Laurel Simmons: It's really interesting that Daniel talked about the real estate market, the Canadian real estate market, because one of the things I wanna talk to with these gentlemen here is a little bit about the concept of fear. Because there is a lot of fear right now. Real estate investors have a lot of fear.
You hear about it all the time and you see it in some of the questions we get and you also hear it in the media. I think we're gonna address it just. Flat out address it. But I really wanna talk to these guys about what they were doing two and a half years ago because the landscape was a little different two and a half years ago, and what they're doing now, if it's changed in any way, shape, or form in the last two and a half years, and if it has why?
If it hasn't, why? What are they doing? Why are they doing it? And let's just bust this fear factor right open. Okay? We have Amiel Jelinek, who is a mortgage broker with Windrows Group. We have Dylan Suitor. Wow. Dylan, you're the real estate agent and broker of, I don't even know what to say.
The stars. Yes. Okay. That'll work. Drew Toth, you are a developer and I know you're doing really amazing things in Southern Ontario. And Matthew Frederick, who's been on stage with us before, actually everyone's been on stage here except for Drew. So welcome Drew. We don't bite and we don't harass our guests much.
You'll be fine. Matthew, of course, he is our trainer. He's been a real estate agent for a long time. Yeah. Okay. I didn't say that , but we're gonna have fun. So right off the bat, I think what we'll do is I'd like to have this kind of conversation. We've got about 25 minutes and let's have some fun with this. First of all, and I'm just gonna ask each and every one of you, are you still in real estate? Is that a yes. Okay. We've established, we're all still in real estate here. Okay. Are you doing exactly the same thing that you were doing two and a half years ago, Matt?
Mathew Frederick: I'm doing the exact same thing, buying, let's say 24 to 64 unit buildings, but I'm just doing it differently. Same thing, just doing it a little bit differently. In a lot of cases I have to tighten up a whole lot of things. See, a lot of people believe that they ask me things like, Should I go firm on my mortgage? Should I go variable? It's gonna affect my cash flow. I don't really worry about that as much. For me in tough times like this, cause I saw the 89 crash. I bought my first house in 84 and in 89 I saw 2000. I saw 2007 in the US. I was in Arizona and Florida. I also saw in 2009 Edmonton and I saw in BC 2017 the real thing is to control the uncontrollable.
Manage the controllable. When someone says to me, should I get fixed in the rate? Because the variable might surpass that for me. I can't control the Bank of Canada, so therefore that's uncontrollable. Therefore, I will fix the rate so at least I know what that is. Then the things I can control is I'll manage my property better, I'll reduce my expenses and increase my revenue, and do a few things a little bit differently.
Ultimately I'm not afraid of the interest rates. I just know that if I can get them locked in, that part I can control. Ultimately, I'm gonna just work on the things that I can actually make a difference in. That's what I've done so far and it's been working pretty good. And I've made most of my money on the backside of a market drop because so many people shake the deck and a lot of things come loose. And I'm sure these guys will probably say the same thing.
Drew Toth: For those of you guys that don't know, we specifically focus on forced appreciated land development. So we will buy a piece of land raw, take it through typically a zoning change or to a site plan to get the value, and then we'll either exit it by selling to other builders, or we'll build out that product.
We typically don't purchase based on appreciation. Going up in the market, we're looking at what is the value today and what is that forced value that we're putting in? And typically over the last 10 years, the appreciation bonus has been fantastic. Most of the land that we're working on now experienced a surge of appreciation, as you guys know over the last couple of years, that the original numbers that we set on are still in a good position.
One of the things that we're doing that we may change. Instead of building it out now some of the projects will hold or will look at doing something different. If we bought a parcel that was specifically to exit just to other builders, we may now look at building them, but we'll build them and sell them at a lower price and mash that land development bump with the construction bump and the to maintain that profit.
That's a bit of a different way that we're looking to exit that product. In regards to purchasing and acquisitions right now what we're doing is we're adding more buffers. When we're approaching land and we've noticed that there's already some discounts coming in, that when we're approaching that land, we're looking at can we still be profitable on that?
