Steve Dekok is one of those people who just gets stuff done. His story of going from living in the basement of his first duplex to buying a block of homes and then an apartment building is truly incredible. He’s all about sharing his mistakes and the lessons he’s learned along the way.
On this episode of The Your Life! Your Terms! Show we have a great chat about life, investing, mortgages, books and more. Enjoy!!
Hey everyone it’s Tom Karadza are with another episode of The your life your term show. And on today’s episode, we have Steve Koch who came in all the way from Perth, on sorry, Stratford, Ontario, which is in Perth. And he came to share his story. He goes through His story is really interesting because he, he really goes through a bunch of real estate properties and acquisitions really quickly. And it’s pretty impressive to hear him and how fearless he is, with some of the things he’s done. He goes from picking up his first property and living in the basement of it, then he ends up approaching people on their doorsteps and making offers into into an apartment building. So wait to hear his evolution of real estate and the reason that we love doing this show and the your life your term show is to be able to sit down with people like Steve and for them to be willingly sharing their story we feel is very powerful because I wish I could get access to some of the information like this when Nick and I were starting out so to be able to share some of these stories that are not coming from us. from other people, people who have tons of experience like Steven who are willing to share not only their successes, but their mistakes and their failures, and he really gets into some of his own life story here. We just I can’t thank him enough. So thank you for everyone listening. And thank you. For everyone who comes on and shares this stuff. This is what it’s all about. It’s to me, it’s how we help each other. And so if you are listening to this and you want some real estate information that is a little different, you can check out some of the reports that we put together. And listen, we have the Ontario’s population explosion The Untold Story. So even though with COVID, and the whole world right now and immigration perhaps slowing down, you have to understand the long term trends of immigration and what’s happening in Canada. And to understand the long term trends you should understand the previous 10 years and if you want to get some of that data, you can get one of our reports at Rockstar inner circle comm forward slash reports, where we talk about Ontario’s population explosion and some of the other reports on there are the four key factors every investor should know to understand where the real estate market is headed. Another one is does paying for your kids education really makes sense. And we compare buying a property to university education. We are not anti education, we are very pro knowledge and pro education. But we just did a thought experiment. And we wrote a report about that. We also have a roadmap to someone who built a six figure income from real estate investing on here. And then we have one of my favorite reports is the destruction of the middle class. I love Canada. And I think the destruction of the middle class because of the way the monetary system is set up in this world, it’s really ripping apart the middle class in a way that’s not often discussed. And we have a report on it called the destruction of the middle class. You can get all of these reports at Rockstar inner circle.com forward slash reports. And with that,
let’s get on with the show. Are you ready to live life on your terms? Is it time to take charge, real estate, business building, the economy,
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It’s the your life. Your turn show
with Tom and Nick Karadza.
ready? Let’s go.
We are live with Steve and Steve. I’m totally gonna mess up your last name here and you just said it to me. But let me try before you correct me. We are live with Steve to Deck. That’s right. You got Okay, I got it. Stephen, what is the what is the nationality of the back?
So that’s Dutch. That’s a Dutch. Yeah, my parents immigrated from Holland after the war. Okay. And I could go right into my story from here. But
yeah, yeah, the purpose to have you here is to share your real estate investing journey and your life. Okay, so you share away. Oh, thank you for doing this. So many people are not willing to do this kind of stuff. So I’m looking forward to it. Yeah. So yeah, tell us Yeah. What have you been up to?
Alright, so how old are you to begin? So I’m 49.
Okay. 49. Married, not married, married, married yet? I know you have kids because I think I’ve met your son briefly. That’s right.
We recently went to one of your events event we talked
a mix automata TFC game.
That’s right next to so you remember that?
Well, to be fair, Nick just told ya.
Okay, yeah, yeah. So married 26 years. It’s my wife, Kate. And we have two kids. Jake and Lauren. Jake’s the oldest, he’s at going into second year university and my daughter is going into grade 11. So, and he’s in University at Brock for business. Yeah. So I’m just kind of showing my kids a little bit about this and see if it piques our interest. And you know what, if it doesn’t, that’s fine. You know, I say to everybody, follow your dreams, told whatever your dream is. If your dream is to be a cabinet maker, go for it. You know, do what you want to do. What you what what gets you up in the morning, right? That’s what I find.
