Closing on 5 Apartment Buildings and 177 Units in 2022 With Quentin D’Souza

**Transcripts are auto-generated.

Erwin  

Hello and welcome to another episode of The Truth about real estate show. And my name is Erwin and I have a quick rant on rent control. I posted on my Facebook and Instagram just last week, an article about how 100 Plus prospective tenants lined up to view a rental property in Dublin, Ireland, their government wisely, this is sarcasm, their government wisely implemented rent control. So the rents do not keep up with inflation forcing landlords to self investment properties, the next property owner may move into the property, thus reducing rental supply or a new landlord. Typically one with deeper pockets. Some of these are massive investment funds now, they’ll want to return on their investment. Hence they’ll turn over the tenants renovate and raise rents the supply and lower and rents are forever gone. And the rich just get richer. Understand that rental developers and people who build purpose built rentals, they do not like rent control. Hence, we saw a whole bunch of projects get cancelled, when rent control was reinstated by the Ford government. No capitalist in general likes their prices to be controlled. So it’s down to the government down to the socialists to build a system of housing, that I am not gonna hold my breath. I’m gonna do what I can to take care of myself, my family and my kids in terms of rental housing. So my team at Island real estate team and I will provide an economic update and drill down into what investments we’re getting into, including turnkey properties, and you wouldn’t believe it. Thanks to this market correction, we’re actually seeing more and more opportunity for triplex conversion going from single family to three. And we’re just talking about lack of supply. My clients and I were creating supply, sometimes doubling or tripling that of one property a single family home, we’ll get into the details around strategy, renovation plans, budgets, and of course, tucking in cash flow. So you don’t want to miss it on Saturday, September 17. That Saturday morning, doors open at 830. At our offices in Oakville, Ontario, just two more meetings until the wealth hacker conference on Saturday, November 12. I’ll post the link in the show notes to register for our meeting. There’s much more fun to learn out there. And there’s always much smarter to learn. And of course, networking with like minded folks, and wealth building to be done. On the personal front, our new Tesla Model y we’ve had for about three weeks now, it has been quite an experience, the electrical quotes were steep, we had to upgrade our panel and obviously have an electrician to instal the Tesla wall unit. Just to test the wall unit just to charge her nothing fancy. It’s not a battery or anything but the charger itself is seven or $700. Or you can just you can just use a dryer outlet. If you happen to have one in your garage, which we do not we do not the learning curve of owning and driving a Tesla is really different. I would compare it to my old analogue Nokia that I had back in the year 2022 years ago, versus a modern day iPhone, it’s completely different. The technology inside of Tesla is really impressive. For example, we dropped off the Tesla to get wrapped for protection on the front end and some window times whatnot. And I was just curious if they started work yet. So I checked my Tesla app. And I could turn on the cameras within the car and it did check where it was. And also have exact GPS location. So I know they moved in the car. Also, the Tesla operates under one pedal driving, because if you take your foot off the accelerator pedal, I used to call the gas. Now there’s no gas, so they call it the accelerator pedal. So that’s one call to when you take your foot off it or ease off of it, the regenerative braking kicks in, it’s actually pretty abrupt. That’s it’s pretty hard break. That’s what it feels like to the point of that is to recover any energy wasted during the braking process. Hence, I actually rarely break anymore. So it’s pretty cool. Also really cool is the autopilot feature, which is the fancy cruise control. It’s especially good and stop and go traffic as the car will come to a stop if the car in front of you stops. And when the car in front of me goes, the car will go without me really having to touch anything. I do just have to keep my hands on the wheels wheel to let it know I’m still there. Once in a while. Charging hasn’t been that bad. And we’ve taken it on like a road trip already up to Blue Mountain Village. And the next thing was our hotel for the weekend. They had a great parking spot for our Tesla for the free charging station right next to the lobby. And again, it was free. Not that charging the cars expensive for a zero to 100% Charge. We’re talking to $8. And then for our daily usage, Jerry and I we use less than 20%. So we’re talking about the cost of a Tim Hortons double double. It’s really inexpensive to drive. Of course, we would not have never considered buying a Tesla without that $55,000 plus HST deduction for tax purposes. Thank you Justin Trudeau for giving the rich such a lovely tax benefit.

