The Hidden Shift in Ontario’s Rental Market | Hart Togman

And your life, your term show, okay.

We are live with Mr. Hart Togman, Mr. I don't know, Mr. Rental Real Estate, Mr. Property

Management, you're doing a lot of stuff these days, man.

Yeah, Mr. Panda.

Mr. Panda, yeah.

So is the Property Management, is it called Rent Panda Property Management?

Is it all under the rent panda umbrella?

Essentially, yeah.

Right now, this minute, it's grow rentals.

In about two months, it's all going to be rent panda.

So we're amalgamating everything, it'll all be clean.

And you're still doing tenant placements exclusively if somebody's interested in that.

Yeah.

So the whole model of rent panda is services and products for landlords throughout their

life cycle.

Okay.

So if you're a landlord, you just need somewhere to post a listing.

Rent Panda has a marketplace, just like Facebook Marketplace, Kajiji, all the others.

And you can post there.

You can use some extra tools.

That's a side hustle, essentially, of the business.

Then we provide leasing services.

We provide full service property management.

And we also do some paralegal, some coaching, some education.

And so the bigger picture is anything that a landlord needs throughout their life cycle,

because typically you go from doing it all yourself to wanting to do nothing yourself.

Yeah.

We've got something for you.

Okay.

Cool.

Yeah.

How does your platform work in terms of posting ads on there?

Because I have seen that and been curious about it.

Yeah, it's just free to list.

You can book showings on there, screen tenants, build your leases, transparently.

That was where we started as a business, but we migrated away from it as the core business.

Because ultimately, and we've talked about this before, but real estate is a people game.

Right.

It's a people business.

People want more hands-on service, white glove service.

So we moved into that leasing and property management game because ultimately everyone

wants to be an investor, right?

You don't want to be a landlord.

And so getting good software still keeps you as a landlord.

We want to move them down that line so that they can focus on investing.

Does that platform actually get attention from tenants, like looking for rentals on

rent panda?

It depends on where you are.

So if you're posting in Thunder Bay, yes, for sure.

We're like match for match to Facebook at this point.

Wow.

As you come further south in the province, it's less and less of a natural place for people

to look.

People still use it as a tool, but that's kind of why we moved away from it.

And there's a lot more people in the game.

You've been in the rental game a while, you know, apartments.com is in the scene now.

They're going head-to-head with rentals.ca, live.rent is coming over from Vancouver.

So the marketplace dynamic is quite saturated.

So we're not pushing that anymore.

We're really focusing on how to provide the best white glove service for landlords.

Okay.

What is it?

Apartments.ca?

Apartments.com.

Apartments.com.

Yeah.

And rentals.ca.

Sorry.

Yeah.

And they're competing for multi-family.

For everything.

rental platform.

Apartments.com and rentals.ca push multi-family quite heavily because that's where they can

make the most money.

But they do everything.

So, you know, if you go to the States, like Zillow and Apartments.com are the biggest platforms.

And they carry 80% of the weight.

Facebook still plays a part, obviously.

But Apartments.com, I think about six months ago, decided to come into the Canadian market

and started pumping millions of dollars in advertising into their takeover of Canada.

So I think rentals.ca has a strong competitor emerging.

And it's likely that in the next couple of years, there's going to be a shift in where

people are looking.

What about view at .ca?

My personal opinion of view at .ca is just that it's a bit of a legacy platform.

I probably found my first rental on view at .ca.

It was very Toronto-centric.

Yeah.

And they haven't done much to really keep up with the innovation in the industry.

It kind of looks like Craigslist, like back in 2010, like, you know how Craigslist just

eventually gave up.

Yeah.

You just stopped updating the website.

Exactly.

And Kajiji had taken over from them at that point.

And it says, you know, circa 1999, probably on there.

But yeah, I think there's a lot of marketplaces that, unless they invest heavily and innovate,

they're going to be left behind.

And just like the US market, it used to be heavily fragmented, which is what we are right

now.

And we are very likely to see a malgamation of those platforms.

I would expect apartments.com to come in and start buying a platform, start amalgamating

them all.

Rentals.ca has already done that across a few platforms.

So what did they absorb?

They absorb a lot of software, like behind the scenes companies.

And they, I forget the names of them, but their syndication network is a bunch of sites

that they've purchased.

And so you think you're on, you know, whatever it is, renttoronto.com.

But really it's just another platform owned by rentals.ca.

Okay.

So I thought that Zumper had done that a few years ago.

Zumper has, I had also done that, yeah.

Because they took like padmapper was I think the biggest one, but they had other platforms

I forget the names now, but they, you know, had merged or bought.

Yeah.

And it's better for them to purchase and keep those brands just so that they kind of

dominate the SEO market as opposed to purchasing the brand and killing it.

And then people will go to those competitors.

Okay.

So there's a lot of names out there, but there's not a lot of companies from an ownership

perspective that control the market.

Okay.

So I used to post on Zumper all the time.

I used to post on rentals.ca, I used to post on Kajiji, and I used to post on Facebook.

And I stopped all of that and I exclusively get my listings on Facebook and or sometimes

the MLS.

I'll have an agent posted for me because I find that's where all the demand is for serious

tenants.

So I won't bother with Kajiji.

I won't bother with Zumper.

I won't bother with rentals.ca, maybe if it's like a Toronto condo, which I haven't done

in a long time, I would consider Zumper or rentals.ca, like how would you, which platforms

would you post on in certain areas?

So that's the key.

In certain areas.

Yeah.

Because it is local.

Yeah.

And so when we're working at scale across the province, so we manage and list from Thunder

Bay to Niagara, from Windsor all the way out to Ottawa, we really have to do it all

in order to not miss anything.

So if we have a listing in Sarnia, yes, Zumper isn't going to get much traffic there,

but it's just easier to have a syndication partner, which is what we do and post everywhere.

And we don't even have to think about whether Sarnia is differently affected versus Chatham,

versus Tilbury, versus London down the road, we're just on all of those platforms.

So across the board, Facebook still gets a ton, the MLS still gets a decent amount.

KGG is actually quite impactful in a lot of tertiary markets still, but we just have

to kind of be everywhere.

And now we're up to like 12 or 13 platforms that we post on with paid ads on those platforms

just so that we can be seen by everyone.

And you probably know this.

I mean, the odds are your lead is going to come from Facebook, but that one lead may

come from KGG, or that one landlord may have had a good experience on Zumper three years

ago.