Sometimes I catch myself when I’m talking to my son. I’m like, I don’t want to be putting my belief system onto him. But but then I’m like, but I am his father. I need to tell him what what you know, internal struggle of like, I want you to go and experience and I mentioned My son because he’s older, my daughter is going into grade nine. Yeah. And I find this internal struggle of like, let him live his life but then don’t do this and do this. Make sure you at least know about this. You know if that’s right how in the world and the way the world is right now I feel like I look at my son and my daughter. I’m like, Holy smokes, you guys have a lot of different things to think about that I had. Um, so yeah, crazy, crazy time. It is crazy times. But yeah, late. Oh,
okay. All right. So I came from a set of hard working parents with a very strong work ethic. And so they instilled the hard working values into what I have today. You know, they are would be say my mentors, right. And so to fast forward, back in 1994, I bought my first rental property which was a duplex. I lived in the lower and lower part of the duplex and rented out the top half.
You didn’t even Take the top for yourself.
No. Oh, you know why? Because it was more money. Yeah. It was a mortgage helper. Interest rates were 7%. And it paid for most of my mortgage. So I lived in a 600 square foot shoe box. Okay. And my friends were would come over and they’d be like, Steve, what are you doing? Like, they had a brand new house in the suburbs, you know, with a pool, a little fish pond, new grass. And I lived in this hundred year old house with old wiring old plumbing, like even I ran my air conditioner off an extension cord, you know, so it was, but you know what I’m all about delayed gratification, right? I just, I wanted something at the end, and that’s I want something extra. So that was my first house. The
principle that you just mentioned, delayed gratification. That’s an economic principle that typically is spoken by people that I found in my life, who achieve a lot of their goals. If you can deliver gratification. That’s it that is beyond to me a personal decision. That is like a fundamental principle of economics. And then if you can gather capital, yes, because you are planning for the future and delaying your immediate gratification, the world is your oyster. And sometimes it’s difficult to do that. But when I hear people like you speak like that, I’m always like, Okay, this guy’s probably gonna achieve a lot of things he wanted to
continue. And from there, it was one of the principles that I live by, because I could see the future, what it could do for me. So I lived in that house, my wife and I lived that house for about seven years. During those seven years. I was a firefighter. I’m a firefighter, still, you know, about four years away from retirement. But it was a, it allowed me to during that time, I also tried to find something extra on the side. So I was working for a courier business. I was trying to get a little bit of extra right, not realizing that, hey, seven years later, I’ve got equity in my house. It’s right in front of me. Right. So I ended up buying a nother duplex, I said triplex, it was a duplex, and the duplex had like a garage at the back, okay. And the guy that was selling it. He said, Well, you can’t you can’t use it as a third apartment because zoning won’t allow you. Well, I went to the city and I asked them, what’s the zoning here and they said, We just changed it. It’s now in our three. I’m like, perfect. So I went in there, I bought the property, got permits, converted that in now I have an extra at that time, six 700 bucks a month. Right. So then I got really excited about it. And I thought this is what I want to do. Don’t want to do all this other stuff. I’m going to focus in on real estate. So from there we ended up actually buying a just a house for ourselves was just a three bedroom bungalow, 1100 square feet, and we can’t we set our roots there and established our family. And then I said you know what? I think I might want a cottage. Okay. So up in Stratford or Kitchener Waterloo, there’s a place called Conestoga lake. Okay? And they have these cottages there, and back then nobody wanted to buy them. Okay, it’s leased land.
Excuse me, it’s leased land. Okay, been
there once Okay, forget it. Like 460 cars are all scattered around the lake. That’s right. Little caught. Like how big are these cars is almost like little Yeah,
you can anywhere from say, I would say our sizes maybe 1000 to 1500 square feet. They’re not very big. Right. So, anyways, so there was a cottage was for sale that we bought, it was like $75,000 Okay, and the real estate agent that showed me this said, Steve, I know you’re an investment property, you got to realize that this is not an investment. Right? Okay, you’re buying a basically a property on leased land, right from Grand River conservation. And I said, that’s fine. I’m there doing this for my family. You know, this is something for us for me. You know, I like the boat and I like to be close to it was so cool. Close to Home and that’s why I liked it. Well it turns out 20 years later the real estate real estate agent dropped by and he goes Steve guess what I was wrong? He goes your car is now worth like $400,000
and 20 years later yeah
it goes he goes I was wrong this is this is an investment right? So from there that’s kind of a little side story but it’s still a real estate based back to my next property what we what I tried to do Tom’s I tried to find properties where much like the try the duplex I converted triplex I’d find something that was like had a discount, okay, so I tried to buy them, you know, a 20% discount or something along those lines. So the next one was like a bank repossession, where a guy had got in, he bought the house, he renovated it ran out of money, and went bankrupt, right? So we went in and I bought that property and, and fix it up, rented it out, kind of like the bur method right and hung on to it. Where was that one? So that one is in Stratford? They’re on staff. Okay, got it. Yeah, they’re all all the restaurants But one of them. Then the, from there, again, what I did is I call stacking homes, right? So that’s a term you hear about basically where I got a credit line and every property I got. Alright, so whenever I whenever I, I bought a property, I’d say I’ll take the, I’ll take the mortgage plus the credit line deal, right? So then as you as you pay off your equity on your house, your credit line rises, right? And
when it starts at zero, you just don’t look at it. But then after a few years, you’re like, holy crap.
