Pre-Construction Roundtable

Nathalie Cloutier, Natasha Phipps, Jason Boccinfuso, Mat Frederick & Michael Richter
 
Sarah: Let's bring in some of these experts and investors that are really being successful, getting it out, doing the pre-construction strategy in different ways. What we wanted to do tonight is bring you a scope of all the different types of pre-construction that can be done so that you get different ideas and insights.

We have Natalie Cloutier from Ottawa and she does the BRRR strategy, BRRR stands for Build, Rent, Refinance, Repeats. And that thing's done some really cool things that we're going to talk about. She buys her own land and she builds her own properties, literally from start to finish.
Jason Boccinfuso, self-made REI millionaire at 23, established relationships with a number of builders, developers giving him an inside view of the process and procedures for both residential and commercial developments. And he's got lots of great projects on the way and opportunities as well for other investors.

Michael Richter, a great friend of mine as well, real estate entrepreneur, house collector, a world traveler husband, dad, speaker, and Double E properties. And they started out buying pre-built townhomes and a lot from Mattamy. You can get that perspective, but also he is an insider and works as well building some of these pre-construction. We're going to hear from him about that, which is going to be very exciting.
We've got Natasha at Phipps from Alberta. We're going to get a different perspective. How it all works in a different part of Canada, because this is national and we want to include all the different parts of Canada, but she's doing something very interesting where she's looking at town homes that are two income townhomes for investors to gain some good cash flow.

We're going to talk about that with Natasha and Mat Frederick with 30 years plus experience has started looking into a prefab and we're gonna get some insights on the benefits of prefab or also known as modular properties. Welcome panelists. How's everyone doing? All right.

Alfonso: Yes. Welcome aboard. Thank you.

Sarah: Why don't we start with the first question? What we're going to do is we're going to have different questions. We're going to have some questions that we're gonna ask everybody on the panel. And then we're going to have some questions that are going to be specific to what each person is doing. Why don't we go to Alfonso? Let's go around. And ask one question for everybody. Just so that everybody listening to this can also get a good grasp on your unique pre-construction strategy. I guess question number one is there are obviously many ways to do pre-construction. What is your specific strategy and why did you go that route? Why don't we start first with Natasha, let's start with you.

Natasha: Awesome. Thanks, Sarah. I'm excited to be here today. When we talk pre-construction I'm in Calgary, but this applies to Edmonton as well, but we think pre-construction, we often think of pre-sale condo buildings and the two to four year window waiting. And that doesn't work so well in our market because our market's not rapidly appreciating. So, you're essentially tying up your money for a long period of time and not seeing those large gains in property value.

It doesn't make as good of sense. But what does make really good sense is designing and creating purpose built investment property from the ground up. From start to finish, we are choosing where we want them to be in areas of growth and then creating a product specifically designed for real estate investors that we can have up and running for you within three to five. We can get that cash flow coming in. That's what Alberta is great for right now is positive cash flow. That's what our strategies make the most sense here on the ground.

Sarah: Awesome. You're taking these properties, you're creating cash flow by adding additional units. And then I think you're actually offering this to investors across Canada. Is that correct?

Natasha: Yeah, hundred percent. We have everything set up for our out of province investors. Everything from property management and the creation of the product from start to finish, we build legally sueded semi-detached properties and have the property management component built in and arranged and set up where most of my clients never even set foot in Calgary or the property. It works pretty good.

Sarah: Awesome. Thanks Natasha for that. Let's go to Natalie. If you can share what you're doing and why that specific strategy?

Nathalie: Sure. We basically build multifamily units, anything from a duplex to a fourplex. We're going to start going into bigger multis as well, but so far we've dabbled in these smaller multi-families. We build ourselves, we do a lot of this sweat equity ourselves. That's how we can determine the amount of cash flow we can get at the end. But it's all about the long-term hold and the long term cash flow.

We're hoping to hit our target cash flow by the time we're 30 years old so that we can both retire and live and then on the casual and then keep going into bigger projects if we want. But that's been our strategy where we find lots that are ready to build. And then we do either the single family homes or the semi detached buildings, and we add secondary dwelling units in them. It's a nice provision that we have in Ontario.
I don't know if you guys have that in other provinces. But in Ontario, it's a really cool tactic that you can do small multi-families without having to change the zoning into fourplex or something like that. So, that's what we specialize in. And yeah, so right now, basically our goal was just cash flow.

