Pierre-Paul may be one of the most passionate Canadians we’ve ever met. He’s passionate about multi-unit apartments, Alberta, energy issues and Canada in general. Heck, he’s even passionate about capitalization rates! He’s a family man, an investor, an educator and an ex-CMHC underwriter who came back on the show to give us updates on pretty much everything. Hang on tight, we go all over the place in this episode. You can learn more about Pierre-Paul over at www.MultiFamilyInvestingCanada.com and at www.facebook.com/MultifamilyInvestingCanada.
Also, here are a few links to articles mentioned in this podcast:
www.fraserinstitute.org/article/alber…rio-heres-how
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Transcript
0:00
Hey everyone, it’s Tom crowds. And listen, I don’t even know where to start with this podcast period. Paul Zhang is someone who speaks from his heart. He is back we had so much feedback from his first podcast on Alberta what’s going on with energy prices and multi unit investing out there that he’s been in. He’s been in town recently. So we brought him in for another podcast recording great guy. We cover the gamut. We go through all the updates and Alberta energy he’s so passionate about it. I think this guy’s got to go into politics at some point. We’re big fans of his and then we get into apartment buildings and what he’s seeing in cap rates out there. So I think if you’re an Ontario investor, you can learn a lot from this just from what’s going on in Alberta and how it’s affecting that real estate market and then just generically some apartment building stuff in the lesson someone who owns a portfolio what they’re what they’re going through, so updates on the on the whole bit. He runs workshops throughout Canada all throughout the year. So if you want to grab on his email list, he’s a good guy really is trying to help everyone he deals with we’re big fans of people just like talking to the guy. And if you are listening to this and you’re wondering what rock star real estate is about. Listen, I want to spend
1:00
Something we hope we started this entire business, the Rockstar inner circle the membership that we run, because Nick and I had invested in some training that was done by us trainers who came up to Canada years ago. We’re talking about a couple decades ago at this point. And they taught us some real estate investing information that really didn’t apply to US and Canada. And then after the training, they kind of just vanish and disappear. And we thought after years of doing our own investing, wouldn’t it be nice to have people who are on the streets, not just talking theory, but on the streets, helping us with our real estate investments, and we couldn’t find those people. So we decided to launch Rockstar inner circle and Rockstar real estate is a brokerage to be those people. And I know that sounds crazy, but it was just because we were scratching our own itch. And that’s why we started this whole business. We are investors who started a real estate membership and a real estate brokerage for other investors. And that’s how this business is born. And if you want to learn more about the membership and how it works and why it’s working, you can get all the benefits there all
2:00
listed out at rock star inner circle.com forward slash member. So if you go to rock star inner circle.com forward slash member, you will see all the benefits that you get as a rock star inner circle member. One of the things is three times a year we run some of these bigger events. We just had 700 people at it. So we’re really grateful that we’re able to try and offer as much value as so that 700 people would show up at these things. We’ve been doing this for some time now. We’re just grateful that it’s all worked out the way it has. But that’s where to learn more about the membership. It’s rock star inner circle, calm forward slash member. And with that, let’s get on with the show. Are you ready to live life on your terms? Is it time did take charge, real estate, business building, the economy, health and nutrition and more. It’s the your life your term show with Tom and Nick Arad’s. Are you ready? Let’s go.
3:02
Okay, I have appear Paul Zhao. I like seeing your last name but how do you say your last name to show today’s young children today john?
3:11
Close enough man I can’t do it. It was a Grinch. You know how bad I was at French in school? No tell it was horrible. I was horrible. I could say Jim about Tom was pretty much it. But beer Paul, you are the most passionate guy. And you are so passionate about oil and gas in Alberta. You are so passionate about multi unit investing. You are just so passionate about life. You are a rare breed of person. You somebody called you just told me and I want you to repeat it is that the the stoic investor correct the stoic investor what why did they say that about because you brought up this gratitude rock that you have My Little Rock from the shores of Lake Titicaca Of course I do because I’m grateful to be here with you doing this where’s that lake and Peru the highest navigable body of water in the world I friend remember the the altitude must be a couple today.
4:00
3000 meters of altitude Can you jump in this thing and swim around? Very cold? Yeah, you shrink your shrivel once you get into the water, and I won’t say anymore but you read between the lines.
4:11
My son did he was 18. So obviously he can tolerate the Yeah, it’s all water from the Andes very cool places. When did you go? Four years ago. This is an adventure trip with my son we went trekking to Machu Picchu. With our private guide to cooks a horseman with three horses all you care is your day back but you get up there 4600 meters and altitude SALKIN type pass so how amazing to get up 4600 meters. It took us while we started a bit higher mind you this road but you know it took us a while it was a five day trip all together all the way to Machu Picchu. 75 kilometers beautiful. Awesome. Awesome. It’s like a safari kind of a format of the track like I said with the private cooks and a tent in the kitchen one side then the dining room mixer. frickin amazing and that we live Yeah, in the no yachts and biking and Belinda road. That’s what
5:00
I want to go on telling you for 600 meters of altitude same different same altitude and yeah but always tell me you were just going down the whole course bus takes you up
5:12
waterfalls listen all I did this I did this in California a few years ago and as I was coming down one of the hills there was literally oil coming out of the side of one house at one point so I’m like oh my god, I’m going down there’s oil
5:28
totally and then later I was further down this kind of Hill mountain not a mountain but like a big hill and ripping down there and there’s some cows out to pasture and I’m just like this is this is live here I am on my mountain bike racing down this hill amazing and I did see people coming up the hill I who I thought I have full full You know, I’m totally impressed by those people but I was just ripping down this thing. So happy but to do what you did. So you also did that on the same trip with your ear is in between we stopped by Lake Titicaca great little place on the shoreline. And that’s where you got the rock. I got the rollout.
6:00
Are you really take the rabbit This one is special. You got to stick your nose down to the beach or old bigger pebbles rights not saying right holder of that. Amazing. Is that like I’m colorblind sighs I go around. It’s got brown, green, red. Yeah and gray. That’s pretty cool. But I always you know you said earlier before we start recording life is a What is it? You’ve got something that I have 10 ounces of silver that I consider call it’s a skull it’s in the shape of a skull because it’s a precious metal silver. Yeah, and what I what I use this to remind people think I like having it around just because it’s silver, which I do like having metals around. Yeah, but to me this represents life, right? Because life is precious. Yeah.
6:34
And then it’s in the form of a skull because life is short. So, you know, we live this precious life and it’s a short life and I use this 10 ounce skull to remind me that it’s a precious thing that we have in our hands. It’s the same idea why here this rock Tom because that’s one of the things I’m grateful for, but I’m going to think a lot easier right now. Pure pop I believe in this 100% Yeah, Nero’s frickin scientists have figured this out being in a state of gratefulness, is part of being happy, becoming a
7:00
Happy but I lost my best buddy at 16 actually, while I was down to South America after we graduate from high school, and that’s when I learned the precious lesson you know that life is precious. And to this day in honor my best buddy when we were 16 I
7:15
just died of cancer she but I was having one of the best years of my life was doing a student exchange program South American Brazil, and he passed away while I was gone, so it’s something that it’s it’s still hurts all these, you know, 40 some years ago. Yeah, for my gosh, I’m old. Okay, but I got more hair than you. He’ll tell you
7:35
guys don’t lose your mind. We’re good. The guy that cuts my hair. I always say why don’t I get a cut? You know, I shouldn’t bug you about your hair.
7:43
Oh my gosh, I don’t care enough. And I tell the guy who cuts my hair. I’m like, I should be getting a cheaper prices. Why are they? Why are the prices going up? And you know, he tells me he said it’s harder for me to figure out what to do with your hair. I have to charge you more.
7:55
So, but you got the muscles. I know I got the hair.
