The mortgage landscape have literally constantly changes so we’re bringing Dave Butler and Dan Patton from Butler Mortgage back on this episode of The Your LIfe! Your Terms! Show to give us the latest. We cover how to navigate the mortgage landscape as an investor, what to know about appraisals when using the BRRR strategy, where rates are headed and the latest on the mortgage stress test in Canada. You can reach them at 1-888-684-8326 or via www.ButlerMortgage.ca and to reach Dave or Dan mention this show or our names when you call.

• To listen to this episode on iTunes click here
• To listen to this episode on Stitcher click here
• To listen to this episode on Google Play click here
• To listen to this episode on Spotify click here

Transcript

Hey everyone it’s Tom Karadza on on a cannot speak and on this episode of The your life your term show, we have David Butler from Butler mortgages and Dan Patton from Butler mortgages or as we refer to him on the show Daniel, and we have a great chat about a whole bunch of stuff. We talked about the burgers strategy and I’m laugh when I say bird, I gotta explain why I laugh when I say bird because when I went backpacking across Europe, my friend and I were at a wine festival, drinking way too much wine. This is many lifetimes ago, it feels like and we, you know, ran into some Italians, we couldn’t speak English and my buddy there starts trying to speak Italian in English and he was explaining that we are from Canada, and I don’t think they can understand quite what he meant. I’m not sure why but then he started going burn better and he started like rubbing his shoulder. You know, when you like clench your arms against your body, you rub at the side of each arm like you’re cold, and he was using, he kept saying better to explain. We’re Canadian. So anytime I see the burst I always think of that. Anyway, so we talked about that and appraiser appraisers and appraisals and why that’s important if you’re using these different strategies and what you need to know about them, many people overlook that aspect. I mean, we’ve been doing this stuff for a very long time. And it’s like, shocking to me that people do not understand that process more than they do before they get started. So we talked about that we talked about using corporations with your real estate investing. We talk about different strategies with banks and mortgages. And we talk about the stress test in Canada, we break out our own crystal balls and talk about the future of the real estate market here in Ontario. So we cover a lot of stuff. Good guys. Nick’s on the podcast as well. So enjoy this and listen, I want to share something. We have a whole bunch of research reports that we put out here, and they’re available at Rockstar inner circle calm forward slash reports. One of the ones that’s most overlooked to me is a report where we compare if the amount of money that you take to spend on your child’s university or college education and compare that to if you want taken that money and bought an income property with it with the property financially be better for them than the salary that they would earn as a graduate of college or university. We kind of map a salary of a university or college graduate against the value of that income property. And listen, we are big believers in university and education. We spend a lot of money on our own education, post college and university ourselves. So this is not an anti University talk. It’s just a one way a little thought experiment and one way to talk about assets and the value and power of assets in your life. We believe you still you we all need assets. So this is one of our our ways to reframe the discussion a little bit. And you can get that report as well, along with the Ontario population report and the destruction of the middle class report that we put together, among a couple others all at Rockstar inner circle.com forward slash reports, check it out. And with that, let’s get on with the show.

Are you ready to live life on your terms? Is it time to take charge Real Estate, business building the economy, health and nutrition and more. It’s the your life. Your terms show with Tom and Nick.

Are you ready? Let’s go.

Okay, we were we are live and Nick I know you can hear me so we’re good to go. Yes. Amazing. Yeah, we are good and this is already disaster because Nick’s here everyone. Dave Butler’s here. And Daniel patent is here. Your parents called you Daniel. No, they call me Dan. Oh, really? Yes.

Oh, I have a good made that up. When he got when he turned into a mortgage broker. He became Daniel. That’s a true story.

I thought when I started doing mortgages, I was professional. Exactly right. I thought Dan Pat and you know, I said, Well, you know what, I better say Daniel J. Patton sounds more

like Dave just laughing outright laughing.

He was Dave W. Dave,

Dave w one year and I was like, I K

how many mortgages Do you think the W the J got you guys?

mean nothing? I gave it up.

I gotta think it was the right call for wave

w wow I think we might just let everyone know that you’re wearing a hoodie right now and two seconds ago when we did a little YouTube video you were in a full I was an associate yes three piece was it three now but I mean it was a two piece could ever get to look like a three piece it was that were two buttons being done. I mean,

it really was classy. Yeah. I can’t I can’t get comfortable on that thing though. So if you want to do a podcast it’s got to be Yeah, gotta be in if you’re listening

to this and you haven’t been to our office yet. We haven’t we have a lot one washroom is rather large. I saw Dave scurry into there with his hoodie and I don’t know are you wearing track pants?

I am. I’m in the track guys now. Okay.

Yes, you changing everything. By the way, that bathroom is so big. I mean, I was I felt like I could bring my work in there and everything is pretty cool.

We were going to put the ad and when we had the big 85 inch, whatever that TV is of the trading room. We’re going to put it in the bathroom because we had we’re storing it in there. We’re like, man, we should just put it up. on that wall Could you imagine what that would be like in the office? That’d

be a nice feature. You’d have a couple of people just stay there and be like, Yeah, he’s going in there. He’ll be there an hour. Yeah,

UFC UFC fight comes on and say Hey Nick, were you watching UFC fighter I’m gonna go to the office bathroom and just hang

out there rather sitting there on the ground.

The problem with the problem with that bathroom is because it has the the the accessibility buttons which are obviously very important when needed when you when you don’t really need them you press the button and the door takes a full I feel like 15 seconds to open it and then it pauses for a good I feel like a minute and then it does another 15 seconds to close. And then you have to press the big button to lock it and the red light the green light goes red and then to get out you’re kind of scared someone’s gonna break it though I have this feeling someone’s gonna be like well the doors trying to shut someone’s gonna like stop it and then it’s just gonna something how the hydraulic systems gonna break or something. I don’t know I have this weird feeling. You should probably put a sign up that whoever breaks it pays for it. So we have a we have a we have a little disclosure form when you enter this office in touch anything Kimberly That they didn’t Nick, you don’t know this Dan was trying to close a door was no door. So this office that we’re in right now, just in case you’re listening to this, I know you can’t see this. The Office we’re in has no door. We have the glass wall at the front of my office, but there’s no doors and stuff yet. And I thought Dan was joking. I’m like, hey, Dan. Dan goes, can I close the door? I’m like, Sure, go ahead and close the door. And I thought you were totally joking, but you know, grabbing the frame of the door of the doorframe and he was making

Tom let him go for a while to

we’re doing a podcast, I thought naturally, we would be in a confined space, but

the technology they got here, all the doors can be good man. I’m a mortgage

broker. Yeah, this is a serious, they’re going to talk about mortgages.

I just

wanted to start with something you guys know, I don’t know how many hundreds of millions of dollars in mortgages you’ve done over the years. You too. But if you look at an amortization schedule, even at like if I take a $500,000 property, and we put a $400,000 mortgage on that property at 3% interest rate over 25 years The total interest payments are hundred and 67,000 bucks It’s big. So that’s a 25 year two By the way, that’s a 25 years that’s a 3% which we haven’t been around 3% for that long. Like if we averaged out how long we’ve been all working together, I would call it like, I don’t know, maybe 3.8 the old

days the old fours and fives

so on every mortgage you’re putting out the door and not every because the price is always changing stuff but anyway, in this example the $400,000 mortgage which a lot of investors will take a $400,000 mortgage on a on a condo or single family home in the outskirts of the GTA or whatever you’re making the bank’s over the next 25 years 167,000 bucks like am I reading that wrong? No,

no it’s legit I mean that there is obviously a spread the bank’s you know, buying the bond but I mean, at the end of the day, it’s at the end of the day, that’s money out of the consumers pocket and it’s going into someone else’s pocket.

So yeah, you’re right okay, so they’re buying the bonds and they’re but they’re just not okay God still making a good chunk

till By the way, there, there there there the big six for a reason, right? I mean, there’s They’re big and they have control over that. And that’s the we’re talking big talking lots of decimal places on those dollars. Like if you ever sat down

and thought about how much money you’ve made the bank’s like, is that crazy? Because I because I don’t really like all the banks too much unless I need them. You guys might be part of the problem, you realize that because you’re here sure, making the bank’s too much money. We’re like,

we’re poor to face, right, we’re playing both sides, you know, we gotta represent the bank in terms of getting away their money, but the reality is, is where we are for the client. So I mean, but it’s interesting how that Ontario disclosure stuff works, you know, in terms of who are you representing? Yes, no, you know, both. I mean, it’s, it’s really odd. But I mean, you know, we always say, I mean, our whole thing I say, we’re, we’re like sports agents. You know, our investors are like professional athletes. And the banks are just the teams, you know, and who are you more loyal to the customer who you’re going and playing those banks, you know, effect effect essentially off each other. You know what I mean? That to me, it’s always been on record. Getting my client. But just oddly enough, the way that Ontario disclosure stuff and everything works is you’re supposedly working for both, which is odd. I don’t get it. But I mean,

yeah. And the forms that the client sign there’s

speak right into the my story.