And they want to service them.

They want to be there.

So you have to be there.

And ultimately, when it comes down to placing tenants, if something isn't going right, as

a company with a service that claims it's the best out there, you have to do everything

to leave no stone unturned.

So what do you think about the MLS then?

Because I noticed they actually post a KGG.

So do they have a, they must have some sort of partnership with KGG?

They may.

I'm not aware of it.

I think too, because I get leads coming in that see it on realtor.ca aren't working

with an agent, but reach out to the, to the ad.

Yeah.

So realtor.ca for sure.

And what typically happens with an MLS listing is other platforms or other people on those

platforms will actually scrape that listing.

So if someone sees a listing on MLS and they want to get some tenant leads in to maybe

represent them as an agent, they may take your listing and post it on KGG.

I don't know that there's a direct partnership there.

I've seen that.

Yeah.

I've seen that on Facebook too.

Right.

I actually saw my listing being advertised by somebody else.

And I reported the guy.

Yeah.

And I messaged him like, Hey, man, like you mother, I don't know what I said to him.

But I'm like, I sent like a, I don't know, not a friendly message.

Yeah.

And he goes, Hey, man, I'm just advertising your thing to get tenants to come.

Right.

He's like, you reported me like, what the hell?

Yeah.

And then he got super pissed at me.

And then I was like, Oh crap, man.

I'm so sorry.

I thought you were a scammer.

So I had to go and find out how to like delete my review on his Facebook marketplace

thing.

That's a bad after in like a jump the gun.

But that's a very indicative of the market that we're in and why MLS is more attractive

these days for landlords to post.

The market is is tighter, obviously more agents in the mix who are not making sales.

You know, the buy and sell market is not hot these days.

And we are also shifting towards more and more of a rental economy.

So as people look to make money by representing tenants and representing landlords and getting

into the rental game, more and more people are going to be looking on the MLS, both or

on realtor.ca, both represented and unrepresented.

More agents who are, you know, hungry for business are going to take your listing and post it

out saying, Hey, tenant, I'm going to represent you for this listing, right?

They don't actually own the listing, but they're going to come to you now as the owner

saying, Hey, I've got these five qualified tenants.

Will you pay me a half months rent to bring them to you?

Yeah, yeah.

So people are generating their own business.

And I think it's a product of realtors more so are getting into the rental game.

Whereas when everything was screaming hot, no one wants to make a thousand bucks commission

on a rental when you can make 20 grand commission on a purchase.

Yeah.

Yeah.

So yeah, that's the way that the market is going.

Yeah.

I felt like I was like trying to get crumbs off the table, like being the guy to rent out

the listings.

You know, I wasn't licensed.

I'm like, I can make a thousand bucks here at two thousand bucks, like I'll take the

crumbs off the table that you don't want.

Right.

Yeah.

So I think you're totally right.

I actually saw a stat that I think for the first time in Ontario ever, there's more

at least listings or more leases were done.

I think it was it completed or just are posted.

There is more leases completed by agents than purchases and sales through the MLS system.

To your point of both the rental economy, you know, picking up as less and less people

can afford to buy and agents now pivoting, obviously, because of the times with less

and less transactions happening right now with rates.

Yeah.

A hundred percent.

And the Toronto condo market is driving a lot of that.

You know, a lot of this inventory is being pushed over to the rental sector.

And it's being done at the small landlord level and at the institutional level.

You know, there's large swaths of condos that are being purchased and pushed into the

rental sector.

You know, I think there was an announcement last week or the week before that there's

a partnership between a large-scale hedge fund or developer and the government.

I forget if it was municipal or provincial to actually purchase a lot of these condos

and put a section of them into affordable housing and then rent out the rest of them.

I saw that.

Yeah.

There's a clear need for more rentals and, you know, a soft buy and sell market.

I thought that was, I haven't read and said at all and I'm not informed on these policies

or anything.

That was kind of a clever thing actually.

Like the government keeps saying they're going to build all this affordable housing.

They're not because they're the government.

They just make shit up to get votes and they know nothing about building.

And if they did build, it would be horrible and they'd overspend and build nothing basically,

which is what they've done for like 10 years now.

And I'm like, well, all these, you know, units are built.

People need homes.

They want to do this affordable housing.

A bunch of condo developers want to be bailed out because they can't sell all these condos.

I'm like, this is actually a clever idea.

On the surface, now I haven't looked into it.

So maybe I'm completely off here.

I mean, time will tell, but I think ultimately, there is inventory out there, right?

Whether it's, there's inventory of roofs for people's heads, right?

And whether or not it's inventory that you're going to sell to an end user, you're going

to sell to an investor or you're going to sell to an institution to make it into rentals

or sell it to the government to make it into rentals.

Not inventory has to move somewhere.

And so I think it's a good use of that right now.

It may be a little bit reactionary, but I think anything that we're seeing today is a product

of what's happened over the last five to 10 years, right?

Nothing happens quick in the Canadian system because of, you know, bureaucratic involvement.

But ultimately, you know, there was a hot time, there's inventory to sell.

Now it's got to be used or else, you know, someone is going to go bankrupt real fast and

probably a lot of people.

So, yeah, time will tell.

Yeah, interesting times.

Yeah.

So you think these, so, I don't know, for the average person listening to this, they're

mainly based in Southern Ontario with their investments.

So I think Facebook, Marketplace, probably still the king.

Yeah.

Is that fair to say?

It's fair to say, yeah.

Okay, get on maybe MLS if you can, maybe.

And then any other platforms do you think are seriously worth being on?

Yeah, I mean, I think it's worth doing a test.

If you're a seasoned investor or you're even someone that's got a listing or two that's

going to be relatively consistent every year or two, you're going to have to list, you

should try, right?

You should try four to five different platforms because there's also some platforms that

people just can't tolerate.

You know, if you go on a platform, like view it and you're like, I'm not going to pay

75 bucks and I hate the interface and it's just not worth it for me.

Yeah.

And you don't go on and you don't respond to messages quickly because you hate the platform.

Even view it's not for you.

Yeah.

That's Kajiji for me.

Right.

And the only one that is outside of that is Facebook because everyone is going to hate

Facebook because the damn is still available button and we're going back to our podcast

from four years ago, probably, but everyone's going to hit is it's still available.

You got to be on Facebook that there's a ton of leads that happen across the province

on Facebook.