7:58
You got the muscle. So we’re good. We’re
8:00
Even so tell me what’s the latest got? Listen because of you. I got to tell you something. Yeah, me too. Okay, we recorded this podcast, I had no idea we were you were going to be so passionate about the oil and gas industry in Alberta. You actually if anyone’s listening to this that hasn’t listened to the first time that we chatted with pure Paul, has it only been once I feel like it’s been more but previous time in January, you not only shared really insightful information about multi unit apartment building vesting, which we’re going to talk about here, but the state of Alberta, an oil and gas industry that you got me reading up on it, and then it now I understand a few things. I understand that some American companies look like they’re proactively trying to thwart some of the developments by Alberta by like, buying a I don’t know if exactly, they’re buying up different companies and then just sitting on them and not doing anything and everyone seems to debate exactly what’s happening and what’s not happening. But there’s this us element that seems to be kind of against Alberta. But then there’s also the BC and I don’t know if it’s the BC government, but there’s I didn’t understand there’s already a pipeline going from Alberta, and it looks like it’s taking the exact route that Alberta wants
9:00
To add an additional pipeline to so the environmental impact to me must be somewhat neck not I don’t want to say negligible but reduced if there’s already a line going, and if this is going to help the province of Alberta, but it seems like there’s some squabbling be between BC and Alberta over this pipeline. And all of this is basically hurting the oil and gas industry in Alberta. What is it? What’s the latest? Is it still depressed out depressed out there? The the whole oil and gas industry? Yeah, I figured you would ask me that question. Yes, I had people like literally people in Ontario saying, Yeah, we got to read up more about it. You have to understand what’s going on there. It’s affecting all of US and Canada. I was shocked by the feedback we got. Okay. And that particular podcast probably got some of the most feedback at the podcast. Oh, that’s pretty cool. Well, I so thank you so much for again, the opportunity to be back here with you. First of all, I got to tell you, so as a result of that podcast, I need to tell you something very frickin cool if I were sitting in your shoes now and have you
10:00
would hear what I’m about to tell you. I feel very proud you and Nick. I actually was people came up I spoke recently the last couple of months in Saskatoon and in Calgary, and people came up to me that heard your podcast and came up to me to thank me for what I said to you in this podcast and junior how freakin humbling is that that’s, that’s good. And it was spontaneous, right? We sat across each other doing this podcast and you know, I started getting into it. And I hopefully they motivate me today must be they’re thanking you because they must feel the messages and getting out and not you’re presenting them and all of us in what you’re kind of saying and sharing. And that’s I if I were younger, maybe dumber, I would run for office because I love Canada. This is not just about Alberta. And you know, that’s what I was trying to share with you. And hopefully I’d like to add a little bit to that. But yeah, that debate is still ongoing. So we’re talking about this mountain pipeline. It’s been in existence since 1953. There’s been no environmental issues. All we’re talking about is a twinning of it.
11:00
We’re having another one parallel to it. So that’s what, that’s what we’re asking. Yeah, it still is a big issue. But you know how much you’re paying a leader gas in Vancouver? Because there’s been $1 70
11:12
Yeah. Wow. And it ain’t over, it’s going to get worse. So there you go. And so why are they paying? Why? Why are they paying so much? Well, because we were we’re, we’re sort of shutting down the valve to oil but also because they’re getting it from nice places you don’t like Russia where they have super high environmental standards. So those tankers are off Vancouver, you know, they’re bringing their oil to them. So it’s very costly. So relax. So finally, who are trying to protect Canada instead of shipping it from next door? we’re shipping it from Russia, you got energy routine? What do you think you get your world here in GTA and go back and eastern Canada where lovely places with beautiful human rights or the sarcasm here but like Saudi Arabia, Nigeria, where they kidnap young women use them as sex slaves and children, soldiers and all these places, Tom
12:00
So when you say you’re were you’re shutting off the valve for bc Do you mean Alberta is
12:07
saying screw it
12:09
means but but are they shutting it off to Ontario as well? No, no now with your new Premier, I feel like your new premier and tug for best buddies. He’s like, yeah, yeah, just let’s get rid of Justin and then
12:24
while we’re getting totally political I don’t know if we can get rid of our selfie probably, you know, he is the selfie King. Oh, gosh, but yeah, we’ll just stop there. And, but but I okay. Tell me so what’s what’s the is there been any new developments or is it just the same story that’s progressing forward and continuing and nothing. Nothing has happened positively. So you know, we’re going to have a federal election so obviously our new premier in Alberta is holding off does want to cause problems for Andrew shear. And by the way, if sounds like I’m so much part is and to be honest with you, I’m not in love with Andrew shear. I’ll say that
13:00
Much, neither am I with, you know,
13:03
what’s his name? Jason Kenny in Alberta, but somebody’s got to run the show. Right? Somebody’s got to run the country. So he’s going to be a little bit quiet. But I think was it today that they repelled repeal the carbon tax in Alberta? If it’s not hasn’t happened. Yeah. Monday? I think so is the next few days anyway. So what is it today where the 23rd. So I think it’s going to happen by next week, Monday, if I’m not mistaken, but within a matter of days. So that’s one thing that’s going to go on. Listen, capital is fleeing this country. I know you’re good at macroeconomics. I love it. I’m not nearly as good as you knowledgeable, but I’m training myself to, you know, overall in Canada, because of Justin Trudeau. We’re losing capitals fleeing this country. There’s no you know, that people are dumping their Canadian bonds. I mean, you don’t you know, more about, you know,
13:47
tax structures, everything. Yeah, right. Exactly. Tax, right. I mean, so that’s another thing he’s going to do as well. Jason Kidd, he’s going to lower corporate taxes back to slowly to 8%. They’re now 13%. So it’s a big hit. So from
14:00
A real estate point of view,
14:02
Tom and you know, I vouch for, you know, multifamily properties but if you’re asking me we have not yet seen the worst in Alberta so we’re still in the dumps our economy very, very much everybody suffering. Junior oil and gas companies are going belly up my portfolio from a real estate point of view I think I share with you we’ve been having to give rental discounts in the vicinity or order of about 200 bucks per unit per month. Imagine that. Meanwhile, do you think my expenses went down? No, they haven’t. So it’s a tough thing because we don’t have in migration anymore. We’ll have a lot of job creation. We’ve lost hundreds of thousands of jobs in Alberta. So it’s still going on it’s still bad but the point I’d like to it well, and the reason why I do this is I love this country like I have a love for the salary comes from I think you should get into politics. No, but I’d like I’d want to do I want to be associated with a bunch of buffoons for crying out loud, Tom. No, that’s that’s the only thing holding me back. I have the right stuff. I think
15:00
But just anyway, the point is it’s not just an Alberta crush just that’s the one thing you know, I’m reading here and not not not to read everything but I’ll Burgess problems hurt Ontario he was hell because of course, you know, we engage in a lot of trade between Alberta and, and Ontario. And so if there’s no trade, everybody’s suffering, right, that’s our GDP. You know,
15:21
we feed really the coffers of the federal government. So this stuff like that, so. So you’re you’re singing this article that you had brought with you from the freezer? Yes, that’s what it looks like. You’re saying just because trade has slowed down between the two because we’re not trading energy back and forth. Both sides are the things that we’re not sending as much money to, to the federal government. Our deficit is over $19 billion. Tom, it’s unacceptable. It’s unacceptable. So the point is, you know, and I don’t want to belabor that topic, but people have to remember this is not just an Alberta crisis. It’s a national crisis. I said this too, and nothing nobody was talking about a crisis are great there. Shortly after that, it became almost like the next week or
16:00
Right after you were talking about it, this was in January of this year I hadn’t barely even heard of. That’s my point. No, no, you were calling out I give you full credit for this. But here’s, here’s why I think it’s a little bit of a weird issue for people in Ontario. In Ontario, we have such an influx Canada has, you know, Canada’s target for immigration last year was 310,000 people. Okay, we took in about 425,000. So somehow the federal government can’t do math really well, or whoever’s managing it over there. I’m not saying this is good or bad. I’m just saying this is what was our target. My parents are immigrants. I’m definitely not anti immigrant. I just mean, we had this target of 310. I’m going to get to my point here in a second. Instead, we brought in 425,000 people 43% of all immigrants come to Ontario a huge percentage of that 43% lands in the GTA or southern Ontario here. So in Ontario, we are in a weird situation where we have a massive influx of population, absolutely massive, and GDP. If you go to the university, any university and you study study economics, they’ll always talk about GDP has two inputs, it has labor, and it has capital. So we have all this labor coming in.
17:00
Because of the US financial situation, they’ve kept interest rates so low for so long. We also have cheap access to capital in this country. As we mimic the US our interest rates are so low. So we have a massive influx of labor. But we also have cheap capital and what that happens in the GTA, it provides for a perfect storm of economic growth. So so if you’re here, sometimes you scratch your head when you’re like, well, what’s actually happening in Alberta don’t even get here. There’s buildings being built and condos being and you know, there’s jobs being created. But you I think we all have to understand that as a country, even though it’s kind of booming right here right now, as a country, we’re, we’re we’re suffering. And when we don’t pay attention to some things as big as Alberta, this is big. This is big. I think we’re doing all of our you know, it’s kind of like short term things are booming, but long term things could be better. Like we have to play the long game here and we have to develop Alberta properly. And I’m not saying I know the proper way to develop Alberta. I don’t
18:00
clueless when it comes to energy and gas, but when I read about things how like US companies get involved and kind of their little nefarious and some of their decision making like buying Canadian companies it seems like and then purposely not developing some of these oil and energy projects so that they don’t compete with some of the Texas projects and stuff like that. And I don’t know if I’m right on that you correct me if I’m right you I don’t know if that happens. What’s been happening is you’ve got the Rockefeller Foundation right and Rockefeller and it was remade this made big money on oil and gas Yeah, funding. environmentalist like the tides foundation reading about this. Yeah.
