Sarah: For us to really have that person that can grow with us and vice versa and that accounts for all of the difference experts that we're gonna have on the panel tonight. They are all award-winning and in their specific professions, they're mentors, authors, sought after speakers and many are our partners as well. They've helped us like I mentioned, scale our portfolios and get to that next level.
We have an accounting professional, George Dube from BDO. From an insurance standpoint, we have Alex Bell from MyCor Insurance. We have Ryan Carson from Carson Law, real estate investing, lawyer. Mortgages and financing, we have Claire Drage from The Windrose Group and Black Jack Contracting, Jon Tenbrinke for all of your conversions and things that investors really need to do. And Jon is the expert for the construction piece.
We are going to talk about questions we should be asking. There's many that we don't even know that we should be asking. We're going to pull back the curtain and bring you a lively round table discussion with our panel from finance, law, accounting, insurance, renovations, and everything that we should be figuring out before we go ahead and scale too quickly, or start buying too many properties and have to backtrack. Laurel, why don't you ask our first question?
Laurel: This is to George. Are you ready George? George, what percentage of your clients are real estate investors or developers?
George: In my case, I don't know if I interpreted the initial questions correctly or what we're required to talk about, but I thought it's really important that your professionals are dealing with real estate investors, developers, et cetera. While, I don't know that there's a specific percentage that's quote, unquote required. It needs to be a significant percentage. I tell my team members, if you're going to consider yourself a specialist. I want to see at least 40% of your clients in a particular industry, or don't tell me you're specialized. My particular case, I don't know the accurate statistics for this.
I would suggest I'm in the 90ish percent area above my 40% figure of course, but that admittedly includes someone that may have their operating business because they are an accountant, lawyer, mortgage broker, plumber, consultant this side or the other thing, but they all still invest in real estate. I want to look at the whole picture, not part of the picture. If I do that, I'm pretty comfortable. I'm 90ish percent.
Sarah: Thank you, George. All right. Next question is for Alex. Many questions that we don't even know that we should be asking, but here's one that we've had requested for you, somebody that is looking at insurance, isn't the same insurance for their primary, principal resident, or should they look at a different type of insurance if they are renting?
Alex: Thanks Sarah. First of all, it's great to see everyone again. It's been a while since I've been on the forum with The REITE Club. Sarah and I we're working today on a new deal for her. Congratulations on that deal. This is a common short concern for new investors. I guess for tonight's conversation, we'll break this down to newer investors and that's one of the reasons people join The REITE Club.
They're getting the value and learning how to do all the systems. The answer to the question is insurance for your investment property is considerably different than your principal residence. There are many factors involved. This is a metaphor I like to use. And I think I've even heard George say this at the previous events, when you're starting to build an investment portfolio, you need to think of it as a business.
From accounting, from an indefinitely from the insurance perspective as well. You need to separate that and keep your insurance exposure or risks at arms length from your personal equity. The answer to that question is no, they should not. Yes, they are considerably different and you need to make sure that you have separation between the both of them.
Sarah: Thanks for the answer. Actually just a follow-up question on that, because I know like you said, we were just doing a deal together. I think you offer something unique as well, right? For investors, can you like in 30 seconds or less just mention the difference between what you're offering versus another insurance company that might not be focused on helping investors.
Alex: The insurance appetite or marketplace right now, the appetite for this class of business is very tough right now. We are deep into what's called a hard market right now. The reality is I'm sure a lot of the seasoned investigators have found out that A lot of their renewals are not being offered in certain provinces. Insurance carriers are getting off risk in certain cases by reducing coverages, increasing deductibles.
There are coverages that are very unique to an investment property that transfer the risk back onto the insurance carrier. Coverage is for a very high level, Sarah. Every insurance or investment property shouldn't contain the following flood. insurance, sewer backup, tenant, vandalism and vacancy endorsement. Those are four key coverages that you need to make sure are included in your investment property.
Sarah: Awesome. Thanks Alex. All right, Laurel.
Laurel: Just before we go to Ryan. Alex, you used the term and I'm not even sure I understand what it meant that it was a hard market. What does that mean in insurance terms?
Alex: In layman's terms, Laurel is the insurance marketplace is no different than the stock market or the real estate market. Everyone's heard me say on previous podcasts, insurance companies are in the business of making money. Forget all the commercials in the marketing and all that. If they're not turning a profit in a particular class of business, then, it goes in cycles. Property casualty, we'll call it investment property and it doesn't matter what the strategy is, single family duplex, multiple, student rental, RTO, whatever it is.
