Sarah Larbi: REITE Club Community. Welcome back to another episode of the REITE Club podcast. I'm Sarah Larbi, and today I have with me, co-host Francois Lanthier. Welcome.
Francois Lanthier: Thank you. It's such a pleasure to co-host the podcast with you.
Sarah Larbi: Awesome. So we are interviewing Austin Yeh today who has recently left his nine to five job. He's scaled a portfolio using joint venture and private money, and he has also started a division on wholesaling.
Austin has a very inspirational story. It's just great to see people taking action, but also being calculated because it's important not to over-leverage.
It's important to plan for the good, and it's important to plan for the bad. So we do have a discussion about that. I hope you guys enjoy today's podcast. And if you haven't gone to thereiteclub.com, check it out. Please go ahead and register. It is free. There's tons of content there. On that note, let's bring in Austin. Austin, welcome to the show. How are you?
Austin Yeh: I am doing well. How are you guys?
Sarah Larbi: Very good. So I've got a special co-host with me today, Francois Lanthier who is also a real estate investor, and has done some tremendous work with us at the REITE Club. And together we're really happy to have you on. And Austin you've been on these podcasts, you've been on my podcast before. You've got an amazing story. And I will say, first and foremost, congratulations on quitting your nine to five job . Having invested in real estate allowed that for you, so congrats.
Austin Yeh: Thank you so much. Yeah, feel like it was a long time in the making, but it actually wasn't too long. It was a long grind. When you're not enjoying what you do, it feels like it's been forever.
Sarah Larbi: Let's take a step back and walk us through how you got started in real estate investing in the first place and what your main strategy was.
Austin Yeh: I got started in real estate investing in 2018. I'll keep it short and concise, but picked up the book, Rich Dad Poor Dad, like a lot of newer investors. One of my buddies recommended it to me. And prior to that I was trying to invest in stocks, and lost money. I just knew that I didn't wanna stay in the corporate world forever, but didn't know my means.
When I read Reau Poor Dad, that was really a light bulb in my head, and I was like, okay, maybe I should start investing in real estate. But, Almost nothing about it because it's more of a mindset book than anything. So I went on YouTube, watched a couple of videos and thought this should be simple enough because a lot of the time strategies sound easier to do than they are actually executed.
I had about $40,000, couldn't afford anything in Toronto at the time, so went out to Windsor and bought my property, therefore $130,000. And along the way there, I made a ton of mistakes. We talked about that in the first podcast, so I won't reiterate all the mistakes, but it was definitely a nightmare. However, still panned out with a good ARV after repair value, so I was able to refinance and then buy multiple properties after that.
Francois Lanthier: Excellent. That's a great way to get started at $40,000 as well. The market was very different. Windsor, now 40K. I'm not sure if you could buy a place with 40K down now? Unless it's your first?
Austin Yeh: Half a place, maybe a condo but not a house.
Sarah Larbi: If you're moving, into it with 5% and you might be able to find something.
Austin Yeh: Exactly.
Francois Lanthier: That's exciting. Great. And how have things changed for you since the last podcast? So you mentioned you were interviewed last time and now you've quit your job and all that, but has your investment focus changed?
Austin Yeh: Definitely A lot has changed from the last podcast. So I think last time we were chatting, I was talking about getting into joint venture ships. I had probably like a couple under my belt. Following that podcast. Thank you guys. You gave me some good clout. So had a ton of more people reach out, still was still hitting social media, hard branding, building credibility.
Got a couple of more joint venture ships. It was mainly operating around Windsor in the small multi-family, single family space. And then of course, there was the huge pandemic and I was worried that I was going to lose a considerable amount of my wealth because I was definitely over-leveraging myself.
Following that experience, I learned to slow things down a bit. And then grow at a more sustainable pace. And at the same time, joint venture ships, I realized they're amazing. But it's definitely when you don't have the right systems in place. And at that time I was definitely struggling with systems because I grew my portfolio relatively quickly without having the ability to look in hindsight and patch up any small systems or mistakes that I had along the way.
As I grew my portfolio really quick, I realized that it's probably better that I start growing naturally myself with private money lenders and start holding these assets on my own. Because with the joint venture, I get 50% of the asset. I do all of the work and yeah to get to the same size as if I was just to own things myself.
I have to double the amount of work if I don't have the right systems in place. So that's something that I've been definitely toying around with more. So when I'm doing more recent acquisitions, I try to do it myself with private money as opposed to joint ventures. Not that I'm totally against that or.
