**Transcripts are auto-generated.

Erwin  

Hello and welcome to the truth about real estate investing for Canadians, and it’s a pain to be on this truth journey. Sadly learned a young man in his late 20s recently went bankrupt, even though he had a five figure coach, my socials on fire as opposed to the picture of me and interviewing Alex Olga, who along with his business partner recently declared bankruptcy just this past August, they both invest heavily in education. It didn’t save them. Unfortunately, they had a coach, but from an outside observers opinion really looks like ego and greed drove them into some really bad investment decisions. It’s really sad to see lives destroyed. There’s in those other investors, especially their promissory note holders, who are owed millions and no one knows when they’ll see that money returned. There’s a reason we do not recommend here at Island real estate my team, there’s a reason we do not recommend flipping to novice clients, especially with those who do not have renovation construction backgrounds. The topic always comes up with new investors, thanks to reality television and social media. Just remember reality TV and social media is not real. The truth about real estate is is that successful flippers I know also have a portfolio of buy and hold rental properties for the long term. All veterans know that there’s a lot of money to be made just in holding. I spoke to a friend this past weekend who’s been holding on to his land purchases for 2030 something years already and he still hasn’t built anything. He still hasn’t sold anything, you still have some you still have some taking some money for the vast majority of his portfolio. There’s he’s just sitting on it and developing it, which is largely just a soft cost and soft effort process. Thankfully, his properties keep going up thanks to the pandemic thanks to this housing crisis, thanks to the loosening of zoning restrictions, but there is no cashflow. If you ask him a question that I literally didn’t ask him he that’s what he said there is no cash flow. Let me repeat that on his own words are that there is no positive cash flow until either sells or actually build something or sells or rent to build something to rent out. The truth about real estate is it’s not all sexy, but the returns to me and my clients are worth it. As I continue to conduct strategy and portfolio reviews my clients past clients that reinforce for me how life changing investing in real estate has been. Our conversations are not about fear or loss. It’s about growth, how to improve cash flow, the path to six figure cash flow per year, our ESPs as they call them, real estate savings plans for their children. The longer a client’s been with us in general, the greater their success as time in the market is a profitable factor in my experience. And again, I’ve been investing since 205. I’ve been full time real estate since 2010. It’s a slow, boring process and learning Bunsen earning my clients millions of dollars who are everyday hardworking Canadians. So please don’t make the same mistakes as others out there and you coaches out there. Please do not give bad advice. I spoke to a new investor on the weekend who also pays for pays five figures to be part of a programme and they had a coach yet they invested in a non legal duplex. This is in Hilton so it’s an area I know very well I have properties on neighbouring streets so I know again I know the area well their Realtors opinion this property currently has six students residing in the basement six students in a three bedroom. Again, the property is not legal as in there’s no permits, no one’s inspected the property for building or fire code in her Realtors opinion. It should be okay. Though no one’s told this investor that the property is actually in the new rental licencing area later this year, that property will be required to apply for rental licencing. And for anyone who knows, which is pretty much everyone in my circles. They know a fire inspections required and a fire inspector will not be happy with what they find. So how the subject did not come up before she bought this house. I do not know. And just a reminder, ignorance is not a legal defence. I’m not a lawyer though. Please go ask her lawyer. How do I know she has a problem? Well, I’ve met with the now head fire inspector at the Hamilton fire department and I’ve asked him how to operate my business safely. I have a pretty good understanding of both building and fire code having been a part of hundreds of renovations between my clients and I plus my own morals and ethics don’t wouldn’t allow me or my client to operate a rental with the potential of someone getting hurt in the fire. So do you know how a fire or city inspector actually shuts down? I’m doing air quotes for those listening and you know how a city inspector shut down a rental property if not like is they like they borrow the doors or change the locks this one time as part of a inspection condition on a commercial property. I had a local fire inspector with the local fire department inspect the property I of course had written permission from the seller the next day they left a notice on the door there that quick to enforce code based on their findings. So they left a note telling what the like the courier companies it’s a sticker note from on letterhead from the front in front of our department about the improper use of an extension cord but it was stated that the fine would be allowed $1,000 If not remedied, and $1,000 for each month after that, again, it was really something really minor. I just unplugged the extension cord and I let the seller know that this would be coming. That’s just a common courtesy, in my opinion. Anyway, so yeah, I’ve been plugging the extension cord and putting it away that put the seller back in this owner back in compliance. So investors were beware, operate aboveboard or live with the consequences. And for those of you looking for coaches, or educational programmes, do comparison shop, there’s some of them that are great out there. And there’s a lot of them that are newer, and with newer staff who’ve had trouble scaling who have trouble training their staff, again, do comparison shop, if you didn’t believe it, but I was asked to as asked a question on questions to ask as part of interviewing a coach as part of your due diligence. I suggested asking him this the first time I’ve ever thought of this, I suggested asking how many bankrupt past coaching clients they have, as part of just one question that a longer list. So this is the first time I’ve ever suggested that question. There are a good number of operators out there in this industry, who both care and can deliver results and have a track record of successful clients, but a lot more recently have just joined the industry in the last three to five years. And they’re leaving disaster and they’re weak. Some have already disappeared. Thankfully, choose wisely in comparison shop. Feel free to attend any of our events where we take investors inside our clients properties. We share their numbers or forecasts. You can network with them. You can promote our past clients and they’ll tell you how it is to be coached by us and no extra out of pocket expense. As we are licenced realtors, we get paid via realtor commissions. When selling homes best in class coaching at no extra cost delivering results that suit most investors most of the times it’s 20 time, honestly our track record is it’s been pretty amazing. And I’m very grateful for the clients who have trusted us. Speaking of events, our next island meeting is a hybrid event of online and in person. Our presentations will be delivered via zoom. So people will be invited to attend and the recordings will be available for anyone who can’t make it followed by on following Saturday. We’ll have a boots on the ground educational tour in Hamilton on Saturday, April 22, We’ll all meet up the number one ranked coffee place in all of Hamilton. I truly believe that any area expert should know where the best coffee places are matched the coffee will go for a tour inside and out of an income property or too often they’re owned by my clients are good friends of mine. If no one has something available to show them, I’ll show Mark Mark properties on the market. And then following that mastermind lunch with like minded investors, including some my clients and myself. The vibe is friendly as there’s no pressure and it’s a sharing crowd. Because honestly, cherry and I tend to attract nice people on the other side of that the sharks notice stay away, they know I know who they are. If you’re looking for that place where theory meets reality, then you found it. Keep an eye out for the invite on our email newsletter. Again, save the date though otherwise, Saturday, April 22. If you’re not on my email newsletter, then you are welcome to join the over 10,000 10,000 plus hardworking Canadians already on my email newsletter, this podcast website, www dot truth about real estate investing.ca. You know all our show notes are posted there. And on the right side you can enter your name and email address on the right side to get on the list. And you know, let’s go. If you’re like that make a difference in your financial future create impact intergenerational wealth that actually works with a group that actually has significant track history. I think we’re the place to go. So quick market note the market is gaining momentum with fixed mortgage rates. Starting to come down we see some good discounts our clients again, some good discounts. We had a client to sign a three year for 5.09 5.09 on a three year and that’s for our investment property. And I just noticed my neighbours are selling within in days, not weeks. So it’s the markets moving pretty quickly. And same goes with the good properties that we identify for income opportunities. Onto this big show. Today we have the host of the major conference, the multifamily conference, Seth Ferguson on the show. If you’re at the event headlined by Kevin O’Leary last year, you know, it was a really great event. Seth has been, however, inspired to 10X.

Erwin  

As he’s got headline speakers, Mr. 10X himself, Grant Cardone and Alex Rodriguez, who is the best known Alex is best known for his successful business baseball career. At one time, he was baseball’s Highest Paid athlete. More recently, he’s been on Shark Tank as one of the sharks and he’s a mega apartment building investor himself very successful investor. Based on the reference checks I’ve done. The event will be a big one summer around 2000 attendees. I’m guessing from all over North America expected for this three day event. I’ll have the booth there. So if you’re coming by, please come by, say hi. And I’ll hopefully see you at one of the networking events or or lunch or breakfast. There’s so many events. I do enjoy networking. And if networking is your thing, then you’ll want likely want to be at again Canada’s largest investor conference of the year. Set this here today to share about what it takes to run a successful conference. What one can expect at the conference, how there’s something for everyone from both beginner to mogul. There’s even a whole day educated on the Friday that Friday of the week, three day weekend. The Friday is meant for beginners, and if you’d like VIP treatment says has spent a lot of time and effort and money to make sure that the VIP is will enjoy exclusive networking events that exclusive read expensive venues. But I’ll let Seth explain that to you. So that is also working on some investment stuffs, I noticed relief under selling it. For those who don’t know Seth focuses on acquiring apartment buildings and mostly in the states and even some hosting developments. Hill announced at the conference, but you’ll get a sneak peek of it. Today’s show. Now for a disclaimer. The lawyers always want me to read the information and opinions expressed in this podcast are solely for educational and informational purposes and should not be considered as investment advice. The hosts and guests of this podcast are not licenced financial advisors. How true not licenced brokers or registered investment advisors and their comments should not be construed as recommendations or endorsements of any specific investment security or strategy. Me personally my team of coaches and our licenced Realtors of Rockstar real estate brokerage and proud to be while easy to obtain a realtors licence. Not all the same rates are in line with the market. But we’re four time winners a realtor of the year to real estate investors, and our track record includes 50 or so self made millionaire and multimillionaire investor clients. That investing involves risk including possible loss of principal investment or worse. Before making any investment decision. You should conduct your own research and consult with a licenced financial advisor to determine the suitability of any investment. For your specific financial situation and investment goals. The hosting guests of this podcast make no representations or warranties as to the accuracy, completeness or timeliness of any information discussed in this podcast. This podcast is not responsible for any errors or omissions, or the results obtained from this use of this information. listeners are advised to use their own judgement and seek the advice of professionals before acting on any information provided in this podcast. The podcast shall not be liable for any damages, including but not limited to direct, indirect, special or consequential damages arising out of related Of or related to the use or inability to use or reliance on any information provided in this podcast. That was a mouthful. Please enjoy the show. Hello, madman, Seth Irwin. Fluff keeping you busy these days?

Seth  

You know, it’s just trying to run this crazy conference, you know, and trying to do some cool things in real estate. So yeah, lots of stress. Lots of anxiety, lots of craziness. You know how it goes?

Erwin  

No, I don’t actually

Seth  

know exactly how it goes. You are the wealth hacker himself. You know exactly what goes into running these crazy events.

Erwin  

Thankfully, my spouse was involved. Yeah, so we could we had two people two heads at this.

Seth  

Yeah, just roped Darcy in whether she likes it or not. So yeah, you guys have gone on your honeymoon, right? No, them wedding hasn’t even happened yet. So this year, we’re running a conference. We’re running another event later on. And then we’re running a wedding. When’s the wedding? August the sixth? Oh, let’s turn. Yeah. And then we’re planning on going to Italy for three weeks. So that’ll be nice.

Erwin  

So now I’m I’m thinking about it. I understand why I’ve been invited to the bachelor party yet. So understood. We have time we have one way.

Seth  

You got to pull off a couple of events first, and then we can party. So yeah, Darcy is not too happy. She’s like, Seth, we have a wedding. And then you’re running another conference. And then so a lot of work. Conferences are

Erwin  

like weddings, it’s good practice. Well, I

Seth  

told her we have such a professional team now. We can like just run the wedding like a conference and bury some

Erwin  

of the costs in the conference for the wedding. You’re a planner. Now you’re not a wedding planner. You’re a planner intertitle which

Seth  

means these invoices. Just get everything rolled over you perfect. Yeah, we’re just pre paying everything through the conference. So yeah, well, I’ll

Erwin  

get some tax advice from Jerry and I’ll see what we can do. Oh, please don’t mention my wife’s name. Because I gave a let’s suppose a tax tip. And obviously there’s not a good tax advisor who’s being sarcastic. But yes, there’s a conference. I know you had you had a lot of fun on the last one. Yeah, the multifamily conference. That was May last year,

Seth  

May last year. Yeah. So thinking back like we were locked down two months before the conference happened. That’s the crazy thing. And then we put it together. It was insanity. Like I have never had such an insane period in my life. We pulled it off. It was great. And then just hopping back on the hamster wheel for number two.

Seth  

Right? Right. This is text the Conference of the original. We are all sequels are better. All sequels are better and we are better. Exactly. I’m Heart strikes wax was better actually don’t sequels are better it was yes. Maybe not frozen to fall trust you on that. Yeah. But yeah, we

Seth  

are literally 10x in conference. My personality is very like out there. Like I like to push boundaries and challenge myself. So last year was great. Like we had Kevin O’Leary from Shark Tank. You know, we were the first major real estate event to get back in person in the country. So that was really cool, great crowd. We had well over 1000 people last year, so it was great. This year, we are going a lot bigger, moving the venue. So we’re right downtown at the Metro Toronto convention centre, I rented out the CN Tower, I rented out rebel nightclub for the after party. So we’re just going like bigger and better with like, everything.

Erwin  

You could rent in a bigger place in the CN Tower. I heard there’s bigger, taller structures in the world now.

Seth  

Taller structures will go next year to Abu Dhabi or something. Yeah, but the CN Tower, like it’s going to be so cool. So basically, what we’re doing there is it’s like a VIP networking kind of setting. And we’ve got like some really cool stuff we’re doing. There’ll be the nice vibe. And then like, it’s all windows right in the observation deck. And that’s what we’ve rented. And it’s just going to be awesome. On Saturday.

Erwin  

Inspiring views are always a good backdrop for inspiring conversations.

Seth  

Yeah, like, I think it’s like the energy to write like, like you’re in a unique setting. Like when was the last time somebody rented out the CN Tower and had a private party? Like, I don’t get invited to those things? Well, you’re invited this year. So yeah, it’s just a cool, unique experience that you normally wouldn’t have fester in the room with, like 200 Other like really cool real estate people from all over the place. That’s where things happen. Like, you know, like, networking, and the connections are where it’s at. So you know, whether you take them a zombie shooting, or

Erwin  

whatever, why isn’t a secret event?

Seth  

Oh, we should we should. I had so much fun. I took my like, so if anybody’s listening like urban does this, what would you call a virtual reality? Yeah, you put it in a headset? Yeah. And you do it with like some really cool real estate people. And I got hooked the first time I did it with you. So I took my family back. And we had such a blast. Darcy had fun, too. Oh, Darcy loved it. My mom went and she like crushed everybody. So

Erwin  

it’s always funny how that happened. Yeah, there’s always a dark horse. And when you don’t expect to do well, I remember once I went with a cop, and they perform really

Seth  

poorly. Oh, maybe the sights were off?

Erwin  

I don’t know. And speaking of hi in, okay, so yeah, networking, you know, especially these times, networking is incredibly important. Who you know, who can make the introductions just like even before we were recording, we were talking about some you know, doing some reference checks as we’ll make some connections for you after this show was done. I hear you have some somewhat successful people as speaking.