The carriers are, they're claiming hardship. When they look at their actuarial losses and there's in its simplest form, moral it's dollars in. They collect the premiums versus dollars. They pay out in claims due to weather patterns, various things like that, wildfires, floods. They say they're not making money and their rates are reflective of that. Most investors on this call, most seasoned investors will find that their premiums have gone up. And not only that it's been a challenge to find insurance on new deals and in certain provinces.
The last piece on that, Laurel, is from what we're hearing from our insurance partners. We'll be coming out of this probably the summer of 2023 things will go back to what they were. Again, some of that is placed on the pandemic as well.
Laurel: Like you said, I do remember you said that before, cycle.
Alex: It's a cycle.
Laurel: That's great, thank you. Ryan, what's one question that you wish your class would ask you and they don't?
Ryan: That's a good question. I would probably say, the question that we don't get asked or that kind of happens to the lawyers because we're at the end of this process is, when should I connect with the lawyer? Is it a good idea to connect with the lawyer earlier in the process? Like when we're talking to our realtor, talking to our investor coach ,talking to our mortgage representative because I think everybody who's on this call, like all the advisors to the real estate investors offer their own unique piece.
I think a lot of real estate investors, especially as they start off and then when they try to scale and really grow and multiply them, their holdings would probably find it smoother. They would probably likely do better because they'd be more efficient at what they're doing. If they talked, not just me earlier in the process, but probably all of these advisors earlier in the process as a group or as a collective, like you need to have your good coach, your good mortgage rep, your good realtor, your good accountant and your good lawyer, good contractor, you're good insurance.
I think we get used to it, but we get used to an assembly line. Oh, I need to find property. I'm going to go get my realtor. Oh, I need to know what I need for a mortgage now or what can they get approved for? Oh, I'm going to go see Claire. Oh, I better talk to my coach because I'm pretty close to securing a deal. Let's make sure the terms are there. And then, George and I usually get kicked around at the end. I think it'd be great to be involved a little earlier cause here's another thing that happens for me because I'm kinda like I'll use the sports analogy. I'm like I'm the closer in the pitching rotation for the blue Jays. I'll show my bias here.
I'm Romano and I'm trying to close this deal for my client, trying to close off the game while I'm only able to close it with whatever my team's left. And so what I'm getting at is if the terms of the deal are such that I don't have a great game to work with while I'm only going to be able to work with what's there. But if me and the other advisors are all talking earlier in the process with the investors, then one thing that you are able to do is get our real estate investors.
In a better situation, get themselves ahead of the pack, get them winning the game, so to speak as I gave in the sports analogy. I think we can do that more collectively at the out-front of the transaction before it's firmed and before you can't make changes or back out or modify so to speak. That would be a question I would say. When should I talk to the lawyer or the power team? I wish clients would ask that question more often so we could help earlier.
Sarah: That's a great point. And I know we've been on some calls with the mortgage broker and Claire's team as an example yourself, the accounting team and George and the investor and figuring out, okay, do you incorporate, how are you gonna do your next deals. Then you strategize, it is so much easier to do it from the start, because even just a question like, should you incorporate, you're going to have a different conversation with George, Ryan or Claire, and it'll all make sense, but they might be looking at it from a different standpoint. It may make sense to do it from maybe a legal standpoint, potentially from a tax standpoint, but maybe not from a financing standpoint, depending on what the plan is.
I think it's genius to say, especially because this is a small industry. This is a small world. If you work with a good team of experts, they likely know each other and have worked together on many deals and schedule that time so that they're all on the same call. They all understand what the goals are. But I think that's very well said, Ryan, so yeah awesome.
Claire, next question for you, we'll ask you the same thing. Is there a question that you wish that people would ask or something that you wish they would do that you can share with us today so that we ensure that we ask you or your team?
Claire: I think there are so many things. I could go on for like hours on the questions I hoped people would ask. I think that one of them would be what could potentially delay my closing? And Ryan touched on it with the timing, et cetera. Let me give you an example. When you buy a principal home, your closing date is Thursday, March 24th. And every property you've bought closed on time and it's a principal home, but you decided you want to buy eight rentals this month. And you all want them to close on a Friday. It's the last Friday of the month before a long weekend. It's two weeks' notice for example.
