to be in this game. Want to get multiple properties intentionally chosen to pick real estate as a, an investment vehicle. But I didn’t Oh, sorry, what

Erwin  

was the other what was the other 65% It’s an

MacKenzie  

accidental landlords, you know, life and circumstances are forced to rent out a property and they don’t even want to be there. They just they just need to know enough. They don’t make any major mistake, cost them a $10,000 eviction or more. And they just need to know what they need to know, to operate without spending more time. And they’re the majority of our group. So like the one off investor, yeah, the one off or, I mean, yeah, one door or they don’t like again, accidentally don’t even want to be there. I guess there’s two sub demographics. But so I launched the programme, I only had a premium tier and a premium offering. But then I made the mistake of telling people I want to move off Facebook and force that hand, and it blew up because that wasn’t serving the majority of the people’s needs. I only had the one property and I got a link in that I tell you so we kind of put a pause on that. And then at the same time about take away my free stuff. And then I came on board with TELUS are still key. A month later, I actually talked to a number of my sponsors in January, I said, Hey, like if I was to leave TELUS, would you guys hire me? And I had got favourable responses from from all of them. So I was like, Okay, it’s amazing. Yeah, it was it gave me the confidence to quit the job security of my day job that I had worked with really good people, but I hated the actual, like my daily responsibility. I just, you know, accounting, the clock kind of thing. And so did that. And so I tried to do my own entrepreneurial thing kind of crashed and burned, took some lessons away. I’m still working on making a 10 inch screen course, I’m coming back again, it’s take a little bit longer because I want to do it right. But again, I also have the issue of perfection over action. I’m trying to correct that as well. So that now we’re here. And then the other thing too is I got hit up in the media with the Edmonton journal in June in July, as well across a couple of articles, I would say, unfairly portraying the story that these Facebook groups were affecting people’s ability to rent homes by a Korean do not rent to lists and unfairly targeting individuals. I can speak to that to a whole nother segment. But yeah, anyways, we had made the decision years before I came on in 2020, not to maintain, I do not rent to this because there was no proper checks and balances in place for other people to get off these lists. But when I

Erwin  

Google reviews, Facebook reviews, there’s tonnes of checks and balances.

MacKenzie  

Right, right.

Erwin  

Listener that’s complete sarcasm.

MacKenzie  

Yes. Well in like, just to provide I’m gonna provide a little bit more context was so we had we had at that point in time in 2020. I think we had around 2000 members. And there’s a great database online called the Canadian rental housing index, I think it’s called I can I’ll share the link with with Ervin so you can put in the show notes after but it tells you that, you know, it tells you how many renting households are in each province. And at that time, there’s about 420,000 rental units in the house. This could be you know, one two bedrooms, one bedroom suites, two bedroom suites, a full house, a basement suite whenever main floor is just called renting households. Now, going back to our numbers, right we’re talking about earlier is roughly 67% of all the rental stocks hold like private monopod landlords. So if I take 420,000, I’m going to do this exercise because the big point here weren’t 20,000. I divide it or I only take 65% of that, because that’s to say that’s how much is because mom will probably take out the big multifamily players, that drops down to 273,000 rental units in Alberta. Now, on top of that, I know the average landlord in farms I’ve seen owns about two and a half doors, but divide that by two and a half doors. That’s 109,000, approximately landlords, private, individual landlords in Alberta, and I had less than 2000 landlords on my page. And I was being roasted in the media saying that I was taken away people’s ability to get affordable housing because they had been unfairly blacklisted. And we weren’t even doing that. So it’s actually to be truthful, up to 2020, we did have a list. And then on it came in, I had talked and I was bringing on sponsorship, I had some great conversation with some industry players, talk to some lawyers, and they highlighted the fallacies that the article talks about where there’s no checks and balances. And we totally agree with that. So we stopped doing that in 2020. But then in 2022, in June, July, I got put into this news article, like we were still doing it as of last week. And what this report found, she got into my Facebook group undetected for about a month. And some posts, there was a tag that you could click on to filter posts about people warning other landlords about really challenging tenants. And by the way, these are generally the worst of the worst, the bad apples of the group. Now, granted, it could be a couple of people that got caught in this list. I don’t know. Because again, there was no checks and balances. But we stopped maintain that list. But she said because I had this this filter that I wasn’t even where it was still there. That was allowing people to filter a list of posts in Facebook, she called that a list. And so she said that we’re still doing it. So we deleted her family once we realise we still had it. But yeah, she wouldn’t talk to us and I offered a hop on a recorded call like this, you can ask me anything. But it has to be recorded. Because I’m I want context because it’s so important to have context around quotes to not have been taken out of context. Anyways, yeah. So I learned a lot in that kind of brush with with mainstream media. And it just now like I always knew, like, you look at a story there’s, there’s always context missing to it. I knew that I’ve always not. But now, I probably really greatly underestimated how often that happens. So

Erwin  

pieces often are just taken out of context. Yeah. You said this back in 2004. You’re, you’re racist. We need to cancel you. Yeah. So anyway, lyrics, you’re obviously a racist.

MacKenzie  

I think we may had read a 400 people on the old list that got thrown out when I took over in 2020. And in a ways if, if I’m 2000 members, and there’s 109,000, landlords in Alberta have an average tune outdoors. We were not impacted the majority of society’s ability to get rentals not even close. Close.

Erwin  

Yeah, but the media wants know me. Yeah. Generate hate and trigger.

MacKenzie  

Yeah, no, it was good. It was a good way to. And I’ve always approached this too, like when we have conversations in the private Facebook group, or I do these conversations or the shop talks. I always spoke with the context of mine, that everyone these words spoken, we become public one day, or always will be public. So I want to speak in the same way that I would, in a private say into it was selling the same way if it’s really starting to media. So I think you got to approach it that way too. Because the relationship between tenants and landlords is mutually beneficial, I get we need. tenants and tenants need good quality landlords, they want a great place to call home, we need someone who’s willing to pay the rent to cover the cost to do this business of investment rentals. And the vast majority, I’d say 95% Are folks exactly like that? It will say 90%. The other 5% are folks that want to be like that, but they’re in financial trouble and they’re having trouble getting rentals. And then that last 5% are the bad apples that are the ones that cause the problems for everybody else that has these eight months waits at the LTV and on that same a core to a lesson learn. I read or I probably spent unhealthy amount of hours that following weeks when I got into the media, reading every form every Facebook group had posted that article I read every comment, just I wanted to get a sense and what I learned out of that was the majority of landlords and tenants were all in favour of a do not rent to list. They said if people are sticking it or being predatory and they’re attacking tenants or landlords and they’re bad, let’s ban them from the industry and kick them out or whatever. And it was that was the general consensus. I got a couple couple 1000 comments and I thought that was really interesting that and I think I totally actually kind of agree with that statement. To really solve this problem. We need to get rid of the slumlords and I use that word very sparingly and the professional tenants do They’re both damaging livelihoods. Either you ruin someone financially that took a decade or longer or century to build up a nest egg to retire on. And that can get destroyed overnight by by burning down a property or whatever right by completely ruining a rental property. And by the same accord tents deserve a great quality places to live. And there’s, there’s unfortunately, bad apples and there’s bad apples everywhere. And I’ve never not said that. There’s landlords that don’t are slum Lords that don’t provide all the necessities. People need for basic living standards. So there’s a really good podcast is by CBC I’m also not a huge fan. But this was investigative reporting. And it was called slum town is about this high profile criminal up in Edmonton that had a tonne of properties. He actually got murdered last year. So he’s, he’s no longer around. But the first episode I wanted to kind of pay attention to is this journalist I’m forgetting her name, which is I said that, but she did. She kind of highlight all these different jurisdictions around the world combine bad landlords, so it was talking about Scotland, Baltimore, and a couple of these places. And anyways, they’re banning landlords from owning properties that had a bad track record. So you know, they’re intentionally slumlords they had to get their properties commandeered, auctioned off, and then the proceeds would go towards combat in s’mores and maintain that. So I thought that was brilliant. I’m totally on favour of bringing legislation in that will remove landlords from the property to the point that they’ll lose the property and remove all that motivation to be cheap to just make money, that they can actually do it and actually get banned from owning properties in the city or province. And then the same side, if someone’s been predatory, and as a professional tender has a track record of destroying people’s livelihoods and properties. They should be flagged in an online database, just saying that same thing with the slumlord, and people should know about it, and just make it difficult for them to do the evils that they’re doing that they don’t participate anymore.