18:34
Can you just fill us in on that? That’s what it is. It’s it’s oil and gas, US oil and gas companies that had been funding like, namely the Rockefeller Foundation we don’t need everybody knows about the Rockefeller and john D. Rockefeller. I think I told you I read his bio, which like, I read his biography. 27 hours on Audible. dot d Rockefeller. Yeah, anyways, but the point is, they’re funding environmentalists up to to come and destroy the
19:00
Well in gas industry in Canada so that they get our oil cheaper because we we only have basically two customers right we have the US and that’s that’s kind of it it’s our main customer so we’re been selling at a discount that discount the last few weeks has widened. It’s ridiculous Tom, if we were to so basically what you’re saying is that this oil and gas were the Rockefeller Foundation basically is funding environmentalists who will negatively portray the Canadian oil and gas industry and they’re doing that in the US for their own benefit because if they are portrayed negatively up here, stuff will not get developed and then they have less competition from us with their American counterparts. Correct. They’re buying our oil so cheaply so they’re making money on our backs. We’re gonna play third we got it we’re too nice up here are two first of all, we gotta hold together as a country. All right, we do have this. I just made a roll up our sleeves and play dirty. You’re right. You’re right.
19:51
Sorry. You’re the guy with the muscle. Not me. But my approach. Oh, no, you’re right. You’re right.
19:56
You know, we’ve heard this this great article that I read this morning and
20:00
It’s important I feel passionate about it because I love Canada right but what’s happened you know the the importance of social media and the internet and the fake news we all know now this is not a joke right there interfered with the US election. Right? Well, it’s also the internet This is an article called the internet killed the oil industry in Canada. Right? So the premise of that one well, so that the premise is that it’s so easy now and and the narrative to like to change I could go on through a bunch of stuff, right? That oil, you know, when there’s a spill, it sinks it’s you can’t clean it up because it doesn’t float bs it does. At first of all, I mean, I could go on to a full article, I can post this and send it to you people really want to dig into it, but that’s what we’re dealing those environmentalists have figured out their younger population, by the way, they were a lot of fleece and all stuff that you need oil and you know, and they just lied to these demonstrations and all that jazz. No, no, but it’s the hypocrisy I cannot stand tall. Like I show up in Toronto here like you know what amazes me and I don’t miss that people may know or not I used to live in you know, I went to school in UT.
21:00
learned English As matter of fact in Ontario but when you show up here and I live in the country appreciate that I have chickens you don’t have omega three when you see you don’t see the mountain and I show up you go holy crap. I mean this the energy the traffic on the 401k and all of that it takes fracking gas it takes oil folks, let’s stop so are we going to buy it from somebody else that’s going to make a profit on our backs that’s what’s going on. That’s and people like being so morally so perfect like you know, we don’t want to pollute Where Where the hell did the seed of material dumping how much water sewage water in the St. Lawrence River or the city of Victoria and Vancouver like come on. You got I could go on. We are being manipulated if I fight if I knew from Alberta is doing the job of educating Ontario because I think Ontario APR
21:46
you are an unfunded volunteer workforce flying over to Ontario on your own dollar to sit on this podcast to teach us all about what’s going on. And I do want to talk about real estate.
21:58
Like like Tom did, just
22:00
Let me give you a few examples. Right? There’s Bill C 40, which was shot down by the Senate last week and ever, you still might come back. That’s the moratoriums Bill C 48. about preventing tankers from, you know, coming to the west coast right near Vancouver. Well, because it’s killing the will so they say, Bs again. Guess we’re 64% of maritime traffic takes place in Canada. You think it’s on the West Coast? Or maybe the St. Lawrence River?
22:26
Do you think there are whales there? Do you hear anybody say anything about that? Here’s the thing. This is just one falsity that I just wonder as an example, and of course we got to get off the wagon here like get on the wagon. It’s fun. Well, you like it? I hate don’t don’t don’t. Don’t search for you’re gonna get me I’m gonna I’m gonna go there. I’ve never know But seriously, seriously. What’s most damaging for the west on the West Coast? Guess what it is? It’s not those few tankers. It’s all the whale watchers. It was a little boats. Have you been on the west coast and watch the West. It’s all the fucking fears that go back and forth between Vancouver and the island, Vancouver.
23:00
Man, worse than that the data that was used to prepare Bs, Bill C 48. was dating back from the 70s. That’s why one of our independent senators from Alberta shot it down and barely won, but it was rejected. And you know, that’s, that’s frustrating to hear. Because I find in today’s world, it’s so tough to get to the truth of really anything. And I’ll give you an example. I you know, everyone talks about electric cars and how they are environmentally friendly. But I hear no one talking about the environmental impact that’s required to produce the electric car like, and then on the life cycle of the electric car, like what happens to the batteries, after those cars are no longer going to be used. And I’m not trying to sit here and say they’re bad. All I’m saying is that when you look at the entire supply chain, from the beginning to the end on the lifecycle of an electric car, how different really is it from existing supply chains that were were able to maybe recycle a lot of the components of gas powered cars and I’m not sitting here saying gas is number one and
24:00
Batteries are bad. Far from it, I drive a vehicle that has half gas and a little bit of battery. I just mean that it’s hard to get to the truth sometimes. Because when I think of these things, I’m like, Who can I even really go to, to really break down such analysis because if you go to the guys who are pro electric, they’re always just going to slam everything on the gas side. And if you go to the gas side, I feel like there’s going to slam the electric side, it’s really hard anymore in today’s world, to get anyone who’s in the center, you know, and as much as passionate as you are about this stuff, I find that you are actually in the center. You’re you’re willing to talk and consider both sides. Absolutely. But then I said to you the last time we did this podcast, the debate is too polarized. But we’re using fake news, Tom, like this, what’s happened? You’re right. What’s happened. That’s part of the internet and social media. Those younger fellows environmentalists have figured out how to use it. And people will read papers. Remember in the old days when there was a newspaper, physical paper with actual paper in your hands. Well, before you put out an article in a newspaper you had to do you had fact checker doctor
25:00
Now this that information is disseminated like that without any checking facts. That’s what I deplore. But there is stuff you know, it’s like the phenomenon, I can’t remember exactly how to express it. But when you start paying attention to something, now you start to see that information. That’s really one of the key things why I’m I appreciate you giving me this opportunity to talk about that. That information. I’ve got a bunch of articles I brought with me here for you today that talks about that that information is out there, but you got to be educated. But the key thing is, it’s not just a bird. This is a Canadian crisis. Our federal deficit is increasing. But you keep bringing that point up, because you feel by lack of sales of energy from the province of Alberta. We are all hindering ourselves in the tax revenues we could be collecting for our own country. Because of that we’re just driving our debt and deficits further and further, which we really don’t have to if we were just operating efficiently with this country, with I’m saying exactly, it’s hospitals, its infrastructure, dollars would go to Ottawa and their risk redistributed, right? It’s the
26:00
equalization payments? And of course, yeah, so what is Alberta?