That’s right, exactly. So then, by now people are knowing that I was I was buying homes and through word of mouth and local knowledge. I had a lady call me and say, Steve, I want to sell my house. So I went over there. And I said, I’ll offer you whatever it was at the time is 25 years ago offer you, you know, $115,000 for this house? And she said, Oh, no, I can do much better with that. And real estate. I said, that’s fine. I said, No, I don’t mean to insult you. But here’s my offer and I can close in 30 days. Well, two weeks later, she called me back. She says I’ll take your offer, but you have to take everything that’s in the house. I said when she goes, Yeah, you gotta have the fridge, the couch, everything my dresser full of clothes you I’m leaving. And she goes, you have to take everything. So I said done. So I bought the house again it was at a discount. And I hired two teenage 17 year old kids rented a dumpster. And Phil fills it up over the weekend, got it out, cleaned it up and rented it out within a month. So again, bought, bought at a discount, buy that property, put a credit line to it. And then my next house was, again, another one. This one here is a little too confident, Tom. I was confident. Okay,
so I thought we’ve all been there. Yeah, I can’t lose here. You’re the expert. That’s right. Like you mean, because you have a few under your belt. It’s right. Yeah, it’s easy. This real estate game is so easy.
Exactly. So I basically I went to the MLS and I went the cheapest house that was on MLS. And I said this was like a month later. And I’m talking all these credit lines together is borrowing like crazy, like massive debt, right? And I said, Yeah, I’ll take that one. And so Put an offer and nobody else wanted it. It sat on for months and but it was a lot cheaper. So I bought this house and I bring the guys in me fixing like, Steve like, we just can’t fix it. There’s structural issues here. And I said, oh no. What are you talking about? He goes well, you know we need to underpin it. My oh my goodness. So, again, I waved the home inspection. I was
confident Yeah. No you
at all. That’s right. Wrong. Right. So I still have that house again today. It’s a house that Tom is doing very well for me. And
it probably almost destroyed you at the beginning. That’s right. He survived emotionally was
in the back of my head forever. You know, I screwed up right. But that’s the other thing that I that I do is that I’ll buy homes that are at the lower end of the scale. Okay. lower end of the price point. But then I will also I will rent to people that don’t necessarily have good credit per se, okay, because of whatever this whatever circumstances they’ve had that aren’t their fault. But then I increased my rents a little bit higher. Okay, so if that host would normally rent for, say 1500 dollars, I’ll charge 1700 dollars and take in so my, my, my price point I’m making more money per house on those lower end homes. Right so my net is a little bit better. It gives them a place to live and it increases my bottom line right as we’re finding you can get the higher
rent because you’re accepting lower credit. Yes. So they’re okay they’re like that’s the trade off you’re like hey, I’m charging a bit more because your credit situation exactly they understand that it benefits you so it’s kind of
right kind of wins on both sides. And you got understand they came from say a three bedroom apartment on the top floor to go into a house of their own. Yeah, got it. So they totally say Steve are willing to do this because we want this Yeah. Okay. So it works out for both for both. Both parties in a very clear from that very beginning. Right. But it just works better for me and my bottom line. So a lot of my I bought a few more homes like that. And, you know, like I said, My First Home was seven years. There’s a seven year gap. After that I was basically every two years I was buying a home roughly. Okay. But there was one year in 2012. I bought five homes. Okay. And I’ll tell you how I did it. So spill the beans. Yes. We all want to know. Yeah. So back then the rules are a little bit different than they are today. And a mortgage broker told me a long time ago is that back then you just needed income, good income, strong income, and a downpayment. And that downpayment could be from credit lines, cash, whatever. And I remember my guy from Scotia saying, Steve, just keep buying them because you’ve got good income, and you have the down payment and all these credit lines. I was borrowing all the money, right? None of it was my own. Right. So I, I went to I had this this one house, and it was on it’s on the busiest corner in Stratford. Okay. And I bought this one house and there was four homes for sale on a block and the owner was selling them. They were second generation, right. So they were Getting to be a little neglected and they want to get rid of them. So they wanted one price for all four. So I put in a lowball offer, they immediately said no. But then my next strategy was because they’re selling it as a block because it’s a busy corner potentially could have been, you know, a mixed use residential building or small office building or whatever. I went in, and I put in a higher offer on one of the homes they took it. Okay, so now I cracked the nut. Right? So then I picked away at the other three from them, because now I had control. Right? So then I bought the other three, and I had now four. So now I got my own street corner. Right and and I had the house beside it, which was the one that I lived in. And then at that time, as soon after, coincidentally, a developer came to me and said, Hey, do you want to sell it? And I said, Yeah, sure. He goes, I’ll buy it off you but you need to buy the next house on the outside to make this a full acre. So okay, so he gives me an offer conditional on me doing this right. So I thought I’m like, great sign done. Right, it’s gonna be awesome. make lots of money. So I go knock on the guy’s door that I wanted to buy the house from. Just imagine you coming down the street.