Even if there's a 20% drop, even if there's a 30% drop. It's typically just stress testing the exit of that land. Right now, if we don't have those extra buffers in contingencies, it's a nongo for us for a product acquisition.
Dylan Suitor: The question is that I'm doing the same thing now that I was two and a half years ago. I'm buying a lot of stuff. And I'll continue to buy. I think the changes that I've gone through a lot of growth, I've hit a lot of roadblocks, I've hit a lot of problems, and it's how you face those problems as Sarah politely said, they're pivoting. Pivoting is necessary. You're in real estate investing. If you model something out and you're planning a 12 month exit or a 24 month exiter, a five year exit, if you're developing plus stuff's gonna change. The economy's gonna change. Bank Canada rate's gonna change.
You need to be able to pivot and know different exit strategies, and those exit strategies may not be around. I was pretty quick to yell out March 7th, because March 7th, the world changed this year. In a very positive way in my eyes. My honest belief is that the solution to affordable housing, which is different from social housing, is more units, more supply.
What I'm seeing from the government is they wanna make it harder for one Z, two Z investors to buy, but make it easier for larger investors to develop larger amounts of properties. There's been a lot of conversation around 35% down payments sometime in the future. I think that will likely come when I look at the MLI select program and I look at what it's gonna do 5 or 10 or 15 or 20 years down the road when we're looking at locking in affordability for 10 years through new development, really with really high leverage it influences building which creates more affordable units.
There have also been talks since I got into real estate about changing from an ownership economy to a renter's economy, and 15% of residential real estate last year was purchased by institutions in Canada that will likely never trade again. Unless we're building that much supply, which we're not, and there's too much caution tape in the cities and in the governments to be able to build that amount of supply, it's gone.
We have to be very strategic with our exit strategies, but knowing that this opportunity we have with real estate investing, it's something we need to jump on. You need to do your research and then take action. Most people do a bunch of research and then they do more research. They do more research, they don't take action, and then they sit back five years later and they say, Wait a second, Dylan and I saw you when you had your first property.
I'm like, Yeah, I just took a lot of action and I figured it out along the way. So building a really strong power team, being around people that have done it, know it and are willing to continue to grow with you and pivot with you is really important. But also knowing that there's gonna be bumps in the road and that everything's not gonna be perfect.
I would love to see one person raise their hand in this room if they put together a proforma that when they bought the property and when they exited the property, it was the exact same, almost guaranteeing that no one will do that. If you did, you're probably lying about a number somewhere, your rents either went up, the rates went up or down, the market went up or down.
Something changed and we've been living through 10, 15 years of fall. If you haven't read the fourth turning, I highly recommend it. If you don't wanna read it, Google the fourth turning and there's a hour and a half recap. It's about the seasons of the economy. 20 year seasons and we're going into winter, that doesn't mean that it's gonna suck.
Winter's skiing. Who likes skiing? I like skiing. That could be fun. But you need to look at what are the downturns that could affect you and how can you enjoy that versus being the one on the sidelines getting snowed in. So it's really important to understand what your model is. Do research on it.
Know that you're gonna have to pivot and grow and commit to an outcome that's positive for everyone. And it may take you a year or two longer. The idea of getting in and out of a BRRRR in six months and being able to do it over and over again and get 150% loan to value afterwards, it just may not be available.
Unfortunately, it happened in the past, doesn't mean it's gonna happen in the future. So understanding that what you can earn in a net worth over the next five years is still likely greater than most of you could earn in an annual salary over the next five.
Amiel Jelinek: Alright, for myself I've certainly changed my investing style. I started out, as Alfonso I mentioned, and rent to own. I did a lot of rent to own a lot of multifamily. Gained a significant portfolio and I ended up selling all of my portfolio and now I do private lending which is amazing. I'm still in real estate, but a different type of real estate investment.
