To New Brunswick and Back

 Francois and Jennifer Lanthier

 

Sarah: Next, Jennifer and Francois Lanthier from FL Homes Corp. They both have been growing their portfolio properties located in Eastern Ontario, where they used to live actually and Moncton, New Brunswick and beyond. They began about 15 years ago and they really scaled up very recently.

I want to say, in the last 18 months to 24 months very much. So, in the middle of a pandemic Francois and Jennifer ended up finding a place to move to and decided it wasn't for them to come back to Ottawa, welcome back. Six weeks later, that's the beauty of being a real estate investor.

You have the freedom to say, I want to try it. Oh, I don't like it. You moved back there. Welcome guys. How are you doing?

Jennifer: Great. Thank you.

Francois: Yes, we spent six weeks in New Brunswick, a beautiful place. We moved all our furniture there and anyway, we moved it all back to Ottawa.

Anyway, nothing wrong. People do miss that. So, like people open the door for you and they're all super friendly. Sarah, when you go down you'll be amazed. It's like a whole different world.

Sarah: Absolutely. So, there's a few questions that we had some people send us to ask you guys to just get to know a little bit more about New Brunswick as a market and just for everybody here, how many units or properties do you have in New Brunswick right now?

Jennifer: We have five units, 19 doors.

Francois: 19 doors for New Brunswick.

Sarah: So, why did you decide to invest in New Brunswick?

Francois: Originally, we had investments in Eastern Ontario and it was getting harder and harder to find properties that would cash flow.

So, prices were going up like anywhere we were buying in Cornwall. And yeah, just the rents and then the tenant laws as well. Can you increase rent by $200 a month? You can't in Ontario. So, in New Brunswick, that seemed very appealing. And Jennifer, do you know why else?

Jennifer: Everything that you said. And I think that we decided really on Moncton, because it really seemed to be the hub of the Atlantic. So, I wouldn't say it's the biggest city?

Francois: No 

Jennifer: But it just seemed to be like really the hub of Atlantic Canada.

Francois: Yeah. And then like with Walmart, like all the fundamentals, that something you say a lot on your podcast Sarah, and you influenced us quite a bit.

So, I influenced Christine, but you influenced us by saying, look at the fundamentals. So, Moncton has really good fundamentals. If you look at the job market, I think there's no sector of the economy that's more than 10%. So, we're in Ottawa. Ottawa has mostly government,  very heavy government and Moncton is so diversified. There's healthcare, there's education, there's technology. There's a lot of high tech, lots of good restaurant distribution, and its bilingual as well, like Ottawa, they have lots of call centers, banks. It's unbelievable and very underpriced for what it could be.

Sarah: I think a big piece is the cash flow that you can get out there versus, within the GTA two to three hours, you're not really getting that cash flow on, singles and doubles or fourplexes you're likely going to be, looking at bigger buildings. Out of curiosity though, how did you go about buying remotely?

Francois: So, we've always been a bit daring, we moved a lot. We did all kinds of things and already invested in Cornwall from Ottawa. It's only an hour drive, but if anybody knows Cornwall versus Ottawa. Yeah, there's an area called the zoo in Cornwall. So, we're like, if we can invest near the zoo, we can invest in a new way.

So, anyway, no offense. If anybody's joining from Cornwall, there's some beautiful areas and Ottawa, there's some bad places, but it's a whole different world, different culture. And we're like why not do it? And it seems like a great place and worst case. We just cut our losses. 

Jennifer: We basically just started out with a good real estate agent. Just getting to know people in the area, talking to other investors that were already investing in the area. And we decided to pull the trigger on our first property, which was a fiveplex.

Francois: Fve plex and we did it as a JV as well. So, that also mitigate risk by getting a partner to get involved. It's like shared risks. Anyway, that property did extremely well. That was our first deal and it's one of our better ones I would say.

Sarah: My next question is also part of Brad's chat question regarding property management. And What's your experience there? How do you ensure, you have somebody there that can trust because we're too far to manage and keep everything like you would want and feel free to share the ups and downs?

Jennifer: We did work with a few property management companies, but what we found that worked the best for us anyway is actually self-managing and was a few on-call employees that we cn just call up and say, Hey, can you go check out this problem?