But otherwise explore the platforms that work for you and then make a decision because there's

going to be leaders like Facebook, like the MLS, those leaders may change over time.

Keep up with the news.

But if you are in general, you know, Hamilton, rentals.ca does decently.

Right.

If you're in St. Catharines and well and rentals.ca as well, Kajiji may be a little bit.

Zomper not so much.

Yeah.

But there's just so many out there right now that it's worth exploring them and diving

into them and, you know, creating an account, spend an hour or two on all of these platforms

and see which one is going to work for you.

It is a bit, yeah, nuanced.

You're right.

And funny enough, the one rentals.ca tenant that I actually put in a property was in

well and all places.

And I was always surprised by that.

Right.

But if you go up to Thunder Bay and you say, I posted on rentals.ca, good luck, you'll

never find a tenant.

Yeah, yeah.

So if you're in Thunder Bay, definitely check out Rent Panda.

Yeah.

And Facebook.

And Facebook.

Yeah.

Yeah.

And in a much broader scale, in a much more balanced market, and we can talk about this

probably for the entire podcast.

But the balance of the market means as an investor, you have to work harder to find your

tenants, to find your quality tenants, to manage those tenants.

It's not a hands-off game anymore.

And so there's a lot of dynamic with this balanced market that lend themselves to more

work.

Yeah.

Balanced or favorable to tenants.

So we're just more favorable to tenants than it was, but it's actually when you zoom out

just balanced.

Yeah.

So at a high level perspective, we are in a balanced market where rent and income ratios

have finally come down to a healthy level.

Yeah.

You know, 10 years ago, what's the rent and income ratio that works?

30%.

Everyone knew it was 30%.

Right.

30% of your income on your housing, in general.

That drifted.

And 18 months ago, that was up to 42, 45, 50% in some regions.

There was numbers that were coming out in Toronto where people were spending 60, 70% of their

income on housing.

Really?

Like it was completely unfulfilled.

These are actual stats.

Yeah.

Yeah.

And when you looked at, we actually did some of that data ourselves because there wasn't

this information on the neighborhood level.

And to be a single individual living in Toronto, it was completely unaffordable.

Yeah.

It was impossible as a single individual earning a decent income in Toronto, even $80,000

dollars to have a one bedroom apartment on your own, you're spending 90% of your income

on housing.

The amount of like zombie relationships and unhappy relationships where boyfriend, girlfriend

stayed together, partner stayed together, just to afford housing.

Right.

And when owners, when it's an investment strategy to take a one plus den and put a curtain

on the den, and that's your second bedroom, that's indicative of an unhealthy rental

market and an unbalanced rental market.

Investors might say creative.

Fair.

It is creative.

But do that now and see what happens, see what quality of tenants and you'll be on blog

T.O.

Just getting roasted.

Exactly.

When you look at a balanced market, a seasoned investor is happier with a balanced market because

it's predictable.

And what we saw over the last couple of years is crazy high rents, insane demand, not great

quality of tenant, but just overwhelming demand so that rents were just pushed and pushed

and pushed.

And a lot of people got into real estate investment because of that.

And so when you look at a balanced market, like we are right now, we're at healthy income

to rent ratios, we still have strong demand, like there's an underlying current of strong

demand, even with immigration cut by whatever the number is, 50, 60%, even more.

But the investors need to be choosier with their properties.

They need to work harder to advertise their listings.

And good listings will still go.

Bad listings won't go in 60, 90, 120 days.

They'll just sit forever because there's enough inventory to keep them sitting forever.

But when you look at being a savvy investor, it still works.

We're still buying properties.

You can still cash low on properties in Ontario.

You can't in Toronto, obviously.

You can't within probably 500 kilometers of the center.

But property values are dropping to healthy levels.

You can still find affordable properties to convert affordably and find quality tenants

to rent them out.

But we just can't get greedy and we can't get overly hungry so that we're going out there

and buying everything under the sun with money that frankly is too cheap.

So yeah, I think it's a balanced market and the movement that we're seeing towards the

next year of being, you know, rents are still dropping.

But they're not dropping as aggressively as they were.

And they will flatten out.

I think that's a healthy market to sit in for the next year or so to reset everyone's

expectations of what investing in real estate should be.

Because it should be.

And what it was for a long time.

Exactly.

Yeah.

And we see no longer super easy mode.

It's like average mode again.

Right.

Yeah.

And I mean, there's a lot of different paths we can go down here.

But a lot of people are taking a knee jerk reaction to say, well, my property was cash flowing

because rents were insane.

And now it's not.

Getting out.

I want to sell the place.

And it's difficult to sell a property right now.

And they're stuck with a rental that's vacant and a property that they can't sell.

But their rent is too high.

And they're not coming to the reality of rents are not unhealthy.

They just were incredibly high.

And you can still have a healthy rental.

Maybe it's not cash flowing.

Maybe it's not cash flowing as much as you would wanted.

But making a smart purchase is the key to making a long-term, healthy decision.

And everyone is forgetting the fact that real estate is not a two-year game or a three-year

game.

If you think about everything in decades versus years or months, it all still will make

sense.

Yes.

Maybe that's a bad prediction.

But I'm very confident in saying that if you're holding a property for 20 years, losing

50 bucks or 100 bucks or 200 bucks a month on a property right now during a downtime

is not a bad thing.

Yeah.

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Yeah, baby.

Yeah.

Or even if you just go back, you know, five to 10 years from now, it's like most property

values are up, rents are way up, and things have kind of worked out for investors that

have bought, even in a Toronto condo, which is the market that's been the hardest hit for

many reasons.

Right.

If you go back 10 years, investors that bought in 2016, their condo values I saw the stat

was like up average, still 160,000.

Now, if you bought peak, it's down maybe about 160,000.

So it just depends when you bought and how long you're in the game.

And once again, it goes back to time in the market instead of timing the market.

Yeah.

Right.

So if you did buy peak, I mean, don't get me wrong, that sucks.

But at the same time, if you just zoom out, you know, take a long term perspective, then

you're right over the long term things tend to work out.

However, you know, especially with condo investors, if you're seriously bleeding cash, you know,

super negative, that's not, and it's not sustainable for your life, then, you know, something

has to change.

You got to get a tenant in there if it's vacant, you got to sell it if you can, whatever.

You got to make the moves that makes sense to stabilize your own life and cash flow.

Yeah.

But you're right.

It's a long term game.

Yeah.