I personally like it because it's less headaches , so I let Dylan manage the properties and I just lend the money. That's from a personal side. What I see in a lot of clients is certainly the landscape has changed over the last, even six months, right?
We've seen interest rates go up a lot, obviously. But one thing to keep in mind is that, hindsight is always 2020. Now is always the best time to get in, of course if it was 25 years ago, that would be amazing, but if you're not gonna get in now, you're gonna kick yourself. Five years from now.
I think there's some great opportunities coming up now because prices are softening, right? You as an investor need to be poised and need to be ready to jump on opportunities when they come, because the opportunities are coming if they're not already here.
If you're not out looking for them, they're not gonna, they're not just gonna stumble across your doorstep. You've gotta go out and find them, right? And it is about potentially changing some of your strategies, right? Now is the best time to buy a flip. I don't know. Maybe not. Unless you're getting it super discounted and you've, crazy, safety factors in your numbers and stuff like that.
Maybe now's not the best time for a flip, right? But, real estate will increase in value. That's, we've seen it, right? Of course there's gonna be downturns, and that's what we're in right now. But it will increase in value. And if you never get in, you're never gonna see that increase in value. Trust me, I get it.
Like I see the same news articles that everybody else does and every once in a while it tweaks in my mind like, Oh my God. But you really have to step back and say, Look like that's just a general media that's saying that we are better than that. We know more than they do. Just, know your strategy and make the right decisions, but you gotta make decisions. You gotta take action, right? That's the biggest thing.
Laurel Simmons: I think there are quite a few new people here at this meeting. Could you just put up your hand, and this is your first time here, so we just oh look at this. A lot of new people. All right. Now this is not just for new people, but for everyone else. How many of you have one door, one deal going on one or more right now? Can you put up your hand ? We know. Oh, okay. So not as many. I know that there are many people here who have more than one, but there are obviously people here who do not have any deals.
The question then to you is, if I'm a brand new investor, I'm here, I'm trying to figure out. Where to start. And congratulations for coming up because this is where you're gonna hear the real stuff. Ignore the media. You wanna know what's coming on, what's happening. You talk to professionals and we talk about a power team.
We're talking about people like this: the lawyers, the inspectors, Everyone you need to know to get your deal put together. What do you think is the best place, what would you recommend to someone brand new? What would you recommend that they look at today? This is September the 13th, 2022. I'm brand new. I've never bought any real estate before. I'm really interested. What would you recommend? I know I'm putting you on the spot, but that's why you're here. What would you recommend?
Amiel Jelinek: I'll give my 2 cents on that. I'm not gonna recommend a specific strategy. I think that there's a lot of strategies that will still. And you've gotta do your research but one of the biggest things in how I got started in real estate and where my real estate career really took off is when I got a mentor. If you've never done this before it can be scary, right? But there are people out here that have done it, a million times, right?
They understand the market cycles and they've seen it, the ups and downs and they can really provide the advice. If you are scared, like honestly having a mentor is a huge factor in giving you the confidence to go out and get there. It's really funny because I used to be an engineer before this and I am a super introverted engineer.
I was never interested in public speaking at all. And it was actually my mentor that got me, that actually brought me on stage. The first time I presented it was, we're just gonna ask Emil a couple yes or no questions cause this is his first time. You know, they can really get you out of their shell.
What you have to remember is that it is a people business, right? And you gotta get out there and you've gotta be, talking to people and networking and a mentor can help you with that, right? So honestly, one of my biggest pieces of advice is if you don't have one already, get a mentor and they can help you along the way. They can help you get that first one and they can help you get that hundred.
Laurel Simmons: Dylan, what about you? What would you say?
Dylan Suitor: It's a great example. If you don't own anything personally, I'd go to a pri, a primary. You can likely get less than 20% down. There's some really heavy tax advantages. You can probably get a pretty decent rate for it.
You can probably have a family member or someone, help with it. I started off initially buying a property that became a student rental that I was living in as well, and I made money on it. My mom gave me the down payment and co-signed on it, and then I just ordered everything back afterward.