26:03
What do you feel? And I don’t even know if you know this answer, but what is Alberta not getting from the federal government that it should be getting right now? Like what kind of support is it like Well, I mean so So Bill C 40 was one lack of support right? Because it doesn’t make sense it’s just the data is not there the scientific data is not there to support that first of all, and secondly, obviously it’s the it’s the pipeline like what people seem to forget it because that pipeline we do everything well he would allow tied waters to the west coast Okay, so because then Alberta could get what has diversified their markets, okay. Have more clients so it’s oil from Alberta, natural gas and oil but let’s say energy UK from mostly oil, mostly oil from Alberta, but also we have a little energy line. So but let’s say well for now, because we don’t have a problem with natural gas, we will have a pipeline for that northern Alberta So okay, so it’s oil to the west coast courage, then opens up exporting it to the world and get world frickin prices for
27:00
Tom instead of selling at a discounted price to the US because that’s the only client pretty much customer we have and the US is because I think sometimes when I read about Alberta oil they’ll say well a bird oil is a different kind of greed or whatever is
27:13
more expensive Yeah, so anyway, but they obviously are still buying it they can process it of course that’s not an issue that’s not the issue is not processing the issue. I mean, there’s an issue there we don’t have US companies are just getting it on the cheap right now. And they’re super cheap and it’s we’re idiots we’re acting like idiots. We’re not standing up for ourselves you know, Canadians we have a high reputation everybody in Alberta right now. Tom, I want to reiterate this it we’re in the ship. It’s like in Alberta, it’s still very bad. My Portfolio is suffering. Okay, what our real estate market Mind you, you know, it’s part of being a single industry kind of economy, right or too heavily reliant on one resource which is oil, but what we’re experiencing in Alberta like you know, I’ve got a good sense knowledge of Canada from Quebec all the way to the west coast. Okay, not so much the Maritimes. But what are we
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Real Estate Market is experiencing as a result of the downturn of the oil industry would not happen anywhere else like some years you may not get as much appreciation and all of Asher right but we’re talking negative appreciation right we’re talking valuations have come down because the fundamentals all broken be and you would never have such a dire and lasting this long like Tom I went out by building I follow a certain model where have a contingency fund in place, you know, you you’re not used to no rain, right? A three months of mortgage payment or as a Yeah, well, I’m two to three years, four years. It’s into that a long time ago because then we compete with large landlords to have deeper pockets. There are some some of them are cities Yeah, of course they want to buy us for you know, 90 cents on the dollar type of thing but so it’s it’s and so everybody is suffering the economy. If people don’t know this and Albert is still reeling, it has not recovered and I don’t see any sign yet. 2019 So right off and most of 2020 You think so I know. I know. fortunate because
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I know some articles about Alberta kind of making fun of Alberta. But it’s almost Albertans doing this to themselves, because there’ll be some article saying, well, we haven’t diversified the economy and Alberta beyond oil and gas. And they’ll they’ll quote articles like Dallas and say, if you look at Dallas and Texas, and you look at their industry, it’s been diversified. They have more financial markets and stuff like that. But my point to that is that it’s such an easy excuse to make, because you can just point the finger and say, well, we really should have diversified, but it is true, but it deflects the whole argument or diminishes the argument a little bit, because then you’re saying, Well, you know, we can’t really blame the oil and gas industry are we you know, we can’t blame the federal government. We can’t blame these pipelines. But if you’re sitting on this resource, and if you’re telling me that British Columbia is paying $1 74
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liter of gas, and and then the American companies are buying our oil, which means they like it, they can do something with it, and they’re buying it on the on the cheap I it just it’s kind of makes me scratch my head.
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Little bit, you know, you can make all sorts of counter arguments, because you could say, I guess that the only reason the Americans are buying it is because is cheap, and they have to process it more. So they would never buy it if it wasn’t like fair market value or whatever. So I know there’s two sides to all this. But I just feel like we’re neglecting a little bit of a national treasure out there. And it’s hurting, it’s hurting all of us. And I think an Ontario we don’t hear the message because we’re so busy and booming and there’s 20 cars, 20 lanes of traffic on the 401k by York Dale mall, and nobody can get anywhere. And we had our own problems out here. You know, everyone out here, Jenny Doyle for all these people around. You need energy. You know, the one thing that’s another article and I’ll just give you the highlights, obviously, actually buying more Canadian oil will actually help the environment. You want to know why. Because we have the highest environmental norms around the world so more cleaner or like they’ve improved by rates of I think in the range of 27% the impact environmental impacts like we’re a world leader in getting
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exploiting oil in a clean way, Tom? Yeah, you’re putting all these charts in front of me that’s proving this. I can’t show anyone these charts over the over a voice podcast. But yeah, yeah, I didn’t know this is what I’m saying to you. And let’s just work as a country together. Let’s be strong and let’s show the world. But again, these charts let’s refer to it right, this one here says that
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since since 1990, oil sands producers reduce per barrel emissions by an average of 26%. Some achieved reductions as high as 50% and oil sands there’s a chart which we can give you you can put it on the website if you want but oil sands represents 0.15% of global emissions. Okay, this is what it means Okay, let’s not be hypocritical we need this we need to make it their position. You know that yes, I believe I’m middle of the ground from the political spectrum. I’m super environmental, like I’m the guy that puts a backpack on I’m 56. I’m will do that until as long as my body will allow through and Bolivia yoga jitter what I’m saying I’m fairly for don’t have like that.
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big muscles like you but I’m you know, I’m fit. I remind me tell you about where I’m off next week because it’s a healthy kind of trip and crazy. I’ve never done anything like this. I still feeling weird about that one. But the point is health is matters to me how I eat and all of that stuff. So environment is everything to me. Yes, we need to move away from fossil fuels Of course, but it will happen overnight. We have been hacked hijacked by environmentalist that knew how to use the internet and social media with fake news bottom line, Tom, this is it. Somebody hearing this right now we’re just hating both and listen, let’s go to the even this one. I was reading something put out but you’re
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highlighting in front of Yeah, well, yeah. You know what, you have an IMF article and Friday. I think I know which one you have. I haven’t read this one yet. That’s just that is putting out fake again, fake data, like making assumptions. You know that Canada subsidized subsidizing the oil industry. baloney. That’s not what’s going on. But it’s false hood like that, that we’re we’re dealing with. We’re being hijacked. We’re being hijacked. We’re the
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most amazing country and I feel now with your election your provincial election past and maybe with a federal election coming up maybe Alberta will kind of turn around and what’s this one over there seem to said about the whales that you know six you know, not impacted as much as but the ferry as well I didn’t even know how to leave so many articles and from and even know how to link out to all the will choose some of these articles I’ll put links in the show if you’re listening to this you can go to Rockstar inner circle calm forward slash podcast and on pure Paul’s podcast episode will have links to some of them he has so many articles in front of me I don’t even know if I can link out to all these but we will link to the link to the Do you have your own website with collections of these Oh, I should start them should start this one. This is your passion project on the cell. I just love this country folks. You know, like you I’m well traveled and traveled regularly. I just we need to stand up for Canada, I believe. I mean, it’s part of the reason I talk about what I talk about and owning assets and stuff. I believe Canada is such a great country give such a good standard of living to people who want to come here and contribute and pay taxes. That if we all do our fair share. It’s one of the most beautiful places in the world. The weather. Maybe
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Not so much better here than Albert. Well, nobody, nobody you have mountains. So at least if it’s snowing, I can go to a middle east of it. So we have I’ve Blue Mountain, which is a hill. Yeah, we
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call that a hill. And I love the mountain. I go there all the time. I’m not I’m not against Blue Mountain. I just mean let’s face it, we don’t have much in Quebec at least I have some mountains. But anyway. So I want to ramp it over to the apartment building stuff. So you so it’s still negative, you’re down $200 per unit per month, on average per month, on average, the average rent would be now on so it was a you know what, there’s no such a thing depends where and why I know
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what you’re talking. You’re talking apartment building, on average, let’s say yeah, on average, but every market is different. rents tend to be higher in Calgary. My Portfolio is in Edmonton. But I tell you what, you know, there’s always how you frame things. It’s always a choice, right? You’re making me want to I never wanted to cheer for Berta hockey teams because I’m trying to make but now with all this stuff going on, I feel like I gotta cheer for I have to there’s been a solid
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spot in my heart for Edmonton Oilers because as a league fan, I can completely relate to like horrible management. So I can kind of relate to the Edmonton Oilers right now which is like a sad thing that’s kind of making me want to cheer for them more than ever have and Calgary Flames I’ve never really felt sorry for but now I’m feeling with that I need to cheer for character, the Calgary Flames and the Edmonton Oilers maybe they can be my like second teams. Yeah, you know, because I feel like they’re the underdog on what’s going on. And everybody cheering for them out there and needs need some support. But so it’s still happening out there where people are, you’re not having a population influx, you’re still having a larger population. It’s growing a little bit. It’s kind of cool actually, if you look at the overall numbers, we are growing, but half of it is new birth before making babies people making love and making babies, half of them
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put tenants in my frickin buildings. But the rest Yeah, we’re getting international migration. But you know it’s things are improving a little bit the numbers but hardly like it’s, it’s you know, like I said I we expect that we’re 2020 is a write off as well as well.