And I think thinking about it, pulling it back to the start, I'd say I have no properties.

I'm an investor that wants to come in.

It feels like doom and gloom.

Everyone is talking about how rents have gone down 17 months straight now.

And at the same time, if you start from nothing, just as an example, and you look at what markets

right now are good, solid investments, you are probably in a same situation of 20 years

ago, where down time Toronto may not be a good investment, right?

And Barry, 20 years ago, was a great investment and lots of people that I know personally have

made a lot of money off of owning real estate for 20 years in Barry.

But Barry now is not Barry then.

You got to go a bit further because everything has grown over the last 20 years.

So Thunder Bay is a great example, and I hate to talk about Thunder Bay just because it's

my baby where I like to invest.

But Thunder Bay, Sue St. Marie, North Bay, as you come down, Sudbury, these are all markets

that are manageable to buy an investment property, to cash flow quite heavily, and to hold

an investment for 5, 10, 15, 20 years and have very solid numbers for that entire duration.

And that's what people were doing 20 years ago in Barry.

That's what people were doing 10 years ago in Belleville.

That's what people were doing 8 years ago in Wellend.

And so it's about finding the right opportunity for you, not just following the trend of

5 years ago, people made fast cash in the Toronto condo market, and that's gone.

So now it's all doom and gloom.

So Thunder Bay is a great example where we just recently purchased a single family home off in

a state. The house costs $225,000. Roughly.

We've put about $75,000 into it.

So 300 all round round numbers.

We just listed that property a week and a half ago.

We turned it into a duplex.

So basement is a two bedroom, upstairs is a four bedroom.

There's a lot of students in Thunder Bay, there's a lot of young professionals who were

students during the crazy immigration boom and are now staying there as young professionals.

There's decent industry. It's not a heavy appreciating market by any means,

but it's a stable rental market and potentially even growing quite aggressively in the future.

We rented out the upper for 2650 and we rented out the lower for 1600.

Nice. So we've got to students?

Yes and no. So the basement has some young professionals, the upper has students,

but lots of the inquiries were across the board. We had families, we had students,

we had young professionals. We had pretty much everyone applying to these years.

Were these like let's say local Sudbury people or were they more so immigrants that had come

there in the last few years? A lot were immigrants. There was some locals, but I would say 80% were

immigrants in the last five years for sure. So the rental economy is still driven by a product

of this crazy boom that was the immigration cycles over the last five years.

But thinking about investing 300 grand into a property that's grossing over $4,000 a month,

that's netting over $2,000 a month after property management, after vacancy, after

everything in there, repairs and maintenance. That's something that still exists in Ontario.

So there's a lot of hype about moving to the states and a couple of years ago is getting

out to Alberta and a few years before that it was getting out East. There's still healthy markets

in Ontario, but you need to think about where to look and you need to run your numbers

correctly with the experts at the table who know what they're talking about.

Yeah, but hard. Ontario doesn't really exist outside of the GTA for sure.

It's kind of all about us here. So like Sudbury is that even Ontario? Where is it?

That might as well be in None of it. And I'll point something out. I don't know any long-term

investor that manages their own property. And this is not a pitch for property management with us,

but most people get scared about buying an investment property because they want to manage it

themselves. And I get it, right? You want to have a tangible asset. You want to touch it.

If something goes wrong, you want to be able to get in the car and drive out there.

And usually for people, that's like a two-hour sphere. But as people grow, all of a sudden,

two hours becomes an unhealthy amount of time. People in Toronto bought in Wolland,

and now they've started to get property management because they're like, it's not worth it for me

to drive out there. Yeah. And then you grow some more. And Hamilton is as far as you'll drive.

And then you go some more and miss a saga as far as you'll drive. And so whether or not your

properties in Wolland or Tilbury or Windsor or Thunder Bay, setting up a system so that you can

have hands-off investment is smart from the get-go because if you go down this path, you will get

there. And even if you only want one, two, three rental properties, it's smart to run a model where

you have property management in place. And property management is not completely hands-off.

You know, passive investing is probably throwing something in a reach or in a safe GIC or a stock.

You still have to manage the managers and you will go through good and bad property managers.

But it's a much more passive approach and it can be a healthy way to get into a balanced market

that makes sense in the long term. Yeah. I always say this to our inner circle, but

you know, each house that we purchase for me is something for my kid, right? So my kids we

are talking about this before. It's called them three and one. They're close. One house is kid number

one's college fund, right? Second house is kid number two's college fund. Yeah. House number three

is kid number one's wedding fund. And so on and so forth. And I'm talking 10, 20 years out.

Even with a market that's heavy cash flow and some appreciation, I don't care about a two-year

investment. I want a 10-year investment at least. Yeah. Well, let me tell you, I'm saving for

my wedding fund right now. And a nice house in Sudbury, I could offload and pull some cash

home would be nice right about now. Yeah, for sure. And at this stage, we're still in a cash flow

generation stage of our investing. You talk to a lot of people out there, other balanced markets,

multi-families doing great right now. You use lots of good deals, a lot of people just like every

established business right now. Boomers are getting out. People who are bleeding cash for a long

time have had enough and they want out. And new blood is coming in. And so there's a ton of

multi-family deals out there. And savvy multi-family investors are buying heavily right now.

Just like the institutional investors. And so you have to look at your market correctly.

And no one in the multi-family game is taking a knee-jerk reaction approach to buying multi-family.

It's a big investment. And so you run your numbers, right? You understand your markets. You understand

what markets are workable now, which are not. And you look at, is that market going to be workable

in five years and ten years time? You make some educated guesses. But I think we just, we're in a

much healthier space that I'm happy to operate in as a service provider because we're not on this

road. Hopefully, we're not on this roller coaster. And hopefully, we're on a little bit of a flat

plane. And we can stay there for a little bit of time so that people's expectations reset.

And back to long-term trends. Yeah, for sure. Yeah. That all being said, I do think we are poised for

another housing crisis. In terms of lack of supply over the next years? Yeah. So everyone asks,

you know, when's it going to turn? Right? When are we going to get back to the good old days of

rent skyrocketing in the GTA? Hell yeah. And yeah, days were nice. They were nice. Unfortunately,

I wasn't as printable. Just print in me. Yeah. Right now, there's an oversupply in the market.

All right, so to be fair to your point beforehand, we are in a tenant heavy or tenant-driven market.

Tenants are out there, quality tenants are out there in the GTA negotiating rents down,

playing people against each other because they've got four or five options or they can go.

