From getting knocked down at 27 to making a comeback to successful Real Estate Investor, Coach and Mentor to other Real Estate Investors, Tim Tsai shares in this podcast episode his philosophy, insights and strategies he's used to grow a successful global real estate portfolio through fluctuating markets.
Francois: Danielle St-Jean, we're getting to interview Mr. Tim Tsai once again. I think we were interviewing him last year or maybe it was with Alfonso, but anyway, he shared some of his wisdom for this interesting time. You've seen it before Daniel, potentially interest rates going up and different things. What did you think about the interview? We can give a little preview to our guests.
Daniel: The fact that Tim is a very humble person and he speaks from the heart. He's not selling anything. All the information that he gives is valuable. And of course, it's always good to hear also from somebody who's been there and is constantly doing it still.
When you go to a restaurant, between lunch and dinner, and you look at the back of the room and the employees are there and you're in a Chinese restaurant and they're eating pizza or the other way around and you're going. If they're not eating the food here, this is pretty suspicious. When you hear coaches, teach something that they're not doing themselves. That always makes me a little hesitant, but Tim, everything he teaches, he does. The two of them work together. Really good advice, pay attention to his advice. It's gonna really help you grow your business.
Francois: Excellent. We're all about education. You'll hear it in the interview. Tim does focus on education. This reminds me, please make sure to rate and review our podcast. Give us a thumbs up and comment and share it with someone that it would help. That's our goal, The REITE Club was founded on education.
We wanna help everybody customize their lives and we have to share this information. That's why we're putting all this time and effort interviewing experts that are very busy. They're giving us their time and we wanna help you grow and scale your business so that you can be financially free. Let's get to the interview.
Welcome Tim Tsai from Trust Your Talent Academy. Tim is a world traveler. We were just talking about Hawaii before starting to record, and I heard about five offers that fell through. Can you tell us more about that? And then we'll get to the interesting stuff.
Tim: You know what? All good because going back into the US market a lot more aggressively over the last few years here. Hawaii was never really on the radar actually, cuz last year in 2021, when the lockdowns were still happening, we actually spent about a month over there. During that time we obviously started looking at properties and talking to our realtor friends and really learning about the taxations and assessing the viability of having let's say short term rental, so Airbnbs and whatnot.
We learned that there were a lot of taxations, a lot of taxes and a lot of rules that we have to abide by. And plus Hawaii prices are crazy high. That kind of got put to the wayside and this year when we were back there for about two and a half weeks, again, we happened to stay at what they would call a condo hotel. For those of you who have been to Waikiki. It was the Ritz Carlton residences on Waikiki.
We actually never even thought about it because again, it's the Ritz Carlton. Nobody kind of really thinks about going to stay outta Ritz and thinking about let's buy something at the Ritz. And then funny enough, we actually met a few owners and the reason we're calling them owners is because we later learned that's why they're called condo and they're actually residences. That's why it's called a residence.
Again, aha moment. We never thought about it because our business model is that we actually don't buy condos for a lot of variables and cash flow and performance and control situations as an investor. However, we really started to dig into that route and we learned that it's actually quite a viable business model, especially for people that want to leverage.
Not so much leverage, but compliment their lifestyle with investing because the idea is obviously we still want it to be the cash flow. At the same time, we're not paying an am every time we go to Hawaii. Because frankly, that's still one of the very few places in the world. I still get a little sticker shock every time I go.
Daniel: I have a question for you regarding condotels: is that something typically American? Do you find that in South America? Do you find that in Europe? What's the story here with condotel?
Tim: What's really cool about that is that we obviously started digging, cuz it was never on the radar. We found out that actually there are not a lot of hotel chains right now that are doing condotels but we did find out that, I think it was Ferrari. They have their own and asked them Martin, they have their own as well Armani, funny enough. But then the more commonly known hotel chains, like the Ritz Carlton or the JW Marriott, Four Seasons, Fairmont.
They do have the condo hotel concept, meaning people actually buy them. It's a hundred percent ownership and you basically join their hotel rental pool. Instead of going through Airbnb or VRBO or all the other platforms, you basically go back into those recognizable brands, rental pools. They manage it for you. They rent it out for you and they maintain it for you.
Francois: I know on the lower end as well, Hilton does it quite a bit in Florida. It's again an interesting model that you own a piece of the hotel and then you're managed and you're part of the brand.
Tim: Exactly, cuz in the beginning we had to make sure that this is not a timeshare, it's a hundred percent ownership. It's a hundred percent deed.
