Alfonso Salemi: Welcome back The REITE Club Community to another episode of The REITE Club podcast. I'm Alfonso Salemi. Today, I am with Francois Lanthier.
Today an amazing guest. Amazing info. Just a really good person as well too. He's got lots of experience, had some great advice. Omar Khan is on the podcast. He's a real estate investor. He's also a stock investment trading investor as well. He talks a little bit about how you can utilize both to create your portfolio and we talk about that cycle or that merry-go-round.
You can put that money to work. Really awesome podcast. A great guest was there today. And if you do enjoy the podcast and you are listening to this, please do not forget to rate, review it on whatever medium that you are listening to or listening to this podcast. It helps us. Reach out to more people out there.
Rate review it, get in touch with us. If there's an amazing guest or someone, maybe yourself that wants to be on the podcast, get in touch with us and we'd be happy to have you share your story and how we can continue to help the community grow through those stories in different ways.
Really looking forward to the interview today. Awesome. Welcome to the podcast, Omar Khan. We are so excited to have you on and chat today. Omar is from Theta Trading and for all of these in The REITE Club community, Omar Khan, gives us a little bit of a background, a little bit about who you are and how you've gotten to where you are today.
Omar Khan: Thanks Alfonso Salemi. First of all, thanks guys for having me on. A little bit of background about who I am. I'm a stock guy. Who out of necessity turned into a real estate guy? Cause I had to figure this out. Just a bit about my background. I grew up in an immigrant household, so not a lot of money, nor financial literacy growing up.
Growing up, I didn't wanna be broke. I had a finance background. I went to University of Toronto, got an economics degree. I began trading in 1998. Now flash forward of 2008. Massive market cash. Global financial collapse. I had all my money in the stock market. Market went down substantially. Now it did recover, but it made me realize that I need to have more than one asset category, not just one asset category ever again.
I said from that point on forward, I will never have all my money in the stock market. I learned how to buy real estate in 2008 or 2009. Bought my first property in 2010 and I bought North of 35 properties, I think of 37. At the highest. I did in a very short time span.
What I do today is I trade options. I use that cashflow to buy real estate. I use the positive cash flow from the real estate to beef up my trading account. It's just a very nice circle that happens over and over again. That's it. Just roll over and over again. That's all I do. It's a bit about me, Alfonso.
Alfonso Salemi: That sounds fun. It sounds like a Ferris wheel, that kind of, up and down, moves it, moving From one side to the other and out of necessity. You mentioned 37 properties in a short period of time. What are we talking about? What type of investing in real estate were you focusing on? Or and how did you go about, starting investing in?
Omar Khan: I first started real estate in 2010. I didn't know what I was doing. I was like, You know what? I gotta buy real estate. I have to buy real estate. I live in Sau, Ontario. I was driving by milton. Saw a new subdivision popping up. I'm like wow. Maybe I should buy some real estate. I walked in, I went and bought two pre construction linked houses, just attached to the garage only in 2010. I paid 355,000 each for two 2000 square foot houses. I had no idea what I was doing. I'm like, I need to get into real estate. I bought these two things, and only later did I realize it was a terrible move.
Cashflow should probably have been buying completely somewhere else. I joined the rain. From the rain, I learned how to buy real estate the right way, and then I kept buying and buying it. That was my education into real estate. Buying for cash flow first versus buying for capital appreciation. I started buying in Hamilton, Ontario in 2010. What I started doing is I started Your Hamilton. I started buying anywhere along the future LRT route, right? You order, go to city Hall, you find out where the infrastructure projects are coming. Because almost everyone is lazy.
Nobody will go to actual city hall and find out where the infrastructure, projects, and future developments are coming. I went, I found out I bought along, all along the LRT Road. Mostly start off with single family houses BR four. Get out with almost all my capital, complete outta the project cash flow. Move on to the next project over and over. I moved into commercial properties. That was it.
Francois Lanthier: Did you ever use like a line of credit from those properties to invest or like what, Or just the cash flow or, Yeah. You went above and beyond?
Omar Khan: Yes cause the cash flow itself isn't gonna do it eventually property. Cause let's say for example, back in your own buying houses for let's say 160 grand, Let's say you put 40 into renovating. Cause you buy absolute pile crap for 60 grand down Hamilton, right? You put 40 and now you're in for 200. Bank goes and says, Hey, this thing's worth 240 and gimme 80% of 240. What does that work?
