Living Through 30% Annual Inflation in Argentina & Immigrating to Canada, Investing in Duplexes & Living Life on Their Terms

We’re here with Sergio Manzur. He’s a Rock Star Inner Circle member and wait until you read about his story. The things he had gone through were crazy. We want to share how he worked through the adversity he was facing and how he manages to live life on his terms, truly inspirational!

It's fascinating because Sergio shares his story of how he and his wife lived in Argentina during 30% annual inflation like that was normal for them, 30%! Then he shares where they lived through a period of 100% inflation for a month!

He goes through that and he talks about how in Argentina you have to play defensive like you always have to protect yourself from this inflation, when they finally decide to pick up Leave Argentina, they decided Canada was going to be the spot for them. And that is interesting enough to all of us real estate investors here in Canada, hearing how, you know, wonderful people like Sergio and his wife picked up and moved to Canada chose Canada as their destination.

But then he also talks about how in Canada, he could go and play offense where he felt like he could get ahead. And sometimes I feel in Canada, Canadians don't see the opportunity. It's kind of like you don't see the forest for the trees right. If you're born here in Canada, you don't realize the great opportunities that we have in front of us in this country with our banking system, our real estate situation, our education system, everything that we have going for us.

Let’s get into it!

Tom: Tell us a little about yourself Sergio…

Sergio: I was born and raised in the main capital of Argentina. I don't know what the number right now. A little bit larger than Canada in terms population and it's a beautiful country. It's sad that you sometimes you have to make these type of decisions to leave. But we did it for the sake of our future and to find a better place to build and raise a family. And we're extremely happy with the situation. So we've been in Canada already for 12 and a half years so.

Tom: So what made you decide to come all the way here to Canada?

Sergio: My wife and I were married in our mid 30s when we when we decided to make this decision. So the last few decades in Argentina have been really quite a mess from an economic point of view. Like,  the economy swings up and down. Inflation is over. problem, currency depreciation. you really cannot plan for your future from a financial point of view. Whatever decision I wanted to make it felt like I was gambling. It’s not that we were having a hard time there, we were doing okay, we just realized we had to work really hard to be doing okay. And we didn’t only just worry about our jobs. We has to worry about inflation, currency depreciation and corruption that’s rampant and hasn’t gotten any better.

While in Argentina we always had to play on the defence, trying to protect what you have. When we first came here (to Canada), we were shocked at how fantastic Canada is to play offence. And the move actually was easier than what we expected. Just because, you know, I believe that this is a fantastic country. displacing ourselves in Ontario is truly amazing, right from every angle that you that you look at. I mean, the economic growth that you have here is just amazing.

Tom: So in Argentina, can you explain to me how did you guys play defense? I like that analogy. But how did you even play defense Protect some of your wealth in an environment where inflation maybe is kind of changed.

Sergio: The only true way of you know having some savings is either you buy real estate. And that's tricky because it's a different market, or you save US currency. And I'm not talking just US currency in your bank account. It's US currency that you have under your mattress under your mattress, or that you can take abroad to a financial institution outside the country. That's truly how you can feel comfortable that your savings are protected.

Tom: Yeah, because Nick and I saw our family go through it and Yugoslavia you know, we weren't there but I remember my aunt going through, she's no longer alive but she’s a great lady I learned so much from watching her sell eggs in the market. There was a cover for her money laundering operation where you gave Yugoslavian dinars in exchange for German marks. She didn’t want to keep her dinars because of the inflation problem and she got arrested for that as it was illegal.

Tom: The government arrested her she was in jail, one of my uncle's had to go and get her out of jail. Great lady, smart when it came to money, smart lady like her kids there have land on the islands over in Croatia, like she came from literally nothing like born in the bush, outside of one of the cities to get to the city start making a name saving, doing all this stuff. So I totally know what you're talking about. It's fascinating to me. Like, but I just need to understand like why you could not save the US dollars in an Argentinian bank account?