There are going to be circumstances when it doesn't close on. Having a bit of a contingency and prepping as much as possible before that it could be things like the borrower was created the problem as in it's a quick closing cause that's how I got the deal under contract, but you didn't speak to your lawyer to see if they could accommodate it because you're not the only client in the planet. That's just buying a rental property that needs to close on Friday, for example.
Have you aligned out, can we get appraisals? The lender onsite, et cetera. I often think, if it doesn't close on time, what can I do to prevent that? It could also be that you suddenly change. If I make changes to the purchase agreement and put it in a corporate name or add a joint venture and they want to in their corporation, do you need to know? Yes, this study was on the day of closing and finding out that you've changed to a different corporation.
The last person that found out was the person giving you the money. Now, we have to redo everything because they needed to get new instructions. I would just say what could impact my closing, not closing on time, because if you understand your backup plans, don't organize your demolition crew to go in at one minute past noon or six o'clock closing date. Don't get your new tenant to move in at nine o'clock the next morning, just in case. And don't close on a Friday. It could be another day of the week than sitting out, and don't close 20 on the same day.
Laurel: I'd suggest don't close on the first of the month. You can possibly avoid it.
Alex: Some people are so organized, Sarah Larbi, that they have their decoration team and everything's all lined up, ready to go. The day of closing.
Laurel: Jon, you're up next. Here's a question for you and I bet you and I know that you wish people would ask you this. Can I get all this done for the money that I have available to pay you?
Jon: That would be a fantastic question to ask. The problem is, as the world has changed a lot in the last two years, including obviously the renovation businesses, most people understand that I get five or six notifications a week about price increases on materials and stuff like that. It's almost impossible for us to keep up with expecting the average person to keep up, but having an opening on his conversation from the beginning of what your desired budget would surely go a long way to your results that you want a lot faster.
There's nothing worse than going through a whole shebang of renovation plans, duplex conversions, and then finding out we have a $40,000 budget when you couldn't buy the materials for that. Having an open and honest conversation about budget upfront would sure save everybody a lot of work and it'll make people a lot happier in the end.
It's one of those things that people are afraid to discuss, because they think that they've said they're wrong numbers that are going to get overcharged by a contractor while I guarantee you. The number you say is nowhere near what the contractor's going to say anyways. Say what your open budget is and that way we can either educate you or we can figure. If this is going to work or what needs to be adjusted in order to make this happen. Sometimes it's just a matter of changing selections a little bit. Sometimes it's a matter of changing how you approach the whole renovation, but that would be a fantastic conversation to have right upfront.
Laurel: I would imagine it has a lot to do with unrealistic expectations. It's just that people think they can do a lot. Even if they did it themselves, they probably couldn't do what they wanted to do. It's just as you say, things change, especially now, things are changing so fast. I don't think that people really have an understanding of just what it takes to make those renovations, even structural things cause a lot of people are focused on the lipstick stuff.
Jon: I'm an electrician, so I'm a big fan of what's behind the walls and that's what I care about the most. Obviously, push people towards doing the important part. It doesn't come back to bite them later. But I think one of the worst things that happens is they get bad advice from the get-go like no one's going to expect you to understand how much things are going to cost. That's not the business you're in. But the problem was getting advice from the neighbor or your best friend that says that you can renovate your old house for $25,000.
I think it causes a lot of issues because they make a purchase. Going in with that budget assumption, especially if you're doing the burn model, that's really important because if you go in with expectations and find out you can't do what you are going to do for this money, it causes a lot of problems. What I see is a lot of times people get desperate and they start to look for the lower end contractors. That's where the disagreements and the lawsuits and all that happen.
I think good advice from smart people, or definitely people that understand the business or investors that do this all the time, but just going. That's why I always promote working with a real estate agent that really understands what you're going after, what your goals are, the average standard real estate agent. Not that they're bad people, but they might not understand a conversion process or triplexes or something like what's going to go into them and zoning and all those things. It's one of the biggest pieces I would say, just work with the experts.
Sarah: The other thing I want to add, Jon because I think you said that really well. Obviously, you don't want to go for the cheapest option, but I think there's something to be said even for you as an example, like your team, you guys only want. With investors. Like 99% of the time, otherwise you're doing a favor for an investor for their house, but you're working with investors. You're doing conversions. You're doing burrs in areas where you understand the after repair value.