People probably know you by this time. Yes. The guy who bought all those Yeah, you’re totally labeled in the community. Yeah,
yeah. So I knock on this guy’s door and I offered him way undervalue. Okay, he slammed the door, my face, okay? And I’m like, What the heck just happened here? Like I screwed that one up like I mean, I offered him like, again 20% of the value. I’m like, Oh no, like, now I have this deal on paper for this X amount to make lots of money and it’s not it’s worthless until I get that house. So I waited two weeks, went back on his door. And he goes you don’t you insulted me when you gave me that offer? He goes come into my house. We need to talk. So I talked to him. He goes, so we know what market value is here. What are you going to pay me because older
Yeah, it’s well, he Well, it’s fine. Almost 50 they can mean he would have been but at the time and the time he was older. He was older. Yeah. Seemed older. Yeah. So I would say middle age. But so we sat down and he goes, we know what it’s worth. It’s worth x and you I want to prove on that. So I often $30,000 more than what was worth, right shook the hand again, really confident that I’m gonna get this done. So now it’s done. I’ve got my project together, I go back to the guy. And guess what? it all fell apart on way to the developer to make developer thing, like we signed off on it. And then they went past their date and the whole deal fell apart. They just they had many outs in this commercial deal, which I didn’t have experience with. And so it didn’t sell.
Bottom line. And were you firm on this other guy’s
property? I bought it.
You bought it? Oh, so was that was a firm 30
Yeah. 33,000 over. So this is the bad part. So then so then the bank goes, you don’t qualify you don’t? Well, they said, Well, you got to we got to send appraiser in. So they send it
over the appraiser goes, this is what’s worth on my Come on. So you have to pony up the difference
if you want dirty clothes. And did you? I did. Oh, so yeah, you sound like a regular real estate investing. It’s like you go through moments of time where you get it all figured out. Some time or just hits you in the head. Exactly.
I can’t see my face because But anyways, it worked out well in the long run that was kind of 2012. And I’ve noticed since 2014, things have really taken off. Yeah,
well, yeah. And you said something really important there. It worked out well, in the long run. Yeah, I feel like in real estate, it almost it like if it works out well, for you in the short run. Yeah, you’re almost short run is that even a term short run in the short term? It almost is a fluke. I feel like especially when you get started in real estate, you have to go through the pains of some short term suffering in some capacity. And some of the real estate investors we work with here at Rockstar if we help them get a property and they’re like, wow, that was so easy. Like they sell one house, they make an offer on it, we get it the Home Inspections good. They rent it out for more than they thought. Cash Flows better than they even anticipated. Then they’re like and we always internally we never really share this but we’re like, oh no, because if they buy the next one Now the bar is set so high and it always happens or the next one is always painful. And then they’re suffering and we’ll get feedback. Like, Tom, the markets completely saturated because the first property we got rented out in one day, we’re now it’s been three weeks. And we were like, No, no, no, like, Don’t worry, like the real estate. It’s three weeks is not not bad. You know, you just keep advertising it, you’ll get someone a cause. So you have to go through at some point, you’re gonna go through the suffering of real estate,
painful, it’s just painful. It’s very painful,
and long term, it works. And one last comment on this, you said something interesting after 2014 or 15, things really took off. That’s when also in the world the money printing got a little more aggressive interest rates have been yellow for so long, sloshing around in Toronto, in Perth, in Ontario in Canada in the world very true that you’re holding hard assets. That’s right natural benefit is the prices go up because the value of the dollar sloshing around or
going down and You know what I was renegotiating mortgages back in the day, like I say, the 2.3, or whatever it was, in my over since 2014. Our net has been going up steadily because of that. And we’ve all seen that as investors because the lending is so much cheaper. Right? back to my original point. I said, How did you do it? The other thing that I made a point about a real estate broker, I mean, a mortgage broker said something to me once. He said to me, or in the early days, at that time, the banks didn’t talk to each other. Okay, so you could get five from Scotia, you get five from TD five.
