Shawn Allen, Jon Tenbrinke and Ken Bekendam
Daniel: Good evening, everybody. Our RETE partners who you see here on the screen are in the business of real estate investing just like you. So, be sure to reach out to them for their expertise in growing your real estate investing business. And by the way, there's 15 of our REITE partners out of hundreds and hundreds of professionals that we work with.
These 15 have been handpicked and you can trust working with them. They are BDO Canada, Black Jack contracting, Brenda Schuiling Real Estate, Butler Mortgage, Carson Law, Elevation Realty, Hub International, Investor Mel and Dave Dupuis, King Homes, Legal Second Suites, Mission 35 Mortgages, Mycor Insurance, Pinnacle Wealth, Trust Your Talent, White Elm Designs and Cherry on the Sunday, the Windrose Group, Claire Drage.
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The REITE Club does not endorse any particular attendee, participant, speaker, investment, sponsor, advertisement or anything else presented during meetings, events or on our website or social media platforms.
The REITE Club also does not guarantee the accuracy of any information presented during our events or on The REITE Club website and social media platforms.
Before taking action, always do your own research also known as due diligence, including but not limited to talking to other people about their experiences and also talk to your legal and accounting teams, and then make your decision.
Alfonso: Next we're going to get to our contracting and renovations panel and we're going to bring Laurel back on. What an awesome night so far. Great, really great panels. And now to cap the night, we're going to talk about contracting and renovations. So, I'll throw it to you, Laurel, for some intros to our amazing panel.
Laurel: Okay. I'm just waiting till we might be having a few technical difficulties, but I'm going to keep on going. Shawn Allen is on our panel here. He is with Veranda Property. He's been called Canada's largest flipper. He specializes in the buy, fix, sell model and has a panache for constructing creative deals. And he's the founder of the Ontario Real Estate Investors Association.
Jon Tenbrinke of Blackjack Contracting became the youngest master electrician in Ontario history to get his masters electrician's license. So, that's a really cool story to tell that I actually want to know how young you were Jon. So, when we started talking to you, you just tell us, and he's a very busy general contractor.
Ken Bekendam with King Homes, Legal Second Suites is a full-time investor, a contractor. He advises other investors about rental property, renovations, legal second suite conversions, and he's just recently constructed five legal sector. So, there we go, alfonso. So, John, okay. How old were you when you got your license?
Jon: Master's license was 25.
Laurel: 25, there you go. Good for you. Okay. Over to you Alfonso.
Alfonso: Right on. And with Ken five and a week. I was going to say slow week, Ken. But yeah, no, really great. Thank you guys for joining on. You guys were some of the best in the industry and have been doing this way before. Even a thing and are continuing again. I think that the thing is studying the ships.
What are you guys seeing from a permitting and city standpoint? So, we're seeing, you're going to have to go in, everybody's taking the precautions, extra steps. I know Ken you're working closely with the city permitting a lot. Why don't we start with you? What are you seeing?
Ken: Yeah, so, we've definitely seen a big slow down at the various cities, pretty much across the board. Everybody's just taking longer to get stuff done. I'm primarily doing a lot of stuff in Hamilton. We also cover the cities as well, Brantford, London, St Catherine's Welland, et cetera.
But basically, a lot of the building departments are still not open to the public. A lot of their staff, their planners are still working from home. So, that greatly reduces their capacity to draw reviews done, permit reviews, done. They may only go into the office, one day a week to get some administrative stuff. But for the most part they're reviewing at home.
They're just their capacity to get things done quickly is drastically reduced, and they're blaming it all on COVID and stuff like that. So, what that means for us investors is that we need to be planning. We need to be thinking ahead. Okay. Because it is taking much longer to get even simple permits through the city. So, the very first thing, once you get the house under contract, is to get your designer in there and get started on drawings because it's taken forever.
Alfonso: Yeah. And get that prep work at as much, get as much prep as you can so that when it's getting to the city yeah. Have that ready to go. And Jon, from the electrical side, the Metro, you're doing a lot of permitting. Maybe that's slowed down a little bit. If we're adding other suites, we need more power to these units. What are you seeing from the electrical side permitting? And then obviously from the general contracting as well.