When you can help people run the numbers and understand what type of renovations in what areas make sense because of over renovating, I think it is a big issue that many newer investors pick very expensive materials or they over renovate. If you're working with just any contractor, they may not tell you that is not a good idea because you're not going to get your return. You're going to be sinking a lot of money that you're not going to be able to pull out on the refi.
Jon: I don't know how many times I've tried to talk people out of doing quartz countertops in a beginner's house, but yes, exactly. I have a client that we just finished. That was in your class. I'm not allowed to tell you about them and they over renovated that crap out of their house. No matter how many times we tried to talk them out of it or with it, it's just sometimes they get so emotionally invested in their first rental property or that they just keep going and going.
For example, these people want to put 20 USB receptacles in a duplex conversion that costs $2,000. Not necessary and it happens quite a bit. That's why, like I enjoy the education piece. I like working with the people and try to steer them in the right direction for where you should put your money, because I will always talk you into putting in new wiring before I'm going to let you do quartz countertops, just because I know six months from now. If you have to fix it and it's going to cost you 10 times, it would have cost you to fix it now.
Hundred percent, I agree with you working with there's a few great contractors in this network, like Ken and stuff like that that just do this. Those are the ones you want to work with. I find the most problems are the ones that you know, are looking for the Kijiji specials that don't understand what you're trying to achieve like the BRRRRs, especially the last couple of years. If you don't know roughly a budget, they can work with our rough ARV. Then it's going to be really hard to help them achieve their goals. If you achieve your goals, you're going to buy more houses. You're going to do more business with you. It's working together as a team type thing.
Sarah: Keep the emotion out of it. You're not living in it. Unless it's like your cottage that you're going to use here and there for something along those lines, but the majority of the time you're renting, being evading it for it to be rented out. You want to make sure that the product that you're using materials are going to be tenant proof, but that you're not breaking the bank. Thank you for that, Jon. Awesome, George, question for you and I'm going to just throw it out there from the top of my head right now.
Not necessarily the stuff that's been written down, but obviously there's a lot of changes from a tax standpoint. There's always lots of changes from a tax payment. Newer investors, but also more experienced investors. What are the things that we should be aware of that you're hearing might come down the pipes down the road?
George: Worried about what's coming down. The pipes are a little bit dangerous of course because those rules have a habit of changing this morning. We saw a major political announcement where now we're able to do all sorts of hypothesizing of what might happen. As a business owner, investors none of that's good, but I more so to see the thought process with respect to what our general trends. I think here, we're going to see that instead of trying to predict exactly what they're going to do because as an example something called a qualified small business corporation share and an exemption that relates to that, which today allows us to roughly speaking, sell shares of a qualified company for I'm just around off the numbers, 900,000 and we received the amount tax free.
Since I was a co-op student, there was fear of that deduction being eliminated. I don't know roughly half the years, since I've been practicing that fear has been expressed to clients to say, the sky is falling. It's coming and sooner or later as accountants, we're going to get it right. It's only taken us 35 years now. We're going to peg that puppy though sooner or later. But if we would have actually quoted it and changed everything we were doing. I lost 35 years. I'm pretty cautious of that. I like preparing for it right now. Obviously, there's just a ton of money being spent in terms or has been spent in COVID.
With today's announcement this morning or whenever it was, I guess I read it this morning, maybe it was yesterday, but I'm not predicting any decrease in spending. I don't think we can predict any decreases in defense spending. For example, from current events, you got a trifecta that is saying there's a lot more spending coming. There's got to be more taxes.
How are we going when too many people are focused on what today's taxes are? What are today's benefits, pros and cons? Let's start talking about the medium and long-term now. We're having a useful conversation. I really don't care what I save tomorrow. I don't want to save, but I'm far more concerned about saving more in my state succession planning for my charities, my business.
I need to make sure my business is going to operate five years from now, 10, 20 years from now. I really don't care about tomorrow. Tomorrow I can handle it's down the road that I've got a lot of opportunities. And to me, that's where the planning opportunities are.
Sarah: Do you think that somebody should have a planning session with you now that these new changes are coming, where likely there's going to be? And again, no one's got a crystal ball, but I'm getting, like you said, more spending, more inflation, likely more taxes with this new partnership with the liberals and the NDP. Should people be having a call with you, with our accountants, just to see that should something. Things be asked more that they have a plan.