Erwin  

Essentially white collar crime. That’s their stealing. But quick question to single key screen for people who have been convicted of crimes?

MacKenzie  

It does, yeah, we have a online source that does over like, if there’s a huge number hundreds or 1000s of databases, but the caveat is I’m gonna start putting the picture here. While it does do big search, not all jurisdictions release criminal records, or they’re not all public or publicly available, that can be scanned online. So yes, we provide that. But I always say do your due diligence, you know, for example, in Alberta, for evictions from RT GRS, you have to go down to the local courthouse to do an in person search. So take out the grain of salt, but any any criminal convictions and things that are in our public records will appear that are available online will pick them up. When you

Erwin  

see a gap in someone’s income for like, the year the time they were incarcerated.

MacKenzie  

Yeah, well, I mean, it just goes back like going back to tents being up front is a form skip, you should be using. There’s very select questions you should be using. And one of the biggest tips I always give away people kind of look at me cockeyed. Like why that makes no sense. But I tell them ask the same questions. repeatedly. Ask them when your first contact on the phone call. Ask them during the viewing and ask them on the follow up call. If you ask it to centre questions three times you should have a very similar answer every time. If that’s changing, and the details are slightly moving. Well, chances are someone’s lying. And the folks that lie that try to get past you can’t keep their facts straight. And you’re gonna see red flags. And you can dive into that further. And I always tell people, right on the phone call, I do background and credit checks. I know we’ve been talking for a long time. This is gonna be like a two hour episode.

Erwin  

But I’m excited to have you back. Set to go through how to add a screen attendant and and probably a separate one on how to write your credit report.

MacKenzie  

Yes, 100%. Anyways, you ask these questions, and you want to make sure that the store is consistent. If it’s not red flags, dig into it further, you might be getting fed some inaccurate information. But lately,

Erwin  

we tend to thank you for so much for going over time. Again. I think we will rebook you for how to run a single key report, do tenant screen and probably a separate one completely on how to read report. That should be one. Yeah.

MacKenzie  

And I’m thrilled next week to have you on a podcast I’m launching. You’re going to be my initial binge launch series and my binge watching. We’re gonna do about five episodes. episodes on the launch here, February 1. Hopefully I can execute on that deadline because I have to relaunch and it’s for rent conversations, the better the rental industry. Thank you.

Erwin  

For listener all the links will be in the show notes as long as Mackenzie gets them to me by tomorrow. Since this, this pod episode drops. I

MacKenzie  

hope you’re right. On Monday. Yeah. And I will help you out and I’ll give you a bio and all that stuff, too. I read your sheet started the podcast. So

Erwin  

just like getting the forms wrong. Don’t trust me to write everything down correctly.

MacKenzie  

Absolutely. Let me let me know source all that information. And you guys can find me on LinkedIn, Mackenzie Wilson. I’m on Facebook as well. Arkansas, this Facebook group. My pleasure. And thank you so much for having me on your show,

Erwin  

I had to google it, fewer than 5% of people can possibly lie or pathologically. So, hence your advice to ask the question three times 95% of people cannot beat it.

MacKenzie  

Think of it this way, too, I think honest, people will lie. If you’ve got some of the really tough situation, perhaps someone fleeing domestic violence, or, you know, they have no money. They’re between jobs. And they normally wouldn’t, but under very challenging circumstances, they’ll change a bit of facts to look a little bit better to get the rental, would you? Unfortunately, I if I was in those situations, I would probably I probably fudge the facts. So I look I shine a degree or two better than what I normally do if I didn’t have that kind of pressure on me. Those people,

Erwin  

those people, just,

MacKenzie  

yeah, and so I mean, there’s that part two, exactly. I mean, I could go on forever, but essentially, they out there, they wouldn’t normally do it. They had all good intention. But if someone’s in a challenging enough adversity, you know, they gotta do what they gotta do to survive. And where can people get more information on single key single key.com complex? Is it appropriate to call it like formerly known as neighbourly is now

Erwin  

part of single key.

MacKenzie  

Accurate? Absolutely neighbourly is now a single key, we’re one in the same, so yeah, and if you guys are curious about checking Alberta, go check out the Alberta landlord community.ca. It’s a private forum, the moving towards from the Facebook, but there’s also on Facebook, the same name, you can find our Facebook group as well. Awesome. Thanks so much McKenzie.

Erwin  

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

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**Transcripts are auto-generated.

Erwin  

Hello and welcome to another episode of the investing show. My name is Erwin Seto the fourth time winning agent to investors hosted the podcast, which is this one, the number 81 podcast for iTunes and all business are focused on bringing you true experts masters of their craft. And we have a great guest for you today in real estate coach and educator Elizabeth Kelly. The term coach has been used very lightly these days. I see folks with one two properties, a 12 months experience. Some even with like longer experience, but they have like one property as a side hustle, and they call themselves coaches. Kelly has a bit more to her resume than that her own property management company manage hundreds of doors. Her own portfolio is very significant. She was a full time real estate investing educator every state Canada Having personally taught a couple 1000 investors including many of the influencers and coaches you see today on social media. Many of them offer products that they learn. For example, rental rental was a hot topic and rich, rich dad. You see today, several wholesalers and rent to own experts that Lizabeth personally taught today we touch on a couple subjects such as investment in real estate education, and some of the different options that are out there. And there’s more than ever. Some do offer better value than others. So we talk about that Elizabeth shares about her career as an investor journey to arrive at where he is today. His strategies when she started out back in 2008, very different than how she invests today. Her goals are different the markets different. I think it’s something that’s really important to investors today. As always, my intention for you my 17 listeners is for you to see how a professional investor investor is at different stages of their life lessons that you may learn so you may avoid mistakes and hopefully make even more money and we will offend many when we discuss what’s working and what’s not working. This may shock you many sad investments getting a lot of hype that will not work in 2023. Make sure you have listened before investing in any coaching or courses or even buying property. 2023 is going to be a fascinating year and here at Iowa State. We will be arming our community with the best information possible. We will be doing sharing the free webinar. We have one coming up soon how to sell a tenanted property for maximum return on January 8 17, followed by our Iowan in person networking meeting on Saturday morning, January 28. Tonight, Saturday morning, I think it’s 29th 28th written whichever it is the last Saturday of January. My team and I share our bold predictions for 2023 For our target investment markets. And we have a real estate investment trust in the house. Whereas propone of Equitana will be giving you a brand new presentation to explain how professionals buy apartment buildings, how they screen them, how they find them the numbers they need before even looking further into information. I know there’s a lot of courses and coaching that’s being offered out there. So here we’re giving it away for a very nominal fee from a very serious professional that yeah, and the second time they are a real estate investment trusts as in they are they’re also regulated on their Ontario Securities Commission. So these guys are legit. So learn how professional invest or at least learn how investing in a REIT works, including clash cash flowing from day one. If you’re on my email newsletter, then you already know how to register. If you don’t go silly. Join the 10,000 Plus hardworking Canadians already on our newsletter, you can go to www dot Koozai real estate investing.ca. Again, that’s www dot truth about real estate investing dossier. Enter your name and email and you will receive an email when we have events and new episodes of the show available. New to 2023 we will be producing a lot more free educational videos and podcasts. So if you have any suggestions or topics you’d like to see covered, please let us know. You’ll see again on our email newsletter, we’ll let you know we have new pieces of educational content available. We’re doing a lot more YouTube. Our YouTube channels also call it truth about real estate investing. So without further ado, it’s my pleasure to introduce you to you my friend was with Kelly. Hi Elizabeth. What’s keeping you busy these days?