Francois: You could live there if you wanted to, but now exactly you're getting really fancy service depending I guess.
Tim: That's kind, what piqued their interest. We obviously started doing our due diligence. We were looking for numbers and reports and really doing the analysis. We deemed that it's going to fit our lifestyle and numbers make sense. We started making offers because of COVID, a lot of the listings actually have stayed on the market for over a year and they are now moving.
You know what? We have five offers fall through because we thought they would be motivated, turns out not so much. That's another lesson that we just learned because that market apparently caters to Japanese bankers, business owners, and the same type of demographic from Korea, Hong Kong.
People that make very decent money that don't invest the way we invest, they're just parking money overseas. Even though some of them have been listed for over 500 days, they're just letting us. Until they get the price that they want. They don't mind feeding into it every single month.
We're not talking about a few hundred dollars every single month, depending on the unit, because their property taxes for investors, not even foreign investors, just regular investors, even if you're American, it's already four times more than if you were to live there yourself.
We are looking at anywhere from a studio to a one bedroom. That's anywhere between 500 to about 750 square feet. The maintenance fees are on average $1,100 to $2,000 a month. The property taxes are about $1,500 to $2,400 a month. That's Hawaii for you.
Francois: But it's luxury and that kind of leads me to one of the questions we have for you. Which markets are you investing in 2022 Hawaii? Maybe not yet at the time of this recording, but maybe when we see you in the fall or something you'll have something or later on this week.
Tim: Maybe even next week when I see Laurel. And I think you're coming out here too. Aren't you?
Francois: Yes, The REITE Club will be live in Alberta for a week, in Calgary and Edmonton. At the time of this recording, we're in June, but maybe this will air later this summer early fall. But yes, I'm curious about Tim now, and I like more serious business. Where else are you investing now? What's happening in 2022. Hawaii has one potential. Very different model to the condotel. Have you seen anything else that's new and exciting?
Tim: Absolutely, Last year we became very active in the Arizona market. Mostly Phoenix Metro, and then also the Indianapolis market as well. And surround an area. About a month and a half ago, we actually traveled down to Cincinnati, Ohio and the Covington, Kentucky area just doing a little bit more due diligence right now in terms of which markets are viable based on the business model that we have. About two hours ago before this recording happened, I literally just interviewed another property management company based out of the Indianapolis market.
Daniel: Tim, you're going to the US. This morning in my email inbox was an email from the Canadian Real Estate Association. The title was why are all the GTA investors buying like crazy in Calgary? Why are we going to Calgary? The Alberta people, you are going down to the US, what's happening here? How come you're not buying a home?
Tim: You know what? We are still buying at home. We just utilize different strategies. I think I should probably clarify a little bit more, cuz I think a lot of people understand that and this is something that we also teach because it's just our investment philosophy too.
It's the fact that we always start with a business plan that should be a profitable one . That becomes the financial goal and that becomes the blueprint that we follow. From that point forward, we start to identify the strategies that we want to implement in that particular fiscal year. And then after that, we start to pick markets that will contribute to those markets.
Back in the Alberta markets, we are still actively doing acquisitions as well. However, our main strategies in the Alberta market have always been the last two years between lending your typical BRRRR and either flip or BRRRR and duplex. As what you would call it out East.
We usually call them Sweden properties out West, as and just keep it as income properties just because Alberta in general is typically, if you think about it, where people come to have nice big yards. Single family detach, it's really where it's at. Inventory on multi-families typically is very low and it's very competitive because whenever something comes. Then there's a hundred investors swarming onto it as well, if you wanna stick close to the city center.
We are absolutely doing that. But then at the same time, we're just very strategic banks. And the last one in Alberta has been and always will be lease option rent to own simply because especially right now with the economy, that Alberta is in an economic situation. Finally, cuz you guys have been experiencing a lot of really natural market appreciation over the last few years when Alberta kind of stayed sideways for the first time in six years.
We're seeing the markets rebound in a very big way. We're very strategy driven. Two months ago, we actually did acquire a 60 unit apartment out East in Canada as well. We've hit our quota on multis in Canada. That's why we are going down to the US a little bit more aggressively now too.
Francois: That's exciting to hear about all these opportunities in Alberta, rebounding and Daniel, you used to do rent to own, lease to own for quite a bit. I guess there's some fundamentals happening there. You need to see some appreciation, some migration as well, like growth and population. That's what Alberta is experiencing right now as well.
Daniel: Prices are rising. Okay and in Alberta right now, but so are interest, but then interests are rising everywhere. It's a national phenomenon. What's your take on the rising interest rates right now?