And the forms that the client sign, there’s literally a line that says we represent the lender in this transaction.

Now, it makes no sense,

right? So during the whole, because we know that in the lawyers representing the lender as well, yeah. Yeah. representing all of us. So wait a second, for some reason. I knew the lawyer at the time of closing was representing the bank like I got that even though you’re hiring the lawyer and you’re paying the lawyer. I understand that the lawyer it really is I don’t think I knew that

it just changed. I would remember back in the day it was it wasn’t like that. Yeah, it was you represented both but then I guess there’s changes with Cisco and physics now physics. I mean, our that’s our governing body for mortgage brokers. And there’s just been every year there seems like some new change to try to satisfy some group of people and

so with that, Time, is there a certain time like the whole process? you’re representing the banks?

Well, we, we, we, we play by the bank’s rules in terms of qualifying and representing them in that sense, right? that we’re providing the right rates, we’re providing accurate info to the clients. But from a relationship standpoint, we were trying to build it with the client, right? So we’re representing them in their best interest and sending them to the right bank that’s going to have the right product for them. So it’s a combination of both are truly on

I like to just go over what is the actual truth? I mean, the bank doesn’t need us to represent them. They can represent themselves they’ve actually decided years and years ago to work with mortgage brokers, because, sadly enough, and I don’t mean to put anyone off here but the bank staff selling mortgages was inept. I mean, if you actually think about it, why do mortgage brokers exist? Just actually think about that? Like, literally? ask yourself that question and think it out. Why do mortgage brokers exist if the banks, the people at the banks did their jobs? Well, a mortgage broker exists, would there be a need for us? answer’s no. But the banks are greedy. And they want to have, in my opinion, unskilled people filling those mortgage positions. And the public over time many, many years ago decided that’s not the way to do this. And some people still do it. But most people now are going to a broker because a broker does get to act as kind of an independent entity to the transaction to bring them both together. And especially when we’re talking about working with real estate investors. Is there more of a need for mortgage broker than investor these days navigating the whole landscape of mortgages? I mean, we, we literally we’ve had I’m not kidding. I came back from a Scotiabank mortgage broker conference. It’s for like some of the big producers at Scotiabank. They’ll take us this year it was in San Diego and the president of Scotia mortgage authority basically said, you know, in other words that the stress test actually gave mortgage brokers like an Another 10 to 15 year history in the business, they’ll be able to continue to navigate because as much as this seems odd, most people are scared of the stress test. They hear stress test, they scared of it. They to them, it’s an extra level of where they have to navigate. And so now mortgage brokers to the end, this is coming out of the Scotiabank, president of scotian mortgage already said, mortgage brokers are now even more important because the general public believes they need to go and reach out to broker to figure out and navigate this space with the stress test now so now imagine real estate investors and we’re talking about people are saying you need a mortgage broker to navigate the stress test. Well, what about actual real estate investors that want to buy 15 properties and need to refinance to their properties need to get home equity line of credit? Is there any more poignant time and that you will need a mortgage broker than when you’re investing in real estate? I mean, it just to me makes the most sense. So

Jeez, Dave, you really seriously

nobody. It’s all interesting. No, it’s Really good information. Well, why do you think? Why? Like, why do you think it is extending the way you made a comment early on there for two comments. The first thing you said is that most Canadians you think are using mortgage brokers are alarm more than I still have to explain mortgage brokers to a lot of people. It’s just wondering if you guys because you guys are in the business, if you think that’s the case, because I feel like I’m always telling you, hey, there’s this mortgage brokers and residential real estate, you don’t have to pay them and you and the next question is, do you get the best interest rate with mortgage brokers and always like, yeah, you totally get the best interest rate. Right?

Yeah, it’s, I mean,

I guess we are in a bit of a bubble. I guess, Dan and I in that, I mean, we we think most people do know that they know me to mean the mortgage broker. But every day, there’s a new scenario that will come up where, you know, we’re like, how are these people not working with someone like us before like, you know, their whole portfolio of like their four properties they did at like CNBC because the CNBC rep said to do it, and we’re like, that was the bad movie. ocbc is not the one you want to use at the beginning. And so we We’ll look at each other and be like, Wow, I can’t believe like these these people got caught and not kind of web.

And I think that even whether you’re an investor, you know, first time buyer, whatever people will a lot of time rely on the relationship that people they know they’ll reach out to their family friends see who they worked with. So, you know, depending on on maybe their family history, sometimes whether they’re just used to go into the bank, they got the same bank or they dealt with for 1015 years, that’s just where they start, but I find a lot of the time now real estate agents in particular prefer to work with a mortgage broker, because product or bet, you know, product wise banks are all very similar, right, the interest rate may fluctuate, but in terms of qualifying as a first time buyer, it’s all very similar. So a lot of it comes down to service and a lot of it comes down to options. You know, if you’re an investor, you’re a buyer and you’re trying to qualify with, you know, 20% down and you’re going through maybe TD and you own a property that has a line of credit, your numbers may not work. So if you’re a real estate agent and you have a TD contact and that TD person saying no to you, you definitely want to have a source of, you know, different ways of getting that deal done, whether it be a mortgage broker different lenders. So we sort of bring everything together as a one stop shop for that real estate agent or for that client and just shop it around

you know what there’s a lot of people the talking about doing I think now the trendy way to call it is the burst strategy. But you know, basically buying a property I

didn’t know what had just figured this out, like we’ve been doing that for years.

But it’s like this strategy has been around forever, but if you’ve never heard of it, it’s anyway by a rehab a property rented out refinance on repeat, I think that’s the whole idea behind the thing. But, you know, I find that when some people are hearing this, they’re jumping in and they think their property is going to be appraised at something maybe that’s a little unrealistic. Where are you guys see, what’s the latest with appraisers right now use because remember, it was around 2017 Where did we get that message kind of like threading through the banks where the banks I felt like went to all the appraisers and said hey, look, guys, you got to kind of tighten the screws here. You got to get a little more would have been 18 right? I mean,

yeah, after the seven 17

kind of peak, I think that’s when you started to see a lot of problems is 2017 just, you know, a lot of multiple offers people having to go in over market. And when the appraiser started going out on those big properties and the value started coming in lower, you had a lot of people walking away from deals, they didn’t have the ability to get more down payment covered the difference. So I think that was, you know,

that was really the start of areas kind of like we had a bit I mean, a lot of people won’t see it as the same way we see it, but there was a bit of a mini dip, or mini crash. I mean, I crashed a terrible word, but there was definitely a dip in 2017 and the last office 17 and then 2018 I think our biggest problems were definitely in 2018. I had like I had clients that had bought new constructions in like 2016 2017 like right in the peak, and then they had to close on their mortgage. We sent the appraiser I remember this one in particular was a $960,000 pricing Callanan brand new and a townhome or

something. No, it was wt Yeah.

And it was summer of 2018 we send out the appraiser appraiser comes back like hundred and 50,000 light because they’re just there was no comps I mean nothing. Because this is this will actually be really good info I believe for anyone listening is that the bank and the more importantly the appraiser doesn’t actually care, sadly enough of like how great your finishes are in your house like oh, you spent an extra 50,000 on foreign or whatever they don’t. That’s not even in the appraisal report that you might have like a checkmark under good condition as opposed to average condition. But that doesn’t equate to as much they’re true and the truth and the reality is, all appraisals are based on the last six months of actual sales of deals that have closed not my neighbor just listed their house yesterday for 1.6 million. So I think that’s not what my place is worth. That’s not that’s not it, it’s actual sales and it can’t even be Hey, my neighbor just sold you have to wait till the actual closing date because the appraiser what happens is they go to your place, they take their pictures, they do their measurements, they get the layout of the home, then they go back to their office after. And they pull up a list of all actual sales within a certain radius of your home, that are like your home, like let’s say your homes to stores. So they’re finding to start to garage to garage, they’re trying to match it up. And then from that list, they have to pick the three or four or five best that compared to yours. And then there’s just this set amount of adjustments like okay, the one that the basement was finished on the other one and yours wasn’t. So they it’s an arbitrary move of like a minus 40,000, let’s say or whatever that numbers are, you have a pool and the neighbor didn’t, and the neighbor sold. So after this moving around of these figures, it’s actually a computer system spits out a number. It’s not the appraiser sitting there going, I think this thing is worth this. They just go put everything in the computer. It’s a software just like a mortgage application. They put it all in their software, and it spits out a number and now then the praiser if you don’t like the number can go back in and make adjustments to some of the comparables and some of the nuances of it, but they can’t just go in and go. Okay, I think it’s worth this, that actually does not happen. But we have to explain this a lot. But that’s how the appraisal process whereas I

find where people are getting caught is there, sometimes people are taking a single family home, changing it into maybe a legal duplex, and the appraisers are going out there and considering it just like a single family, residential single family, great that you made it illegal duplexing great that you like maybe almost doubled the income on the property, but they don’t really see it that way. They’re just looking at it as like, what are the six months worth of comparables on the street? Correct? Am I my mom

and and part of that might be because if the area is new, you know, in particular, maybe a place like well, and it doesn’t have a lot of duplexes and people are maybe going in early. Now, there’s no comparables For this reason, so they’ll just appraise it as a single family and say there’s no comparables around,

or even if it’s totally illegal.