Elizabeth  

Not too much. had a fantastic holidays. Lots of time quality time with the family enjoying the weather. How about you what’s going on with you?

Erwin  

Anymore holiday I’m actually we’re actually going on holiday next week. I think you know that right?

Elizabeth  

No, but tell me where are you going?

Erwin  

Just cruise. My daughter was sick before the holidays, so we weren’t able to fly. Gotcha. So we had to rebook everything for this coming week. Gotcha. Yeah, so I haven’t really completely decompressed yet from 2022.

Elizabeth  

Yeah, you had a crazy busy year, that wealth hacker conference was awesome. Thank you. I really enjoyed that.

Erwin  

Appreciate it. Yeah, we’ll do something similar. I mean, that we’ll talk about at lunch. Yeah, that’s some brainstorm ideas. Sounds good. Yeah. Our vision for 2023 is a bit more balance.

Elizabeth  

That’s a great vision to have. And I think there’s a lot of people who are in that same situation. I think, you know, the way we started 2022 In the beginning with you know, it was so hard to find properties and everybody was kind of buying, buying buying and then you know, the the steep decline started a couple of months in and I think people got to the end of the year. I think people are kind of worn out right now. And people are maybe a little uncertain about what’s coming and, you know, rethinking things. And it takes a lot, I think to admit that you know, the strategies or the things that you were doing or the way that you were thinking before, they’re not serving you anymore. So what does that new game plan look like? And I love that you’re, you know, one of the front runners in terms of, hey, we need to revisit what we’re doing because it’s not working for us.

Erwin  

Because for example, we’re going to talk about it is like, where your career like day job career, I don’t know what the term is, like your day job career, talk about admins, as well. And then just even what we’re seeing, I don’t think anyone expected the recession to come this quickly. And just like you’re saying in how the real estate market behaved, you know, like, beginning of the year, like no one can hire anyone. Yep. And now we’re seeing what was it Salesforce isn’t just announced 10%, layoffs and Amazon? Yeah, Amazon is 18% I believe it is. And having dinner with someone who works in a mid level pharma company, they’re gonna lose 30%. So jobs are one like we haven’t had jobs at this much risk. Since 2008, I think,

Elizabeth  

yeah. Here’s the interesting thing that when I was driving here this morning, I was listening to the radio, which I don’t do very often, because I’m not a big kind of listener of, you know, that kind of stuff. But what they said was that the number of jobs that were created in the last little while was much higher than they anticipated. So now they’re saying that’s probably going to lead to a larger interest rate hike, because obviously, inflation is not as much of a problem because of all these jobs that have been created. So it’s almost like this crazy, you know, on one side, we’re hearing all these companies and you know, layoffs and everything else. And then they’re like, Oh, what the actual stats, say this? And you kind of go like, where’s the balance? How do you know what to believe? And then at the end of the day, what you’re left with is, hey, these next interest rate hikes are going to be bigger.

Erwin  

I’m fascinated by this stuff. Yes. My thought is that like, how much job losses is enough? Because like, the US Fed notes were just released yesterday. And so people were poring through them. I’m not that detail oriented. So as read the news on them. And that was what this was what the meeting notes with Jerome Powell, and all the other staff, the US Federal Reserve, was that jobs are still too high. There hasn’t been enough losses yet. Oh, so they’re going to either have more raises or hold rates longer than they expect. Yeah. Right. Like, I can’t, I can’t believe that someone’s job, well above our pay grades to decide how many job losses is enough.

Elizabeth  

And at the end of the day, those are really people there’s a families that we’re talking about. And that to me really speaks to why I could never be an employee again. You know why I could never I mean, it’s one of the many reasons why I’d never want to be an employee again. But literally, I could be doing an outstanding job, I could be amazing at what I do. And my livelihood is still dependent on somebody else’s decision, somebody else’s whim or what the numbers say,

Erwin  

I have this friend who’s a C level executive, for a big company. So they have like board meetings and stuff, whatnot. So I’m trying to plan vacation around their schedule is really difficult. Right? For example, we looked at cruising for a certain date. So to have a cruise that worked for their schedule, cost 50%, more than the week after. Wow. As a group, we’re like, I don’t think any of us are willing to pay an extra $2,000. We love

Elizabeth  

you on all but we’d love you just to have your company. The rest of us are paying for it. Yeah, exactly.

Erwin  

So same thing why lofts investors are investors is to be free of these sorts of whatever on our time, like loss of control of our time. Yeah, I have a family member who’s in government, federal government in Ottawa. And they were just recently announced they’re required to be back in the office two to three days a week. It was actually funny conversation because she was like, Aki believe it. And like, so my question was, what was it before the pandemic? Oh, we just mean the office five days a week. Like, oh, so you went from five days a week, two to three days a week? That’s pretty good. Yeah. The world does not last, at the end of the world.

Elizabeth  

No, but I mean, I suspect you and I were talking earlier, you know, the idea of going back and working for someone else and having to be sitting, you know, at your desk in the office for 9am Every day. For a lot of us as real estate investors. That’s not something that we value or that we want to write.

Erwin  

Right. Something I want to cover was you and I are real estate investors. But we also both have day jobs. Is that the right term? would you what would you call it?

Elizabeth  

See I don’t think as a coach, I don’t do it because it’s a job I do it because I love it.

Erwin  

Okay, you have a career

Elizabeth  

it’s my like, passion project. It’s something that I never get as much fulfilment from achieving my own goals and doing my own things as I do from helping other people achieve theirs and to know that that ripple effect of you know someone doing their first deal or someone that You know, securing a property that’s going to provide good cash flow and get them one step closer to leave their to leaving their job. That makes me way more excited than anything I could do for myself.