Erwin  

understand almost everything electric vehicles over 50 grand the Tesla Model y was was significantly more than that. It’s the most expensive car you’ll ever own. And we’d never do this deal without this monster tax credit. Thanks to our lovely government, you can be more of a tax implication and I would left a link to cherries article on the on a tax savings for buying a Tesla or equivalent electric vehicle. Speaking of rich people, this week, we have the very successful Quint D’souza on the show. There are tonnes of coaches and multifamily experts out there but my experience Quentin is one of the best. I know many of his past students, including Steve Phillips on on my island real estate investment team. And I know many of its investment partners. They’re all like Clinton’s legit. Let’s leave it at that. Not many have a successful track record like Clinton’s, so you probably want to pay attention to this show. He’s on the show today with cherry actually, Terry’s been delivering the interview. It’s always out hosting a golf event with fellow seven figure entrepreneurs. So Charlie and I had to quote unquote, divide and conquer. We don’t conquer anything, though. I don’t know why. You can see that term, actually prepared the questions that I wanted to ask Quentin personally about pardon building investing, investing in the US where to find cashflow these days, and what the future holds. You know, the same stuff you’d ask for someone you know, with hundreds of units in their portfolio. Yeah, quite. It’s pretty successful if you don’t know and also like the show title. Quinn has closed or real close on 177 units this year alone. He’s always looking to level up Quinn’s an old friend. He’s the chief education officer and founder of the germ Rei, a really, really great long running working group that meets monthly majorem region. He’s authored four books including the most recent the action takers, estate investing planner, and I’ve linked in the show notes to the Amazon that are going to search Amazon you can search Quentin D’souza or again the name of the book The action takers real estate investing planner. Obviously, Quentin is a big time investor. Please enjoy the show.

Cherry  

Hi, Quentin. 

Quentin  

Hey, how you doing cherry

Cherry  

Welcome to our truth about real estate investing Show and welcome to my very first podcast host duty show. I hope we will be doing okay. What’s keeping you busy these days?

Quentin  

Let’s see I’m buying apartment buildings. We closed on in March we closed on 17 unit and a 24 unit 24 unit was in Kingston 17 unit was in Belleville we’re closing on 100 units at the end of this month. Next month we’re closing on 20 unit and another 16 unit. So we’re buying apartment buildings. Keeping me that’s keeping me busy. Seems sounds

Cherry  

a little bit busy. But how’s how’s the summer How’s been? How’s been not being a baseball dad.

Quentin  

So it’s been really good. My my oldest son got on to the York bulls baseball team. So we’re going to be doing a lot of that in September and October. He has doubleheaders every weekend, my younger son is doing house league baseball, and we were really enjoying that. I did a trip to Machu Picchu or the Inca trail with my oldest son we did a week at the end of June and we and then both my son’s we did a whitewater rafting trip at the beginning of August for about four days. So we had lots of fun there. 

Cherry  

So that’s amazing. 

Quentin  

Yeah, it’s been good. 

Cherry  

Yeah, I hear baseball is worse than hockey in terms of training schedule. And then also competition schedule.

Quentin  

The definitely is a lot, a lot of time, but now that he drives and so that makes it a lot easier. So he is able to drive himself to practice. And my older son works out like every day. So he goes for like two or three hours, takes the car and goes and works out comes back. Right. So like it just it makes it a lot easier. And then we just show up to the games.

Cherry  

Yes, that is very that’s like I would say 80% of the battle. Yeah.

Quentin  

Oh, yeah, for sure. There was a lot of of chauffeuring going on between Laura and myself, just, you know, getting the kids to different events and stuff like that. And now with the older one driving sometimes you can take the younger one. Oh, that’s amazing. I hope so. Quite a bit for sure.

Cherry  

How do you like go like, I don’t know if I would ever be able to like completely like go drive the car, take the car and not worry about that.

Quentin  

Well, I mean, you still worry about them. The other thing was he’s not driving my truck. We bought another car using this. We call it the family car. Oh, okay. Right. And it’s neither my wife’s car, my car, we’re, you know, we have a third vehicle so and it’s just like, little Hyundai can’t remember. It’s just like a little Hyundai and you know, it’s great for getting from A to B and so it’s worked out well. That’s awesome. Yeah, it’s amazing. And he’s been really good about you know, we we He make sure that he contributes to the, you know, the car. So he’s paying for his insurance then yeah, and then, you know, after the first tank of gas, because that’s to get to work and to go to the different places he’s paying for anything additional to that. So want to make sure that he has some responsibilities to, you know, when it comes to keeping in maintaining the vehicle, any tickets he’s gonna pay? So

Cherry  

Oh, yeah, for sure. Yeah. So like, like going along with that line. I know, you have been an educator for many, many years before you jump into being a real estate investor full time, and you’ve got a wealth of knowledge to share. And how are you educating your kids? Because your kids are? I mean, my kids are eight and seven, they’re relatively young, maybe 10 years behind your kids? How are you educating them? And how are you developing their financial sense?