Jon: Electrical, there's no difference. I can have a permit in about 15 minutes. It's all done online. So, for the ESA, the inspectors have been just fine. They did some COVID protocols. A lot of them were doing sight unseen and video calls. The ESA just changed their entire inspection system for the first time ever.
It's called risk based oversight. Now, instead of regular inspections, it's more of an audit system. The more trust you have as an electrician with the, yeah, say the less likely they're going to show up, which speeds up the process. And then from a general contracting side, especially with the basement suites, each city's kind of different.
Hamilton's always been traditionally slow. In my opinion, that's Ken can probably attest to, I have Niagara, Welland's just fine. Brantford, just fine. It's a little bit slower than normal, but it's not crazy delays, but overall things are just taking longer. That's the same advice Ken gives. Just don't wait to do this. I had someone call today, and said, I want to do this for a year for now. Yeah, now's a good time to start.
That's basically what I'm seeing is just don't think someone's going to happen tomorrow night, give three weeks for three weeks extra. And it seems to be finding Ken did some drawings for me this summer for one of my customers. And it took six weeks to get a simple permit with no variances. It was starting to get a little better in my opinion, but it's still planned for patience.
Alfonso: Yeah. Be patient out there. And we'll wrap it up with Shawn, Jon you're doing all kinds of crazy stuff. Adding levels, ripping things out, doing all kinds of stuff, like driving the bulldozer through some properties and starting brand new. So, you're doing a lot of permitting work. I'm sure. What are you seeing in the areas that you're working in?
Shawn: Yeah, I think just like Ken and John said we're seeing delays pretty much across the board in any city. There's a backlog and because of COVID. I think it's been compounded because all these people that would normally be spending money on going away or doing something going and all that kind of stuff for them are actually putting their money into renovations for their house, which is compounding. The wait time and with this backlog. It's the same thing.
We're seeing the delay pretty much everywhere. It depends on the city. It's getting done now and they're starting to pick back up on that. So, it's not as bad or definitely like Ken said, you just have to work through it now thinking in advance when you're going to need it and start to be proactive about it.
Laurel: Okay. So, in terms of the, I guess the actual doing the project, because we're hitting a little lot of shortages, right? Lumber and appliances and all kinds of things like the mills were shut down and there's such a backlog of orders. So, this has been affecting your business, like what you do and what should be, what should we be aware of in terms of renovations and all the rest of it? Ken let's start with you.
Ken: Yeah. On one recent project where we were caught with their pants down on appliances, because we used to be able to order appliances and have them delivered like the following week. If not two weeks later now it's we need to be ordering appliances at the very beginning. Hoping that we can get the stuff, two, three months from now when the job is going to be completed.
Definitely with appliances, we gotta be thinking way ahead than what we're used to on that front, when it comes to lumber, unfortunately. Yeah. The prices are going up. In our company we've been trying to source out different suppliers of lumber trying to order in full pallets full skids of a lumber to try and get those bulk prices, all price discounts. But unfortunately, it does translate to higher framing costs for our clients.
There's nothing that we can do about that. Lumber is like two by four, it used to be like $2 and 20 cents. Now, it's up over $7 in some places. So, we've been really having to try and source that, pressure treated lumber, too. Same thing, there are some suppliers out there who are getting better stock and inventory of pressure treated. You still gonna find shortages at your big box stores because that's where the vast majority of the public. I've been really trying to seek out these small, independent, little, small lumber mills, these lumber yards in the small towns, they tend to have more stock for us.
Laurel: Okay. That's interesting. Yeah. A good trip to go to the smaller places. Jon, what about you? What are you seeing as the shortages?
Jon: The same boat, really. The lumber, getting a standard of spruce lumber for what we do for a normal framing, there's not really a supply issue. It's just an expense. As Ken said, January was 385. Now it's 728. So, this year, the price of lumber doubled at an all time expense.
In my opinion, labor materials. It's absolutely insane. Windows, I saw a lot of windows with the base and sweets and I happened to do windows on the side and we used to be able to get windows custom order delivered within two weeks. Now it's been six to seven weeks since the press retreated. I actually had to drive four hours.