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How
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to build a frickin pipeline doesn’t happen overnight, like to open up new markets like that doesn’t happen overnight. Like I said, the confidence and people need to understand this impacts the whole of Canada. Like I said, capital has been fleeing, you know,
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confidence to return is this pipeline was built between Alberta and BC and over to the west coast. Yeah, you think that alone? I don’t there’s no doubt we have, you know, how we carry the oil out of Alberta by train. I think we talked about that in the last podcast. We’re back on local business or No, well, it affects the apartment building business kind of directional, but it’s transported by train which travel excuse me in river valleys. Right. You think a spill would be extremely damaging. If you have a train derailment huge. It’s reinforced like it’s like swimming or nexar anyway, but so that it will take time and lack of there’s verse I believe, and I hang out with frickin oil rich folks on vacation with them and I sometimes tell them like you guys did a poor PR job which did they do they know that but is there
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interest of what my friend replies to me is their interests from the media less even in Eastern Ontario to listen to that not really because now the winning side, to a large extent due to some, you know, history and bad fake news and all that is like the oil companies are all bad people. I just give you a stats that shows that, you know, what were some of the most the leaders environmentally friendly technologies and all of that, right. So that’s the image you’re battling against. But I think they could have done a better job of that. So hopefully, I know, through the grapevine it’s not official newspapers, but I got a buddy who goes to the petroleum club in downtown Calgary so I have some intel. That’s not anywhere, but they’re working on that. You know what, whenever he said the guy was the guy that used to do documentary more like the fat guy. If I if I had that skill, I would Roger Moore. Yeah. I would do a documentary like that to you know, just to put some of these fake news out of there, but it’s going to take a while. Yes, you’re allowed to call anybody fat anymore. I think you have to say me, so I don’t know. I don’t know the politically correct. You know, that’s because where we
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Where were you born? I’m very were you born in Quebec? I guess I feel like if you’re born in Quebec, I guess that would be politically incorrect for me to say what I’m about to say, Man, you can’t say anything anymore. I don’t know what to say. It’s so we can’t say anything. I’ll just leave it at that. You wouldn’t you can’t say anything because when I was born, is that if you’re born to come back, I think you are politically incorrect, but I like it because I like it when people just say it as it is. I hate having to tiptoe over all these we’re too old. You know what last night I know I’m politically correct. And everybody listening to this I apologize last night at my talk right I spoke last night that the Von real estate investment club but one of your buddies and former buddies and somebody came up to me said exactly the same thing. You’re politically correct. I love it don’t change.
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No, you are you are me. I don’t know how to do anybody else. You come from the heart. It’s not like you’re, you know, what can we pause on that? Everybody’s on a journey, but I am there. Now you and I get along because you and Nick are the same. Man. It can happen to all of you listening to speak from
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Do yourself. And you know, it’s an evolution. Some of us I’m a late bloomer, but man, I’m there now. And when I do what I do, whether I teach or speak, it’s, it’s,
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it’s so empowering. It’s such a nice place. And I to be honest with you, that’s the thing, that trip I want to talk to you about because I need to transfer that ability when I teach. And when I do this stuff, like, you know, teaching real estate and investing apartment, well, I need to transfer that in all areas of my life. But I think I’m on the verge of a breakthrough. But let’s leave that at the end. Wait, wait, wait, that’s interesting to me. Because you feel like you’re not fully speaking from the heart and some area. I don’t get that feeling of
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full coherence. Yeah, everywhere in all fields of my life. So I need to congruence ruins. Thank you The word Yeah. And I need to treasure that feeling in this particular thing. You know, it’s a phenomena. You know, I before I started recording the Malcolm Gladwell book, the outliers, right? 10 when you do something for over 10,000 hours, like the Beatles and all the examples of sports guys, you become you become very good at it. That’s where it
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You know, I have reached out when it comes to what I do as an investor despite the fact that my portfolio is suffering because of factors external to me right the economy I don’t control an Alberta economy but I know my stuff very well for my background and CNBC and all that. So when I do these things, these trainings speaking it like I was telling you, I’m in a state of flow in the zone that they call it athletes, right? I just need to figure out to transfer that in other areas of my life, but I do a lot of personal development like you do and all that daily like having the gratitude rock is one strategy that I don’t go anywhere without my gratitude rock so I’m just saying it’s Yeah, that’s what I’m saying. I need to kind of learn what what I’ve done there, but I just wish everybody could reach that place. It’s when I’m in that state like you know, you you are exactly where you want to be where you belong. Like, I wish I need to I need to expand that to all areas of mine. I think you’re doing a pretty good job and and I think what comes across listening from you is to you about apartment building stuff is because you speak from the heart
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You can almost not that you do this, I want to frame this correctly. But you can almost give people advice that maybe doesn’t work out for them. But if they know that you’re speaking from the heart, and that you believe in what you’re saying, you truly believe in what you’re saying. They will understand and they won’t hold that against you. Does that make sense? Because if you are perfect, you know, sometimes we’re going to give, I’ll give bad advice unintentionally to somebody. Yeah. I’m not saying you ever will. But I just mean, that happens. But I think when you’re coming from the heart, people can figure that out, and they can feel it. And even if you give some information that maybe doesn’t pan out for them, they really don’t hold that against you. Because I know I’m that way with people who I know are socially when I listened to you. I know you’re speaking from the heart. And if some if you told me something, and it didn’t work out quite right, I never hold that against you. Because I know you. You had the best intentions for me. We’re getting way off topic, but I truly do believe that. Well, that’s the way the world works. Yeah. Well, it does. I think all of us as human beings need to reach you know, move towards that state of being right and I’m
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Reading I’m reading the Power of Now by the way Have you read that? Yeah I love the Power of Now I listened to the audio I did you listen to the I do both Yeah. When he when he realized that he’s he’s got a funky voice or what his voices but when he speaks if you haven’t heard this is Eckart tolle lyst stuff. Yeah. And that gong that goes off at the boy like that builds me up. Yeah, it annoys me
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here that I’m driving around and start looking around like what is this? And then his voice, but I love that book and his his other book with the gold cover when you were a new earth. And Tom let’s see since you read these two books, right first of all, you’re supposed to start with the power of knocks, so Eckhart Tolle Lee, and then the second book following book was a new earth by a car totally. I have my young children like young adult children 19 my daughter 1921 That’s some has said I’ll pay you read those frickin books and that’s what I recommend anybody every human being the one a new earth is a toughest read, to read because it’s about you Eagle so good though but everybody I think all human beings show me that. This is like a
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handed that book Otis GIFs. Yeah, one person returned it to me. Yeah. They said, well, ready. You know what it was that they said it’s too deep for it’s too heavy. And I read that book, I swear, every page, I felt like I was taking in so much information that I had to like, reread the page. It took me forever to read the book, because it was so much James, every single page, I should go back, it’s probably been 10 years since I’ve read the book, I should tell you that I’ve had one breakthrough as a speaker. This is when I read the New Earth. So the conversation we all have in our heads, right? You know why, Tom, you’re not good enough. Or Tom disruptor bald, listen that right? You know, and that’s not us. That’s not who we are. Remember the power of now. We’re not those voices we hear in our head. We are the watcher of these thoughts. That’s the exercise that one needs to do. And that’s really the my chip. Next week, we’ll come back to that at the end. We’ll finish with a punch. But I want to go back to how I teach my stuff like as you know, I have my next workshop, the last workshop in 2017. Tomorrow in Hamilton is experiential. I
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Pull no punches, I don’t withhold any information I tell the good and the bad I make a point of that. What’s very cool about the way I teach is and I bring so much wealth of experience both personally and what I saw at CNBC I tell people the mistakes and all of that and it’s not making money overnight like I want to listeners me like proper real estate investing it’s not overnight unless once in a while you hit a home run which is sure and I’ve got lots of examples of that. But you need to know how to find these gems right but overall I teach the same way with the good and the bad have students that come and share their the graduate students who are successful because people do take action share that so it’s very much the same way providing the full gamut of truth and the good and the bad so that’s that’s how my workshops are designed to give that to people shorten their learning curves by years and hopefully prevent them from making costly mistakes because the world of multifamily right it’s it’s it’s a lot of dollars, right. You realize you started with that card stolen, you took it to monkey dressing only certain people, only certain people
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can take
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but it’s valuable. Listen, since we’re on that topic Yeah, you do your workshops three times a year I want to come back to some questions about commercial investing but the workshops that you do are they two times a year or three times a year? Well sorta different parts of the country. Oh yeah. Where I did my very first one in Vancouver. How did that go? Very well. 9.64 is out of 10 is what the students evaluation set think I did okay. Yeah, no, that’s it that’s like
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a big multi unit rental property market multi unit Well, no, it’s you cannot afford so people that take the workshop are not not going to buy in. Okay, so there anything coming but they might be buying the door. We’re looking at the lower mainland or you’re looking at about bare minimum if you if you’re lucky if you can find something for $300,000 a door. So we’re talking for $500,000 cap rates. so ridiculous. I won’t even go there. So what is the cap rate? I’m too curious. It’s going to be about three and a half. Wow. Got it. But what does that
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Copper cap rates in Alberta because rents have gone economists. They have gone up even though rents have come down. They’ve managed to go up okay, I said this evening because I do coming down property probably technically that’s how I should work Kalka should be increasing. Yeah right because when when you said rents came down I’m like I wonder if cap rates are stable
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Okay, I taught this obviously this is this is part of what I teach okay. cap rates like valuation approaches first of all they’re called approaches okay? It’s not the science of valuation. If you recall, there’s like three valuation approaches the cost approach cost of building buildings Donald then the one Right, exactly. Then of course, the second valuation approach not the science of valuation is obviously the what is the sales comparison approach which a lot of your, you know, listeners are probably investing small rental properties. That’s when you get to see me comparative market analysis, one column you have the subject property, then you have comparable sales. So we use that for multifamily a little bit in terms of compares value per door or the cap rate of one property with recent comps other caps rates from re Scott Harris
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The hill that CNBC or bank is live copper income capitalization approach, right? whereby the analog derives the values derived out of the NY net operating income All right, but these are approaches Tom they’re they’re flawed in the number themselves but people will use an easy mathematical formula such as the income capitalization approach because it’s an easy one for banks. It’s a divided ny by prevailing mark is a daily people talk about it so easily like that. You’re like, what’s the count? What’s the count? Here’s the thing I tell people lesson. Don’t you frickin get hung up kind of talk like this on your show, of course. Okay. I think you were saying worst things half an hour ago. No, you’re good. Okay, you’re good.