Sergio: Because every once in a while, you can actually be prevented from taking that money out, believe it or not, maybe you can just get, you know, take a little bit every week, whatever, when there is a crisis where your funds are needed. In some cases you may lose it all together. There was one crisis where they, the government issue some new law and all the dollars that people had in their bank accounts were automatically converted to the local currency to pesos. And that's it, it's like okay now is you cannot have dollars anymore, and we converted everything to pesos.

Tom: So a lot of people do that take American dollars wherever they couldn't keep them at home or get them abroad.

Sergio: some studies that talk about, you know, the how much money Argentineans have outside the country, just because they don't trust that the country's a good place to keep their savings.

Tom: I don't know if you know this in Germany right now. They're changing the law that you used to be able to buy 10,000 euros worth of gold bullion anonymously in Germany but they're changing the law there in a couple months. And I was just reading about this and they're reducing it to like 2,500 euro that you can buy anonymously in gold, everything over that you have to report. So Germans are queuing up some gold dealers own there are like there are shelves are empty. And there's queues of people trying to do this because that country has a history of what I mean it's even the blood of the country there yet because they have a history of what happens in inflation and currency crisis. So when they see something like this, they are doing the same thing. But in their mind, it's the gold, they're buying the gold and I'm sure squirreling it away wherever they can squirrel it away. So like this happens all around the world and as Canadians we never really see it, so you think oh, that's kind of like fairy tale talk almost. But, but Okay, so there's the currency. But then also, did you have a Did you ever buy a property with a mortgage on it? That wasn't in the Argentinian peso?

Sergio: Yeah. So in 2001, we bought a property that was the first condo that I bought a And I had to buy it in a mortgage in US dollars. And it was 10.75%. So not only the rate was super high, but I also had the currency risk, right?

Tom: Because you were being paid in pesos. Exactly. So if a peso depreciated against the US dollar, your mortgage payment on up,

Sergio: and actually that was one of the up swings where you can actually get a mortgage, even if it was hard. There was some other times where you just cannot access credit, right? And many people, especially right now, because this situation cape deteriorated, unfortunately, many young people, they just cannot buy a property because there is no access to credit.

Sergio: And the properties are quoted in US dollars and he's like parallel market, but he's kind of legal that you know, all the prices are in US dollar like a local currency. Just doesn't mean a thing, right? When you have inflation that is normally you know, 30-40% a year with some swings when sometimes it was a little better, but we had periods of hyperinflation, I had to leave one of those when I was already at an adult age. And it's just a nightmare, because it's not just that living through a hyperinflation is absolutely nuts. The reality is that the country, the economy is spiraling completely out of control.

Sergio: So the businesses go bankrupt, people lose job, actually, you know, 2001 does be crisis, I lost my job too. So I had to almost start again. So it was, it was painful. And you know, then a few years later, I started to spend more time because of my word to traveling outside the country. That was in the US I came even came here to Toronto, and you start comparing how people leave and how okay with the same amount of effort or even less, they have a better standard of living, and they don't have to worry about so many things. One thing that amazed me here is people and some people care a little bit about You know, politics, less people, I would say care about the economy. I know you do. You do a lot. But the majority of the people don't care. And the reality is that they can leave without caring. Over there. It's more like, you need to survive. So you need to become almost an expert in the economy, right? It's weird, at least in all the aspects that will allow you to move fast if you see some trends in the market, because you can go belly up that quickly.

Tom: And where's there? I'm curious, what was the highest level of what was like a normal level of inflation and what was the highest level of inflation you lived

Sergio: Normally I would say about 30%. There was a below the 30% in the 90’s.

Tom: 30% to normal right now your annual inflation of that 30% so groceries that cost $100 one year 130 the next year?!

Sergio: It’s nuts. by the end of the decade it spiraled out of control.

Tom: your income going up at that time was the income inflation matching.

Sergio: That's the main challenge. You are constantly trying to prevent your income from you know, falling behind in real time. So if the nominal rate is like 6%, for example, reported, but inflation is 3%. Their real rate is 9%. That's crazy.