Seth  

Yeah, we might be doing okay. So yeah, like just going down the list. Like I’m so excited. So our celebrity speakers Grant Cardone, you know, four and a half billion dollars worth of assets under management.

Erwin  

US dollars. Yeah, US dollars. A million Canadian then yeah.

Seth  

30%. And then like Alex Rodriguez, like a rod. Most people don’t know this. So most people know him from baseball and being a guest on Shark Tank. But he owns over a billion dollars worth of real estate like he’s huge. Over 15,000 multifamily units. So huge guy there

Erwin  

are people I heard don’t sleep on a rod I heard he’s actually incredibly bright. Ya know, like, he’s

Seth  

been great so far. And so what we’re doing is we’re doing like a fireside chat. So I’ll be talking with Alex on stage. I’m actually really looking forward to that. And then we’ve got Janet le Paige. So CEO of Western wealth, she’s talking about how she went from zero to 7 billion really excited for Janet. Then we’ve got Brad zoom rock. Brad, if you you’re not tuned into the US multifamily scene Brad is a superstar when it comes to syndicating deals his students have I’m going to mess up this number by think they’ve acquired over like $6 billion in multifamily apartment buildings. Then we’ve got Mellon, Dave Dupuis, who are talking about creative financing and how they grew their portfolio. We’ve got Delia Barsoom, she was a financing and she was a great hit last year Marcin Rhodes is coming back. Like the list is huge. We’ve got two guys from equity con coming to talk Daniel JSON. I’m so pumped up for the speaker Rossi rehab, it’s going to be so much fun. And it’s two days. Two days. Well, it’s actually three days there. Yeah, sorry.

Erwin  

I knew that. Sorry. Yeah. Yeah.

Seth  

So what we did was last year, what we found is a lot of people were coming to the conference who had real estate experience, right? So they may be doing like single family homes like small plexes. And they were interested in learning. Let’s say Joe Fairless. Last year came in he he’s at like 3 billion now, when he was on stage talking. If you’re kind of just getting into multifamily, you might not get the most out of what he was saying. So this year, on the Friday we’re running a special a boot camp workshop just for beginners. So it’s myself. We’ve got I think five or other speakers coming in and we’re covering all the fundamentals. So that way after the Friday, when you’ve got Janet on stage grant on stage talking about these bigger concepts, like you’ll know exactly what they’re talking hearing about and how it relates to what you’re doing. So it’s like, my goal is to make it the best experience possible for somebody who comes. So we learned from last year that hey, like a lot of people are coming to learn. And so that’s why we’re running the boot camp. So hopefully I’ll see lots of people there. We are, like cap with numbers with that room. So get it while you can.

Erwin  

Where can people get information?

Seth  

Oh, you’re just getting into tickets? Yeah, but multifamily conference.ca. Today, actually, yeah. So today, we’re at 8% sold out of VIP tickets. So there’s just a small handful left. And last year, like platinum sold out to VIP sold out, like we will sell out. So it’s kind of cool, because we’re not dealing with all the stuff from last year with the lock downs.

Erwin  

And you’re nuts to have dealt with that last time. I was like, You’re so kind to offer refunds.

Seth  

You know, but you know what, like, I’m so stubborn. And like Darcy will she tells me like I’m the most stubborn person she has ever met. So like when I told her I was going to run a conference, there was nothing stopping me like we were going to run the conference no matter what. And I think like, there’s good things with that. But there’s also like bad things. But luckily, it worked out. So yeah, I

Erwin  

can’t believe you pull that

Seth  

off. Yeah, it was insane. And you look at

Erwin  

word from my conference in November, which is your month five, I was month 11. Six months ahead of me. And I was worried for my conference.

Seth  

It was like the stress level, like I have never been so stressed because the amount of money that was on the line, and not only like the money, it’s like your reputation and everything. And when you start seeing all the other events like postpone like big major events, it’s like

Erwin  

or someone quiet. Yeah, someone quiet because they didn’t do well. Yeah. And it’s like,

Seth  

what am I doing? But you know, I had a good team. And I think like, as we grow with the conference, and the events and the team, we have, like I’m becoming a better and better leader, because like, you know, I’ve never run a 30 person company before. And now we’ve got like all the staff. So I think last year, it was like it stayed true to the vision. I was like, no, like, we’re gonna pull this off, and everybody kind of fell behind me. And I think the people really made it happen, because without the key people we have on the team, like there was no way it was going to happen at all. So yeah, crazy. The craziest thing I’ve ever done, hands down.

Erwin  

So what can someone expect to learn? Like there’s a pretty loaded question. Yeah. So sorry. So the first day is what half day full day?

Seth  

It’s a full day. Oh, boy. Yeah, full day.

Erwin  

Friday, Friday, so it’s not for everyone, but just for beginners. Yeah, I totally agree with you love. Beginners do not have basic grasp of concepts. They don’t know, like, fiat currency, hard asset. Don’t use a spreadsheet to calculate cash flow. I deal with these things on almost a daily basis.

Seth  

Yeah. And I want somebody to come to the conference, get the very most out of it. Right. And I was thinking, Okay, well, if Brad zoom rocks on stage talking about syndication, you know, a beginner might not know what that means what he’s referring to. So it’s like, okay, well, let’s get them the right information. Let’s build the foundation with all that like financing. You know, structuring, like how you make money in deals, like all that kind of stuff. Let’s get you the basic foundations. And that way when Brad’s talking like oh, yeah, I know exactly what he’s talking about. And then you just have better comprehension. But yeah, for the main conference, like what somebody’s looking at learn, we have a number of different reasons why people come to the conference, we do lots of surveys. Number one, like 47% of the audience wants to learn how to raise more money. Because without the money without the capital, the deal doesn’t happen. And you know, I’ve made I take very seriously like, who’s on our speaker roster? And who’s covering what, because I want to make sure we covered the full breadth of the multifamily business. So raising capital is a big component of what we’re doing at the conference, because that’s the number one concern people have. Number two is deal flow, like, Where can I find the deals? How do I get better deal flow? How do I underwrite the deals and find a great deal versus a good deal versus a bad deal? Well, mistake, a huge mistake. And

Erwin  

they’ve been raised expensive capital to put into a bad deal. They don’t realise that they don’t realise their mistakes as they’re getting in.

Seth  

Exactly. So that’s the second most requested topic at the conference. So we’ve definitely got that covered. And then we talked about structuring. Then we talked about like, the mean of creative financing, the financing component of that. We talked about management, the value levers in the multifamily deal. So basically, when somebody comes to the conference, you’re going to walk away after those three days or two days, depending on how you want to participate with the most comprehensive insight into the multifamily business, whether you’re brand new just getting started, or we have people because I see who buys tickets, like we’ve got people with like billion dollar portfolios in the VIP section, people with half a billion dollar portfolios in the VIP section. So it’s not just for beginners, like we’ve got some very experienced operators coming and you know, networking is a big part of that. But also like, you know, janela Paige is running a huge company. Anybody can learn from somebody like that Grant Cardone huge, huge reach. Anybody can learn from Grant. My feeling is whenever I go to a conference, like it doesn’t matter who the speaker is, if they can just give me one thing. It’s more than worth than Yeah,

Erwin  

the interesting thing about working with Grant was because we were hosting grant. I was 18 Right 2019

Seth  

Oh 2019

Erwin  

Got it up before the pandemic Yeah, we had no idea. Oh god that would have ruined us as a pandemic goddess. Yeah, anyways, what was going on was a lot of people do not like him. But what a lot of people don’t find understand is like for example, like Don Cherry, a lot of people don’t like I’m lucky to like him. Also, people to understand are similar. Kevin O’Leary, a lot of people don’t like him. Yeah, very polarising figures but that’s important though. You need to be polarising to get attention. Absolutely. What I think elected to understand is that sometimes it’s a character Beyonce is a better example Beyonce is a character that cuz she’s incredibly shy and and so she had to create a character that could go on stage and you know dance the way she does and dress the way she does and singers the way she does right? Whenever I spoken to grant off camera is very different

Seth  

variation you want you what’s very interesting. So you know the same thing with Kevin Right? Everybody sees Kevin on TV you know he has his one liner is great. In person such a gentleman like great guy like very down to earth I very easy to talk to with Grant. If you look at Grant when he first started on social media, you can see the change in the Persona. It because like you’re always testing Hey, what’s working well, what’s not working? Well, you know, the way I am in person is very different to me. On this podcast. Yeah. No, like we’re pretty good. But But yeah, like, you know, me like refereeing a hockey game. I’m a very different person on the ice because I gotta lay down the law. So let’s

Erwin  

Yes, the job. Yeah. Yeah. No different than being like a social media personality. It’s a different role.

Seth  

Yeah, for sure. But if you’re always vanilla, you have nothing to say. Right? Right. You have to have strong opinions. And you have to like plant your flag somewhere and you will repel some people, but then it will increase your attraction level to the people that really resonate with it

Erwin  

back to grant. I don’t share love his opinions. But he’s also He’s a gentleman. Yeah. Like when the cameras aren’t running. Like when we’re just talking normal. He is very polite. He’s very kind. His staff love him. But ones I’ve talked to, I’m sure. Of course, he did have staff isn’t that don’t like him? Yeah, he was very public. He slashed like what? Two thirds of his company? Yeah. Oh, yeah. So of course, he’s gonna have people that absolutely despise him. But the people who stayed on, I think a lot of them really like him. And I’m pretty sure a lot of his investors are very happy with them. Yeah.

Seth  

And I think too, like what happens is, you know, when you’re polarising like, you build your tribe, right? And that’s what’s really going to attract people to you. And that’s something like, I’m not great at like, I have to get better in terms of really planting my flag and making my opinions known. And that way I will repel the I guess the wrong people and attract the right people. Well, Grant said

Erwin  

something I forget when he said it is point was exactly about his investors, his investors really like him, because he pays them every month or whatever it is, right. And this is not a promotion for anything that he sells. Right? First of all, it’s American. So we never really truly Hartford unique Kenyans get a hold of anybody. My point is, he has lots of fans among the people that matter most to him, before he can print his employees and his investors. And I find that generally true. In my observation as a real estate investor, like there’s some people in an industry I don’t like, but I always find their investors still likes them. Because they make the money. Yep. So for so for anyone who wants who anyone who wants to have more happy people in their lives, make the money.

Seth  

Exactly, exactly. And the other thing too, is he just like he has built such a very impressive group of companies that he runs, you cannot do that? Well, I guess you could like there are examples where you can be an absolute dick and run a company but like, people have to want to follow you to get to that kind of level. Same thing, like you know, you’re looking at yourself in charity, like you guys are good people, and people want to work with you and follow you because of who you are. Like if you’re just being a dick, like, leave

Erwin  

out and be gone.

Seth  

Yeah, in grants team has been great to work with, like really excited to, to have them be a part of this. And yeah, like my goal is to put like the best lineup of speakers on stage for the multifamily conference. And we’ve definitely done that. And we still have some people we haven’t announced yet. So there’s still some more surprises coming up and more budget to spend. You don’t want to know the budget. So we have we have 10X the budget.

Erwin  

And it’s not even an all day event. There are native ads.

Seth  

Oh, yeah. So we’ve got Yeah, on Saturday. There’s like the CN Tower party, and then that’s for VIPs Platinums have their own party. So we have two parties on one basement this

Erwin  

entire right now we’ve got one if you want to be if you don’t want platinum, no so actually, no, where are the platinum people?

Seth  

Yeah, so the platinum they’re actually Got a venue at the mtcc. So you don’t have to go very far for the platinum networking party. And then Sunday night, that’s our like, last year, our after party was great. We had somebody ended up in the bathtub at like four o’clock in the morning. So it was it was great. So that’s why we went with rebel. And that’s Sunday night. So we’ve got like a special VIP networking dinner and then we’re just hiring a DJ. Now. I think everybody will be very happy with that. And yeah, like lots of cool stuff.

Erwin  

But what is Rebel for those who don’t know, I’m sure some people are coming from out of town actually, for you know, there’s a lot of people coming.

Seth  

Yeah. So last year, we had people come from literally every state except Alaska, and every province in Canada. So and this year, because of the border situation is a lot more open. Like we’re attracting people from all over the place, which is like it’s a North American Conference. But yeah, rebel nightclub is one of the top nightclubs in the city of Toronto. It’s right on the water. So basically, when you’re at the there’s like a balcony there, you can look across the lake at the CN Tower, like you get the cityscape, amazing location. And lots of really big artists have played there. Like as soon as I said, we’re going to run a huge like after party. I’m like rebel. So we got it done.

Erwin  

It will be fun. CN Tower can only be taught by rebel rebel and

Seth  

then like mtcc.

Erwin  

But then you’re working away. We’re not talking about what’s after. Oh, well, we

Seth  

can allude to it

Erwin  

was filled the bag. Yeah, I should have told me anything.

Seth  

Yeah, so we’ve got something special that hasn’t been announced yet. And depending on when this airs, I’m not sure. But yeah, we’ve got like a two days something special for like, we’re running the Friday Bootcamp for beginners. We’re putting something special together for more advanced people on the Monday, Tuesday immediately after the conference. And really excited about that. So it’s going to be more for like experienced investors like really looking to make some big changes in their business. I can’t really say too much yet, but it’s going to be a really cool two days.

Erwin  

Yeah. Remember a grant did the same thing as growth conference. Yeah. The stamina on demand. That’s right. Yeah. You’re a lot younger than him. So you probably have like 10 Extra stamina.

Seth  

I don’t know about you like after your conference. Did you just go home and sleep? Like did you just collapse

Erwin  

the for about three, four weeks? Yeah,

Seth  

yeah. I remember last year, they lost my car keys. Because did I tell you about this? No. Okay, well, here’s a quick little tangent. So the conference ends, everybody’s like taking stuff down, down. I go to my greenroom. And I’m like, oh shit, Where’s where’s all my car keys. And like, all my stuff was gone. So we had the staff everywhere looking for my keys, looking for our like, probably an hour and a half looking for my keys. And it turns out somebody had collected my stuff and like, given it to somebody who was no longer there with like the takedown crew. So anyways, we got my car keys, I got home and I just like collapsed. Like it was like my face hurt from taking so many selfies with people and everything. Like you know to write, but yeah, it was I was done. So

Erwin  

I was a one day event. Yeah, your five.

Seth  

Yeah, basically. And like I’m, I’m like teaching the bootcamp on the Friday. I’m there Saturday, Sunday, and then myself and two other people will be running the the advanced course.

Erwin  

But you’re you’re gonna announce another five days after that? Because we’re looking for 10x 10x.

Seth  

Yeah. I don’t like it. Like we’re already talking about 2024. Because that like, you know how these conferences go like, like, they’re beasts, right? And, yeah, it’s insane. It’s insane.

Erwin  

to feast on a treadmill.

Seth  

You Yeah, actually. Well, I ran a meeting this morning on my treadmill. So again, my steps and I see your treadmill over there. So it’s collecting dust is collecting dust. We get it out. But yeah, no, because there’s no pacing that is paced to the office instead. Oh, gotcha.

