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Sarah: REITE Club nation. It's Sarah Larbi here. And welcome to this podcast episode recently, we've had a special national webinar event related to the numerous federal budget announcements about real estate and brought together a number of experts to offer their thoughts on what this can mean to you in this episode. Alfonso Salemi interviews Christopher Humel and he is not only a real estate investor, also a realtor. And we what is happening in the market today. I'm sure you're going to find this very insightful and helpful to your real estate investing business. And don't forget to rate and review our podcast. Here is the episode.
Alfonso: We have Christopher Hummel from Smart Choice Realty, budget interpretation from the real estate side of things. Christopher is a full-time investor and a full-time real estate agent working with some of the best in the industry, winning several real estate awards and being profiled in several real estate, investment magazines and articles.
Welcome Christopher. We're excited to have you on and to share your knowledge from the real estate market. Everybody's talking about it. It's a crazy market. I swear if I get a dollar every time that I heard it's a crazy market, I could probably buy my next property cash and then refinance it. But yeah, Christopher give us an overview. Let us know what you're thinking from the real estate agent perspective and your real estate investor as well too. Let us know what you're thinking.
Christopher: Thanks a lot, guys. I really appreciate it Alfonso. You know what Alfonso, why don't we flip the script a little bit because Travis took a little bit outta my thunder earlier. Shout out to Travis and listen. Brian, I think you speak a lot of truth there, so I really appreciate you going first. Here's here's the deal, Alfonso it's a totally different. Okay right now. I'll tell you guys as investors, a lot of sellers are nervous.
I'm just telling you that they are nervous. Why? Because it's not the feeding frenzy that it once was. Now we know that the market has changed. The market has softened. Here's the funny part. The news seems to catch these little news bites and they run with it. And what happens is just like the radio. You hear the same song over and over again. You hated it for the first time, but you love it now. And you're singing, it's in your head.
That's the same thing with the real estate market, especially with the news, you keep hearing the same thing over and what does that do? That turns a small little news bite into a big thing. The interest rates have softened the market. I'll venture out to say that the market was already starting to crest a bit. But guess what the government's gonna do, they're gonna say hey, wait a second. You see what we did? That was all us.
You gotta understand now of course, with the budget here they're hoping to take a lot of credit for a lot of these things as well. Alfonso, I'll just jump into my presentation real quick, by the way, guys, it's super quick. It's super dirty, but I just wanna highlight a couple of points and then maybe what you and I can do is we can do a little a question answer, period.
Alfonso: Sounds good. And yeah, make sure REITE Club community, you get your questions into the chat as well to ask Christopher your questions.
Christopher: I'm just gonna throw this up real quick. I don't want to take too much time with this. Like I said, it's real quick and dirty. What I wanted to do is unpack this budget here for you guys real quick. But again, Travis, you did a great job in covering this so much better than I could. And frankly, did you see all the graphics that he had? It looked real crispy, real nice.
Here's the point. There are a couple of good points in. I don't agree with everything. I can see certain themes making some sense. For example, the housing accelerator fund. They're looking to put in $4 billion and we know this point, but the whole deal is this. It's supposed to incentivize these communities, these cities to create new middle class homes.
It's also to modernize, build new homes, create more density. I love the more density bit, and I think a lot of you guys out there as investors like that as well. I'll tell you what I'm doing. A lot of you guys now you're doing basement apartments or accessory apartments, whatever they call them at you in your community.
A lot of us now are moving and gearing towards the garden suites. I guess I love garden suites as well. I'm moving towards actually building because I think that's the next best thing. Everybody's doing the basement apartments. Everybody's a lot of people now are considering the density with the extra suite.
I like taking down and I like building. Some of you guys might be involved in that as well. But here's why I like. It's because I believe from what I'm seeing here, that they are going to be expanding the zoning and that's important. They already did that for the basement apartments or the second suites. I expect they're probably gonna be able to do that or be doing that sort of communities for the zoning. Maybe doesn't need to be an R2. Maybe R1 will allow you three, four units.
It may not need to be such a large frontage. I like that too, because a lot of lots now don't have the frontage. Maybe they're gonna allow that all of these things really are unclear. We don't know. I'm just inferring and guessing, to me that is the direct. There's a couple affordable housing programs and some great stuff, but here's the deal.
If you guys are into bigger projects they got this rental construction financing initiative. I won't get into detail about it, but the point is that increased construction of new rental housing by offering low interest loans and mortgage insurance, which everybody loves low interest loans.
There's a caveat of course, is that you gotta have 40% of the units. That must be at 80% of market rent or better now, is that really something that we're looking to do? No, not particularly. There's some strings attached. But honestly, if you are looking at the bigger picture and this fits your portfolio, then this might be something that would make sense for you guys.