Erwin  

Do you want to preface that by saying, not everyone can do that? I don’t know you’re in a special position. Yeah.

Elizabeth  

I don’t know that. I would say not everyone could do it. I think theoretically,

Erwin  

specific, specific to what you do. Oh, yes.

Elizabeth  

Okay. Yeah, that that makes sense. Because one

Erwin  

thing I don’t like, and you and I both agree on this policy is putting putting words in your mouth is like, what that’s being sold out there. Like all these marketing things, like quit your job. Pursue your passion. You never know, working on a day in your life type thing. Yeah, right. Okay. So then the example I often give is like restaurants and gym owners, they may love it. Those are the two businesses that banks don’t lend to. for a reason. Yeah, she’s at the highest default rate. Yeah, or the highest failure rate. So yes, you can work in your passion, you may not ever be able to stop working your passion. Yeah, you can work stop working your passion, because you have your portfolio. Yeah. But

Elizabeth  

honestly, my portfolio gave me the ability to follow my passion. It’s not like I follow my passion because of like, Do you know what I mean? Like, my passion is what makes me really happy. My portfolio was like my fallback. And no matter what I was doing real estate helped me build my net worth to the point where I did have the freedom to choose what you know how and what I wanted to do. And I had some health challenges in 2022, they were unexpected. And my passion gave me the ability to be flexible, so that, you know, there were times where I was, you know, spending more time in bed than I had thought or I was, you know, I had a couple of surgeries that I was recovering from, and none of this was expected or planned. It wasn’t like I started the year and said, I’m gonna go on a health journey. But it also gave me the money to hire the professionals to help me recover quickly. And it gave me the ability to hire people to support you know, a positive mindset and all those other pieces that go into it. It’s not just your physical recovery, it’s your mental recovery, because you go through life, and you just kind of assume that your body is going to be there for you and your mind is going to be there for you. And then you reach this point in kind of middle age where you go, you know, this stuff isn’t forever.

Erwin  

Aren’t you younger than me?

Elizabeth  

I don’t know how old you are. We won’t get into it. Middle Age, like the 40s middle age, because most of us are gonna live to be 80 to 90 No, we’re

Erwin  

living to 105 Okay, tofu for lunch, fantastic genetics,

Elizabeth  

and you take good care of yourself. That’s awesome. The general population what is the average age like 84? Something like that? Is the average lifespan.

Erwin  

We is midlife crisis, like now, which for us that?

Elizabeth  

Well, I wouldn’t say I’m in a midlife crisis. I say that.

Erwin  

You said midlife. But yeah, no. But like so then like if we’re going to have a crisis would be nourished? Yeah.

Elizabeth  

I mean, we’re going we’re a long way from real estate now. But I think it’s very common for people in their 40s to, you know, you wake up in the morning, and you don’t jump out of bed anymore. Like, you know, your knee hurts or your back hurts, or this hurts, you know, and you don’t have the same energy that you did. So I think it’s very common for us to start thinking about what is the next half of my life look like? You know, because when I was younger, I didn’t know what I didn’t know. But now, and I’m assuming, you know, you have ageing parents as well. So, you know, we’re sort of confronted with this idea that, you know, this is what my parents are going through this is what they’re dealing with. This is the mortality, how am I going to plan and prepare so that I’m not living that? Because my husband and I, we don’t have kids? So we can’t say okay, well, our kids are going to take care of us. Because they’re not, we don’t have any. So we need to make sure we plan and prepare better so that we don’t, you know, end up dumped in a home somewhere. With no assets and no one to care for us. You

Erwin  

bring up a good point. Because when I speak to when I speak to an investor for the first time, often they they’re very novice, and they haven’t planned. Right. So now they’re looking for how to get to some sort of form of financial security, financial freedom, financial peace, product, unfinished piece versus me, I have been constantly planning.

Elizabeth  

But you’re you You always say that, you know, you’re a worrier, right and you have anxiety, so that planning piece goes with it. But there’s other people who are worriers and have anxiety, and they do what I call the ostrich manoeuvre, which is where they just stick their head in the sand and hope that everything’s going to work out. Government will take care of them. Yeah, but I think we all pretty much have a good idea at this point that we have to take care of ourselves. And quite honestly, I love that I have the power to do that. That the locus of control is within me and I don’t need to rely on anyone else. Okay,

Erwin  

so let’s get into the journey. How you got there? Yeah. What did you do for a living for real estate?

Elizabeth  

So I had a few different careers. I have a degree. I have a science degree in kinesiology. And then I don’t think I knew that. Well. I do very little with it unless somebody gets sick, and then I take a lot of attention. And then I have a post grad certificate in sport administration. So For a long time I did I worked for not for profits, and I did fundraising ran charity events, I worked for United Way and for the MS Society and that kind of stuff. And then I moved into I got my insurance licences and I worked for State Farm at the time. And I did home auto and life insurance. And then we had my husband and I built a portfolio. And he was finding it to be too much managing the properties we had and working full time. So we made the decision that that I left my job and I started managing the properties full time and grew the business. And then he left his job in, I think it was 2014 2012, or 2014. I can’t even remember at this point. But he left his job. And then we were both working full time in our property management company. I also got my mortgage licence. And I was working with investors to help them secure funding and private mortgages. And then my husband got sick in 2017. So I had to give up my mortgage licence and get right back into full time property management, then I was teaching for Rich Dad for eight years as well, because you started for teaching for Rich Dad, yeah, 2012, I taught three courses for them. And I loved it, I absolutely loved the opportunity to get out and meet with new investors and talk about their journey and help them plan their future. And then I saw how much a year later, two years later, the same students would come back and connect with me or they messaged me on Facebook. And they were struggling. And they sometimes they hadn’t even done one deal. They didn’t know where to begin, there was all this theoretical knowledge out there. And they didn’t know how to take the points or the parts that were most relevant to them, and work that into a plan that was going to help them achieve their goals. Always the gap between theory and application. Absolutely. And I think that’s one of the biggest challenges for new investors is that there’s so much information now,

Erwin  

like you could argue too much. Yeah. It’s really terrible.

Elizabeth  

And when you’re starting out, you don’t know what’s good advice. And what’s bad advice, right? Same as you don’t know, like, who can you trust? Or who should you put on your Power team? Because you learn some of those lessons the hard way.

Erwin  

And also just different, like your portfolio is extremely different than mine. Like it’s everyone’s values, goals, resources is totally different. Yeah. Right. And that’s one very specific and very custom I think everyone’s playing it should be very customed. To them.

Elizabeth  

Yes. And that’s one of the things I was talking to one of my clients on Wednesday about it actually was that because there’s so many opportunities, and there’s so much flexibility in real estate, that everybody’s journey is going to look different, but it makes it look the same. But that makes it that much harder to figure out, what should my journey look like. And when you don’t know what you don’t know, it’s really hard to sit down and say, Okay, I’m not making a decision on this property. Because I’m missing, you know, these pieces of information. So all I need to do is get these pieces of information, and then I’m going to be confident in making a decision to move forward. So you get some people who make decisions, because they just get so frustrated that they’re like, I just have to do something, you know, I set these goals, I have these numbers, and I just better do something because otherwise I’m a failure. And then you get these other people who are like, I’m so afraid of making a mistake and being a failure, that I just can’t make myself do something. That’d be like every day. But I don’t think that is you. I think that that’s maybe the way you see yourself, but I look at you and I don’t see that. But I see a lot of decisions made to get to where

Erwin  

you are, that’s mostly cherry.