Sarah: Awesome. And the BRRR strategy on steroids is what I like to call that.

Nathalie: Yeah, pretty much.

Sarah: And Natalie was recently on my podcast, so we had a great interesting conversation about how she's been able to scale her portfolio, doing these very cool things. Awesome. All right, Mike, I know, you started off initially with buying pre-construction. And you've moved a little bit in a different strategy since then, but can you share some insight on why you started that route and maybe some background about it?

Michael: Why did we start pre-construction? When you zoom out, I look at real estate. How can it serve you? How can it serve a purpose? And that purpose, why we started doing it was based around our, why, what we needed in our lives to that point. To be honest, we didn't know a lot about it, partly it was by accident. We didn't know a lot about BRRR strategy, multifamily rentals, flips. We just didn't have awareness of that back then.

All we knew is, Hey, really? There's an opportunity. Let's get into it. But when we really drilled down on it, I wasn't so much interested in venturing out at that point because I had two very young children at home. I was working full time back then. I didn't have a lot of time. I didn't have a lot of expertise and investment.

I knew I wanted to attract tenants where I didn't have, where I wasn't chasing rent or I wasn't doing repairs and fixing up properties. So, I knew these properties from the research week. I attracted very good tenants. Second of all, we didn't want to get our hands dirty. Like I mentioned, we didn't have a lot of time.

Back then you could go to a builder. You could sign a pile of paperwork. You could walk out, wait about a year to a year and a half later and then close your property. And it was basically a turnkey solution. It was at that point, it was perfect for us for what we did. And remember, we weren't interested in cash flows.

We weren't interested in secondary suites multi-family, we were just interested in long-term appreciation. We were buying in markets like Milton right now, where we could purchase a property for about 400 K at the time. And now they're about 800,000 to 900,000. But specifically for capital appreciation and not for scalability. And that's why we no longer use that strategy now, but it worked for us very well back then.

Sarah: Absolutely. If you get a handful starting at four and now they're worth eight or nine, a few years later, that's definitely a great strategy. And I think you started selling some of them, so you can acquire more different types of properties now. A great way to get started. Again, Milton may not cash flow anymore. It seems like it's done well for you. When you start and there's lots of other areas that you will like, be that Milton but maybe five years from now or whatnot. All right, Jason, let's go to you and then we'll finish with Mat. But what strategy when it comes to pre-construction are you focusing on and why?

Jason: Okay, thanks, Sarah. Good to see you again. When it comes to pre-construction, I'm in the Greater Toronto Area, so I have a presence in a bunch of different cities throughout the GTA. And it's really been a great way to establish a war chess at the beginning. Rather than tying up my limited resources that I had when I started investing in real estate, I get into a lot of pre-construction because of what I found. I could achieve a hundred percent or more return on the money on the capital that I had employed in not too long of a time period. And the strategy that I employed was very simple, I would just buy in the way of development.

I would find where the development was headed to where all the population increases were headed to the industry, the jobs, wherever people, flocking to, and then I would race to go to those areas. And buy pre-construction and those areas. And the reason I did that was because the values went up a lot quicker.

For me at the beginning, it was a quick hit. I didn't have any money when I started investing and I'll get into my story later, but I had a very limited amount of money, so I needed some quick hits so that I could then take that. And redeploy it into longer-term poles to build wealth. That's really the big reason I did that.

There's some strategies that have been very successful on how to get to the front of the line and actually buy before members of the public stand in line for hours on end. There's actually ways to get in and buy even ahead of that when you understand the requirements that the builders and the developers have.

Sarah: Yeah, absolutely. You want to get into that? Like family and friends, a discounted rate. All right. Very cool. Mat, you've got some experience building and developing. But I also know that you really started looking into the prefab and a modular piece. And maybe you could just give us a bit of an overview on your strategy when it comes to pre-construction. And then maybe you could touch a little bit on that prefab piece as well.

Mat: I just started building sticks or building normal and infill houses. And I found my niche at about 35 house subdivisions, although I've built 113 houses on division. And when you build a house, you have to start in the middle, where you go vertically, then you have the visual part of it. And I was wondering, is there some way I could make the middle part easy? Like once the basement is done, Going in and going vertical and trying to, let's say, make that section glob easier to make it worthwhile to build one or two units. And again, for me, I like to build 35 units, but to build one or two infill, I find it irritating.