I could complete a project and find a small town like Ken was saying. And Everything else even on the electrical front because all our parts were brought from Mexico and they went on a big short to shut down. So, right now a simple $7 breaker that I've never seen in my lifetime. I can't buy it right now. We're having to stock up on stuff like that simple stuff. It's just an interesting time we live in and all you can do is buy what you can and source what you can't.
Laurel: Yeah. And Shawn, are you finding the same thing and also Shawn, I want to ask you. Have you ever looked at maybe all three of you? Alternate sources of materials, because I've seen a lot of stuff starting to pop up. I've been doing some research on the internet about not just using lumber because all the interesting materials are coming along. Have you started using those shots or looked at those or what's happened?
Shawn: Yeah, I think we're in the same boat as these guys are. There's a lot of price increase number one, but there's also a shortage of material, especially for pressure treated lumber. We just had to do five different decks. And like Jon said, I had to have my guys drive an hour to try and find the course to finish the stack off.
Now on, what you're talking about for alternatives. Sometimes you gotta do some things that you may not want to do and turn up. If you want it to win one railing on your deck, maybe now you go up to the loop, you have to start figuring out what makes more sense to get the property dining and keep the jobs moving along.
Prices are up a mature answer now, but it's hard to store some stuff, but I think you just have to really just look for deeper discounts on our properties, on the bias side, in order to mitigate those costs and the extra.
Alfonso: And that's a great thing, guys, is that the problem is there it's identified. There's nothing any of us can do about the price going up and the availability and like Jon said as well, too, more people are often wanting to do things at home as well, too. So, there's other people that are also competing, not just contractors and renovators right.
There's the Joe handyman at home. But that's the first problem. The first thing is to identify that problem. That's great knowing it, and then going and seeing what the alternative is. So, everybody here has already told you, hey guys, we just try to stock up or find alternative sources, finding those options. Are there solutions where your energy is best sped. Great answers guys.
Laurel: Yeah, so, I've got to jump in with just, there was a really interesting question. I was just asked and it was, everyone there, do you think that the raw material prices will come down in the long run? Do you think they're going to stay up or, you know what? I think it's going to happen. I know you don't have crystal balls, but what's your gut feeling? You think prices are going to stay up for maybe six months, a year, 18 months, two years, whatever the things will start to come back a little bit down again.
Ken: I see lumber prices coming back down. Lumber is a commodity. So, it does fluctuate with supply and demand, right? Just like oil and gas and other sectors. So, I'm not too worried about lumber, it will come down quickly. That's anyone's guess, but I see it coming down myself at some point.
Jon: I see coming down a bit. I don't think it's ever going to go back down to the level it was at, but some of the materials as well. I think they're enjoying their profit margins and they know they can get away with it because what else are we going to do unless they regulate it. I think most renovation I observed on a stay up. I don't think they're going to be as high as this, but I don't think they're going down to the pre COVID levels. That's just my opinion though.
Shawn: Yeah. And that's just right. It's supply and demand. They know they can get it now. And it's going to say for a short time, first short term, at least anyway while everyone continues to work on their homes and to have this big boom will it come down a little bit? Yeah. Jon said it might come down, but it definitely will come back to where it was.
Alfonso: Yeah, prices will always continue to go up. I used to be able to get a coffee at Timmy's, 25 cents, 50 cents. Now, it's like you gotta go back to the car to get your second loonier third loony, right? Even if you want a cookie or something, the price will continue and it will climb. So, I want to shift gears just a little bit, and I know you guys overlap in some markets, very different markets for, in some examples, but where are you seeing most of the rentals, the flipping. As it, like in more rural type properties, is it in the inner city where, maybe people were like, wow, okay, here's another opportunity. Is it a mix of the two?
What should we know in terms of those projects? I know I'm working on, specifically with Shawn, a project that we worked on a year or two ago. I think some of the guys were actually camping at the site because it was so far off the beaten path, but what are those things to anticipate if you are in different locations and we'll start with you.