Erwin  

What else? What else about the conference? And also people know?

Seth  

Oh, like, basically, if if you came to cause a couple 1000

Erwin  

people going, can we say that? Oh, yeah. I see that. Oh, yeah.

Seth  

Like we are the largest real estate investing conference in the country, like hands down. The budget to Yeah, yeah. Yeah. Every time I look at the budget, I started sweating. But 10X speaker quality. Yeah. Well, last year, we had a great speaker lineup. And Kevin was awesome. Kevin was great. And but this this year, like we’re like, we thought grant and a rod and everybody else I mentioned like, I’m so excited about that.

Erwin  

Speaking Kevin, I actually enjoyed the pivot. You guys have to do hope you don’t mind me talking about it. So yeah, for sure. Because there was no meet and greet with Kevin for the because of his, his strength or skill.

Seth  

Yeah.

Erwin  

Can you explain what happened? Yeah. So

Seth  

what happened because of all the COVID, the COVID stuff, so I didn’t want to get him demonetized on YouTube by saying that. Because of all the COVID stuff, the Screen Actors Guild actually prohibited anybody who was contracted with them from doing meet and greets.

Erwin  

So Kevin, because he’s on TV. Yeah, yeah, biggest

Seth  

TV show. all right. So he was speaking about rare event, he’s still funding falls under that umbrella. And it wasn’t coming from him. Like if it was up to him, he’d be like meeting everybody. So yeah, it was unfortunate. So we did a q&a with Kevin, which I thought was awesome, which was great. Yeah. And actually, we kind of took that idea. And for this year, so with Grant Cardone grant is doing his main presentation. But then for VIP tickets, he’s doing a special private session, just for VIPs right after in the VIP area. So that will be a chance to actually like, ask questions and get more of a, like a one on one kind of field with grant. So I’m actually really looking forward to that as well. But we’ve got like, we felt like 160,000 square feet for the event space. So like, I haven’t shown it like wait until you see like this the stage and the AV like speaking of taxing the budget, like we had lots of fire last year on the stage to annex the fire. Oh, like that was callin my son’s favourite part. So like, he say, no more fires like, okay, let’s add some more fire shots and fighter jets flying. Yeah. Because like, okay, so this was my pet peeve with like most real estate events, right? I was actually having a conversation with somebody who will be speaking at the conference about this, like most real estate events you go to, it’s like a ballroom, you’ve got roundtables, you’ve got a PowerPoint presentation, and you’re falling asleep. And like, I’m a big fan of like, needing the energy, they’re needing the annual to feel and to get like, You need to feel there plus the quality content. And not a lot of people merge the two. And that’s my big vision for the conference. Like, yeah, we’ve got the fire, we’ve got the energy, but we also have like, really good people on stage.

Erwin  

Okay. I thought, Man, that’s musical guests. Oh, no,

Seth  

no, no. Drink? No, I don’t have to budget for that. But actually, well, speaking of that, so for the after party, we were actually looking at some pretty major people to come in. And then I ran a survey. And everybody’s like, I just want to DJ because I would just want to network and dance. But yeah, we were actually looking at bringing some very, like heavy hitting musical acts. But people said they didn’t want that. So we cancelled that. So yeah, so the experience is there. And then we’ve got a huge tradeshow components. So we have lots of exhibitors, ranging from services, education platforms, like you name it. We’re still booking exhibitors there. So

Erwin  

as you saw you saw space for exhibitors.

Seth  

And sponsors sponsor being the sponsors. Oh, yeah, we’ve got so much space for that. So yeah, if you’re interested go to multifamily conference.ca we can hook you up with

Erwin  

is there a separate LinkedIn contact for specifically for sponsors, there’s

Seth  

a button right on the on the page, and then you’ll get hooked up with our sponsorship team and they’ll take care of you like we do everything custom. Right. So if you’re looking for a specific or you’re

Erwin  

finding cookie cutter, yeah, so I did my own.

Seth  

Exactly. So yeah, like if you’re looking for specific portion of the audience, for what you’re doing. Like, we can definitely do that. So yeah, we’ve got lots of demographic data.

Erwin  

Good, good. Good. Yeah. Cuz I borrowed from your presentation. Yeah. Thank you again for sharing.

Seth  

Oh, yeah. No, no. I learned it from somebody else. And yeah, I feel like you’ve been such a good I don’t know, like support, kind of friend. Like, you know what?

Erwin  

Support animals.

Seth  

I remember like, calling you being like the world’s ending, and you’re like, oh, no, everything will work out. and stuff. So yeah, like, you’ve been so awesome. Ever since I started this kind of crazy idea. So yeah, thank you. Happy to help.

Erwin  

Yeah, man. Just enjoy helping. Yeah. I mean, again, like, you know, I’ve been through it. So you definitely have not this not tenax.

Seth  

No, but that’s just me being crazy. And Darcy is always on me. She’s like, you’re doing what again? Yeah.

Erwin  

So you know, silly analogy is talking in my head. It’s like when I drive in the forest. Even though it costs money. I’m grateful. Because the damn thing cost billions of dollars. And I’m able to pay like 20 bucks to use it.

Seth  

Exactly. Exactly. One of my very, very, very good friends. He’s like a second father to me. He actually ran the legal team that did all the land assembly for the 4070 My God, really cool. And then the province. Yeah, the province did that all in house, they were going contracted out and he was like, no, like, our legal team can do this. And it was a big shift in terms of how MTO and the government did their stuff. So

Erwin  

yeah, but my analogy would be to to your conference would be like to speak get pay a small amount to benefit from your 10 excise budget.

Seth  

Oh, yeah. No, like Yeah, like you know, our lowest price ticket. Like we still have some specials but prices go up every week Right? full price is 500 bucks. So like 250 bucks a day for like literally the top people in the space. I think that’s a steal. Yeah, a steal.

Erwin  

There probably isn’t another opportunity to see a rod or grant in Canada.

Seth  

No, unless you go like the grant runs his growth con but that’s not a real estate specific event like We are Real Estate specific. So yeah, like plus networking, the quality of people, I literally got, like, hundreds of emails last year messages from people after the conference, the most consistent thing was like the quality of the networking and the attendees. People were blown away. And like, my phone still blows up. Like every week, I still get people messaging me like, last year, like one guy. He thought he was done investing, that he’s like, Yeah, I had a good portfolio. He came to the conference. He’s like, Oh, I’m really missing a lot of stuff. So he sent me a message like a month and a half ago. And he’s basically three x’s portfolio in the year, less than a year since the conference, because he just saw what other people were doing. He got inspired. He learned some new stuff. And he basically went from being retired to now like more energised and invigorated within this is investing. I love that stuff like that. That’s that’s the coolest part about running the conference. So you do

Erwin  

other things besides run conferences? I understand you’re a real estate investor.

Seth  

Yeah. The conference is like a beast. Like it’s like, it’s a full time job and a half. But yeah, so we like you alluded to, like how it’s hard for Canadians to invest in us real estate. Right. Talking about complicated. It’s very complicated.

Erwin  

My understanding is majority of folks are going with all cash. It is like, like financing is you don’t take your financing as a Canadian. Well,

Seth  

yeah. So depending on like the size of the asset, and then how you’re like structured, like Mom and Pop.

Erwin  

Yeah,

Seth  

for sure. It’s, it’s tough. And so we’re working on something right now, that’s top secret. But we’re basically making the easiest way for somebody to invest in us apartment buildings around, like whether you’ve got $10,000 to invest or like million dollars to invest. It’s going to be registered funds, whatever. Obviously, I’m not soliciting anything, because it’s top secret, but it’s going to be bite if you want. So it doesn’t even involve Yeah, so. But yeah, I’m really excited. I’ve got two great partners working with me on this. And it’s, it’s really going to like, I believe it’s going to revolutionise how people invest in us real estate from Canada, it’s going to be so cool. I’m so excited. We’re not even partners. No, everything’s top secret yet. But I think everything’s on track to launch at the conference, where she’ll be like, really, really exciting because like, there’s a lot of legal work that goes into this. And accounting instruction work, like you shouldn’t see like this structuring side. But that’s on our end, like for the Canadian investor, very easy, like the easiest thing you can imagine, which is important. Like I want it to be like really investor friendly. And that’s like the main thing that I’ve always been really adamant about. It’s just making it very simple and straightforward, easy to understand.

Erwin  

I believe everyone can do some passive diversification of view into the US. For sure. I think I’d be silly not to it

Seth  

is the US economy is a juggernaut. Like we are literally a drop in the bucket compared to the US, like the US is the home of capitalists are

Erwin  

noticing us, but you’ve drilled down into much stronger markets. Oh, yes. So throwing darts at a US map? No, no, no.

Seth  

Yeah. Like I have seven like key drivers I look at when we’re looking at markets. And you know, we’re very selective in where we look.

Erwin  

Are we secretive about what state you’re looking at? Oh, no, no,

Seth  

it’s no secret. So So yeah, whenever we launched this top secret product, but we’ll be focusing in like, you know, Florida, Texas, you know, Arizona. States like that, where you’ve got the really solid growth drivers happening. good policy, too. And yeah, really excited. Yeah, landlord friendly laws landlord friendly. Like all that stuff is taxes. Yeah. And like, let’s say you wanted to invest in like a US syndication. Number one. Most US operators don’t know anything about CRA and the cross border treaty. So the election, they are a drop in the bucket. But that’s the thing, right? So they don’t know they’re not structured the right way, you’ll end up paying double tax, nobody will know who to refer you to who knows what an EIN number is, as a Canadian, how you have to register for one withholding tax, like all that stuff. So our goal is to eliminate all of that we take that on ourselves, and just make it super easy for the Canadian investor.

Erwin  

This is make it clear, this is more like a real estate investment trust that people are buying into syndication. You know, some of the folks who’ve been around longer to think syndication they think like fortress. Oh man. Yes. Yeah. Nothing

Seth  

like that, ya know? So there’s a big, big, big, big difference between mortgage syndication and equity syndication. So mortgage syndication is hey, somebody gets a whole bunch of investors together and they loan that money out on debt. Yeah, gigantic mortgage. Yeah, for sure. And you know, there’s a time in place for syndicated mortgages lots of developers will use

Erwin  

I won’t put any money into it don’t

Seth  

ever know. When I say syndication and you know, like, for instance, at the conference, Brad zoom, rock, Grant Cardone janela page all those speakers are talking about cynic. ation and funds syndication there, we’re talking about equity. So you’re writing a check, and you’re getting ownership of the actual asset in terms of equity, not debt. And then with equity comes depreciation, you get tax benefits, you get the cash flow, all that kind of stuff. Dividends. Well, so yeah, so when we talk about how people make money investing in multifamily real estate, you have your distributions. So you’ve got like the cash flow, all that kind of stuff, monthly, quarterly, however, people structure it, and then you have capital events. So that’s like refinances sale of the asset, that kind of thing. So that’s syndication, where you were going with your question was, syndication is great for a project by project basis. So that was my focus before where it’s like, okay, we’re going to do this asset, we’re going to raise the money, we’re going to take down the asset, manage it, and then we sell the assets like 100 unit building, right. And then on the fun side, it’s okay, now the fund is going to go and acquire, let’s say, 20 buildings, it helps the investor diversify over many buildings. It’s the capital right now. And the reason why we’re doing what we’re doing now is, we’re really excited about the economic conditions at play right now. I think over the next two years, we’re gonna see a lot of good opportunity. So we want to make sure that we have the powder dry, so we have the money raised and ready to go. So we can pounce on these assets in a more efficient way. And because of the Canadian aspect, doing it the way we’re doing, it is a million times easier than doing a syndication. So we’re, again, we’re streamlining the process, making it easier for everybody easier to understand.

Erwin  

And one can invest Canadian funds. Are they convert to us? Or?

Seth  

Yeah, so it would be they would invest using Canadian funds, like everything’s tailored for the Canadian investor. And then obviously, we like we have our US investors too, and they’ll participate in a different way. But yeah, like it’s just quite like it’s tailored for Canadians. I can’t say too, too much right now. But it’s just I think it’s the might be the the biggest game changer in Canadian investing in us real estate. Oh, yeah. It’ll be huge.

Erwin  

Come back when you can share.

Seth  

Yeah, well just come to the conference. So and you’ll learn all about, because it’ll be announced in there. Yeah. That’s exciting. Yeah, I’m so excited that two other partners are really excited to

Erwin  

is one of our partners has to come on the show. So Paul, is scheduled for last for the conference. Yeah.

Seth  

So yeah, like I’m so excited because like, I’ve been like working in the space. And when we all got together and said, Hey, listen, like these are the problems. This is what we want to do. It’s like, oh,

Erwin  

like this could be really huge. For my own understanding, is this no different than like a private equity REIT?

Seth  

Well, REITs are different, right. So with the REIT, you’re basically buying a stock of a company that happens to own real estate, right. And without getting into specifics, like most of the time, you’ll have like a publicly traded REIT, you don’t have the ownership benefits that come with having the equity side. So we’re talking think more like a private equity fund, where the you’re investing in the Fund, the fund will then go acquire assets, and you still have ownership of that. It’s not like you just don’t own a piece of paper on a public tree and publicly traded company.

Erwin  

So then you did get to do something similar to like, like, for example, your sponsors at your last show. Do you need like an exempt market dealer to represent you? Are you gonna do yourself? Yeah,

Seth  

so we’re licenced. So with this comes a whole lot of, I guess, compliance overhead tonnes tonnes. And you know what, whenever I think we talked about this last time, I was on the show with people who like raise money the wrong way. What’s happening? I can’t believe it. Yeah, I was in Ottawa a couple of weeks ago doing a talk there. And I had a conversation with Christian spud Fogle who and it is ridiculous.

Erwin  

Yeah, it is ridiculous. Harry Stinson, I think is out of business over this.

Seth  

Oh, really? Yeah. Like it is insane. Like the amount of like trash people put up like you can’t guarantee returns. Like you can’t you can’t solicit. Okay. It’s insane. So anyways, like compliance and everything. Yeah. So our plan, like everything runs through in the end, we stay compliant. Like that’s really important to me to like, in terms of doing everything above board has to be scalable. Yeah. And it’s just, you know, we’ve had some high profile people blow up. Yeah, it’s really important to me, like, you know, I want people to have confidence if they’re investing in our top secret thing that I’m not soliciting for in any way. But if somebody chooses to, to work with us in any way, like, they should feel confident that you know, we’re it comes down to like our legal team, our accounting team, like we’re working with some very top tier people to make sure it’s, it’s the best product possible.