Quentin  

You know, it’s being open having conversation. So at dinner time, my wife often says that we talk about finances quite a bit. Right. And it is something that I never did when I was a kid, but I’m making sure that we talk about it now. We talk about, you know, prices, we talk about inflation, we talk about just different concepts, real estate and the purple book, right, the Robert Kiyosaki book. Yeah, we, I would have them listen to that when we did car trips. So I did I put on the, like, the audiobook version when they were younger. And when I took them on long trips, I would just put that on. And then we were talking about concepts. You know, I like definitely encouraging the older one to read books. And, you know, making sure that that he reads the books. Right. So that’s, that’s been good. The younger one, he’s still you know, he’s interested more in cryptocurrency and NF T’s and that sort of thing. So I’m encouraging. I bought one of his NF T’s. Right. So I was like, Sure, I’ll buy it. I don’t know. Yeah. Right. So I’m encouraging them to experiment. And, you know, do that. But yeah, I mean, it’s always, it’s always about sharing, and just telling them what I’m doing. Like, I’m often saying, Look, I’ve raised this, we’re buying this, this is what I’m doing, right. So I’m pretty open about it, so that they understand what I’m doing. They don’t understand the details and going into it. But if they are interested in I’m always happy to share more, right. So

Cherry  

that’s really cool, really cool. I’m trying to make Bruce do these burpees as they do, as he does burpees, he earns, like 10 cents per burpee. And so he’s doing a lot of burpees. Lately, it was by accident that we discovered that Bruce was bruises only seven years old. So he’s like quite young, he doesn’t really quite grabs the concept of money. So it was by accident, he loves to go into he loves going to the gym with me. So my trainer offered him 10 cents for burpee, because he’s always reading the book at a gym. And so he started doing burpees, he got so excited about doing burpees because of the money that I realised, hey, like, you’re actually very motivated by money, I’ll just pay you to earn that money. And then a few weeks later, we go to Niagara Falls, and we were at this breakfast place, which is totally a tourist trap. Anyway, so they charge $5 for a cranberry juice, a glass of cranberry juice, and Bruce wanted the cranberry juice. And I said, that’s fine. So you have to pay for it as $5. And then I said how many burpees? Do you have to do 500 books. He’s like linking the two and he’s regretting it. So he’s linking the two. I know, it’s not a direct kind of science to match the two, nobody is going to pay him to do burpees ever. But it’s kind of like introducing that concept. I think introducing it and talking about what you do. I think leading by example is also extremely to me, it’s extremely important. I’m trying to live up to that standard.

Quentin  

Yeah, for sure. And I mean, like they they really need to know that. Like there is different ways to earn, like money as well too. Right? So that’s, you know, time per hour. Right? And that’s definitely how everybody starts off. Right? And then there’s other ways like investing your funds in order to have your money make money for you too. Right. And that comes later on but that’s that’s great. That’s a definitely a fundamental concept for them to learn. So that’s that’s pretty cool. I like that.

Cherry  

Hey folks, his burpees So you mentioned that you have been so busy purchasing closing properties and then skelding properties to buy as well. Can you share with us where or how you’re investing in finding these deals because majority of the people are complaining like there was no deals out there. Maybe there are more deals now after the interest rate has gone up so much. But before people were complaining, like I can’t find these deals.

Quentin  

Well luckily I have a book on that top Back to finding properties toolbox. It goes into a lot more detail. But with there are a lot of different approaches to being able to find properties, particularly multifamily properties. And it’s more about the relationships that you have than it is about the marketing strategies, there are a lot of like, I get, like, every week, I get mail from realtors, from people who want to buy directly, like, who’s purchased a list and our, you know, mailing apartment building owners directly, I get phone calls from brokers asking me whether I want to sell my buildings, right. So there’s that approach to doing it. Another approach is talking to, you know, the people who are interacting daily with apartment building. So talking to property managers and saying, Hey, listen, especially because I’m not a realtor. So I can say, look, property manager, if you have, you know, of one of your clients that are looking to sell, I will pay you $5,000 referral fee, if I close on the building, and I’m happy to do I’ve paid a property manager $20,000 to close on a building, and then I refinanced all my money out of the building like two years later. But, but I mean, like having those just because I know I can do that, I do that. You can talk to trades and be able to find that. The other thing is that develop relationships with realtors and brokers who that’s what they do daily. That’s the relationships that they have are with building owners, that’s where you’re probably going to get your biggest result is developing good relationships with people who are actually in the trenches day to day dealing with the relationships that they’ve built over the last 1015 20 years to connect with other building owners. And now they’re connecting, what they’re trying to do is connect the buyer and the seller together themselves. That’s who so if you can build those relationships, those are three different strategies that you can use to, you know, be able to pick up multifamily buildings. And if you want more go pick up a book.

Cherry  

So what’s the percentage of your property purchase? Through the strategies that you mentioned? Or are they also on MLS? How many are through your relationships, or your network? And how many are really through the public MLS? I saw this list thing, like the rumour or the story that I’ve always been told is that when you buy multifamily, it’s never on MLS, those are like probably the last ones that you would look at.

Quentin  

I don’t think I bought a build apartment building off the MLS at all. I don’t think so nothing I can think of off the top of my head. No, the other 25 Plus buildings, none of them have been on MLS Wow. Not that I can think of usually, it’s relationships. Yeah. Just trying to think if there was one on the MLS or not, and no, but

Cherry  

that already gave me the all the audience the percentage that, you know, if you want to get into the game, you’re not just relying on MLS, you have to develop these relationships.