It’s tough to refinance it.

Well. I mean, it depends on the area. refinancing it after when you’re doing the burgers, there’s different ways to do the bar, right? You can look for ways to do that. Well, like the present day, there’s different ways to get to the bird.

The bird dance, if you’re gonna dance, you better know.

But there’s different ways of structuring the mortgage and the way to access money after you know, there’s you can do like purchase plus improvements where you can sort of secure an amount that you know, you’re going to get back. But if you think that, you know that that program is limited, like 10%, typically of the purchase price, and so if you’re an investor saying, Well, my house is going to be worth 100 grand after closing, and I want to access that full 80 grand the 80% then you want to gamble on an appraisal. And that’s, I mean, you’re not gambling, but you gotta, you gotta talk to your agent, you got to talk to the people around you got to look at your comparables, you got to know who you’re working with so that you have a good sense of what that value will be because otherwise you’re right, we we see it come back with, you know, different values

feel like you got to work these upgrades. I remember back in the day, I think Dave it might have been your somebody sent appraiser to one of our student rental properties. Yeah, but this one was by York University. I met the appraiser there. I was like selling the place. I’m like, Hey, man, do you see the carpet on the stairs? Totally. This is the good carpet. You see this banister feel I was 30 this Ben.

It’s amazing, right? And I

was doing the most ridiculous thing. But I was literally telling him hey, we paid for a secondary entrance out of the basement from the builder like it’s done properly. With the stairs are all dug out, there’s a drain at the bottom. I’m like explaining all these things to the guy. And I was surprised that he didn’t really know that he’s like, Oh, that’s not standard on all these properties. I’m like, No, that was actually a big spend for us. So I was working the appraiser and I know they don’t like you to do that. They don’t like you to be there and stuff. And some of them do the drive by or is that still done?

drive drive by is something where the bank will say we’re okay with the loan to values low. So they’re okay with a drive by but it’s rare, because

the drive bys not on appraisers not really happening

are pretty Yeah, not actually going into the home. They’re just kind of driving by making sure it actually exists. And it’s not like a piece of cardboard that has the shape of a house. You know what I mean? And that’s and then they and then but then they go Back in they do the exact same report that they would be doing if they had seen the house. I mean, the reality is of going in and seeing the house is just to provide the bank with pictures to say, hey, the house is habitable. You know, it’s not doesn’t you know, because the reality is, is there are homes and Dan and I have seen them and you’ve seen them that are our clients are buying and they require a lot of work. There’s holes in the wall, there’s water damage, the banks are not clamoring to lend on those, I’m sorry, but they’re just not I mean, if you’re giving money, you’re not going to want to lend on that. And the whole thing is, is we have investors go well, I’m going to fix up till the bank that I’m so I will but the bank doesn’t care. And to be quite honest with you, if I told the bank that it’s a fixer upper, they’re actually less interested in the deal, because to them, that’s short term and the banks don’t like to lend short term which is also the same reason why if you have your house listed for sale, and you want to do a refinance on it, if it’s listed for sale that makes sense. No, we don’t want to lend on this. This is short term. I mean that’s you have to understand is the way the bank works they have a cost every every doing of a deal cost them a certain amount. Money. So and they’re working off spread, like we talked about. So, you know, they’re they’re not interested in that short term stuff, which is why, you know, we have to navigate that space and why we have you know, there’s, there’s, there’s always little, we’ve had clients who have said, clients, hey, you have to take this off the market and the realtor calls us up screaming at us. And we’re just like, we sorry, it can’t be done. Your clients need to refinance this and the house hasn’t sold and we need it off the market. So they’ll take it off for a week and we’ll get our appraisal done and then they can put it back on after we’re done the refinance. But that happens. I mean, that’s, that’s I think that’s almost a normal everyday practice. One of the best people

I’ve ever seen to kind of navigate the whole refinance process has been Vanessa, I don’t want to say her last name because I don’t know if we should and I can’t remember if you guys have worked with I worked with her directly. She’s, she’s amazing. She’s amazing because when it’s always has baffled my brain when the first time she walked in, you’re in here and she said, Okay, I bought a house with like a crawl space, and I’m going to get the contractor to cut the house off the foundation. Then I’m going to get a crane and this crane is going to lift the house, three feet higher, and then I’m gonna get the contractor to build more foundation so now I have instead of a crawl space I have a full basement and my mind is being blown here because of Vanessa Is it like a tiny little lady great like you know lots of guts but tiny little lady. She has a family she’s married she’s out there doing this kind of stuff the way she

By the way, she has a full time important job.

Yeah. Yeah, yeah. So when you’re talking to things can be done. I’m like, I don’t know, like, what are the limiting beliefs that you have? But she she she changes the square foot. So the way she did it was brilliant, because then it didn’t require any income analysis to increase the value. She did unstraight square footage. She bought basically a one level house out in Hamilton. Yep, raised the house built out a full basement. Now when the appraiser goes by, it’s a full like, it’s almost like she’s doubled the square foot over the house, and then she can refinance it because she’s getting a tall, high appraised attala praise. You got a tall, super tall appraisal, and you get a tall appraisal you refinance. And then one of the properties I’m pretty sure she after she did something like this, then she gets approval to build an extension on the house. I don’t like another whole

you run an old unit. Really amazing. about her is that she actually will take the time to contact the appraisers and find out what she can do to help get the numbers that she wants. Like she doesn’t just do the work and then go well the appraiser can better give me the

contact the appraisal later, I thought

you always had to just meet the one No, she’s she’s gone out she’s came to us and said, Hey, I need like five of your appraisers numbers. I want to contact them and get their opinions and like, oh, not

the one that was necessarily hired exact. No, yeah, there was it

wasn’t even hired yet. I thought there was just she just came to me and was like, I want to do this. I want to do this. And I was like, That’s brilliant here, I’ll put you in touch with them. And I had to call the appraiser because it’s very abnormal, right? I’d call the present. Listen, I gotta be honest. So it’s that we’re not contracting, you did an appraisal, I need you to speak to a really good client of mine. And this is what she wants to do. And she just wants to talk to you for a bit. And so we just had to kind of throw that up. But, you know, the reality is we would use four or five of the firms that we do a lot of business with that we could pull that favor on. It’s not that because not every appraiser company is just going to want to have a half an hour chat with some And they’re not making any money out of it, you know, but we were able to navigate that and kind of put that together. And I know that that helped her a lot. And it really helped her see. And I think for me personally, I love that as the broker because my client now has a perfect picture of how appraisals work. And I don’t have to explain and say the same thing at nauseum as to at what I normally have to do, which is this is how appraisals work. She was able to figure it out on her on her own, and contacted the people figured out what she needed to do. And it was, I was able to do my job more and say in terms of getting the right mortgage and everything else as opposed to wasting a lot of time explaining things like that she went and did the research on her own. I don’t think everyone’s going to do that. I don’t expect them to that’s what we’re here as brokers to do, but I’m just saying it was a treat for me as a broker to have a client do that.

How did you two start working together? I feel like Dan, where Daniel has now worked with so many rock star members and investors and the whole bit, but at the beginning we were Dave almost exclusively working with you. But you were working. You guys are buying this. Dan. Dan was After my first year, so Okay, you’ve been in this business long time over like a decade. And

that’s right. Well, I’ve been doing it for less than Dave. So about 18 years now.

