Ryan Bond, Kristin Wood and Melissa Shymko
Alfonso: We're going to do a little bit of a round table, you know, maybe I'll have some questions specifically for Ryan, Kristin, Melissa. Make sure to put the questions in the chat as well too, like you saw Francois is going to be monitoring that. And we'll try to get some questions from the group as well.
Ryan, we're going to start out with you. Obviously financial planning and mortgages, that's your game. That's what you do. You must see a lot of investors, newer investors, seasoned investors, all different types. What are the most common mistakes that you see some investors make?
Ryan: Well, first of all, I want to say thank you for having us the REITE club here tonight. I think this is fantastic. There's a really good turnout. I appreciate being here. One of the biggest things that I've found most newer investors don't do is put a plan together and attach kind of alluded to that a little bit.
I started in the financial planning world about 21 years ago and did the whole mutual fund thing and you know life insurance and retirement planning for clients until I read "Rich Dad Poor Dad" and realized that a larger portion of my clientele, they're doing all right. They need their RSPs. They need their TFSA. They need all of that, but they weren't getting wealthy off of that. And so that's when I pivoted and went. How do I figure out how to plan a retirement around real estate? That's got to be included in that.
I really took a different direction, got a mortgage license and started doing that for clients. And I find that a lot of people now. They just want to own rental properties. I want to buy rentals and I'll ask them, well, how many? I don't know. Well, how much income do you need to bring in from these properties and what age do you want to retire? I don't know. I just want to buy rental properties.
Let's take a few steps back. Let's ask some questions and figure out exactly how many properties you need under your belt and how we're going to get there. And over what timeframe and it's very simple. We take a look at all of that. That's one of the biggest mistakes that I see not setting up your own personal property, right? From the beginning, your personal property, it could be your bank. So, I always advise clients to have that re advanceable line of credit on there. You don't need to go apply to pull out your equity. It's already there. You're the boss of that.
The other one is 30 year amortizations. I think they're a huge part of building your real estate portfolio. And oftentimes somebody will come to me with four or five, six properties and we'll take a look at them. And it's kind of like building a brick wall, if you're not measuring and doing it right from the beginning. And all of a sudden, you're five feet down, you look back and this is a big curve to it right. And you got to go back and fix things. That's what I see a lot of times they're not putting the 30 year amortization and they're not doing the re advanceable line of credit. And that's really one of the three big things .
Alfonso: Absolutely getting that plane lined up, looking at your own property first. And sometimes there's a lot more work unwinding, all of that then actually just starting out speaking with the professional and getting those goals lined up. Great advice. So, I'm going to come to Kristin next and I'd love the background. I love the hats there and it's really cool, awesome. And you're in the property management world and a lot's going on obviously the last few months, almost a year now, pandemic job losses, pipelines, no pipelines. You know, what do you see happening in your world of property management specific to the market that you're working?
Kristin: Well, the last year has been very interesting. What we did see as we saw a shift when at least in Calgary here, when we were in full lockdown from about March that's when we stopped everything shut down, no one was moving, no one was renting, no one wanted to leave their house. Everyone was at home.
Normally our market is from March to about October. Well, everything got pushed. We saw a huge surge of renters moving in May. We skyrocketed between May and June, and we've kept that trend up all the way into December, which is amazing because we always Peter off in about November, December, and then you start to kick back up into March.
What we've seen here is it's just been consistent since we've kind of opened back up again. It hasn't really slowed us down in the winter. I mean, we're also very weather dependent here. Not a lot of people like to move when there's three feet of snow and it's minus 30 out and we've actually been really fortunate with the weather as well.
We're seeing an insane amount of movement in transitioning people from condo living attached to talked about this a little bit into bigger spaces, because again, people are working from home. They need home offices, they need extra space and you typically can't get that in a condo. A lot of people are moving to the suburbs purely because they can get more space for more, for the same amount of price.
Alfonso: I'm assuming because it's a little bit more competitive because there are less units or rentals available for those clients right? And creating that demand in those desirable areas where you kind of get your elbows out and a little bit more room, a home office, a basement, and maybe a yard as well, too. Those are probably going to be really quick when those units are up.