Quentin  

And that’s actually why people tend to want to partner with me is because I’ve developed all those relationships. And you know, I’ve been able to, like, have the deals that that makes sense. And I have developed partners who get deals as well. And like, all of that stuff is things that have been developed over the years, right. I often make jokes, sometimes that MLS is where good deals go to die, like, especially in the apartment building space. But I mean, if I was to list the property, I would probably want to list it on the MLS, right? Because I know that I would probably be getting the most I could for for them. Now if you develop a relationship with a broker, and they’re able to give you the price that you want. And it makes the most sense because based on cap rate and net operating income, you get the price that you want them Why even go to the MLS at the same time. Right? Does that make sense? So I don’t know there’s there’s a lot of pros and cons, I guess. But when it comes to buying properties, it’s always been based on relationships and relationships that have been developed for sure.

Cherry  

Like I have to say, early on in my career, I was very focused and very narrow minded and I would just hide myself in the home office like cranking numbers and crunching tax returns and doing all these things and it wasn’t until recently like just to be fair, I I am still at heart and introvert people don’t call me an introvert but I am at heart very much an introvert to put yourself out there to do the network and make yourself known is not my own nature. Are you an introvert? Yes, you are.

Quentin  

Oh yeah, I’m a big introvert. Well, yeah, sometimes you can see me A party’s and I’m, I’m just sitting there looking. You know, I do push myself to be able to go out and talk to people. You know, most people would call me an extrovert, but I’m not like I am. It’s just not, you know, I like to sit in think honestly, I would rather be going for a walk by myself than I would be in a party with a bunch of people. Like I would rather be hiking or, you know, camping and I’m good with being by myself. You know, it’s funny, I was at a retreat once, and people were all talking about, like, what they would like to do. And I was like, Well, I just like to be on an island by myself for a week.

Cherry  

I don’t think I’m not that extreme yet.

Quentin  

You know, I just sometimes like, you know, I, when I was in university, I did tree planting, right, and tree planting was enabled me to pay for university, and I got paid per tree, but I wouldn’t be working by myself for eight hours, just like hard labour. And that was fine with me, I was good. You know, you crave at that point, you start to crave being social with people, right? Because you’re often by yourself, but I was okay with it. Right? Like, you know, everybody’s different, you got to kind of do you do have to talk to people, you do have to do events, and you know, but it’s about pushing yourself, right? I’m a very goal oriented person, we, I like to do travelling I like, you know, I like to do, and push myself to do new things. And that makes me get out of my comfort zone. And the only way to grow is to get out of your comfort zone. So I agree. Sometimes I tell people, if you want to change, especially what you’re doing, add a zero to every deal that you do going forward. Right? And all of a sudden, you move from a $1 million deal to a $10 million deal. Totally different, right? That’s gonna push you out of your, your comfort zone, right? Kind

Cherry  

of the 10x mentality. Yeah, absolutely. And it’s

Quentin  

not for everyone, right, you have to decide for yourself if that’s for you. But if you want to grow, you need to do something different. You can’t grow by doing the same thing over and over again, you need to grow by doing something different. And then once you find something that you’re happy with, then you just you know, you can continue to get to a point. But what gets you to one place is not going to get you to, you know, a different place. You have to change what you’re doing.

Cherry  

Absolutely. So speaking of that changes and going into different markets and buying multifamily, because we talked about earlier on between us that you grew from you didn’t start buying multifamily unit, no, like 100 unit in one town. Right from the get go. There was a journey from your beginning from the beginning to now and you also quit your job focus on this full time. I want to revisit that story a little bit. Because I think to our listener here, there is a lot to learn from you. Because a lot of us are attracted to real estate because they want financial freedom and dreaming one day that hey, maybe one day I can quit my job with the real estate portfolio. How did that happen to you?