At 192, I'm pretty happy. I only put 200 of my own money in. I'm walking out with the eight grand, roughly. Give or take some soft costs, but it allowed you to either get every property for free or very near free if it wasn't for the banks and their challenges. Like the banks are the biggest impediment, in my opinion, to growing your real estate portfolio.
They're not, they have no common sense. They're not able to think outside the box. If they were, I would've continued doing this. But they make it so difficult, so increasingly difficult that you're like, You know what? I've had enough. I cannot do this anymore. It's just too difficult at some point to get loans. You wind up moving to commercials, right?
Alfonso Salemi: In the commercial properties, was that like commercial, like high rise apartment buildings? Were those businesses that were renting out these buildings and where were you doing?
Omar Khan: Same thing. Hamilton, Ontario. I started buying small little threeplex, fourplex, fiveplex, 10, 15 little strip plazas, that type of stuff, and just accumulating one by one. That was it. Same thing again, you try to pull the BR four method on there. What I would try to do is I would try an absolute pile of crap. I would go there, I would renovate, I would refinance it, almost all my capital out. Cash flow and leave the property. That became obviously increasingly more difficult as prices were rising.
Back then it was very doable. That's why when I said I bought so many in a very short time span, it's because you're able to identify the opportunity. If you're not able to identify the opportunity, it's completely useless. Back then in Hamilton, when houses were signed for 160 grand, it's a complete no brainer. When you're renting these houses for 1400, 1500 bucks. You're all in expenses for 700 bucks. 800 topps complete no brainer. But you have to act really quick and that's what I did.
Francois Lanthier: If you started in 2006 when the rules were very different as mortgages, you could buy no money down deals like, or even cash back. My first house. I got it with cash back. They paid you to own the house, which you don't get anymore.
Omar Khan: I wasn't fortunate. I didn't get into real estate until 2010. Like way later. Like I didn't think I'd ever be a real estate investor. If you had gotten in 2006, it would've been way easier because no down payment. I remember before I got in, you had to go 5% to 20%. Even before that, you could buy these properties with 5% down payments. Back then it was a whole different world. You can see it's gotten more and more people who are real estate investors. The government has to be very careful about what they're doing.
Alfonso Salemi: That's interesting. One last question. What does the portfolio look like today in terms of your real estate? What are you managing? What are you working on? Are you currently buying more? Obviously we're talking from eight and 10 years ago. Things change and always, with hindsight, things look easier. In 10 years from now, maybe we're gonna look back and say, Oh, it was so easy and prices were only that much. What are you currently working on and what are the types of real estate projects that excite you or that you're working?
Omar Khan: I'm gonna just hold all my commercial properties. I have right now. I sold off the vast majority of single family homes because it was personally affecting my credit. It's such a massive impact on your own personal credit. I had to get rid of those. Commercial luck doesn't impact your credit really? I have my commercial properties that I have in place I am not adding to my portfolio. Simple reason is because these numbers don't make sense to me.
I understand the stock market quite well. I'm able to look at both asset categories and objectively see where I see more opportunity. Right now it's not in the real estate market. It doesn't mean it won't be in the future, or sorry, I should say this much. It's not in the southern Ontario region where I lived.
There are other regions where I could do what I wanted to do and be successful with it. In Southern Ontario, with the landlord tenant laws that are the way they are, which I find to be extremely one sided. It's extremely one sided. That combined with the increasing prices and the forecast of rates going up over the next couple years I wouldn't be comfortable buying at these prices. That's where I'm just holding my portfolio. I will add to it when the opportunity presents itself.
Francois Lanthier: Cool. And you're stuck with options. Do you buy in REITs, Maybe you're still doing real estate there or investment funds of some kind?
Omar Khan: No, in the stock market, I don't stick to REITs. I stick to, I look at companies that are transforming the world, like Tesla companies that are able to change the way we live. I stick to companies that I believe in that way. Blue chip companies, not blue chip household companies that you've probably heard of, right? The main thing I will say is this, though. If you can't look at two asset categories, it's very difficult to objectively understand where to allocate.