I just need to wait for the right partner, right? Like a truly passive partner. On top of that, I was featured on the Toronto Life article, and that came with a lot of hate and fame. So that was a weird experience. What happened there, funny enough, is that the article was supposed to be published.
Before the pandemic happened. But then the pandemic happened and they said they're gonna shelve it and then just randomly added the blue. They called me like two, three days in advance and said, "Hey, we're gonna put it out. And a lot of key information was missing there. They couldn't put everything out there.
I was getting a lot of hate from people. They were just like, oh, he owns 1% of every asset that he mentioned in the article. And then of course, like landlord hate groups, so on and so forth. So that was an interesting experience. Any publicity is good publicity. A lot of the followers who are inspired by it stick with me along the journey.
That definitely helped grow my credibility branding following. And that translated into starting different things as well. So the Rise Network Group, which is the real estate community that I have founded and hosted around Toronto, has grown as a direct result of that Toronto life. Notoriety, that big article. And then the podcast that I also host as well has also grown as a result of that.
Sarah Larbi: Austin here I gotta stop you because you were saying like, so much good, valuable stuff and I wanna dig into it a little bit. Do wanna talk about over-leveraging, cause I think that's gonna be something that's gonna be important for us to have a good pulse on.
Before that, I do wanna say congrats on and I do wanna point out, unfortunately it is pretty crazy and I've had a similar situation as you when the Toronto Star published my story on the front page and I got so much hate for owning more than one property.
I shouldn't be owning more than one property. I'm a slumlord. There's just a lot and it's funny because they warned me and ironically enough, I actually did not have Facebook back then. I didn't have Instagram back then. I really just had LinkedIn.
The Hate came from, I think it was like the Reddit stuff and all of that stuff. But I will say, we do it to inspire we don't do it to be like, Hey, look at me, look what I have. I thought your story was really well written. Of course it's gonna get taken outta context, unfortunately.
I think you've got a really inspirational story. And like at the end of the day, guys, I know we're talking to the choir people that are listening to this are obviously inspired by your story. But it is crazy, right? The higher that you get up in terms of publicity or features that you yet you get, the more, unfortunately the more hate that you get.
I wanna say congratulations cause you know, that was a great article and the people that reached out to you for the good and to be inspired. Kudos to you guys that did that. But I want, do you wanna take a step back? Because you say so many good things and I'm like, oh, I wanna ask you more about this.
Let's talk about leveraging, because , I think it is going to be in the next 2 years, 3 years, 4 years, I don't know when there's gonna be a bit of a wake up call for investors. I don't know what it's gonna look like. I don't know what's gonna happen, but it is going to be important that you can ride the ups and you can ride the downs.
Whatever they look like. They might not be that bad or they could be bad. What are some things that you did? And you probably did something similar before you left your job as well, to ensure that you are not. In a situation where one little disaster, you're bankrupt, like what are some of the things that you did in order to not over-leverage?
Austin Yeh: Definitely. So one of the things that I realized is that with a T4 income, it's much easier to get refinances from the bank. It's significantly easier when you have a stable income. So knowing that I made sure to try to maximize my ability to get unsecured lines of credit, not pulling the money out, but being able to tap into several different banks for lines of credit.
Right now I have over $150,000 in unsecured lines of credit. I did that all within the period of a week. And the reason being is because I didn't want everything to hit my bureau score. If I was to do it in two or three months, take my sweet time with it, then like the banks are gonna be like, what the hell is going on?
I did that, actually, it was all in one date. Like I just applied to all of these things. I set four or five hours aside. So got all of that just in case. If shit hits the fan, then I still have liquidity to access. Tried to complete as many refinances as possible. I wasn't able to do as much refinancing as I like.
I still have one or two properties. I still need refi, which is damn near impossible now. But I did refi all of my other properties or have it in HELOC.
So if I need it, I can pull that liquidity out again. Those are the main things that I did. And I also made sure that I had at least minimum six figures in cash reserves, which is a lot for a lot of people because people say you usually need six to eight months in emergency funds.
When you're dealing with real estate assets, and again, like if something happens with the roof furnace, that's like a couple thousand outta your pocket. The tenant stops paying rent, which was a huge fear of mine during Covid when the pandemic first hit. And I was like, this would drive me bankrupt. So I made sure that I had at least six figures in liquidity, like actual cash.
For a lot of investors, it's hard to hold that money cause you're like, oh, it's like depreciating over time. It's cash, right? It's not making me any returns, but for me, it gives me a peace of mind. Honestly, I would take lower returns any day for a little bit of peace of mind to help me sleep at night.