None of us knew that. You know, it was like you accidentally learned
it. So I was all piling on one bank, right? And then I and then I realized, and he said to me, Well, they’re gonna lock you out. Like you mean you have to. And so the banks didn’t talk to each other. So you can basically slide your portfolio and make five copies of it and go to go down the street and like, try and get
pardon me during that time when we kind of were told that the banks weren’t talking to you there. I’m like, huh? Are the banks doing this on purpose because it’s not very hard to talk. So in my mind, I’m always thinking how the banks are screwing me in some capacity. Yeah. Are they intentionally not talking to each other just to allow more mortgages to go out? Like, I’m like, why are they not talk? It’s it’s the year 2015, for example, or 2012. Why are they not talking to each other? Yeah, but
yeah, so yeah, so back to that debt debt was my friend. Like, I mean, I built this empire on debt. And then over time, I would pay things off and then in 2016, I’ll just fast forward here in 2016. I bought a 15 unit apartment building, okay, distressed but in a good location downtown. Alright, so ended up putting a lot of money into it. It was next level. You know, I’m used to my biggest thing at the time, was a four Plex. And I did it for two years. And then we were not finished a project we we had to again, there’s no investors here. It’s us. It’s our equity, our money. so stressful, sleep, sleepless nights, something coordinating everything with contractors and handling the banks and things. And then I, I met a developer and he said, Would you ever sell it? And I said, Yeah, you know, he came and looked at it. We went upstairs in my office up there. And we had a deal on a napkin. Yeah, I do on a napkin. Six months later, we closed 2018. So that was why was he so eager to buy uh, do you think because he’s growing his company. Okay, so this is it was a great location. close to downtown. There’s a lot of development going up there. We’ve got the University of Waterloo. We have an area that the city wants to develop as well. Okay, so sorry, I missed that. So that one wasn’t in Stratford that isn’t Trafford? Oh, satellite
company, satellite campus. Oh, for University of Waterloo. Yeah,
yeah. Oh, wow. Okay, got it.
So anyways, he went to grow his company. He has a lot of contacts and wanted to also has a he does project management and then also has the they do the look after the tenants. I can’t think of the name of that company. But anyways, they want to grow their company. So they want to get in, they want to get in fast and you got to really Also in, you know, 2018 before this pre COVID thing, things were rockin prices were going nuts. They wanted to get in before things got too high. We were midway through the project. It was a good fit for him. He had the infrastructure in place, and it worked out great. So that allowed me to take that and pile that back on debt and reduce a lot of my debt. I was already reducing a lot of my debt. And I
think he paid more for it than you paid because you had already done a lot of the renovations to faster if you if you invested into it. Absolutely. Okay. Absolutely. So rents were raised already. Did you haven’t read tenanted or? Yeah,
so we had five tenants leave on their own accord. So at that time, we could fix them up a little bit and we increased rents for below market value Sure, way below market. So it was a big difference because then you took it to market value. So you really increased the value of that building. That’s right. Exactly. You know, from rent from, say getting 1600 to say 1375 you don’t I mean? Big deal. And something
you said 1600 to 13. Sorry.
600 675. Yeah. So yeah, we almost doubled these rents and some other beautiful, beautiful spots, right that we did. Some of them were mainly micro suites. But, again, you know, you talk about the negatives. And one of the negatives is, it was almost too much for me, because it was a huge project. And I think we need to be real about that, too. Because people always talk about the positives, right? And I do really, really appreciate the investors that talk about the negatives because it’s real, right? So to say, you know, you did this made this much money, everything’s glorious. It’s not so glorious, right. So I had to, you know, go through a lot of struggles to, to get to pull that off, put it together, both financially and timewise.
Right. How did you handle the stress with the family? I’m sure you must. Well,
let me say let me say this. I was. I was physically at home but mentally not. Yeah, right. And that’s the real truth. Right.