Elizabeth  

But you have to agree, right? You guys are a team. And this is another challenge that a lot of investors have a lot of my investors that I coach our couples, because it’s very challenging to go from, you know, I have a job and you have a job. And we spend eight to 10 hours a day apart. And we need to come to a consensus on like, how to manage our household. And then all of a sudden to be like, Hey, we’re business partners. Now we need to have consensus on how we run our business and how our finances interact. And that’s a very different journey than Hey, I’m doing this by myself. And I’m the only one who I need to, to make happy,

Erwin  

short answer. It’s complicated. It’s always

Elizabeth  

complicated. Life is complicated. But it’s good. It’s beautiful.

Erwin  

So where did you start putting in real estate? Like, did you just start investing on your own? Or did you or in combination with taking courses or

Elizabeth  

so I met Emma in 2005. And he already had a couple of investment properties with his business partner. And the more we kind of talked and the more I saw what they’re doing, the more I wanted to be part of it. So I bought a couple of condos as my sort of first investment properties. And we were doing I mean, this was a long time ago, we were doing duplex conversions in new markets and, you know, buying single family homes and you know, doing rent to owns and those kinds of things. So in 2008 we started taking courses with Rich Dad, and yeah, it was actually because then we turned around and bought a whole bunch of buildings really quickly. And it was amazing, like some of the people that you know, we took our courses with and we connected with like Denise and Stuart McPherson. I mean, we’re still friends with them 15 years later and we met them at Rich Dad, you know, so yeah, some of the the networks that you build and the people that you meet are tremendously beneficial years in the future, even Michelle And might go check. I mean, I had some challenging days building a property management company, and Michelle was my go to phone call, like these people that you place in your network, these people that you continue to build relationships with, they can be absolutely essential to your growth.

Erwin  

That’s hilarious. I didn’t know. That’s how I knew Stewart and Denise because I met them through rain. Here from the other part, Rich Dad. Yeah, not that it matters.

Elizabeth  

No, it doesn’t matter. And, and quite frankly, I think that, you know, that’s part of one of the challenges for newer investors is like, where do you put your time and your money? How do you choose to educate yourself? How do you learn what you need to learn in order to, you know, be confident to make those decisions moving forward? You know, what kind of strategy do you want? You know, are you focusing on cash flow? Are you focusing on network, you know, all these critical decisions you need to make at the beginning? It’s like, I don’t know, it’s like, I would imagine the high school kids feel right now, you know, they’re, they’re a year younger than we were, they’re 17. And they have this tremendous weight on their shoulders, and they feel like they need to, you know, make this decision about what they’re going to do for the rest of their life. Like,

Erwin  

what did you go to school for business? Okay,

Elizabeth  

so you’re kind of doing what you thought, but clearly, I’m not doing anything in terms of my degree. And I was actually talking to my god daughter on New Year’s Eve. And I said to her, don’t be so afraid that you’re going to do something that you’re going to make a decision, and you’re going to end up not wanting to do it. Because sometimes doing something and figuring out the answer is no. gets you closer to Yes.

Erwin  

It’s often your best education. Absolutely. No, I must have been finished university. Yeah. All right. Michael Delvin. finish university.

Elizabeth  

Yeah, I mean, unless you’re something like an engineer, like my husband, or you know, you’re an accountant, like cherry, like, a lot of us who take these more general degrees don’t end up doing very much with them. Or we end up in a very specialised branch, where that’s when the experience comes in. And it’s way more useful than anything we did in university. I mean, I wrote a lot of psychology exams, I can’t remember most of what I learned

Erwin  

was like more options for education than ever, everywhere, formal post secondary courses being offered by real estate people. There’s never been this many options. Now, when I started out, I think there’s really only two, I didn’t know that Rich Dad was available for courses back then I joined rain. And like, really, they were like the really the only ones. And they weren’t even not based in Ontario,

Elizabeth  

I don’t see rain as sort of being in the same category as some of the other ones. Like you look at Rich Dad, and key spire and some of the other big ones. I mean, they’re, they’re all different. They’re all different. But a lot of the formulas are the same, like the process is the same, and the end goal is the same. So really, I think what you need to focus on is what is the quality of the information that’s delivered? You know, our need? Yeah. And if you’re someone who’s looking to really gain information, then your focus should be on who’s going to provide the greatest quality content, who’s going to teach me the most and less about, you know, are Is this a place to network? And I think that that’s one of the things is that there’s so much competing information coming at people now. It’s how do you make a decision about what’s the right thing for you,

Erwin  

is thinking about my own journey, and I’m cheap. So let’s start with that

Elizabeth  

frugal, the words frugal, and we’ll use both.

Erwin  

So I don’t poopoo on a certain organisation. I’ll use a timeshare sales thing and with the lever as an analogy, I remember cheering I sign up for this presentation. Yeah, I forget what we got for free. I think we got a free night or to it like up in Collingwood. Oh, I

Elizabeth  

think I went to the same one. Yeah.

Erwin  

So we saw the dog and pony the required pitch that you had to go through. And it all sounded wonderful. The salesperson who wasn’t really a salesperson. Yeah, but she was a she was a timeshare owner. She’s really just sharing her experience. Yeah. Lovely Lady, lovely lady. You never would have. She was a professional salesperson. Wonderful pitch. It all sounded wonderful. But cheering I went in with a plan. We’re not buying anything. Right. And like, wow, I was so tempted. Yeah. Because I want to do my due diligence afterwards. So then the other pitch, I said, no, they brought in the closer. I still said no, he got mad at me. Whatever. And we said we’re not buying anything today. Yeah. And then my first thing I did when we left the room got on my phone. I did GG I wanted to do gene check. Can I buy this timeshare from someone else secondhand? Yeah, and I quickly found out I could buy the exact same thing that they’re selling me for 10 at 20 cents on the dollar. Wow. Because their senior people who no longer wanted it. Yeah. So I get pie for pennies on the dollar privately and get the exact same thing. Yep. But then you think about all the people who signed on the spot? Yeah. Was it doing the basic due diligence? Yep. And I see the same with these courses and networks and memberships. Right? The analogy I give is often you know, it’s talking to someone. Some of these membership groups are like $30,000 And like, Okay, do some comparison shopping. What do I get for $30,000? Versus I can hire a one on one coach for usually a third the cost somewhere around a third? Yeah. 30 to 40% of like 30 to 40 cents on the dollar I can get Hmm, I really quality coach one on one?