Shawn: I think you're seeing that across the board, rural and urban for us, I'll just speak for myself. Anyway, we source most of our own deals and get them off market just from our own marketing channels. We've with the 11 or 12 that we got going on right now, I think only two are from MLS. We're seeing just on our end from the off-market channel, we're seeing a lot of small towns.
It's outside like an hour outside of any sort of bear community like London, or KWC or even Brantford. So, we're doing a lot of driving and like you said, our guys have to basically, park a camper there to finish the jobs. But that's where the opportunity is. And we're really just looking for ourselves. Anyway, we're looking for where the margins are. And where we can get those deeper discounts and the demand for properties on the buyer side, out in those markets is just as high as it is anywhere else. So, selling it once it's done is just as good.
Alfonso: Yeah. And then maybe that has to do with the effect of the downtown cores, not so important to be in those big, tall office buildings. People are now expanding, moving out once a little bit more elbow room into smaller type communities or country type properties. Jon, I'll go to you next. Where are you doing a lot of your contracting? Same type of thing, expanding or in the cities.
Jon: It's starting to expand out but Brantford was an extremely popular market for us this year. Even though the prices, Hamilton, is still very popular. And it is obviously a really big hotspot for us, but we got a couple. I got a JV partner we're working on a flip in Drayton, Ontario, very rural population of 5,000, but just a hot market.
As Shawn was saying, there's one hotel and the term hotel is used loosely and your source and other other sources of material away from big box stores because they're not local and all that stuff. So, there's not one area that the real estate market's not booming in our area.
So, to source the deals that have some juice spread on them is getting more and more challenging. But on the basement suite front, the hotspots haven't changed. We're starting to see it expand outwards, but it's still the main market.
Alfonso: Yeah. Awesome. And how about you ken, to wrap it up?
Ken: Yeah. So, this year obviously my business is doing conversion projects. So, there's always a strong demand for those types of permit applications and renovation jobs. I've definitely seen a notice of going to more legal triplexes and illegal fourplexes or bigger don't get me wrong, 80% of it is still duplex conversions for the vast majority of it, but definitely an increase in the larger conversions as well. And I think the trend is going there, with the way the prices are heading for these properties. And the demand, definitely investors are seeing the benefits of more units under one roof.
However, that looks so the same thing, like Jon was saying that the big markets are the big markets still, it's no different for me. Hamilton, Brantford, St. Catherine's, Welland, London. We're doing some stuff in Cambridge, Kitchener, Mississauga, Oakville. I'm starting to see a lot of homeowners, just regular homeowners in the other markets that we wouldn't normally think of as investing markets, but Oakville and Burlington, Mississauga, a lot of just homeowners wanting to do a basement apartment and there just to help, handle their increased mortgage payments. They're not so much as strict rental properties, but just for the owner occupiers out there.
Alfonso: Awesome. Sounds like there's going to be a lot more people joining the REITE club, learning how to turn their primary suites into secondary suites. And that's how we're in a real estate community. Because we call them the regular homeowners. They're not doing anything else. And now, maybe entertaining that idea of bringing that secondary suite to supplement some income. Awesome great answers.
Laurel: So, if people are looking at sometime in the next three to six months of starting a conversion project or a rental or flipping, what do you think are the major hurdles that they're going to be facing? And I think we've touched on a lot of it, but I just really want to crystallize it here. What do you think of the major earth hurdles, Shawn, we'll start with you.
Shawn: I think, a lot of what we talked about already, we've got the permit issue. We've got the price issue from material as well as the shortage of material. I think, moving forward, you're going to have even more issues with the high price of properties right now. So, if you're just trying to buy off MLS and trying to find specifically what I'm talking about for flips or BRRRRs, it's very difficult to find, right?
You're going to have to look for off-market deals, whether that sort of wholesale or through your own marketing channels or whatever. But I am also on the contractor side too, that I think you just really have to be proactive contractors and work solid for months. And if you're getting someone to even get out there to quote. Typically the price is pretty high because they got so much work that they don't seem to care.
You have to really be wary of that if you're going to get into a big project and not be able to have a contractor and have that place set for a while, it just eats up your capital. So, I think those are a few of the things that you have to look at.
