Francois & Jennifer Lanthier
Daniel: Our next guests who are also playing the role of host this evening, co-host Francois and Jennifer Lanthier. Francois and Jennifer Lanthier are both active in the corporate world and they're juggling a very busy family. You got three kids, right?
Francois: Two, we have a cat but.
Daniel: They're very active, and they keep you busy. It hasn't been very long that you guys have been involved in real estate. What is it? More than a year, less than a year? How long has it been?
Francois: Really five years, but in the last 18, 19 months. We've gone really young at buying sprees and growing massively.
Daniel: In that short period of time, you've been able to recently, what was it, the November or October you retired from your nine to five corporate job?
Francois: Yes.
Daniel: It's about to do the same when you move.
Francois: Yes.
Daniel: She's still going to be busy with the REITE club, but she's not going to have to get dressed and go to a nine to five job.
You've quickly grown your portfolio and you have some actual properties in New Brunswick that you're actually moving there.
Francois: We just were attracted by many things that cost the cost of housing. A house there is not even a quarter of our house in Ottawa. First thing, and then a University. Our son is going to be 18 in a few months and heading to University in another year. It's just perfect for us and being close to most of our investors.
Daniel: Let me ask you some questions here. And you remembered the theme tonight is property management. That doesn't mean all the questions have to be about that, but we're going to turn a lot of these questions around to property management.
We heard from a New Brunswick lawyer about some particularities for investors investing in New Brunswick. I'm going to ask you the question as somebody who is investing in New Brunswick from your experiences. Are there any differences to be aware of when investing in New Brunswick as opposed to other provinces and especially coming from other provinces?
Francois: Yes, Jennifer?
Jennifer: I think the first thing is that the speed at which things go is completely different than in Ontario. I think that we want things to happen yesterday, where I think that in Atlantic Canada. It's more like within the week. I think that you have to get used to the speed of how things go.
There's also the way that people work, which is just, it's not a bad thing. It's just different that you have to get used to working from a distance. We are getting used to that whole zoom mentality, but you have to get used to doing your inspection on zoom. You have to work with your contractor on zoom. You have to work with your realtor. A lot of things, you have to be able to feel comfortable with doing it from a distance.
Francois: And then even laws are very different. That's one reason why we love investing in New Brunswick and the tenant laws are very different.
In Ontario, we have a tenant that's been in an eviction process for 19 months and there is no end in sight, nothing. It's just whatever, while in New Brunswick, the tribunal is awesome. You can get someone out in a few weeks if they don't pay or trash the place. We just love that, but there it is a double-edged sword.
In Ontario tenants tend to be more loyal. They'll stay longer while in New Brunswick they don't stay as long. They don't have to give as long of a notice. And there's like month to month leases, which is not very common here. And there's something called a damage deposit or a security deposit, which is different.
You don't get first and last month. That's something to consider. So, we often like the first and last month. Okay. It gives us a little bit of money too, I don't know. Invest in appliances while here it's a damage deposit that goes to the tribunals. You don't see it. Then some of our investors were like, where's the last month's rent?
I'm like, there was no rent last month. They paid it last month and that's it. Yeah. So, that's a little bit of management.
Daniel: Okay. What about for example, in Ontario, you're limited in the percentage that you can add from year to year in Alberta, there isn't something like that. Does New Brunswick more like Alberta or more like Ontario that way?
Francois: Like Alberta.
Jennifer: You can increase the rent. They do ask that you increase the rent only to market rent. You have to make sure that you're within a certain range. But a lot of the places that we purchased at market rents are below market rent.
We're able to increase some quite a bit. And we actually explained, we have the conversation with the tenants and explaining to them some do leave, but then you're able to get someone new in at market rent.
Francois: That's it. And that's the nice part is it's a conversation. Look, okay. We are increasing rent, but here's what we're doing for that as well.
We're fixing everything that the landlord did not do. And that's probably why he did not increase rent. And unlike other provinces, you're not forced to become a slumlord because you can't increase rent. That's the rent increase we're getting in Ontario. But property taxes have gone up a lot. Yeah, New Brunswick they're expensive, but they're not that cheap in Ottawa, Cornwall and the cost of water. And so, there's a lot of benefits.