Erwin  

And then also the most compliance stringent laws in Canada

Seth  

for sure. Yeah. Well, and then we look at like capital raising laws in the US. So with us, because we’re working on both sides of the border. We have to play well with the American laws as well as the Canadian laws. So it’s, that’s why the legal team has lots of billable hours right now. Making sure we’re compliant everywhere. Yeah, so it’s loaded. Yeah. Crazy. But yeah, like I’ll be able to share more at the conference. Like if everything’s on track now. We’re doing some legal stuff right now. But yeah, it’s going to be really, really exciting. Is that the the last hurdle? It’s legal stuff? Well, yeah. So like, we’re probably got the buildings under contract. No, no, but we’ve got a couple of weeks we’re working on. But yeah, we’ve got about two more months worth of legal, like securities kind of stuff and, and building things out. So but yeah, we should be on track. That’s exciting. Yeah, it’s a really cool process. Like we’re working with some very experienced people. And I’m in the space and I’m still learning about like, the the Canadian, like cross border stuff, too. For

Erwin  

anyone who’s listening. You gotta be like, wondering, juggle all these things. He’s getting married. It’s got a conference for a couple 1000 people. He’s starting a fund. And those properties are like, like a four or five hour flight away.

Seth  

Yeah. So well, what’s the fun like it? Like it allows like we’ve got, we’re talking with some very experienced people that will be coming on board in terms of like acquisitions and everything. And we’re talking like, really, really cool people. So that helps. But honestly, like, Katie, that’s the answer. Like Katie is my Director of Operations, she runs everything. I would not be able to do anything without Katie. So Hi, Katie, if you’re listening, but

Erwin  

Katie asked for a raise.

Seth  

She got she got one after the last conference. Yeah, it’s like time management. But like, I think the thing I’ve learned is, you know, there will always be something to do. And I still struggle with this. So you know, at the end of the day, there’s always another 20 things I could be doing. So it just makes me prioritise. And like think about, okay, well, what’s going to have the biggest impact on the business or on what we’re doing? And I’m finding is like, I can actually drop some stuff. And it doesn’t necessarily have a huge impact. And I’m learning to is kind of like the CEO kind of front person is like, I have to be very careful while I’m, you’ve learned this too, like, I have to be very careful about where I put my attention. Because I my schedule literally is like, schedule in 15 minute blocks. So like from the morning all the way tonight. 15 minute intervals. It’s insane. And your dad, Oh, yeah. Plus my son and everything to like, he’s got hockey, like I coach, his hockey teams and everything. So yeah, it’s a whole point. Now. He’s six.

Erwin  

And they play like regular like full ice hockey.

Seth  

No, no, no, it’s like halfway. So it’s like in the morning, so it’s like tomorrow. It’s like 830 in the morning. And the kids have like snot pouring down their nose, and it’s fun. I like That’s cute. Yeah, yeah, it’s good. But yeah, it’s insane. are going to referee ever again. You I didn’t come back.

Erwin  

I didn’t come back to this. We’re talking about oh, no, no,

Seth  

no, no. So like, last year, actually, I came back. So before I was doing like, I gone to the states did some hockey there and then came back and worked the OHL for like nine years. I think it was I’m not getting around all around Ontario. Oh, yeah. Yeah, everywhere. I packed them in like five, six years ago, I retired. I didn’t skate at all for five years. And then last year actually started doing something like the, like more local junior hockey, like once a week. So it gives me my hockey fix. So I stayed within like an hour bubble. So like I’ll do like University of Guelph. That’s close, like Laurier and Brock. Stuff like that. keeps you fit.

Seth  

I bet you bust your butt. Yeah, it’s good. Actually, you know,

Seth  

the cool thing for me is I wanted to prove to myself that I still had it because I hadn’t done it for like five years, but it was like riding a bike. Like it was like I’d never left. There’s just some kind of games. Yeah, yeah. The he keeps one that the slimming Centre in Guelph. A couple like a month ago, month and a half ago. He loved it. Like it was like a full house like 5000 people there and he loved it. Yeah, they have 5000 people there. Yeah, it was a special event game. So usually they don’t have that like with the OHL like you go to one didn’t like that place holds What 910 1000 people. It was awesome. Yeah. Lots of fun. You’re getting like that refuse such chant. Oh, all the time. Get off your knees. Yeah, you’re blowing the game.

Erwin  

The funny thing about the refuse suck chant and not about that. It’s just like the hometown fans are all incredibly biassed for sure. Oh, for sure. You’re out to get my team.

Seth  

Yeah, but you know what, like, you have to be kind of crazy. I’m not sure how we got onto the subject of hockey. But yeah, like you have to referee at a high level. You have to be kind of crazy. And you have to, like thrive on the pressure. Because like, you’ve got 10,000 people booing you, and like something happens and like you have to make a split second decision. You have to be very confident. You have to be able to adapt, and then you have to thrive under pressure. And most people can’t do that. Like it’s a very specific personality type and live with mistakes. Yeah, well, I think maybe hockey helped me run a conference. I don’t know.

Erwin  

But But yeah, just hockey fans out that memory. I always love never forget the like Terry Fraser and Doug Gilmore. Yeah.

Seth  

Yeah, like a carry wrote a book and like growing up his favourite team was the leafs. So but

Erwin  

yeah, we’ll get off hockey though. You talked about fundamentals and the Friday of the event. Yes. You mentioned this opportunity think there’s opportunity next two years. Yeah. So I have my own biases where the markets going, what do you see in the market? Why is there opportunities? Well, I think what’s happening, especially if it worlds was ending, is we’re going into recession and all this while the road is always ending.

Seth  

But, but yeah, okay, it’s looking at it specifically from like a multifamily like a larger multifamily standpoint. Over the past couple of years, a lot of people got into deals in using bridge debt. So short term debt, you’re paying a lot more for interest rates. And then with the plan of rolling over into conventional financing after they implemented their value added programme. What’s happening now is those bridge loans are coming due. And interest rates are a lot higher, so they can’t roll into another bridge loan. And the property values have dropped or their business plan wasn’t able to do what they wanted to do, or the property now can’t qualify for conventional financing. So there’s going to be a lot of people in some difficult situations coming up, where it’s a solid property, they just put the wrong type of debt on the property, certain amount of cash, yeah, they’re stuck, they were over leveraged, right? They were stuck, and you can over leverage a house, you can over leverage a five Plex, and you can over leverage a 200 unit apartment building, it doesn’t matter. So and for those reasons, I’m very much looking forward to the next, you know, 1824 months. And you know, it’s an opinion that shared not only by myself, but you know, the partners I’m working with, and some other people I really look up to in the industry. So you’ll be seeing some some people making some big moves over the next couple years, especially in the apartment space, in terms of like deploying an insane amount of money. Insane, right.

Erwin  

Yeah. And that’s, that goes to the point where you’re doing an equity syndication versus a debt syndication. Yeah. We have equity. You don’t have debt service, yet. Well, yeah. So so same debt services these guys are probably dealing with

Seth  

Well, no. So so just to clarify, we still put a mortgage on the right. But the the money we’re raising is

Erwin  

like, for example is like the investor today will have a tough time putting like a HELOC. a HELOC for a down payment and getting a mortgage. Now, your blended rate still over 6% somewhere, you know, I mean, but you know, that’s what I’m saying. Like you’re using cash, essentially, renters are pulling cash. So there’s no debt service on that money to be able to buy apartment buildings,

Seth  

correct? Yeah. And then, you know, the profits are split with like, you know, we can go into how everything’s structured, if you want but yeah, like, you have all the benefits of ownership, you get the depreciation, the tax credits, you have the strong cash flow multifamily provides, you have the stability, and then you have the appreciation aspect through, you know, value add components. So to me, like, if the markets getting Rocky, I want to put my money in apartment buildings, like it’s you look at any other real estate asset class apartments when hands down, looking at the past three, three recessions.

Erwin  

So poof, the future is all bright and sunshine and rainbows.

Seth  

Well, it turns multifamily. No, no, like we still have lots of issues going on in the economy. Right now. We have lots of issues going on in the world. But I look at, you know, if I look at the past three recessions now, obviously, nobody has a crystal ball. But chances are if an asset performs a certain way, the past three times, it’s probably going to act somewhat similar the next time. Probably someone has a

Erwin  

better asset class, please let us know. Yeah. Because we have we will come investing with money.

Seth  

Yeah, exactly. And if you have a working like, crystal ball, let me know, too. And I’ll pay you a billion dollars for it. But, but But yeah, so if I’m expecting some choppy economic waters, which I think most people are, where do I want to put my money? Not in the bank, you know, very few places, but apartments like it’s proven performance. Yeah, that’s a great safe place for my money that’s actually going to produce cashflow. And appreciate

Erwin  

and some diversification outside this country.

Seth  

Oh, 100%. Yeah. And lots people have different differing opinions on what you know, the direction things are heading in the country and stuff like that. So yeah. Interesting. Yeah. And also, you will be investing in the business that generates revenue and US dollars. Right. Let’s have no, it’s not bad at all. Good stuff. Yeah. Interesting. That’s why I’m so excited. But I can’t tell you too much.

Erwin  

We are not soliciting money for this. No, I

Seth  

am not. No, no. No entity is like we’re still working on the legal stuff. So yeah. Awesome. Where can

Erwin  

people find out about the conference? Because everything seems like the world starts with conference.

Seth  

Yeah, but yeah, my world. My day starts with the conference. And it ends with the conference. So yeah, the conference website is multifamily. conference.ca. And, yeah, like ticket prices go up every week. So the sooner you buy your ticket, the more you’re saving, and just hurry like VIP tickets are almost sold out. It’s like the very best ticket we have. And then platinum sold out last year and we’re selling a lot of platinum stew so they will sell out as well.

Erwin  

But you don’t want to platinum because you end up in the basement. You want a VIP.

Seth  

VIP is like the top ticket like for sure. And like the quality of people there who I know have bought a ticket. It’s a really cool room. A really cool room. Terry and I are

Erwin  

proud sponsors of the multifamily conference as well. Yeah, you

Seth  

guys send come visit ermine and cherry. And thank you guys have a booth there and everything too. And you guys will be working the room. So yeah, awesome. Yeah.

Erwin  

All right. Any final thoughts stuff?

Seth  

No, just, well, final thoughts. Somebody The conference will have a whole lot of fun. And, yeah, just appreciate everything you’re doing.

Erwin  

Back to the forest analogy. Yes. It’s like watching this these $300 million movies, which is pretty close to your budget. Pay, like, I pay like 16 bucks for that ticket. And I’m like, I’m so grateful. So I’ll spend all this money for you to enjoy this

Seth  

for you look at it, like I know what I’m paying people right to show up. And so, you know, if you wanted an hour of their time, I know what you would pay for that. Right? So I’ve kind of taken that we’ve got all these people on stage. And you’re getting that for like a small, small, small, very small fraction of that. I think it’s a no brainer. Plus, like it’s not Yeah, sure you’re coming to learn stuff. To me the real the real value is networking. Like if you’re looking for an investor, somebody’s they’re looking to place money. If you’re looking for a potential partner, somebody’s they’re looking for another partner. If you’re looking for deals, somebody’s got deals, like there’s so many stories from last year where people came, found what they were looking for, and I’ve been able to take action on it. And that’s why like zoom networking drives me nuts, like zooming events are great. But like you’re sitting here in your pyjamas eating food, like you’re not networking, like you have to show up in person being in the room. And that’s why I’m so passionate about like, that’s why I stuck my gun last last year with the conference. And for this year, like you have to be in the room. And that’s why we have three different ticket tiers depending on who you’re looking for. And the date again. Oh, May 26 to 28th It runs Friday to Sunday. And then stay tuned for an announcement for something on the Monday and Tuesday for like the more experienced operator

Erwin  

fibres. Is there a ticket level that gets you into your bachelor party?

Seth  

The bachelor party? Ooh, I think that would be the ultra VIP.

Erwin  

We haven’t come up with that yet. Yeah, tax surprise for that one.

Seth  

Yeah, to be honest, I haven’t even like I’ve been so focused on the conference. I haven’t even thought of a bachelor party so

Erwin  

we can discuss it after you’re gonna

Seth  

discuss. I’m actually doing an event in Vegas in the start of May. So maybe I’ll write down some ideas.

Seth  

Thank you so much for doing this or finding 50 minutes and your schedule for this. No, I blocked off like an hour and a half for you around. So thanks so much. Thank you

Erwin  

before you go if you’re interested in learning more about an alternative means of cash flowing like hundreds of other real estate investors have already then sign up for my newsletter. 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  