Those were the things that I did in preparation for leaving the job. I wanted to make sure everything was refinanced, all my liquidity was in check. So if worse comes to worse, I could still survive for at least a year. And then I can try, go crawling back to my corporate job if I really need to. Not ideal, but that was the game.
Francois Lanthier: Cool. And then you mentioned earlier joint ventures, so some of it like maybe talk to us about pros and cons, and you also mentioned systems, so having some systems in place. I'm going through that myself so I can totally relate. So if you could expand on this, please.
Austin Yeh: Definitely. I think joint ventures are absolutely amazing. If you take the time and grow it at a sustainable pace and build systems around it. So what I was doing prior, I guess some of the mistakes that I did with joint venture ships is that I was still doing all of the bookkeeping myself, right?
I was thinking, oh, you know what? Like I can save 150 bucks a month. So I'm not gonna outsource bookkeeping. I was trying to do everything myself pretty much from beginning to end of the transaction without outsourcing much other than the contracting, of course. But yeah, and I was trying to grow at a rapid pace as well.
Obviously those two things are not, I, at one point I'm gonna drop the ball on something. So I just. Up all day, all night working, and it was extremely stressful. In terms of joint ventureship, some of the cons with it is that, as I mentioned a bit earlier, you're getting 50% of the asset while doing all of the work, right?
If you can raise money and do it yourself completely, A gun, you have to qualify for the mortgage as well. That's probably a preferable route, right? Because you're doing all of the heavy lifting, you're sourcing the deal. Capital is just one aspect of things. And if you get private lending, it's theoretically cheaper capital.
Cause you're still keeping a hundred percent of the equity debt is cheaper than equity if you know what you're doing, right? So that's one of the cons. Another con is that you are technically reporting to another boss, right? And it is stressful. When things go wrong in real estate, I understand that things will go wrong and I can pivot and make decisions on the spot.
It's unfortunate, but I learn to live with it. But when you're dealing with someone else's money, sometimes no matter how much you prepare someone for it, it doesn't completely ring true in their head until something comes up and then you gotta explain it to them and the conversation can be tough, right?
Cause not everyone understands cause they're not the expert. Like you're the expert. And it could be tough conversations to navigate, right? But it's the reality of real estate investing. Maybe that's just. I just chalk it up to myself. I should better prepare investors that things can hit the fan. I do let them know, but maybe I don't know.
Maybe I just need to keep on stressing that point and that's tough. Again, when you're dealing with joint venture money, it's much easier and less stressful when you're dealing with your own money. Oddly enough, the pros are joint ventureship, obviously, like someone is qualifying for the financing. So if you're self-employed like myself, that is a huge W because it is so hard to qualify for financing, I find.
There are ways around it, obviously, right? But in general, it's tougher. You're gonna be paying high, higher interest or generally higher down payment for the most part. Also another pro is of course scalability. That's a big thing that's self-explanatory and There was one more point I was gonna make slip my mind.
Maybe if I remember, I'll try to bring it. Oh no, I remember what it is. You don't run outta, you don't run outta capital, right? You're literally using someone else's capital. So when there are things like capital calls, depending how you structure your JV, when there are things like capital calls, like during the pandemic, right?
If you were to get a bunch of private money, you would definitely be pooping your pants. But if you have multiple joint venture partners and each joint venture partner does still have liquidity in the background, it's not as stressful. Because not all of the capital calls and financial burdens are gonna be on you, but those are some of the quick pros and concept JVs.
Sarah Larbi: It is interesting because on this call we've actually all left our nine to five job, but we've all done it in a bit of a different way. And like for me, I qualified with my T4 income and I've scaled it. And only now that I'm out, I'm bringing in some partners to do some bigger deals.
There are pros and cons. So I think the pro is you're not sharing, if you're taking action, you're not sharing the cash flow. You're able to refinance, you're able to have that control over. But there is definitely some pros cause, Francois, maybe you can talk about this a little bit, but you've been doing, I don't know how many properties you have right now, but you left your nine to five job and you did this entirely with JVs.
Francois Lanthier: Absolutely. I really agree with what Austin is saying at first. Some of your partners are new and getting started. So one thing I do now, one of my systems is really to interview my JV partners and run through some bad scenarios. What if I die? What if you die? What if your spouse dies?
What if you get divorced? There's all kinds of things. Or what if we lose $10,000 and the place sits empty for six months? So those are systems that you can do for joint ventures, but I agree with you now you have multiple bosses. But when I contract at jv, I tell them as well, this is a working relationship.