Hopefully, the government's not listening. But it was a really good way to get started. I ended up walking away with about 60 000, 70,000 after four years. Didn't do anything to the property. This was, I dunno, 2008 maybe. And then I took back capital and I bought two condos, took those condos, did a flip, didn't really know what I was doing on real estate investing for 10 years, and then got really serious, came to The REITE Club and actually just made a comment to my team members.
I was like, Just an fyi. I just realized while I was sitting at the windrows table that I met Claire and co here and we did an event. It was like a multi-family event and I didn't really know what I was talking about at the time, but I just listened and she was almost a mentor to me, and I don't even know how much debt I have with them now.
Probably closing it on nine figures of debt. I think that it's this room that you guys are in stepping out of your comfort zone, getting into networking events. When Alfonso says, Go and talk to someone you haven't talked to he means it and talk to everyone you haven't talked to. Like me, there were a lot more hands than I expected raising their hands, saying that it's the first time if you don't walk outta here with 20 people to follow up with.
You've done it wrong and you should literally be booking a breakfast to launch a dinner with someone in this room every single day for the rest of the month. Especially if you don't have a single property and you wanna get into real estate. I'm specifically wearing a t-shirt today that was at a conference that I was at.
Gary wore Gary Keller, and it says, Charge the storm because we're in tough times. We're gonna be in tougher times and most people are gonna farm it. But if you deal with it head-on, you deal with the problems and you're ready to tackle the problem. Then you'll learn from them. I'm not saying jump in and buy everything and you'll way over.
Leverage yourself. But understand the market. Understand what you're doing, educate, talk to people, ask questions. Most people will grab breakfast, lunch, or dinner with you, and then attack it and build out your strategy and run with it, and then pivot as you need.
Laurel Simmons: Just before I go, we got Drew. Some of you may not have picked up on something that Dylan said, but he said, Oh, I think I have a what? How many zeros of debt do you have? With a lot. Okay. A lot of zeros.
Dylan Suitor: Close to nine.
Laurel Simmons: Okay. That's a lot of zeros. But the point is that, If you don't, that's what we call good debt. If you're just new to this, you think, Oh, that's really scary. The more debt you have, the good debt you have, the odds are that the wealthier you're gonna be in the long term. There's a cause and effect there. You don't get rich just by wishing. We all wish that, right?
That doesn't happen and you don't get rich by just pulling the money outta your pocket. That's not how it happens. You have to leverage other people's money, and that does, by the way, include the bank because the bank does get your money, which is other people's money. There's all kinds of ways to use other people's money, and that's how we get rich.
Amiel Jelinek: I'll just add, it can be sometimes intimidating hearing people like Dylan that have done it, and they have those nine figure loans. But how did you start Dylan?
Dylan Suitor: One?
Amiel Jelinek: Exactly right. That's how everybody starts. It's not like somebody gifted him, a hundred properties, right? You start with one and you grow from there. You gotta start with that first property.
Laurel Simmons: Exactly. You start with one. We started with one. Everybody starts with one, and maybe two, and then maybe it's an exponential growth. Maybe it's four, but you don't know. Maybe you go back to one. It doesn't matter. But you all, we all start with one. All right, Drew, Next.
Drew Toth: All right, I'm gonna give you another acronym to take away, cause I'm sure that's just what you need. For the folks that are just getting started, the word is leap and it's to learn everything about property. I remember when I first, it was about just over 10 years ago, maybe 12 and I can't undervalue the comments that these gentlemen said about getting a mentor, being in as many of these rooms as possible, reading as many books as possible, becoming an expert, learning everything about property.
I can tell you that the first purchase that I ever made was a duplex. We fixed it up a bit, but the key thing that I want you guys to think about in this season of real estate and starting is if you could purchase a rental property that you're not banking any money off appreciation, it's just off of cash flow and debt service. I feel like that would be a pretty safe place to start. You may not find it in Ontario right now. You may need to look out of Ontario or look to the US, but I think that would be a great place to start because it's a safer and easier bet.