So we’ve all been there and it’s it’s it’s not a good feeling. It’s not something You want to
feel like you know what they understood? Like You mean my kids? Maybe I don’t understand so much. But my wife understood that I was for the long term. Again, delayed gratification. So I was out into like, you mean, there was a time where I was laying in bed and we’re talking like, you know, we gotta change here, something’s got to change. And that was that was a turning point in the sense that you know what, I was either gonna sell something or are changed a lot because it was it was too much on my time. Right. So and that that was great. So we got we ended up selling that. And then we recently for our own personal home, I’m a big guy of knocking on doors like me, I’m old school that way. I can tell I want a house I can knock on the door, right? Just like that other house. So I knocked on this guy’s this my wife we drove by this place is this property. It’s just a bungalow, and had 10 acres of land right on the edge of the city. And we’ve been driving by it every single day, right? It’s right off our main thoroughfare towards our house. My wife said I’d like to live there someday I’m like, Oh, really. So I knocked on the guy’s door five years ago. He’s 80 years old. I left my phone number knocked on the door three years previous or after that and said my phone numbers changed. And so then guess what happened last summer. He called us. His son called us last June, we’re selling the property. And we moved into that property. So we sold our property in 24 hours. What we wanted for it and bought this for pretty much par. So we were what kind of property is it? So it is a bungalow. It’s on 10 acres. It’s just on the edge of the city. Okay, now it’s in the county. And it’s a treed woodlot. So it’s a great shop there I have anyways, it’s just like your dream play. Yeah, it’s just it just again, but I go back to I’m going to knock on doors. You know what I mean? If you really, really want something, you have to work for it. And you have to step outside your you have to step outside your work outside your comfort zone. You have to be determined. You have to be committed. And sometimes you have to sacrifice a lot. So
if people don’t go and knock out on doors and be committed and do what you’re saying to do. Does that just mean they’re not really into what they’re saying they’re into? They don’t I mean, like, it is that like when someone says because, you know, we mean I’m sure you meet a lot of people, I meet a lot of people who say, you know, I’m really, really want to do this and then you talk to them and you’re like, Whoa, you’re not really doing anything. Like you’re, you’re talking a lot, but you’re not doing anything. What is that? And let me take that back a bit. So let me just say that maybe I’m an anomaly in that sense where I’ve taken it too far. Okay. I’ve made too.
Let’s be honest, not everybody is like the normal
30% Right, exactly.
Let’s take that back. Because that’s that’s an extreme but let’s say say for the average person, let’s just say you have maybe one or two properties, you know, you only need say a few properties to have some kicker money down the road. Well, one
we tell everyone Hey, man, that’s all yours. Yeah.
And and and then you know, what, down the road when that mortgage is paid off, right, and you’ve got all this money sitting there, another stream of income, you know why? You can either use it as a stream of income, you can you can stop working or go part time, it gives you options, right? Or you can pay for your education, your kids education or whatever. So that’s to take it back. So we say, what is it? Like, you mean, I kind of went way off left field that way, and but I don’t think the average person really wants to do that. But I still think that you, if you really, really want something, whether it’s your, you know, whatever it is, you’re like, you have to enjoy doing it, right. So if it’s collecting coins, for instance, if you’re a coin collector and you’re really good at it, you research it, you can make money collecting coins, right? If you’re if you’re passionate about it, you understand it, whatever it is, doesn’t have to be specifically one specific sector. So yeah, that’s kind of where where I was at with things. And
when you go down this path, I know you were going to talk about some of the books that you like in that kind of stuff. But when you went down this path, what was the like, for me, real estate like I was in the tech industry. I was working in software to all my friends, that was the place to be. But I had somehow convinced myself, rightly or wrongly, that I needed to own property, like, Oh, just in my head, I’m like, every day that goes by that I don’t own some hard asset or own an asset that’s working for me. I’m just wasting time here. Like I somehow in my mind, I made this a huge problem, right? Like it probably a bigger problem than it actually was like, I was at a great job, and I bought a family home. And, you know, I
was actually the same way and along the same lines, for a brief period of time before I was back out of college, I was unemployed, and I try to do something productive every single day. Okay, so if it was the first day I just went the unemployment office. That was my if I made three phone calls to three potential job prospects, or if I didn’t resume that day, I try to do something every single day to build for the future, gain momentum. And then
why do you think you’re like that? I don’t know. I think that’s you see your parents. To the beginning, yeah.
So my parents, my parents were very hardworking. They didn’t have a lot. And so, I don’t know, I just I had that internal drive that has been inside of me. It’s, you know, filling up the bucket with the drip, drip drip. Next thing you know that the buckets full. Yeah,
you know what, someone asked me the other day, like, where does that come from? And I was, you know, I’m like, every every once while I change my answers on I’m like, sometimes I wonder if it comes from fear. Like, does it come from fear of just like, like, maybe I’m personally a control freak. And if I’m not doing something, I feel like I’m not in control of my life. And by trying to do something, I feel like I’m controlling my future. And other times, I’m like, Oh, no, it’s just my personality type. Like, I have to get up and hit the ground running. I think
that’s right. And you know what, sometimes it’s not always about money. And I find that too, is that, you know, sure, money is a big part of it, but it’s not everything. Right. And I want to talk a little bit about that later on as well.