18 years. Wow, you look young. Thank you.

A lot of hair.

I don’t know, man. I see it. I see less and less every time I look. But I said I couldn’t. But But

no, but that’s the relationship because you guys know each other. We’re basically brothers. I feel I feel like in this saga,

we grew up together. Yeah. Dave and I have known each other Believe it or not, since we were about five or six years old. So

tell me what high school you went to and I’ll judge you based on that. I went to St. Martin’s.

We’re on different ends of the town but that was for school. We were all sports guys. I went to

Philly okok on the other side of Mississauga, so we hated Martin summer of course, like Martin was like our arch enemy at the time. I was going to school anyway.

Well, I didn’t know I wasn’t even Catholic. My mom got me into my mom was half Catholic. So actually, I was supposed to go to woodland so I went to Queens and drive like public school. My feeder school was Woodlands but they didn’t have a hockey team and my dad thought I was gonna be a hockey star. So he pushed me to go to a brand new school which was St. Martin’s how hockey team. My mom was half Catholic, so I was somehow able to get into schools. I went to a whole brand new high school but I had never I’d always really hung out with my sports buddies

anyways. Right So Dan was your sports buddy?

Well, we Yeah, I dated a girl at her high school to that I was friends with so that’s sort of when we really started to reconnect maybe in like grade nine or 10 or something like that.

He hated each other. There’s a whole story

each other and my verse at grade nine when he was dating a girl who your friends and

it was so we knew each at five or six, we actually live by each other. And we I was this thing that we realized down the road that happened that that’s how we knew each other, which was I had, I guess, ran through my screen door window and cut myself up as a kid. And I guess I was crying on the backyard or whatever. And it turns out, I was telling Dan the story, he’s like, that was you and this is like years and years later. It’s like that was you. I’m like, yeah, that was me on Martin’s Pine Crest. And he’s like, yeah, my house back down to the thing. I’m like, yeah, wait, what? And so turned out Dan literally lived behind me at a different house. We didn’t know this till later on. My I remember my mom came home and told my brother and I that in our backyard ran through like glass

when you’re like six years old or whatever however old it was man like I can’t imagine what I pictured the kid to look at. I already went through glass and he had to be extra nice to him because you know he was he was in a lot of pain and whatever so that I think my mom made me go over and introduce myself I said hi and and I don’t ever Oh

no, no, we never hung up but then then we played hockey guys yeah, so all of a sudden then years later I would be playing hockey and there were no coach on my team would be like, you gotta watch out for that big guy Pat number 14 you know, I mean, and there was a couple other guys and then it was funny cuz he would tell me that his coaches would do the same thing about me because I always go after Butler he’ll retaliate get him to get him to take a penalty and love a power play. And that was that was the game a lot of games we basically just we would we were rivals and then all sudden, I started dating a girl at a school so I was hanging out more there and then there’s oddly enough we just all sudden became friends. And yeah, from there it was you started selling

mortgages.

Well Then we will actually with a We’ve been in business for a long time because we were running that bookie operation back in the day which I’ve talked about.

We were running a book

Yeah. It’s just so weird to think about it like today that with with online gambling I mean like

but back in the day when that wasn’t there I remember we used to always get those sheets like in I don’t know, get your sheets back for whatever this weekend is like who’s the guy running the show that some guy with a backpack, stuffing his little sheets? And they’re like,

Oh, yeah, we were we’re taking straight on but I think I’ve talked about this on another podcast. But yeah, we were we were running up in a great graduate. So let’s start in like grade 10. And then it just kept getting bigger and bigger. By the time I got to university, it got too big. So I went to U of T. So it has a very large like, University of Toronto, the makeup of the school for a lot of Gamblers there. I mean, there was just a lot of people that are in the casino and gambling and again, this is back in the day before on gambling on the internet. So we were taking lots of bets. I had Dan running bets. Dan, were you going to use it?

No. But I

showed up at the campus and it just you’re like

you’re the heavy? No, I just had to give them a no Dan was running Everyone had region. So like Dan had to share it in and his buddies and I had other guys, so I had guys that would just take the bets for their crews. And then they would be the ones have to collect Mike’s I couldn’t collect money from like hundreds of people. So I would just pick like Dan would go and collect all the money from his, you know, 25 people that were betting through him. And then I had other people at different schools that we collect the money, and that’s kind of how it all went, but we were in business together before mortgages, and then, you know, I got into mortgages, and then you tried to

get legitimate, I tried.

I was like, I gotta get a real job. Now. Like, all of a sudden, online gambling became a thing. I was like, Okay, that’s it. I’m done there. So I had to actually find a real job. And

I still remember the first mortgage. I think I signed with your office, you were in Oakville at that lake shore office.

If you can get excited about this whole office might have been bigger than your

Oh, it was tiny because I walked in off the street and when I opened the door and entered with one foot, I felt like I was in the middle of four people. Yeah, you were five and then you were like, hey, Tom, you’re gonna sign the paperwork. And this girl on my team. This is the first time she’s ever closed more either. sign papers. Can you come and I took me out into the hallway and then back into some other room, which is kind of a boardroom or something. I think like yeah, you know, it’s a first mortgage and we signed them and I didn’t even know what we were doing getting a more I didn’t even know which property that was for like, I don’t know cuz I

don’t know that one wasn’t with well,

could have been. Another one. might have been your principal resident who knows

what was the recollection?

The first one that I reached out to you for was in Mississauga? It was a flip that was going to do that’s that’s where it

was that one that we were doing in him the first student rental that you guys had in Hamilton.

Yeah, Whitney is

Dave. Dave

okay right here right here. It was when it was like the four of you though you guys had like a four person crew back then.

Yeah, he was he was doing some stuff with Tom and I were doing stuff Yeah,

by the way this a lot of people even know that rock star used to have a different name. Like how many people do you think know that?

About 10 members, a bunch of the members who are originals know that?

Yeah, yeah. Once we started Rockstar never had a different name, but it was started. The investment group was like had income for life isn’t ifl maybe

you’re an ifl number Are you a member and our email addresses were like Tom at my income for life calm it was the longest just email me at Tom and hat my you would hate

signing into Netflix you would not like putting that one in right now.

You know we found it we still wanted we wanted Rockstar realestate.com obviously right? And it’s URLs Rockstar brokerage. But Rockstar real estate was registered by it’s some it was some team or something now that’s in California. I think it’s in California. But it was registered to literally like, two weeks before we went to go register because we looked were like, oh, maybe it’s gonna expire. Maybe we can use it. It was like literally just before we wanted it. We looked and someone registered and we’re like, Damn, I can’t believe this. Someone took it. Otherwise you have it

up on the screen. Yeah, yeah,

yeah. Oh, man. We missed that by like, yeah, that was it was so cool. Where are they? Are they in the States?

Yeah. California, California, or maybe not. Maybe it’s actually area code

760 I don’t know what that Definitely contact our team. Yeah, area. And for me,

well, I’ll put out there ifl Those were the original day. No,

but you know, when people joined to work with us, we would give them because we had no clue what we’re doing. We had some papers that we gave them as like, hey, congratulations, you’re signing up as a member to work with us and stuff. And we had a purple shoe bag, like the kind of bag that you would travel with shoes with, even though I’ve never done that in my life. Like I’ve never model a crown. Yeah, it’s actually like a bottle. Yeah, it’s like that bag. It’s actually more like that bag. And we had a bag like that, but not nearly as good quality. Like, I’m tired. This was horrible quality. And it said income for life and a picture of a little house. And we stuffed papers in it. And then we would have it leaning against the wall. And somebody would say, like, Hey, what’s that there? And they’re like, well, you only get that if you sign up to become a member.

Leaning and salt that’s full of top secret investing words that will make you money and those are only members of

the things you do to start a business.

Oh my god. I was just Telling someone our first one our first office compared to this one was literally a an old closet at this brokerage and the room was smaller in the office we’re in now way smaller, probably half. And then the door would opened, obviously. And the little office was actually L shaped. So I set my desk was around a little corner so somebody could open the door and talk to Nick and I was behind this wall know what people wouldn’t even know I was there.

Yeah. better looking brother to represent the company, right? Yeah.

