Sarah Larbi: Tim Tsai is next from Trust Your Talent Academy. An international real estate investor, award winning mentor, business coach, retired himself at the age of 30 and became financially free 25 months after his first REI training and project. Tim has built cash flowing portfolios in Canada, US, UK using a variety of strategies and income properties such as lease options, residential and commercial, creative financing, flipping, wholesale, infield development. You've done it all, man, mobile home, parks, et cetera.
I think you're talking about investing fundamentals, what we need to know to be recession proof. Obviously, there's some really turbulent times coming ahead and that we are experiencing right now, so we just need to know how to maneuver through. And so what can you share with us from all of your different strategies in your many years of education? The floor is yours.
Tim Tsai: Thank you, Sarah. I'm so happy to be here. I have every single time I get a chance to share it. It's a great day for me and you all actually happen to catch me on an extra fuel day today, but I'll share with you a little bit. In terms of why, I did actually have a presentation prepared today, as in I don't have slides.
Most of the people that have been exposed to the way I like to share information. I'm very old school even though I'm not that old, but I'm old school. I'm just 40. At the same time though, this is the first thing that I wanna share with everybody in terms of why I'm always so jazzed on stage in front of the camera.
I know I've been told so many times. It's every time I come on the camera it's like boom. And actually, you know what? I think I'm pretty okay because compared to some of my US counterparts. Just their energy level is just way up there.
Sarah Larbi: But you know what? I think about this energy level, and I'll come back on camera and say this. But I think it's authentic, right? I think you don't have to overdo it. You've gotta be yourself and you're being yourself, which I like. So you don't have to over force it. You don't have to be the most energetic person. I think sometimes that comes off making some, you're not an actor, you're a real person. So anyways, I just wanna say I appreciate that.
Tim Tsai: Thanks Sarah. Coming back here though, and this is why I think I do get invited to share my journey quite a bit these days, and I think it's because through Trust Your Talent, especially now I really get to extend my personal values and my personal vision in terms of what the mission statement really is.
I feel like I've had a calling and I really want to help create financial independence one person at a time. And I know tonight is not, not exactly quite interactive yet until maybe the networking portion later. I'm just going to share as much as I can. And then we can go into a bit more of Q and A in a little bit too.
I know some people, they fundamentally look at words like financial independence or financial freedom. They think that it's just marketing buzzwords. And I'm gonna be completely honest with you. When I first got started, I thought that it was a tired phrase too. And then the more I live this life, the more I realize that, oh my God, this is something that I want to really help people understand because I wanna help people be able to sleep at night and not worry about bills, not worry about the recession, not worry about rate hikes, not worry about real estate market coming down, not worried about stock market plummeting and what's gonna happen to their retirement.
Why? Because over the last eight, nine years, I've actually been able to work with a lot of people worldwide to create that relief to really release those stressors by helping them increase their financial education. And this is why I always say I stand for financial education and I really just really love real estate, and I think that's why we're all in this room, right? I really just love leveraging real estate investing as the main vehicle to demonstrate these principles because through financial education not only just with real estate, however, my partner and I, we've been very fortunate enough to leverage a lot of fundamental principles to really go into other industries and other businesses as well.
However, tonight because we're at the REITE club and I love sharing my real estate investing journey, so here we go. First thing first I wanna share with you the fact that even though I am not. You know that old. However, I've had a lot of health challenges and I think one of the biggest things that I really want everybody to understand is that we all get into investing for a reason, and I'm going to be very good money right now, no pun intended, that it's because we want a better financial feature, both for ourselves and for the generations to come.
And at the same time though, what I've really noticed over the years, including myself, this is something that I've spent years fighting against as well, is the fact that the world has moved on. And yet the values, the principles, and the blueprint on money, how money works, how investing works, and more importantly, what investing using real estate means.
Those things are stuck in the past, and when I say the past, mean even just the sixties and the seventies because we like to joke that people that do not get properly educated, and this is why again, you're at the REITE club meeting, is that you are looking for the information. You are looking for knowledge and education.
And so the point here is I hope nobody is doing this tonight anymore. First thing, first we always say that you never ever want to do what we call buy, rent, and parade, because people that are not properly trained on different strategies nor how to do proper due diligence. They tend to fall into the buy, rent formula because all they are doing is they might watch some TV shows and I know this is not you or they might actually just think that, hey, real estate is really cool.
I'm just gonna go and pick up some properties. Buy the property. All they know how to do is they rent it out and they just really pray every single day that they always get good tenants, that they always pay rent on time, they never damage the properties and that the property itself is always in good shape. It's strong enough to withhold any sort of natural disasters or any sort of natural wear and tear. And so with that said, this is why I wanna share some of the high level concepts in terms of how it can help you navigate through your journey moving forward.
