Voytek: So people are not moving because there's nothing else available. There's nothing for them to go. And so it's creating huge pressure on, and the rent are actually going up. Which is crazy steadily and people have nowhere to move to. So you're getting your rent paid faster and it's creating a really good environment for landlords, I believe, for for decades to come.
Katherine: Hey, Daniel, how are you doing this evening?
Daniel: I am doing fine. And we're going to be talking about Detroit.
Katherine: Absolutely. We've got James Lloyd and Voytek Mardula from US Properties, a Canadian based company that has developed their company for investors wishing to invest in not just anywhere across the US, but in Detroit.
Yes. That Detroit, that would be the Detroit. That declared bankruptcy, not too many years ago and has literally buckled down and had seen a creative and driven resurgence. That is just a phenomenal phenomenal thing to see and experience the creativity is awesome. I'm Katherine Nelson Riley. I'm the operations manager for The REITE Club.
I'm here with one of the co-founders Daniel St. Jean. And looking forward to to this interview tonight.
Daniel: And it's gonna be different investing in Detroit that I'm used to because in August I will now add a driver's license for 50 years. I have bought about 23 or 24 cars in those 50 years.
And all of them were from Chrysler, Chevrolette, GM or Ford. So I have been investing in Detroit all my life, but this is gonna be a different type of investing in Detroit.
Katherine: Oh, that's awesome. And with that, let's get to let's get to the podcast.
Daniel: Let's do it.
Katherine: Absolutely. And we're gonna be getting to them in just a moment, but I just wanna remind our listeners, don't forget to go on onto your favorite listening podcast, listening sites.
Don't forget to give us a rating. Also. Don't forget to head on over to TheREITEClub.com, where you're gonna find all of our podcasts. You're gonna find all of your resources, our events, networking, your power team, anything that you are going to need to be successful and to grow for those in the business of real estate investing.
And with that welcome Voytek and James.
Voytek: Thank you so much for having us.
James: Thank you for having us excited to be here as always.
Katherine: There's so many questions that we have, especially like we've got the Canadian market, we've got the US market things have even up and down and all over the place as we've been dealing with COVID. So interest rates have been going up in Canada and the US and how is this affected real estate in Detroit?
Voytek: It's been Detroit is an interesting market because it's been it's been one of the last ones to recover from, the great recession the crash in 2007 and 2008. And, there's been a number of markets in the Northeast that have been behind a lot of the US massive real estate growth, but they have been increasing in the background.
And so what we've noticed is that COVID was amazingly kind to real estate, it was so devastating to so many families and , so many other industries, but pretty much globally, we there's been a massive increase in pricing and growth and real estate and interest rates. Despite the fact that, what we found is that the premium properties in the us market, when you get into places like California or New York, where, there are homes for three, four, $5 million, Those markets are affected in the same way that let's say the Toronto market or the Vancouver market has been affected as of late, where we've noticed less sales, there's more inventory and the prices have come down.
In markets like Detroit, where you're dealing with. 120, $150,000 properties that already have a lot of cash flow associated with them. When you have $150,000 , property that is generating $1,500 in cash flow, even though the interest rates may go up 1% or 1.5%, it's not a significant.
Amount that it would deter investors and people from buying the property. Because at the end of the day, with that volume of a mortgage, it's only a hundred or $150 per month that it translates into which most people can afford. So what we've seen, and we were a little surprised by this is an ultra hot spring market.
That's been, we're getting record setting appraisals , we honestly have not noticed any slowdown whatsoever in the Detroit market, which we're surprised by it. And maybe down the road that will change. But at the moment we're seeing an amazing increasing growing market. Just like it has been for the last five years.
Katherine: Wow. One of the things that both of you are lifelong entrepreneurs.
Which is so cool. So when you came together and how long have you had US Properties?
Voytek: It's been six years now.
Katherine: Six years. So what I'd love about US Properties is that you have the entire kit and caboodle and package for anybody who wants to invest, like you have the knowledge , , for Canadians investing in the US market.
So you have people who are versed on your team. You've got the realtors, you've got the lawyers, you've got the accountants to be able to help with all the tax and the financing and so on and so forth, it's just To me it's turnkey and you've got property management, correct?