Here's the reality of it though guys and this is what we're seeing here in the market is and you know what you speak to builders and they'll tell you all the same thing. They'll say wait a second, guys, all of this push for new housing, all of this push. But we don't have any skilled labor. We don't have the materials. We just don't have the supply to build all of these buildings, to build all of these rental units, to build all of these homes, especially not all at the same time.
Look we already have an influx of kids going to university and no trades, just here skilled labor is really on a decline. We just don't. We know especially with the pandemic here, it's really exposed the fact that we just don't have the supplies. Is this a pipe dream? Is it just government speak? It's tough to say today but I'm going with empty promises. I'm sorry that's what I'm going with.
We just don't have the resources to make this happen. And often I am, but that's my belief here. Hearing it from a number of builders, and this is what they're saying, that we can't do this. There was talk about the MultiGen home renovation credit. And I thought that was pretty interesting. I know it's not clear yet, but it's a tax credit, $50,000. Tax credit, 15% gives you $700 and $7,500 back.
What's unclear, is it occupied only? Is it for rentals rather? Can it be for rentals? Let's define family. Who is this for? Is a senior does it have to be a grandparent? Could it be a cousin? Could it be somebody outside the family? Listen we don't know. But keep your eye on it because I think, you know what, it might make sense. I like this one. I do like it. I have some issues with it.
This is the support first time home buyers. Yes, there's a tax free savings account that they're setting up now for first time home buyers specifically, you gotta be under 40. And you can save up to 40,000 tax free. We know we got some information there from Travis earlier. It's like an RRSP, so it's before tax money, but the good thing is it's like a TFSA.
When you take it out, it doesn't count against your income. You can't combine it with the home buyer's plan. We know the home buyer's plan already exists. You cannot combine both of them. You're gonna have to choose which one or the other. You're probably best to use this one first and then follow up with your TFSA.
If it's underused, if it's not used by 40, it reverses, it reverts to a regular RRSP. But here to me is the critical aspect because I do talk to a lot of people and frankly, you know what, listen, I do talk to a lot of first time home buyers. It's not just investors. Have a huge portfolio of investors. But as you can imagine, new entrances into the market are really the life blood of the community and of the market itself.
Here's the problem, you talk to a lot of people and they have no idea that an RRSP is not just a savings account. They tend to put their money into just a savings account without understanding that you've gotta invest it in something, are you investing in mortgages?
You can invest in stocks, you can invest in mutual funds. You can invest in crypto. In an ETF format, not directly, but in an RRSP, you can do a number of different things. I find, frankly, when I talk to a lot of these new entrance to the market, they are putting their money into a savings account. Thinking that this is helping them grow their RRSP.
I understand that it's not the way to go and it tends to be that I have to educate them quite a lot. Is it gonna help? I don't know, soon to be seen, I guess this is the big one here. The government is talking about a home buyer, bill of rights, and this is gonna affect, I believe a lot of things here.
National plan to ban blind bidding. We know that we hate going in and blind bidding. We absolutely hate it because I don't know what you've bid and I don't know how much I'm bidding over or under for that matter. We hate that. Could I be bidding 30,000 over the last offer? Yeah, maybe I don't know. The sellers love it.
Sellers love it because they can get somebody off the street and really blow somebody else out of the water right now. Here's the question. Is it really gonna help? Sounds intuitive, but is it really gonna help. Because I'll flip to the next one here and I'm just gonna point out Australia. A lot of you, people know where I'm going with Australia. They've got an auction system where, you be into a house that you want with about, who knows 10, 15, whatever the case is.
Other bidders on the front lawn and the real estate agent is holding the auction. You're gonna bid on this house and if you don't get this house, you're gonna move down to 2, 3, 4 down the line and maybe even one same day. Here's the point. This is a different system. I don't know that we're gonna be looking at this similar system but it's not a blind bid in the vast majority of cases, but I don't know that you guys can see it, but residential properties have surge 23% in 2021 Australia records strongest annual growth in home price.
Obviously, that impacted by things like low interest rates, just like we've got here. The pandemic has really accelerated things, but all I'm just trying to point out is they've got a different system yet they're in the same boat as we are. The question is, does blind bidding or a ban on blind bidding really help or again, is this just government speak? Something that they're gonna take credit for? but may not mean anything.
Just bear that in mind. But listen, at the end of the day, Brian told his best that we're seeing a lot of sellers not get those offers. They're listing low and in today's market, we're not seeing the same amount of feeding frenzy we're seeing, frankly a lot of offer dates just pass where they don't get the number they want and you'll see it the next day prices up to closer to what they're looking for.