We're been married for a few years, so you have to get along very well. And yeah, it's been really good. And all my partners have been excellent. I've had one exit and actually we parted ways in a very positive way because everything was prepared from day one, built into the agreement. I'm sure your JV agreements have some sort of exit plan and early exit, like penalty or different things. So there's mechanisms you can put in place.
Sarah Larbi: That's a good point. Austin, what do you have for your exits? That's a great point Francois
Austin Yeh: Exit, it's a five year term. If both parties mutually agree to sell the property before the five year term, then we go ahead and sell it. After that we can choose to renew it for another year, and then we go by that, and then we don't have a shotgun clause. I know some investors put that in.
Sarah Larbi: For anybody listening, what's a shotgun clause?
Austin Yeh: Okay, I'll give an example, right? I'm better at explaining examples than the actual textbook definition of what it is. Basically, what a shotgun clause is that if one party wants to sell a property and the other party doesn't want to sell the property, the party that wants to sell the property can basically go to, you know what? I'll use Party A and B. Party A wants to sell the property, party B wants to keep the property.
Party A will go to party B and say, Hey, I want you to buy me out for a hundred thousand. And if party B says, no, I don't wanna buy you out for a hundred thousand dollars, let's keep this asset. Basically party A now has to buy party B share at a hundred thousand dollars. So it forces an escape, right?
There's not really much discussion in it. It forces an escape. And the issue I have with that, is that the party with more capital at the time is usually gonna win, right? For example, if someone is in, I don't know, like a capital, maybe they have several projects on the go. They only have $10,000.
I could go to him and be like, buy my share out for 20,000. Now he knows he can't afford it or she can't afford it, right? And , they're like, no, I can't afford it. It's okay, I'm gonna buy you out for $20,000. So it's probably not the best clause to have in there, in my opinion.
My lawyer definitely advised against it. What I go for instead is, I forgot what the exact term is, but Essentially. If one party wants to sell, yeah, I don't know the technical term, but if one party wants to sell the other party has the option to buy them out or find another partner to buy them out.
If I can't buy them out or I can't find another partner to buy them out, then we take them to the market. And the amount that we decide to buy them out at is based on three individual appraisers going in the property and getting an average of those three appraisals. Do you know what the technical term is? I forgot what it is, I can't believe I forgot what it's called.
Sarah Larbi: I don't really do that many JVs, but it sounds like a good clause. And guys like, we aren't lawyers. Walk through this with your lawyer. I had Carson Law do my JV agreement for the time that I will be doing it in the future. So how much of your portfolio is JVs percentage wise versus you owning.
Austin Yeh: I think all of my portfolio. Has been partnerships in terms, but not JVs necessarily. Like I consider an asset my girlfriend and I own as a partnership, so we own everything is a partnership. But in terms of JVs, where I raise the capital, I'm the active partner.
I wanna say 70% of it is still JVs. I've recently pivoted more towards partnerships where I put in capital, my buddy puts in capital, but we both bring something to the table in terms of managing the property. That's the preferential route. And by the way, Francois, you mentioned a very good point about setting the expectations at the beginning.
That's definitely something that I need to do better, so I do mention it, but I like how you pivot the conversation literally to be maybe 10 minutes, 15 minutes, 20 minutes, 30 minutes of what if something goes wrong?
Francois Lanthier: Go through all the horror stories and get it out. Then you'll see their reaction, and then now's the time to part ways. If you're not in agreement before you have a property. Yes. Move on. That's anyway, it's really worth it.
Austin Yeh: Absolutely. And one thing that I do need to keep in mind as well is that again, like I'm not opposed to JVs. I don't want it to come out that way. I would like to say all of my JV partners and I have a great relationship.
However, going forward, if I was to explore junior Ventureship, it has to be with like one or two parties who have a lot of capital who are gonna fund me for multiple deals as opposed to 10 or 15 different people, cause that's 10 or 15 people to manage.
Sarah Larbi: That makes sense. So then you pivoted, so you pivoted to private money. And for those you know, that may not know, there's lots of ways that you can get private money, but what are some of the things that you've done or companies that you've reached out to, I don't know if they're mixed or whatnot, but where is your private money coming from and how are you getting that structured in and out?
Austin Yeh: Very fortunately for me Spent a lot of time building a brand. So it's easier for me since people I like, I don't go out and ask for private money and more so that I attract it by building a brand. But one thing that I am going to implement that I have explored is that, So Whelan, Miguel, my business partner and I, we have a wholesaling business called Ontario Property Deals.
One thing that we have when joining our buyers list is a question that says, are you willing to lend money privately for X percent return or double digit return? And then people will click yes or no, right? The people who click yes. We're planning to throw them on a drip campaign, a drip marketing campaign in which they're gonna receive several consecutive emails, talking about private money, educating them on private money, right?