James: That's right. Everything you just said is really accurate. I think is what defines us, as a company is the fact we're a full turnkey operator. Everything in an investor would need to go from contemplating an investment like this in the American to Detroit market to actually being a cash flowing landlord and everything in between like property acquisition, construction. Can you set up correctly with our us attorney for taxation and liability reasons and like the connections with the lenders, getting you a US bank account. We have all that in house, right? So we pass all of that on as a service, as an amenities to our clients. So it really is a full turnkey operation.
That's really where I focus on a daily basis. It is just taking our clients as they approach us, introducing them to the market showing the potential properties and then taking them step by step. Through that turnkey system until they're all set up and ready to acquire properties. Yeah. So we have all that and it's, I must say, it's been a learning curve for us as well, and as we've grown and as we've gained experience, the system's gotten better and better. And I think we're operating at a really well oiled machine pace at the moment. So it's going really well.
Katherine: And we know that because we have a number of our REITE Club Community who invest with you. And not just investing in one property, but I actually was speaking to one of our members and I think she was just closing the deal on her fifth property if I remember it correctly.
So that, that was pretty cool. And her fifth property with you, but so many Canadian clients have seen property values decrease, normally red hot markets like Toronto. And it the same in Detroit?
Voytek: They've actually we have not seen it. We have been getting lots of our clients are getting properties appraised right now.
They're refinancing. We're we haven't seen any situations where, we had an area that was very hot and now it's, come down 10 or 15%. We've either seen same numbers that we saw three or four months. Or we've seen higher numbers. We feel that because the market has we feel like a lot of room to grow.
The mayor of Detroit came out a few months ago during a press conference. And he stated that he feels that Detroit is in the third inning, if it were a baseball game and, and so these the properties that we're offering are, for $150,000, We have adjacent neighborhoods that are selling for 300, 500, $300,000 that are very similar homes.
And, it's just a matter of time and they're already radiating away from those neighborhoods. So we feel like it's just a matter of time before they hit those higher values, and because we're buying in better neighborhoods in B, B plus neighborhoods the values are insulated more than, some US investors go into purchasing very small bungalows and, and see neighborhoods because they're cheaper, and it's, and we've actually have been down that road and made some of those mistakes.
And we've seen that those values don't appreciate as much. And so what we've really done is duplicated what we did in our personal portfolio and offered that to our clients.
It's just so they can have maximum potential appreciation, but also enjoy the cash flow, which is mostly not available in Canada. So you're really getting the best of both worlds. And because those neighborhoods are better BB plus neighborhoods, they're more insulated against dips because of value and because of neighborhood quality, cuz you have a lot of homeowners in those areas and those homeowners are not gonna be exiting because the interest rates went up because chances are they have a fixed rate and nothing's really changed for them, right? Or they're not all of a sudden gonna be, they don't have the opportunity to move anywhere else. I think one of the big reasons that's worth mentioning is that there is a massive housing shortage in Detroit and in Michigan right now.
It's extremely tight. We have units coming up for rental. and they're renting out in two, three days. Now, this is, we've never seen anything like this. And this is to government tenants where the government is paying the rent, and we've not seen anything like that during COVID because everything was delayed and slow during COVID.
And people were getting so much financial assistance and that they were just staying home and spending money at home Depot and at, bed and bath and beyond, and just enjoying life. And which is created inflation, but what's happened now is that this market is tightened for housing.
So people are not moving because there's nothing else available. There's nothing for them to go.
And so it's creating huge pressure on, and the rent are actually going up. Which is crazy steadily and people have nowhere to move to. So you're getting your rent paid faster and it's creating a really good environment for landlords, I believe, for for decades to come.
Katherine: And the resurgence I have a feeling that because of the resurgence that Detroit has seen it's just unbelievable over the last, even 10 years, what has happened? Yes. And how they have reinvented themselves and the creativity that's gone in with it. And the type of businesses and people that are moving in.
I have a funny feeling that some of your neighborhoods that would've been possibly considered a C neighborhood . A few years ago, because of those people within those neighborhoods that are doing the renovations and are upgrading and the infrastructure that's coming in, that they've now become maybe a B minus or a B neighborhood, if not higher.