Welcome to the truth about real estate investing show for Canadians where the show content is decided by you sort of. I, Erwin Szeto of iWIN real estate, I’m always out there networking thinking with real estate investors in our community. I want Instagram, Facebook and Twitter to keep my finger on the pulse of what investors are interested in and what’s going on. Currently, the market has turned that shouldn’t be news, interest rates have shot up credit and capital markets have dried up. For anyone who’s out there trying to raise money right now you know exactly what I’m talking about, both in private mortgages in for capital for joint partnerships. And now in big news SVB. Silicon Valley Bank. That’s kind of old news now, because as I woke up this morning, I read about Christmas Christmas bank is now going, it’s now been consumed by a competitor UBS for a lot less than the company’s worth. So along with that central banks around the world have promised to provide liquidity, which means they’re providing more money out, they’re going further into debt, which means more inflation, and economic turmoil is great for mortgage rates coming down. Last week, actually, the five year bond rate in Canada actually reached a 12 month low. So we should start seeing some less expensive mortgage rates. Probably already. We’re already seeing them real estate market pickup, the market that I operate in, in the price range and property types that I operate in, prices are well past the bottom. And it looks like the bottom was this past August. So congrats to our clients who’ve been accumulating property from August until now, I wasn’t expecting interest rate cuts in the US or in Canada until next year. But based on the current happenings, the bond market has moved up the timing and increased the size of the cats. So again, that’s only good for mortgage rates. So for anyone who doesn’t have locked in mortgages like myself, this is welcome news, or anyone who has mortgages coming up. I know many of you out there have mortgages coming up. So this is great news for you. Sadly, we’re seeing novice investors and coaches not only lose their investments out there, but go bankrupt. It’s actually I found out last week that pretty sizable, newer investor who got started around five years ago who’s well known in the community, they recently missed payments on their on the money they borrowed without any communication. So real estate investors are supposed to be like this, when done right, which is slow and boring. And with cash flow, as Warren Buffett quote goes. So understand that when I say boring real estate with cash flow, that’s right, for most people most of the time. There are of course, obviously exceptional people. We’ve had many other show developers and whatnot, who can operate without much cash flow for many years. Like is that deep pockets? That’s not most people most of the time, as Warren Buffett quote goes, when the tide goes out, you realise who’s been swimming naked? Unfortunately, there’s many gurus out there selling coaching and raising money and selling courses. While the marketers are in courses in coaching because they honestly can’t raise capital right now. And they’re selling. They’re selling courses on how to live highly leveraged and invest in real estate with very little of your own capital. Which is this markets terrible for and a whole lot of people lost their shirt doing so that’s too much risk for our 350 Something clients. FYI, none of my clients are going bankrupt. Actually, they’re thriving. If you understand my investment model and how long we’ve been doing it for, then you understand that I’m talking about the truth. I think you can appreciate how well Mike our clients are doing. I wonder if the other coaches and gurus out there can say the same. Understand I’ve been at this since 2010 coaching clients. If you do want to learn how to vest is right way for most people, most of the time, I’m hosting a webinar this Tuesday night. Hopefully you’ve picked here this episode. So that’s March 21. No charge on this one. And this is regarding my favourite investment strategy. One of my favourite benefits of investment strategies, which is student rentals. If you want to learn the strategy that works that allowed my clients to raise their rents 40% over last year’s market rents, you will want to tune in my own rents. Unfortunately, I didn’t have complete turnover my my tenants, but my Hamilton property went up 20% over last year. Invites have already gone out in my email newsletter many of you have already registered. And if you’re not on our email list, that’s too silly. I recommend you do the same and share my newsletter with anyone you care about. And you can find that WWW dot truth about real estate investing.ca. Again, that’s www dot truth about real estate investing.ca. Simply type in your name and email address on the right side and you’re good to go. Besides, you may have to check your spam this Saturday as well for the first time ever, Cherry and I be hosting our monthly meeting in Whitby, Ontario, immediately followed by an income property tour in Oshawa, led by our team member Coach Steve Phillips of HGTV fame. I’ll be there as well finding support and cheerleading along the way in the meeting tray. We’ll be sharing her top tax tips for 2023. And in my humble opinion, this is the most difficult accounting year. I can recall recent history With all the new changes with the anti flipping tax and the US housing tax, you know, of course, I’ve been following the economic story. With Silicon Valley parents demise, the US Federal Reserve’s bailout, the Swiss government bailing out, and then orchestrating a deal for UBS to purchase credit Swiss bank, opposite to the economic data that shows where interest rates are going. So if you’re trying to decide between fixed and variable you will not want to miss this is this week’s show, we have been Bergen who has acquired 14 income properties over a short period of time, and has the scars to prove it that metaphorical scars. Paint is a graduate of one of those many years paying 13,000 per year for group coaching. Remember, that’s group coaching that’s not like an MBA or something or formal business programme. He spent close to $50,000, over three years. In his words, he grew too fast, too soon, his investment was ego driven. And that’s not uncommon coming out of the group that he visited. I’ve heard that from many other past students, he nearly lost his shirt, when he had three and a half, between three and four Innovation Project major renovation projects on the go. As in there’s lots of vacancy, and lots of money going out the door to pay for renovations. My observation is that if not for Ben’s on sweat, hard work on the tools, he was in the construction industry as a oil refinery construction business, and he would have ended up bankrupt. Also, because he was investing in Sarnia, the price points are a lot lower. So things are a lot more affordable. So in combination listings, then sweat equity, his own being on the tools and knowing how to be on the tools and just more affordable market. And that’s likely what saved him in the business world been filled both the visionary and the integrator role. So for example, if this business was Apple, he was trying to be both Steve Jobs and Tim Cook slash Steve Wozniak, trying to be inclusive here. Anyway, as in Steve Jobs, could sell the big dreams and big products and you know, be the motivator, be the visionary, raise capital, but you needed a Steve Wozniak type to actually build the actual first computers, or Tim Cook, who is the current was the CEO, Chief Operating Officer, now the current CEO, he made operations as smooth as possible to make things efficient. So that product could be manufactured and delivered in a shorter amount of time. Bring keep the costs, bring the cost down. Yeah. So yeah, Ben, we’re trying to do both things, almost three things. In my study of failed real estate investors. They were credible at raising capital, their influencer marketing was expert level, they get excellent training and the programmes that they’re in, but they cannot execute on their vision of having on time renovations on somewhere close to budget. And it’s been a challenging environment. So, but it’s not like it, it was always a challenging environment. You know, a lot of these people start started in the pandemic, and they knew they’re entering a challenging environment, both in construction. And the truth about real estate is that no one’s talking about it. There’s more folks out there than ever trying to raise capital from both veteran investors and we can guru workshop graduates. But like I mentioned earlier, a lot of the best people I know at raising capital, they’re having massive trouble because passive investors lenders have dried up with interest rates being so high back to then, if not, for some pretty decisions in his skill set, then would have been in huge trouble. Hence, it’s best to give this episode a listen, learn from his own challenges and hopefully make your investment journey a lot smoother. Ben lives in invest in Sarnia he has construction background, he has since left a six figure job and that pension behind he’s starting up a property management company with the help of coach Elizabeth Kelly, in the name of his pm company. You can find it on Instagram RSP property management 2021 All the links are in the show notes folks. Please enjoy the show. Hi Ben. What’s keeping you busy these days?

Ben  

Real Estate Yeah, real estate in general. It’s been a busy few months for sure. Last six months been really busy. Just finishing up renovations doing refinances all that fun stuff that we do as real estate investors.

Erwin  

Well not all real estate investors you have a 14 properties is a mouthful.

Ben  

Yeah, it’s a mouthful, there’s a lot going on. There’s always something there’s always something with every property that you just got to keep. Again, I just always pick away the things always prioritise what needs to come first and work on that stuff right so that’s always just me I don’t allow stuff to get overwhelming for me because it’s just it is what it is and you just got to work through it and be calm stay calm.

Erwin  

Hey super chill guy. 14 properties and these are what’s the range single family duplex two

Ben  

yeah single family I got a single family semi detached which was actually my first purchase back in 2018 was a single family semi detached and then duplex triplex no four Plex, but I do have a five Plex that is a for residential and one commercial. I’m actually looking into to rezone that commercial space to residential because it’s literally only a bedroom size, commercial space. It makes no sense for it to be commercial, but because of where it lands inside the zoning area, they require to be commercial, but I’m gonna hopefully have a rezone residential and make it part of the main floor unit of that building. And then and then also apply for a permit to put another unit in the basement. Cool. Again, lots of stuff going on.

Erwin  

How big is the commercial unit? 600 square feet.

Ben  

Oh, goodness, no, it’s like

Ben  

100. Yeah, yeah. Literally. Not the commercial space. Right. You can’t like an ice cream store.

Ben  

Not there’s no bathroom in it. You can’t even take out ice cream. Yeah. I guess I mean, but yeah, it was one of those things. Here

Erwin  

you go go washroom somewhere else.

Ben  

Yeah, just like throw it out the window, I guess? I don’t know. That tiny. Yeah, it’s just a tiny bit because where lies in the zoning of that of that street. Interesting. They want the front facing window of that building to be commercial. So it is just silly. And that’s why again, we had to bring it to council and talk to them and be like, Hey, listen, this doesn’t make any sense. Yeah,

Erwin  

yeah. Let’s say you’re trying to do they want a business. They’re generating income for your product track more taxes and all sorts of thing. Yeah, it was wonderful things. Sorry. I have to ask, how did you find this? The five Plex with the commercial being mixed use?

Ben  

Um, that was with the with the lender, or the lender?

Erwin  

Tough. Okay. Yeah. It still made sense. Even though you had to be lender rates. Yeah,

Ben  

yeah. Yeah, it’s, I mean, the purchase price was quite low. I think I bought that place for 380,020 20. I think the pre pandemic or post pandemic that would have been during right around it was at the end of 2020. Oh, okay. So you probably got a deal. Yeah, I got it. Yeah. 383 80 was, and then I think last time it refight it or reappraised for over six, was barely doing anything to it. So again, the market was on my side at that time.

Erwin  

Good for you. Yeah. You greedy when others are fearful.

Ben  

Yeah. I’ve always been like that. I’ve always, you know, Warren Buffett always says, Buy One thing people are scared, right? So people returned a little scared of that time. And I was just ignoring all the noise and just wanted to focus on me and stay in my lane do my thing. And it’s you know, it’s worked out

Erwin  

to for you. So good for you. All right, where should we start? No. So I always ask this not always. Why are you investing in real estate? Before recording you mentioned like, you have a sound like a nice paying job. Pension Benefits everything. Yeah. It

Ben  

seems to be the same story with a lot of investors. Right? They sort of they think I know for me, personally, I thought like I was doing everything I was told to do, or one go get it. You know, I went got a trade. I went and got a job paying. I don’t think it was making 50 bucks an hour at the time. Pension good benefits, you know,

Erwin  

the $50 is probably gone up. Yeah. Oh, yeah. It’s

Ben  

gone up since I think it’s yeah, I’m not even sure where it’s at right now. I did go up with inflation. And I don’t even know where the rates are at right now in regards to, I think it’s probably around 55. So, like Emerson, yeah, inflation, Baba. Yeah. So yeah, it’s just sort of living the dream. I was I convinced myself I was living the dream. And then just consistently notice, like, myself, always questioning everything and asking, like, one day I wrenching. You know, one day, I had a couple of wrenches in my hand, I’m working on this piece of equipment. And I’m like, is this it? Like, is this really it for me? Like, is this what I’m gonna be doing? Like I was coming up to 40 years old at the time. And I’m like, This can’t be it. There’s got to be something more out there for me than this. And even before that, like I’ve always said, if I find one thing that I that I really think I can be good at. I’m gonna go all in on it. So I think it was leading up to Christmas of 2018. My wife told me that I should start reading books. And I said, Sorry, you weren’t worried before? Oh, goodness, no. I was a construction worker, I would go home. I was not the type of construction worker to go home and drink beer all night. Like there are a lot of them do. I was never that one. But I was always I always just kept myself busy with little projects in that route in the house and stuff like that. But she goes, you know, you should start reading books. And I’m like, What am I going to read books about? Like, I don’t read fantasy books in this kind of book. And I just got to be some sort of a book of value. And so one day I’m scrolling through Instagram and boom, this ad comes up for puncher financial self help books. And there was this book right down right front row set of purple with the yellow lettering I’m sure you know what book it is. Instead of Rich Dad Poor Dad on the front of it. And that caught your attention that caught my intention. I had no idea what this book was even about. I just knew that I was

Erwin  

okay you’re the probably the first ever heard that learnt the book from an ad almost everyone else was given the book.

Ben  

No, never. I literally like I stumbled into real estate. I literally stumbled into it. Oh,

Erwin  

man, people have all this hate for social media. Here it is. A bunch of money, right? It’s

Ben  

just like, I read the title on like, bye What is that all about? And yeah, I just said, Okay, you want to get me a book for Christmas? You want me to start reading books? Give me that book there. Again, no idea what it was about. They hadn’t even heard of Robert Kiyosaki, nothing like and I was just living that blinders. Yeah, just had the blinders on and really wasn’t focused on anything else, but just going to work and making that paycheck. And then after that, I read David children’s book, The Wealthy Barber and then after that book, yeah, he’s a local to Sony as well, which is really cool. And then I read the Rich Dad, Poor Dad quadrant, and then just I was just sort of I got hooked into this. And then I found out that the, I think it was like legacy education was rich dad was Robert Kiyosaki his education programme. Yeah.

Erwin  

They previously had the rights to call Rich Dad. Yeah, yeah.

Ben  

Yeah. So and they were coming to Sarnia at a little weekend conference going on. So I was signed up for that. And it was just sort of from there was just like, wow, everything just sort of started happening really, really fast. But and I sort of knew that, at that time, this was it. Like, like I said, I was always waiting for that one thing to enter my life. And I was gonna go all in on and that ended up being real estate. And so that’s where I went in all in. And that’s where I’m at now.

Erwin  

Are you still friends with legacy? No, I

Ben  

never I always only one weekend conference. Oh, it was only one weekend conference. I didn’t get signed up with them further than that. Then I started looking around and sourcing out other ways of educating myself on real estate, because it was very expensive at the time still is it still is it’s very expensive. I did yeah, at that point. I was still getting like I’d pay $250 to be there for that week. I think it was $500 to be there for that weekend. Right? And I’m just like, handing them the money. And I’m just like, Man, this is a lot of money. So then then when they threw the other prices in my face, I’m like, No, I can’t do this. So I’d be divorced tomorrow. If I said yesterday,

Erwin  

so what was your next step then? From that point, they’re

Ben  

looking at ways of getting myself more educated in real estate investing. So that’s when I we started sourcing out coaches, there’s people coaching real estate out there, that and I was able to source out a coach. That’s really what got me going in the real estate business. And once I got that coach under my belt, and you know, helped me really learn the ropes of real estate investing. Can you share how much that costs that the first year I believe it was around 13,000 for the year,

Erwin  

okay, rain never crushed her rain or Rockstar never cried.

Ben  

I mean, they did early on, but it was just again, I I should even back up for I was a very shy, timid person before. I was very shy, very timid. I was just I wanted to stay in my bubble all the time. I was introverted, definitely an introvert by nature. And so when I was sourcing out December, I was always just sourcing out the easiest overhead. I looked at something like that. I’m just like, it would just been way too overwhelming for me. Yeah. So I mean, stuff like that now excites me, you know, because I love getting around those people doing massive things, writing massive deals, massive projects. I was well talker in the VIP lounge, you know, getting around those people seeing what they’re and hearing what they’re doing. I’m like, wow, I sort of can’t believe I’m in this space right now. And to be honest, because it was it was very cool to be around those people and inspiring for sure.

Erwin  

Very cool. Very cool. For the listeners benefit if you need a referral for where to get started. I’m happy to give one and it won’t cost you $13,000 a year. Okay. For context. Again, it’s a long time ago, when I joined rain, it was $200 a month plus times. Okay. All right. And that was when Don owned it. It was wonderful education. Okay, again, $20 a month versus Yeah, right. Yeah. $2,400 a year plus tax.

Ben  

Right, right. Yeah, definitely a better deal.

Erwin  

I’m cheap. So it seems you like my wife would not?

Ben  

Yeah. That’s one thing I’ve learned. I’ve learned to be more. Yeah, like, okay, like, this sounds good. But is it the best possible deal? I could possibly you know, this, there’s something else better for a better price. And there always is. There’s always something better out there for a better price. It’s just you got to find it. You got to be willing to look for it. Right? Right. It’s like anything,

Erwin  

because for context for 13,000 a year. I could probably find a coach to coach you one on one. Yeah, like one of the best coaches versus how to pay for a programme be part of a programme be a part of a group and whatnot. Way less attention. Yeah, yeah. And I’m not talking about any coach. I’m talking about like one of the top five in the country.

Ben  

Right. So yeah, we’ll talk

Erwin  

so I can actually comparison shop no different than you said. I’m not paying this when you at the course. Yeah, no different when I was at a timeshare the story I’ve given us, you know, I went to a list of timeshares.

Ben  

Oh, yeah.

Erwin  

Free Lunch and figured out what else they included and when they pitched and they pitch pretty hard. I’m like what we agreed we’re not gonna buy anything today. And then as soon as we walked out, like my phone, go on Kijiji, and I can find the exact same time I’m sure for like 15 cents on the dollar, right? Because there’s people that no longer want them. You know, they’re like 70s 80s, or they’ve been injured and doesn’t make financial sense for them anymore to own that timeshare. Right. So just waiting five minutes. Yeah, if I really wanted it, I could have saved 85% Yeah, just a little bit of comparison shopping. Yeah. Never been easier. Yeah. That’s, that’s when

Ben  

it comes down. You got to compare shop. Because there’s, there’s always Yeah, like said there’s always a better deal out there if you just gotta look for it. And, and my attitude used to be always just like, whatever is easiest. Go with it. Right. And that can be very expensive. Yeah, very

Erwin  

expensive. Yeah, very expensive. Or it’s not optimised. It’s just not my nature. I, I’m kind of a fanatic to try to optimise everything, including, like, how can I get like literally like, how do I get from A to B faster? Yeah. You know, driving wise, map wise, you know, I always like to optimise everything. It’s just my nature.