Jon: I'll add to that one. Just don't wait to book a contractor. Book them now if you need them in six months, because the renovation market, not just for what we do, but in the general renovation market has never been this busy. Yeah. There's no unavailable. So, book it now and just prepare because it's not going to be a cheap year to do renovation. So, you have to buy right and plan.
Laurel: Actually, I thought just crossed my mind if you have for everybody who's attending, maybe if you have children who are a certain age 19 20, 21, even older, looking for a trade, maybe now is the time to go get some of those skills, because it sounds to me like we're going to be needing those skills, not just now, but for a long time in the future.
Jon: Absolutely.
Laurel: Ken, what about you? What would your advice be for somebody looking at the next three to six months?
Ken: Yeah, I just second with the other, guy's. Basically, the time delays are increasing because one we're in a competitive market. So, people are having shorter closing times 15, 20, less than 30 days. But then on the permit side it is taking much longer. So, we have clients that are sitting here holding properties. Once they get possession, they want to start renovations. And every week that passes, they get more and more stressed out.
You just have to know the upfront look, you could be sitting here holding this property and not have a building permit. And you have to be okay with that. It's got to be part of your number crunching like many of us. We do start renovation sometimes without the permit. And there's lots that we can do, but still we always want to have that permit in place as quickly as we can. That's pretty much what I have to say.
Alfonso: Yeah, no, that's great. And anticipate that, build that into your numbers and be prepared for that. Okay. So ,I'm going to change it a little bit and ask, what's maybe one positive thing, we've talked about this, low prices are higher on properties. The materials you're waiting for are long. There's no over contractors, like I don't want to be all doom and gloom and all that kind of stuff.
Let's try to bring up the mood a little bit and say, what's one positive thing that has come from, through this pandemic or through this time in the last few months that you guys are like, wow, that's how it should have been before. Now this made it go quicker or something like that. Jon, let's start with you.
Jon: It's a hard question, but I noticed that even though we have higher expenses, we've got slower times. The projects are very successful. A lot of people are going after the BRRRR model. I've had a really good year with my investors doing the BRRRR model and making sure they get most of their capital out.
I got a personal finding of quality talent for my team. It has been a great year because of the pandemic of layoffs and uncertainty. So, I've been able to add some really active employees and subcontractors. And that brings up the quality of your team and your renovations. And you know what, just overall through this pandemic, the real estate market booming, the investor market's booming. I think everybody's doing right now, even though it's a lot of doom and gloom, especially in the real estate world.
Alfonso: Awesome. Let's go to you Shawn. And I don't want to hear, I've been playing more golf as the positive, because I know you get out there when you can, but what's some positive things that you've found?
Shawn: It's definitely not good golf though, Alfonzo. It's just golf. Yeah, for me, it's been a great year. Actually, I know COVID has been difficult for some people, but there's so much opportunity out there right now. And there's so much, most of it's off market stuff, but there's just a ton of opportunity for buying properties off market and at a good discount. Whether it's people just, they're dumping stuff or they're fearful, or all the preparing for the future or whatever it is.
There seems to be a lot more opportunity. And on the other side of that, because we have a lot of private financing. I think it was clear that it was saying that there were a lot of private investors that were pulling back. And I did see that right at the initial March, April timeframe. But since then there's been a ton more than I've ever seen. And I think part of that is maybe those investors that might've bought something themselves. Are now taking that money and putting it to a different use right. And investing in other people's projects. Yeah. Doom and gloom now it's been great for us.
Alfonso: That's awesome. That's great to hear. And Ken, some positive things that maybe within your business, within some of the contracts, jobs, things that you've seen in the last little while.
Ken: Obviously, with my business being in Legal Second Suites and conversions. My business is, I'm very blessed. We've been having an excellent year this year. We're up over 40% from the volume last year. So, we've seen no down, we're on track to do 140 conversions. This year like conversion permits, there's a certain percentage of those that we actually did the renovations for as well.