Is that nuanced though? Because if you're priced right, I don't find that it's like tenant heavy.

I just find like a fine priced right. Yeah. Then I have the leverage or it's balanced leverage

or whatever, right? But that's always been the case. Yeah. It's when people get they anchor at

higher prices. They anchor and they don't want to lower. Exactly. When you push the envelope to higher

prices, you get people who are smart tenants saying, Hey, I really like your place. I get why you're

trying to push. You know, you put in all the nice fixtures. You put in the quartz countertops,

but I can get the same place. And maybe it's a, you know, granite countertop for 200 bucks less.

So come on, strike me a deal, right? And so you get totally yeah. But if they look at it and they go,

this is a great deal. They're going to jump on it. I mean, priced appropriately is always the

name of the winning move. Yeah. Yeah. Whether you're buying, whether you're selling, whether you're

renting, and we speak from the same tune, you know, it's a conversation. I probably have 20 times

a day. It's just reality. It's like facing reality. Right. You got it. The price is what the market

will pay for your place. Exactly. So that is always the price of what the market will pay. That being said,

we're in a tenant heavy market because there's an oversupply, right? We are the product of the trends

over the last few years. Money was cheap. People were making money hand over feet. And so more people

got into real estate investing. At the same time, you have these developers that started these condo

developments in these purpose built rental developments five, 10 years ago, all that supply is now

getting dumped on the market. So there's a lot of supply right now. Right. In what though? I mean,

purpose built rentals are out there. One bedroom, two bedroom places are out there. We can talk about

kind of the asset class that's still doing really well. But ultimately, there's a lot of rentals

right now. In the near future, that will not be the case. In which locations as well? Right. So

I would say as a broad strokes statement on the southern Ontario, there's an oversupply of

rental listings. Okay. Right now. Relative to the last few years. For sure. Yes. Relative to,

you know, 2015. No, not so much. Relative to the last, you know, even five years. There's an oversupply.

And a lot of that is pushed by the condo market and the purpose built rentals that are dropping on

the market. All that being said, we're at this perfect storm where immigration is down. All of

this supply is dumping on the market. But that will not be forever. That is likely to be a year,

18 months, two years max. Because housing starts are at an all time low. I think the number was a

30 year low. So as these cycles go, everyone is investing. And now everyone is dumping the supply

into the market. Now, no one is investing and no one is building. And so without those housing

starts in a few years, all of that supply is going to be sucked up. Right. It's likely that Canada

will open its doors more aggressively than it is right now, maybe not a million people a year. But

it will start to open its doors more aggressively. And that surge of immigration will come back. And

that will lead to another housing crisis. That will lead to another spike in rents. And as most

people settle in the GTA, the GTA will be most affected by it. So we are now most affected by

the dramatic drop in rents. And we will be most affected by the dramatic surge in rents that will

likely happen. So all of that to say is it's more volatile. It's more volatile. But as an investor

with a 10 year scope on the market, it's still a healthy market to be in. Because yes, we may be

at the bottom for us investors in terms of their rent coming through the door. But the basic

fundamentals of the demand in the market are still there. And the lack of housing starts will create

a housing shortage in the next few years. We don't know exactly how long that will be. But if you're

looking at a 10 year horizon, it doesn't matter whether it's 18 months or 24 months. Right. Yes,

you may bleed a little bit more cash. But just think about it as if your boiler goes out.

Right. Think about it as a repair maintenance fee or increasing your vacancy cost.

If you build that into your numbers at the start, it makes sense. And that's why the institutional

investors are getting into it. Because they can bleed for longer than the small investors.

And they know that the fundamentals are there. So they can hold out. And they will win the most

when this surge comes back. I remember when I bought my first rental property. I had to partner

up with my buddy. We were 23 and 24 when we bought it. And it was like we just scraped together

like the minimum down payment we could. And we bought it. And it was slightly negative cash flow.

We did a rental. And so like our cash flow was higher than it would have been as just a straight

rental. But we're still slightly negative counting maintenance costs in that inevitably come up.

And I remember thinking about it back then like, okay, I'm willing to dump 100 bucks in a month

or whatever I have to. You know, as the maintenance costs come up through the year, you know,

100 bucks here, 200 bucks there. Because to me, this is like kind of investing in like an RSP

or a TFSA. Like I'll dump that little bit of money in just so I can get my foot in the door.

And that's how I kind of thought about it back then. Now, you know, later on, I had like three

variable rate mortgages that all went up with the rate spike. And then it got a little too hot

for me where I'm like, okay, now I'm dumping a little too much that I'm comfortable with for my

monthly cash flow in some of these properties. And so I sold one. You know, that was negative cash flow

worked before the rate hikes didn't work after the rate hikes. And so I offloaded it. And so I

think it just, yeah, it matters your personal situation. Like these institutions, to your point,

like they can just dump all kinds of money in it because they have huge pools of capital,

long-term price horizons. And it's not like a family who has to decide between, okay, do I want to

dump 500 bucks in this negative cash flow property? Or do I want to have 500 bucks more for little

Timmy's, you know, little leak, right? And I think people were purchasing without even thinking

about a negative situation that may come up. So when you could borrow money a percent and a half.

I got a 1.2% mortgage at point. They offer me 1.6 and I was like, can you do any better?

Right. And I said, we can do 1.2. And I should have gone back, can you do any better?

I took the 1.2. Right. And so, but you probably didn't run your numbers with an 8% mortgage.

No. You're like, it's never going to be that. Yeah, yeah, I didn't foresee that at all.

I got a 6% mortgage, probably only a few years after that. And when we got that 6% mortgage,

the deal was so good that we're like, we don't care. And we actually locked in, I think it was a

three year fixed because we're like, the numbers work. And we don't know if things are going to

shift towards a 7 and an 8 and a 10. It's likely to go down. But if the numbers work at 6,

I would rather have a sleepless night than a few extra bucks in my pocket if the rates drop.

And the rates dropped again, but the numbers still work. And that property were actually just coming

up to our mortgage renewal and maybe another year or so. But yeah, we'll get a better mortgage

and we'll make a bit more money on that place. But throughout this whole time, it's worked.

And looking at the 10 year numbers, they're not massively affected by three to five years

of a bit less money. And so if you run your numbers very conservatively with a worst-case scenario,

and it still makes sense for a long term buy and hold, then you're solid. Yeah.