Kristin: And that's exactly what we're seeing. You know, for the same price from a tenant's perspective, for the same price that you can get a two bedroom brand new condo in the heart of downtown. You can get a three bedroom duplex with two and a half baths, a yard, potentially a garage, you know, for around the same price. Without the need of having to go into an office and be downtown, why wouldn't you do that?
Alfonso: Obviously, that caused a lot of competition. Next, Melissa in Edmonton. And I know I saw in the chat there, the Edmonton Calgary rivalry, I see it from hockey, right. The battle of Alberta. And I don't know if that's the same in real estate, but I know it's out there with all the rivalries we got and through through the network, the community and all the Facebook checks. We've heard that you've been referred to as the addendum queen. First of all, how do you get a point to the queen of being the addendums and tell us a little bit more about that. I know you want to protect yourself with legalities, but yeah. Can you unpack that a little bit for us?
Melissa: First of all, thank you so much for having me. It's really exciting to be a part of this. I've been investing in Edmonton for many years, Edmonton and the surrounding area. And I've also been working with agents for a long time and as a realtor myself. My background pre-assessing, this was actually in law. I love paperwork, my actual lease. I self-manage all of our rental properties. My lease is actually 12 pages long and my representation is a mirror of that.
I'm a firm believer. If you don't have it in writing, it just doesn't exist. So, I will literally put the smallest details and I cannot tell you how many builders I've worked with that literally will tell me, Melissa, we don't ever do this. This is a lot of paperwork for us to process. We don't want to deal with this and I'll say, well, you can want all sorts of things, but my expectation is we're going to complete this agenda to support what is expected and everybody's happy at closing. And that really is just my number one goal is to make sure that everybody is happy to close.
Alfonso: That's so important. You know, a lot of people say, if you don't put it on social media, it's not real, but it's like, if you don't put it in writing, that's the real, it doesn't exist because you know, a handshake, unfortunately these days really changes very quickly. You have to have it in writing, protecting yourself and obviously with the legal background and you saying, I love doing that. That's awesome.
You probably make your partners and the people that you work with very happy. One of those, I don't like getting too much in the paperwork, make sure we have the professional review it and to do that. That's awesome. A 12 page lease that's cool there. We got some comments during the chat. We have like the standard lease in Ontario, which is, I think, a 12 page introduction.
Melissa: Can I get a copy of that?
Alfonso: Yeah, definitely. Guys, we're going to put Melissa's contact. Maybe who can get Melissa a standard of that contact. She sounds excited to read that, but it was really where you stick on you just for one more second here. I want to talk a little bit more and unpack the actual strategy that you use. Obviously, you have that 12 page lease once you're doing that, but what is the primary strategy that you're utilizing for your portfolio and
Melissa: You know, similar to Natasha actually it's just been over the years when the opportunities present itself, it's really understanding this market. We don't have mountains here, but we have a nice valley and really affordable real estate and there's lots of money to be made. The strategy around that is looking for the opportunities, understanding the area and knowing how to really implement that. I actually have properties spread out throughout Edmonton and then our neighboring cities that are on the cusp of Edmonton's border, like Leduc, Stony Plain, and Spruce Grove.
We have those properties in our portfolio for a long time. You know, understanding the tenant profiles in those locations is really what base is my decision and having self-managed all of our real estate for the entire time. I have a really strong grasp on what the market can hold. What type of tenants to look for how to control that interaction between landlord and tenant, as well as owner and property manager. And so it's a lot that has been strategizing based on tenant profile.
Alfonso: That's wonderful. And I call it one of the rare breeds that you're self managing. And that's not a lot of the reason why a lot of investors get into real estate. It's not to manage the clients and collect the rents and that kind of stuff. Kudos to you. God bless your soul. 12 page leases and self managing that takes a lot of work. And most people are going to turn to somebody like Kristen that maybe wants them to make. The other properties take care of it and, you know, be very organized. For someone that you know, I haven't personally invested in Alberta or out West, and maybe I'm thinking about it.
Obviously, I can't, you know, travel is tougher, it's harder. And you know, I'd want somebody boots on the ground to kind of, you know, take care of things. So, Kristen, out in Calgary in the areas that you're working. What's unique to the Calgary market, property managers, you know, a lot of workers in oil and that's what we hear out East here, right? But maybe what you let us know, you're working with these tenants and clients all the time.