How they can loan us money if they wanna get involved in some of our deals. So we're exploring the drip campaign. And it, and on top of the drip campaign we're also putting material on updating our personal life and personal projects. So it helps people who aren't maybe not as familiar with us to know and trust us.
That's ultimately the three things that people need before they loan you money or even partner with you. A lot like raising private money and joint venture capital. I find it's the exact same, almost the exact same skillset, right? So really any material that I put out is targeted towards making someone either know me better, like me better, or trust me better by building, I guess like me providing them expertise in real estate, liking me by
Obviously giving some of my personal life and my personality out there and trusting me by showing them projects that I've done previously, people who have lent me money in the returns that they made in terms of the structure and of private money.
Literally changes all the time. I don't have the same structure with any one partner. It depends on the particular asset that we buy. Some assets that we buy, we can get a traditional commercial mortgage on it and then we wanna go fully levered. I know we talked about the dangers to leverage, but some deals are just juicy enough to fully leverage because they'll have cash flow, fully leverage.
We'll get 75% loan to value and then we'll wanna find a private lender who's comfortable loaning 25% loan to value. Second in charge. So we're fully leveraged at that point. Not every private lender's okay with that, so we need to find a particular private lender for that. And then we structure your terms accordingly.
One private lender that I've been chatting to recently for one of our deals they're loaning a hundred percent loan to value plus construction costs. So they're loaning everything, but the interest is ridiculously high, but it still makes sense. So they're charging us 20% interest, which is really high, but they're tagging that to the very end.
We don't pay anything out of pocket until our project is completed. So there's so many, like joint venture ships. private lending the same way.
There's so many creative ways you can go about it. It's just a matter of what you can negotiate, what the other party's needs and interests are, and then you work to find a middle ground. And it also depends on a project by project basis.
Francois Lanthier: That's awesome. Cool. So yeah, creativity in real estate. That's why I love it. I just, that's why I enjoy it. So in that, what does your future goal in real estate look like?
Austin Yeh: Recently I've been focusing on more active revenue, liquid capital strategy. So wholesaling as I mentioned earlier. And the reason being is since I left my job, cash flow is obviously great, but I invest in real estate. Primarily for long-term wealth and cash flow is like a small supplement towards my income, right? So I realized that I needed more active strategies if I wanted to sustain a decent lifestyle not working a corporate job.
Explored the world of wholesaling and that's really where my shift and focus has been over the last couple of months really. So Whelan, Miguel, I mentioned him a couple of times. He and I are partnered on interior property deals. He focuses a lot on the acquisition side of things cause he's a salesman, he's a sales director and a big tech company.
I focus more on the operational side of things and on the disposition side of things. So I'm what's called an integrator. And Whelan would be the visionary. The visionary in terms of high level planning of the company, strategic direction. It's a lot of skills that he got in corporate that he can pull over to the wholesaling business.
For myself, I come from a consulting background, strategy background, worked in numerous internships and full-time jobs revolving around that. He has some big plans and sometimes not, like we have to bounce ideas back and forth and I have to put those plans to action. Or sometimes I'll be like, have you considered X, Y, Z?
It's really a pairing between the two. The focus is to grow that into a seven figure business and then systemize it because we don't be, we don't want to work in the business. Right now I'm working like 60 hours a week, which is crazy. I don't want to be doing it. But the ideal goal is to systemize it, right? Hire people on board so that they can take the day-to-day operations and Will and I can both focus on just the high level task of the business.
Sarah Larbi: That's cool. Ironically Will, and I, my first job ever out of university was Xerox. And so he used to work at Xerox too, , and then we reconnected at the REITE club at one of our, live networking events. He's do you remember. Me and we started talking and I'm like, oh my God, that's so funny. So obviously, wholesaling, I think even in the last two to three years has really taken Canada, and put Canada from a wholesaling perspective, like on the map because before this you heard about wholesaling and it wasn't.
Much done here, and I think maybe originally I don't know, maybe Luke Boron really took it and built a scalable business. And now there's a few others as well that are really doing a good job. So obviously, like you said you're working 60 hours a week, it's not for everybody. This is active income, this is another job in a sense, but at least you're making yourself wealthy. What are some of the things that you're doing? If somebody wants to find some off market opportunities, Maybe not necessarily scale to the way that you're doing, but they may wanna buy one for themselves. What are some ways that they can look for some opportunities off market?