Sergio: Yeah. And sometimes here, you hear people that say, Yeah, that's great that you're, you know, you're a salary increase 2%. And they don't even think that, you know, okay, but inflation rate is about 2% you really didn't get an increase

Tom: In inflation was 3% you're behind it. Yeah, you got us our rate of 2% you're actually bound by 100%. But I find that's the sneaky thing about inflation when it's at small levels, like it's reported here 2-3% people kind of ignore it, but if it's going at 30% like it was for you in Argentina, yeah. If the inflation rates, the nominal rates 30% but the real rates like 40% everyone pays attention, because they're like, hold on a second here, man, things are really going up 40% not 30% Yeah, like, this is a big deal.

Sergio: You know, fix all the decisions that you made, right, how you save where you save, sometimes you have to, you know, you know, wanna buy some stuff because you say, yeah, I'm gonna need that in the future and it's gonna go up so I better you know, buy my car now. For example, it is crazy but it just messes up a your whole decision making.

Tom: if 30% was normal that incomes really ever match inflation like, or no. Sometimes they do, how was that handled like employers really said, okay, you're getting a 30% raise this year?

Sergio: it's just a struggle. Sometimes, you know, unions, they are very powerful. And depending on the government, there's some governments that accommodate their requests much more. So we had some years where actually the unionized employees were getting a better you know, salary increases that non unionized and then other periods with other governments it was the opposite, right? But at the end is you have to be on guard, and you want to make sure that you get at least the inflation rate. So, again, he's one of those open phones that you have to have in your head just to survive that here. You don't have it.

Tom: I think we could have a negative rate here a negative real rate with positive nominal inflation. What I mean by that is, we could have a situation here, where we might be interest rates might be 2%. Let me get this straight, but prices are going down like 3% price are actually going down slightly deflationary 3%. So like that's a negative 3%. But in real rates are 2%. So then the real rate becomes not negative three becomes negative one. Yeah, so we're even we even though we have like this positive rate, we're actually have this negative interest rate environment, which is completely insane to me.

Tom: Like every time I even talked about it, I'm like, my brain starts just kind of exploding, that this this could be a reality. And I think that's kind of almost the world we live in, in some areas where some things are going up. You know, the real rate is much higher than it's being reported that people believe, but then there's also this weird situation that I think the Fed and the bankers are a bit worried about that we can't go negative. And that even though we have these rates, were These positive rates were actually in this weird negative territory, a lot of things that they measure, and it's absolutely crazy.

Sergio: And if it's not negative, it's still very low. Because consider that, you know, we can get a mortgage rate right now, even on our rental property, which is higher, you know, 3.3%, something like that. And if inflation rate is two and a half percent, that means that the reality rate is only .8%. So it's free money. It's still free money. That's a concept that many people struggled to understand. But the reality right.

Tom: I like how you're literally laughing at the situation you're in, but you're laughing because it's like so good because you're thinking this is just a joke because if I could survive at 30% when I look at these rates here, and 10% interest rates maybe or whatever you were getting, what did you say you got one of your mortgages with a 10.75% but again, in US dollars.

Sergio: the concept I think is not that complex. But then when you when you want to track what happened after 10 years, 20 years, then it gets more complicated, right? Because then you have to if you talk about the dollars, for what year? Yeah, got it really having to adjust for Okay, I'm talking about today, these many dollars, but back in the 1970s, it would be this amount of dollars today. So that's where it gets a little bit tricky, right.

Tom: So you said you live through like normal was 30% inflation, what was the highest you lived through?

Sergio: So there was one month and I remember perfectly because we're so crazy March 2001, where it was like 100% a month. That's insane. That's insane. That's absolutely insane. That's an I mean, people were super mad. People were, you know, looting supermarkets. My mom at that time she was in a supermarket and you know, they cannot keep up with adjusting the prices and at the time, I guess there were more stickers right that they have to put on the on the shelf right for the pricing. And my mom was in a supermarket. And they announced via the speakers that okay, as of right now, all prices are up 30% and people will win Not a lot of people just grab their bags and left without paying the supermarket, right? It was chaos.