That's the same problem I had before I became a real estate investor. This is my challenge to real estate investors, step outside of your comfort zone. When I was buying my first property, I only knew the stock market. It's because of my mind. I believe the stock market was the only way really to get wealthy. I find over the years that when I talk to real estate investors about the stock market, they're also very closed. My point is if you learn multiple asset categories, it's far easier to make a decision on where to put your money.
You're not gonna be pigeonholed to one investment. You'll be able to be more opportunistic, wait and say, Oh wait, I have other places to put my money. I think that could be a bit of a problem for real estate investors. Because I know a lot of real estate investors personally. They just keep buying regardless of price. There's no more thought process. It's just by buying everything that will just go up forever. I keep saying it's probably not gonna work out then.
Alfonso Salemi: I love that you bring that up because I can put my hand up, maybe I'm a victim of that or not comparing, or maybe just having the blinders on and saying, you know what, I'm, I don't understand the stock market. To me it's like college football. It's confusing. There's a lot of different things, with yourself having, the financial background that you have. You said, with an economics degree, you understand that. I think that the biggest thing is that financial literacy is part of comparing that, that's apples and oranges. They're both fruit, right? You can still compare the two, right? When you're talking to real estate investors or maybe someone like myself that is saying, Hey, you know what, I don't, where do I start? Or how do I get involved? Or how do I even make that comparison?
I know I can touch one of my properties. I know the cash flow. I knew who my client was. Where does someone start or begin to learn, and like you're saying household names, people are, you know the big stocks that are out there and that go across the different tickers and things like that. Where do you get that initial knowledge that someone doesn't have that economics background, like yourself to compare the apples and the oranges?
Omar Khan: First of all, I will say I learned none of this in school, nothing. Zero is taught in school. Nobody in school teaches you how to make money. They just teach you how to get a job. When I went to the University of Toronto and got an economics degree, I learned nothing about making money, not one thing. That's the first thing. You don't need any background. If somebody really wants to get started, you know the reason and don't wanna get too much under the stock.
We created theta trading two years ago for that very purpose to give people education into the stock market and financial literacy in the market itself. I would suggest the first place to look is maybe just go to our YouTube channel and just start educating yourself. Just start thinking about it. The same thing I did when I first started buying real estate. I started working out models. Okay, how does it, if I put down 20%, I extrapolated outwards a 4%, 5% growth rate. If I had positive cash flow, like I started building out models, if I had one property, two properties, three properties, The key with real estate is leverage.
Leverage is what really does it for you, right? You want a 20 million portfolio, or 30 million portfolio or something like, how much of your own money is in there? Maybe 8, 10 million bucks, right? So it's not, you've got that leverage factor and you got, let's say you got 20 million portfolio and it goes up, 8%, that's $1.6 million. It's very difficult for people to save 1.6 million doing anything, right? That's why real estate's so powerful. Real estate is challenging as the cash flow. Cash Flow is very challenging. That's what I would suggest for people. I would suggest that you start educating yourself and start seeing whatever you do.
Don't be close-minded though. That is what I'm really good at. Don't be close to it because most real estate investors. They're like, Real estate is the only thing in the world that works. I'm like, That's a horrible attitude to have. Terrible, It's gonna get you in a lot of trouble. It's hard to tell that to people who are fixated on one thing.
Francois Lanthier: It's so easy to fall into that trap because a lot of us were burned in 2008. That's when I had a lot of stocks and different things. I didn't self-manage, so I had no idea. I just put the money. I'm like, Let's hope it does something. For the most part it went down and then a lot of investors got scared and turned to real estate. That's my story anyway.
Omar Khan: The thing is the stock market, like for example, the stock market's always recovered, right? Like it, it does go down from time to time. But here's the thing with the real estate market now, like again, I'm a real estate investor too, but from like in the southern Ontario region from 1999, today, okay, that's 22 years now.
This market has gone nowhere but north in a hurry. To me, at some point, it's the same thing that happens in the stock market. We look at irrational pricing and say, Hey, that is now getting to be unfounded, irrational. If I'm buying a commercial property in Hamilton with a three-cap, why would I do that? I don't, there's no reason.