So but somehow we managed to fit the two smallest desks you’ve ever seen. And I’ll never forget one day I don’t know. I’m doing so I don’t think I’d quit my job yet. I was like living two lives at that point. And, Nick, we had we had a total of eight Rockstar members. And Nick’s like shit, I gotta go to staples and get the labels for the CDs that we’re mailing out to everybody. Because we have a he goes into staples, he comes back and there’s this little comb that you like, you put the CD and then you put the cone to drop the little sticker onto the thing. He dropped the sticker like wrong and it kind of stuck to the code and all crumbled man, I didn’t Enough these goddamn stickers back to staples. So then he wouldn’t went back to staples. And I’m like, this is the life that we were living like we couldn’t even mail out eight CDs. It took us like eight days. Yeah,

we but I remember we burned them one by one on the laptop and then printed the label, put the label over the CD. And I was like, Oh, I don’t

even know. I don’t realize how tough that was you guys like and you guys were sending those out? Like every month. I was getting

pumped. Yeah. And we didn’t care if people were thrown or thrown out or whatever. We were like, hey, look,

back then. That was good content though.

Right now it’s good content.

What I’m saying back then, you know, throw that in your car. I

put that CD in my car. I’ve actually listened to Tom and Nick on my car on

the way to like, I don’t even know if Dave knows this. Damn. So I’m just gonna direct this at you. Nick calls me because at some point, I was screwed up for a mortgage. He’s like, yeah, I met this guy, like gold’s gym or whatever, call him. He’s gonna do mortgages and I talked to him and then we started this business. And I’m like, Nick, I don’t know if we can use Dave like, I don’t know like These investors like they need a little like comfort and coaching like Dave’s seems like he gets mortgages done. There’s no doubt like I don’t question he gets mortgage, somebody talks really fast and he like, he kind of gets animated and I think he like really will be in the face. pretty accurate investor. Yeah. And I’m like, Nick, I don’t know. And we literally test it out at that time, like early days because we have other mortgage brokers walking in there was mortgage brokers part of the brokerage that are supposed to use, we must have tested out like 10 mortgage brokers and they all spoke so nicely gave us little pins with our names engraved on them. And they all said they were going to take care of our investors. And each one of them over the next 18 months, like failed us. Yeah. And literally, Dave was the only one who kept stepping up and delivering and we were like, okay, no, I guess. I guess

it doesn’t, that’s how we came to love the Butler, or mortgage

process of elimination. We really don’t want to, but he’s the only guy. He’s the only guy

apparently does what he said.

I say that jokingly. And, you know, over the years now we’ve had many investors getting jams and you’ve stepped like Dan, you’ve done incredible things, Dave, you’ve like stepped up a time over the years and really help people out when they get into jams. And I think that’s the power of a good team. So you know, thank you now, we enjoy that stuff. Honestly, I think for us, it’s in this will sound weird, but

to

to be able to help people that need it, we’re in a position to be able to help them. We feel definitely at this point in our career, you know, as long as Dan and I’ve been doing this, we’ve built up really good relationships with some of these banks. A lot of these people were working with the banks, we’ve known for 10 plus years, we’ve spent time with them. We go out with them in the sense of we were always learning product, the other and you build a relationship with these people. So I mean, that’s that’s, that’s what I think we’re bringing now more than anything is that we didn’t have that back then. I mean, back in the when we were doing those original mortgages, we were just trying to make them jam men as best we can. But now, we would feel like at this point in our careers, we actually have some help from the banks. We have people that can see us they see what volume we’re bringing in. They like the business They see that our default ratios are some of the smallest in the in the whole country. And they’re interested in our business and they’ve come to us now. So back in the day, we’d have to fight to get on lists to work with certain banks and lenders. Now they’re lining up at our door because they want to work with us and your clients.

Well, let me ask you something on that how, and we talked about this little bit on this little Rockstar minute that we did, but how many? How many properties can somebody buy in Canada and remove the income qualification for a second? Because I get told by so many investors? No, Tom, you can only buy like three or four properties in Canada. And Dave, you just explained this. So I don’t know if Dan, you know, has this the same message? Yeah. Like,

what is the answer to this question? Well,

I mean, I’ll jump in and then Dave can certainly fill in any holes but it depends. It’s it depends on the on the bank, you’re going to because every bank has a different variation on how many properties they’ll let you hold and how many they’ll let you buy. So for example, a bank like TD will say you can have five rentals total doesn’t matter if you have two with RBC. One was Scotia Once you’re at five total you can’t get any more from them. So if you’re going to TD and saying how many properties can I get TD is gonna tell you five that’s it. If you go to CNBC CNBC will say well we don’t care how many properties you have outside of us will allow you to get five with us. So the answer it see okay gotta be different now. Okay,

so TD saying all encompassing five Civ right he’s like I don’t care what you have

coaches right in the middle it’s going to have up to 10 properties in total on application but you just can’t have more than five Scotia so

so the order the order, right is very important. Now what gets in the way sometimes of going in the exact order is the qualifying because the qualifying could change from bank to bank and you know, things like limit of a healer can start to impact an approval and things like so

like if you have an E lock of like 300 grand but you have zero balance on it, it’s not going to screw you Well, the bank,

yeah, most most banks in there and they’re counting that what’s equivalent to a $600 per hundred thousand give or take. So for every hundred thousand you have available on a line of credit, they’re attributing a $600 payment to that. So a 300 thousand dollar he look like you’re saying is going to show us an 1800 dollar a month payment, even with a balance of zero. Yeah, right. Even if the down payment coming from there, that’s how they’re counting it.

Yeah. So it adds I mean to go back with Dan saying is obviously the first like in a perfect world, if you were to say to me like in the most perfect situation, you know, my I have a client, they they’re an investor, they want to buy as much as possible, assuming I can’t split up the husband and wife to kind of duplicate the situation. So I need both of them on the application. Perfect World you’re getting four or five with TD, you’re getting four or five with Scotia, and then you’re getting four or five or up to five with the ABC and I mean, that’s now that you’re in between there you’re going to sprinkle in maybe a student rental with RBC as like property number four, you know, I mean, and that might take away as a student

rental. Yeah, not many others do student Rios

so I mean, that’s it, just you know, and then all of a sudden, you might have your client decide that they want to start buying in corporations. And that also throws things off because there’s certain banks that won’t allow you to buy and corporations. So I mean, that’s why it’s always important when we have and we it’s Funny I mean, people said Oh, you still meet with your customers because we’re kind of old school like we have to sit down we either meet with in person we do like a long phone commerce because we have to lay out like all these different steps that are going to be in the process. And we also have to find out where their heads are like some of them come to us and they’re like, I’m only interested in student rentals, high cash flow did okay, that’s fine. But we have to now set up that plan. If you’re not setting up that plan. I just I can’t stress this enough. It’s the most important thing as an investor because we can’t tell you how many times someone has come to us. Yeah, I just got five rentals with CNBC and I, they won’t do anymore and now we want to buy and I want to bind a corporation and we’re like, Okay, well scotian TDR out because they don’t do it in corpse. So now I gotta go to Bhima Oh, wait beemo because beemo says wants to four or five. They don’t want to see anymore. Now you go to a national bank or you go to RBC RBC says, Well, we only have appetite for maybe one because we only do up to six or seven. And they said Now listen, you have that perfect application that could have probably got 15 or more properties. And now they’re capped out at Five and then a couple more here and there from, you know, maybe a couple other banks World Bank, that’s not a plan that doesn’t make any sense to me like, you need to sit down with someone who knows the space. That’s just the bottom line. And there’s not just us, there’s other mortgage brokers that specialize in working with real estate investors. Nothing wrong with that. But our whole point today is you must have a plan with no plan. Yeah, because you’re going to end up back in my in my office, and I’m going to be having I have to tell, you know, because you’ve gone and done it the wrong way.

You know, I mean, we had a big discussion on Monday with our team about corporations and stuff. So I just want to clear this up for some people when you’re buying a lot of investors want to start a new Corp, new Corp has no fannett financial history and they want to close in a corporation to do that you still have to personally qualify and guarantee even if the Corp even if the bank is going to allow you to close with the Corp. Right? Yeah, that might sound so obvious when Nick and I started we didn’t like we just thought, Oh my gosh, we’re going to start a new Corporation will buy these batteries in a corporation, the bank’s gonna lend us money. Like that’s how I mean this was back in our 20s, but we totally believe that but so when you start A new court if the court has no financial history, the bank’s not going to lend on it. So you have to qualify personally and guarantee personally, even if it’s closing in the court.

And I mean, let me I just have to say this because this there’s the talk about this thing is just like, why if you’re buying your first one or two or three rentals, and you don’t have your account telling you for sure that you have tax implications, and why are you putting it in a court? I mean, I don’t I’m not trying to put down the businesses that are thriving from people setting up corporations, but at the end of the day, if you don’t believe

it,

because you have to, I’m sorry, but you have to pay your accountant to do the books for that Corp. Right. So there’s, you’ve got that right off the bat. I mean, and is it saving you any money? I mean, don’t get me wrong at 589 10 properties plus, yeah, you might need to start putting some in course, but on property number one or two, to be buying that into a Corp. I don’t personally see the I don’t get the idea.