That's gonna be a good return. That's where I started and it was about 12 or 13 years ago. And the mentor comment is very good. I had mentors for creative financing, mentors for construction, mentors in engineering and planning and development. Those key relationships that I could bounce questions off and leverage their experience was so big in starting at one and being able to scale to what we do. That's I leap, take away, leap, learn everything about property, and be in as many, be in as many of these rooms as possible.
Laurel Simmons: Matt, just before we go to you, so Drew, I think again, I'm gonna draw attention to something you said, which is that you go to different people, don't rely just on one person because everybody has a different experience.
Everybody has done one or more strategies. What my experience is in real estate is gonna be different from Sarah's or from Paul's, or from Steve's or Eric's, or, I can go around the room. Everybody's experience is different. Yet when you talk to people, especially when you get to know people who have had more experience in one area, you're gonna pick up a lot of knowledge, a lot of information that you can use.
But don't expect that person to know everything about real estate, because I gotta tell you. These people up here, they don't know everything in real estate. They never will. They can't. It's impossible to know everything in real estate. You look for the experts in those areas and you put it together and you'll be surprised at how quickly you get your own real pool of knowledge. Okay, Matt?
Mathew Frederick: Most of your life, by the way, I agree with everybody. So most of your life as an investor, you're looking for money because you always find different deals. If you're beginning to invest, maybe you should figure out where that money's gonna come from. I have investors who buy houses and I have investors who buy buildings.
In the last two and a half years, most of my investors who bought buildings, let's say 12 to 24 unit or even houses, I made sure they went to people on the opposite spectrum of where they are. In other words, their beginners, they're new, don't have a lot of money. Go find somebody who's 72 years old who has a building, and most of our buildings were financed.
By talking to somebody who's 72 years old, which is not old, people lift about 84 these days and we ask them do you wanna sell? They say, No, they have a portfolio. Are you still buying? They say, No. We say, How come? They say, Cause we're a little bit tired. And I go, do you ever lose the bug?
They go, No, we don't lose the bug. We're just a little tired. My people are not tired, so they know real estate. They bought houses or buildings dirt cheap 20 years ago and it doubled and tripled on them. I don't have to convince 'em about real estate. Like you talk to a doctor, you gotta convince a doctor.
Building owners or property owners, large property owners, they actually understand real estate. So we just say to them, Listen. Or when I talk to them, I said, Listen, I'm still young. At least compared to them. You still wanna be in the game, but you still wanna be a little bit hands on. Why don't we go into a deal together and you could live vicariously through me?
Because they never lose touch. They always wanna still be investors, but they want someone to do most of the work for them. Most of our buildings are financed by people who actually have tons of equity, who have buildings. And I tell them, You know what? Let me be your Viagra. Let me be the blue pill I'm gonna, And I tell 'em straight out, I'll be your blue pill. I'll do all the work for you. Listen to my students well. Ultimately you can still live vicariously through us. Hey folks, be Viagra. That's all I have to say.
Laurel Simmons: I don't even know how to follow up on that one. I really don't.
Amiel Jelinek: It's if you take one thing away.
Dylan Suitor: You should write that down.
Laurel Simmons: We've talked about the people who are new and what about more experienced people? Maybe they have 2, 3, 5, 10, and they are concerned about interest rates. Everybody talks about it, low, the feds are gonna raise the rates again. What's your feeling then?
I guess I'm going to assume that a lot of you say that rates don't really matter, and those who are really experienced in real estate know that real interest rates are probably one of the last things you worry about right now. If you're a serious real estate investor. But let's talk about how we deal with interest rates and what we can do to mitigate the risk and some of the other factors that we look at other than real estate that will make a deal feasible.
Amiel Jelinek: I can start if you like. Some of my suggestions are, like Sarah's nailed it with her presentation, right? It's pivoting. If you already have a portfolio, really take a look at your portfolio. How is it performing? What is the impact of these interest rates, and is there anything else that I can be doing with my portfolio? To increase the income. Cause that's what it's all about, especially when your expenses are going through the roof.