James: Yeah, you're absolutely right. We really have a really strong team, but a huge amount of experience on, the neighborhoods of Detroit. We really curate, in the back of our hands. So there's a core group of around, I would say 10 neighborhoods where we've traditionally been buying over the course of the last five years.
But as you said, as time passes. See it, you see it going out like the radius going out, and the neighborhoods developing where, when we first started, it was really Northwest Detroit. The areas like Bagley and Fitzgerald were really were the first areas to turn where it was really popular.
Now there's some movement going towards the east side to some of the areas like Jefferson Chalmers. And you hear a lot about the Aing list village everywhere in Detroit closer to Grosse Point. So, look we know it and as Voytek was saying his last point, I think the real value there lies in the fact that we're only operating in these better class neighborhoods, where it's really acted as a hedge against anything uncertainty. It really protects the values of the homes and in those areas where we operate, it just remain really hot.
Katherine: Nice, nice. So I've got a question for you, financing. Because it is different in the US than it is in Canada and what it is that you're able to do. So what are the pros and cons of purchase financing versus cash purchase followed by refinements?
Voytek: So I think that, many investors that come in that are purchasing from Canada because we have had access to inexpensive capital in Canada, a lot of investors have chosen to take that capital and purchase a property with us.
And then subsequently refinance in six months because a lot of lenders require a six month seasoning period in order for you to refi. And we've had so many success stories of people that have bought and because the market's been so hot, You know what we've been lucky enough to do that we've been able to offer some clients some equity in deals right away.
So perhaps they would buy a property for, from us for 130,000, but the property was worth 150. And so right away, they had that $20,000 in equity right off the bat. And then, six months later, If the market is doing, let's say 10% or 15%. That's another, maybe seven and a half thousand in equity, just from appreciation from that 150.
So by the time they go to refi, they're looking at $157,000 value for something that they paid 130 for. So they're thrilled, right? Because now they're getting 70% of 157 back.. So they're gonna end up with most of the money back that they've put in. It's the classic BRRR strategy that, most real estate investors know and it's the best, the worst kept secret in real estate.
But it's terrific. It's, that's, it's how you can build a massive portfolio. And with not that much money, or just a little bit money up front. And so a lot of our clients have utilized that strategy. And the advantage of buying with cash that way and then refi-ing later is that we find that sometimes lenders, when you go to refinance six months later, stabilized property, a tenanted property, et cetera.
So that there's value in that, there was additional work put in potentially and there is a tenant and it's stabilize. They tend to give them higher values when you refinance, strangely enough, this is what we've seen a lot in Detroit. Okay. The appraiser will give it a higher value.
When you go to purchase financing, it's great because you get to leverage right off the bat, right? So you, if you have $50,000 US, you can start, and if that's all you have, then you'll have limited options. And I encourage so many people that are starting with us or investing in real estate, walk before you run.
Don't invest all of your life savings into a single property, and then be very tight for cash, have extra. And but if you're all you have is, let's say $60,000 and you wanna take 50,000 of that and leverage it into a property. We're able to do that now.
We have some great lenders that really specialize in Canadians who are looking to acquire in the US market. They really that's their niche and their fees are low. Their interest rates are still relatively low. They're very automated. The process is fast, it's easy, it's efficient. We're just really thrilled with the relationship and we continue to work together.
And that's one of the benefits I think of working with us is that we have access to financing and to lending, which, a person. It's not easy to find or instinctive, . It took us two years to find our first lenders that are willing to work with Canadians in Detroit.
And I think one of the keys is, was us having a property management company that can manage the asset to ensure that, that mortgage gets paid at the end of the month.
Katherine: So there's a big advantage of US lenders versus the Canadian lenders.
James: I would just kinda echo what Voytek said that, it's taken us a long time to get where we are with , but it's opened up, while it is more attainable now to get purchase financing. It can still be advantageous to buy with the Canadian funds like Voytek was saying, because we are seeing, I ideally with this a lot on a weekly basis of appraisals and we're getting some really good appraisals for the stabilized homes after six months.