Austin Yeh: Definitely. So there are a couple of ways that you can go about it. And I'll go over the low cap, low cost, no cost strategies, because I know a lot of people starting off in investing, they don't have a ton of capital to start with. I would suggest mailers. However, mailers are quite costly, right? Our second greatest lead source, believe it or not, is just networking with people. So more of the recent deals that we've been sending off is because of other newer real estate investors who have somehow run across an off-market lead.
Maybe it was because they bought a rental property. And the neighbor beside them had a good conversation with them and the neighbor knew someone else who was looking to sell also, because they have been making phone calls to anyone who touches seas and smells real estate. Pest control people, divorce lawyers.
What else is their property management? Property management. They know people who are distressed landlords, maybe they know they're managing properties where no one is paying rent, right? And that person might be looking to sell, right? So those are some great ways to find off-market leads. That's been a huge source for us, right?
We don't actually do it ourselves, but we have, I guess what we call bird dogs. Do that for us. So really just call anyone who touches CS and smells real estate. If you make one phone call a day, 365 phone calls a year, you're gonna get one off market deal. Definitely. And also what we found success in doing, and this is like a longer turnaround time. I've heard success stories from this as well and we've also done it is that we've been messaging for rent ads because there are a lot of landlords.
Who might be trying to rent out a place but are having trouble finding someone to rent it or having a high quality tenant rent it, right? Because the property might be in mediocre condition, which you can see through the rental photos might not be in a great area for whatever reason. So I message all of these four rent ads, which is super easy to do, right?
Say, Hey, look, I'm not interested in renting your place, but if you ever have considered selling your place, I'll be more than happy to put in the cash. And then a lot of the times you'll get nos, you'll get no responses, but every once in a while you'll have someone say yes, like I'm interested. We made, actually I did that before and I made about a 60k profit on a deal, just close on it.
Whole tailed it, and that was it. And that was just from a full rent. There was another investor, Josh Doyle, he made, what is it, like a 70k or 80k fee by doing that same exact strategy and he got like a deal from Burlington and then sold it in 24 hours, right? So it is a viable strategy. What you need to realize is that a lot of these hustle, high energy strategies do take a while, right?
It's not like you can just kick back and wait. You gotta go out and actually grind and get it. And it could take three or four months until you get your first deal. But man, imagine you do that for three, four months and you like Josh, you land an 80k fee on something that makes it all worth it. And there's no, there's really minimal costs involved in it.
Francois Lanthier: That's excellent. And are you still buying yourself like some properties in this crazy market, I guess you're seeing off market, so you get first dibs, I assume?
Austin Yeh: We are, I am still buying properties in this market, but at a considerably slower pace. And the deals that I buy have to be like, they have to be. Pretty good deal. So it needs to be obviously, under market value, which fortunately for me in the industry that I'm in, all of the deals that I touch and see are under market value. But then there also needs to be a way to strategically renovate it.
Whether that be adding bedrooms, bathrooms, a secondary suite. So I can double hedge myself. I can hedge myself by buying under market value. And then also on top of that, I can hedge myself by strategically renovating the place. Another point that I do wanna bring up is that typically, for the most part, I'm not saying that this is going to happen in the future, but rent prices don't really drop off during a recession, right?
There are some exceptions like core downtown, but that was for a very particular reason, right? That's because there's no students. All of the service workers went back home, right? So that's very specific. But in general if you were investing in, I don't know, Windsor, Brantford, so on and so forth.
During recession, your rent prices are still gonna be leveled off flat, even if it takes a small dip. If you have a good product, if your place is renovated nicely, it's in a decent area, then it, you're still gonna have demand for that rental product. And if you can run a scenario where if you have to cut rents by 10%, are you still able to cash flow or be neutral, ideally cash flow, then you're hedged against a downturn.
That is not to say, to go out and still over-leverage yourself. It's something that I'm cognizant of. I'm not buying 10 deals a month or anything like that. I'm doing it at a sustainable pace, or at least what I believe is a sustainable pace.
Sarah Larbi: Like for a province like Ontario, I think, a hundred percent agree with you, like the vacancy rates in most of the southern Ontario areas are like, 2% or less, right? So we have a shortage issue by the time, even if there is a recession, in my opinion, that means more people are getting to rent regardless.
Then, I get, I can't speak for the US cause their US, if there's areas already within an 8% vacancy. At some point they may need to pivot. And you saw that in the US from, 08 and 09, some areas there, they pivoted to try to attract more tenants. Often those are in areas that are or cities that are not controlled by rent control. Think because we're in an area that has rent control, I'm looking at literally every single property I own, right now and as of the last two years, everybody that's still in there is like $400 to $500 a month behind.