Elizabeth  

Yeah, I think it’s about knowing, knowing who else is out there, like fully researching all of your options. And some people, you know, it is I mean, we were in, I think we sat in probably a similar room to you. And we had the same thing, my husband and I said, we’re not buying anything. And we had just taken our negotiations course with Rich Dad. So we literally sit and picked apart all the different negotiation tactics in there, we’re keeping notes, and then we went out afterwards for lunch. And we compared notes about what strategies did they use? But what are they good, they were relatively decent. They definitely weren’t professional sort of salespeople, but certainly they were, they were probably my estimation, they are probably realtors, something, you know, starting newer realtors, so they would make the commission on that that was my estimation. But I think it’s really hard for people who are starting out to have that critical thinking, it’s much more likely that we become emotional. And I think sometimes that’s where some of the bad decisions get made. You know, whether it’s looking at a deal, whether it’s looking at a partner, whether it’s looking at investment opportunity, is people get emotional. And I don’t want to in any way disparage I mean, if I hadn’t spent my time with Rich Dad and I invested double what you had quoted for my education at rich dad. But the way my husband and I looked at it was he hasn’t had an engineering degree, I had a science degree, we both invested money and time in this, if we were going to invest in our real estate education, then we just needed to make sure that we took action and made it happen, which we did. The challenge is when you invest that kind of money, and then you still don’t have the pieces that you need to move forward. And my husband is the personality type where he is supremely confident that no matter what happens, we’ll be able to figure it out. That is not to say that every deal we did made money that we never made a mistake that everything was roses and sunshine, it definitely wasn’t we learned some hard lessons. And we learned some expensive lessons. So you just need to be prepared for that. And recognise that, you know, sometimes you’re going to pay more if you go to a dealership than if you bought a car privately, because there’s overhead to pay for and there’s advertising to pay for. And there’s all those other things. So there could be other options out there that are not as as expensive, or that might be a better fit for you. But there is a I believe there’s a time and place for you know, group collaborations, group education, those kinds of things. Just do your research and know what you want and need.

Erwin  

Just exactly to your point. There’s so many options, and people need to know what’s right for them. Yes. So a lot of these programmes a lot of the more expensive programmes are meant for people who are going to go full time. Yes. All right. I think they all know, maybe 3% of the people that go through will be truly successful full time, maybe 3%. So then knowing that, it’s like when I went to, like when we’re having our first child cheering I went to these breathing classes at the hospital for like,

Elizabeth  

do you mean like Lamaze? Yeah, and no. birthing classes?

Erwin  

The objective was so that you could go through delivering the child? Yeah. Without taking pain medication.

Elizabeth  

Right. Okay.

Erwin  

So my first question was, how many people take the epidural? Yeah, impossible nurse at 80%. Like, okay, we’re gonna do this, we’ll just do that.

Elizabeth  

And then you look at it now, when fully a third of births are C sections. So I mean, it’s not even as much of a factor at that point, like you don’t have a choice in the matter.

Erwin  

My point is, if you go in knowing you have a 97% chance of not leaving everything that you’re never going to teach there. Maybe it’s not for you.

Elizabeth  

Yeah, that’s an interesting point. I hadn’t thought of it like that.

Erwin  

Because generally, my clientele is all side hustlers. Right? They’re looking to build like a portfolio of like, one to 10 properties, and keep their job. They like their job. And so do they need all of that? I don’t think so. Personally, the challenge

Elizabeth  

I have, with some of the sort of bigger education programmes is it almost feels like you come up with kind of just enough to be dangerous. So you have, you have, you know, a lot of theoretical information. But again, it takes us back to where we started today, which is, how do you take all that theoretical information and shape it into a plan that makes sense for you, that’s going to enable you to achieve your goals in the shortest amount of time possible. And it still doesn’t give you all the people that you need to know and all the information that you need to have in order to make decisions and those kinds of things. So I mean, I’m a little biassed, I’ve had coaches most of my life, and I fully believe in the value of coaching. And I think that that’s kind of the niche that coaches fulfil, is that it helps people when they have that knowledge, it helps them figure out their individual journey.

Erwin  

I’ve had a course. I’ve had coach for almost 10 years, same coach.

Elizabeth  

It’s Marianne Gillespie. She’s amazing. Yeah, she’s super inspired something special. Yeah, she is.

Erwin  

She’s so humble.

Elizabeth  

She’s pretty amazing lady.

Erwin  

Okay, so what I find more recently, the last five years, last couple of years, I don’t know within within 10. So we haven’t had a bear cycle within the last 10 years, which is also the same time some of these groups were created. Yes. So then what I find his missing is experience, which is why we have you on this show.

Elizabeth  

I appreciate that. Now, let’s

Erwin  

talk to your investor journey because your investor journey has changed. Yeah, like your original goal is very different than what your goal is today. Yeah. And that’s why I want to discuss it because people’s goals change. Yes, people change. People situation change, and gamble, just so we talked the beginning, everyone’s investor journey will be different. Everyone’s goal is different. And that’s why I kind of one minute talk to your journey so people can can see what they like about your journey. Maybe they were like, oh, I want to do that. Oh, I like that. That makes sense. To me. That’s where I am in my life. I want that. Yeah. Right. So you’re all over the map.

Elizabeth  

The first thing I think that people have to get comfortable with is the idea that, and this was part of my journey was I thought, you know, everybody talks about buying real estate and buying real estate and buying real estate. And unless it’s a strategy, like flipping, very few people talk about selling. So I’m like, if I want to sell my portfolio, I must be a failure, I must be a bad investor. And it took a while for me to come to terms with the idea that I want things in my life that serve me. And at around the same time, when I started thinking about wanting things to be different, I hired my high performance coach. And what he helped me understand is that high performance is not about never making a bad decision or never changing your mind. It’s about your ability to recognise where you are, where you want to be course correct or pivot as fast as possible, so that you are minimising the amount of time you are doing stuff that doesn’t serve you. So as soon as I learned that piece of information, it was like a light bulb went off. And I was like, I don’t want to do this. I have bought myself freedom from my job. But I don’t have the time freedom that I want it. And so I started having conversations with Emmet. And Emmett was struggling with the same thing where he was like, no, like, we worked so hard to you know, buy these properties and build our portfolio and blah, blah, blah, I’m like, but we’ve we’ve increased our net worth. Now we want to buy our time back. So if we sell our properties, then we have this pool of funds. And we can move into different things, we can move into land development, we can move into new construction, we can sit back and do a bunch of private lending for a while until we find you know exactly what we want to do. And as we started to make those decisions, all of a sudden, it was like the stars kind of aligned for us. And you know, things kind of became clear. And it was at that time, when we started selling the properties that my health started becoming an issue. And it was almost like the universe. And at first I was very upset. And I was struggling and disappointed. And I was like I’m still yelling, and why am I struggling with health issues. And I realised it was basically the universe going, this is the time for you, you made the right decision. You’ve given yourself time freedom. Now you can choose how you want to spend your time. And that made me so excited. Because now I get to choose. And this is one of the great things about being an entrepreneur, I get to choose my clients. Just because I do a discovery call with someone doesn’t mean that I’m automatically going to take them on as a client, if I don’t feel that they’re, you know, coachable and open to feedback, or if I don’t feel that I have the right skill set or the right experience to serve them fully, then I’m probably going to refer them to somebody else, somebody like Christian who is, you know, an amazing coach and super skilled and experienced in his own areas, he might be a better fit for someone. I don’t have to take every

Erwin  

geography because His specialty is within a certain small radius. Yes,

Elizabeth  

yeah, exactly. So I don’t have to take on every client the same as every client doesn’t have to choose, you know, a specific like, each coach, just because you talk to a coach doesn’t mean you have to work with them. Just because you talk to a realtor doesn’t mean you have to hire

Erwin  

them. Just because you like it or Instagram doesn’t mean you have to work with them. Exactly.