Tom: And so in that environment, though, you could still get food. It's just the prices were changing. And I remember some of my family over in Croatia during a time like this. They told me the moment you got paid, they would literally run to the store and exchange whatever currency they had for whatever food or groceries supplies that they needed because if you waited just like your environment there if you waited like two days now what you could get for your pay might be completely different. So it was a matter of just getting the currency and exchanging it immediately for something of value.

Sergio: Yeah, so in that environment, a lot of crazy things happen for example, when you are the new you know, business two reasons that you sell one company sell product to another, etc. You cannot wait to get paid. So in those extreme situations, it's almost cash. It's okay, drop the emergency you have to pay me cash today. I don't want to check that I kept to the paucity in one week, not even 30 days, right. That's crazy. If you want 30 days, and we're going to factor another 30%.

Tom: I remember, and I've shared the story, you're but you're making me reminded that remind me of it when we bought that place we have over there in Croatia on the Adriatic. We went to go do the final payment. And I thought, okay, we're just gonna go to the bank to get a bank draft and to make a payment. And they my cousins like no, the banks, don't trust each other because every 20 years or so some banks just go completely out of business. So there's no concept of bank draft. So we had to go order the currency, like so. So to make our final payment, we ordered the currency and local and local currency, it was cut, it's called the Koona over there. And I literally had two plastic bags of money that I walked out of the bank with. And then I handed it to the people that we bought it for, because they were banking another bank, who was literally just across the street, but the two banks had no way to connect themselves. So I gave the currency this is this is like six years ago, this is probably get now like nine years ago or so. But this is so that's like still 2011 this is what they did. And then they took the money that we counted. And then they went to their bank to deposit Well, I thought it was the most ridiculous thing I've ever seen.

Sergio:  It's still like that in Argentina, if you're buying a property, it's still like that. And then it's a big deal when you are presenting your offer, who decides or who's negotiating where that transaction is going to happen? Because let's say if you are selling, you would like the city you know the buyer to come to your bank so that then you can count the money there. And you just put it there you don't risk going to the street to the positive somewhere else a couple hundred thousand. So that is one of our big negotiating points right where the transaction is going to happen.

Tom: Okay, so when do you get to the point? Where what was the deciding factor that you're like, hmm, we just have to leave Argentina?

Sergio:  since I started working when I was in my early 20s, the economy was solid with where they are and the government implemented a program no matter the name, but suppose that is something like the RRSP program here which is basically free tax deferral program. Okay. So it's like a private It was like a private savings plan retirement savings plan. Okay, so I diligently contributed as much as I could, for many, many years, at some point that I was making relatively good money, at least for local terms. So I save a lot of money. And many years later, I had 90,000 US dollars on those savings and they allow a, you know, US dollars are there, right.

Sergio: So then, when a crisis came, the first thing that they that the government did was force all these institutions to lend money to the government. So I got that money. And of course, I didn't have a choice, right. It was like a law so that money got converted into a bond. It's not a US bond. It's a bond of the government of Argentina right so it got converted to a bond in US dollars. And then a few sometime later, it actually got rolling to the say the equivalent of the CPP here say “well we'll give you something we consider these when you are 65”, so I felt that they stole all my money so when they come out like this is because I'm not expecting to see any any of these maybe peanuts when I'm 65 but likely not even that because I left the country so I won't even have the year to qualify but those $90,000 were converted to $90,000 but on our bond, so you of course you can discount that and then it got converted into local currency and with a depreciation It was like $30,000 and then it goes roll into the you know, that long term problems of basically I lost everything.

Tom: So basically all of this combined, you guys are like, Hey, we're, you know, I've traveled a little bit now out of Argentina. These crazy people in these other countries don't even realize how good they have that we're going over there. Yeah, yeah. Was it hard to get into Where were your choices? Canada?