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Don’t get hung up. I have one slide. It’s got to go. You go to at least game and when they score, you got the red light flashing? Well, I’ve got one slide that says it’s with a red light flashing but doesn’t fly. I shouldn’t make a flash come to think I’ll admit my slide. But it says don’t get hung up on frickin capris watch, you don’t get to choose them. We’re going to wait a little bit from the top out of come back to the moment but don’t
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get hung up on capris What do you get hung up when you invest when you invest in real estate Tom Come on there’s only one show most people the price just straight up the price but the income yeah and the cash flows cash the cash flow now at the end of the day not even expensive income it’s your most people I’m thinking I’m a residential smaller investments most people just get hung up on I’m paying too much and paint him and we try to get them to think about the income and the cash flow reducing expenses that whole bit okay, you’re writing multi unit I get it. Yeah, income expenses cash flow noi. But the point I’m making here is you can technically use the way of arriving at a capital should have come down in a market where it’s it’s all all bets are off. It’s it’s there’s no other real estate market where we would that would go through what’s what Elbert is going through because of the lack of diversity of the economy and all of that. So what happens is I would have thought they would have gone up knock on gone up that’s what what did I say that he said down? No, no, no. Okay. Yeah, yeah, yeah.
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The critical
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Captain chef going out there for values go down, right because it moves in opposite direction, it values per door have come down people to a cap rate is less used now, as a way of arriving as some valuation will use more the value per door. So overall values per door have come down. Because if you do the mathematical formula doesn’t make sense anymore, because it’s such a unusual circumstance. I don’t fit makes sense dumb, but that’s what it does. Because rents have come down a bit. Yeah. And the cap rates not really telling us the true story, or the true value that so you’re now it makes sense. You’re saying the valuation approach is the proper way or the better way to the theoretical way? Yes. But now we use more values per door when they have come down. I’m not gonna dispute that. Yeah, of course they have. So this kind of stuff you talked about in your workshop. So you do a Vancouver one, you obviously do one in Alberta.
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In two weeks ago. I’m having my very last one in 2019. That’s in Hamilton. So I think that we’re going to miss that if anyone’s in Ontario. The next one out here. Is it a whole year away or is it in the fight don’t have a new diagnosis.
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So if they Why? I know you’re exhausted. But now you want to go to do about it. Yeah. Okay. Yeah. But on these workshops, you do something that no one else I really know. We were talking before we started recording that in Canada, I find it’s really hard to find anyone, we were just talking about this. It’s really hard to find anyone who purely specializes in apartment building analysis in an ongoing way. Like I’ll meet the odd realtor who does a little bit of apartment buildings over here. They kind of know a little bit apartment buildings over there. But I don’t know if there’s anyone like you in the country of Canada legitimately. Who is educating people on hey, here’s how you analyze apartment buildings. Here’s how you look at apartment buildings and who has contacts throughout the country. Because we’ve and I mentioned this at Rockstar, we’ve been helping investors. We’re over a billion dollars now and helping investors and properties. We rarely find anyone who really specializes the way you do. So that’s really a testament to you. You’re really filling a niche here that isn’t really being addressed it so we all need you to keep doing what you’re doing.
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You know she’s come to the workshop. Yeah, so these are three days so if you’re listening to this one peer posts, definitely somebody you want to tag along on will handle your URLs and stuff. I’ll link to them a rockstar inner circle was crazy support I mean, multifamily investing cans of MC like the acronym multifamily investing camp calm, and people can sign up to get an E book and when I announce new dates, but right now I’m just finished three in the last two months so I’m pooped. So I know what no more workshop for 29 and do you do any feedback or the last if I will? Or no, I could know same mechanics what
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the real estate transaction was a little different but the mechanics of the cross can be even abroad us Yeah, see my buddy list is in the oil and gas industry. It’s the same income capitalization approach and why is your your right on valuation? Yeah, these are basically business at some point. I’ll translate everything because obviously I’m Francophone. That’s not a fake accent by the way. my accent is genuinely from Quebec, but yeah, it’s good point I’ll show you in English. could probably do.
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It’s true. Actually. Somebody people have been trying to get me out there.
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We have some members that are from Yeah, go back. You’ve got people in Saskatoon that came up to me that tonight podcasters you’re listening to the GTA Yeah, we close to you. He listened. Rockstar was born out of frustration of not finding this kind of information, PRP just like you. Yeah, we just thought Nick and I had taken we had spent 10s of thousands of dollars on mentors, and different things are. The people weren’t coming from their heart, we got a bunch of us specific information. On Monday, they went back to the US, we were left to figure everything out by ourselves. And the stuff that we were taught didn’t really apply in Canada. Like we were taught strategies that are good in the US that don’t really work up here. So we decided to start rock star more just as an exercise to satisfy our own inch. Does that make sense? Like we couldn’t find anyone who was really helping people around? Yeah. And that’s kind of where this was born from. So kudos to you. I was quite impressed people in frickin Saskatoon coming up to me thanking me for what I said on a podcast that you record in GTA and you know, feel wow
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It’s shocking on this podcast. Yeah, we have people listening. We look at the stats in the US on Europe, Asia. Yeah, it’s really well, I got to start my own. I’m working on that. But just go back to my workshop. What I do is indeed unique in terms of credentials. Like I’m not you know, like you I’m an active first and foremost I want to be seen and you know, that’s what I am as an investor. Like I said, I’ve got a financing application sitting on my desk. I’m going to hand over to the the bank on Monday next week, right? So that’s what I am first and foremost, but I’ve seen so much in my days that seems he was other people’s deals. They weren’t mine but it’s the same idea of the wealth of knowledge and ups and downs different markets because I underwrote in three provinces three territories right at CMC. So I’ve got I’ve got an incredible amount of amount of what are you seeing apartment building owners in Alberta doing like you mentioned that, you know, we’ve all been trained in real estate to have at least three months of an emergency fund on her property, that kind of stuff. But if that gets drink down, how are people survived like a question? Well, so I’m still working on that. I don’t have a full answer.
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Clearly Finchum is down you got to work on your operating expenses All right? So you got to get smart I’m working with a new property manager happens to be somebody that I mastermind with their their brilliant somebody like you very technologically savvy. So you got to lower your operating expenses. Okay, so that’s on your focus bringing in new technology, you got to do that, right? There’s an application for example, happy, cool, whereby when the tenants move in, it takes pictures of everything. And so when you know if they destroy the switch, you can do chargeback but everything is digitalized. Can I say that? Yes, digital information. And so,
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and we’ll do semiannual inspections versus annually. And if something’s wrong, like the store hasn’t been cleaned up, you’re going to start charging 35 bucks, you’re going to get that downturn or I am suffering I’d like to again like I can’t I don’t know how to be any differently as a real estate investor, I am suffering because of the you know, you lower revenue, right? I can’t pay myself to be honest with you. This is how bad it is. But here’s the thing.