So they, clients are enjoying. Larger equity lifts and the ability to scale and recycle those funds over and over again. So it's quite powerful. But yeah, so look, whatever you, our clients want to do, we have those options available and it's all here waiting if everybody wants to get started.
Voytek: And just one thing I wanted to add Katherine is , I think one of the big benefits of US lending is that they don't consider personal income in the way that Canadian banks do as, a factor upon which you can, exercise your mortgage. So I, I can literally if I have the down payments, I can literally open a hundred mortgages at one time on a hundred different homes. And so you can really scale and you can have such benefits. In Canada, I find that eventually the banks say, oh, you have seven or 10 properties. It doesn't matter what you make or what you have. There's no more lending, right? So they're essentially determining , what your scale is and what it's going to be, which is hard to deal with for entrepreneurs, right?
Because , people who are in real estate, they always wanna buy more. We find, people who, they get into real estate. They're not investing a lot in the stock market anymore. They just want more real estate because we all know that it is the best vehicle for long term financial wealth.
There's, I can't think of anything better than real estate. There's so many ways to make money from it. And it's a long term asset that you can pass onto your children. And in the US the amazing part about it is that no one is telling you that you need to stop right now, if you want to, and you can grow as much as wherever you wanna set your ceiling, whatever you wanna set your goal, you can achieve it.
Daniel: I wanna make sure that people who are listening to this podcast, the company name is US Properties, but you guys are a Canadian company, aren't you.
Voytek: Yes, we are. The, our website is usproperties.ca because we are based in Canada and, and we, we started the company, my wife and I started the company six years ago because we were investors just as many of you are on this podcast and and we were curious about investing in the US but didn't have the right tools. And we felt that every, all the information that was available online was very inconsistent. And there were different opinions flying around about so many different topics from companies to taxation and to absolutely everything.
And which is why we did, a year's worth of to try and get the information and really get the right information to Canadians looking to invest. We're based here. We're available to meet, to really help anyone who's interested in taking the journey south of the border with their real estate investments.
Daniel: And I wanted to make sure that people know that because it there's a difference between dealing with an American company drawing Canadians into the US versus a Canadian company, helping people invest in the US. So Katherine, take it over.
Katherine: Yeah. And that's one of the important things too with US properties is as we have had Voytek and James on many of our different events and our different segments, and the cool thing is because you have those experts that are part of the power team that are needed that are within within US properties to be able to cross the borders, to make sure the taxation, the rules, the regulations, yeah. And everything, and the experts are there. And what was really cool is be. On those segments that we had other of our partners and our sponsors that were with us that are in accounting and legal and everything else.
And every single one of them was backing up and agreeing with what you said. Yep. You're doing it the right way. Yes, that's exactly right. So it was really cool that even the sponsors within our community, they're all also supporting each other. Our community wants everybody to win. There's enough of the game, enough different strategies, enough different situations.
Excellent. , those are great things to know, and for our community I know I'm going to actually pass baton over to Daniel, cuz I know that he's got some lightning round questions. Okay. That he would like to ask you gentlemen.
Daniel: All right. So actually, you know what, I'm gonna ask that question first from Voytek and then from James here, because you're gonna add different answers.
What I want to know from you what is the best business advice you've ever received from any source book, coach, video podcast, whatever. That you can share with our listeners?
Voytek: Whew. That's a tough one. I've listened to so many different podcasts and read so many books , on success.
I think the best advice would be to write down your goals and be specific with goal setting. And be bold with your goals, whether they're financial, spiritual, family, whatever that you wanna accomplish in your life. Write it down and you'll be very surprised how many of those goals you're able to achieve within a very short period of time.
Daniel: So translation here, find out what your, why is and then go do it.
Voytek: Absolutely.
Daniel: What about you, James?
James: I always remember my father, I've always respected so much in business. Pulling me aside when I was, turning of age about 21 and just really instilling in me that you could get one chance in a lot of situations to make a first impression and to maintain and just to always take the high road and work hard and that you'll be rewarded in the long run from doing that. It's really, it stayed with me and I know how much I respect him and his business reputation. I try to live up to that.
Daniel: So my take on that is build trust.
James: Yes.