Sergio: Yeah. So at the time we look at the US, Canada and Australia, the US and we're talking like you know, the 2005 around that time, the US was already at tougher to get in without a job offer right without a sponsor. It started to be if you want to do things written completely legal. There are other ways right, but…

Sergio: But if you want to know everything legal. So, then we actually looked very seriously at Australia and Canada, where affiliate has a point based immigration system very similar to what Canada what Canada has a Yeah. And we like both options and we ended up applying, you know, to Canada. And it took us about 20 months until we got all our paperwork and we had to, you know, do a trip here to officially land and then we were permanent residence. I was amazing, right? Because as a permanent resident, you know, you're Canadian, right? You cannot vote. But and then five years later, yeah, we became Canadians.

Tom: I remember as a student, I worked at the terminal one, the old terminal one you probably don't even know this old building, but old terminal one, a horrible little terminal. And I worked in basement as a student customs officer, and planes would come out and every once in a while, we would get people hiding in the hallways to declare straight up refugee status. I don't even know if I would do that anymore now, and, you know, talk to them, and then they would declare, I'm declaring refugee status and I would walk them into immigration. But the people that were coming with their proper papers to stack of papers landing for the first time and saying, I forget the language, It was like I'm landing to declare my status here or whatever it was, and I was taking them to immigration. And they were so happy, so happy and it was like, I felt happy to be Canadian, welcoming them. And I always tried to make an extra effort to be like, welcome to Canada. I'm like, Who am I haha?

Sergio: and that meant a lot to them because my wife and I still remember where you know we go to customs and they grab all the paperwork we go to this basically the final step of the immigration process where you when you officially land right and then you become a permanent resident. Yeah, and the officer once everything was done, he totally Welcome to Canada. I just felt absolutely amazing.

Tom: So when you so you decide to come here, and then how do you transition to. I guess you picked up a job. Up here, then. So you've been working now here for 12 years?

Sergio: Yep. Something like that, approximately 12 years.

Tom: And then how do you transition from getting a job here to getting into how you're investing in real estate in a country like you're in a country you're not born in and have so much respect for that? Because I find Canadians question investing in real estate, the ones that are born here and educated here and they are always debating Should I or shouldn't I have here you are landed here? What process did you go through? Was it a series I think you mentioned to me, I feel like Rich Dad Poor Dad stands out to me. That was one of those is how you started reading these books.
Sergio: So real estate is still relatively new to my wife and I, we started when we bought our first property in November 2017. So what we did, when we came here, I started working and my wife started a little later because, you know, she stayed a few years with the with the kids, we have two boys very close in age. I started working and my focus was to increase my salary number one, and the second focus was to save as much as possible. So we went through a period where we saved and we were when you can see we saved about 50% of my salary. We need to save money and we need to save money fast, because we need to catch up.

Tom: You actually had that working for you, you had this burning fire inside of you to do this.

Sergio: Yeah. So that was you know, for quite a few years until we save some money and we started investing in the traditional way, not through all the, you know, either TFSA storage fee or even our ESP that we set for set for our kids, but all in the traditional way right through mutual funds, right? And then we realized that okay, the returns are not what we would like. We have Almost no control of their of the outcome. And the fees are ridiculous when people really do you're laughing but you know I know I really do their homework and realize how that more than words it's a complete rip-off because they all these meet these you know financial institutions they manage trillions of dollars and even if they get you know between two and 3% A fees that's billions of dollars of profit that they get regardless if you make money or not. And even that 2% that they take compounded assuming that they can deliver for you average returns of the average market portfolio which sometimes you don't get even that.

Sergio: So we realized that okay, no matter how much we say, you know, I probably was able to get ahead at work and increase my salary quite a lot and by just you know, taking more responsibility, right. And, but right now I'm already at my highest marginal tax rate that means that every additional dollar that are getting salary or in the month the yearly bonus 50% I don't see that.