It is about pivoting. What are other strategies that I can look at, if I already have a portfolio, can I scale to a little bit bigger? I love the idea of taking commercial properties and converting them to residential and, overall when you look at like per unit costs, obviously it's a lower cost that they're finding, so what are the other strategies that you know that you can look at? That will make you money with increased interest rates. The interest rates are always a big topic. The funny thing is that when I bought my first property back in 2007, the interest rate was around five and a half.
I was like, Oh my God, that's an amazing rate. Lock me in for five years. That's gonna be great, right? So I know that we've been in a market where rates have been lower. We need to get outta that and realize that rates are gonna be higher going forward. I don't know if we're gonna see those 2% interest rates, for quite some time.
Nobody has the crystal ball. Nobody knows exactly where it's gonna go. It is about finding those strategies at work and adding value to your property. Adding income to your property, can I rent out the garage? Laneway suite that kind of stuff. Laundry income, storage income, parking income. There's all kinds of different strategies. Okay, my costs have gone up. How can I combat that with additional income? Because that's what's gonna pay the bills.
Dylan Suitor: Just wanna start off by reminding everyone that he's the introvert. You had the last two questions he started. So something that I think is really important, and you should write this down because we're in a rising interest rate environment, right now. Yet my team and I consistently reach out to our current clients and do an analysis on the property, what their goals are. And a lot of times people are like, No, I don't wanna sell. Things are gonna keep going really well and we're gonna be good, highest and best use is something you should always be looking at.
We had a number of clients over the last, probably 18 months, maybe 12 before the last six that kind of cashed out of their duplex conversion, triplex, fourplex, conversion. And started looking at apartment buildings. The reason they did that was because duplexes used to make sense when they were 400,000 as a bungalow and 650 as an exit with a hundred thousand dollars reno or $90,000 re, but now you're looking at a $300,000 re or whatever it played to numbers are, and you're underwater.
It doesn't even make sense on a cash out exposure. You're just, it doesn't make sense at all. What I've noticed a lot of clients do is they get really excited because of a model worked or because the strategy worked and they tie themselves to that strategy and they keep, they stay really narrow focused.
Most of my success has been from opening my eyes to other opportunities and strategies. Sarah and co have shown another strategy. You guys can look at conversions. I just bought a conversion firmed up on it last week. It's a, we're gonna be probably putting 23 units in it. The seller thought it could go to 12.
It was 1.4 million and a 7 million after repair value. There's lots of room. That would never have happened if I stuck to just duplexes or triplexes. It's okay to play Monopoly and take your little houses and upgrade to a hotel. And I really think you should really consider that all the time, especially these bigger investors, smaller investors.
If you've never bought anything, play monopoly and then play Monopoly in real life. If you're a bigger investor, play monopoly in real life. Maybe now's not the time to sell. I know the department buildings have held value a lot better than the housing market has in most areas.
I also think the numbers matter. When you see rental rates going up 30% year over year, the interest rate doesn't really matter because that offset's pretty well. To think of the different financing structures that are in place. My personal prediction, if the Bank of Canada keeps increasing rates, the government tends to be really slow to make any changes.
They're gonna do that, they're gonna go too far, and then they're gonna be in a recession, and the only way to fix it is to decrease rates again. Go ahead, keep increasing them. One last thing I would actually say is that I'd like to see everyone's hand up for one of these two questions. The question is gonna be, Who thinks that a residential mortgage from an A lender will actually be higher.
Then a commercial mortgage from an A lender, Your hand up, higher residential. Very few hands. Who thinks that a commercial mortgage will be higher than a residential mortgage? Raise your hands. Still a lot of people are not raising their hands. I just got 4.3% for 10 years from CMHC on a commercial mortgage.