Cause I don't understand how to do anything else. That's why I'm buying a three-cap. Or unless I really believe in something. But my expected rate of return on capital, I expected return on invested capital. How high could it be when I'm buying a, at such a cap rate, am I expecting cap rate compression?
Am I expecting rates to go down? I don't think so. My point is when people start buying these things at some things, when valuations don't make a lot of sense. It's because they have excess capital and little knowledge, lot of money, No idea what to do with it. That is the problem. And that's when you see market tops. Same thing happens. By the way, in the stock market. They're very transferable that way.
Alfonso Salemi: No, I'm listening to this. And you know what? It's true. Cause I, again I'm victim of that, of maybe looking at only one way and there are different ways to produce income and to provide that and looking at that. Again, at the end of the day when you're looking at real estate, whether it's a stock market, you're always about that time investment. In terms of your real estate portfolio, the time that it took you to build that from the time that you're spending on educating and learning about the stock market, talk a little bit about what the investment of time would be for someone. To get to a certain point where they're confident as you are, in terms of putting their money in the stock market.
Omar Khan: Real estate, it took me a long time to build my real estate portfolio. When you're doing your BRRRR method, like it's, there's a lot of work involved. There's no doubt there's a lot of work involved between managing contractors and dealing with the bank and insurance companies. Luckily, from the beginning, my first property, I went with a portfolio manager, a property manager, and then after a certain time I got an assistant and to this day, I have an assistant who does everything for me.
She's wonderful. She does all my paperwork. I'd be in terrible trouble without her, and she coordinates everything with the property manager, which means I get to do my favorite thing, which is nothing. I'm down to about one hour a month, right? We have one call per month, and I have one hour per month.
Now, initially building the portfolio took a lot of work, but now at the maintenance level, it's nowhere near as much work. You've got a property manager and then you've got a full-time assistant who looks after everything. It's a very easy thing to manage. I did a course back a few years called Strategic Coach by Dan Sullivan.
It was a very expensive course that I paid for four days, but I learned something extremely valuable: outsource, systemize, delegate, all tasks in your life. Ever since then, I learned the value of time, like you know. Not doing groceries or cutting grass or cooking your food or all these other tasks in life that take up so much of our time, you just translate that to the business world.
I did that with real estate. I'm down to one hour per month. When I want to add to my real estate portfolio, it'll be a lot easier. I'm just gonna add, move into the process and that way, quite frankly, if even if I'm not there, all I really have to do is identify. And my assistant and property manager can take it from there.
Francois Lanthier: That's excellent advice.
Omar Khan: It's a good spot to be in.
Francois Lanthier: It's important to start early as well, before you're overwhelmed because it's easy in real estate. Like you said, the BRRRR is a lot of work and a lot of work done, covered in paperwork, then year end and you just want to give up. It's important to get assistance. In Canada it might be a little price seat, not for everybody, but think outside the box again. Be open-minded.
Omar Khan: You could outsource the Via virtual. Absolutely. It's the mindset. Most people have the mindset of, Oh, I can do this task on my own. But the understanding has to come that time is the most valuable commodity. Your time is the thing that you have to try to preserve. Outsource all these tasks to somebody else, and you focus on what you're good at, which is scaling your real estate portfolio. Real estate's a portfolio.
Real estate is something that can be scaled if you have a good system in place, if you have people on your team that you can trust, but that's the key. You've gotta build a good team and then it's pretty easy scale, especially on the commercial side. I know you guys have commercial properties too, right? Which is a great thing. You don't have to worry about income and all that stuff. It's very simple, right? Your dcr, either 1.1 or 1.2, 1.15, depending, institution. That's all you gotta worry about. It's a lot easier.
Alfonso Salemi: That's great advice. Maybe, we talk about delegating, having the right team members. What are some other things that are translatable from looking at real estate, investing into stock market trading and investing? What are some of the things that, maybe your own personal skills that are translatable into those two different realms?
Omar Khan: Identifying asset prices, it's the same, think about our logic. Money will always flow to where it gets the best return. Okay? That's what it does. Now, educated, intelligent, informed investors understand where to put money. Right now, the reason some asset categories get bubble territories as it has happened with the stock market in the past and as happened with real estate in the past is because it's too much money and not enough knowledge chasing one particular asset.