Tell people the same thing unless maybe you’re buying your first property of building or something like

that where you make or you make $500,000 a year and you’re already in the highest tax bracket anyway, and you can’t have any profit from that property show up on your taxes. Okay, I understand that. But if you are a husband and wife making a combined income of like $150,000 a year, which is great income, and you’re buying your first rental please, somebody explained to me why you need to put that oh, we agree with? Yeah, that’s what I’ve heard lawyers told me that all that is, is just a it’s one extra layer for the other side to try to get through. Yeah,

but I think it depends on it depends on the type of property, right? So single family stuff with the way insurance is structured, usually more than covered. But if you’re buying, let’s say you’re buying, let’s say you’re buying student property is to five unit things. I know some of the investors up in London, and it’s so there’s 10 units of something drastic would happen even if they have a $2 million policy. How photo year are they do they want that extra layer of commercial right

10 units so it’s

just not student property? It’s really two units that are grandfathered as a Tunis June rental rates are 10 rooms. Yeah, 10 units will be different. So I think it’s that’s pretty much The The only thing and you’re right, you’re right about it like they can still get through it. The thing is, it’s much if they can’t prove gross negligence, I’m not a lawyer check this earlier. But what I’ve been explained is if they can’t prove gross negligence meaning you’ve done something completely stupid, like boarded up a fire escape, or you have a bedroom as a closet with no windows and you know, you just do stupid stuff, then you’re you’re pretty much covered, right? The liability is limited, right? So that’s, I think that’s where it comes into, but for the average single family thing on your first property. Yeah, it’s a little bit excessive. I wanted one of the guys that I had a friend that he was buying properties and someone told him that he should really set up a corporation for every single property, a different one a different one, you guys you guys actually all know this guy. And he and I’m like, Are you serious? Like don’t do that. Like that’s insane. Like just the management and the taxes and stuff like that. He’s like, no, that’s what I was told to do. So I’m going to do that after about five properties that I you know, this was stupid. like, Yeah, no kidding. I can still do stupid tax or corporate taxes for each 1000 bucks on

properties. Were like single family home. Yeah.

And by the way, they were probably so like in terms of again, just from the accounting standpoint like revenue expense like it’s not no sorry it’s like that we

tell everyone you’re listening to that we tell everyone listen talk to your lawyer usually 123 properties get liability get the right $2 million coverage maybe per property. I just want to repeat we’re not lawyers talk to your lawyer upset about what liability coverage you need. And then you’re kind of you can kind of for most of your liability exposure, but this kind of this cool thing comes up a lot I remember our accountant

because of the different assets you have a lawyer he said, but you probably the accountants conversation Iran have to totally

I just mean on liability just for your lawyer. And then one time Nick and I were doing this the multiple corporations and I think one year I swear I feel like we had $50 in like we because we had what we had like holding Corporation we had another Corporation now their Corporation and we’re like moving money around and we paid like all this corporate tax return. And I’m like Nick, I don’t even know what we’re doing because like I have 50 bucks in my like, holding company like I know after all the fees and stuff and after years, it does get it turns out to be a beautiful thing. But to rush into it, I tell them when lead with revenue, men make money and then let the money decide what you do next don’t like do all this expenditure up front on corpse and all this thing when you don’t need to, I think I’d feel a little different about the Corp thing if there was an advantage to it on the financing like i think i think it’s I think there’s a disadvantage. Yeah.

So I mean, when you’re buying rental properties, and let’s be realistic, what is the most important thing when you’re buying rentals? It’s getting the money, getting the money, okay? Like we’re talking about accounting and everything else. To buy the house like I mean, that’s the way I look at like the account, that’s all going to happen after if you’re making profit, like then your accountant will get all that figured out. But for me, it’s getting the properties. If you have two major banks that are big time players in your first five to 10 properties, and they’re saying no, you have to do it in your personal name. Shouldn’t that be part of your plan, or you’re just going to negate that and go straight into doing it in a Corp. So effectively, what you’re doing is you’re putting the cart before the horse you’re gonna you’re going to think about my profit first. Before I even get the money to buy the house it just for me personally, it doesn’t seem to make sense to me. That’s that’s you’re putting number three, I had a number one, it makes no sense.

That’s what I anytime a client calls me and just ask that question I asked him why why do you want to put it into court? What’s Just give me

a liability? Right? Well,

you know, no, I say someone told me to

Yeah, and a lot of the time, they’ll say, you know, I’ll get as far as you know, well, me and three buddies want to pull all of our money together into a Corp and go and qualify for a property. I mean, it doesn’t unfortunately work that way. Unless you’re all going to personally guarantee it, but it that the question it has to be asked, because why are you thinking of doing it? You know, well, I was just told that I want to buy as many properties Well, if you want to buy as many properties and you were told that then whoever told you that glit

was three Yeah. Okay. Is that the best? Oh, yeah, everybody because that happens a lot. Three buddies get together. So it’s to use the names individually, if we’re that breaks apart is one of the buddies is married, or all of them

doesn’t qualify. I mean, we have that too, right? I mean, but then what we’ll do is we’ll say okay, out of the three of you, number one, and number three, you guys are good to go on and application together. Number two, you make enough money that you can go on your own. And that way you both now as a group, instead of all three going together, because this is the one that people don’t understand, if you’re going all three together, that doesn’t change the rules of the 510 15 properties that does, it’s all based on an application. So if you go, if I split three people up that all qualify, I might be able to get them 15 properties times three, not but when you put them together, there’s no 15 times three, it’s just 15.

As long as they have the income that we keep saying 15 and properties but like you still have to have the income to qualify carry all that debt

the whole bit, which is, which is all going to happen when you are working with your mortgage broker because that’s part of what a good mortgage broker that works with real estate investors is doing is planning that out. When you when you come to Dan awry and you say yeah, I’m with Rockstar real estate, we know immediately. You’re an investor, we need to line you up to try to set you up for your index for your portfolio and try to put no stops on you try to give you an open canvas to do your thing. Right. That’s really what we’re doing. So we’re sitting, we’re having this conversation. Are you looking at buying a court Are you looking You’re buying student rentals. And we literally and I don’t mean to sound like we’re artists, but I feel like in a way, that’s what we do. We paint a picture then as Howard

and Dave and then the mortgage artists

are like on the big whiteboard just like let me know this is for you. And like, you just have paint on your hands, like massaging the whiteboard.

And by the way, I am the farthest guy that no, I couldn’t even draw a human like, I would feel terrible. So I mean, I don’t want to

pull the trigger. I’m sure you guys think it’s a bad thing.

Hey, what do you guys think about the stress test? Like, you know, how the Prime Minister came out? Like, I don’t know if this is all smoking mirrors, or what but what are you guys hearing about the stress test? Because, you know, the Prime Minister came out and said, I love the words that were used. It was like, we have to make this thing a little more dynamic. Like that’s the word I kept hearing over and over, let’s make this a little more dynamic. Is it just pure bullshit? Are they going to do anything or is it just good politics to say they’re going to look at as an election coming up? Is there one coming up, right?

I’m not sure. No, I don’t I don’t

know. Three years. Yeah, he

wanted then he got quiet. There was just one way Yeah, he stopped taking selfies. Yeah.

I don’t know. I

don’t want to see a whole lot of it. What does he do now? If it doesn’t at least before he did say he took selfies now What’s he doing? I guess nothing. Yeah, I don’t know. Anyway, sorry Dan, I cut you Oh, no, no, no, I was an important question. Oh, no, no, Justin Trudeau is listening to the podcast just said just you know what just DM me directly dressed and all right.

And we’ll get him set up as an investor will plan it out for him. No prob the beard. shave the beard. Yeah.

Yeah, and answer me why Canada only has 76 ounces or 72 ounces of gold. I want to ask him that. Yeah,

there’s a lot of questions there. So that’s a whole other podcast I But to answer your question, I mean, look, we’ve been hearing things about the stress test ever since the stress test came out I mean, a year ago we were hearing stress test my drop this year’s just as my don’t

think they’re gonna drop it at all. Well, I’m going to drop it. We’re seeing I don’t know I don’t know if you’ve told you guys this around the GTA. So in the price points of like that we plan usually 450 500,000 multiple offers here like mo 10. Mike on the team was out Africa was Kitchener. I think it might have been Kitchener, there was 15 new listings that came up on Wednesday by Thursday or Friday 11 were sold 11 were sold he put offers on four other ones last on all four.