George: I think they should be doing it all the time. I'm using those as today's examples from a year ago. I'm sure I could have given you different examples. Next year I'll give you some more examples, but today's pretty acute compared to normal, perhaps. I think it should be something that's more constant where there's always a plan and not that it needs to be neatly typed if you will. Binding type of a high school university type of thing, or at least for my age. But No question. I think there needs to be a greater game plan that is being tweaked as circumstances change, not necessarily radically overhauled, but I do think there's too many people operating on what I'm going to call a base system where there's literally planning out there.
As real estate investors, we should be the first ones to get this. We can use other people's money to pay for our taxes as real estate investors. Why wouldn't we do that? It defies my understanding. It defies my understanding why we're planning for again, saving taxes today, trying to ensure that we don't pay too much to the accountant, to the lawyer, to the mortgage broker, to this, that, and the other person to acquire that property.
If we invested a little bit of money, we'd be saving more. On the tax side and with my professional call wigs and all different degrees, and it's no different than repairs and maintenance doing proper contract work in a property we may be doing from a hands-on aspect or a paper aspect, but why aren't we building that portfolio, spending a little bit of money for some quality and not get too excited. It costs a little bit of money to do it. Let's start talking about value added. Let's not start talking about costs.
Sarah: Awesome.
Laurel: Thanks, George. Over to Alex. I bet that you would like to have someone, especially a newer investor. Ask this question. Can I just add this new property or properties to my existing or add the avenue prior properties.
Alex: That kind of dovetails on the first question that we were talking about. This is no fault of the newer investor, they think this is just like buying car insurance or your standard house insurance policy. That couldn't be further from the truth. When I start working with newer clients and I see we're looking at comparing or doing a review on their small portfolio. I see that often, with insurance companies like Allstate or whatever. What they'll do is they'll add that on as a rider. What that does is that puts the investor at risk from several areas, the first being from a liability perspective.
What they're doing is they're having a commercial or business liability risk that could potentially happen in that investment property and the coverage and the warning in their personal lines, pro policy will not pick up that loss. There's a liability exposure there.
With respect to the actual building limits, you want to carve them out separately. You don't want to stack them together. The third thing is the corporation piece. Some new investors after consulting with George and Ryan and whatnot and Claire as well. If they're going to set up a corporation initially, and we've all had that and heard that conversation many times. At what point do you create a number company? But I have seen newer investors who've done that.
Dealing with an insurance agent or company that didn't know what they were doing. They put this numbered company as a rider on their existing homeowner's policy. Effectively they have no insurance. If there were a claim something were to trigger on that policy. There's no coverage. So again, you need to keep it at arms length from your personal assets and make sure they are completely separate.
Laurel: I'm even surprised that an insurance company would allow you to do that.
Alex: How do I say this politely? There's a lot we'll call generalists, not investor focused insurance people in the marketplace. Not so much in the brokerage world, but with direct carriers. They really don't know what they're doing and they have the pen with their certain carriers. They'll bind the policy that way they have binding authority. It doesn't happen. 10 years ago, I used to see quite a bit with clubs like The REITE Club investors that were coming far more educated. I don't see that as much now but it's still out there. The last thing we'll send and effectively what you're doing there is there you're setting yourself up for a denial of a claim or loss. There'll be no coverage.
Sarah: It's important to know. Thank you. Ryan, many times we've talked about JVs and GPLPs, and probably up until maybe two, three years ago. I didn't even know that there was something above the JV option other than like you hear about the syndications and all that stuff, but just in the grand scheme of things, or just an overview, somebody that's doing a lot of JVs or wanting to do JVs, can you share that there might be something additional to just the regular joint venture agreement and why someone might want to look at that?
Ryan: Sure, thanks a lot, Sarah. There's like several different ways obviously to structured businesses just in general. Forget about real estate investing for a second. There's several options, obviously focusing on a real estate investor standpoint, the common one, especially when people are initially getting started or initially speaking with others. You hear the buzzword JV agreement, which is joint venture agreement. Obviously, the joint venture has some great benefits because you're basically creating a partnership with another person or their corporation or a group of people and corporations but not being liable under the partnerships act because a legal partnership is specifically different from a joint venture.
