Newfoundland

Nevin Hollet

Daniel: In the meantime, we're going to be speaking with Nevin Hollet. How are you doing, Nevin?

Nevin: I'm doing great. Thanks for having me this evening.

Daniel: So, Nevin graduated from Memorial University in 2005 with a BA business administration and a minor in economics enlightened me about Memorial University?

Nevin: In St. John's.

Daniel: So, that means you are a Newfoundlander?

Nevin: Absolutely.

Daniel: Okay. I'm going to ask, because when we talked last time to somebody in Whitehorse, Yukon, you were from somewhere else. The guy in a Yellowknife was someone from somewhere else, but you are from the island.

Nevin: I was born in Ontario. But I moved here when I was a kid,

Daniel: All right. Okay. And then you've been for four years in a row, you were among the top five agents in Atlantic, Canada. So, think about that for a second. I'm sure there's a good market in St. John's, Newfoundland, but there's also places like Moncton and you think that your chances of being a top agent are, so you must be really good.

Nevin: It's a good track record. I'll say that, but yeah, we've just been able to take advantage here locally of some good lead generation models over the years and have those built and compound, and we were able to get some great results.

Daniel: Alright. And I know from having read something about you, that you're a 24/7 student, you're like a sponge looking for knowledge all the time, but you just like to learn all the time, but tonight you're going to be on the teacher's seat.

We're going to be learning from you because we have some questions for you. About the market and how things are going in Newfoundland. And you're the first person to talk to our group ever about Newfoundland. So, welcome to Atlantic, Canada webinar regional spotlight on Atlantic, Canada.

Thank you for being here.

Nevin: Thank you so much for having me. It's an honor to be here with everyone tonight and I'm really happy to share about my market because I really feel that we have some great opportunities here in this market, given the market data. I wanted to be able to cover some of that tonight.

Daniel: Okay. So, the first thing I'm going to ask you is when I talked to you on the phone last week, you told me about this couple of the move from Oakville or Burlington. Please tell me about that because that floored me.

Nevin: Yeah. So, we're right now, we're seeing a tremendous amount of migration into the province, particularly out of Ontario.

So, they're our greatest export for many years. In the seventies and eighties, we sent a lot of people to Ontario. And then, nineties and early two thousand, a lot of people to Alberta in the oil patch. So, we have a lot of Newfoundlanders living elsewhere in Canada, but in particular, the group in Ontario, many of them are now ready for retirement.

So, they moved as early in their careers in the late, in the seventies, early eighties. And now they're getting to the point where they're at the end of their career and they're looking at retirement. And I don't need to tell this group about real estate prices in Southern Ontario.

And they're sitting on a pretty crazy nest egg and property, and we're looking at retirement years and many want to return home. They still have roots here, family here in the south, there was such a disparity in pricing. They're able to sell their property, buy it here for cash.

Still have a massive pot of cash that they can use to invest in property or invest into the capital market. Or just live it up in retirement, whatever takes your pick. And so, we're just seeing a tremendous amount of that. And in particular, what's very funny is that properties that really seem to be a real premium put on ocean view or to be next to a pond or a river larger lots three quarter acre plus somewhere with a bit of space because they're coming out of such large metropolitan areas.

And we're just seeing it consistently. I think that if you were to talk to any busy realtor here locally, we all have anywhere from 2 or 3 to 10 clients each and we're working particularly out of Ontario.. I think that we'll see this year, probably when it's all said and done, have one of the largest years for migration in our province.

Daniel: Yeah, because those people you said they sold their house for a large price. They bought something a hundred feet from the ocean.

Nevin: Daniel I actually did a close today. It was funny, I had to go and get keys to one of their relatives not long before we started the session.

And that couple, they basically sped up their retirement by close to 10 years. Okay. So, they're in their early fifties, they sold their property in Cambridge. They sold their property for, I don't know what it was a hundred and $160,000 above asking or whatever. They were able to pay off their remaining balance.

They purchased a house here for cash. Plus, they still have a significant excess amount of capital. And she's going to start a new career completely. Something that she wants to do. And he is able to effectively transfer his skills and employment here. And so, now they went from living a life of corporate jobs and stuff to now mortgage free, pursuing more passion projects and effectively, enhancing that process by probably a solid 10 years.

Daniel: Okay. Wow. So, again let's look at a section of St. John, not the one where they, yeah, the castles, but not the one on the wrong side of the track, but a nice neighborhood in St. John, Newfoundland, what would somebody pay for a 1700 square foot house from the eighties or nineties or something like that roughly?