Ben  

Yeah. And that’s a great way to be, it’s a great way to be because I feel like I could probably learn something from you know, optimization, really making sure that you’re doing the best thing, the best thing possible all the time. Yeah. Well, why not? Yeah, excites fun. It’s probably fun.

Erwin  

Suddenly, like if I can save some time or surveys and save like five minutes in like a 60 minute drive that makes me happy. Oh, yeah. That’s weird that way. Yeah.

Ben  

I think I think he’s just a guy thing. Before

Erwin  

recording, we discussed who you were coaching with back in this is like, 2019, that you said, Yeah, you were paying 13,000 calls a year. So to protect the innocent, you know, and it’s till proven guilty, whatnot, we’re not going to mention names. What was that experience? Like, though? What was that programme, like,

Ben  

I felt it was good when it started. It’s just I think, as it grew, there just became more and more, it just got a little bit too noisy, per se, I think just noisy, there was a lot of a lot of information that was being thrown out to me, that wasn’t really pertaining to what I was trying to achieve in my business. Just because when it gets to be so big, you have to appeal to the masses. Right? So the your a lot of the information is generally is general information. So everybody can you know, so at least it’s touching some people in the group, right? Yeah. Or they’re covering multiple topics. Yeah, yeah. So I mean, and for me, like I was, I was at that point there, it was just sort of like, okay, like, let’s, it seemed to be a lot of the information than what that also it was getting, a lot of the information was getting repeated over and over again, it was just the same information over and over again. And so I was just like, okay, you know, that’s at that point, there was, it was just like this, it’s just time to go and, you know, expand my wings and get myself in different rooms, bigger rooms around different, you know, big people doing massive things that, you know, things that I want to do like, the bigger commercial Maltese, and also that land developments and whatnot. So,

Erwin  

excellent. So you were at this group for three years?

Ben  

You mentioned three years. Yeah.

Erwin  

It was a long time, too.

Ben  

Yeah, it was a long time, I met a lot of really good people, there’s a lot of really, ya know, that the network was just fantastic that people were awesome. That part of it was really good. I made a lot of really good friends, and you know, lifelong friends in the industry. They’re very, very helpful people and people that want to, you know, lift you up, and guide you help, you know, in your problems and your troubles. It was really nice to be around that people around those people getting into the industry. Like I said, I was very shy and a nervous person. And these people just sort of bring out the best in you. Right. So that was that was that was a fantastic part about being in that community. For sure.

Erwin  

So one thing consistently I poopoo on a lot of these organisations, but one thing consistent across all of them, I find is that generally their people are nice. Yeah, like my experience at REI. In my experience, the Rockstar people are just generally very nice. Yeah, of course, you’re gonna have the bad seeds. And yeah, and then again, like, even people that want to take advantage of you’re gonna have to be nice. Yeah,

Ben  

yeah. Yeah. And that’s one thing that I’ve learned for myself is like, you gotta watch it even just recently, like, I’ve made a deal that I look back at now. And I’m like, Was there really? Was there my interest really their main focus? Right? Was this really a deal? I should have said yes to. I’m looking back at it now. And I’m thinking probably not based on the way the whole transaction happened. And I just read something the other day, if it’s like, if the transactions, it’s if it’s easy, no questions asked. It’s a good to go. But if there’s all this confusion, then you’re wondering what’s going on why these, why this is happening, why that’s happening. And all these questions are popping up, just drop it and move on. Like, just just really make sure that if it’s easy, it’s meant to be if it’s hard, keep going like I mean, then then I feel like if you’re pushing it to make it work, or make it happen, or whatever, you got to walk, you just need to call your loss. At that point. You haven’t lost anything, because you haven’t signed any paperwork. But yeah, just make sure that as a new real estate investor, and that’s the one thing that a lot of newer when they get excited about a deal, when they get a deal that’s in their hands, right? They get really excited about wanting to make this thing happen and make it work and then they again, put the blinders on and don’t really see the big picture of what’s actually happening on happening and, and I think that’s where a big loss And for me was, you know, pay attention to who? What the people are saying to get the deal done? Like, are they just saying things to make it sound good? Or is it legitimate? Like, is it a legitimate comment? Or are they legitimately trying to make a good deal for you? And that’s one thing I’ve learned, you know, recently just, you know, next DNI by whenever that might be, if it doesn’t make sense, right? From day one, it’s a no, that then that should just be a given. You know, that should really just be a given.

Erwin  

In general, we should all be saying no, more often than Yeah,

Ben  

yes. Honest. Yeah. Cuz I mean, I think, um, you know, as a newer investor, you always just hope for the best when you get into these, you know, you hope for the best. Yes, there is potential. And of course, there’s potential and everything. But you got to make sure that you are dotting your I’s and crossing your T’s and really making sure like, don’t be scared to buy, but just make sure you’re buying. Right, right.

Erwin  

Are you speaking from like, something you bought, like a product or coaching or an investment?

Ben  

It’s an investment, it was an investment? Yes, it was, it was a piece of real estate. Yeah, piece of real estate that I had bought it. But again, it was very confusing. There was a lot of noise, a lot of questions, a lot of things going on, and you’re just like, what was your bought? Was a wholesale private, it was it was a wholesale deal. It was a wholesale deal that I was buying, yeah.

Erwin  

What kind of questions do you have? Well,

Ben  

I was just sort of like, well, first of all, like, you said, there was gonna be a vacant unit, and there’s no vacant unit. But you said that this person was leaving, and then they’re not leaving now. And then also even close them, right? Reluctantly did Yes. And I guess it was, yeah, and you’re shaking your head, I get. Again, it was one of those investors with a lesson I learned I chalked it up as a lesson. And that’s the way I look at all these mistakes I make. It’s just, they’re just their lessons to make me a better real estate investor in the future. I’m still looking, I’ve only been doing this for three years. I don’t claim to know it all. And I never will know it all, because there’s just so much to know. But yeah, when it comes to for me, that was a big part of personal growth. For me, it was like, you know, I was always very passive, very passive person and thinking that everyone’s out there to make a good for everybody. Oh, no, you’re it’s not right. It’s not it’s not the case at all. You just got to really make sure you’re looking out for number one, which is yourself when you when you’re getting your real estate. Yeah, so that’s and again, it’s just I learned it too late. But I mean, it is what it is. And I’ll chalk it up as less now, I have felt the pain, which will now just, you know, I will never want to feel that pain again. So I’ll avoid those. Those mistakes in the future.

Erwin  

We were helping a client buy a house, it was tenanted, and for everyone knows just signed an agreement before standard language is vacant possession. Yeah. All right. So we didn’t have to say anything. Addition, on top of anything, right. Is there a regular conditions when I went from the deal, as well, my team members, you reminded the selling agent. They don’t forget when you vacant position back for closing. And then they saw agents like okay, here’s here’s the forms to say you’re moving into like a not like, oh, no, we’re an investor. We’re not moving in. We’re not signing those. So the listing agent screwed up. And we’re not closing, right. We’re not assuming your tenant, like best what they wanted to just sign in anyways. Like, no, we’re not doing that. We’re not Yeah, we’re not breaking the law. Everyone’s breaking the law or whatever. We’re not signing that. It’s just being shady. We’re not being shady. Yeah. We’re not doing that. And then they offered us compensation. I think they offered us like 10,000. We said no. Yeah. Because the Mark I think left the room was really low. Yeah. Like, that’s not enough. That’s like, covers us for like eight months. Maybe. So we’re just pushing up the platform. Eight months? Yeah. We might make him possessions what we agreed to. Yeah. Right. And so eventually, we had to walk away from the deal. But yeah, we were weren’t closing on that. Yeah. And

Ben  

you know, then that’s a beautiful. That’s what I wish I would have done. I would have been like, you know, there’s just too many red flags popping up. Yeah.

Erwin  

Because they couldn’t deliver vacancy. How are you supposed to deliver vacancy? No, stranger. Again,

Ben  

you’re, you’re listening to what the people are saying. And the people are saying just pay the person $4,000 though, leave who’s seen who’s saying the sell. So let’s hold the wholesaler. Just pay them $4,000 They’ll leave. Oh, okay. Well, you’ve already had the conversation with the person. Yeah, they’ll leave. Don’t worry about it. Oh, my God. Oh, I know. It’s embarrassing. It’s the lessons I want people to learn. I’m glad to take the brunt of the mistakes here just so other people moving forward, can learn from me and be like, You know what, Ben Bergen did that. And he said not to so don’t do it.

Erwin  

Because we negotiate these things before closing before we get a deal. Deal together.

Ben  

Yeah. And then moving forward. It’s like, yeah, that’s it vacant possession or nothing. If it’s a very you’re looking to do on that property, then it only makes sense to get a vacant.

Erwin  

So I should bring it up. Before recording. We were talking about wholesale, for example. And I think as soon as it’s wholesale private deal, whatever. I think it needs double and do the due diligence of what a regular deal would need. Yeah, this is a general rule of thumb. Yeah. So there’s like no way I’m not inspecting. Yeah, right. Or, you know, I’ve been around the block a few times. So I’ve you know, I’ve I’ve bought properties without inspecting. But again, I’m different. I can afford stuff. And also, I’ll still have it inspected so that I have my check. I have my laundry list of things to do for my general contractor. Yeah.

Ben  

Right. And it just creates a good list of ammunition going into the negotiation. Right, like, Well, you said it was this and now I found this right. So it’s

Erwin  

Oh, no, I’m saying I for referrals still. Oh, okay. I’m at a new game. I’ve been around the block long enough to know what stuff costs. Yeah. Right. And I know what I can’t see. So I can accommodate for that as well. And then even still, if I, for example, had a boiler go to the boiler went a year before I expected it to go, but at least I plan for it. Yeah. Right. Yeah. Just enough for the if you’re gonna do as a newbie, you better have help. Yeah, but deep pockets. Yeah,

Ben  

I just had a furnace go last. I think it just replaced it yesterday in another place. Yeah, it was just one of those things. You just happens. You just gotta you just gotta be able to be resourceful and get fixed and make it right.

Erwin  

So I said do double due diligence. I was thinking, I think double the buyer beware.

Ben  

Yeah. That’s right. Yeah. I mean, 100%. Yeah. And you got to the buyers definitely got to watch for sure. For sure.

Erwin  

A friend of mine bought off a wholesaler property. That was a grow up, and they didn’t disclose it.

Ben  

Oh, yeah. Because Wouldn’t that doesn’t something like that ended up being a tacit title. Oh, yeah. Yeah. Yeah. Because I remember looking at a place in London that had been a grow up, and it was disclosed, but it also got sold for a really good deal.

Erwin  

That’s fair play. Yeah. Right. Yeah,

Ben  

it got sold for a really good deal. And because the buyer and then has has to do all the work to be, you know, get that taken off the title by, you know, having the proper assessments done on the property, and correcting anything that does come up.

Erwin  

So it’s all on spec to assess fair play, so I’ll probably pop are probably gonna probably go to probably got a good deal. Yeah. Unfortunately, our friend didn’t. Yeah. Because the wholesalers are not regulated. There’s no recourse.

Ben  

Yeah. And I think even beyond that, just like there’s a lot of illegal properties, a lot of legal units in in and around the everywhere, everywhere, everywhere, right. So I mean, that’s one thing. I’ve learned another pain point, go to the city, ask them, What do you have this building register does? And they’re like, Oh, I’ve only got a rich says a single family unit or property. I’m like, Oh, okay. Why do you got three in it? Right. This will be tricky for financing. Yeah. So then at that point, then you can go back to the buyer and be like, Hey, listen, seller, or the seller, I would love to buy this as a triplex. But unfortunately, the city only has a register as a single family. It’s not going to work unless you sell it to me for another $150,000 off because, of course, again, vacant possession again, because I’m going to have to do a whole laundry list of improvements to this property to make it legal. And yes, I mean, again, another another lesson I learned in my short time as a real estate investor,

Erwin  

or the seller has to produce the documents to prove it to local tribes. And even then I still not trusting them.

Ben  

That’s why you just go right to City Hall. Find out you get it right from the horse’s mouth just getting up. Yep. Yeah, no, it’s been registered as a duplex or triplex or whatever. So then that’s why the moving forward buying purpose built stuff. Yeah, is obviously something that’s much easier to navigate as well. Right. But there’s still even that at that point. I would still call the city and ask what they because I mean, they might have slipped an illegal unit in there somewhere that shouldn’t have been there. Or it’s not registered with

Erwin  

the order. Yeah, he could be out of the order. Yeah. It’s a bit of them. All of us in the real estate. Yeah. Especially in smaller towns where I’m like, you know, people can do things and inspectors don’t catch on. Right. What were your other lessons from three years of coaching? Um, and this is before Elizabeth Kelly, did we mentioned this was killing? No, not yet. Okay. We’ll get to Elizabeth. Oh, okay. So just so everyone’s super clear. We’re not talking about Elizabeth Kelly. We’re talking about pre Elizabeth Kelly. Yeah, I think it matters, kind of like what we said. It’s kind of expensive.

Ben  

Yeah, the coaching is expensive. It definitely expensive, for sure. Right. And maybe one of the lessons I’ve learned is like real estate investing is a lot about relationships. Everything’s about relationships, it’s all relationship building constantly, you wouldn’t be here right now. Right? That’s, that’s why I’m sitting in this chair. And the same thing goes for when you’re working with a coach, it’s a relationship. And it’s a very important relationship because you’re being taught by this person, a lot and this information that you’re getting, it’s meant to benefit you to make you a millionaire, because that’s why we get into real estate to get to create wealth for us, right. And so, the one thing I really do want to impress for the newer people listening is like when you’re coaching when you’re sourcing a coach for real estate investing, you know, you really want to vet the coach themselves, make sure that they they know what they’re talking about, know what they’re doing. Obviously that’s very important, right? Because you want to make sure that these people have years in the industry not just a few years years because you want to you want to make sure that they have weathered storms live very much like the storm are weathering today. How did they weather that storm? How did they get through that? You know, another question is like Have you ever lost money on a job or on an on a deal? Because there’s a lot of questions you need to ask these people. And hopefully they disclose that information to you. Because I mean, it’s stuff that helps you build that relationship, that credibility with that person, right. And so I think, if you get into a coaching situation or coaching scenario where you maybe aren’t jiving with the coach, you’re almost better to be like, this isn’t what I thought it was going to be. I really wish you know, I thought it was gonna be something else. Call your losses at that time and move on to maybe sourcing out. Somebody that maybe works with you better jives with you better, because I just feel like I maybe hung on to that relationship a little bit too long. I you know, I was in it for three years. After two years. I feel like that would have been enough. Because once I got into the third year, like the information was continued to be the same. It was the same information. Right. So that’s what put your opinion 13,000 a year? Well, I mean, the prices went up every year. Oh, good. Yeah. Good.