The joint venture gives you the ability to craft and specialize all your terms and everything as many people know and create this business arrangement to do all your real estate investing and so forth on but what's become a common topic that we've had as lawyers. I think I've had this conversation a lot of times with yourself, Sarah and your students, especially in the scaling classes you do. George and I have had discussions with our clients about scaling and people specifically asking a question about GPLP structure, which is a General Partnership, Limited Partnership structure. What is that and how does it work and what do I do? Why am I not already doing this?
It could be a great tool and opportunity and business structure for some on this call to take part in and to utilize for their scaling in their business models moving forward, but just like JVs, GPLP isn't always for everybody. First of all, if you were shy about the professional service costs like accountants, lawyers and probably others for a JV like they're much bigger for a GPLP because it's a more complicated structure as you and I know Sarah with the GPLP structure.
You have to start being concerned. Definitely at the GPLP level or are you selling securities now? Do you have OSC requirements that you're offsite? And if you thought the CRA was nasty, like OSC is, that's a different kettle of fish. You don't want to piss those guys off. The GPLP structure is a great way to scale bigger, maybe more quickly and raise capital. That's not necessarily just destined for a singular project. It's a way of pooling money, but you have to be careful. Like I just said about new aspects that are on the legal Natasha.
That may be with a JV. You don't have to be .As worried about because the JV is boiling it down. Probably a much more defined scope and project and so forth. Whereas a GPLP is its own kind of legal agreement and entities. It's got multiple layers of corporations. Probably depending on how structured it is with the accountants, there's going to be not only corporations, but a family trust.
You've got a partnership agreement. You've got a lot of moving parts, so it can be an excellent opportunity to scale and grow. I know I'd be happy to talk to anybody about it. What's this GPLP that people are talking about. I want to know more about it. But my caution would be it certainly comes with more costs, but you can't look at it. Oh, geez. I'm out of money. You don't have to look at it. George said this lots of times when I've heard him speak.
You have to look at it as you're investing back into your business. Get the right advice, get the right accounting, tax, coaching, et cetera, advice, legal advice, and make sure at the end of the day you're investing back into your business with the right structure. This could be a great structure that could allow you to do 10 X number of deals. Whereas, going at a slower pace because maybe you're only doing JVs, but it's all it's again, like I said, it's a more complicated topic then you're going to give me time.
Alex: Ryan, I have one question on that myself. When you look at incorporating, it's like the magic number 8 to 10 properties, whatever it is. Is there a difference? I understand what you're saying. As far as investing in your business, is there a target number of properties you have in mind scaling down the road where you should take that GPLP structure? He's at a very high level. It all depends on your individual.
Ryan: It probably depends on the individuals. It probably depends on where, like where are they networking to raise their capital? Like a lot of people obviously probably started. A lot of people go to friends and family, that kind of thing. Probably acquaintances, because it's an easier conversation. I know some people shy away from that. Like they don't want to mix business and pleasure. Oh, I don't want to do my stuff with my family and my friends, if I screw up where they want to be my friend anymore. I get that too or there's privacy in that kind of thing that they want to just keep private.
I don't know if I've got a magic number. I wish there was, it would make my job a lot easier and probably George is right. Because everybody always says, when should I incorporate? When should I do a GPLP? I think it just comes down to projects like certain projects, like larger commercial apartment buildings. I think so. Passive investors is a good one. I think it really boils down to where I've seen the GPLPs.
The most successful are the larger projects, maybe development projects. Like larger apartment buildings, commercial developments, those are red flags to be like, oh, maybe a GPLP is a better way of structuring and raising capital here, but also just like trying to have because as investors, one of the biggest problems investors have starting out is where's my money coming from. Where's my capital coming from?
If you are really sophisticated and great at doing GPLP structure, it's a way to create a fund or multiple funds and literally have a pipeline coming all the time. Now you've just got rid of the one single biggest issue. Probably over 50% of the investors on this call have, which is where my money is coming from.
Alex: It's more about that. It's more about the type than the actual number then?
Ryan: I think so. I think it's a deal. I think it's the deal side and source.
Laurel: You know what I'm hearing, I think we're going to have lunch and learn or a focus group or something just on this topic cause it sounds like there's a lot of stuff that a lot was written about, great questions. I'm going to keep it moving along. We've got time for two more questions. One for Claire and then one for Jon.