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There’s always two sides to story. What doesn’t kill you makes you stronger. As an investor, I am getting to a higher level of sophistication slowly, gradually. So that’s why I don’t have the full answer to your question. But I’m moving towards that. So I’m also proud of that and grateful. I’m grabbing my little gratitude rock from Oh, this is gonna make you you’re going to come out of the listen to Paul, we just had this week we had two American friends of ours, one out of Chicago. Preston, let’s and Rob Minton out of Cleveland. These guys we’ve known for some years, they both had big real estate operations going on in each of those cities in 2006 2007,
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then 2008 and 2009 and eight hit them quite hard. But one of them changed from doing real estate brokerage type investment and being an investor himself into a property management company because he had to survive. Yeah, so he managed to find a Nisha becoming a property management company himself. He grew that business so big that he reached two years ago he sold it. So out of out of the depths of despair. He really was able to create another entire business that he saw
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For huge value two years ago, and Rob Minton has been able to survive that correction in the US through a combination of strategic defaulting. What they did down there is that things got so bad. Yeah, they chose to stop paying the bank on some properties as a survivor. This is how bad things got. They said, You have you’re not foreclosing on me yet, but I’m going to collect rent. I know this sounds brutal, but this is what they did. Yeah, they collected rent, and they chose to stop paying the bank, knowing that the banks were so backlogged that it would take a year or two years, and it was the only way they were able to survive. Yeah, because then they kept that money. Then when they finally lost the houses, at least they had a few years of income. Can you imagine that’s how bad things got. They were calling it strategic defaulting, meaning that they were proactively choosing to do what you gotta do, and then going proactively to the tenant say, Hey, I’m about to lose this property, you’re going to have to move out, you know, things were bad,
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really, really bad down there. But they learned a lot. And they learned that the people who bought the right properties that paid for themselves, they actually were able
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To survive through that, yeah, Chicago and some of the apartment buildings, rents did come down outside Cleveland and some of the single family homes tenant demand went up so much that tenants actually stayed strong because people still need to live in houses. So the rent and go down at all on the single family stuff. So they both came out of it. Not without scars. Yeah, that’s cars, but they both consider themselves more sophisticated. It’s interesting to hear what you’re saying. Because they said they’re both more sophisticated in both real estate and in business, because of what they went through it. I’ve mentioned this to Nick here for a long time. I said, you know, people in Ontario really feel real estate cannot go down. And our family almost lost everything in 1990. You know, 1990, crushed Toronto crushed. Our father was flipping properties. We almost as a family went bankrupt. Your dad was a real estate to that. Oh, yeah. Our mom was renting out rooms in a boarding house in Toronto for $12 a week changing the sheets, doing everything in the 1970s in the 1980s. Our father was flipping properties in Mississauga as Mississauga started to develop 1990 hit
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right at that time, he had three
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properties luckily sold off to one went from $750,000 in four months down to 450. We almost lost we couldn’t declare we couldn’t give it back to the bank because the banks had full recourse.
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So we would lose not only that property, we would have lost our family home as well, like it was, you know it as guarantee. Yeah, it was Dire Straits, of course. So we had to try to rent that house out, losing monthly money even when it was rented out. And that’s always stuck in the back of our heads that like the thing that they taught us about. It taught us about luxury real it how luxury real estate x in a recessionary period is very different than starter homes or apartment buildings. So it taught us that you can’t ignore the negative it will happen there’s going to be an A an Alberta type event they’ll be an Ontario event, you need to prepare for it so that when it happens, just like you’re saying, you’re not paying for yourself but your your properties, you’re able to to serve you’re in survival mode, right? Yeah, but if you had owned some portfolio finally enough, personally Yeah.
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But if you had owned a portfolio of luxury real estate, yeah type of market, those come down so hard and heavy. And if you’re flipping them, you’re not getting income from them. You can lose everything in a snap of how do you think I feel? I’m the king of frickin assessing risk factors that they’re investing in apartment. mitigating that Yeah, but I don’t have control over frickin provincial economy and oil and gas. It’s interesting to hear what you’re saying because you’ve gotten into oil and gas the way we’ve gotten into interest rate and the global macro economic because high because our family was sideswiped in 1990. so badly, and then again in 2008. This happened to us Nick and I thought, why are we letting the only variable we cannot control right now? economy around us we need to have a better understanding of the whole world on because it affects all Simon Yes, this frickin bullseye. I wish you know, we could have a beer now because I you just made my day by saying what you just said. I would not have had this information. I was blindsided by the oil and gas industry because it’s like a real estate market. You got to appreciate it.
1:00:00
appreciation p your principal down everything’s hunky dory and I was caught off guard and now this will never happen because now people I can
1:00:10
I’ve got a hole
1:00:12
down on your right so fantastic for you to be that perceptive Tom to get that straight but I’ll also tell you so I’m going to make it a mitigate that risk now Once bitten twice a shot How am I going to mitigate that risk in a book, Alberta tell me how I’m going to what lessons I’ve learned, you want to ask me? First of all, because we’re so dependent so these are the lessons What doesn’t kill you makes you stronger? So yes, I’m monitoring the oil and gas like, like never before so that I can mitigate my risk because every risk can be mitigated. right this is I’m a former CNBC frickin underwriter. I didn’t see this one coming. Guess what all my former colleagues at CNBC whom I met at a conference in Edmonton, yeah, racing they wouldn’t had that no, this nobody even willing gas people that I hang out with some of them second generation has been a darkly so but now I will see the signs a lot sooner. And maybe be
1:01:00
Able to maybe react faster. Plus, by integrating technology real time technology, we have access to the numbers, right? Because you know, there’s always a delay, right? You collect the rents at the beginning of the month. And then your your parking mentioned does the numbers, it takes you weeks. So we’re going to have I really, if you’re lucky, yeah, yeah. So but in a better world with better technology, we’re going to have that information in real time. So we’re going to be able to use it better to manage those risks. Okay, the market risk aspect of it. The other thing I did in Alberta, when rents were going up like crazy, as you know, we don’t have a restrictive landlord tenant legislation, so you could increase your rent by whatever the market could be. And man, I can tell you in a span of think from 2003 2000 in,
1:01:39
gosh, 2014 rents went up by about 44% everyone in Ontario was just going what is crazy. Okay, so it was okay to go to 85% loan to value rent to over leverage. Now asked me I’m refinancing this deal now. I’m going 65% of the evaluator super conservative. And now as you as I teach this stuff, because I’m always doing
1:02:00
Doing this and teaching right? I come up with new tools. Now I have a full flow chart like it’s amazing. It starts with what are your investment goals? Like every deal that you have people say what I want money, okay? But more or less, right? You know your loan payments are going to be lower. So you end up with more cash, but your cash flow cash return is going to suffer, what is it that you want I as an instructor to teach the mechanics of how to do these things. But then at the end of the day, as an investor, you need to figure this out for yourself, because it comes to time too. So it starts with you your investment goals as an investor and then at the end of the day, you gotta decide what’s the loan amount going to be? How much boring how much financing Am I going to get, and that’s when you connect these two things. So my first box and that beautiful flowchart, I think people saw it in the in the webinar that I sent you guys cool, very cool. And then so it starts with you and it ends with you as an investor where your goals but so I would not 65 in this particular cases of one of those buildings. I don’t have one other investor from Ontario By the way, and we want to pay down because cheap cost of money still ridiculously cheaper. I think I’m going to get a loan of 1.1
1:03:00
million dollars 2.7% interest rate when I said the cap rates in the vicinity of five and a half, so my spread is there. Right? I talked a lot with my hands here. Technical. So anyways, so that’s one thing I would do differently. Definitely word D leverage a little bit because of to acknowledge for the lack of diversity of the Alberta economy and just to protect it gives you a little bit of protective layer. Some are okay, but but the definitely reducing costs, but I’ve always been good at that, like I actually be honest with you. I hear a lot of stories from other people know, very unknown, as you know, and students of mine, so I’m doing very well, considering what we’re experienced, because I hear a couple people had bridge loans in place and then value went down. And this is why I hear some investors, they’ll they’ll come to me and they’ll say they’ll get all hyped up on how many doors they own. And I say Listen, this isn’t a game from being in real estate for many years. I know this isn’t a game of how many doors you want. It’s how how sustainable are those doors because if you have a whole I know a whole bunch of people who over leveraged themselves, they get they load up on real estate to do all kinds of joint ventures. They get all
1:04:00
kinds of doors, right? Because they’re trying to get the most doors possible. And I’m like, Listen, how good are your properties? How,
1:04:06
how well managed? how stable is the income? Yeah, on those properties? These are the questions I’m very interested in. Because just the fact that you have all these doors in a short period of time, if there is a recession or a change, what happens to you and what kind of promises you mean to some of your joint venture partners? Do you owe them some capital back? Like this gets it and I’ve seen it get nasty on and I’ve dealt with that. Like, it’s not about how many doors you own? It’s just how sustainable is your portfolio? Because if I meet somebody who has two properties, let’s call it two doors. I hate even saying the word doors, but two properties.
1:04:37
But maybe they’re fully paid off. Yeah. But someone else rather runs and say, Well, I have 12 doors and but they’re fully leveraged. I don’t know the person who has two properties fully paid off maybe is the one that’s in a better position, and maybe they’re the quote unquote, better real estate investor. I tell everyone in Ontario, listen, we haven’t had a deep recession here in a long time. None of us are sophisticated investors until we’ve made it through a recession. I strongly believe
1:05:00
That even Rockstar real estate was founded in 2008. I tell you this one. Yeah, yes, I know you’re a veteran, I tell Nick, I say even Rockstar, like we’ve been through a recession with our family way back. But it said rock star is a business yet we need to actually go through a deep recession and research to prove to me where our real business is proven because I feel like if we can protect you, that’s a stoic approach. But yeah, it’s just like, the stone, I’m telling you, I’m going to send you the link. We need to protect the members and in real estate investors as best possible because even though everybody thinks the real estate only goes up, if we can protect people around us and get as many people as we can through a recessionary period and the business itself through I then I feel like I can finally maybe say, okay, we did something that’s decent love. I know, until that recession comes through here. I’m always a little skeptical of our own chops of our own sophistication. You know, it’s just too easy when things are going The only problem, Tom I don’t see any recession happening and there’s no I know, I know. You’re freaking funny.