I thought if I can find a way to solve that problem, maybe the modular build. I remember modular is not mobile. Mobile trailer park is a whole different thing. Module just means you're buying a house that's been built in a factory in pieces. You ship those pieces on deck or on site. And then of course you can put a finish on the outside and of course you've finished the inside, but I wanted to know, is it possible to take the middle part where you have the HVAC guy fighting with the electrician, fighting with the plumber and blaming everybody below them here and there. Can I avoid that segment?

That's why I started looking at the modular, because that portion is built in the factory. At the same time, I was looking at four story buildings because I've bought four story, 50 unit condo buildings. And is it possible to do that in the modular world? And I've discovered that it is, and I've been looking into it very seriously. And there's lastly, even some places like Kitchener Waterloo.

Now, they're looking at triplexis or you can have a house with two units in a coach house in the back. It's now looking at maybe a modular for that smaller coach house, because yes, you can make money with your house in your basement suite, but if you can get a third suite in there, a coach house that might make enough money cashflow for you to maybe put your kids through university. Again, I'm looking at all three of those, the multifamily and a quick way to build an infill house as opposed to the larger 35 house subdivisions.

Sarah: That's recent that they're opening that cash flow. The majority of Ontario now. It's a great opportunity for investors to look at additional cash flow. Awesome, perfect. Thanks for answering question number one, Alfonso over to you.

Alfonso: Before I get to the panel, I want to put it out to the REITE club community, put a "Y" or an "N" to this question. Yes or No. Have you bought pre-construction before? "Y" obviously for "Yes" and "N" for "No", but put in there, why, yes or no? If you've bought pre-construction before. That's awesome. We have a lot of that, there's going to be a big variance. I personally never bought pre-construction. We bought after the fact for the brand. I'm really interested in learning this question. I'm going to go in the same order that Sarah did.

We'll start off with you, Natasha, and then we'll go in the same order, but can you share with us the highlights or a recent pre-construction project or deal that you've worked on, some of the highlights, some of the lowlights maybe that come across you're a seasoned vet. There's probably less of those, but they still always come up. But yeah, some of the highlights, lowlights of a recent project. And share some details about that.

Natasha: I have a recent win and a recent not so win, in pre-construction the thing about pre-construction is there's a lot of time that can go by. And I had a pre-construction closing last spring in Langley that I was very excited about, but time was just not on my side for this one. Pretty well, everyone I know, made money on those units, but for whatever reason we weren't able to assign. We had to close, which was fine. And then it just, the market really just shut down.

And so that deal we didn't make a dime and my money was tied up there for three years. And the risk that we were worrying about, which I think is something to be very aware of, is when COVID came out and we had to close in April of last year. We didn't know where property values would sit. And it's a very realistic thing to be aware of that if property values fall below what you have paid, now you are at risk of having to come up with additional capital to close your deal. Thank goodness that did not happen. It closed at the price that I paid, though.

I did not appreciate it at all in those three years. And then we had to sell it and so on and so forth. I wanted to keep it, my partner had decided it wasn't something that they wanted to do. That was one that just didn't work out, but we have had some slam dunks with pre-construction as well. The most recent one I'm working on that I am very excited about is like hot off the presses.

What you guys were just talking about, getting in very early at the friends and family type stage, which I just, we had this release today, which is in Canmore. It's outside of Calgary in the mountains in a very vacation rental zone. It's zoned for Airbnb, which is impossible to find in a national park area. And I'm very excited about that one. I'm not jaded about it, but you'll have to be aware that it's not necessarily a slam dunk either.

Alfonso: I've been to Canmore, which is beautiful. I know Sarah snowboarding definitely. Yeah, it's beautiful out there. And with the Airbnb zoning, that's amazing. That's pretty cool. Awesome. Thank you. Thank you, Natasha. Natalie, we'll come to you with a recent project that you've completed from the pre-construction side, some of the highlights, maybe some lessons that you learned along the way that you can share with the community.

Nathalie: Yeah, sure. A highlight to me is the numbers. It's always about the numbers, right? The numbers are good. It's a highlight. One fourplex that we're building right now, it's still under construction, but the numbers are really great on it. And we got it appraised for a million dollar value and it just went up since COVID we got that this appraisal came in last year and obviously with the market post COVID has been insane.