Elizabeth  

Exactly. So, you know, the ability going back to what we were talking about the ability to recognise that what’s going on right now in my life isn’t serving me, what does it look like if it does? And asking those kind of bigger questions because I think a lot of what we spend time doing as real estate investors is doing, we’re doo doo doo doo doo doo, I find a job or find a property run numbers, you know, look for Power team, like we spend a lot of time doing sometimes we don’t spend enough time sitting back and going, what do I want? What is the life that I want to create here, I have a couple of new clients who started with me recently, they don’t want to leave their jobs. They just want to make you know, $20,000 a year because they want to, they want to have a really good travel, trip plan, whatever it is, you know, whether it’s two trips a year, whatever it is, they just want to travel and they want something that’s going to fund their travel, they work for the government or they you know, work in Department of Defence or whatever. And you know, so they’re going to have a good pension, they’re gonna have, you know, a relatively easy job. They just want to improve the quality of their life and that’s okay too. But they’re being required

Erwin  

to go back to the office.

Elizabeth  

I wouldn’t want to go back to the office myself, so I can’t really judge on that but

Erwin  

I just have to give up that kind of income though.

Elizabeth  

It is Yes, it is an for me it is pretend that when Emmett left his job, that everything was roses and sunshine would absolutely be disingenuous, because it was tough. You know, we didn’t do a great job at the time of saying, Okay, how much is the income that needs to be replaced? And, you know, what does this look like? So he went from six figures as an engineer with, you know, full benefits and everything else, we went down to literally zero income. So then all of a sudden, the money that we were churning and continuing to put into our portfolio into renovations, repairs, upgrades, and growing, all of a sudden, we couldn’t put that same money, and we had to take the money out to support the household, and neither one of us had business degrees. But a lot of people when they become real estate investors, you don’t realise now you’re a business owner. So you need to know about it. And you need to know about marketing and social media, and you need to know about budgeting and financial planning and cashflow analysis and some legal stuff, do some legal stuff, like, you need to know all of that all of a sudden, and there’s not very many people, you can call for help with that.

Erwin  

So that’s why you need a coach, if you’re going to be certainly serious. Yeah. And there’s,

Elizabeth  

again, you need to know what you need. So if you are someone, no, but then you have to do your research. But so for a lot of people, they choose a coach who just helps them in one strategy, which is fantastic. But then it takes them back to they don’t have the business foundation they need. They don’t have you know, the corporate structure setup, or they don’t, you know, have their financing piece in place, or, you know, they’re missing pieces on how to like analyse markets and run numbers. So they know a strategy, which is great. But there’s other pieces that are missing.

Erwin  

And then I’ll add to that the piece I think that’s missing often is experience to know what a deal looks like.

Elizabeth  

Yes. And you know, what, honestly, people’s ideas of what deals have looked like in the last two years, there has not been the number of deals that there used to be, I mean, with with the amount that people are paying for properties, and the bidding wars and the inability to put in, you know, conditions, a lot of what people were buying as deals were not deal. So we need to get reacquainted with what is the deal look like. And the fundamental is we need to be buying under market value. That is a fundamental that has always been true in real estate. And it is more so true. Now, as the market is continuing to decline. Because I don’t for a second think that, you know, as of next week, the market will start to recover. I think we’re probably looking at two years, before we really truly hit the bottom because now we’re about to go through a phase where all those people who were qualifying for mortgages at the stress test, were above the stress test, all those mortgages are coming up for renewal. And there’s people who are not going to be able to afford to be able to pay 7% interest,

Erwin  

there’s probably gonna be some inventory, some distressed sellers coming on the market.

Elizabeth  

Absolutely. Absolutely. So that presents opportunities for people who have done their homework and who have educated themselves. And they’re working with a good mortgage broker and they have access to capital, they will have the opportunity to buy under market value.

Erwin  

Here’s the other challenge that was that. I find some novices are depending on inexperienced coaches for to to help them to qualify what a deal is. I spoke to an investor just two weeks ago, horrific deal that her coach that her coach checked off on both her realtor and her coach past it. I said, if you were my client, I wouldn’t even have shown you this property, let alone let you write an offer on it. Yeah, right. I knew right away, this was the no go. It’s possible. The coaches just simply experience. If they just believe what they saw on a spreadsheet, it looks like a good deal. Right? The realtor, they’re at a market. They’re under market realtor. They could have the best intentions. They just didn’t know any better. And then let them the investor definitely did not know any better. Yeah. All right. So again, we say do your homework, it means a lot of things to different people.

Elizabeth  

It does. And so many of the fundamentals that have been taught since 2008 have been very much applicable to a growing market. And there’s not a lot of people around who have seen how to function in a market like this. And I’ll be honest, I’m not buying right now. I am not buying right now. Because next week, next month, next year, it’s going to be worth less than when I buy four. So I would prefer to buy when prices are lower, because it’s gonna make my cash flow more appealing. Even if the interest rate is 1% more.

Erwin  

I’m okay with that. Because again, because you’ve done like everything. I’m sure there’s lessons for most everything

Elizabeth  

you think and where you want to go now.

Erwin  

I don’t have the time for it. Here’s one question you want to ask? Because if I recall correctly, you used to do a lot of small town investing? Yes. Yeah. Would you do that today?

Elizabeth  

I’m not right now. So again, this is part of knowing and understanding the fundamentals of different strategies, how to match them to your market and how to then coincide with your goals. So let

Erwin  

me pause you there. Yeah. I think the better way to frame this question is and I think a lot of listeners will pretend appreciate this as if they’re on someone’s list. For example, someone who puts together rental owns. My experience has been that 10 times when I get the email. I’ve never heard of the city before. town or city? Where’s located before? Yeah, and it’s in Ontario even. Right? I grew up here. I don’t know the name of the city. And to me, that’s a red flag. Okay, what do you think about that?

Elizabeth  

Well, I don’t think that’s necessarily a red flag. So I bought in smaller towns, because I bought for cash flow. So typically, you’re going to be paying less money, and you should be generating a decent cash flow. If you’re buying in a small town and there’s no cash flow, you’re not going to see appreciation either, because appreciation comes from the larger markets. So I mean, you’ll you might see a couple of percent a year, but you’re certainly not seeing what you would see in Toronto or Vancouver. Oh, but there’s in between, though, yeah. So at but then there’s in between, there should be a bit of a balance between cash flow and appreciation. And you should see a little bit of cash flow. And you should see slightly more appreciation than in what I call tertiary or smaller markets. Whereas when you buy in tertiary or smaller markets, you’re primarily buying for cash flow and appreciation. I mean, we should always consider appreciation is gravy. Obviously, in a market like this, there’s not a lot of appreciation, but the cash flow was my primary concern. So if you’re looking for cash flow, and you have done your analysis, and you you know, the economic fundamentals of a smaller market are good. I don’t have an issue with that. What I do have an issue with is when people are trying to have everything in one deal, the likelihood that you’re going to get cash flow and appreciation to build your wealth in one deal is is highly unlikely, especially with the prices in Canada, you can get that more in the US to be honest, I’ve been looking at deals in the US lately. And it’s definitely because your prices are just lower. They’re so what I go back on buying in smaller towns, no, because it gave me the cash flow and the ability to be able to create the wealth that I needed to then sell, reposition myself and go with strategies that give me time freedom.