Quentin  

Well, I mean, what ended up happening was that I built a small portfolio of properties, mostly single family homes and duplexes. And I ended up with about $5,000 a month in cash flow that had come from my portfolio. This was back in 2013. And 12, I had bank, I’d been banking that money aside, and then 2013, I needed to make that decision whether to continue or not. Now, when I quit my job, I really only had that one source of income, I was running the Durham real estate investor club. And that gave a little bit of of income, but it wasn’t as much as my portfolio was. And then when I quit my job, I added another form of income, which was flipping properties, which allowed me to gain and all I was doing was the same buy fix refinance strategy that I was doing before, but instead of refinancing, I was just selling them off. I always have a backup strategy. Whenever I did those projects, I always have two or three different ways to exit a property, either refinance and hold or refinance and partner with somebody or sell which is what I was doing at that time. And I was just I was just selling them off. And what was useful about that, and I don’t think a lot of people realise this is when they quit their job, you’re not going to get financing anymore. It becomes much more difficult to do that. Now you could go to be lenders, you there are different ways to go about doing it, but it becomes a lot more challenging. So what I ended up doing once I realised that that wasn’t going to be how I continued to grow unless i i I partnered with other people who would qualify. And I did. I’ve done that before. But what I ended up doing was moving to the apartment building space where it wasn’t based on my qualification, it was mostly based on the building qualification, right. And that allowed me to scale and can continue to grow. And then as I refinanced those assets, I was able to recapture some of the equity that I could reinvest into other projects and to do do what I needed to do with that. So, you know, I think that one to four unit properties are great for people to start to create that that base layer of financial freedom. And then once they take that, they get to a point where they say, Okay, now I’m going to leave my job, you know, I’ve created this great base of income. Now it’s time to think about moving to apartment buildings, for sure. And maybe even just before you do that, to move to apartment buildings, because I think that is where you actually create wealth, you create net worth, and you’re not creating, I think sometimes the mistake is that people think that apartment buildings, you know, they’re not a great cash flow generator, the thing is, is that you have to change your thinking into how that cash flow comes to you. Because in an apartment building, you may be reinvesting all of your cash flow into the asset. But in year three, or year four, year five, you refinance all of your money out, right. And then in year six, you do it again. Yeah, right. And they really the challenge is to make sure that you’re not extracting too much equity, so that their capital gains aren’t theirs, you’ve extracted so much equity, that there’s, you can’t pay the capital gains if you decide to sell the asset, right. So that’s, that’s a, that’s a problem. But that’s not a problem with, you know, one to four unit properties, right. And so it’s a different model. And I think that as you grow in what you’re doing, depending on where you’re at, that’s when you need to decide on what you’re switching to right. I have a great chart where I show, you know, people start off in the build phase, and then they move into the growth phase, right. And when they move from the build phase, they have high leverage, right? Because you owe everybody starts off with high leverage. And then as you’re building, your leverage starts to decrease and your cash flow starts to increase. And as you get further along in your real estate investing career, you end up with, you know, very low leverage, higher cash flow, but that takes time to be able to get to that point. The issue with real estate is that you can be equity rich and cashflow poor. Yeah. Right. And so

Cherry  

lots of clients like that showing negative every single year.

Quentin  

Yeah. And the challenge is, okay, well, then how do I how can I leverage the those one to four unit properties in order to access some of that equity, and maybe you lend it out, maybe you do some some other strategy in order to create cash flow from that. But that is really a problem with one to four unit properties. In the multifamily space, it’s based on net operating income. And because I can add, increase my rents, I can increase the value of the building, thus, I can refinance the asset a lot easier, and then recapture that equity and put it to work again into more assets.

Cherry  

So what’s the typical loan to value when you refinance? When it comes down to the multifamily space?

Quentin  

It just depends on the debt coverage ratio, and it depends. So let’s say you’re going to CMHC financing, you’re probably at a 1.2 debt coverage ratio. But that could mean an 85% loan to value depending on the asset. And we just did. Was it a 17? Unit? Yeah, the 17 unit was a 40 year amortisation 85% loan to value. Wow. But the debt coverage ratio is 1.2. On the asset makes sense?

Cherry  

Yeah, if you can get 40 Yeah, that’s amazing.

Quentin  

Right. And, and that’s in the multifamily space, right. So it is very different. But could I qualify for a car loan? This makes no sense. But this is the banking system, right? Instead of taking a loan, I’ll just pay for it in cash. All right, and then that’s fine. Like it’s just a different way of doing it, unfortunately. Right. But because I don’t have a T for income in the same way. I have to make sure that my my corporate books are in order. I can show what my corporations are making, but because I don’t take it personally because I don’t need it. Right. I may not be able to even it’s such a weird I know, weird situation. Right?

Cherry  

Yeah. Yeah. That’s how our banking system work. That’s right. So in Canada, yes. So okay, now that you mentioned in Canada, so I’ve seen somewhere that you’ve invested in the States. Yes. So yeah, yeah. Yeah. How are those investment coming along?

Quentin  

So I have, I’ve got properties in Tampa in Tampa properties I bought in 2008. Team. And because I couldn’t get financing, I had to purchase them cash, right? I couldn’t get financing on them. And then I got a foreign, like, what do you call it like a foreign buyers loan or whatever. And it was like 7% interest rate at 65% loan to value, which was a real pain. But since that time, just earlier this year, I actually was able to get a loan with a financial institution that had in Canada that had an office in Florida. And so what that enabled me to do is get a 75% LTV at like a rate that made sense, which was like 4%. Yeah, the properties in Tampa, I’d actually doubled in value since I had purchased them. And you know, now it’s still cashflow is about $2,000 per month on those assets. And you know, and I’ve got different, I’m involved in different projects down in, in the US, but I see my stuff in the US as a hedge against the Canadian economy gives me the opportunity to get paid in US dollars. And you know, that’s really the main reason for investing in the US. And it’s important to, you know, from a tax perspective, to avoid double taxation. Yeah, right. Because if you’re not structured properly in the US, you could really like it can really mess you up. And I find that a lot of advice out there is bad advice, because it’s old advice that doesn’t work anymore, like use LLCs. And things like that, right, which just don’t work anymore, right?