Tim: You know what? I'm just gonna really put on my investor's hat. I actually really love it personally simply because the fact that I do believe that takes away the HGTV trained buyers and the investors that are really property collectors. It allows the markets to really correct itself positively, and that it really allows people like us to be able to get back and stick to the fundamentals even more so that eventually collectively. I think as a buying group, professional and trained investors over time.
We are able to correct the market together, but then for me really, it's awesome because you no longer have emotional buyers that are going. I'm just gonna buy and flip something or buy and hold it forever. Because now with the rising interest rates for those people. Before they might be feeding about 50 to a hundred dollars into every single property, and just waiting for the market to go up and now they're going, hang on a second.
Can I actually afford to go in the negative for 200, 300, 400, especially if they want to scale, which is a bit of a nightmare from our perspective. I think so. It's painful. Don't get me wrong. I do like it for the market correction part. However, for acquisition it's painful because we're on the flip side. We're also seeing our own cash flow diminish a little bit at the moment.
Daniel: Just a comment on this because I'm talking about two people here who were not around in 1981 when the interest rate was 21.85%. Even as interests are rising, people seem to have a very short memory. They don't remember that say seven or eight years ago, 5%, 4%, 6% was the norm. And then it went crazy to 1.95 or whatever. Now it's rebounding to 3.75, 4.25 and everybody's panicking. Hey guys, this is even cheaper than it's been over the last 20, 30 years. You should have been around in 1981. You would think that 4.5% percent by now is free money.
Tim: Exactly, pretty much. That's an amazing point. Actually, it still is free money. If we actually think about inflation.
Francois: Yes, it doesn't even match inflation, not anywhere close. Which is insane. Very cool, interesting optic as well very different. A lot of people are fearing, but you're seeing the opportunity and I think that's how investors need to see it. Even at 21%, I'm sure people were buying properties back in the eighties. We saw construction. There are homes and buildings that were built in the late seventies, early eighties with crazy interest rates.
There was a lot more private lending, second, third mortgages. My parents told me all about it. We had three mortgages on our house, things like that, which are things you don't hear as much, but it is happening more and more again. It's like a full cycle. 40 years later.
Tim: A hundred percent. Frankly, I call it two and a half cycles that we've experienced now because we've been living in Edmonton, Alberta for 12 and a half years at this point. When we first moved here in 2009, that was pretty much right after the global financial crisis or kind of in the middle of it still. We got to see what it was like right before. The market cooled down. However, Alberta's really interesting in that sense. That's what we've also learned.
Being a resident here is the fact that we're really heavily oil and gas driven. And as much as a lot of statistics might tell you, it's 25%. That's what it accounts for. However, let's not forget oil and gas. There's also byproducts for import and export as well.
Yes, while the Alberta economy overall is diversifying and I'm happy for that, obviously at the same time, though, we're still very heavily driven by oil and gas prices. And the trajectory of it. During 2009, when every other province was suffering because we're impacted by the global financial crisis, Alberta was actually doing quite okay. It wasn't until 2014 when it actually really crashed.
Francois: When everybody else was booming, you guys crashed.
Tim: Exactly and now it's the other way around.
Francois: Right now, Ontario, things are really cooling off and things are changing. It's not perfect, but Alberta is still seeing some major increases. Again, this leads us to the next question. What do you think investors should do with this speculated recession? Because this inflation increases interest, all kinds of things. Will most likely lead to some sort of recession.
Tim: I guess Econ 101 concept, it's all supply and demand, first of all. And second of all, I do personally believe that we are going through a recession. It's just a matter of how deep and how long because again, rising interest rates. What that also means is it's encouraging the general public to save money, to tighten their belts, to budget a little bit better simply because they're fixed expenses. If they have debt, if they have mortgages, if they have HELOCs for example, Their debt servicing is gonna go up, which means they're gonna cut down, spending in other places.
That's gonna drive the economy into a recession period, by definition, really. However, the government is gonna have to look at it and go hang on a second. Cuz traditionally, how do governments curb recession or bring the economy back up is to encourage spending. I do see that at some point the interest rate will fall. Government is going to correct that.
I'm hoping for a 12 to 24 months turnaround, who knows, but at the same time, I do think that we are going into one, but then that's the funny thing, because in the beginning of COVID, especially when it comes to real estate, let's take a look at what happened.