Or you can go do that. We work with a lot of good tenants too. So, if we have a few good tenants that are in the building, we'll say, Hey, can you throw some salt on the driveway this winter, and we'll give you a gift card or we'll give you a certain amount. So, it seems to be really working well for us.

Sarah: Are you guys going back though, like every six months to check on it, or how is that?

Francois: Yes. So, we are visiting every six months. With the lock downs and things, it's been a little more complicated. Let's just say I did sometimes self-isolate while painting an apartment to make it worth the two weeks. But anyway, I figured it out.

She sends me and then I come back soon. Anyway, it's important to go and have a presence. I always remember. I can't remember who said that. It's whatever you don't inspect, you don't respect. So, you need to inspect your properties every once in a while.

And yes. So, we have teams there and installing cameras on Airbnb, you can keep an eye remotely on what's going on. I do pay tenants to spy on certain things. Can you send me pictures of things? And then as well, we have a handyman, we have a team of renovators, it's setting up your whole team there.

But property management was a big challenge. We had to let go of two different three property management companies.

Sarah: So, I guess you could self-manage if you're used to it and you're okay doing it and you plan on potentially going once in a while because you do want to at least do your fire and all those tests.

And hopefully you have somebody on the feet on the street to do that. What would you think is maybe the two biggest real benefits of investing in that area versus Ontario or versus somewhere else.

Francois: The cash flow, their relationship with the tenants as well. So, it's not just one sided.

So, a lot of people see, yes, cashflow, you can increase, man. That's really nice, but there's also the other side. So, you're not forced to become a slumLord, like in Ontario where you can't increase rent and then things break and I can't afford it. So, we'll just leave it. Then it just gets worse and worse.

So, that's what I like about it. There's one of our tenants, we doubled her rent, but we told her, yeah, we're like Christine, we fixed the windows. We fixed the kitchen, changed the floors. She has a new place basically, but her rent, her bedrooms. Yeah. So, that's one thing that is sad as well that we're seeing.

There's a lot of slumLords in New Brunswick, but like in Ontario, that's an opportunity to buy, fix the place. And just like our guests previously said, if you work with them, you can really make it a better place for them. And for us, it's great cash flow. It's still in Canada. So, we also invest in other countries, but in New Brunswick, still Canadian laws.

So, yeah, it's nice, safe, affordable housing, like Sarah says, I think that's the key. Like anywhere in Canada, if you provide somewhere that's clean and pleasant, people are proud of calling it home. It's just nice.

Sarah: Do you think it was the properties out east that really allowed you to create that financial freedom or was it the equity built in the Ontario properties?

Francois: More of the equity built in the Ontario properties, but because you need a lot more doors that the reach that we pulled out like 300,000 this summer from properties that we had for a year.

Like you can't get that. You could force appreciation and stuff, but cash flow 300K would take a little while to get it. 

Sarah: You do need a mix. I do agree. But on average, You've got 19 doors and you have other investors that you know either. What's the typical like cash flow per door? I know it's so general, but like just on what you're seeing, maybe as a range, if you're able to share?

Jennifer: So, I would say it's probably between one and 200 per door.

Francois: In New Brunswick? No, it's more than that. More around 400. Sorry. I deal with it on a daily basis. Jennifer likes her job, so she's keeping her job. I'm focusing on real estate. So, she chose to work.

Jennifer: I'll correct this, a lot of those are JV. So, we're actually getting half.

Sarah: oh, yes.

Francois: So, about $400. If we did not have a partner, because we chose that route, we're like let's do it. So, that, yeah that's just doable.

Sarah: What was the biggest challenge for you guys being, not in New Brunswick, investing in New Brunswick?

Francois: I'd say some of the cultural differences and that's something I was trying to talk about with Christine earlier. Even though it's still a Canadian province and all that, there are certain ways of doing things that are different. We're not accustomed to everyone like tenants, contractors, realtors, it's a much more relaxed, much more laid-back atmosphere.

People are friendly and nice. But for business we're Ontarian. So, chop, we need to get this going. So, it's hard, oh yeah, no problem. And it takes another week, that's an adjustment. You need to set your expectations differently.