That one's been really good. Our construction budget is about 650 on it. With this one, we'll be able to go and decide how much money we want. If you want to pull out any money at all, if you want to be a little more leverage or if you want to be lower leverage and have higher cash flow in the deal.

This one's been really good. But at the same time, it's also been difficult. We've had a lot of challenges. It wasn't a more urban core area. A tighter spot. And it's just been challenge after challenge since the beginning of the construction and my husband and I manage everything ourselves. We're both architectural technologists so we do the design and the construction drawings from the beginning. And then we take over the whole project management.

Then my husband gets in and does a lot of the work sweat equity wise. We're in there and there's a lot of risks, but at the same time if you know what you're doing, and if you have a good team behind you, you can basically tackle any risks, but it can be stressful.

It tests you as an entrepreneur and as a couple, definitely. Just to give you an example of the recent thing that happened on site they were doing the stone and it was like minus 20 degrees here. They had everything tarped up. And they were heating it with a propane tank and then somewhere along the line to pull paint and caught fire.

And then they were under the tarp sole. The guys kicked out the tank outside the tarp, and then it was just spitting fire. And my husband was so anyway, thankfully we had a fire extinguisher on. That was my first lesson learned, always have a fire extinguisher on site and he was able to pull it out to take it out.

But yeah, that was a little stressful because we didn't know if the tank was gonna explode or anything. Yeah, the crisis averted though. But no, if you have a good contingency budget and a good team behind you, you can get through it, but it doesn't unless the process that I would say to anybody who's looking to build it's not always as easy as I might make it seem on Instagram.

Alfonso: Isn't that the truth, right? It doesn't look good. And the next time that I hear anybody in the real estate world say, I'm putting out a fire, I've been putting out fires all day. I'm going to remember that story. And you actually had to put out fires that day. Yeah, for sure. Mr. Richter, we're getting Michael, we'll come to you next then. And I know, again you did mention you've shifted the strategy now from the new builds and a little bit different than maybe what are some of the lessons that you pulled from that the new construction to the pre-construction, the prefab that you learned while you were doing that strategy into what you're doing now, maybe some lessons that you can share with the community or from I know some of the projects are not so recent anymore. Something that you learned that you've applied to moving forward.

Michael: That's a great question. One thing I learned is that when it comes to new build construction, you have to look at risk and control. They almost go hand in hand. So, when we're buying our new build construction we're buying them at a steep discount, typically 50 to a hundred thousand dollars under market value. And then I could buy them in a year and a half. So, I only have to put down a small deposit structure. And I didn't even afford it at the time. Typically buying these, but a year sometimes the first two, we bought clothes within six months, two years, it was perfect. We got addicted to it.

We did more and more. And then, the last two we bought new construction. They were delayed over a year. There was a one year closing and then the builder held it back over a year. The builder kept delaying it. They had to compensate 7,000 bucks as compensation, but they had trouble selling them because this was high speculation.

A little bit more speculation than I thought. There are a number of variables and the builder kept delaying and delaying. And some of it was because of unforeseen circumstances, but two years down the road, I don't know what my financial situation is going to be. I can plan, I can predict, but there's a lot of things that come up and we're closing at other properties in the meantime.

Our financial picture was changing. So, two years later, Yeah, sure, we made a lot of equity. We didn't want to back out of that deal, but we had a lot of trouble and a lot of challenges closing on these. We weren't using partners back then. We're closing. We didn't have joint venture partners back then. We're closing out our own names that gave us a lot of stress at the time. We still did it. But what we like about doing BRRR and controlling the process and adding value is that the timelines it's thought that the risk is less necessarily, but the timelines are maybe in four to six to eight months and we're in control of that construction process.

And we can see a lot of this stuff that can go wrong versus buying level ground, and getting site plan approvals, and all these other things from builders that we can't control. So, that's one of the things I took forward out of that is that the less control you have, the more risk there is sometimes and builders have many different intentions. It's not always what's in your best interest. It's what's in their best interest. So, that's a big takeaway that I took.

Alfonso: That's great advice. And more of the process that you can control more like Natalie said, making that big wind, that's the highlight making those numbers line up. Yeah. Thanks for sharing that. And Jason, I know on a lot of the REITE club community has worked with you and the project out in Niagara, on the lake, I know there's even more coming down the pipeline. I don't know how recent that is, but yeah, what's some recent projects with pre-construction that you've been working on?