1:06:00
So strong, so strong and people think I’m in migration you guy. It’s funny because people think I’m crazy because on one hand, I say Look at all this stuff going on Ontario like it’s phenomenal our population growth, but at the same breath I’m like, be careful, don’t get over leveraged, you know, and people think I’m, I’ve literally had some people walk up to me saying you don’t understand how to make money in this market. And I’m like, Listen, I’ve just seen all markets. You know, I’m not going to buy a property just based on appreciation, something in a triplex somewhere in Toronto, well over price just because you tell me it’s going to appreciate No, I need to be smarter than that. Because things can turn on a dime. I can be sideswiped overnight, and I just don’t want to be so
1:06:36
big that the storage like crazy what what’s your favorite? What’s your favorite? You said is the daily stoic. Why do I know the daily Stoke? Is that an email you get? Yeah, it’s a daily thing that you get. It’s amazing. It’s um, I actually start my workshop by introducing cold showers. Yeah, I love cold showers. You know, I mean,
1:06:55
that’s part of it. I can stretch the meeting a little bit, but just like
1:07:00
Fasting, right so that it makes you
1:07:03
want to start I do intermittent intermittent stuff. I’m gonna be doing that that’s part of my so what are you doing? So now you have your workshop. I know I’ve kept you too long we’re gonna have to. I know me too. We’re just going to be here. I have some tequila
1:07:17
touching a weak spot in my heart tequila. What?
1:07:23
What what are you doing to relax after all this stuff? You you’ve been alluding to it? Yeah. Well, I just I did something very spontaneous. I’m I’m very tired. I’m back.
1:07:35
I’m burnt out. Okay, I’m still a one man show like you send an email to my support that multifamily investing camp.com. Guess who answers it’s me directly or when you join my online course. And you know, you ask questions. It’s me. And me and me.
1:07:49
I mean, I do have a bookkeeper and a professional accountant, but I’m still not big enough, but I probably have limiting beliefs. But yes, talking about limiting beliefs. I find a poop because it’s a lot of
1:08:00
As you know, I shoot videos and webinars now I’m saying to get the gospel into technology and all of that, right? You’ve got your brother and yourself that’s cool and that’s pressure. And I look up to you, you know family is big for me in my world as well. But right now, just last Friday, I just announced to my wife dear
1:08:17
I’m gone in June because I knew like by the time I finished my workshop on Sunday night I am so frog because you know you talk to a passionate look at your passion you I mean, oh, this is a you went to your wife and said I’m gone. She’s not coming with you. That’s the fruit Yes, she’s not Oh, let’s hear about kidding. I know I’m waking up where I did what she’s not coming.
1:08:38
What are you doing? I’m off to frickin Mexico Sayulita. Here I come What say you leave, work to have a yard or small town on the beach. I rented a small apartment. I’m going for 10 days. I’m going to go to yoga and I’m going to meditate. And I’m just going to reset press the reset button. But I feel weird not not by having my weapon. Geez like three months ago. We’re in believes the two of us
1:09:00
That was high end stuff. This is low profile. And just to reset button, I rethink a few things. I feel you need it. I need I it’s a necessity. Yeah. But it does feel weird. Because we have. I mean, Deanna said, you gotta do, you can go somewhere for your own. It’s for your own health. You know, I find if I played small, you know, we all struggle as all of us with limiting beliefs, and I just need to figure things out because it’s a bit strenuous right now, you know, but it’s not the end of the world. Like, I’m still like I said, I still carry my gratitude rock. I got so much to be Oh, yeah.
1:09:32
You’re hustling hard things. I just need to do but I feel weird about it. I don’t know what’s going to come out of it. But I don’t want to change a few things. And it’s very cool. It’s, you know,
1:09:41
very cool. Sometimes I think those times where you take time for yourself, to be alone with your own thoughts, when you really analyze your life. I think when you coming back home after that, you will do that. I haven’t done something like that myself in a long time. Where I did do that for years, probably a decade is I would get up before my family and I
1:10:00
would spend about 5am to about 7:30am. Every morning reading, writing in my journal with my own thoughts. And that was a really, really important decade for me and I’ve gotten away from that a little bit as my kids have gotten older. I’ve stayed up late at night to sleep in in the morning, quite frankly. I just went on the first trip alone with my wife just two weeks ago, we went down to Mexico. Yes, and pictures that Yeah, and,
1:10:26
but nothing myself. Well, maybe that’s maybe that’s coming Julissa. I’m not sure how to feel like literally said, you’re doing what? And this is coming up like in a matter of a week like I’m leaving next Saturday. I’m working Holy crow. What are you doing? Like I think there’s a part of me that’s afraid of scared there’s a bit of fear. But I awesome. No, I don’t know. I don’t know. I’ll tell you next time.
1:10:50
Take away two or three days themselves and go up and which is kind of a reasonable amount of time I’m taking 10 days is good. I’m impressed. Like I thought when I looked at the calendar, I thought because
1:11:00
We were in Belize for five days. That was cool. High End stuff. We had a 2500 square feet. Also Villa de Janeiro pool. But it’s not long enough I found I found that you just start resting and then you mentally you’re not there and yeah, we need to repatriate our space in our mind. I get where I get that and I’m with the whole family so maybe doesn’t sound like it works but we get to go away to Europe this year. And I really shut down the email and my phone and after, like after you know by the time I’m into my third and fourth week, I’m walking around I’m relax. That’s the point. Yeah, it’s a month you go for go for a whole month. I feel really blessed. I do. You do need some time I as a physical aspect of like, my body heals up. Yeah, I’m not going to the gym. I’m not doing anything. I eat really well. beautiful face and wine and espresso. Yeah. Oh yeah. The love life and your lemon is beautiful. So I think you need these periods of time. Well, you know, I’ll tell you next time I come back for another podcast. That’s how it went. But
1:12:00
I’m doing it Yeah, everything you’ve shared so thank you for doing this give out your URL on one more time. Yeah multifamily investing Canada com multifamily investing camp multi family investing Canada. com. Are you on like Facebook as well and I do have a Facebook page. I have a weird genre. I don’t even know multifamily canada.com will find it and we’ll link this is where having a consultant will find it. On Rockstar inner circle calm forward slash podcast on the show notes for this episode, you will find links to pure pulse stuff, including his website and the social stuff. And I’ll collect the one or two of these articles. I don’t know something I don’t think just one thing, Tom, one thing I’m committed to it. I’m inspired by you because I came to your entrepreneur summit last year. I have been over the year. So if people join my online community because I’m trying to emulate you and I mean next Sorry, I look up to you guys to create the online community. I have stuff that I’ve been prepared over the years. I’m going to put it out slowly so it’s going to become Canada’s multifamily place to go
1:13:00
I do shoot interviews with my graduate students with Lenders Mortgage brokers like for the multifamily This is so you’ll have you have been building up. Yeah, you’re just holding your I just can’t be everywhere but I known it by the end of 90. You Mark my words all of you listening. Okay, I will do this before the end of the year. But
1:13:19
too so we can spread it out there and more than that multifamily investing can calm. I’ve got an E book, you’ll be on my mailing list. Here’s something I don’t put out a lot of content like, you know, emails won’t get email. I put out stuff. It’s content. It’s fun stuff, fluffy stuff. So that’s very important to me, because I don’t have time to write fluffy stuff. gotta gotta have content. We’re gonna see you in politics sooner than later. No, I won’t do it. I don’t want to be associated with the time you’re in town. We got a chat again. Thanks for this for having me. Cheers. Hey, everyone, it’s Tom again. So hopefully you enjoyed that talk. We went all over the map a little bit. Just a fun guy to talk to so passionate I feel like about everything that he’s involved with. It’s easy to get excited about the different topics that he brings up. So that’s pure politics.
1:14:00
We’ll definitely have him on again, if you have any feedback for us on any of this stuff, you can always email podcast at Rockstar inner circle. com. That’s podcast at Rockstar inner circle calm, those emails will come through to us. And if you are getting some value from this show at all, if we can ask that you leave us a rating and a review or just a rating or review whatever, on iTunes that would be greatly appreciated. So that is like the fuel that fires us up to keep this going. So if you haven’t done so, and you feel we’ve earned it, we would be extremely grateful for some type of rating or review that you feel like we’ve earned it on iTunes. Thank you for that in advance. That’s it for this time. Until next time, your life, your terms