It's really funny, I've worked with so many people that actually are trained in strategies like wholesale, like the stress properties, like they use the BRRRR process. They also are in multifamilies, Airbnb, short term rental, midterm rentals, mobile home parts like I am. However, where they make mistakes is actually where the mindset is lacking, and this is why I'm so excited about this.
Now, first thing first I really enjoyed Michal's top earlier because as she was sharing what it's like for us foreign investors we're considered foreign investors. Unless you have a different status down in the US we are all considered foreign investors because I do invest in the US as well as the UK and a lot of people, they do ask me to compare the three different countries all the time.
That's a different conversation. I wanna bring it back here because I picked up a few key words. Not as easy anymore. The party's kind of over, it's still going, but it's over. And works like HOA, those are like your stratas and your condo boards. What that usually means is, as investors, I always say you probably wanna stay away from properties that have a condo board, an HOA or a strata attached to it because it does limit your growth potential and your earning potential.
Another conversation is also increasing in rates. I'm just gonna level with everyone. I'm gonna put it out. I'm super excited about the pending recession. In my opinion, Canada's already in recession in the US. We're starting to see signs and there are a lot of things happening in the background in the US economy.
We won't go into it at the moment, however all the indicators are there. So I'm also going to say this. Is it going to be a little harder to find a great deal now? Absolutely. It will be largely because of the fact that a lot of the sellers these days have not adjusted their own expectations yet, and this is why you might be seeing values in various markets across the US.
Just so you know, I actually just came back from Arizona three days ago again too. What we're seeing really is the fact that sellers have not leveled out with where the market is. And so another rate hike all these things, by the way, not without SSN Social Security Numbers as foreign investors.
Just to give you a quick, high level thing, you might be looking at getting an ITIN done or an EIN done. What that means is depending on your corporate structure or your overall investing structure between Canada and the US. You can do things like that. However, this whole thing, the reason why I'm making notes and leveraging it as a bit of a jumping forward is because of the fact that a lot of the time we're gathering information.
At the same time, it is hard to decipher and make it meaningful to our situation. And this is where having a lot of the fundamental skills will come in really handy. Because I'm gonna be honest with you, I've been investing in the US since 2013. I started this journey back in 2010, and I've always wanted to go down to the US like most Canadians, because I think the first thing that we always look at is the fact that when we go into the US markets. There are markets where you can pick up properties for, I'm just gonna use the word cheap, even though I really don't like it.
And that goes into the very first lesson that I wanna share is the investor's mindset. Because as an investor, and for those of you, if you're not driving or eating or doing something else and you got pen and paper handy, I really encourage you to start making some notes. Because this is a professional hazard for me.
I love sharing. However, I really do believe that if you actually make notes for yourself, more of this will stay with you and it'll make sense, and the dots will connect better when you are faced with the next opportunity or the next investment deal that's right in front of you. So first thing first, okay?
It's not how much it's gonna cost me, it's how much it's going to make. I'll say that one more time. It's not how much it's gonna cost me, it's how much it's going to make me, and so some of you guys probably have the light bulb right now. Yes, it is the return on investment concept.
This is one lesson that you always need to remember because I think people enter into different markets for the wrong reason. They're getting in for the sake of getting in. And what that usually translates into once again, is that they're doing by rent and prey, because so many people ask me, so what's really the difference?
You're an investor. You buy real estate. Yes. However, I'm not just a buyer. As an investor, I focus on the numbers first and foremost, and I let the numbers dictate which markets, what kind of properties I actually acquire. And so with that said, that was the first lesson. The second one is, even though I wrote down one here, I think this is one of the first questions that we all have to ask ourselves because of course, the market's getting tougher.
Sellers eventually will adjust their expectations. The markets will eventually change. Prices will eventually come down as we go into this recession. I know I'm being very bold here and I'm okay with that. And you can agree or disagree. That's completely up to you. I just really wanna walk you through the thought process and rates gonna go up one more time while the values are kinda unsure.
And the other thing is nobody's got a crystal ball. We don't know how many more rate hikes are going to happen. And so here is the thing why real estate, if all the challenges are in front of us, why are we still choosing real estate? At the end I will share with you some of the content that I've also created, and it's all education based and it's all just content, so you can go and take a look at it.
However, one of the first things I want you to really draw down here is I want you to really. Separate investing versus real estate. Real estate is the vehicle that we are using because so many of us can go and do a startup. We can invest in Bitcoins crypto, we can invest in a brand new business.