Daniel: Give me an example. Let's say you buy a single-family home and I don't know, I don't mean the exclusive part of the mountain, but a nice part of, let's say the equivalent of Orleans in the mountains. What would you pay for a single-family home there?
Francois: We don't buy single family homes. We're not the best, but around, between two and 300,000, you could get something at night, maybe closer to four.
Jennifer: Yeah. We just purchased a house that's 350,000.
Francois: But it's a duplex and it's 4,400 square feet. It's huge but it's not the regular house. I'm not too sure we buy multi-families.
Daniel: You bought something for, what did you pay again? You say?
Francois: 350 yeah.
Daniel: What would your annual taxes be on that as a resident on that 350?
Jennifer: The property tax?
Daniel: Yes.
Jennifer: It's probably going to be about 5,500.
Francois: Which is much more than Ottawa. Closer to a million. We pay about the same.
Daniel: If I buy that same house and I'm going to rent it, I'm going to pay double tax. You're saying I'm going to pay $10,000 of taxes per year on that.
Jennifer: We're paying owner occupied taxes at the one.
Daniel: I understand, but I'm trying to find out what happens if I want to buy many properties in New Brunswick, because we bought seven properties in Halifax.
Let's say, I want to go and buy seven properties or eight properties. And all of them are going to be rented. And you say for one house, it would be, say 5,000 Bucks but if I'm not occupying, it will be doubled $10,000 of taxes on that property?
Francois: This one's not a good example because like I said, this is an oddball property.
Let's say we use a fourplex that we have and we pay how much property taxes around 6500 for a fourplex. We have a five flex we're at around 8,000. This minus just because it's big and anyway. It's not a good example at all, but yeah, it's not cheap. '
Daniel: If I buy, like you say your fourplex there and I'm going to pay $10,000 a tax that's almost a thousand Bucks a month just for the taxes. Ouch
Francois: But you can charge good rents. You can get the 1% rule and more we had in Ottawa. For that fourplex you'd pay like $1.7 million or two, and you'd pay about 10,000 in property taxes. Now that you're at that price range and rent would be a bit higher than Monkton, but not that much more. And you can't increase it and you can't evict people. And so, on and so forth.
Daniel: That's where I was. Okay, good. We've gone right around the Bannon, but that's because that was one of the things I wrote down, double taxes on income properties. I thought it means if we're going to keep me out of New Brunswick, but with this whole conversation here and you're pointing out differences in prices, differences in whatever.
Finally, it's not really a big deal because yes, you pay less for the property. You're going to pay more on taxes, but then the rent we sell LP to cash flow, which is very hard to do in Orleans.
Francois: Cash flow and appreciation is different. We heard prices have gone up a hundred thousand in New Orleans where we are.That's more like 300,000. I guess it's a different market. If you're buying and selling, maybe like flips and stuff, there are pros and cons to different markets.
Daniel: Any tips or tricks to investors listening on the webinar this evening, or we're going to listen to the recording later on. Any tips and tricks for people from anywhere in Canada, Ontario, let's say who are interested in doing what you're doing, which is buy properties in New Brunswick.
Jennifer: I would say, talk with a lot of people who are already doing it. That's a really important thing, especially since, like I mentioned earlier, you can't just go to New Brunswick and go and visit your properties.
You have to go into quarantine for two weeks and it is realistic to do that and really have a good team that likes to build a good team that you were very confident with because that's always important in real estate investing, but it's even more important if you can't physically go to the property.
Francois: Exactly. Like we had a call today, our coin up the washer is not working. Well, you can't really head over there. Then I have to call someone. Can you find a technician, let the person in. You need a solid team. Any distance investing, you need a solid power team. You need friends that live in the province.
I saw one of our new friends there, Christine. You need people that can head over and take a look for you. We're investing in Detroit, Michigan, so same thing. You need a solid team. Because that's just the nature of things and tenants need quick service. The same rule applies everywhere and you can self-manage at a distance.
Jennifer was saying everything's done on zoom. And it's possible, but you do need somebody who is over there.
Daniel: If some people are interested in working with you guys your information is right there. They can contact you. I know you're the kind of person that likes to help people.
And of course, you're always looking for people to partner with you and stuff like that. Here's the picture. There's the name. There's the email address. Contact Francois and he will be of assistance.
Francois: Yes, thank you.
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