That's how much it's gone up. But I can't say the same for Edmonton or Francois. I know you invest in Eastern Canada now, has that changed for you? But in Eastern Canada, Francois?
Francois Lanthier: Up there, out there, what's nice is you can increase rent and then adjust it to market value. So it's really excellent. But then vacancy turnover tends to be a little higher. So it is a bit of a double edged sword. So when there is rent control, rents tend to be higher, which is weird. Should be the opposite, but. And when there is no rent control, then you have to offer a decent rent. Because tenants and landlords have more of a conversation, it's more open. So it's been excellent.
Sarah Larbi: Awesome. Yeah, so I think it just depends on what the market, but I think just going back to what Austin you were saying, and I think it's very valid is don't over-leverage and even just you had a good point there, like if you had to drop rents by 10, are you still okay?
At what point are you potentially not? Okay. So I think that's a great opportunity to look at your portfolio. Same thing, if rates, if interest rates go up, you can always lock in if you're on variable but at what point, can you go up before you're like this is getting really tight.
Good to like stress test. Your portfolio. And I think that there's a new stress test yesterday at the time that we're recording this in early April that just came out. That they're, I think they're starting to, to wanna slow things down a little bit without, like causing some craziness.
Again, stress test your portfolio. At what point, are you still able to keep going? And this is why we don't wanna be buying things that are not gonna have cash flow, even though the cash flow in some provinces like Ontario. Is not gonna be as good as other provinces or potentially even the US. Cash flow is still important, even if it's not, hundreds and a few, a thousand dollars of cash flow. It still needs to be there to help you take the waves of the up and down.
Austin Yeh: Absolutely. Cash flow I see as a hedge. And then the asset is the wealth.
Sarah Larbi: Awesome. So the next part of the podcast, Austin, when we can keep talking to you for forever, I'm sure we'll have to bring you back at some point and see where you're at that point in time. But we are going to go into our lightning round. Are you ready to play?
Austin Yeh: I am ready. I'll keep the answers short. This time.
Sarah Larbi: Answer first that comes to mind. We will ask you four questions. Everybody gets the same four. All right. So question number one, Austin. What is the best advice that you have ever received from another investor or at a networking event?
Austin Yeh: I heard this from another investor. I believe it's a quote. I don't know who said the quote, but I have the quote right here. Don't compare your behind the scenes with someone else's highlight reel. And I think that this is super important in the era of social media. I find myself caught up like I'm a pretty competitive guy for better or for worse.
I find myself making irrational decisions when I see. Someone like it is motivating seeing someone scale quickly, but then now you start benchmarking, comparing yourself against this, oh, we started at the same time let me start buying more and more assets.
You start collecting things like numbers. You start over-leveraging yourself. You start not you, you don't make the best decisions when you're overly competitive and just trying to acquire. And I find that in social media and I'm even guilty of it. As much as I try to be transparent, you're never gonna be fully transparent.
There's always gonna be stuff that is not appropriate for social media. Or like it's stuff that's, I don't feel comfortable sharing it just yet. That's happening behind the scenes. Whereas a lot of social media, you're showing your accomplishments, right? You're giving advice, you're sharing things like financial motivation, freedom, quotes and I just need to understand that I'm on my own journey, right? I have my own goals and not to get caught up with FOMO or what everyone else is doing.
Sarah Larbi: That's great advice. Awesome.
Francois Lanthier: Thank you. Yes. The FOMO is that's what we're seeing in the market right now. Next question is, what is your favorite resource for real estate investing? Anything? Book training. A person, an event.
Austin Yeh: My favorite resource is definitely masterminds. I never understood the value of it until I actually joined one. So I'm in Corey's coaching program. I'm also in a group, a US based group, seven figure altitude. And then I also meet up with a couple of investors via Zoom every month or so.
It's just awesome because when you're going you're talking with people who are on the same journey, same path as you, or maybe doing different strategies, but it's a more tight-knit community. It's usually around just, like it's less than a hundred people. So you can have more relationships.
Where I find some large events you like if you're, if you need to really make an effort to connect with someone, right? Because there's just so many people there. Definitely Masterminds is a huge resource for me. Bounce ideas with people, build like actual long-term sustaining relationships and the narrower the Mastermind is and we're not trying to be exclusive or anything, but the more narrower the mastermind. The more you can connect and build a long-term relationship with these people?
Sarah Larbi: Absolutely. Like they say, you're the average of the five people you hang out the most with. So there's some great people that you can meet and hang out with at events like that. Awesome. Number three, what is the one attribute in your opinion that has made you most successful?