We can buy a franchise. We can go into even a direct marketing type of business. It doesn't matter why real estate, because real estate is our preferred vehicle. First thing first, and we are training to become investors. What that means is investing by definition is learning how money works. Learning how money works. So with that said, I'm going to share with you the two biggest main priorities that we look for as investors.
It doesn't matter which market you go into or what kind of economic conditions you're going into. First thing first, we are looking for cash flow. I don't know how many people here went to business school like I did. I really feel like business school. I just learned to become an employer, an employee. And so first thing first though, if you did go to business school, they will teach you revenue minus expenses equals profit. And we know when it comes to real estate, sometimes the calculations are a lot more complicated than that.
However, at the end of the day, after all is said and done, nobody wants to acquire. A cash flowing negative business. And so priority number one, this is what I call it, is cash flow. Cash flow. Cash flow means at the end of every month, are you making money? Are you in the clear?
Number two is what we call return on investment or cash on cash. The definitions are actually quite different. However, in the interest of time, I just want to put down the return on investment because I think that is a term that most of us can actually understand. Like I said, I will share some additional resources later too. These are the two top priorities. However, I do want to stress this because I get students asking this all the time, and as a student before I ask my mentor, that too is, oh my God, it is so hard to find a deal that will check out both boxes.
It seems like there is an inverse relationship between cash. And cash on cash return, or return on investment. And that is the true nature of the beast. And this is also why it is so important for all of us to understand why we are investing in the first place. Now, I always like to say this, I'm not one of those trainers, coaches, mentors, that tells people that you have to walk away from your job.
You have to fire your own boss. I wanted to fire my own Boss. Because I didn't like the politics that was happening. However, I never got the opportunity to, even though I declared financial freedom because I was actually laid off, which was of the best of both worlds looking back now. However, the point here though is that when you are looking at every single property, and I think Macel touched on this point earlier too, is that you have to treat every single property.
Every single property is like a business, more importantly, like a viable business. A viable business means that you need to be able to know that it's either going to cash from day one, depending on a strategy, or you know that after you've gone through the bur process. It is going to cash, meaning you already know that this is going to be a proper asset for you.
And that also goes, comes back to if we were to call this lesson number two, lesson number 2.1 definitely is the definition between asset versus liability. That's going to be a liability. There we go. If it's not producing the profit that you need, obviously it's not a viable business, meaning it's a liability. And so this, I hope, is really straightforward. I'm just setting down the foundation now. A couple of things that I think I really want to share with everyone tonight though is, how do you make offers?
How do you make offers in a situation like this in a time like this? And one of the first things that I actually learned from my early mentors is this, be embarrassed right now if you're not embarrassed. If you're not embarrassed by the offers that you're putting out there, you're likely leaving money on the table for your deal. And why is that so important to understand?
I'm gonna flip that around because the idea is what we call making money in the buy. You always wanna make money by buying. When you're buying the property, that's when you're making money. If today the comps, the CMAs, whatever you wanna call it for a certain property, is coming back at half a million dollars.
You better be making an offer and have it accepted way below that. And this is assuming no work is needed. No work is needed. And so you wanna be embarrassed. Why? Because you don't know which way the market's gonna go. Or even if you don't know how quickly and how much further it's gonna go.
So that is your buffer. That is your protection right there. And so moving forward, the second thing here is truly understanding what I call the wheel of wealth. The wheel of wealth says that there are three different types of income, earned income, passive income, and portfolio income. Earned income, passive income, and portfolio income.
And so the reason why I'm bringing that up is simply because of the fact. We should all be investing with the financial goal in mind and to Trust Your Talent. We have this formula we call SMP. If you're making notes, please write this down, draw the circle, do the three buckets of income, and then write down goal smp, because I don't really truly believe that people would just collect properties for the sake of collecting them.
There is always that financial goal somewhere, somehow at some point. And so what most people do once again, is they will start by looking at P stands for property first and then most of the time the market that they choose is the market that they live in. And then their only strategy is what we call vibrant and prey, as and so we want to really flip that because for those of you who are currently investing any other asset classes and any other investment vehicles.
I'm just gonna use stocks as a quick example. If you're buying or if you did buy stocks, I'm gonna guess that even if it was Google stock, Facebook, Amazon, Tesla, whatever it is. One of those really famous and well performing ones.