Jason: Really great stuff coming on board and really some things to support what the other panelists have said, mistakes to avoid. Remember new construction, different from resale to a degree prices are completely arbitrary on new sale. Remember there's no guidelines and that the builders and developers are working with, they just make it up. They can put whatever price tag they want on the property when they're launching it.

We got to make sure that we've done their research and that when I look at pre-construction opportunities, All right. I'm evaluating it against the resale market at the same time. So, I want to look at those two comparisons and the real trick is where you make a lot of the money is in being able to buy a pre-construction property for under what the resale market is selling for.

Now, if I can do that mixed with buying it in the way of development. I'm actually investing in total. And the lays and things are bad if I'm buying pre-construction to move my family in, but they're fantastic. If I'm an investor, I'll give you any details about Aurora on Yonge street, Kaitlin corporation, fantastic group.

I purchased two penthouse condos on Yonge Street and they were supposed to be ready in 18 months after the purchase. And it was seven and a half years. Okay, not their fault. They ran into soil condition issues on the site. But at the time when I purchased that 340,000, they were worth 950 when they were ready.

Time, because I bought in the way of development ended up being a massive windfall for me. Some of the current projects we have coming up, I focus on being in the way of development and making sure I'm always first. Okay. So, what do I do? I just follow the Gautrain. Look, I'm not a genius investor. I just follow where the government is dumping all of their money into industry. And I raced to get on their back and buy everything I can in that path. And the longer it takes the better if I'm first of all. And then first to that site, we talked about friends and family. I want to know how to get into the founder's club and buy even before the friends and family come to the table.

If you're doing all those things, there's actually six rounds of a builder's launch. Okay. Many people don't know that. They just think, hey, it's pre-construction, you walk into the sales office and you buy, but if you're buying through the sales office, by walking in, you're actually in the sixth round of releasing. Even if it's phase one, there's founders club, friends and family, VIP registrants, VIP brokers event, public launch, VIP grand opening. Then the sales office opens. You talk about hedging, your risk and risk management. If you're buying six steps before the public, I'm buying $150,000-$200,000, sometimes $250,000 less than the public.

If I'm doing that mixed with buying it in the way of development, I'm first to the market, I got a heck of an insurance policy to hear if the market turns or slows down or we run into things. And if it keeps racing, I'm tripling, quadrupling my money by the time it closes.

Alfonso: Yep. Great advice and spinning what Michael said about the delay in closing, but from the investor point, if it's not in your personal name you're working with other partners are investing that delay actually might be a little bit of a sweeter return at the end. Awesome. And yeah, we'll round out with Mat. Mat, what current pre-construction project that you're working on a pre-build or you putting together those modular houses, like Legos or maybe it's not even in this country, maybe it's somewhere else. What construction project are you working on?

Mat: Right now, I'm building a triplex and beliefs. I got one more month to finish, which is interesting. It's a whole different kind of build. I'm not building modular buildings here in Canada, but I've been investigating it for a long time and I've been watching existing buildings. As somebody asked a question a few minutes ago with regards to the cost of the modular, is it less or more modular is about 15% less than the actual price of a regular house to build, but you have to build it right. If you do it wrong, if you get the foundation right. The person who's sitting in the basement, it's going to cost you 10 times more to solve that problem.

Now, the fact that it costs less is not because it has less material, a modular house has about 30% more material than a regular house. Because if you consider, if you have a house that comes with modules, each module has a Florida seat. That's what, and then the next level up has a floor and a ceiling. You have almost two floors.

There's way more material in there in order to ship that product. But the savings will come because the moment your basement's done it takes about 21 days to cure. But the moment it's done that house can show up. And now three days later, they can button it up. Let's add an extra month to that. Two months after the property is dropped and it's just dropped in one day. It can be finished.

What I'm building a house. It takes me about four months from the time the basement's done to actually complete a house. I'm looking at four or five months and I'm paying more for a lot of stuff. I'm paying for my financing. I'm paying for insurance and paying for keeping people there, labor I'm paying for security.

I'm paying for a whole lot of things in order to maintain that property. It's much faster to get. But keep in mind, it's being built three months before you actually have to bring it on the ground. Can you repeat the stages again? Okay. Basically, if I'm going to build a house, I obviously have to talk to the city.