I’ve also like it’s going crazy so far 2020 that’s all I’ve heard from people we work with is that it’s all multiple offers the markets

it’s a little 2017 ish, right? Well not at

the higher price so but we’re not seeing it like you know the one that when the demand is what like the $2 million single family home we’re not seeing multiples on that not that market no longer home market around the GTA we are seeing demand. Yeah, that’s

enough, but demands gonna yesterday. So if that’s the case, why are they gonna do anything with the

stress test? Why make that situation worse?

Well, I guess I are you asking? Are they going to change the stress test? Or are they going to change the rate on the stress test because they’ve adjusted the rate?

Right, they did

make that because of the rest is because most of the country that’s why the rest of the country suffer, to do something to try to open up the rest of the country and it’s hurting real estate. The rest of you think they’re going to do something No, I’m saying that’s what they that’s, that’s the problem they’re trying to fix. It would be wise, definitive answer. I’m just telling you what they’re thinking. You’re using logic. And I get I

guess without cutting Dan off though I can give you an answer for that I have from some of these executives from Scotiabank. I mean, taken, been sitting on the answer over there. No, I mean, they they believe and by the way, there’s some of these people that we’re getting this information from over there have political ties. So what we’re hearing is that they think they did a fantastic job. I mean, the government in terms of implementing the stress test, they are all patting themselves on the back. And some of the higher ups at Scotiabank, some real high ups there have a feeling that nothing will happen to this dress that I literally nothing, I think so. I think that’s because they believe 2020 is going to be a monster year. That’s what they’ve said especially especially Ontario that will coming out of that conference. I go to try to make some of the you know, pitch changes that I want done that I think will help benefit our Customers but more importantly, I like to go there because you get to finally talk to some of these people that are in there the ones actually in the work in the bonds working work in that situation. You want to ask them if they want to be a rockstar, inner circle member.

Next time you talk to one of these executives to handle this whole thing Rockstar. No, sorry, you should be a member. I probably should. I should definitely.

Okay. All right, gosh, probably do that. But But no, I mean, the reality is, is that’s that’s that’s what we’re hearing is that they believe 2020 is going to be really big year specifically in Ontario, and that there’s no reason for them, they believe for the government to change, trust us, and that’s coming from the bank. So take that for whatever it’s worth.

Yeah, I agree. I think it’s To me, it’s so much crap, because like, they should have just raised interest rates A long time ago, and they can’t raise the interest rates for many discussions that we’ve already had. So now we’re stuck with the stress test. I’m just wondering if they change rules even further. Like I’m wondering if if the stress if like maybe down payments change permanently on how much you can put down even for first time homebuyers. Like I’m wondering if they just say Okay, forget it. We’re gonna have to because if we have a situation of a You’re worth of multiple offers all around the GTA what happens? Or do they just to Nick to your point to they just have some like Ontario changes?

Well, it’s it That’s amazing. They said literally what was popping in my head was a term that I had never heard before I’m maybe it’s been heard. And that’s just shows how much I’m tied to my desk on my computer all day. But the whole point about Toronto and Ontario being very, really cutting themselves different from the rest of the country. And the term that was used was the Manhattan ization of Toronto. That’s actually what some of these bank people were saying like that is where this is going. And if you go and you look at New York and Manhattan, and you see kind of how the real estate market there played out, comparative to the rest of the United States, very, very different. So we’re probably now seeing what used to be a really uniform country with the way that our finances and our real estate market work. And then it started getting a little off on each side on the west coast and the East Coast with Toronto, Vancouver. But now we’ve seen Vancouver really cool off and now we’ve got this Toronto thing and this They believe that this is a problem, by the way to have a TTC bus in the background.

Yeah, now we’re moving tables in the background.

say there’s a subway about to come and

take us all out here. Damn, can you close the door?

That door Okay, visible.

But just to your point. I feel like that’s happening in Toronto because I don’t meet anyone who’s like, Hey, we just got married. And we bought a great townhome in Brooklyn. Like, I don’t know, we hate we just moved to Queens and we just got this awesome place in Queens. Like, I don’t hear those discussions. So I feel like Toronto is going through that kind of stage. I don’t I think to Nick and I have chatted about this many times. But this is the This to me is the last easy, 10 year window. And by easy I mean, there’s still opportunities all around the Greater Toronto Area for all of us. And after that there will be opportunities to, but I mean, it’s going to be much harder. Like if I look back 10 years from today, we were buying single family homes in Brent, are you let’s go back to Burlington, Nick, Nick and I were buying we bought a fully detached home for an investor in Burlington, Ontario, Nick for 230,000 Yeah. $230,000 Well what does it mean what does

that play well for today you think

oh man it was a smaller home and brochure even back then at 230 was a good price for a single family but I don’t know I gotta think that’s a 750 okay so that’s that’s a double right that does

not mean that well i mean they literally

they my 200% increase on the first student property This is longer ago the first two improperly about by MAC right right in prime location by MAC was it was a power of sale right? So it’s pretty beat up and we did a bunch of work to it. It was 100 and $105,000

or 135

the phone for five runs it is a $60 maybe 100 grand more

Yeah, but it’s we we reef we did the work we refinance I got to reappraise that too and took all our money out of it and to this day, that’s not even how many years ago so I took we took all our money out at spin off a bunch of cash flow and it’s gone up by ever however many thousand hundred thousand dollar one

property turns into for

this day. Yeah, it’s been it’s that’s been winner. So

I’m trying to put a door on the wall.

That’s Dan.

Dan brought his toolbox he just decided to work during the podcast

48 hours away from the doors.

They haven’t finished the construction. They started saying it they started grinding the cement floors last week, it was like an airplane was landing in our unit. It was like we were all shaking, I couldn’t even talk to each other. But I want to say something on that point that what I find where real estate investors and I think the book Sapiens really drove this one for me was talking about like how humans over the over the course of history, are really unable to see the future very well. Like they can’t extrapolate their decisions today very well into the future that can extrapolate trends very well into the future. And I feel like as investors, we’re horrible at that. Because in 2010, we were telling people Hey, buying Hamilton, even Nick and I were a little scared of some of the prices because we were like, shit, we were buying it like 225 now it’s 239 and I remember Nick remember, we were like 230 Raising, but at that time if you look, if we understood monetary policy, the way we understand it now, it would have been like low and we were already pretty convinced Dave, you know this, we were always telling people, low rates, low rates, low rates. Let’s go, let’s go. And we were still kind of cautious. I feel like today in Toronto, the same thing happens because we have population growth in this area of the country that is exploding. Like that’s documented, exploding. You go to stats Canada and look at the numbers. It’s absolutely exploding in Toronto right now, by 2041. The GTA supposed to grow from 6.7 million and from 2016 to 9.7. That’s 3 million people or for 43% increase, or another city the size of Toronto moving in here. So if you get to buy a property today, imagine Dan were like, hey, buy a property today because another Toronto is moving here. What is that going to do demand by the time that you’re 20 years into that property, and I feel like people just get hung up myself included on oh my gosh, like, I’m not gonna buy that property in Hamilton or Oshawa or Claritin or berry because Last year, that property was this price. I’m now getting ripped off. Yeah. But if we just extrapolate the trends going forward, it looks like holy smokes. There are good times ahead. And unfortunately, none of us can guarantee it. And

that’s what makes it scary. Yeah, yeah. I mean, it’s the whole crystal ball thing. But I mean, I think we all have, I think everyone in this room has, has a pulse on what’s going on. And all we can do is go off of what we see. But everything you guys have been saying for years and years and years. I mean, the reality is, is, you know, I don’t mean to say this, but everything I hated doing. Nick was Nick looks at me in a way where he was like in a recording or something on the phone. No, go ahead. I know everything you guys I mean, I every time I would go to the rock star Congress, my favorite thing was listening to you and Nick, talk about and do the rock star kind of forecast, the financial forecast and the market forecast. And if you go back, I’m sure if you go back and grab all those slides. I’m assuming you guys must go back. there and go. We were right here. Look, we were right there. Ha ha, like, Oh my

god, how did that happen?

But it really is true. I mean, but you know what started at all it was in 2008, when the markets got crushed, like the financial markets just froze up. It was just a lack of understanding. And that’s when that’s when it just kind of like triggered like, hey, let’s Why did this happen? Let’s try to understand it. And then it was just, it’s just been trying to do like a little bit of research. So we don’t get screwed again.