Tom: So shocking. The first time I got a commission check at a company called Oracle software company, an American company that I was working for. It was a it was in my life. It was a massive commission check. Okay, this commission check was $32,000. Okay, one commission check. Like when I got this was like the lottery. To me. This was like, I think I might have just one. This is 30. I remember counting the day till I was going to and you didn't get the check. I just got the pay stub saying that it was deposited Right. Yeah. And I remember The day I got the pay stub and I guess online banking wasn't so good because I didn't check the deposit or whatever, I rip open the pay stub. And saw the net amount.

Tom: Yeah. And they had taken 50%. But it was 16,000. And obviously, that's a huge that's still, I mean, that's a lot of money. There's no doubt, but in my mind, I am I had a harder to Island. What happened to all the money. And I remember how hard I was working that year. It's not like I just stumbled into that. I mean, I was working it like I was coming in early. I was thinking I was I was working. Right. And it was it was a good paying job. So I didn't have anything to really complain about. But when I saw that $16,000 deducted off I you know, when you just have that sinking feeling like I just been ripped off and is there a mistake here? Like do Is there a number is there a number that I call the government and say hey I think you're screwed up here. So yeah, I can totally relate man. It's shocking.

Sergio: Yeah. So that was kind of our realization, right? That even if we're doing all the right things, and you know, I'm have a good salary. I'm doing okay, a job at work, etc. Yeah, that that money never seems to be enough, right? It's just like a lot of work for, you know, just for surviving.

Sergio: I started looking at Real Estate but mainly from a numbers point of, like, okay, different strategies. What are the numbers started running the numbers and I realized that, wow, this is pretty powerful. There is something here. Think about the basics, right that and you know, these well not even if there is a 3% appreciation on the market and we know we've had much more than that, right, but even a 3% if you're putting 20% down, that means that their return on your investment is 15%. And you've done nothing, even if the property breaks even, but it doesn't just break even because you are also getting at a minimum, you know, the principal repayment, and that's traditional equity that you are making right? So you your return automatically is going to be above 15% even if you are just breaking even from a cash flow point of view, and then if you find the right strategy, and you can get additional cash flow and again, cash is king of course, but that's a pure bonus. So when I started running those numbers and saying Okay, you know what, what does that properties going to do for me in five years or 10 years. And I said, Oh my god, there is something there. There's something that no one told me about it about this. So I was pissed about that. But now I know and I'm looking at the numbers, and it's true. And I remember, you know, listen to you or Nick many times saying something like, oh, if someone just buys one rental property, and they keep it for 25-30 years, they're gonna be okay.

Sergio: And it's true. Actually, if you if you run the numbers, you it's, it's true. I mean, it's a great vehicle to build wealth. And the cash flow is fantastic, but it's, tough to get for sure. But the cash flow, you know, it's the gravy, the wealth creation that you get on equity is just amazing, especially when you have a strategy as you guys talk all the time we are here and you know what property prices may go down. But if you have the right property and you still cash flow, and you can you know, you can go through that those years when it tough eventually properly I'm gonna come up. So they're gonna be okay. So to me, it was like, super interesting to, you know, understand all the numbers and then Okay, well, I mean, now it's a matter of defining what type of strategy.

Tom: How was you wife in this process?

Sergio: She was seen but she was seen more conceptually not as much into the detail at the beginning.

Tom: There's all these things to do with real estate. That's why I tell everyone I'm like, yeah, it's not really. It's a pretty simple thing. Real Estate, but it's not always easy.

Sergio: You know, it depends on the strategy that you pick, right, as I mentioned to you, and then we can go you know, my strategy called duplex conversion.

Tom: that's what that's what it takes. And on a duplex conversion. Have you been able to pay for someone to do the work? Are you doing the work? How you doing that?

Sergio: I still don't have the expertise or the or the time to do it myself.