Cherry  

It’s not just that like we had in our practice. I mean, this is truth about real estate investment show. But I can’t help to talk about some taxes. We’ve helped a few of our clients doing some structuring Layli worth their US purchases. And we found that without experience, even with the great limited partnership structure, we see some crazy number of taxes, the Combine between the Canadian and the US side is crazy, even with the proper tax structure. And it’s almost like a cost of doing business outside of Canada, that people often don’t account for. So that’s the part that I always wanted to do up sort of a presentation on eventually, one day, I’m not ready. I’m not there

Quentin  

yet. So that would be a great presentation, I’m sure Yeah, yeah,

Cherry  

absolutely. So you know, a lot of investors in different stage in their journey. And I mean, I want an I never really invested in never made a lip to invest in, I guess, in apartment building. We wanted to every time like I went to the multifamily conference, I will I see all these people taking all these massive action, I talk to Sarah, I see that all everyone’s doing all these massive action, the only hope I have is like, I have my own accounting business that I do have to take care of. And my, my husband, Irwin has his own real estate team that he has to take care of we have businesses, and how much of the involvement in the day to day involvement. Do you like how much time do you need to do this thing?

Quentin  

So that’s a trick question.

Cherry  

I’m not sure.

Quentin  

But it depends on how you answer it. So what I would probably say to you is then you partner with somebody who is somebody who does the day to day work, and you don’t take on the amount of work that’s required in order to do this and build the relationships and do all those different things. So you don’t have to be that person that oftentimes I have. I have conversations with business owners, and usually professionals like doctors, dentists, I’ll talk to just different people who are busy. And instead of being you don’t have to be the person who is the operator and do the day to day to benefit from apartment buildings. You can be a partner and it’s okay. Okay,

Cherry  

so how does that how does that number work? Tell me Tell me pretend that I am the Crazy Rich Asians I’m no. I am. But how does the number work? Like if I were to put in like $200,000 and invest it in one of your projects? How does it work?

Quentin  

Well, I can’t really present something like that on a show like this. But like, in general, what happens is that you would take your your funds, and you would own an actual piece of the building, you’re actually an equity owner in the project. This is not like a fund, right? Like you’re actually an equity owner. So that that is shares that are equity positions in the building. But what happens is that within that within that structure, there are people who are you know, more active, those people will have a higher percentage, but they end up doing the business plan. So they’re working on you know, the day to day operations of the building. They’re all So doing the, you know, making sure that the property is going to be able to be refinanced and pull all the funds out. So usually what happens in year three to five, we’re looking to refinance the building and make sure that our partners are able to get back the funds that they invested, but they still own the equity share of the building. Right. And so if you think about that, from a return perspective, that in three to five years, that’s very lucrative. Yeah, right. And I mean, nobody can promise, you know, anything. But I’ve been doing this since 2009. You know, and I, you know, I work with people that I like, and that, like me, and I think you don’t have to be the person who is in the day to day. Now, if you wanted to be the person who is, and this is the other side, if you want to be the person that is going to be in the day to day, there are lots of great people that have courses and that that you can learn on, you know, how to do underwriting on multifamily building to make sure that you’re able to carry out a business plan, right, you need to spend time and effort into learning that business, you need to be able to develop the relationships and go out like, I’m often like, maybe once a week, at least going out for lunch or meeting somebody this morning, I was here as meeting I was, you know, I’m always meeting people in building my relationships. And that’s something that you’re going to have to be able to do, if you’re a busy business owner, you don’t have time to do that, right. So you have to keep in mind that there are a lot of things in the background that you need to do as well, you could just buy a building off the MLS, that’s definitely something that you could do. But that doesn’t mean that you’re going to be cashflow positive, when you’re doing that. And it doesn’t mean that you’re going to be in the position to refinance in three years. But it could mean that you still own that asset, right. So it just depends on like how you want to go about doing this, anybody can buy real estate, you don’t have to be you don’t have a PhD to do that. The problem is, is that, you know, buying the wrong asset is going to be a lot more expensive than just partnering with somebody in giving doing the right thing, right. Because like apartment buildings, like if you end up with an asset, that’s losing money every month, and then you have to put in 100,000 or $200,000, for renovations, and then you have to, you know, pay somebody to leave. And then you have the LTV issues that come up, you can be out like hundreds of 1000s of dollars, which is very different than, you know, dealing with one to four unit space. And that’s often why I say start off there, right. But I often have like we are usually, you know, working with people who want are working in the one to four unit space, don’t want to get into the commercial space, but know that that’s where they want to go. So when they saw an aside or, you know, they may work with us. Yeah, right. There’s just different ways of doing it. Like, yes, you can definitely do it how much time is really based on the amount you want to dedicate to it, right? That’s the success you’ll have, right? If you want to be great multifamily investor, expect to spend, you know, 20 to 30 hours, just like every week working on that business to a point where at some point, you’ll know what you need to do. And then you’ll be spending a lot less time doing it. Right? Just like any business,

Cherry  

absolutely. 100%. I like your when we go to events, we often get pumped up and think oh, it’s super easy. You’d like tomorrow, I the day after the event, I would hear or see my clients saying like, I’m doing this, my goal is this big. And I’m like happy for them. It’s just that at the same time, I’m looking at my own personal situation like, can I just quit my accounting job and just do this full time. And that’s not something that I can at this point I want to do. And so that’s why I’m like, I need a realistic picture in terms of how much time commitment you need, I guess with any business is the same.