We all remember The REITE Club has put out so many sessions, right before the market went crazy again. It was just going down, and look at what happened. I do believe that all it takes once again is just go back to the fundamentals because it comes down to the fact that every single property should be a viable business.
What that means is when we are looking at any opportunity, we need to know that it's gonna be able to cash flow after stabilization, if not from day one, it could be $5 doesn't matter. As long as you're not in the hole for hundreds of dollars, if not thousands of dollars, right from day one, just because you're buying and holding for no reason.
Daniel: Very smart, good advice. Tightening up, that brings to me the word streamline. How do you streamline your investing business?
Tim: How do we streamline it? I love that question cause going back to again, what I always call the SMP philosophy is like I mentioned earlier every single year, because we run it as a business and Francois and Danielle, you understand, this is the fact that we do leverage other people's money as well, which means it's a huge responsibility and we do manage for other people, and so we have to answer to them. And even though these are very close friends, like pretty much, and we've done business together over. I know Daniel, you've been doing this for a lot longer too. I've been doing this for 12 and a half years. Francois, I forgot. How many years have you been?
Francois: Seven years. I'm the newest investor here.
Tim: It doesn't matter. I always say it's not the years, but the mileage that counts. 7, 20 something, 30 something, 12 doesn't matter. The point is, if we are working with OPM, it's our duty. It's our responsibility to take care of that. This is why, I know all of a sudden, it seems in the real estate investing world, it became popular. All of a sudden Canadians are going South of the border. It shouldn't be that way because we've been investing in the US since 2013, because it really comes down to what your financial goals are.
Let the goal determine the strategies you wanna do, and then let the strategies dictate the markets that you gotta go into. If we're looking strictly from a cash on cash perspective, hypothetically speaking, and this is really just theoretical, is that if you're making cash on cash, a 5% here in any Canadian market, that's the best you can get.
You can go South to the border and you can get 10%. Why would you not even look at it in the first place? That's always been the philosophy. Then we look at the property types. That's when we actually determine, okay, are we gonna go commercial, industrial warehouse, offices or multi-family or single families? Once again.
Francois: Amazing advice. I love hearing about OPM and how you should treat it carefully. It's people's retirement funds oftentimes, or savings for their kids' education. A lot of people I hear are very casual about OPM, but this is nice to hear that it's a big responsibility, even more so than your own money cuz somebody trusts you with your life savings.
Tim: Exactly. I want to add to that. I do believe that I've shared this in one of the previous episodes that I've recorded with The REITE Club too, is how I actually got started. One of the reasons why I got started was because in 2009, I was working a typical corporate JLB like a lot of people. Even though I was making good money, I had no life. I had no freedom. I literally had no health, but more importantly, I was watching my RRSPs, my TFSAs, and my company stock options decrease in value week after week, month after month.
I'm like, I'm putting in 80 hours a week for what I'm never going to retire. I put my money into a development project, so I was the OPM for somebody and then long story short, they took the money and ran.
Francois: Wow. Noritz Carlton back then.
Tim: What happened was we had to end up going into a law firm's office to see if we could recuperate our money. And again, I was only 27 years old, completely uneducated about money and finances and real estate investing at the time. I walked into that room. I was easily one of the youngest, if not the youngest person in that room. What I saw was what changed the rest of my life in a way. It's the fact that almost every single person in that room, besides me, is in their fifties, sixties or seventies.
By the way, Daniel, I still stand by what I said that day. I believe you're in your late fifties. However, those were the people that I saw and they were crying. They were banging on doors and floors and tables and some of them were going. How am I ever going to put food on the table? That was my entire life's work and that's really, in a way, scared me into financial education. The fact that I realized it could happen to me again.
Francois: Thankfully we're 27. Technically, once you regain your health, people have to listen to this older episode about your health story, but then you were able to rebuild. You had time, but if you're 70, you don't have as much time you don't have. Time is non-renewable so hopefully you have 30 more years. If you're 70 but could be 20.
It could be five who know at any age, but even more so in your seventies. And you're not gonna go back to work. If you've retired, things like that. It's a tough situation. Thanks for sharing your wealth of knowledge as always Tim and now it's time for our lightning round. We have questions.
Daniel: Actually, before we get there, I have one question. One more question for Tim, because for the last 20 minutes, we've been talking to Tim, the investor. I know Tim more from the coach's point of view. I wanna talk to Tim, the coach for the next question. Tim, for the people who are listening to us here. I don't want you to give all your secrets and stuff, but as a coach who coaches investors, what do you think is the biggest mistake that you see investors make and how should they correct it? I'm putting you on the spot. I realize that, but you're a smart person. You'll come out with something brilliant.