Tom: So you're buying the property that has the opportunity to be converted into a duplex? Sometimes you're almost doubling your income on it. And that's what I try to give everybody some warnings because the refinancing thing is a beautiful thing. It's another one of those things that conceptually is so beautiful, but it depends on when you hit the market with your refinance because a lot of times what most Canadians don't understand is the appraisers are given instructions by the bank saying, Hey, listen, if there's any sort of market correction in the next 18 months, and we've heard through the grapevine that this stuff happens, I don't have it firsthand.

Tom: So I should say that, but we have heard through some pretty reliable sources that appraisers have been told under certain situations that this kind of thing: “if the market corrects, and your appraisal comes into high and we are underwater on the property value over the next 18 months, We're not going to be using you anymore.” And when that happened a few years ago, all of a sudden, we saw appraisal values coming in way low across the board almost overnight. And when you're banking on that appraisal to be able to go refinance it to pull out your money, sometimes it hurts. And sometimes appraisers don't do a good job of the income approach of properties, you might have done a beautiful duplex conversion, doubling the value essentially on the property because you've doubled the amount of income you can get, because now you have two units instead of one. But they are just looking at it as like a residential property.

Tom: And so you don't get the full value. So it's, you can't always it's a beautiful strategy. And we all do it. We all went with that's been done since the beginning of time, but it's something you have to navigate through and can be very frustrating. The appraisals sometimes.

Sergio: So going back a little bit when we decided to jump in and look at different strategies. I realized that Yeah, even if you find out you know, you buy a single family and that's great, right? If you're not going to spend a lot a lot of time on it, but we decided okay, we want to do more. We want to spend some time we want to go through the grind whatever it takes an unlearning because there is something There. So we said, okay, you know, we want to focus more on multifamily for the cash flow, which is what gives you the boost to their return on investment, right? Because you can actually, you know, pull that money and use it on a project. And so far we've been able in every touch on every refinance that we had, we were able to pull all the money from the renovation, and a little bit of the down-payment. I didn't have any of those crazy home grants that some people talk about, well, you

Tom: You never know when your home runs coming though. That's the thing I can tell you from experience in real estate is sometimes the Nick and I have had many times where you're like that property. Why did we even buy that. You always have some properties that you don't like but they're your portfolio. But every once in a while the property that you think is not going to produce it just produces like a magic. You know, you just have one that it appraises beautifully. You always rented out for top dollar and another property that you think is going to be your diamond property but it doesn’t appraise quite right. So you just never know when you're going to hit that home run.

Tom: how are you managing some of these things you’re working full time. Did you pop in on the weekends afterwards?

Sergio: pretty crazy at some point in time, because, you know, my wife and I, you know, we're both working full time. So it was a every day doing a little bit over the phone, talking to people eventually going and checking the properties, you know, when we were trying to feel, you know, to feed the property, for example, and weekends, there was, you know, a point in time where I had at least two projects on the go. Maybe that will be our maximum where I was working, you know, five days a week, and then I will be there almost all Saturday, because right now we're investing in well, and so that's about an hour from what we leave.

Tom: That's freaking me out than somebody born in Argentina is Investing in well and on because like when you're born here you never think and I don't mean to anyone listening to this from well and under we do a ton of ton of Rockstar investors buying Welland telling us we do a ton of stuff in Welland but just to hear that story like you're in Argentina you come here to get it and now you're investing Welland, why?

Sergio: a coach I had that helped me with real estate told me about the potential in Welland.

Tom: We just put out the latest population numbers. So the US immigration, the financial post has an article right now that US immigration fell to one of its lowest levels. And I think it's a couple decades to about 575,000 people last year, Canadian immigration last year was about 430,000 immigrants into this country. And, you know, that was that's not quite equal. 430 and 575 are clearly different numbers. But you know, we are one 10th of the size of the US. So when we are one 10th of the size, but we are getting almost the same amount of immigrants in here, like what is happening here in Canada and you know, this, when you sometimes people here I try to convince them like you and you don't understand not only our property prices going up because of what's happening in monetary policy with inflation, right, and money is created when a new mortgage is taken…

Sergio: and economic growth…the same time economic growth. It's also fueled by immigration, not just property market, right.