This is a very and the thing is the cities and provinces are making it easy. And I'm finding that we're getting more and more educated on conversions and what it takes to put an illegal apartment. We have many more educated ambassadors than we used to. But there's still lots to learn. And even myself, I'm still learning everyday to every project I get into. I'm learning something new. So, as long as we keep an open mind and open ourselves up to learning. That's how we grow together.
Alfonso: That's right. Come grow with us. That's what we say. Yeah. Amazing, amazing stuff. And I think we are going to get to the wrap-up.
Laurel: I'm going to ask you, like in 20 seconds or less, to just give us one takeaway that you will, with one tip that you'd like everyone to really remember from tonight, Shawn, let's start with you.
Shawn: For me, on the flipping side, I think you just have to be very clear in order to be successful right now, you need a deeper discount than you would normally get when you're purchasing.
Jon: Mine's just back to planning and timing. Just make sure you give yourself plenty of time to obtain your goals here, because it's going to take a little bit longer. So, bring your patience and you should be successful
Laurel: I planned to be patient. I really liked that plan to be patient. That was a good one. Ken?
Ken: Yeah, same thing with Jon said, just get started right away on your drawings and your permit applications. We should be in there today after you go firm on the deal.
Laurel: Thank you.
Alfonso: Awesome, awesome. Great advice, gentlemen. Thank you guys so much for joining us. You guys are some of the best in the industry and for the REITE club nation that wants to hear and learn more from these amazing gentlemen, we're going to put their contact info in just a sec. There you go. There's Shawn Allen, Jon Tinbrinke, Ken Bekendam, thank you so much, guys. Get in contact with them.
We're going to be answering questions in the chat and in just a few minutes, we're going to be doing some networking. So, I'm sure these guys will stick around and answer a couple of questions in our networking session as well too. And debrief a little bit about this panel, but thank you guys so much for being on. Laurel, a lot of great questions, a lot of good answers from these Titans here. What was your takeaway?
Laurel: I love the comment that, prepare to wait, prepare to plan, but just be patient, be prepared to be patient because it's really important, but don't give up, never stop. Just be patient.
Alfonso: Absolutely. And so, we have our other co-founders joining us back here as well too. As we get towards the end of our formal part of the evening, don't forget to join the Facebook group we have, I think, over 250 members now. I'm right on there as well, too guys. So, if you send a message or are out there, we're on Facebook, make sure on the Facebook, it sounds like from 1992 or something, but Yeah, make sure you guys do join the Facebook group. A lot of great conversation info that we're going to keep posting up on there as well. Yeah. So, Sarah, Daniel, you guys have joined us back on.
Sarah: So, just a couple of things. Upcoming podcasts. We've got October 2nd, Mark Frentz. We've got some events and guys check out our website. So, you're going to see the events there as well as street tours and different things that our partners are going to be doing.
We're going to be posting some things along the way. October 14th, we have a one hour virtual event with Daniel Patton from Butler Mortgages, and Dan Tetzlaff from Hub International. So, tune in for that and Daniel let's talk about our REITE club online community.
Daniel: Yeah we're getting more and more people joining and we are getting more and more people doing things with the forums and stuff. And of course, we are very close to adding a lot of different things and features to our community website, like a marketplace and things like that. So, keep going to the site, keep going to the site because it's going to, we keep saying, come grow with us, but what we're in the background, what we're doing is growing the site and growing the community. So, lot's happening there.
Sarah: Absolutely. So, guys check it out. And by the way, before we do our byes and takeaways, don't forget to stay on if you do want to network and you can ask lots of questions or just network and meet like minded individuals. Guys, this is always awesome. Laurel, Daniel, Alfonso, you guys are awesome to work with and we have our ups and downs for sure. But, I'll tell you that it's been a great three and a half years. And Paul and Catherine and her team are just absolutely amazing.
Daniel: And when you say team, don't forget to mention, Francois Lanthier, our member advocate recently joined the group and any issues, anything that anybody has with the club or the community or whatever, or any question, he is the guy who's going to take care of you guys. He's got a long history of customer service. We're so glad to have him on board.
Laurel: Not only that, he's got a lot of real estate investing experience. Everybody we bring on, learns about investing and, or has real estate investing experience. So, we're really happy with our team.
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