I'm gonna guess that you never actually really picked up the phone. Let's say call up the CFO at Amazon and say, Hey, can I do a campus too at Amazon in Seattle next week? Because I'm thinking about buying some shares. No, most people don't do that. In fact, probably nobody does that. However, why do people line up or get so excited about buying Amazon stocks because they're looking at the performance of the stock, and that's the biggest thing about investing in real estate or leveraging real estate as our investment vehicle.
Now that being said, once you've determined that, it really determines which income bucket you want to feed. I know most of us have current incomes. If we have jobs, just over brokes and if you are actually doing really well, meaning you're diligent and disciplined, you probably have some sort of portfolio income because this is our RRSPs, this is our savings. This is anything that you put in there, basically the piggy bank that you are not allowed to open or you don't want to open unless you really need to.
Passive income is something that most people lack, and I don't know if it's something that you want, crave or even need. Regardless, the whole idea is whenever a deal comes your way, you need to really put it through this process first. Does it satisfy my financial? Does it satisfy my financial goal?
Your goal could be, you know what? I make a decent income already, and between me and my spouse, we live pretty well. And so really our goal is to make sure that our retirement is really safe even though we make really good money together. It's hard for us to have a really quality family vacation.
I know what's really funny is during lockdowns, during the covid times, every time I do a class, people always say, you know what? my dream, my goal, my whys to spend more time with my family, and then lockdowns happened. All of a sudden when I'm asking those questions, they're like, I don't wanna spend more time with my family anymore.
And so the funny thing is, what we found out is most of us want to spend quality time with the people we wanna spend time with. And so quality time in today's age, and this is also why we say money is just a tool. And that's why you need to have a financial goal. And money isn't everything.
However, money sure does give us a lot more options to choose from, and that means you can have more quality time with whoever you wanna be. Now I'm going to leave that here and then we can continue forward because I'm noticing that 20 minutes feels really fast. With that said, like I said, my goal is to help people declare financial independence, not necessarily financial freedom if you want, as a byproduct.
Once you're educated, it's not a big deal, very easy. At the same time, here is the differentiator when you, by definition, okay, financial freedom means when you have enough passive income that will cover all of your basic expenses. That is the first step. There are actually three different levels that you will be exposed to once you start to go through the content later, however, with that said, I wanna share with you why I focus on financial independence, because there are people that don't think that they can walk away from their jobs.
They cannot walk away from something that's taking 40, 50, 60, 80 hours a week from their time with the family, their time to improve themselves, to take care of their health. This is why it is what it is, because within these buckets was then these three buckets. What strategies you end up choosing has a lot to do with which buckets you are actually feeding into because from a real estate investing strategy perspective, we all know we can do wholesale.
Number one. Number two, we can also do flips, and that's usually what we call the stress properties, using the BRRRR process so that you can add value to it, you can do lease options, you can also do private lending. I'm gonna continue on here, and then the list can go on a little bit longer too. In passive income, you can once again leverage private lending.
You can also, once again leverage lease options and we say income properties. And here's the funny thing. Income properties is actually a really broad umbrella and this is why you will hear the different types of properties now that you can specialize in. So single family homes or single family residential, multi-unit residential commercials. They all fall under this. Technically, mobile home parks fall under here as well. And then later on you can actually go into the portfolio income bucket.
If you are getting this already, you understand. Technically speaking, every single strategy that would feed into your passive income bucket should actually build portfolio income automatically. I'm gonna say that one more time. Every single strategy that feeds into your passive income bucket should ideally and directly, and most importantly, automatically build your portfolio income bucket already. This is really just the tip of the iceberg. This is why, does recession fun? It can be if you have the principles guiding you through what deals you want to look at and not.
Now, the other thing also is, I know we're coming down on the time now, in every strategy you can analyze deals in however way you want. At the same time though, whatever training that you are doing, I want you to really focus on some of the basics that I've shared with you, because every single one of us, when we first embarked on this journey, I know we're at different stages in life, different ages, different cultural backgrounds, language abilities, different life resources, different connect.
There are so many different factors that would determine our path, and this is why I am never one of those people also to say, hey, you know what? Multifamily seems really hot right now. Learn that Airbnb seems really hot right now. Learn that it's not about that. It is about ultimately your goal and how you want to create the most well-rounded financial situation for yourself.
And so with that, This is the only thing that I have left. If you want to reach out to me with any more questions, I know I'm gonna stick around that as well. But if you've got any more questions, I'm always happy to chat and here are some of the places that you can follow for more content. Thank you.
Sarah Larbi: Amazing. Thank you so much. Tim. We will ask for your contact information here, cuz sometimes the screen is a little bit. Your board is great, but maybe people are seeing it small, tim@trustyourtalent.ca fabulous info. Thank you so much.
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