I don't think you're gonna get that in most residential mortgages right now unless it's variable and that's likely gonna change. With the programs that have now been released, and I come back to March 7th as a really important date, yes, it's March 10th, they actually picked up files, semantics. I'm very detail oriented when it comes to that stuff.
It matters because my financing and my exit really does make a difference. But there are some very good financing terms on apartment buildings. Lee explained one specifically where he got 85% of purchase and a hundred percent of Reno. That's a very common opportunity, especially for a vacant property. If you actually are an investor that is looking to scale up and duplexes, triplexes, fourplex don't make sense with the construction costs, whatever that may be, do seriously consider selling your portfolio, selling off, getting rid of it and then taking that capital and putting it into something that's a higher and better use.
I think highest and best use is a term that everyone should always be focused on. If you're not in the highest and best use, then. Offload a property and buy other properties you buy in the market, you sell in. So even on a low market, there's, there can still be opportunity.
Laurel Simmons: In other words, if you don't have the highest and best use, you're leaving money on the table.
Dylan Suitor: Absolutely.
Drew Toth: I'd agree with the first two comments. I think it is a time for everyone to look at their existing portfolios and see where you can add those pieces. But I'm gonna add the development piece as well and say, look at all the for sale signs going up and have been staying up and they're gonna continue to go up.
I think that if you own a specific property, maybe the neighbor beside you is gonna go up for sale. And so it's looking at maybe some land assemblies with your existing properties. It's looking at maybe putting an offer together on a few properties because sellers are getting a lot more flexible.
From a development scope of one of your existing properties, there may be a severance opportunity within it already or there may be a chance with zoning. It was interesting you guys pulled up a property that was commercial, was already zoned residential. There may be zoning. A lot of cities are updating their official plans.
There may be zoning that's changing on the existing properties that you have, which will allow a higher and better use, which you could take through the approval process, which will probably take, a year and a half, two years, which will come up the other side of the market, I would suspect. That's a place that I would encourage people to.
I do think it is a season to maintain cash reserves as interest rates go up. That's one of the things that we are talking about. I don't think it's a season to go more leveraged. I think it's the season to maintain cash reserves because costs are going up. But I think that it is the season to look for deals.
I also think, the question was, when is the time to buy? Is it now? Yes, the time to buy is now, but I also believe the greater sale is still coming because with interest rates going up and more houses on the properties on the market, I think we're gonna have forced sales.
When do opportunities come and when do deals come, Not when someone wants to let it go. There's a change in people's lives as well, right? Divorce happens. So many different things happen well before in the previous season that we were in, no matter what people's situation was for their houses having to sell or maybe they're moving for a job, etc.
They would want to get the price. If you are moving to a new job out of province or out of the country, you're not gonna sit and let your house sit on the market for six months. At some point you're gonna have to offer it because it's the better decision. I believe the greater sale is still coming as well, and I would encourage you to look for highest and best value, but also not eliminate the severance and the developable land piece as well. One other quick comment that I have is I believe that the demand and the pressure on the rental market will just continue with cost escalating. So for example, I'm in the midst of building a 129 unit apartment building and we've been wrestling with cost.
We are not concerned about the end value because we know that the demand for rental is so strong right now and it's gonna continue now because it's new construction. We don't have rent control to deal with. But I was talking to one of my buddies who builds High Rise condos, and we went through as an exercise on the cost to build these things, right?
It's about 10 to 30% land. % to 40% hard cost. Government fees are say around 20% and the profit is say, seven to 20%, give or take in all of those. Are any of those costs to build coming down? Maybe the land comes down a little bit, maybe construction comes down a little bit, but I keep getting emails all the time from the government about development charges.
These charges up. The cost to build new homes, I don't believe is gonna come down anytime soon. Even to get out the other side, when I believe the economy will speed up again and the market will turn around again. And so that pressure on the rental market, I think is just gonna push harder. So again, I would just throw that out there. With the raising of construction costs, I'm watching some people put their projects on hold. We are moving forward on purpose built rentals specifically because we believe that demand is just gonna continue to grow stronger and stronger.