I have to get my permits in. I have to get my drawings. The good news is with modular companies, the drawings happen there, you sit down with them and pretty much they pull out templates, but you can modify those things. And that's about 5,000 bucks for the architectural part to be done. You're going to submit it the exact same way as you would for any other house.

If it takes about a month, let's say to get the basement, obviously semester, come in, dig a hole, pop the basement and go through all the footings and pendings. When that's completed, then the house drops in one day. If it's four segments, it's all done in one day and then you need about 30 more days to button everything together, attach a connection, everything. Plus about 30 more days for everything else to be done.

Keep in mind that when you have a modular home, it does not come with a garage. You have to build and at the same time, you have to do your landscaping and a driveway, like everything else when it comes to building material, by the way, just really quickly for supply. If you order whatever you order, whatever you have on your contract. You're going to pay, that's what they're going to sell that property for. And it's only 80% done.
If their supplies go up or go down, it doesn't matter if their pricing goes up and go down for them, it doesn't really matter. And keep in mind that they buy everything bulk. Okay. I don't have to worry about sourcing materials for 80% of the property. Yeah, it can be fast.

Sarah: Perfect. I think that's some good insight, Mat. Thank you for that. We're just from a time perspective, what we're going to do is we're going to do one quick question for everybody. Each question, a different question per person. I'm going to go ahead and then Alfonso will ask the question. I'm going to start with naturally out of curiosity when you're looking at a piece of land, whether you're going to be buying it or not, what are some of the criteria that you want to consider that you can share with us? In order to say, do I want to actually go ahead with this piece of land or is it better to walk?

Nathalie: Yeah, sure. Definitely the utilities that are provided, if there's no water and you would need not do it. We've done septics a lot. We're not afraid of those, but the soil needs to be good. The last fourplex we did last year, it's still under construction. But that one had terrible soil. And so the septic field cost us a bundle. I wouldn't say I wouldn't do it again. But it wasn't fun. It ate up a huge chunk of the cost.

If you can get a soil test done to predict that, and then also will the location, how is your value going to be if you're too outside of cork you know, if you're too far out, even with the values going up, we have to factor in the fact that the materials are going up as well. You have to make sure that you'll be able to still build lower than your value rate you have to. The bank's only gonna lend you for 80% or 75% of that value.

Make sure your market, that you have the demand versus the supply, that's all right. Do you really have to know all these things? If you don't know your market, don't jump in. I always say, when you make an offer on a property and these days too it's kinda hard to make an offer with conditions on it because there's a chance you might lose it.

But if you're not a hundred percent sure that you can build what you want to build and that you can recoup all your costs, then let the deal go because you're taking a risk. So, I always say, if you can't add these two conditions of getting financing approval, it doesn't have to be the whole process, the whole major approval, because that can take a lot of time, but at least just a letter saying that you can be approved up to a certain point. And then getting a satisfactory building permit.

Always put that condition in because we did it in the last project. We got cocky, thought that everything was going to be fine, and ended up finding a hidden provision in the zoning that we didn't know about. And it's still okay. We were able to do a minor variance and get it all done, but you definitely need to have that pre-consultation with the city, don't hide things from the city, be straight up, tell them what you want to build and have it in writing and make sure that they say, okay, you're a good to build what you want to build on it. If not, then a lot of this is a common mistake that a lot of people make they're going to be stuck having to resell the land. And then sometimes depending on the market, you might lose money on it.

Alfonso: Yup. Absolutely. Due diligence is not just a catch phrase. Jason, we're gonna hear a little bit more about your story. Later on when we got to our success stories, the question that kept on coming up and I saw it asked a bunch of times, how do we get on that founder's club list? How do we get to that front of that line? Now, if you want to share all the secrets of big numbers.

Jason: It's interesting. I've always been into real estate. It's not something you have to keep to yourself so you can share it with everybody. And there's enough to go around. What we've done is we've just created a network of the builders and developers in the Greater Toronto Area, Golden horseshoe. And just put a network together and said, look, there's gotta be a better way of doing this whenever we launch a project, why don't we support each other? If I'm going to launch a condo project and I build myself, how do I lean on the other builders and developers to take a unit or two each, just to support the project, get it go on and hey. Every time, for example, Kaitlin launches a project I made for two units where it doesn't matter where it is, I'm in for two.

What we've done is we created a founder's club and we can share that with people. It's no big deal. There's not an unlimited amount of deals there. I don't want you to think just cause you get information on a site that you're going to be able to buy it because there's obviously a limited number of supply or else the whole project would be sold at that level.