If that's not your strategy, then maybe you need to pivot strategies in the short term,

or maybe you need to look at something else to generate some fast cash. And that's just the

reality of the market that we're in. It's not easy, but there are definitely ways to still make money.

Yeah. Yeah, I think it's important to say it's not as easy. Like it's back to what real estate

investing was for a long time. It's just money got so cheap and asset values got pushed up so high,

even from 2010 onwards, you could even say certain markets, right? Other markets didn't boom

until later on. Like let's say Niagara, for example, I think didn't start ticking up until about

2016 time, where I am personally. And yeah, so it's like it's back to like you got to put some

effort in. Yep. And with 10 to 20% drop in sale prices and home values, we're seeing markets come

back up that didn't make sense beforehand. Yes. Yeah, we're seeing that too. Like we're seeing

single-family homes come up. There's one in Hamilton, the cash flow, as a single-family home.

Yeah. And we're like, oh my god, if you could find this in 2021. Right. And if we're back to like,

let's say, I don't know, 2021 price levels maybe, it depends on the market, whatever. But it's like,

do you know what would have happened to this property in 2021? Right. But the numbers work so much

better. And like, so it's just psychology, right, of the market. Yeah. And we have to work through the

glut of investors coming in so hot. Right. And I think looking at where we've gone from a legislative

perspective and a policy perspective, we're in a much better place to make better, smarter,

and more impactful decisions as investors. So as an example, if you looked at that Hamilton,

single-family home or that Hamilton duplex conversion five years ago, 10 years ago,

you wouldn't even been thinking about another ADU on the property. Yeah. Right. You wouldn't

in Toronto, you wouldn't be thinking about, you know, four plus ones. You wouldn't be thinking about

four unit developments on major streets, like the densification, the change in densification

allowances that have happened over the last five years because of this shortage of housing

has set us up for a healthier market, a healthier investment marketplace. And I think a better

opportunity to spread out our investments across, you know, various markets that can work for us in

the long term. And if we just remove our Toronto blinders, there's a lot more out there that

can add value to our lives. You mentioned a few minutes ago there, we can talk about an asset class

that is doing really well right now. So what were you referring to? In short, three bedroom units.

And where? So in most markets, but very true in Toronto, and then less and less true as you get

further out, because things, like I mentioned before, Toronto is volatile. But as you get further

out, things kind of pacify a little bit. And so the disparity between, you know, one bedroom

vacancies and three bedroom vacancies kind of moves away. But over the last 17 months rent has gone

down fine, doom and gloom. But three bedroom units in the GTA are the only asset class that has

grown in rent in any month of those 17 months. It's still down. But last month, as an example,

I think three bedrooms went up by 0.6%. It doesn't sound like much, but when one bedroom's are going

down three to four percent, it's significant. And what's not showing us is that in these urban

centers, or like, you know, just outside the urban centers, people are looking for homes, right?

People are not, it's not this massive wave of immigration that's coming in that's renting,

you know, three people to a one plus 10 500 square foot Toronto condo. It's families that need to

rent, because affordability has been an issue for the last 10 years plus. Families need to rent,

young professionals who want to grow the families, groups of young professionals, even student groups,

they're looking for better homes. And a better home is somewhere we have space, somewhere where you

have parking, somewhere where you can actually live for a longer period of time versus kind of

this transient one bedroom pop around approach to life. So we're seeing three bedrooms or even

three plus ones doing very well, holding their value. And a lot of builders have moved their

models to these three bedroom units. So they're picking up lots for, you know, $800,000,

they're putting up four unit buildings. And each unit is a three bedroom, or each property is a

three bedroom unit. And so those are models that we didn't see even three to four years ago.

And I think those trends are here to stay, especially if you listen to a lot of the analysts out

there, like Dan Focus, an awesome one that talks about how Canada is showing all the signs of

moving towards a rental economy. We're showing all the signs just like European countries of more

and more percentages of the population renting long term or for their entire life. So creating

homes that people actually want to live in is again important, which again is balanced. It's healthy.

Right? We shouldn't be creating two bedroom units that are 420 square feet.

Yeah, dog crate shoe boxes. Right. Because there's a gym downstairs and there's a

co-work area where people want to live in their homes now. Yeah, yeah, yeah. Imagine that.

Imagine that. Yeah. Yeah, to your point, even in these tertiary markets or secondary markets,

where I'm often helping investors find tenants, I get happy when it's a three bedroom unit,

because I'm like, it just appeals to way more people. Right? Right? Families, students,

young professionals, even just like a couple, but they want more space because one of them

works from home. They want an office. They want a spare bedroom. Yeah. They want to have room to

have a kid down the line. Yeah. It's just it appeals to more people. And I think, you know, people

talk about the lack of demand. And I think the demand is there, but the demand is pick here.

And so people are not willing to go into the three bedroom place and the third bedroom they walk

in and it's the size of this desk. Yeah. And it's like, oh, well, you know, the engineer who did the

drawing said that you could fit a crib in this corner. Yes. But do you actually want to put your

kid in that closet? Right? Yeah. Yeah. And they would rather spend less or spend the same amount

get into a slightly older building that's larger so that they can have a family. And so the

demand is there, but it's pick here. And so you have to create homes that people actually want to

live in. And a lot of the conversions that we saw, especially in like the Niagara region,

the homes were weird. I don't know if you found this, but a lot of tenants will come in and you

hear the comment weird often. We're just like the layouts a bit weird or, you know, the kitchens

over here, but the fridge is like often in another room or under the stairs and things just feel

weird because a couple of years ago, you could hack a house together and it would cash flow like

a monster and you'd rent it out in a week. Yeah. And that's not the case anymore. And so,

you know, sacrificing a little bit of, you know, efficiency in your designs for building a home

that people actually want to live in thinking about how they experience that home, that's really

important. Yeah. I've definitely seen much better design conversions than other ones and the

much better ones obviously do much better. Yeah. And maybe more money went into it or maybe

just higher quality finishings, but those things tend to pay off over time in terms of ease of

finding tenants, ease of managing it, less turnover, better quality tenants, people willing to pay

more over time, right? Like it makes sense to make a product that people actually desire. Right.

Which ironically was not the case a few years ago. Like it was pretty unique. Yeah. Yeah.