Daniel: Katherine likes to say people will do business with people they know and trust,. My record so far is on a weekend is raising 1.8 million before that it was 1.5. And the only reason I do that's cause people trust me.
And so every single day that you are starting a new day in business, To me. It's what can I do today? Not to screw up the trust that people have in me. So any kind of situation that comes up, it always goes down to, okay. Can't lose the trust here. So what am I gonna do to get out of this situation or what am I gonna do to create this win-win so people can keep the trust cuz the trust is everything.
Voytek: For sure that's exactly it.
James: Absolutely.
Daniel: There was a a US Senator a few years back who said he was in an election. I can't remember his name, but he said, if you have credibility, nothing else matters.
If you don't have credibility, nothing else matters. So I use that in one of my podcast, not podcast, but post and I translated that to, if you have trust, nothing else matters, but if you don't have the people's trust, nothing else matters.
James: That's it.
Daniel: And people trust you and we trust you, that's why we are doing what we're doing with you guys.
James: Appreciate that.
Daniel: All right. Voytek, what is the key attribute that has made you a successful business person?
Voytek: I think it comes down to to perseverance and to keeping a positive attitude. I feel that. As you go through business and through life, you're gonna get stuff thrown at you and, and you can, the glasses always half empty or half full, and I always try to find the upside in anything that gets thrown at me and, and not to trivialize it and to learn from it.
But, don't let negative events, affect you for long periods of time? I would say, I think if you can bounce back from negative things that will happen to you quickly I think you can achieve anything that you want in life.
Daniel: All right. That's very powerful. And what about you, James?
James: For me, it's, I have very regimented structure in my life and daily routine. Like I wake up early every day. I exercise in one way or the other, whether it's running or tennis, I write down my daily goals and then I take action.. And I do it every day. So do you know when you live a way that is like that, where it's really structured?
I go to bed for the most part at certain times, surely I take time off and all that, but when it comes to my working time I, it is pretty consistently the same and I try to stay very even keeled and just just that I really write out the goals what's going on in the morning. And then I just get to. Every day.
Daniel: All right. And what's funny because a lot of people will be listening to this and they won't be looking at the picture. But when I look at you, I see a uniform, a cap, and I see the guy, that the guy that in the movies there, that when the new recruits come in the army, the one who takes them to the routines in the morning, I am so seeing you like that kind of guy. Gets people to do stuff in the morning when they don't feel like doing it. Am I close?
James: It's a great time and I love the mornings, right? It's a great time of day. You get up. It's a new day and I'm well, my family's well, and the business is good and I can really focus, get some exercise in and just to just concentrate on what needs to be done for the day. So it's, I love it.
Daniel: I wasn't so much thinking about the time of day I was thinking about discipline. You look like a discipline person who likes other people around you to be disciplined.
James: It wasn't always that case.. It wasn't always the case for sure. But it's certainly it's very predictable these days for sure.
Daniel: All right. So Voytek, if a genie could give you any talent that you don't currently have, what would you ask for?
Voytek: I think Roger Feder's backhand.
Daniel: Oh, okay. are you a tennis fan?
Voytek: I am. I'm a big tennis fan. Love tennis.
Daniel: Are you good at it?
Voytek: I'm pretty good. I'm pretty good. I've been playing for a long time. I've been, I should be better considering how long I've been playing, but I know how to play.
Daniel: All right. Okay. What about you James?
James: So if a genie could offer me, what one wish was it? What was the question?
Daniel: Yeah, one talent that you don't have that you can have instant.
James: I like to be better, a bit better with the math, with the numbers, I I'm very good at communication skills and dealing with people. I'd like to be a little bit better with, on the number side of things . I have Voytek doing that for me there, but I'm learning a lot. I'm not sure that's my one wish, but it's certainly what's come to mind right now.
Daniel: All right. Okay. I have one more question for each of you.
So Voytek of all the places you visited in your life, where would you go back to instantly if I could wave a magic wand right now?
Voytek: To Val d'Isère in the French Alps.
Daniel: And what was it about it that, that blew your mind to the point where you wanna go back?