But you can go to www.frontofthelinebuilderprogram.com. I'll type it here because I typed it incorrectly the first time. You can put your name on a list. And if there are opportunities will come up, can't guarantee that you're going to be able to get them, but at least you start to keep a price of what's coming up all throughout the Greater Toronto Area, Golden horseshoe, whenever we do launches people get access to them, divide them, and I'm talking $50,000, $100,000, $150,000, $200,000 or more, less than what it would be to the public. And that's just the way we've always done it, which is great. Now when there's bidding wars everywhere. Everywhere else, there's bidding wars, you go and you pay $200,000 over, or you can go here and actually save money off of the price.

Sarah: Amazing. I think we're all going to go ahead and sign up for that. If you want to type it in with the correct crate the correct way, and then I'm going to sign up for it.

Jason: Did you just get on a list and as they come up, but you just get information on it. If it's for you, just say, hey, I'm interested in if there's any available, you can pencil yourself in. That's also, I'm going to take that.

Sarah: Awesome. Thank you. All right, Mike, let's go to you. Now, you are also in a way you're a bit of an insider because you're still active in the trades, working on new builds. Is there any insider information that you can share with us?

Michael: You know what? I always say, if you don't know the industry, know somebody that does, because I spent a lot of time, a lot of my history and construction. I do more on management, like on the high level. But if you're buying these, you have to know what's going on behind the walls, because some of the stuff I see it's unbelievable. These sites move at a fast pace. These are custom builders. They make money through turning out, widgets through volume. The stuff I see going on behind walls is absolutely unacceptable.

I'm talking about the big builders and small builders too, because they try to cut money off of the corners. It's luck, the reality is it's one thing. If you're just flipping it to make profit, you're buying it low. You're turning it over. You're selling it. It's not as advantageous to really follow it along the way. But if you're buying it for a long-term hold, like we were at the time and you're going to have long-term tenants there, the longer you hold a property, the more problems are going to experience that have had errors in the beginning. You don't want to just buy a property blindly, and this doesn't mean you have to buy it in your own backyard, but have boots on the ground.

Have an agent you can trust, have a home inspector. They can go in there. Have somebody who has background experience go in there and look at it before the walls go up. It's a great opportunity that you just don't get. If you're buying a resale project that's already built. So, go out there and take a look at it. And also when you're buying this to go out there and check with the land, you wouldn't believe how many properties come up for sale and they're marketed as, hey, it's six months away.

They're going to be closing, but there's a conservation area sitting on it. It still hasn't had any approvals yet and it hasn't even gone through the city hall yet. And they're trying to market this as a very short closing period. Go out there, drive out there, use Google maps, get somebody to go out there for you to take some pictures and really find out what you're doing, because what the reality is for closing that we found and what's marketable.

Remember the majority of people are homeowners. It's not like what Jason was saying, where you're buying yourself time. That's what we do as investors typically. But homeowners love quick turnaround. That's why there's such a big gap in price because people have a quick turnaround. A builder's going to tell you six months a year, when really it was like us, they're delaying us a year.

They're compensating us, but they're buying themselves time. So, really I'd say that's the biggest thing you could do from working in the trades, go out there and see what's going on in the land and then contact somebody if you're not sure and say, hey, does this make sense? This timeline? And then that'll give you a better idea of what you're closing.

Alfonso: I love that advice. And I want to make sure that I echo that out there as the team that you surround yourself with is so important. And as I'm scrolling through the attendees tonight, I see so many REITE partners on the call as well too. Shoutout to Claire and Amiel and to George Dube, mortgage agents and brokers that are amazing as well as the accounts. Getting all that lined up and being ready to go so that you can be nimble and out there and is so important having that team on whatever they're doing out there.

Next, we're going to come to Natasha. I know you've done so much in this industry, in the pre-construction and all that kind of stuff. And, you're like, We're going to close it and it just rolls off the tongue. Oh, we weren't sure, but it worked out and you can call and we talk about it now, but maybe someone that's looking at buying their first pre-construction or we're looking at, getting on that founder's club or getting together.
If you can summarize it in a shot, a little shot glass, what's some of the experiences that you'd like to be prepared for, because it's going to happen nine times out of 10 or more often than not. And something that maybe you've built systems around that to be prepared for those that are getting into this.