Quentin  

It’s the same with your profit, like how long did it take you to get to where you are?

Cherry  

A long time? Eight years, 10 years, 10 years? Eight years?

Quentin  

Yeah. And same with me, it’s taken me that long to be able to build my portfolio to the size that it is and develop all the relationships and the business partnerships and all of that that got me to this place. So yes. Can anybody do it? Yes. Anybody can open an accounting practice. Can you? Can you be a successful accountant with a successful practice? That’s very different. Yeah,

Cherry  

absolutely. I agree. 100%. Yeah. Now speaking of all these investments, where do you think that interest rate is gonna go? That million dollar.

Quentin  

All right, first of all, I hate that question, because I get asked all the time, but I have to ask. I know. And, but the thing is, is that interest rates are just an expense. Let’s not get like people get all caught up with what’s happening in the last 30 days, and lose sight of what happens in the next 10 years from today. because if you think about interest rates in the fact that okay, interest rates have gone up, you’re probably thinking, you know, because the one to four unit market has lost 25% In the last six months, or whatever it is, you’re losing sight, the fact that in the last 10 years, that same asset would have probably tripled in price. Yep. Is it more like so let’s start to focus on whether the property cash flows that makes sense is cashflow positive, and you’re able to carry that asset based on, let’s say, 10 year rates? Can you carry that asset based on tenure rates, and that way, your stress testing, whatever you’re buying, and you’re able to hold that asset for the long term, because if you’re able to, like, if you’re able to hold that property, and everybody out there, I want you to think about, if you bought whatever property you lived in 10 years ago, what is it worth now? Right? Yeah, it’s probably worth a lot more. Yeah, right. Especially if you’re in a market that makes sense. Like, you know, we have population that’s coming to that area, we have different sorts of employment, we see governments that are investing into the infrastructure in the area, we see all of those good things that make the the economics of an area. Good, right? If we’re doing that, that’s what we should focus on. Because interest rate is just an expense. It’s just like property management. It’s just like property tax. It’s all it is, is an expense, let’s not get carried away, is what I want to tell people look at, stop thinking about what’s happened in the last 30 days and start thinking about what’s going to happen the next 10 years. And then make sure that you’re buying properties that are cashflow positive, always I’ve always said that if you buy a property that’s cashflow positive, and, and your plan is to hold it for 10 years, and you’ve stress tested the asset so that you know that you’re going to be able to withstand, you know, rates that go up, then what doesn’t matter what interest rates do?

Cherry  

So that’s such a tricky answer as well. The reason is, because then it leads to a lot of the questions that maybe I don’t get, but a lot of our clients would, would be asking that those questions. How do you find these cash flowing properties? Because it seems like it’s disappearing, like I think Durham and Hamilton Hamilton is where I invest. And I know you invest in Durham heavily, at least in that one to four unit space. So how do you find the properties that would still at least let’s not go to cashflow positive, let’s just go into like cash flow neutral? How do you at least find that properties that would be able to give you enough rent to support everything?

Quentin  

Well, let’s say prices decreased 20 to 25%. All of a sudden, you’re gonna see assets that make more sense. That didn’t make sense before. Yeah, the trick is to stop being fearful and, you know, start being greedy, because this is what everybody else is they’re being fearful. Aside from that what ends up happening over time is that you move out from from a market and you move further out. But you want to make sure that the economic fundamentals are there with whatever market that you’re interested in. So maybe instead of being in like 10 years ago, I could have bought a property in Pickering, and it would have been cashflow positive. I’m not going to buy a property in Pickering. That’s cashflow positive today, right. So I’m going out to maybe Bowmanville to be able to buy a similar asset. Now I’m still in the Durham Region. And but I’m going further east, right? Maybe I’m in Peterborough, maybe I’m in Kingston, maybe I’m in Belleville, right. And I’m looking at different markets as long as all the fundamentals are there for the market. And you you see the long term, macro economics are there. And then the fundamentals are there, that helps you to make a decision on where you’re going. I may be called the Durham Real Estate Group, but we have people from all over the place that come because it’s not about that it’s about buying cash flowing assets. So maybe what it is, is like people need to start thinking about a different area. Like if it’s if the area doesn’t make sense, right now move to a different area that does, right start, don’t get pigeonholed?