So key word so are we now current with your real estate journey? Yeah, so Okay, good. Okay. Yeah. How about Those, those credit lines that you were able to get on those properties, I think that is, when you started, you could get those and the banks really didn’t even penalize you for them more currently, if you get credit lines, you know how we were saying the bank loans. Now the banks will Oh, you know, you have a credit line on that property. Okay, we’re gonna even though even if you have zero dollar balance on it, right, and it’s $100,000 limit on that credit line, for example, some banks over the last few years have said, well, we’re gonna assume that you’re taking the hundred thousand, and we’re gonna use that against you, when you’re qualifying for this property. It’s like, Oh, my God, you’re right. It’s why I tell everyone and I think people think I’m very, I come from a selfish place. When I say this. I’m like, hey, when the banks are willing to lend you the money, you take the money. Absolutely. You take them, even if even if you think the current environment is not right. Yeah. When the banks are saying, here’s some money that’s you take it because you never know when they’re gonna change their story or change their
mind. And and you know what, that’s one theme over the last 25 years that I’ve learned that nothing is constant with the banks. You know, you walk in one day, you Walk into next day and things have changed. Like we’re all those rules. Where’s my banker? We got promoted.
Yeah, toes young you make friends with one banker. I remember when we went to CMHC went to zero percent down around 2006
for your AMS.
Yeah. Oh my god. Oh my gosh, I totally forgot about the 40 year amortization. Oh, crap, I totally forgot. Yeah, zero percent down, and four year amortizations. And I remember the, the mortgage insurance on it was rather huge, because it was, but I remember thinking as an investor, if I can make this property cash flow, Nick and I were looking at each other, like, Wait a second. And at that time, way back, then we can actually get some real estate deals and we can’t anymore where we negotiated on the agreement of purchase and sale that the seller would pay for our closing costs. So that we had it documented all up front. Zero. Yeah. So we were like, Wait a second, the bank’s going to lend us everything and the sellers going to pay for our land transfer and our legal so we can bypass and we were somewhat hesitant because I think we were looking around going Why is everybody Why is everybody not doing as many like are we miss? You know, when you’re doing something that you think’s really good, but you think maybe you’re on the wrong path because nobody
And looking back, I’m like, why didn’t we hammer down on that even fat harder and faster, but you look back. That was the time when we learned when that all went away. We’re like, wow, you know, those moments in time when the banks are willing to lend? You really take advantage. And it’s interesting now, right? Because the banks, Steve, I don’t know if you know this today, the five year fixed in Canada is being offered at 1.99% by HSBC. 1.9 first time in history of Canada, I 1.9. MC just sent me the link. So if I’m not right on the history of Canada there, but don’t hold me to that, but I believe it’s in the history of Canada 1.95 year gap. So yeah, if you can grab some, but you have to be smart. You know, you were smart with your debt. Did you ever lose sleep of how much debt you were carrying?
Ah, you know what, it’s kind of funny because it it. It was always in the back of my mind, but I always push it out. Because I knew was a necessity, right. And I knew I had some assets. My wife and I were We always just said, worst case scenario, we sell everything. We just walk away. Right. So it was there. But I mean, it was all debt. But I mean, I had something attached to it. So I knew that I could get out of it. Right. But, and that’s the thing, you have to be comfortable with that too, right? Most people can’t sleep with this extra day. But now I’m on the other side of the coin, where it’s working really well, and we’ve got our debt, that thing is really, really low. So but yeah, it’s a necessity, you know, and it was, it was challenging. But like you said, if they’re gonna give it to you, then take it, you’ve you could always sell the property. You know, real estate is overtime has been forgiving, right? We’ve seen some blurps. And you you There
are times when it’s even tough. I mean, I remember when our family went through the worst period of like, 1992 1996 I want to say that was tough because even if you want it to sell you could you could get the money you were going to get back for the property might not even be covering the debt you owed. So yeah, there were there have been times in history. Yeah. And that’s why I tell everyone, it’s kind of weird. Like, I think you’re in the same position. It’s like We promote the idea of real estate. But we always say be very short term paranoid, and long term optimistic. Yes. You never know what’s gonna happen tomorrow. But if you’re in it for the long game, yes, you’re gonna win, Nick and I will never buy a property, even if we’re thinking to flip it in six months, unless we think we’ll own it for 10 years, right? If we believe good thought, yeah, we’ll own it for 10 we would hold this property for 10 years. Yeah. Then we’ll proceed on even if it’s a flip a short rent to own whatever strategy but the first question that must always be answered. Would we own that sucker? Yeah, for 10 years? And if the answer is no, forget it. Right?