Natasha: Two kinds of main things that I would point out one is obviously we're talking about a little bit, but do your homework on the builder. There's a wide range of builders out there and there are some that I absolutely will not work with or have stopped working with, for various reasons. And that was, earlier in my career, I wish I would have asked around and just asked around.

Ask people what they think. The amazing part about the world right now is we can connect with investors from across this whole country and that can save you a lot of money and a lot of heartache if you just ask around and don't be afraid to ask those questions. The other thing, at least in Alberta, I don't know if this is the same everywhere.

I know it's the same in BC that every builder's contract is different. And so just because you bought one pre-construction does not mean that another contract from another builder or in another province is going to look anything like that. I always recommend a contract review. They're not necessarily going to change the contract for you but it is very good for you to understand what it is that you were actually agreeing to and what could happen to timelines, to deposits to what if they changed materials?

All of those questions could come up during a construction process. Really understand your contract and know what is in there. And then the other thing is, make sure you're aware of whatever taxes are involved in this pre-construction opportunity and they could also change like my BC opportunity that I just spoke about during the time that I was waiting for closing the taxation for owning a property outside of BC had changed.
That changed our numbers substantially. If we wouldn't have had that. We actually would have made a little bit of profit at least. You have to be prepared that those numbers could absolutely change. And then the only third thing I just thought of that I always do is any new development. I want to know what is happening around that development. What other roadways or trains are coming to the area that is either a positive thing or a negative thing.

Sarah: Absolutely, very well said Natasha. Thank you for that. My last question for you just when it comes to what to look for from a piece of land, we talked, I think Michael brought up the environmental piece and where there's the railroads, there's all those things like, can you just walk us through maybe when we're looking at piece of land, potentially some of the obstacles that we might face if if the piece of land is in an area that might be close to some ecological stuff, or, you know what let's go through some of that, train tracks, railroads what are some of the potential challenges that we should have the foresight to think of?

Mat: Okay. If it's close to a railroad, there might be a setback that could be 30 meters at the same time. There might be spills from railroad train, car spills. We'll have to do a phase one, but maybe even a phase two environmental, and then maybe a phase three to clean up. If you're next to the factory, that could be the same issue as well.

If you're next to the farm land, you don't know if they had pesticides, herbicides, fungicides. You don't know if they had farm animals who had vaccines. Now they pee that stuff out and that's into the water system at the same time. You have to look and see if there's rivers on the property, because the different ministries that look at those things so Christians, you might have a conservation authority who's looking at that river. You might have a slope, you might have to do a slope analysis. You might have to see if the bank of the river is at the same time. Do you have any sort of overhead wires or if you build something it's going to be blocking someone's microwave talent.

Also we need to see if you're next to a highway, if you're next to a highway, then the ministry of transportation is in. If you've got administered potential you have she hadn't rail, which they're a glorify company. They've been around for a long time. They have a lot of power and obviously we're having to have a say in what you do then all of a sudden, some that can take a short space of time becomes a long space of time.

Somebody has just asked the question. If you're building a property on a slab, how long would it take to do a multi-family building? I built a 24 unit building, three stories on a slab. It took me a year at 1.8 years. That one that we saw in Montreal. That's when the team went out, which took about five months to build.

Five months modular to build a three or four story building, as opposed to 1.8 years to build. I just really quickly, when it comes to modular financing, might be an issue that you may want to consider. See a bank is okay with giving a builder tronches money coming in as the house is being built. If 80% of your house or 80% of your buildings are built in a factory, a bank has an issue with giving me.

That whole issue of how to finance the property is going to be a major conversation. And even if you're building a house, there's going to be a fire separation. How was that all being dealt with? Okay. Again, a modular fire separation financing and for land, how many ministries do you have to talk to, or have the say in that piece of property? Is that a regional road or is it a city road? Because if it's the region now, if you're dealing with a smaller moving entertainer.

Sarah: Awesome. All right, great answers guys. Great answers, Matt. And I will say if each of you could just respond to all panelists and attendees and just provide your contact information. And then just take a quick look if you haven't responded to some of the questions that were addressed for you please do throughout the night and thank you so much.

Alfonso: Don't forget the virtual networking afterwards. We're going to, hopefully some of our panelists can stick on and ask those questions, but awesome.

Sarah: Absolutely. Thanks so much guys. It was a pleasure of having you all on and thanks for your insights.