So I think if we continue down that trend, it should be better. And when we hit that next housing

crunch, hopefully like with these institutional investors with more investment in purpose built

rentals, we will have the housing stock to actually accommodate it. Okay. So this is such a vague

term purpose built rentals. And I hear it all the time. And I personally wonder like, what are

these purpose built rentals? Are they big apartment buildings? Are they like little eight

plexes? Like are they investors, you know, doing a four plex, five plex? Like what are all these?

I know it's like it probably counts all of those. But what's like the majority like what's

actually coming on market? Like I know in Edmonton, for example, a bunch of investors have jumped in

and doing all these eight plexes and stuff in Edmonton. That's like a recent local trend.

Right. So yeah. What's your opinion on these? Yeah. I mean, when the media reports on

a purpose built rental, it's typically a large scale apartment complex. Okay.

Ready. If you think about the 80s, when I think I'm quoting it, right? Maybe the 70s or 80s,

but the majority of apartment buildings in Toronto around the periphery were built then.

And if you live in an apartment in Toronto, it's likely that it's a 70s or 80s build.

It has a certain style to it. You know, those parquet floors and the big windows with the sliders

on the bottom. And they're usually either one or two bedrooms. It's very rarely ever a three bedroom

place. And these purpose built rentals are managed by large scale property management companies.

They're investor built and managed. That is what is typically referred to in terms of purpose built

rentals. Yeah. You know, in Toronto, you've got like Fitzrovia right now building a ton of these

complexes. There's one up by Yorkdale as a new hub. There's one, I think it's DuPont and Dufferin,

another, you know, four 800 unit complexes, like massive complexes of purpose built rentals.

When you talk to CMHC, you've got them surveying purpose built rentals of four units or more.

So when you actually look at the numbers of purpose built rentals, you've got, you know,

a purpose built forplex. So it's someone who's created that building, that envelope, that structure

for rentals specifically. It's not a converted single family home duplex triplex. But a lot of them

are eight flexes, a lot of them are 24 flexes. So there's small multi family, small purpose built

rentals. But usually when the media talks about purpose built rentals, it is large scale apartment

complexes. Yeah. Okay. And what we're seeing is, again, Toronto dynamic, but the large towers

are primarily being built in Toronto. Or when you look at the demand, if immigration starts a

surge for population numbers, start to grow a large percentage of that population is going to come

to Toronto and the GTA. And they're going to want this type of housing. And it's generally transient

housing. Right. So you're in that one bedroom, two bedroom apartment with yourself, your spouse,

maybe one kid for a defined period of your life, usually not a very long time. And then you move

into home ownership versus if you look at something like Hamilton, there's a lot more secondary

rental market assets on in that city, where it's conversions, where a blue collar family is going

to live there for 10 plus years, or there's going to be lifelong renters who move between rentals,

but they're going to live their full time as a home. And we're seeing that as densification

increases in certain centers, there are more towers going up. Like if you look at Kitchener,

Waterloo, even Hamilton is a good example where more and more of these towers are being built,

but it's heavily focused in the GTA. In a lot of the tertiary markets that we're seeing,

there's a lot of opportunities for small multiplexes. Yeah. The infill development. Exactly. The sixes,

the eights, the fours, those are doing really well. But when you get really far out, let's say,

Susie Murray as an example, or Thunder Bay, or Tilbury, you get to a point where it doesn't make

sense to build multi-family, because land is cheap enough that it actually just makes sense

to buy another single-family home. So we went through this exercise where we've got a single-family

home. We turned into a duplex. It's in GTA terms. It's a cash flow monster. It's netting over

2,000 bucks a month. Toronto investors who see that are like, this is a huge part of land,

like plot of land. Why don't you put an 80U in the back? You can put a garden suite on there

for $250,000, and it'll gross you an amazing amount of money. Well, the house next door we could

buy for $180,000. The duplex down the street we can buy for $320. A lot of the times it doesn't

make sense to build. It doesn't make sense to densify when you get really far out, because it just

makes sense to buy the next plot of land. Whereas in Toronto, you can make the case. You could say

it's going to cost me $250,000 or $300,000 to build that garden suite, and maybe that's comparable

to a condo. You could buy a condo down the street for $400,000, or you could build an 80U in your backyard,

a two-bedroom for $300,000. That's a much better value purchase, because it's much more desirable

than living in another one of these condo units. I mean, the forced appreciation in a market

like Toronto is going to be that much higher. We actually just rented out a coach house, and it was

downtown-ish, and it rented out for still $36,000, $3,700 in this market, and it rented within a week

and a half, two weeks. Again, it's a house that people want to live in. It's got parking,

it's three bedrooms, it's a house, but it's that densification and that forced appreciation that

the owner was going for. He built it a few years ago, but those models still make sense in Toronto,

but again, you have to look at what asset class makes sense for you as an investor, what asset class

makes sense for the market, what market do you want to be in, what are you comfortable with,

and make those decisions? What I'm realizing from talking to you, because we've been talking about

Toronto's more volatile, and I think so than Ontario in general versus the rest of the country.

It booms the hardest, and maybe right now it's corrected the hardest. Ontario and BC have had

the biggest corrections, but after the biggest booms for decades now, and this is a Bitcoin

reference, so allow me, if you will, but this guy, Michael Saylor, he talks about how Bitcoin,

it's volatility, he's volatility is vitality, and that's how he positions it. It's because it's

this interesting asset that it goes through these crazy booms and busts because it's the most

interesting thing, like a young kid is volatile, because it has so much growth potential. What's

not like a grandma, an eight-year-old grandma isn't volatile, because the growth is done. An

old established company like Xerox printers isn't volatile, but Amazon is because of the growth

potential. It's the most interesting thing with the most potential,

like Toronto's a growing international city, like one of the great international cities around

the world, and so it makes it more interesting, but it makes it more volatile.

A hundred percent. As an investor, are you someone that would have invested in Tesla stock

from day one, or are you someone that would have invested in Xerox, right? Or are you now like,

okay, I'll invest in Tesla because it's safe. Or do you want to balance?