We’re not doing and as you can probably tell, in my journey, I’ve never really sold anything other than that one building. Apparently, I could have held on to everything so and that was a big thing. So you’ve never
had to guess. Yeah, so that when you sold I sold I’ll never forget, I sold one of my student rentals by York University that owned with my brother in law and paying the taxman on when you sell a property that you’ve owned for some time. And you write that check. Yes,
that is not a fun check. Right. But the thing is, even if capital gains are 25 25% You’re still ahead. 75%
Oh, yeah, no, no, I’m not complaining. Well, you know what?
Anybody wants to pay that? No,
but it’s just when you see that dollar amount, you’re like, no, how many potholes? This better fix every satisfy. Exactly in the history of Toronto. That’s
right. Exactly. Exactly. Yeah. So I got a couple of, you know, funny stories, too.
You know, when you just like you said earlier, when you think you’ve got everything figured out, we were getting so good at getting everybody at the property at the same time that we were getting too good with our marketing and one property. I couldn’t be there with Nick, Nick went by himself. And instead of like four families at the same time, we had a dozen families. So that means kids, so there was a 30 some odd people. And one big guy comes in the kitchen to Nick like Nick, Nick describes him as like a pretty intimidating character. And he basically said that what’s going on here? I thought I had the property to myself. And it’s like, yeah, we overbooked it. Our apologies. And you know, we had to turn it down. A little bit. So now whenever we do that, we always tell everyone Hey, look, there are going to be other people at the property at the same time. This is not like us, right exclusive viewing for you.
That’s good advice. But
it’s one of those situations where you know, you think you got it all figured out and it comes back. But he said, Man, there was kids running around shoes flying out the front door, people running around the lawn, people coming in the back door. He said there was people upstairs he goes, I thought somebody was having a shower upstairs while he was talking. It was just a disaster.
I once had a tenant, they gave me verbal notice they were leaving in 13 years.
Okay, then, yeah.
What was the what’s the what’s the story behind that?
Um, you know, they were an older couple. They’re in their 60s and they said, You know what, we figured that by, you know, we’re early 70s. We’re going to leave so 13 years. We’re leaving here.
That’s just like a nice Canadian. Yeah. It’s like, Hey,
listen, if you want to give me a chance, maybe
13 years, sometime in the next decade. We’re going to be leaving. Yeah.
And then I had had another fun Story one some lady called me um, she said that this couple called me up and they said, our toilet won’t flush right so I go over there I’m like what’s going on? I’m trying to plunger this thing and like it is not going down right so I’m like What did you look? Did you just put anything in here? Like no no no we did nothing bla bla bla bla like okay, whatever I pull a toilet off and I flip it over I look in the bowl, and there was an LG ear in there. I’m like I pulled out with my my vise grips or in my my noodles. I pulled it out like What’s this? And they said, oh, sorry we emptied our fish tank and we don’t know what to do with the algae eater so we flushed down the toilet. Oh, like are you kidding me? Like why don’t you be honest with me and tell me right so anyways it was
we if you’re me Give me flashbacks. Now we had a property where somebody I guess was flushing rags for whatever reason down the toilet and they built up right on probably about a foot on our property line. You know if you get a sewer backup, like a like a sewage backup and it’s caused by the city side of the demarcation point on the property. The city will pay typically damages on the property. But these regs, I guess, got flushed far enough like down because, you know, went down and went under the house, the way this toilet was this, the piping literally went diagonally under the entire length of the house. And then it went the entire length of the lot right to like the edge of the property line. And it stopped like one foot on our side. So already put the cameras down to check against the city problem or our problem. And then they managed to put one of those snakes down there and bring it back up. And the tenants are like, Oh, yeah, sorry. You know what we’re flushing these kind of, like greasy rags that we’re using for their cars or something’s down down the toilet. I’m like, Oh my gosh, and we had water damage, overflowing toilets, you know? And I’m like, Ah, geez. So anyway, sorry. Sorry. Actually, that reminds me because it was the same property sorry, now maybe another flush but it’s the same property where we had different sewage backup with different tenants who flushing things down the toilet. The sewage comes up into this laundry room area that was right next to where we put in a new furnace. Have you You heard this story from evil Nick when there was literally it coming up through the pipes and Nick got there and I got there roughly at the same time