Tim: Brilliant or not, I'll let you be the judge. I'm forever biased and I guess the first word really is thankful and then biased for the financial education that I did. Like I said, it was what I witnessed that scared me into taking courses because I realized that. If I knew what I was doing, I could make good money from real estate investing, but I didn't know what I was doing. I could lose money fast as well. Obviously, the biggest advice that I have for anybody, and this is personal experience.
It has nothing to do with the fact that I am coaching or mentoring these days. Honestly, even if I didn't start a business in that industry on my own, I would still encourage people to do and I would definitely encourage people to really look into getting themselves educated. It could be, as overall all encompassing as the business model that I utilize, because obviously I work my business model and that's how I coach, how I mentor and how I train.
I understand, there are a lot of great coaches and other organizations out there because really ultimately the mission is financial education. The mission for us in particular is to create financial independence, one person at a time. Like I'm not one of those people that says, hey, you have to quit your job. Financial freedom is the only thing you have to go for. To me, that's marketing buzzwords.
Francois: Some people love their jobs and if everybody quits exactly big trouble right now.
Tim: Exactly and the idea really is I truly firmly believe in financial education. One major way to solidify what we call financial happiness, financial security, and that's really through leveraging one vehicle that we all know that is real estate investing and leverage it to create multiple streams of income. Cuz multiple streams of income is really where it's at. We've all heard the saying that the average millionaire has a minimum of seven streams of income today. Why should it be any different?
Daniel: You know what, for people listening to this, they're gonna think this was rehearsed because everybody talks about The REITE Club but you forget that it's an acronym that stands for Real Estate Investing, Training and Education. You just told people that you just suggested that people get education, which is exactly why we started The REITE Club. We're on the same wavelength here.
Now, I have five questions for you. What is the best bus business advice you've ever received from any source book, coach, trainer? What's the best business advice you've ever received?
Tim: I'm gonna say this is coming from the very first mentor from my real estate investing. My financial education workshop, and he basically just said, I don't know if it's a quote, but then later on it became one. I guess it's really just believing in your own ability to accomplish anything that you want. I've heard it in so many different ways from gurus like Tony Robbins and Bob Proctor afterwards, but that's really what it is, gave me the confidence and the faith.
Daniel: They all say the same thing when it comes to that. Tim, what is the key attribute that has made you successful? Cause you are successful. Anybody who knows anything about you puts the word successful in front of Tim's Tsai.
Tim: Thank you. I think it's along that same line. My answer has always been treating myself like an amateur at all times being a lifelong learner. The more I realized, that the more I learned, the less I know. And so just never stop that hunger to learn.
Francois: Very humble, which is good.
Daniel: You know what? We do a lot of business with a person named Jason Boccinfuso. We were on the bus tour recently with him and somebody asked him the same thing. Right now, this guy has a hundred projects in development in the GTA. Somebody asked him almost the same question. He said, since I go to the office every morning thinking I know nothing, and I rely on my team who are smarter than me to make these things happen.
Tim: Yes, absolutely. If you're the smartest person in the room, you're in the wrong room.
Daniel: Tim, of all the places you visited, where would you go right now? Right this minute. If I could wave a magic one and send you there, where would you go?
Tim: Paris, not Ontario.
Francois: I hope not.
Daniel: Similar question, of all the places you've not visited yet again, where would you go?
Tim: Budapest, because, I think I've just fallen in love with Europe in general. I have not really explored Eastern Europe yet. I've gone as far as Warsaw in Poland and I love the buildings, the architecture, the history, the vibe yeah, Budapest.
Daniel: My last question for you today, if you could go back in time and meet anyone in history, who would you like to meet and why?
Tim: Gandhi and I think it's because one of my all time favorite quotes is from him, be the change you want to see in the world.
Francois: Words of wisdom. It's hard to beat .
Daniel: With those words of wisdom Francois, what do you think? Cause I don't think we can do any better than this. Should we end the interview here?
Francois: Yes, thank you so much, Tim, for sharing a bit of your knowledge, your wealth of knowledge and also the fact that being humble and learning is part of your daily life. Where can our listeners find you? What's the best way to reach out to you or hear more from Tim?
Tim: They can look me up at thetimtsai.com.
Daniel: Tim, thank you very much.
Francois: Thank you very much again, in Hawaii at some point or something.
Tim: Yes, absolutely. You're always welcome anywhere we get properties, you're welcome.
Francois: Excellent. All the best. Cheers.