Kristin: Well, I mean to kind of piggyback off of what Natasha said, we have a very young demographic, right? Overall I think our city's average age is like less than 40. It's like 38 years old. We have a very young city average and a lot of people pre COVID and probably post COVID because we can't travel right now. Want the flexibility to travel and purchase something. Walk you down, you know, you can't go traveling for a year. You can't go backpacking in Australia. I think, especially with COVID when the world kind of goes back to normal, that's the first thing a lot of people are going to want to do.
They're going to sit on an island or travel the world, so they don't want to buy right now, right? Especially the younger demographic. They're looking to rent and they want the bang for their buck. They're looking at new construction. They don't want to look at a condo that was built in 2002 that might have a little bit more space by has, you know the old Berber carpet and the white appliances, right? We're getting to that generation where they want shiny and new. They want that new. Want the newest phone, the newest tech. They want everything new now.
Getting into new construction sounds appealing to them. And to know that, you know, they can lock into a one-year lease or a two year lease is amazing. And the other benefit, at least in Calgary here, in property management, we are very cognizant of people's jobs. And the fact that they might be relocated. From a tenant perspective, when we are getting people that are coming into the city for work, a lot of them have the potential to be uprooted again.
Having a management company that can set something in place that safeguards the owner. If that does happen, which we do have in place, we call it a job transfer clause enabling both the owner to feel safe that they're protected and the tenant's ability to also leave if that does happen. And that's more and more common in Calgary, in a good market right now. We're not getting a lot of people from outside, but it still happens. I have a couple clients right now that are going through it that are being relocated. So, that's something huge that we have to deal with, especially in Calgary.
Alfonso: That means you don't want to be tied down to that kind of free lifestyle. Pick up your stuff, move on to the next. You know, obviously, family's a little bit more rooted, but if you're single or living with a friend, a lot more movement involves yeah. Being able to kind of determine how long and how good these clients are going to be is definitely a big thing. I'm going to come back to you. And, you know, we talked about mistakes that realtors or real estate investors make, and they're not being prepared.
There's all different types of money, lending things out there that, you know, we can't apply for, obviously with Chris and Melissa, they have their portfolios, maybe someone that's new ish has a couple of maybe their own primary, but what can a new real estate prepare, like what is something if I want to invest now in six months from now a year from now, like how long does that take and what are some of the things that as a newer investor you can do? That you can prepare getting all organized to get the best financing so that when it comes time to getting that 12 page lease or having Kristen be that property manager I know that my financing is secure as well, too, as part of my duty.
Ryan: That's a great question. I mean, we start off with a pre-approval for everybody, but it really depends on what they're looking to do. I've got many clients that are looking to do a flip and you know what that right there sends off a light bulb in my head that I'm going to be going to this lender over here. But really we want to set them up going back to the goals and setting up a plan for them. And sometimes, you know what, they're not quite there. They might need a co-signer. But we'll take a look at their financial picture. And from there, we'll be able to determine exactly what they need to do to get things set up.
Sometimes it's credit, you know, there's a lot of different things. The reporting on the credit bureaus nowadays that people don't really know about. We'll take a look at their full picture. Down payment is another one, especially when you're buying investment properties. They can't be borrowing. We've got to set that up and take a look at where the down payments are coming from, but it's really just getting a good pre-approval in place and understanding their plan and their goals going forward.
Alfonso: Absolutely, great advice and definitely somebody that they'd want on your team to make sure that you have all those in place. By the time you do get there, you're not looking silly and you're able to actually close. And that's the biggest thing in our industry is being able to actually close on that property. There's only so many times you can work with people before finding something to come through or have to delay again. And that doesn't last too long to make sure to get that right.
Ryan: That's right. And one other thing to add on there too, with everything that has happened with COVID is we've had a lot of job interruptions. Making sure, you know and people don't really love doing this, but getting all the documents up front, reviewing their T1 generals. And we're right in that timeframe where we're getting those prepared and to get, if we were forgetting to T4 and it's not matching their employment letter, you know there's a story there right? Which is COVID.
Getting all that information upfront and you know, there's a lot of work that the lenders do ask for. It's not, you know, for my benefits, it's getting the right information in place so that when they're out shopping with that realtor, they're not wasting anybody's time. They're ready to go right to pull the trigger.