Nevin:  Yeah, high twos or low threes. High, two hundred, low three hundred effectively here in the city. Like our average sale price is still right around the 300,000 mark. And you can, to give you an idea of this property that I mentioned there, that was a two story that was close to 900 square feet per for the basement was only partially developed, but it was about a hundred feet from the ocean.

It was less than 20 years old. It was in great condition, propane fireplaces, and we closed that for 350,000. Okay. It's excellent. Like you're getting into, once you start anything here over $500,000, you're into a real premium product and a real premium product.

So, you know what I'd call typical housing. High twos, low threes, more quality. You're getting into high threes, low fours. And then when you go 500 plus or move into more of an executive.

Daniel: Now, if I buy that house for 325, let's say, am I going to be able to cash flow based on what the rent is going to be?

Nevin: Absolutely. And what I would say is that in general I have never really seen even in the height of our market. And this is one of the things I want to talk about. Our market's actually down in pricing, but even in the height of our market, I've rarely have ever seen negative cash flow property, basically every property here for the most part.

Is cash flow positive? We don't have a lot of cash cows there because of zoning. Issues here, like effectively in the eighties. A lot of our zoning got whitewashed to just be, you don't have one straightforward, detached single dwelling. So, we don't have a lot of great multifamily opportunities here, which can be great cash cows.

But, we refer to something here as a two-apartment home, which I believe elsewhere, you might call a duplex where there's two units in one dwelling. When the structure and that's common here and they will usually run you after mortgage, after property tax, after insurance, positive cash flow of, anywhere from, $150 to $450 a month.

So, that's generally the area. So, for us, it's not about here for our investors. It's not about finding you know that cash cow per se, or that diamond in the rough, it's about finding quality real estate. And to me, the biggest item here is versatility because we are going to be a bit of a boom and bust market.

Okay. So, we're really driven. We're an oil market, that's our number one industry is offshore oil and gas. So, it's funny, like right around Canada prices have never been higher. If you go back our last 10 years, 5 of the last 10 years, prices are actually higher than they are now. So, we're actually just starting our recovery.

Our peak pricing was 2014. And I'll give you an idea from the bottom pricing in the last 10 years. Our pricing is only 5% to 9% depending on the area. And it still has to go up another seven and a half, eight and a half percent to reach pricing that we were already at.

So, we've got great capacity in our market. So, it's more about finding quality real estate that will pick up that appreciation. Okay. Because everything's cash flow is going to be okay. So, it's more about the game that is not just casual here. Reasonable cash flow plus giving the opportunity for that appreciation.

So, then obviously you can turn around and access that capital and leverage it further.

Daniel: Okay. Now you notice that they've added some squares here to the screen. That means somebody is trying to tell me that our time is up, but I don't care because I'm going to ask you two more questions. Number one, how is the tenant landlord, tenant board say in your province compared to other provinces, is that landlord a favorable?

Nevin: It's tenant-friendly, but probably a little more balanced.

We have a relatively new landlord tenant act. Let's say within the last five years, it used to be extremely tenant friendly. Now it's probably more moderate, but still more friendly than landlord friendly. And a couple of things there Francois mentioned first and last month's rent.

We don't do that here. It's the first one rent and a damage deposit. And our damage deposit is capped at 75% of rent. So, it's usually 50% of a monthly rate, but it's kept, you cannot legally charge more than a 75% damage deposit. So, that's one of the things in the act. If you're serving notice to have somebody a tenant leaves a property, it's a 90-day notice.

So, it doesn't matter even if it's a month to month lease. And you will see plenty of months to month leases here. It's still a 90-day notice from the landlord, whereas it's only 30 days from a tenant. No matter which way you look at it, everything seems to be more tenant favored, but it's not. It's not quite as arduous as some other jurisdictions.

Daniel: Now, if somebody, again, who is listening to this or who has listened to the recording, wants to know more about investing in Newfoundland, but mostly in the area where you are. We just saw your email address.

They should contact you because obviously from what I said earlier, the province, the market and you are obviously very successful at what you do. So, if you want to invest in Newfoundland, the first thing to do when you take action is to get a hold of Nevin and then take it from there. Right, Nevin?

Nevin: Absolutely, and thank you so much for having me, and I'd be happy to help anybody or have a further conversation about what the opportunities may be