Erwin  

What was the second and third year?

Ben  

I don’t even remember. It was it was enough, though. Do you spend around 50 grand in coaching? Three years? Yep. It’s a lot of money. Yeah.

Erwin  

I don’t even think I’m allowed to share what I pay for coaching.

Ben  

Yeah, it’s Yeah. So like I said, there’s, there’s good options out there for people looking to get into the industry. There’s really good options out there right now. I like how you do it, you’re always resourceful when it comes to that stuff. And in your and it sounds like you are able to source out some really high end coaching for really good pricing. So that’s, you know, again, we’re gonna have to talk afterwards.

Erwin  

Sure, most coaches want my attention. So then naturally add to reference check. So it’s not hard. Yeah, right or wrong. I’ve said it before on the show. I judge the coaches based on the students performances. Yeah, right. So you know, and yeah, and I have friends who’ve been you know, I have friends who are dynamos like the Susan Weitz, Orion cars. You know, my friends, I’m friends with Quinton D’Souza, you know, I’m friends with many of his clients, his past students shadow Julie Broad, who’s retired as a coach, I she had some Dynamo students. Right. So again, I just been around long enough. Yeah, yeah. And just having relationships that you know, that I can reach out to almost anybody. And they’ll they’ll usually pick up my pick of take my call, right and ask for I’ll ask for a reference check on this person. Yeah. Nice. When also when a reference check, I don’t just take what they give me. With social media internet. So easy. Yeah, I’ll scroll for a while. And again, just because I’ve been around long enough, I’ll ask I’ll do reference check people, their past students, once they didn’t give me, I’ll reference check who the general contractor is or property manager, anyone who’s done business with them, in terms of say, for example, like a bit like a JV or business partner? Right? When you find out a lot of information on people, yeah. And then having done all these reference checks, I can tell who’s not reference checking. Gotcha. Sorry, it there wasn’t probably wasn’t much data at that point. Yeah. But actually, to me is actually a red flag, not a red flag necessarily. Just because someone has like a handful of bad students. I don’t necessarily think that our bad coach is just, there’s all these coaches who don’t have any red flags. You know, I mean, who have like, no blemishes on the record, right. So then why would I just go there? Right. I’ll start there. I’ll start my search there. Yeah. Right. And then even still, I may ask them who is your coach? Yeah, so may go above that.

Ben  

Right, right. Yeah, cuz every coach, every coach should have a coach, I feel anyway.

Erwin  

Yeah. Yeah. And then I may even ask them again, like that person. Who is your coach? Yeah. And I’ll see what fits my budget.

Ben  

Is there a top coach out there? That’s like the coach of all coaches.

Erwin  

Here’s the sad thing is it works both ways. There’s coaches who are responsible for lots of successful people. There are coaches who are at the top who are responsible for a lot of failed investors. And before we’re recording, like, real estate is a pretty safe way to make money. Yeah, but it can be done wrong.

Ben  

It can be done. Yeah, it can be done wrong. And then that’s where real estate becomes risky. When you do it wrong,

Erwin  

I’ll argue a

Ben  

lot of it’s avoidable and it is avoidable. It that’s 100% avoidable. I’ll even say like,

Erwin  

I never trusted the realtors level and wholesalers. Yeah. Fine even piece of information. I’m gonna check it. Yeah, right. So you provide me proof that your triplex was a triplex I’m still gonna have a verified Yeah, like just like you said, I’ll provide the city Yeah. All right. And literally one time it came back like My name is on this document. I did not sign this. Yeah. My signatures on this document. It was not me that signed it. This is a fake. Oh, wow. Yeah. Oh, wow. So as to the real estate investor. Yeah. In that person’s an influencer. Oh, wow. Yeah, that’s the truth about real estate investing. Trust knowing, don’t you trust me? I don’t trust me. So no one should trust me.

Ben  

I’m taking that’s gonna be my big takeaway. Trust No.

Erwin  

Trust people like, you know, Elizabeth said nice things about you. I’ll trust her. Right. And then, you know, say we decided to do business together. I need to do another level of due diligence. Right. You know, I mean,

Ben  

and that’s the way I tried to be when I say yes to something. It’s a genuine Yes. It’s not a hollow. Yes. And I don’t say yes. And hope that it works out. It’s a yes. Because I know I can make it work, right. That’s the way I just figured it was going to be with everybody. Right? Like it was just, I think you were saying that, you know, there was the the person said yes to the deal, and they weren’t able to close on it. You know, I feel just like, if I say yes to something, it’s going to be a real Yes. And that’s just the way I like I want to operate. And that’s the way I like to operate. Right?

Erwin  

I think you’re in the minority. All of us been,

Ben  

but it’s I mean, it’s just like, I just feel that’s the way it should be in life. It’s just like, that’s

Erwin  

the way it should be. Now, before recording, we were talking about someone that you met at the the coaching programme, pre Lizabeth, who became a coach, right. And this gentleman is now bankrupt, or not naming names, obviously, you know, innocent till proven guilty. I’ve heard from multiple sources, it sounds pretty bad. But yeah, you witnessed this person? Oh, my first question was, did you think they’re qualified to coach?

Ben  

So for myself, personally, like coming up? As a trades person? You start off as an apprentice, right? You start off year one, year two, year three, year four, year five, right? So that’s where I always looked at real estate investing as well. There’s so much stuff to learn in real estate investing, that I honestly think that some people that people that are coaching need to have at least seven years under their belt had to you know, whether just Yeah, full time. So sometimes, yeah, like, I feel like sometimes there are people out there that are coaching that maybe aren’t as qualified as they they should be. Because they just don’t have the time. They don’t have the experience under their belt. They haven’t weathered the storms, and all that. Like I think there’s just so much people need to learn and like, I will never claim to know everything. Like I’m very, very careful about what I tell people when they come to me for advice. I had a young guy reach out to me last week, asked me says, you know, Ben, I’m looking at getting some coaching documents. That’s fantastic. What do you suggest I said, Well source somebody out, that’s going to help you build the foundation. First, the boring stuff, the stuff that nobody ever talks about. Because if you want to operate this real estate investing business as a business, it’s like any business, you need a foundation under it. And I think that’s where a lot of people start out is they start out without that proper foundation underneath their business. That’s how I started mine out. There was no basement underneath it. No Foundation, right? So I always use the the term like it’s like a house with a bad foundation. What do you do? You lift up the house, you rebuild the foundation, and then you put the house back down? And that’s that’s essentially what a lot of people, that’s where I’m at right now with my stuff, right? I’m slowing down, I’m slowing down, working out the kinks, you know, getting to my numbers a lot better. In my in my business. I was never a numbers person before, which is obviously a problem in real estate invest, because you need to know your numbers all the time, right. And that’s something that Elizabeth has helped me out with greatly, like a lot, putting together these proper spreadsheets and being able to really dive in and understand the numbers in my properties. I really never didn’t know them before. And it turns out that there’s not a lot of people that do which, you know, I felt like I was the only one thank goodness, I’m not. But I’m always working towards making myself better. Right. So. But yeah, as far as there are people out there that are coaching, that I feel like I would again, question like, I’ve had people reach out to me and be like, Oh, what do you think about that person coaching? They’ve got less experienced than you do?

Erwin  

I’m like, because there were students same time you were Yeah, it’s just like, oh,

Ben  

I mean, it is what it is. That’s capitalism. Yeah. If they feel like they’re qualified to coach a person, then let them let them out. Let him have him. Right. So I’m always very careful about the information I give to people because and that’s because I mean, that information that I’m giving out is it could hurt that person if it’s not the right information, right. And that’s what scares me about, again, giving information out to people that are asking me for questions about real estate and mentoring and stuff like that.

Erwin  

So I’m not I’m not saying I’m paying everyone, all the students at the same organisation you were at with growing too fast too much. Too soon. I see a lot of it and they’re not the only ones I’ve seen. I know that organisations I can think of three off the top my head where I’ve seen a lot of too fast too soon. Didn’t work out. Yeah. A lot of people Branca up to quit their jobs. Took OPM other people’s money. Now that money is gone. Yeah. Maybe we’ll back to their day jobs. Yeah. Back in the parents. Yeah, that’s real estate investing. So guys,

Ben  

as we all know, like 2019 2021 22 You couldn’t do anything wrong, right. And, and it actually goes back to almost when I first started as a pipe fitter, there was all this abundant work and all this you know, there was lots of overtime and lots of people were making all sorts of money. And the older people, the guys that have weathered many storms kept telling the younger crowd, don’t spend your money. Save it, you know, don’t just go out and blow all your money. You need to build a nest egg. Sorry, where you were working was tied to oil and gas. Yes. Yeah. It was in Ontario in Sarnia. Yeah, yeah. For the listeners benefit if you don’t know Sarnia has a pretty large refinery. Oil Refinery is just one is Suncor. I know there’s multiple other Suncor. So shell. So they’re probably the that’s probably the biggest employer. Oh, it is. Yeah, it’s it’s the meat potatoes of Sauron. And that’s really what keeps our need together is is that oil industry? Right? So

Erwin  

you’re seeing the older guard was telling the young bucks, you know, like, save some,

Ben  

save some for a rainy day will be rainy day, there will be rainy days. And you know, I think that’s almost what happened in the real estate businesses. Nobody was really looking at the potential for a rainy day. And I think that’s where, and then all of a sudden, like the tide went out. Got to see your everybody that wasn’t wearing a bathing suit. And that’s what happened.

Erwin  

So just to clarify, because I actually had some reach out the other day, asking what is overleveraged? Right. So I don’t think it’s discussed enough. Right? So I think for most people, most of the time to have more than one vacant property could be overleveraged. I don’t know everyone’s in income situation. Right. But for most people, most of the time you have multiple vacancies, then that’s probably a lot of financial stress. Yeah. Like, for example, if you have four properties, say they’re all private money, for example, because your mid bermad, flip, whatever, you have no money coming in. Right. That’s a lot of financial stress. Yeah. Right. For most people most of the time. So it’s a different thing for most people. But generally, that’s where where I’ve seen people come into major financial difficulty, and meaning the bankruptcy. Right. All right. Well, at least you avoid that. Yeah, yeah. And yeah, definitely. Right. So

Ben  

what led you to too fast too soon? Just led me to that point. I think a lot of it maybe was, you know, again, being vulnerable here, just ego ego driven decisions, I think, just again, thinking that I could do no wrong, right? That’s, again, that’s sort of what what the where the industry was going in the last few years is like, people, you couldn’t do anything wrong. And you that’s sort of where things ended up. You know, again, it’s honestly, it’s one of those things I learned about very early on in real estate investing is, I remember, hearing somebody say it on social media don’t grow too fast, you know, and I think, honestly, like, when a person gets into real estate investing, once they get to the third property, they should really stop and assess where they’re at everything about their business, like really just stop and assess. Because I mean, at that point, there, you’ve got maybe six to 10 doors, really stop and digest where you’re at, and really see where your business is at. And really start, you know, see where your foundations at, do you have a proper foundation to continue to scale because you don’t want to keep scaling. If you don’t have that you’re hitting on that proper foundation. So really stop and assess, make sure that the three properties you do have are running, running as good as they can be. And then before you continue to scale and then continue to only scale like, at the most three properties a year. That’s one every four months based on the time of renovations and refinances and all that stuff, like everything, really, you know, you’re probably even saved for up to a year. Give yourself that, that six months runway for each project.

Erwin  

I even go as far as saying if you’re a novice, have finished a project before you get your next one. Yeah. And that’s that’s even better and, and so at least have a tenanted Yeah, as an apprentice coming in. Yeah. Yeah. All right. I think that’d be a bit conservative. Yeah, I think it’s reasonable. And before you take on your next project, you avoid having two vacancies that way.

Ben  

Yeah. It’s just we ended up going trying to do too much too fast. And, you know, again, the deals were flowing, there’s all sorts of things happen. And you get caught up in the in the, in the excitement of it all. Yeah. And then you sort of end up looking back and you’re like, Oh, okay. Now it’s like, Okay, now we got some, so it was exciting.

Erwin  

When did you start feeling pain?

Ben  

It’s been Yeah, probably in the last well, since last six months or so. Right? I mean, the good thing for me, I get I don’t know why I did this when everyone else was saying putting their mortgages on variable rate mortgages. I was going fixed, like large majority of my properties are on fixed rate mortgages. Why I chose fixed rate. I have no idea. I probably saved your bacon. Yes, it definitely did. It definitely did save it because it was everything that honestly it’s not going variable rate when everyone else was saved me for sure.

Erwin  

And granted, no one predicted the Bank of Canada would be this aggressive this quickly. They were so slow to do anything then it just like rip the band aid. Stuff. Halt on this. Rather than like slowly Yeah, yeah. So for the listeners benefit. I think it was summer of 2021. Inflation was about 4.4%. So fast forward today, I think so January’s inflation was 5.9%. Right. From the point is that you cannot see those too high. I don’t know why they didn’t have a problem with 4.4 back in the summer of 2021, when their objectives always been 2%. So if it makes any sense, all right, so yeah, carry on. Okay, so at least you need to do well doing fixed mortgages, what was causing the pain then?

Ben  

Again, I think you just just really too many projects going on at once, right? Just too many things, like too many projects going on at once is really how many 1.3 or four? Like, that’s just too many. Yeah, just too many projects too much too fast.

Erwin  

So three, four properties that all had different various stages of innovation in the agency. Yeah. I’ve been at this for a long time. I’ve honestly, I’ve never had that much stuff. That makes me feel uncomfortable.

Ben  

I can tell your loss for words. Yeah.

Erwin  

Last words, like, because I’ve never even thought of it. Yeah. All right.

Ben  

Again, like I was just ego driven. I just, oh, I can I can do this. I can do this. I can do this. And and I’m doing it’s working out and it’s fine. It’s just, you know, I feel like, I was just a glutton for punishment. I’m almost like my neighbour, my neighbour before he passed away goes, Ben, you’re a glutton for punishment, because you’re always just trying things just to see if you can do them. And I’m like, Yeah, I guess I sort of am that guy doesn’t make sense sometimes. But just like MMA, like what? just silly. I don’t know. And that’s where I get to a certain point of in my life with a lot of things just like I do things just to see if I can do them. And then it’s just like, okay, I can do that. And then on to the next thing, so, but you’re sticking with this one? Yeah. Sticking with this one. This one’s here to stay.

Erwin  

So how are you? How are you feeling today? As the portfolio stabilised?

Ben  

Yeah, everything’s working out. Well, now.