Erwin  

Just try quantify for the listeners benefit the Calvert, for example. I think their threshold is they don’t invest anything on any. They won’t land on any property in that town less than 50,000. Somewhere, right? Yeah. 1000 for you. Yep. So

Elizabeth  

well, no, my town. I mean, Kirkland Lake is 10,000. Right?

Erwin  

Imaginary, your expert was a little bit different.

Elizabeth  

I wasn’t always I didn’t start out an area expert, I kind of became one because of spending so much time there. And being so active in the market. I think that’s another challenge that new investors do is they try to become an expert on everything at once. It’s important for disaster. It’s important to pick your niche, you know, choose your market, choose a strategy, become an expert, and then grow from there. Don’t try and know everything about everything all at once.

Erwin  

No one will ever pull the wool over your eyes. If you are an expert in that subject area in that neighbourhood 100% in that property strategy.

Elizabeth  

Yep. And I love it. You know, I get people calling me for property management. And they’re going, Oh, my realtor told me I could rent the unit for this. And I’m like, no, no, you can’t you can’t rent it for that. That number doesn’t even make sense. So

Erwin  

it’s important work. If you offered your lease, go on Kijiji Facebook marketplace, check with rents were before the festival festival, your Realtors telling you?

Elizabeth  

Yep. And putting the right people on your team. You know, do you know the right questions to ask to make sure that you know your accountant and your lawyer and your mortgage broker and your realtor that they’re the right people for you? Because let’s face it, how many realtors are there in Canada? Right. And there’s a very, very small percentage of them that I’d actually want to work with.

Erwin  

Yeah, just being in the same room with Yeah. Long works.

Elizabeth  

I like most people, so I’d probably be in the room with them. But, you know, as investors, we’re looking for a very specific skill set, especially when we’re starting out and we don’t know what we don’t know yet. So until we are the experts, we need to have high integrity, high quality people around us who are the experts, and can share that knowledge and information to make sure we’re making good decisions, and not just making a decision because they need to pay for their BMW next month.

Erwin  

It’s funny because people I find, I find generally people have a healthy distrust of large corporations. And surprise, they don’t have the healthy mistrust of people selling them stuff.

Elizabeth  

That’s a good point.

Erwin  

Here’s an example. I often give people like one of the one of our big banks was investigated, and they were found guilty of pushing products on their customers that they did not need, particularly targeting seniors. Right. And I remember them interviewing people at the branch level. Insane. Like why did you do this? Because my job counted on

Elizabeth  

Yeah, I had a quota I had to meet I remember that.

Erwin  

Yeah. Two things. The institution was doing things I shouldn’t be doing. Yep. And human beings at the frontline. Were doing it because it meant that meant that they can make a living.

Elizabeth  

Yep. And that was probably the primary one of the primary reasons why I left. My job was because I didn’t want anybody else’s ethics and integrity to dictate how I how I conducted my business.

Erwin  

So where’s the same mistrust for all these other influencers out there? And I mentioned I say that because my predictions for this year as we’ll see a couple of them go bankrupt.

Elizabeth  

Yeah, I could see that. I could see that. I think we still have the idea that what we see on social media and we go Oh, it’s on the internet or it’s on social media and we know we tell ourselves, that’s not reality. But we see these people living these lives and we’re like, I want that life. And that emotional tie to wanting that life overrides any sort of intellectual thought about is this really the life that they’re living?

Erwin  

That’s how marketing designed to work. Yeah, influencer.

Elizabeth  

Marketing is designed to make everything look like roses and sunshine,

Erwin  

which is funny, because the way I designed my marketing is, well, I do a lot of the same stuff. But I invite people to come meet my clients as well. So you can ask them yourself, what their life is like.

Elizabeth  

Yeah, and I think I mean, I’m not a big one for posting, you know, deals that I’m doing and stuff that I’m where I’m not a big one for posting that all over social media. And I actually

Erwin  

just see on the right side of the Ontario Securities Commission.

Elizabeth  

But I was talking to a marketing consultant yesterday, and she’s like, you need to do more videos. She’s like you, you need to share more about your life. And I’m like, Do people really want to know about my life? I don’t know, I guess, but to me, it’s not second nature to be like, hey, like, here’s what my house looks like. And here’s, you know, what’s going on with my dogs. And

Erwin  

like, that’s just Ricardo knows. Yeah.

Elizabeth  

I don’t know. Maybe I was just maybe I’m old. And I was just raised differently. But it doesn’t. I don’t know. It doesn’t

Erwin  

depend on your goals. If you want to influence in game and grow whatever you’re growing, because just just like it just the hustlers. How he promotes himself versus grant. Yeah, very different. Yeah. Net worth is very different to Yes. Right. Like grant literally did flying in his private jet to wealth. Conference, right. Early. Right. brought the whole family versus Jesse flew American Airlines. fly business class. Probably. Yeah. But he’s so rich. Yeah. But he doesn’t have a private jet. No. But he’s,

Elizabeth  

I mean, he just showed up. He’s richer than grant. Yeah. He just showed up. And he’s wearing like, his his like casual clothes, and he looked like a surf bum,

Erwin  

you would then know you’ve no idea how you’d have no idea how successful he was, was just looking at him. No, all right, very different, very different, how they present themselves in the media and their social media. Right. But it depends what your goals are, though. Like grants trying to raise funds for his fund fully cool. Yeah. Right. And for selling his courses, whatnot, Jesse’s just like, doesn’t really care.

Elizabeth  

I think that’s important to going back to what you said, in terms of doing your due diligence, I think it’s important to look at people’s motivation for doing things.

Erwin  

To try to sell you something, you should raise your level of due diligence.

Elizabeth  

Yeah. And I think, you know, like, for someone like you, your goal is literally to educate people to share knowledge and information. My goal is to make my clients rich. Well, that’s one of your goals. But but the reason why you do so for example, the podcast, I mean, you don’t do the podcast, in order to make your clients rich, you do the podcast, because it gives you a platform and an ability to be able to pull these high quality individuals in and be able to pick their brains and ask them all kinds of questions, and then share that information and give back to the community.

Erwin  

What are some teen listeners were likely to get richer for this?

Elizabeth  

I think you’re at 18. Now 18? Yeah.

Erwin  

You told your mother about the show.

Elizabeth  

Thanks to one of my clients, BB. BB is with us now your 18th listener, she’s thrilled

Erwin  

about it, appreciate it. But that is the desired outcome for the show. Because if you don’t want to work with me, totally cool. Even like, I want to work with you. Yeah, I’ll bet you any money that our 17 listeners, their net worth is higher than the average Canadian. I’ll gladly bet money on it.

Elizabeth  

Yeah. But I think it takes a certain type of person who listens to podcast to I think, in general, those people are people who are thirsty for knowledge and information, and who are coachable and open to new ideas and feedback. I think if if you believe that you’re right, I mean, I’ve seen people hire coaches, because they just want affirmation that the decisions they’re making are right. And when you when you tell them that they’re wrong, they don’t like that. Yeah, they suddenly get mad at you. And they tell you, you don’t know what you’re talking about, or that you’re disrespectful or you’re not listening.

Erwin  

And trying to save you money. You’re being disrespectful. don’t appreciate

Elizabeth