Alfonso: Just a quick follow up to that. I've heard it, you know, Ontario. And even a little bit about the West that maybe there is that approval. And then if there's a longer closing, some lenders will reapply or ask for reapplication or most up-to-date documents. Are you seeing much of that, Ryan?
Ryan: Yeah, for the most part, a lot of them will ask for that. And especially with the new construction we do have a couple of lenders that will look up, look at everything upfront, which is ideal. And so they're not doing a look back and you know, judging from the strength of the borrowers will know where to place that file. One thing to add is, you know, we've got the financial advising licenses in place, but the mortgage licensing is there as well. Through my financial advisor licensing, I actually have access to lenders that mortgage brokers. It's a bizarre thing to think about, but the one lender does some crazy stuff for us and any other mortgage broker doesn't have access to them unless they're dual licensed.
Alfonso: There you go. I love that unique ability. How can you be structured differently having a power team member that's going to be on your side? How is that special access? A great tool to have. Melissa, I'll come back to you and it's in there and obviously, you know, the Edmonton Calgary and I think they got the better hockey team in Edmonton now, but why is the Edmonton investment? I know I'm upsetting all the Calgary guys. Sorry, I'm not a fan of either, but anyway the Edmonton market as an investment you know, what are some of the things that, you know, if somebody is thinking about coming out to out West, obviously we hear Calgary. That's like the main hub and then Alberta, but what makes Edmonton a good investment and why do you like it? For an investing market.
Melissa: Well, believe it or not, we were actually the capital of Alberta. Just don't point that out. All joking aside, Edmonton is an interesting city and Calgary and Edmonton are very different. Calgary definitely has a lot more head offices and a little bit more white collar Edmonton. You know, we are, it's very common to see the denim tuxedo. You know, that's a lot of what people are like in Edmonton. It's maybe a little rougher on the edges sometimes. I've mentioned that unique city in that over the last while when we've seen it definitely a dip in our oil and recession type economics.
We've had a lot of boosters in our economy. Major downtown infrastructure has come in with our ice district, which is a brand new ice arena that was built in a pretty rough part of downtown. And as soon as that was annexed, there was a huge construction that came up. Our downtown skyline hadn't seen a new tower in decades. And we saw major groundbreaking which kept a lot of people employed in conjunction with that.
We had major infrastructure development with our LRT, which is our Light Rapid Transit going to boroughs of the city that it just had for decades and decades. Tons of new infrastructure that came in really helped to carry people through those dry spells of work from the oil patch. And there's multiple projects that are being built that are continuing to keep that alive. I think for Edmonton, we have the jobs and we've got that strategy.
That's been helping us along and there's still quite a bit coming through. I know personally, just from the real estate that we own.
I haven't had vacancies, which is very nice, even throughout all of COVID. I haven't had a single vacancy and we've even actually had rental increases, although small, you know, every dollar counts when we're looking at the bottom mine. So, that's been nice. And again, I'm not saying everybody's experiencing that nobody can see it's a thing, but it's just strategizing and buying properly. So, I think that's a little bit about what makes us different and why Edmonton is certainly a viable place to invest.
Alfonso: Great comments. And I know again, once the downtown structure, the arena and everything, the shopping center. The buildings around that definitely gave a big revitalization and going back out to Calgary with Kristin, I know there was the talk of a new arena, not a new arena, the mayor, all the stuff going on out there. And it is just a matter of time. I do believe right there that the building is what that was from the Olympics right? Probably early 80's. That they had built that.
And you know, Natasha mentioned that off the top really quick from the Exodus from downtown to the suburbs. Where are you seeing the best places to rent? Is it still a little bit from what Natasha said, the downtown people have? Or kind of doing it again, going out into the suburbs to get that a little bit more space.
Kristin: It is exactly that it's the suburbs. People are looking for more space, more than ever. You know, Natasha and I work really closely together and every property that she brings our way in terms of these new constructions, we did duplexes. They are hot off the market. They are quick turnovers. We work really closely with the investors. We have an investor state of mind and we just try to focus on getting them rented for the best price possible. And like Natasha said, they have some really great incentives if you have the right builder which really helps.
It helps with us to do our job as well, knowing that, do everything we can to get the property rented while taking advantage of all of these things that the developer is giving you. That enables us to rent these properties really quickly. I mean, they are all in the summer. We've had absolutely no problem.