Cherry  

Well, we have, we work with a lot of clients who buy pre construction homes, and they they feel comfortable because they know and it’s like less to maintain, because it’s only a pre construction condo per se. So there was only 800 square feet to maintain. There’s only so many appliances in there. And so a lot of these people are unable to get financing. They are running into different challenges. And but they see the capital gain appreciation because they tie up your money for a number of years. And therefore there is that, I guess not forced appreciation but the market has gone up over time and then they see appreciation and they see this success. Would you say that over the last 10 years? To me I’ve seen so many different deals and some people are doing great. Some people have developed systems and I are truly successful. But there are mistakes that we may like to be honest, like I’ve seen in my own portfolio, we’ve sold a couple of properties that are barely breaking even. And I feel like we’re breaking even we’re lucky because thanks to the real estate boom, rather than, like my own success or my own decision making, I don’t like I don’t know, if I’m explaining myself well enough. I think what I’m trying to say is that real estate because of the asset class, it has been going up. And can we continue to? Can we operate smartly? And can we take advantage of the growth? Is what I’m trying to say the instead of relying on luck?

Quentin  

Yeah. And I think like, I’ve got to say, I’m not like, I am not a fan of pre construction, anything. I think that’s more speculation than anything, but this is my own personal opinion. And I, everybody does it their own way. So however you want to do it, yeah, I prefer to buy an asset that is cashflow positive from day one and continue to manage it. And you know, I think that there, you have to decide, I’m saying that from my perspective, because I don’t think it’s wrong for people to do that. You just have to decide for yourself, why are you doing it, like if you’re doing it to pass on intergenerationally a condo to your kids, and you want to be able to do that, you know, maybe that’s a great asset, or you’re looking to add net worth, or you’re just trying to make a quick buck, like whatever your reason is, are you trying to create cash flow, so you can quit your job, all of those things, kind of push you into different assets, right? Like when I’m buying, I’m not buying. But if I were to buy a pre construction, I’m betting that today’s price that I’m locking into is going to be lower than the price that it’s going to when it’s completed is going to be sold that right. And whether I take possession of that asset or not is, you know, it’s just going to depend on what I decide to do. Now, the tax consequences going to be different depending on whether you’re holding that asset or not holding that asset. Right. And so that plays a part, but not everybody talks about that, right? Oh, I

Cherry  

tried to trust me, I tried to every other videos is about assignment HST, and then assignment income, but people don’t like to hear it.

Quentin  

Yeah, well, they don’t like to. But that has to be part of that the like the thought pattern where most people, and I like to buy assets that I’m going to hold on for for the long term. I’m not looking to do quick flips. And I also think that sometimes those pre construction condos are, are marketed as quick flips. Right? And I just don’t, it’s just not me, that’s my point of view. I think that, you know, if you’re buying that asset, it’s cash flow neutral right now, I would say how can you change the way that it’s run right now, in order to change the way that the cash flow comes from that asset? Do you need to go back to your tenants and say, Listen, you know, I don’t think that this is, I’m not making any money here, maybe I can pay you, you know, a couple grand to leave. And, you know, we can end the tenancy, maybe I can, I can do something else to make sure that that cash flow is is there in that asset, you know, that, like, I think we’re only locked in because we think we’re locked in, right, there may be other ways to go about doing this. And, you know, thinking about the different ways that we can create cash flows from an asset to make it different, helps us to be able to hold on to that asset. So, you know, I understand what you’re saying. The other thing too is like, you know, there are rules that we can take advantage of, for example, if you have a unit that’s been created, I can’t remember the date is that like November 2018, or something like that, it’s built after that you’re not in rent control in Ontario, for example. And that allows you to like if you are cashflow neutral, all of a sudden you bump up or if you built a basement suite from an unfinished space, that basement suite maybe is not under rent control, but the upper unit is but that that basement unit can make maybe make you cashflow positive in a way that allows you to hold on to that asset right. So let’s like let’s be creative. Let’s think of ways that like I’m I’m a total you know I like to think of different ways to be able to do things there’s not always one way right and so like let’s you know what I would say is okay, let’s take a look at that that asset and see what we can do with it in order to make it cashflow positive. There’s there’s lots of ways to do that.

Cherry  

That’s amazing. Well, thank you so much you’ve shared so much with us today and I am very thankful to have you on our get like as my very first podcast host guest so thank you so much and if for anyone who wants to reach out to you or find out more about term Rei, how do they reach out to you Oh,

Quentin  

You can go to Durham rei.ca Or if you want to reach out to me I can I’ll do a 15 minute call if you are the right criteria if you go to Quentin D’souza dot com, and then you can we can chat and see if there’s a good fit.

Cherry  

Yeah. Awesome. Awesome. Thank you so much for coming on, again. wealth of knowledge, as always, and I appreciate it. No problem at all. You

Quentin  

did a great job to us. Awesome.

Cherry  

I just need to ask questions and have my text twist to it. That’s it. Yeah. Awesome. Thank you. Oh, you’re welcome.

Erwin  

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

 

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