Laurel Simmons: All right. And Okay. And you did, you called this yourself, the old man at the end. Oh, . I'm gonna let the old man at the end have the last.
Mathew Frederick: Thank you very much. I'll give you an image of something that you've seen before, but an image that I want you to have in your mind and use that image to look at your power team, your renovation team, your property that you're buying, maybe your property that you have now, and maybe the math on it.
Here's the image you've seen before. Cylinder put about eight rocks in it, so all filled up. Then somebody throws tinier rocks in there and that fills up. Somebody throws sand in there that fills up and they throw water in there. You've all seen that before? Correct. You're making more use of the same space.
How do I apply that? Let's say an apartment could be 600 square feet. Let's say I'm charging 1800, I'm looking at self storage. So self storage would have that same 600, but 10 by 10. So it's a hundred square feet times 6, but that's a hundred. Square feet times $400. Four times 6 is 24, so 18 to 24.
Now how do I have to change because of this time? Even that's not looking so good right now. So now that 600 square foot, or that 10 by 10, let's say solve storage. Now I'm gonna rent that space as record storage. Now there's 50 boxes in there, and each box is someone's records from a company and that is probably $10 per box.
All of a sudden I have 50 boxes times 10, and now that's a seven year game plan because I have to store the records for seven years. It's like an annuity. Now, obviously that's maybe what I'm doing, but you see what I'm saying? You look at the same thing and how can I be more effective within that same body?
Obviously, if you have a property with three bedrooms, you might build a half bathroom. Now you have three separate people who are common to each other, which means they do not know each other, but they have the same theme. They all kind of work the same way, think the same way, and now you're getting more money for that same unit.
Now, I didn't invent that. I've been doing that for a lot of years. Today. It's coming back today. Or you can say to yourself, Maybe I should get outta my box. Maybe I should talk to Alfonso. Alfonso, what's happening? What's happening with this rent to own? Can that help me? I might talk to Ken. Hey Ken, building a carriage house.
A coach house in the backyard to get that third rent. Could that make sense? I'm gonna go to Sarah Larbi and say, Hey, Sarah Larbi, what's going on with the conversions from commercial to residential in know which you have to get outta your box and try to make the things you have efficient, or even in a sense try to do some of the things that maybe you were not doing before.
Nowhere did you hear up here. The word fair, What we didn't say was the word brave, but brave is the opposite to fear. I think everybody here has gone through tough times. I've gone through tough times. Just one, one quick thing I remember. I bought my first house in 1984 and the market shot up in 89 and then it collapsed in 89.
That was great because I bought three properties after that. But you know what I didn't really, back in those days, if you were an investor, you were a terrible person because it meant that you were greedy. Today it's a little bit different. If you're an investor, you're doing very well, you're posting it on Facebook.
If you're not doing good, you don't wanna ask the enemy for help because all of a sudden there's a little bit of pride, a little bit of ego. I didn't tell anybody that I was in trouble because I was in trouble. Even though I was working a pretty damn good job, my parents would've helped me. But I had a certain amount of ego in pride.
I remember for four months, I literally had no hydro in my house because I was so in winter. I was so busy trying to take care of everything else that I didn't ask for help. The last thing I gotta say is if you're having a tough time. you ask people for help. At least you won't sit in the winter for four months, make an 80 grand a year, have lots of properties looking pretty damn good on paper, rocking a Toyota Sora, and still not having electricity living in the dark. And that was a little while ago.
Laurel Simmons: Way to end this because I think really the moral story is none of us does this alone. We all ask for help. We all started with one, some of us have grown our portfolios more than others. That doesn't matter. Whatever's comfortable for you. If you're just getting started, ask for help. If you have one door, ask for help. If you are 25, you ask for help. None of us does it alone. All of us need help. The sky's the limit cause if the only thing I'm gonna say about fear right now is that everybody out there is afraid to get into the real estate market, now's the time to do it cause there's no other better time than right now. And with that, I'm gonna say thank you.
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