I'm renting them out. We actually have a lineup of people typically that are looking to rent these properties. These suites of duplexes with the basements are the hottest thing on the market right now. You know, I've had to turn away great clients because we didn't have enough. So, that's been the hottest thing and it's been great.
Alfonso: A quick question here from the group. And thank you guys for seeing so many of the questions coming. Thanks for participating and paying attention, but really quick vacancy rates. Edmonton vacancy rates, Calgary, Melissa, we'll go to you first.
Melissa: I believe our vacancy rate is sitting somewhere between four and five right now.
Alfonso: Okay and Kristin?
Kristin: I think we're sitting around 6% right now.
Alfonso: Okay. Awesome. Thanks for the questions. So, yeah, we'll go around the horn here. One more time with everybody and just maybe some tips, advice, something that you'd like to leave with the REITE club community. Maybe it's in general, maybe it's about Western Canada and Alberta specifically. What great piece of advice to look into use for the year ahead in 2021 now? We'll start with you Kristin.
Melissa: Can you repeat the question? I'm reading the chat question.
Alfonso: Yeah. That's awesome. And we're going to continue with that. Definitely the networking we're going to get those questions asked, but so a piece of advice, something that you could share whether it's for the Calgary market specifically about the rental, or just some advice for 2021 that you can share with the REITE club community.
Kristin: I think that if you're going to invest in Calgary or Edmonton or Alberta in general, and you're out of province, you just really need to connect yourself with the right team. Asking the right questions, do you have, you know, if you're dealing with a realtor, do they have someone that they recommend for property management? You know like Natasha said, what kind of investor, what kind of investor incentives are the builders. You know, do you have a property management company that is an investor, is proactive in the investor relationship?
I know a lot of property management companies don't treat their investors any differently than what we call the accidental land right? And it really is a very different relationship and the people are treated very differently in a good way, because there's a little more hand holding. So, I would say just asking the right questions, having those conversations and not just trusting people blindly. We're always open and willing to do a video conference or a phone chat to answer any questions that you have. And that's what we're here for. So, I would just say, ask your questions and do your due diligence before you invest in anything.
Alfonso: Absolutely great advice and exactly why we have you here tonight on the REITE club is transparent, you know, people that are doing the business the right way, sharing that info, looking out from that perspective of that investor. So, Ryan will come to you for advice for 2021 Western Alberta investing financing. Give us some advice for 2020.
Ryan: I think that comes to my mind first and foremost is taking advantage of these rates and putting your money to work for you. And getting it done quickly, get in the car. When I'm sitting down with my clients right now, we're calculating just a mortgage pay down. We're seeing double digit rates of return on their money. And who knows where the stock market is? Is it at its peak right now? Are you going to get those double digit returns? We're seeing interest rates under 2% for rental properties. Again, take advantage of that while it's there because I mean, I don't have the crystal ball, but who knows what's in our future.
Alfonso: To get them while they're hot, right? That's awesome. And the other thing you mentioned the stock market, they want to go into it, but never have a game stop kind of issue if you're investing in real estate, right? That I was a kind of cool news item last week, but all right. And we'll go to you Melissa. Some advice for the REITE club community in 2021 that you can leave imparting some wisdom with the REITE club.
Melissa: Sure, absolutely. I think that just to point out, definitely talk with people who have experience in the locations that you're working in. I know between Natasha and myself both of us pride ourselves on having the team. You know, that's running on the ground, the people to support you, whether that's a handyman, a property manager, lawyers, everybody that you need to actually make that transaction happen and just support you throughout is definitely very critical.
Talk to the people who are actually doing it and are in the trenches. Having a feel for what's actually going on currently is critical because what happened 6 months ago to 12 months ago to 24 months ago is different from what's going on now and could change tomorrow. Having those people who are really in the trenches in going through it and just understanding your numbers, making sure that the numbers that you're looking at are accurate and double-checking your data.
Alfonso: That's awesome. You want those people around you supporting you? It's the ones that tell you not to do the deal, because maybe it's not the best one that you want on your side and avoid those traps, so that you can go do deal number two in three and five and 10 after that. Ryan, Kristin, Melissa, thank you so much for your time.
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