That's how I find it quite transferable. I like when I am able to identify bubbles, the market, the stock market. You can see asset pricing re reaching abnormally quick levels fast. And you can see the same thing on real estate as well. People, I'm not saying it's a bubble or it's gonna pop or I'm not saying any of that stuff.
I'm saying the pricing is substantially higher than it was years ago, and I'm not able to get anywhere near the same opportunity in Hamilton for me. I think that is one thing that is very transferable, being able to look at and when you say, Okay, my expected rate of return on this, if I hit, these parameters is 7% a year for the next 10 years, right?
You gotta put all these variables and I can do the same thing in the stock market and identify companies, but I want to invest in those ways, that way it's very transferable to identify asset prices, right? So for example, if you look at a company, let's say you look at a company like Apple, you value it on the balance sheet, the financial state.
You look at the earnings and you say, Okay, I think Apple's worth X amount of dollars per share. It's the exact same thing as when you look at an apartment building. You look at an apartment, you look at the rent roll, you look at cap rates, you look at what is my cap expenditure? How much can I get the rents up? What can refine my property out of? It's the same sort of exercise that you go through when you evaluate a real estate property, you do the same thing on the stock side. The unfortunate part is that not many people know how to do it. That's why I would encourage people to learn how to do both, so you can make really well informed decisions.
Alfonso Salemi: I love it, man. you're like a chameleon. You have the experience in both. You understand both and compare the two and I'm looking forward to more conversations because I do think you have to be looking at different ways to get your money working for you. Whether that's real estate and again, there's different areas. We're talking specifically Southwestern. Again, I'm a Hamilton guy and I've seen the prices just go up and I'm like, That place when I know . And it's hard to, it's hard to realize that. But again, I also look at, and again, there's challenges from both sides.
There's advantages to both sides. Just knowing that, and having that, I like what you said about the information versus just chasing that money and following that and understanding. Great advice and you could tell it's coming from a place of knowledge and experience as well too.
Omar Khan: That's how bubbles are created, right? You look at real estate, right? I don't know about you. I know so many people right now who have preconstruction, so many people that worries me. I'm like, dude, you leveraged your last property. You took a line of credit up for the down payment on this property. Right? Now you've done that with two other properties. I'm like, You can't close these properties. I, these are people that personally know me, right? I know them personally. There's more of them out. The reason is because you get it's alluring
Prices keep going up. You start thinking you're bulletproof and nothing can ever go down, and then you just keep chasing it all the way up. And that's when you get inflated pricing. I think we're starting to see, hopefully, It's still underpinned by a very good demographic. Still 500,000 new people, Canadians moving into Canada in the next three years alone.
Each year, you've still got a pretty good economy with low interest rates, you've got a lot of positive factors. But the point is, our asset price is gonna go up forever and ever. People forget when I moved to Masaga in 1987, my parents bought a home and that home went from about a hundred and maybe 160 to about 250,000 back then within a year or two or a couple years. Okay. It went back down. It didn't recover in value until the late nineties. From 1987 to 1999 in the saga, the real estate market pretty much did nothing. That's my point.
People have short memories. They think that this is only going to continue. Of course, long term, I'm a huge believer in risk. Same with you guys. It's a great hedge against inflation too, right? So they all have their positives and negatives. My point is to objectively learn to identify where to put your capital to work. If you can't do that, it becomes very challenging.
Alfonso Salemi: Great advice. Appreciate that, Omar Khan. I think we've reached the point of the podcast that it's time for our lightning round. Omar, are you ready for the lightning round?
Omar Khan: Let's do it.
Alfonso Salemi: Awesome. All right I guess I'll start with the first question of the lightning round. What is the best advice you've ever received from another investor or at a networking event?
Omar Khan: Always understand what you're investing in and why you're investing in it.
Francois Lanthier: It's important again, the knowledge. With knowledge, you have power and you can make the right decisions. Great.
Omar Khan: That means if you don't understand something, don't just if I don't understand Bitcoin, I'm not going to buy it. Everyone else is gonna buy it. I don't care. I must understand. Great advice.
Francois Lanthier: My son's trying to explain it to me and I still don't get it. Question number two. So what is your favorite resource for real estate investing? Could it be a book, a podcast, like a source of information?