We're finding that things are really changing in the market. People are now getting time for a home inspection, which is nice. But there's suggesting a legal right to a home inspection. You know what, frankly, I really don't mind that. They're also saying that they're gonna get access to sold data. We're gonna get access to sold data.
I should say cause I'm the agent and more transparency. That's nice by the way, sold data. Some of you guys know what is it? Health Sigma that's GTA mainly. If you're going outside GTA, they don't typically have other provinces may not have that available. Foreign buyers don't quite make up a whole lot of of the of the buyers, at the end of the day, somewhere between 4% to 7%, it's not a huge number. is that really gonna make a difference? Is that really gonna help again?
I think it's the government trying to propose something may not have too much of an impact, but it sounds great to the average individual sounds great ban on foreign buyers, all those Chinese, those I don't know name, where they're coming from the UK, those guys that listen, man, you know what some of these guys aren't even buying homes over here. And frankly I don't think that there's a large percentage, a large enough percentage of people that are buying these homes.
I'm looking at the numbers here, but hey, soon to be seen, right. Speculation tax, we already talked about. I won't really get into that, but I will tell you that's gonna have some type of an effect. Guys understand here. Here's my perspective. I think we should have some type of an adjustment to the capital gains. This is just me. My perspective.
I think the problem is the market is so tight. People can't afford to move people. Can't sell you as investors, Brian, for example, he told us it doesn't make sense to refinance a property that he's had because he's gonna be underwater. Maybe he doesn't wanna sell it because he's gonna be killed with, by capital gains.
Maybe an adjustment to capital gains tax might actually incentivize some of us to trade properties, trade in those four green houses to pick up that one red hotel. If we could somehow alleviate the capital gains tax or roll it into another investment, again, just my perspective. But I will tell you that I believe that this speculation tax will have an effect on the market.
There has been a lot of flipping out there just because the market has gone up so much and so quickly. That's really what I wanted to present and we can talk about some numbers as well as to, kind of market. What's happening on the streets right now? I don't know the time that I've got, I almost think that I'm way over. What are you what are you guys, what are you thinking about Alfonso?
Alfonso: Just looking at the numbers. I know we've talked about that, like it's and government wants take their credit for that. Someone that is fairly new looking to get into real estate investing and they're coming to you and saying, okay, Christopher, what strategies do you recommend? What should I look at? What are some strategies of risk investing? That's gonna help me profit and get my portfolio started. What would you say?
Christopher: I think the old standby multifamily units, two units are the big thing course, three units and four units. I think are really great because now you can stay within the residential mortgage space. Some of you guys have already played that out. Some of you guys already have multiple units and you might want to get into the larger multi-unit spaces. And frankly, that's what I'm seeing. I'm seeing a lot of larger purchases late. I'll be honest, multi-unit, I'm talking six and plus 20 unit buildings and more on fire.
It's really incredible because we always thought these buildings were about numbers. Cap rate numbers. That was really what it was. I don't care where the building is, what it is, as long as it made sense on the numbers front. But we're seeing that those properties have been going out play crazy. And frankly, I don't know that's gonna change because a lot of the larger corporate bodies, a lot of the larger organizations and some of these investors who have done very well with their four green homes.
They're now looking to step up, they're getting into this space as well. It's really crazy but listen, for some of you smaller guys, I still think the two unit properties, the BRRRR method. Shout out to Sarah and her crew because I know you guys are brought up on that and frankly, I still think it works but what I do love is and I'm hoping this works in our favor is the whole zoning changes.
I'm really hoping that works well for us, cuz some communities are yet to allow three units on one. Who's to say, you know what? You might get four, you might get a basement out of that garden suite. We don't know, but that might be really interesting coming down the pipe.
Alfonso: Great advice, great insights, Christopher. There's his contact information in the chat. Thank you for joining us this evening and sharing your thoughts or insights. Definitely get in touch with Christopher at smarthomechoice.ca and for all your needs. He'll be sticking around for our virtual networking as well, too for some Q and A.
Christopher: Thank you Alfonso. One last point to you guys and Brian, I'm gonna reiterate it. You guys are investors. Let's go, I know this market is gonna make you pause a little bit, but you don't stop. You guys are looking for future wealth. Let's go now. Let's get you guys in gear get your money. Get out there. This is the time. No one else is looking. Sellers are panicking. Let's go.
DJ: Thanks for listening to The REITE Club podcast, where the focus is on helping all levels of real estate investors advance to the next level and help you customize your life. Be sure to tune in next week at thereiteclub.com/podcast or wherever you listen to podcasts. And if you get a few seconds, please rate the podcast. Wherever you're listening, it helps the show get noticed by others like you. And we truly appreciate it, and don't forget to subscribe.
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