Austin Yeh: I would say grit. So grit. It was a book also written by Angela Duckworth. And essentially what that is, is like perseverance, consistency over a long period of time towards a meaningful goal, right? And I think that's what separates a lot of successful investors from those who are not investing or not as successful in the real estate world.
It could mean that we're a bit hard headed at times, right? Because we're over. Dedicated to our craft and to real estate, but I don't think I'm talented by any means or any of us really have any special circumstances to make us successful investors. It's just that we work hard and we're consistent with it.
Some very smart people find the need that they don't have to work as hard. Or they can work hard, but they're not doing it over a period of a year or two years. Real estate doesn't happen overnight, like success in real estate. But I think all of us in this group were hard workers. We might not necessarily have the inherent talent, but we're consistent, right? That's what separates me from or not separates me. It's answering it like an interviewee's question. That's what I feel like. It makes me a successful investor.
Francois Lanthier: Excellent. Yeah, it's so true. Consistency. It's like everything, like fitness and anything in life. You have to be consistent. Like these podcasts too, were consistent, that's how you become successful. Our next and final question, what do you typically do on a Sunday morning?
Austin Yeh: On a Sunday morning? So I live alone now. Not alone. I live with my girlfriend now. So every weekend we head back home, like she goes back to her family. I go back to my family and family's been a huge cornerstone for me and my entire life. And it's also cultural. So Sunday I just kick back, hang out with my family. We either go for walks, drives, or just hang around the house and watch tv. Nothing exciting.
Sarah Larbi: Sounds nice and relaxing. Awesome. So thank you for playing the light round lightning round Austin. And where can our REITE Club community reach out if they want to know more and connect with you? How can they do that?
Austin Yeh: Follow me on Instagram at Austin Yeh Six. And my link tree is there yeah, you can see all of the other contact information on.
Sarah Larbi: Awesome. And final question that we ask everybody, what are your final last words of advice for a community?
Austin Yeh: Final last words of advice. Let me think quickly.
Sarah Larbi: Like powerful words.
Austin Yeh: Man, it has to go back to that quote, don't compare your behind the scene with someone else's highlight reel, right? We're seeing FOMO happen right now. Like all of these home buyers that are just constantly bidding things up to unreasonable. I consider unreasonable prices, right? Just understand what your goals are. Don't get caught up in anyone else's journey and just focus on your own goals.
Sarah Larbi: Amazing. Austin, thank you so much for being on this show and congratulations again on leaving the nine to five corporate world and creating your own destiny. Congrats.
Austin Yeh: Thank you, Sarah. Thank you Francois. Really appreciate it.
Francois Lanthier: Thank you. Pleasure.
Sarah Larbi: Awesome. I really enjoyed this podcast, Francois. He is so inspirational. He is a go-getter. He talked about grit. He had lots of great points for us to say, we can start applying some of the cool information and the great information that he provided us. Do you have a big takeaway on your end Francois, about the podcast or a part of it?
Francois Lanthier: I do. Yes. So the two things he mentioned were a bit different. One of them was scaling back, which we don't hear much about. We always talk about growth and go crazy and buy more. He said no, take a step back, breathe , put in systems. So that's number two. So systems take a bit of time to make sure everything works well. That was really excellent, I thought, and great advice from him.
Sarah Larbi: Absolutely. I think one of the things that I thought was really interesting is similar to what you said, but it's not always the right way to go with the joint venture route. Right? There's pros and cons to both and, utilizing private money in some people, in some cases that might be the easier way or the better way to scale and take a little bit more control. And then the other thing, I think is important too. He's a go-getter. He's, high activity.
He's high energy, and it doesn't mean that it's for everybody, but he started a whole really successful wholesaling business. By the way, if you're not on the wholesaler list, reach out to be on the wholesaler list so you can get the deals that they find, but that is another job, right? Again, I choose to keep busy doing something else.
Not for everybody, but I think it's, it is really cool cause now he's got his passive income JV and his own stuff. But then he's also got a different source of active income and some of the JV fees, we talked about 50-70 grand. I've seen them as high as 200 for some bigger properties.
You can make some good money. Of course it. It takes time. It is a grind, but there can be some good cash on that. So on that note REITE Club Community, thanks for joining us again. Francois. Thank you for being an awesome co-host and co-hosting this with me and it was awesome having you on. First podcast. Done in the books.
Francois Lanthier: Thank you. Come grow with us. So I've grown today. That's great.
Sarah Larbi: Awesome REITE Club community. Thank you so much. See you next week.
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