Omar Khan: A source of impression for me would be, I like to read. I have so many friends that are in the community. I generally listen to them and what they think and forecast. And also anything Don Campbell related, that's a gentleman I really expect in the industry. Think he did the phenomenon of, I learned a lot from, found that guy to be very classy, very knowledgeable, so anything Don Campbell related and just to keep a pulse of myself on the ground through all the friends I have in the industry. That's what I use.
Alfonso Salemi: Perfect. Okay. Question number three. What is the attribute that has made you successful?
Omar Khan: Necessity. Poverty. Not growing up with money. It's either figured out or broken. And I was like, There's no way I'm dealing with being broke. There's zero chance I'm gonna do that. That was it. What's the old thing? Necessity is the mother of all invention, right? So that's what it was.
Francois Lanthier: True. You've reinvented yourself completely, quite successful. Congrats on taking action. That's great.
Omar Khan: Oh, thank you. Same with you guys.
Francois Lanthier: Question number four is, what do you typically do on a Sunday morning?
Omar Khan: Sunday morning, I always get up late, always. Sunday is the one day that you could afford to get up late. It's always a sleepy day. From there I proceed, have breakfast with my family. And then hopefully my beloved Dallas Cowboys are playing and I can watch them. If it's not off-season, just do a family activity. But if the Cowboys are playing, watching my cowboys.
Alfonso Salemi: They're looking good this year too. Awesome. Omar Khan, for those of the community, if they wanted to reach out and get in touch with you and learn more about what you're doing, how can they do that?
Omar Khan: You can shoot me an email or just shoot a message to any one of our platforms on social media and lemme know the questions and I'll be happy to help anyone out.
Francois Lanthier: Excellent. Thank you very much. And any final word of advice or parting words?
Omar Khan: I think the one thing I will say is I think the next 5 to 10 years and I think we'll look back at this thing we're about to enter a serious transformation in human life. Like a serious transformation where so many new things are coming up, like electric vehicles, things that are radically gonna change our lives. I would encourage people to look into what these changes are. Not only will it change humanity significantly, it could also be very profitable. That's what I do.
Alfonso Salemi: Amazing. Thanks so much, Omar Khan. I appreciate it.
Omar Khan: Thanks guys, I appreciate it.
Francois Lanthier: Alfonso, what did you learn from this amazing interview?
Alfonso Salemi: You know what, I love the idea of opening up that mindset, maybe as a real estate investor you always get caught up in the same thing, doing it the same or over. We always talk about staying or getting outside of our comfort zones and trying new things and if, like I said, we've been doing Rent to own for seven years. This has really opened up my mind to maybe find another income stream. That can help, with cash flow or, long term investing as well too.
Definitely, it sparked some ideas in my mind of how to get creative and getting, more money to work for you. How about you, Francois? Cause I know you've been learning about this as well too, you and Jennifer. What did you take away from this podcast?
Francois Lanthier: Love the idea that, I think it's not actually on the podcast, but using some of that cash flow that you're creating through stock options. He did mention it to pay off some of your properties in markets where there is no financing. I mentioned Costa Rica. There's no real financing option. Of course you can use a line of credit to find creative ways, but this is a great way of supplementing that income. Creating something fun. My vision for 2022 is fun. Not everything will be fun, but that's my goal for real estate investing. It's gotta be fun. It's gotta bring some new fresh elements. That's something there that I learned.
Alfonso Salemi: Absolutely. And we had to continue to learn, continue to grow. And this is just another thing that we could put in that perspective, in our lives, that continual growth mindset. And that's what The REITE Club community is all about.
Continuing to grow, helping you grow, and helping others grow around you so that we can all achieve more together. Super great to the podcast. Great for you to join me today, Francois, thank you so much, and again, if you have enjoyed the podcast, please rate, review, share with a friend, and don't forget to get to The REITE Club community website.
That's thereiteclub.com and get in touch and reach out to us. Thanks so much and we look forward to seeing you next time.
DJ: Thanks for listening to The REITE Club podcast and joining our community of real estate investors online at thereiteclub.com, where the focus is about helping you grow. We look forward to seeing you again next week. Thanks from your hosts, Sarah Larbi and Alfonso Salemi.
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