I'm going to go to Claire and I bet you, Claire I wish you would get this question. I just know you want this question. Here I come to you, Claire. I'm a hundred percent financed. And I bet you're wishing that I would ask you, so it's possible maybe that I'm going to be late for things like how much notice do you need and does it really make a difference anyway? Cause you know, like everybody knows what's going on. What do I need to tell you?
Claire: I think it would still be as soon as possible, things I'm going to go with plan. Especially when we're doing like a hundred percent financing, it's private lending and we're doing more than that, potentially loans or purchase plus improvements for the renovations. We will typically do one year terms, but especially during the pandemic and then now the supply chain as well as permitting issues, not issues with getting updated.
How long it takes to get the permit et cetera, can just delay your project. Obviously flipping, we do tend to find most of our flips range from five to seven months. When it comes to how are you going to pay back the private lender off for one year? It really is more on those that are doing a BRRRR strategy, it's the refinance with the bank to pay out all the money you've borrowed. That can take some time. If we're told, we'll reach out to the borrower 45 to 60 days before the natural renewal date to see what's going on. Do you need more time to understand what's happening?
Sometimes we need 9 months because we actually didn't touch the property because we're waiting on a permit for the single dwelling unit to go in and it was delayed and we had to do a variant and blah, blah, blah. We can't leave for another six months or a year. The important thing is we can't guarantee that the lender wants to extend or wants to renew. Sometimes we need to go out and source another lender. As soon as that there's any delay or anything, or even just asking the question. If things extend beyond what I expected or the bank takes six months, because we're not refinancing one property, we're refinancing 28 over three corporations that can take a bit longer than expected.
The sooner the better that we can plan and prepare because there's nothing worse than having actually let me backup. If you need to extend a private mortgage it is going to be more. You're going to be paying a lender fee, a broker fee, et cetera. The sooner we know what's going on, the sooner we can try and mitigate that and see if there's other options. Just be part of the planning process and knowing as soon as you know that there is significant delays without us having to knock on the door of every property and do our own inspections.
Sarah: Absolutely be a friend. And I think you're starting a fund or something along those lines too. Do you want to just briefly share just a quick overview and then where we can get some more information on that if you don't mind?
Claire: Yeah, of course. We have a mortgage trust that just launched about three and a half weeks ago, the Windrose Mortgage Trust. It's an exempt market data. It's a private market opportunity from a borrower perspective. There's no difference really it's another avenue for us to raise funds because the minimum investment is $10,000. We're used to people that want to invest in a pool of first mortgages with obviously a superior return and can get in at $10,000. It's rather like what Ryan was talking about with the GPLP.
I look at GPLP structures when you want to raise big money and it's a capital race. A JV is a project based investor. It's almost like property first would be a JV. In my opinion, one-on-one JV, but if you need to raise 3 or 4 million, it's unlikely you're going to get a joint venture partner. That's got that kind of dope or cash, to bring in.
Our fund in combination with being able to raise larger amounts is just another avenue to get there because especially with the current market, we're always looking at where the market is going and If you can't buy it, you need to build it basically. Therefore having unlimited capital available to be able to do that. Hence we added the trust to our product shelf.
Sarah: That's exciting. That could be a whole conversation, lunch and learning as well. All right, Jon, we are in the I guess spring of 2022, you are doing and seeing and working with a lot of investors. What are in, maybe in your opinion, if you wouldn't mind sharing. It's a fairly good sized group. It's not like there's thousands and thousands of people. The secret won't be out, but what markets are doing the best in terms of where you're seeing investors get the best results. And what kind of renovations are you seeing do the best in 2022?
Jon: So far it's been conversion, BRRRRs in Hamilton, just because of how fast Hamilton appreciated the short period of time. Now, I'm not sure if that was skill or just damn luck. But the point is, the matter is I've seen some people have great returns in the last few months. I feel like it's slowing down a tiny bit based on what I'm talking to some people. Niagara, I think, has caught up because the prices jumped so high and the refis are a little bit behind, like Hamilton and Brantford were traditional, but they just had exceptional returns in the last little while.
Standard straight BRRRRs and straightened versions had great ones, but flips are tough because you gotta buy. Some people are seeing the flips really on the outskirts of the typical areas where they're buying them really under market value. I don't see flips doing real strong around here right now, but conversions all the way.
Sarah: Okay. Awesome. On that note, thank you so much guys for being on our panel.
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