Voytek: I love skiing. My, my father took me there when I was a teenager and it was very impressionable place. It's just beautiful and culture and the food and French wine and just everything about it is incredible. It's it's a really special place there. And teen it's one of the best resorts skiing resorts in the world, and just so much to explore. And it's a very special place.
Daniel: Didn't they have wasn't there an Olympic that was held there in Val d'Isère?
Voytek: There was a world cup, there was a world cup and there was a, yeah, we actually, we skied the world cup the peace where they did the downhill. It's it's very steep. You really get going.
Daniel: And James, my question to you is of all the places you want to visit, where would you go right now if I could wave a magic wand and take you there.
James: I've got a young son who's just so enamored with animals and stuff. I'd love to be able to take him to maybe to Africa, to Kenya or Tanzania and safari at some point, and just see some some of the majestic African plains.
Daniel: So that means this is on your goal list or should be on your goal list that the other gentleman was referring to earlier.
And that could be a really interesting Powerful, why to be so successful that you can take your son on a safari for a month in Tanzania.
James: That's it? I like to be a little bit older, but he is in his teens, I'd like to take him on something like that, for sure.
Daniel: Okay, Katherine, I'm passing it over to you. Thank you, gentlemen.
Katherine: Awesome. I'm really excited about the resurgence in Detroit and the fact that you are offering Canadians, be the way that the market is to be able to be investing in an up and coming and a resurgence. Yeah. That's so close to the border and so close and you're all encompassing everything.
And actually, I know we've talked about this before, but I'm just starting into my real estate investing career. And I know that we've talked and we will be talking because I will be investing with US properties in Detroit. I'm looking forward to it because I'm down there a lot. I think it's an important thing to be able to do.
So thank you so very much for being able to provide an alternative for people in our community to consider and where can our community reach out? To connect with you.
James: You could reach out through our website, usproperties.ca there's an area in the website where you can fill out a submission.
You could also reach out to me personally at James Lloyd, L O Y D us properties.ca. And we're here to help, just reach out anytime I'm very responsive and we get back to everybody.
Katherine: Absolutely do thank you so very much. It's been an awesome awesome conversation and we'll be seeing you in Detroit soon. Thank you.
James: Thank you so much.
Voytek: Thank you very much for having us.
Daniel: Thanks guys.
James: Bye.
Katherine: Whoa, what a fact and information filled podcast that was with James and Voytek. Daniel, what was your biggest takeaway?
Daniel: My biggest takeaway was first of all, the fact that Detroit is no, we hear what's happening in Florida, multiple offers over asking, but it was interesting to find out that's not quite the case in Detroit and people invest in Detroit and cash flow, which course, I don't know where you are. Whoever's listening to this where you're from, but if you're from anywhere in Southern Ontario or many parts of Alberta or BC, or even Nova Scotia, cash flow is something of the past, in many cases, but apparently not, apparently, evidently we can do cash flow now in Detroit.
So that to me was a revelation and and very hopefully it's gonna be a revelation also for many of our listeners.
Katherine: Absolutely. I think one of the things I really like their six year old company, but what they've done is they did it themselves first learned along the way. Took and developed a model in order to establish a a company that is all encompassing, everything underneath the umbrella.
They have the experts that know all about how to be able to be investing, as you say, out of Canada and investing out of Canada, but to be able to cross border know about the accounting, the taxes, the legal, everything that you need in order to, to cash flow and to have a business that is outside and as well as giving us that's what they gave us in this podcast was the pros and cons of purchase financing versus cash purchase followed by refinance.
It's different type of version of the bur strategy. That's very popular across Canada. The advantages of US lenders versus Canadian lenders. And how do you do that? What do you put in place and how do you do it? So it was a really it was an excellent podcast and I really learned a lot.
I'm quite sure our community will too. And for our community, don't forget to rate us. So that that's always a great great for us to know how it is that we're doing. Your input is super duper important. Please make sure that you also join us on our website that www.thereiteclub.com where you're going to find all kinds of resources and information connections, networking what you need to know, your partners, your team, get your questions answered. And just reach out, ask questions in our community, not only online, but also in our social media, Facebook and Instagram. And we invite you to not only come grow with us, but through real estate investing, to customize your life.
Thank you for joining us. Thank you for joining.
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