Yeah, there

was. It was a lot of panic sellers, right. I mean, that’s what really, if it was, if you look at what 2008 2009 did, it really washed out that last group of people that were on an hour, right, well, and

I and I’m convinced Nick and I talked about this, we’re like, unfortunately, at the next big downturn, we are going to be presented with a weird opportunity, all four of us sitting here because there’s going to be some investors who want to dump their properties and we’ll be telling them don’t sell Yeah, do not sell this property and they’re going to respond I already know saying no, Tom, I heard it’s going to get worse. Things are going to get worse before they get better. Take this property and unfortunately, a lot of people are going to transfer properties and sell properties that they should not. And I know this is going to happen in advance of it happening. I just feel it in my bones. And the reason that I feel that way is back in 1990, I saw it happen to my father’s friends. People were like, Hey, I’m selling in 1991, because I heard it’s gonna get worse. Yeah, right. And the activity was there, people were selling and they should have just kind of rolled that out. But a lot of them to be fair, they bought paper back then on paper was flipping over it even though it was panic.

I think history shows the market will rebound. Right?

Yeah, the thing is, as long as we can all survive it, like that’s why we always talk about cash flow and the whole bit. And to that point, a lot of people have given us crap over the years because they’re like, well, Tom, you should have bought all those properties downtown Toronto because they appreciate it like crazy. And yeah, maybe we didn’t maximize what we purchased for ourselves. But we always have to be prepared and paranoid of a potential crash and surviving that right

yeah. If you’re not thinking about if you’re if you’re operating this market right now, you don’t think this thing’s overheated? I mean, I’m not I you know me. I mean, you guys personally know my dad. He’s a pretty doom and gloom guy. So I come from that background. And I said, Yeah, he’s he’s calling for the market crash every year. But I mean, you know, when you when you look at the market in the last 25 to 30 years, and you look at the history shows that markets do usually have some form of correction every quarter

century,

will guys do the math late 80s, early 90s, at 25 years, so that we’re actually past that and I’m not trying to say there’s a crash coming. I’m just saying, guys, there’s you if you’re not operating in that idea, that paranoia so for you guys to not have people buying in Toronto. I think that was the smart move. Now. Certainly, in hindsight, you know, it’s almost like okay, we’re playing. We’re playing craps. Okay. Some guys been on a roll for an hour. He just can’t roll a set. We’re all making money. Okay. Does that mean that that’s a smart time to get in? No. But at the end of the day, the odds say if you jump in, he makes roll seven and you’re out. Well, maybe he goes on another hour long. Run. That’s a saint. That’s equivalent to what we’re talking about Toronto. Toronto was an overheated market already years and years ago. And it just kept getting bigger and bigger and bigger in terms of its where it’s at. It’s way overheated, but will that correct? Who knows? No, no, no, no one has a crystal ball. Nobody. But if you don’t think it’s heated up right now, then I think you’re in a fantasy land. And I think your guys’s message was the smart move. And you guys also picked properties that made sense, yet go out and buy an $800,000 place in Toronto. What are you going to do with that? I mean, how are you going to make cash worth

at that time? Now? There’s, you know, uh, yeah, there’s still options now, but at that time, it was that was a higher end property in Toronto right?

I have the crazy because it was a big market correction would be and you guys will be the first people will want to be talking to you. If you ever see credit, freezing up, like we need to ever see credit lines being shut down. You’re like, Oh my god, that’s so weird. Like one of our clients had a credit line and like some bank just magically closed the credit line down. You have to call us immediately. We’re doing an emergency podcast if anyone listening to this. He’s a member. urgency at the start of a podcast. Listen to that

podcast. You always want variable rates to one variable restart flipping and like you see variable rates without a discount or like at a premium in here.

So I have this weird theory because I’ve been short term paranoid for like, at least a decade. So I’ve been kind of like your father, but you know, we’ve still been in the market has

been at he’s been like 25 years, you’ve only been like

that for like nine, but we’ve been still in the market. We’re still.

Like, we’re still like, yeah, we’re paranoid, but we’re not going to stop now. So but but here’s the thing. I never liked to be on the side of the majority. Nick knows this. We talked about this all the time. And I feel like right now, because before in 2010, when we were saying interest rates are going to stay low. Everyone’s like, well, Tom, that’s very nice of you to think that but they’re going to normalize that was the language I was always told they’re going to normalize. They’re going to normalize. I’m like, I don’t really think so. But anyway, I feel like now that more and more people are thinking the market you know, it’s really high. I have a weird feeling that they can’t let it go down. Otherwise, Wall Street itself comes crumbling down. I’m like, Oh my gosh, if they’re not going to let a recession happen in the States because they just can’t afford to let it happen, and then we are going to be the beneficiaries of that you can argue if it’s positive or negative beneficiaries, but we’re going to be the beneficiaries of that with low cheap stimulus money and low money and we have a population that’s increasing here. When you mix a lot of cheap money with a growing population base. That’s the formula for an economy that’s exploding I’m like, are we accidentally going to benefit in the GTA from the global monetary policies that are happening and I secretly think that we are Yeah, I guess it’s not that secret deals like that but but that’s where I feel like we’re at I’m like, Oh my gosh, yes, there could be something happening but the policy response to whatever happens might actually blow the market higher another 10 years so it’s it’s like fascinating stuff. Anyway,

we’re markets act irrational i think you know, even after this look at the stock market, I mean, how many times people like oh that stocks way overblown then it goes on, like another hundred percent run. I mean, that does happen. I mean, you can never tell when that’s the whole thing is you can never pick that spot. If you can, then you’re you’re the magic

special person. I know why Oracle shares when they went to 20 bucks. And I was like Carol, I think we’re going to go rich, and then they went to 40. And then they went to 16. Then they went to 80. I’m like, Carol, I think I’m pretty sure we’re rich. Right? And then they went to 14. Yeah. I’m like, yeah, Kara. We’re not we’re,

yeah. Guess what, when they,

when they did go to 80 or there when they go to 60 when you think about that the thought of them going to 14 literally you would have gotten

No, no, there’s no chance and that’s the whole thing. And that’s Oracle Corporation, and it’s not going back down. Exactly. And that’s the that’s the kind of there’s that

hive mindset right now. That is, you know, really that’s the part that scares me the most personally, is that I’m looking at the market I feel like we are in a real that high euphoria part Still, we got it felt like we there was like that little dip brought something back to normal. But that doesn’t seem to have lasted because 2019 was a monster year. And 2020 we’re being pulled is going to be even a bigger year. So I mean, we’re Where does this thing start to lose its steam I feel like we leave it we’ll we’ll this has to be continued discussion Daniel patent thank you for I don’t know if you’ve been on the podcast but

not on this one I appreciate you for hanging out thank you for everything you do with Rockstar investors and

we really a lot of people don’t realize Dan is like the vehicle that drives Butler mortgage now right he’s like the hidden kind of gem but I need to keep him hidden so that doesn’t get poached. I

really would like some pans engraved with our names

that will get you some flashlights or some star stuff yeah

What about some like golf those like visor golf.

I got a mouse pad last year someone gave me a mouse pad summer company when you want mouse pad

thing You guys must get those phone calls, though, right from the company that like Hey, how you doing? You guys must need some key chains. And

I think Christina handles most. We don’t take any. Dave’s dad

used to love those calls and he would get the people to they’d say, you know, well, we’ll send you 100 rounds. You know what you want my business you send me 500 you send me like that, and then we’d show up at his office and boxes of stuff. Cool flashlights you know knives like the Swiss Army Knife is about all Butler mortgage.

If people want to reach out to you guys who don’t know how already How do they do it? What’s the best way right now?

The best way on wizzy conduct our offices we’re old school at one triple 86848326 or we have a lot of people reach out to our corporate website at Butler mortgage.ca. And then they’ll just put in the comments that we are from Rockstar you heard of income for flow, we’re income for life Well, your life your terms

for life and there you get special mortgage

legacy rates. But

by the mortgage.ca just mentioned Dan Patton or Dave Butler or even Tom and Nick and everyone’s trained there to know to get that lead over to Dan and he’ll he’ll contact you.

Cool. appreciate this guys. Thank you, Dan. Thank you. Hey everybody, hopefully you enjoyed that talk. I was like talking with those guys. Good guys. We’ve been working with them for a long time. And if you’re listening to this and you want access to some real estate investing reports, go to Rockstar inner circle calm forward slash reports. That’s Rockstar inner circle.com forward slash reports. You can check them out there until next time, your life, your terms.