Erwin  

Everything’s tenanted,

Ben  

yeah, everything’s I’ve got a place right now that I just recently finished up. The nice thing about Sarnia is the price points are still very low, quite low. And the rents are pretty much comparable to the rest of the province, you know, so I got a duplex right now, I got two units that are for rent, or I’m getting asking 19 per unit 1900 per unit. And I’m getting lots of bites on it. Right. So yeah, so I purchased that for 330. I’ve got about 120. Now on your 75 into which is a substantial renovation for the size of the building. But it again, it was a crack house before I got it. So I needed everything. And so I gave it everything. So

Erwin  

we really do. Yeah, okay.

Ben  

Yeah. Like you said it was it was a lot it was.

Erwin  

Versus I would like to buy turnkey. Yeah. I’m not younger, like you and as ambitious. So 19, one of these two bedrooms, three bedroom, two bedroom, two bedroom. $1,900 per unit. Yeah. I’m guessing that’s probably a function of the oil and gas industry was paying well,

Ben  

yeah. I mean, that’s the that’s the thing we’re starting to do is like you got these these high paying people. They’re high paid blue collar workers that are making good money. So making six figures. Yeah, easy. Yeah. Yeah, sometimes multiple six are like 200,000. Like some people like crazy. What keeps the prices down then? Good question. I think it is the refineries, I think, at the same time. Like yeah, it’s like, that’s what’s keeping it down is I mean, but I’ve talked to a lot of investors that have come to Stargate and did a project concern. And they’re like, I don’t even know if I want to sell this place. I think I might just keep it for myself. Because they love like service surrounded by water. You got Lake Huron, and then you got like a Sinclair river right there. People get there, and they just love it. And they think that even if they’re in the middle of the city, they think they’re close to the beach. And we’re like, no, the beaches like way over there. It’s like 15 minutes away. They’re like, well, that’s close for us. Right. So when they get there, they you know, soldering is only 75,000 people. So smaller cities still a very, still a very small town. feeling when you get there for sure. Which, you know, a lot of people love as well. 75,000 Yeah. 75,000

Erwin  

sorry, we’re down. 7500 Yeah, no, no, that doesn’t sound right now. That’s like a that’s like two high schools. So you mentioned you reached out to you hired a coach. Yeah. So you’re you started starting a property management business?

Ben  

Yeah, so I’m actually starting and launching a property management company in Sarnia business in Sarnia. And so again, with me really having no being in the oil and gas industry never really having owning a business or running business per se. I wanted to reach out to somebody that I knew was already in the industry that I was working in already had the business structure in place, the processes and all that stuff already in place in their business, right. So I actually reached out to someone in my network that I knew again, doing my due diligence that I knew had been working with us had worked with this coach in the past right and when I spoke to that person, they just just a long list of just beautiful stuff they had to say but Elizabeth right. You know, right from just you know, when they started working with Elizabeth they had mentioned that their business was in shambles they you know, so what Elizabeth I love how she says as she goes, she will take the straw the plate of spaghetti and take one noodle and straight straighten it out at a time I’m taking on just one noodle all the time. Let’s get that figured out. And we’ll go to the next noodle and get that figured out. Right? So. And that’s what Elizabeth had done for these, these other investors, right. And they, they said before they worked with her, they were in shambles. But once after they figured out their noodles and got their noodles all straightened out, it was, you know, they were off to the races. And then from that point there, they were looking to get into development. So Elizabeth says, Well, I can’t help you with the developments. But I know this, I know this guy, you know, this, this person here will be able to coach you on developments and whatnot. Right? So that’s when I reached out to Elizabeth and then and got, you know, got introduced to her and had my discovery call with her and right away, like just positive vibes, I really, really enjoyed her personality and how joyful she was and how, you know, it was just it was I could tell he was going to be a beautiful again, it has to be a relationship, it was going to be a good relationship with her because it just it felt so natural and organic.

Erwin  

Sir, I have to ask the $50,000 you spent on the other coaching programme, but that’d be better spent

Ben  

with Lizabeth I think I think the biggest the biggest takeaway I’m getting the one thing I do really like about Elizabeth is, is just simply having zoom calls, just weekly zoom. Just having that in person in person zoom calls, we can share information by simply screen sharing, or spreadsheets or whatever it is we’re talking about. I think that yeah, had I sourced out Elizabeth from the get go, I think things would have maybe been a bit different for sure that the outcome would have been a bit different would have been a little bit less, less, um, a little more calm. You know, I think Elizabeth that’s what I like about Elizabeth is she’s, she’s calm, she’s got a calm nature about her, right? It’s not just aggressive, go, go, go, go, go. Push, push, push, push, push, it’s just very common, let’s mid let’s make sure this all makes sense. And, you know, there’s not this push to, to buy, buy, buy, buy buy stuff, right? So

Erwin  

you felt the other coaching organisation was just pushing buy, buy, buy, buy? Buy?

Ben  

I think a lot of them. Yeah, I think a lot of it just maybe it’s, what ends up happening is, um, there’s always that, you know, keeping up with the Joneses, or FOMO, or whatever. So people get sort of anxious when other students are doing something and, and they’re not or, or whatever. Right. So I think that’s where a lot of a lot of excitement gets generated in the in the group coaching programmes where, like with Elizabeth, I don’t even really I don’t even know who are their students are because I’m just so focused on she’s so focused on me what I’m doing, and I’m focused on the information that she’s given me. And it’s just that’s it, we’re just focusing so much on each other, making sure we get the best and most out of our out of our coaching calls.

Erwin  

So I think it’s fine to be in a group where people are like doing stuff. And I’ll usually dig into it. Yeah, you know, so someone’s doing well. I’ll see if I can buy him lunch. Yeah, they can do a little bit. Yeah. Have him on the show. They can do a little bit. Yeah, it makes sense. Yeah. So when you like the wholesale deal, for example, like the were the whole social Jesus paying for K they’ll leave you didn’t get vacant possession now, but it didn’t hit you at known the bounce that off of like you had you had coaches around you. Yeah, again, that one? I think. I mean, that’s what a coach is for. Yeah. And I think to be the bounce stuff off of vet that deals vet transactions to vet people who you’re doing business with,

Ben  

right? I yeah, I had to coach at that time. It was Yeah, I think at that point there. I think like I said it was maybe I gotten too far, you know, I get I always analyse what went wrong. You know, I always asked myself, What did I do wrong? What should I have done better? Maybe I didn’t, maybe I should have bounced this deal off this coach. Right. And I didn’t? Yeah, I think it was just one of those things that I just ignored the signs. And I’ll only ever point the finger at myself. Because at the end of it all, I was steering the ship on it, I was the one making the ultimate decision behind it. So

Erwin  

okay, so I am looking at my phone, just because a friend of mine said something recently that I think it pertains to how you say, again, I never prepare for these things. So for example, there’s a good number of arguably con artists Time will tell whether or not these folks end up in jail or not. I made the comment to my friend that a lot of victims are actually very quiet. For example, some of these people are still posting on social media, to recent people I can think of, again, both bankrupt and then the comments, I find that on their posts are generally quite supportive. I’m not seeing the victim say much. Right? And sir, I’m very surprised. I don’t know how the victims feel. And they don’t feel know what to say. And like, just like yourself, I often take responsibility. Yeah, but I’ve no I’ve been conned a couple of times. And so even though I’ve responsibility to never let that happen again, it’s still on them that they’re con artists.

Ben  

Yeah, yeah, it’s I think, and I’m a big believer in karma. Eventually it’s gonna come out in the wash right eventually you know, it’s going to what goes around comes around I often but I believe that I think like it’s, you know, you can only do so many things to people before it comes back on you. Right. So That’s where yeah, like I said it, it is what it is. And I will get there was a pain point that I felt and you know, avoid that pain point again. And then anybody that calls me and asked me what I think about this or that, and I’m just like, Okay, well, let’s just really dive deep on the whole picture of the deal. What red flags? You know what we got to ask what red flags are being popped up? What do you see that you like? And what do you see that you don’t like? And as I mentioned before, if it’s a really noisy deal, like if there’s a lot of if there’s a lot of questions being asked or a lot of eyebrows being raised, it’s probably not something you want to take on.

Erwin  

It’s just like a perfect con, though. Like, again, don’t ever get in trouble for this. company got paranoid equity, for example, you know, the owner of the company can’t be found to the executives have been charged. They both declare bankruptcy, but the owner of the company, the main owner of the company, we can’t find them. Right. Right. So will justice be served? Karma is a bitch. Yeah. Because that company employs a lot of the founder, owners family, his wife. I think he had like, three son in laws that were there. His own Son was working there. So yeah, Cameron’s been a bitch that they’re all out of work. And they’re all their name is mud. Yeah. Funny name. But the middle name was mind blowing. But yeah, he’s probably avoid jail because they can’t find them. Right. Right. So yeah, but yeah, currently, it’s pretty bad. Yeah. But you know, I’m pretty sure the victims would like to see him in jail. Yeah, right. So yeah, my point is that white collar crime is difficult to prosecute. Right? Because it’s still the police in the middle of the day. And I don’t know cops. But when I think of cops, I think of people who wanted to, you know, fight bad guys. Yeah. Right. You know, catch criminals, catch bank robbers, whatnot. Right, catching a white collar crime. You know, that’s really different. Yeah. And to understand your collar crime, you have to kind of be like it from a background like us. Yeah, like investors. That’s probably not a lot of cops. Yeah, right. Yeah. Right. So it’s difficult. You know, I love cops, they have probably the most difficult job in the world. But my point is, again, white collar crime difficult to prosecute, like only just recently where the owners of fortress recently charged it that took forever. So yeah, Justice this low, maybe no justice. And just to comment to listeners if you are a victim. I don’t feel embarrassed. There’s lots of other people just like you. Yeah. All right. And it’s not your fault. Yeah. Some of these. I’ve been kind. Admittedly, I’ve been behind. You know, it’s gonna happen. It’s gonna keep happening. Yeah.

Ben  

said, yeah. That’s where you just if it’s questionable, Jen will just walk away.

Erwin  

That’s the prominent really good con. Yeah. All right. For anyone doesn’t believe me? Just look at Paramount. Oh, that is good. Give me see you. They’re gone now. So I don’t think anyone left to sue. You’re getting into property management?

Ben  

Yes. Is that when we’re that’s where we were going with it? Yes, sir. Yeah, yeah. Yeah. So what did you ever say to you again? So yeah, yeah, um, so we started. That’s why I hired Elizabeth was because I’m starting this property management company in Sarnia. I wanted to make sure I had a good foundation, I wanted to make sure that when I launched this company, I want it to be legit, I want it to be right. I wanted to be processes in place. I don’t want to just say that I’m a property manager, give me your property, and then figure it out. As I go, I want to I want to be like at 75 80% of knowledge before I dive into this, because when I generally do things I like to do with the rightest way possible. And I felt like okay, hiring somebody that’s already in the industry that I want to be in is the way to go. And that’s what I’m doing with Elizabeth. And so yeah, that’s why I hired her was because I am launching this Pm business in Sarnia. I’ve had multiple people already reached out to me, you know, begging me pleading me, Ben, when are you launching? Let’s go, we’ll assume they’re there. I’m like, hold on, just hold on just working. The I’m working the kinks out, I’m working on a few things, I’m building that foundation, because I want to be able to offer my clients a solid service, because that’s what they’re paying for. Right? I want it to be, you know, solid, because there are a lot of property managers, companies in Sarnia especially have a very bad report a really bad rap as being just bad, in general, just just not good at their jobs. Right. So that’s, that’s where I saw that there was a problem there that I could solve by by doing this. And furthermore, you know, creating an extra source of that active income creating that active income that I feel most real estate investors need getting into this, I thought that I could quit my job and live off my portfolio. Well, to a certain extent, yeah, until the till the storm hits, and then you’re left you know, questioning where the next you know, the next paycheck is going to come right. So that’s where I’m like, creating this active income for myself and my family. Of course, that’s number one. So really excited. I’m really excited about this because it is it’s the first time for me, I’ve taken a business idea and built it from the ground up. Like really, like I said, a really building really just literally building from the ground up from zero from nothing. And again, that’s why I’m not doing this loan never will claim to do anything alone, I’m done. I’ve got lots of support behind me, I got contractors behind me, I got already people that I work with in Sarnia. And again, creating those deep rooted relationships with these people so that way, and I’ve already told them said, listen, when I launched this Pm business, property management company in Sarnia, like, are you going to be with me on this? Like, are you going to be with me? And stick with me through these? Through this? Right? So and they’ve all said yes, so that we love working for you already. So why would we not continue to want to work with you and just stay with you? Like, my contractor generally only works for me up, you know, I hired him a little bit over a year ago. And he just says, Yep, you just keep the jobs in front of me. And he’ll be happy, right? And so he’s been happy and he’s, we’re still working on processes between the two of us again, that’s just a an evolving thing that we’re going to continue to work on time after time, every project is going to be different, we’re going to learn something new after at the end of every project, you know, sit down and talk about what could have done you know, what could have been done differently, what could have been done better, so that we can take that knowledge and those products and build those to have those processes in place already in for for when I want to take on clients

Erwin  

when we’re way over time? Oh, sorry, Oregon, folks learn about your Pm company.

Ben  

So if you want to go to my Instagram, I’m going to just give you my my normal Instagram is just Ben Bergen underscore, r e i, and there’s a link there to my property management Instagram page as well. If you want to just go there. It’s RSP property underscore management underscore, Inc. So again, it’s just easier to say Ben Berg and underscore Rei.

Erwin  

Some of the details listeners will have it in the show notes. Yeah. Ben, thanks so much for being so open and sharing. You know, I guess the the nugget side takeaways you know, don’t invest with ego. cover all your bases. Yeah. The investing with the ego thing like that led a lot of people to ruin Yeah, we’ve had. We’ve had several guests come on the show and share the same thing. Yeah, Shadow, Jared hope, you know, he had over 100 properties, largely on ego Brussel Wescott shared, you know, bought 100 properties. Blossom did not work out. Right. Right. So it’s yeah, this is just the cycle repeating himself. Yeah,

Ben  

it’s humbling. It’s definitely humbling for sure. Right.

Erwin  

I mean, any final thoughts for sure.

Ben  

I mean, I guess if if anybody ever wants to reach out and just chat to me, you know, reach you like you got my you got my instagram handle there. Definitely DM me, and we can talk about whatever struggles you’re going through good chance, I felt the same pain, it is just part of growing and that’s again, that’s what I the way I look at it is just I think you’re gonna see a different calibre of real estate investor come out on the other side of all this storm, you’re gonna see some really good real estate investors and really strong real estate investors. But if anybody wants to reach out talk to me about just their pain points and what they’re struggling with, please do. Cadets will point you to the people that can help you if I can’t. So,

Erwin  

awesome. Thanks so much for doing this Ben.

Ben  

No problem. Thank you.

Erwin  

Before you go if you’re interested in learning more about an alternative means of cash flowing like hundreds of other real estate investors have already then sign up for my newsletter. I know for yourself what so many real estate investors are doing to diversify and increase our cash flow. And if you can’t tell me I love teaching and sharing this stuff.

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**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.