Tom: But labor times capital was basically the big equation. And then if you if you have labor coming in here in droves, high quality people like yourself and your wife, educated people, I mean, the quality of immigrant no one believes me, I tell everyone, you don't understand the quality of immigration that we get in here is very unique. So we had a high quality immigration and then you marry that with cheap money because interest rates are cheap and stuff, the economic impact and that we might be in this magical spot. And I say that with complete short term paranoia, because I'm always scared. I'm always scared, market could tank property prices could go down, interest rates could spike up you know, I'm always going here, but long term, I'm very optimistic about this.

Tom: I don't understand why in Burlington, for example, 10 years ago, I could get a fully detached home for you know, like, 350,000. And now it's like, a million dollars. And I'm like, well, there's all these factors happening that you're not paying any attention to. Yeah, you know, and I think someone like yourself, because you've gone through what you've gone through, you clearly pay attention to this stuff.

Sergio: Back in Argentina, what actually happened is that population growth was still there, with some immigration, you know, from inside Argentina or other countries. So immediate. So population growth was still there. At some point in time, there was no access to credit. We know credit is a big driver, but it wasn't a big driver there. But we just with population growth, and because of the crises, new construction was actually very low. property prices skyrocket too.

Tom: cause it was just demand from population growth? I’ve always been concerned thataccess to credit is such a critical factor in the real estate market that when that disappears, in the back of my mind, I'm always like, we might have to live through 18 months period where property prices really nosedive. And that could happen at any time but you're thinking or from what you've seen with experiences population growth. Add a little bit like it prevents the collapse?

Sergio: think it's a matter of you know, how we change for example, right now we have access to credit. If that access to credit gets easier or worse is going to have an impact for sure. So it's all relative, right? You know, in Argentina access to great these has always been incredibly tough. So when there is a little bit of access to create, it also boost the property market, but even when there is no access to credit because that is probably a less of a factor. They are just population growth. That's the trick because it's the Basic Law of you know, demand and supply. Just as I give you an example. The condo that I had in Argentina that we sold a year later, you know a year after we came here so that was around 2008. We saw the that 170,000 US dollars. Those condos right now cost like 300,000.

Tom: With very little access to credit as well.

Sergio: yeah, because there is you know With all these prices is the recent much new construction, but the demand is there, the demand is still there when population grows, right? So it's crazy and again, in the same way that you know, US dollar that you keep under your mattress over there, you know, a property is also a way to save.

Tom: It's like a piggy bank

Tom: But I still to this day, haven't met anyone of real wealth that doesn't own real estate. Like I've never met that person. There are some quote unquote, new rich, you get some Bitcoin stuff, some tech stocks, of course, there's going to be that stuff. But I mean, like any kind of generational wealth that owns real estate, pretty much anyone who has generational wealth, there's always real estate in the family somewhere. I've always found that, right. Sergio, this has been man, this is real fascinating talk.

Sergio: I don't feel that they really understand that there are sacrifices, and then we have to work hard. You're gonna go through that phase, and it's gonna be painful. But when you understand that, that's how it is in life. And as long as you you know, you keep going, you keep going, you keep going, it's going to be fine. But I feel that many people, you know, they give up quickly when they see how much work it is, or even before if they realized how worth it is is. You have to learn so there is a sacrifice a but it certainly pays off. Right? But you have to be willing to do that sacrifice.

Tom: Bringing up such a big point here because I think what I've come to realize now is that without mistakes, you don't have the raw material for your own success. And what I mean by that is the mistakes help you make better decisions. So If you make no mistakes in life in any endeavor, you don't have the context in which to make a better decision. Thank you for sharing your story with us, Sergio!

Hey everyone, it's Tom, we hope you enjoyed this transcribed article of my great conversation with Sergio. We're going to bring Sergio back because I just enjoyed talking to him so much to keep track and tabs on his life's real estate journey. So really want to thank him again for doing that.

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