Right. Personally, as a real estate investor, being in the property management space,

being in the leasing space, I'm so heavily invested as a business owner and an individual in this

space, I want my real estate investment to be slow and safe. I want that model of 20 years ago,

where I buy a house, and that's my kid's college fund. But there's a lot of people that don't want

to be in real estate investing for that. There's fix and flippers that have made a ton of money and

continue to make a lot of money with volatile markets and high appreciating markets. There's a lot

of condo investors that made a ton of money on that volatility. Yeah, but taking a big downside

risk, right? And they're taking that risk. And so I think the trap that we fell into a couple of

years ago was people believe that the condo market was safe, and it would never react to. Yeah,

and no numbers were considered, no cash flow numbers. What if I buy it, close on it? What if I

can't close on it? And what if I do close on it? But then there's no buyer because I was never

planning on actually keeping it and renting it out. And developers were making those mistakes too,

right? There's whole developments that didn't get off the ground or now sitting on dead inventory

and are figuring out what to do with it because of that. But the developers have a higher risk tolerance

than you or I as an individual investor. And that's why you're 100% right. That's why institutional

investors now and the government is coming into the game because they have the deep pockets and the

long bandwidth to play a highly volatile game over a long period of time, which eliminates

the volatility. Because if you look at real estate, wherever it is over the last 50 years,

it's a very, very shallow line, right? And it's always going up. Yeah. If you zoom in, there's

going to be some massive wild dips and spikes. But it's slow and steady. And if you can play it long

enough, that volatility evens out. But if you're in it for the short term, you're going to feel that

volatility. Yeah. So real estate going up or is the money going down?

Maybe a bit of all. That's a topic for another day. That's a different topic.

Okay. Cool. What about students? Because I've had some units recently in St. Catharines. We were

trying to rent them out, find good families, good couples, whatever. And it was a bit slow. We weren't

finding the people as fast as I would have liked. But I kept getting students reaching out.

Now these landlords had never rented to students before. These were Brock University students.

And they were asking, how does this work? What's the lease cycle like? They just had no idea.

And so we actually pivoted to renting to a few students in some of these units because that's

where the demand was. And these were, in my opinion, the best quality tenants. And I like students

because you get them all in one lease agreement. You get parental guarantees. You've got three

students plus three sets of parents backing up that money. And they're just kind of trying to

cover their small chunk of that shared rent, which is like let's say 600 bucks a month for them

out of the shared rent. So I like it. And so we pivoted and the landlords were happy with that.

And I was just finding good demand with that. So what are you finding with students in different

markets? There's a lot of headlines. Maybe less so now, but of all the international students

being cut and student rentals are dead. You know, the markets blown up. All the student rental

investors are screwed. And we were sitting back like, okay, maybe if you bought like some eight

bedroom home beside like one of these, you know, crazy private campuses that were offering these

programs. And they were just like low key ways to get like immigrants into the country and benefit

off these international students. But if you're by these established schools, like we have not seen

a drop in demand around Western University, around Brock University, Queens, McMaster.

Like, so what are you seeing with students? We're seeing the exact same thing. So ultimately,

you can never listen to the headlines. You have to talk to people on the ground. Yeah, exactly.

And if you have an eight bedroom rental in Toronto, that is, or let's call it in the periphery of

Toronto, not to mention specific cities. And you are relying. You can say Brampton. You can say

Brampton. Okay. And if you have a student rental. It's my home, man. We can bash it as much as we

want because I spent 27 years there. I reserve the full right to talk about Brampton any way

that I want. Speaking in your voice, because I'm not from Brampton. Speaking in your voice.

If you've got an eight bedroom, 16 person rental in Brampton, you are going to be suffering.

Yes. Because the massive drop in international students coming to the country is real,

but a very, very large majority of them, we're going to these Mickey Mouse colleges.

Yeah. Because think about it. There's no school in Brampton. Right. There's Sheridan College.

Right. There's a Sheridan College campus. Right. And if you talk to Sheridan College, they will

probably say that their international student enrollment is down. But when you look at the finite

number that that is, it is not enough to impact you as a student rental investor in that area.

Yeah. Yeah. So yes, if you jumped on that bandwagon and you tried to make a lot of money way too

fast, you are going to feel it now. You may think about pivoting that strategy. We still invest in

student rentals up in Thunder Bay because there's Lakehead University and there's Confederation

College, both of whom will say their international student enrollment is down and it's down significantly.

Yeah. But then what percentage of their enrollment was international students?

Right. Because it could be like 10%, 15%.

Even with those cities, it was relatively high. Speaking as someone who's invested and

was business started in Thunder Bay, I'll reserve the right to say, Thunder Bay probably brought

on too many international students and new immigrants for the health of the city.

How dare you. Yeah, I know. But there was just not enough housing to accommodate it. And when you

go to Thunder Bay, there's a lot of Brampton-esque situations that are happening and more

DoorDash and UberEats drivers than you've ever seen because these kids don't have a way to make

money. Yeah. And they're trying to make money and they're trying to live, but there's just not

the infrastructure to support it. That being said, we're still doing quality student rentals there.

And when you look at London, when you look at Windsor, when you look at Kingston,

all of these cities are still doing well when it comes to the fundamentals. And so if you have a

good quality student rental and you're running your numbers correctly, you can still run a good

student rental business. And we still are. But again, the demand is pick here. So those high

quality students, we just filled ones in the upper unit. They were asking a lot of questions.

They needed to be handheld through the situation. They were asking for $50 less in rent.

Like the quality students still understand that there is more supply than there used to be.

But we still filled it. Are we ran our numbers at 2400? I think it was. And we filled at 2650.

So there's still an opportunity for growth, even amongst the specialists who put their numbers down.

But we did it conservatively. So it's still a really healthy market. And I think it's a boring

healthy market, right? Student rentals, again, over the last 30 years in Ontario have been strong.

Yeah. These universities are not going to go under anytime soon. And these universities,

I would argue, have more lobbying power than a lot of other entities out there, right? And they

can come together and it used to work for an entity that did lobbying for the universities.

They have a lot of sway when it comes to political advocacy. So when the policy makers sit at those

tables and decide who's coming to the country, what those numbers are, I would bet that the

universities are at those tables. The substantial colleges are at those tables. Uber Eats might

be at that table too. Tim Hortons. Uber actually doors the hatch. Yes. Feel like Timmy's

door dash Uber Eats and like Conestoga, Mickey Mouse colleges are like running our immigration system.

Fair. Yeah. But my bet as a student rental investor is that lobbying pressure will push

for those numbers to increase. Yeah. So that's just my bet as a student rental investor.

But we see it all the time and we see it still doing well. Yeah. We'll follow the money and

the incentives, right? Just the international student tuition. Yeah. It's just so large.

For sure. And I think it's it's easy for people to get excited about sexy volatility. And

the name of the game for me right now is again, it's not doom and gloom. It's back to basics.

And those basics also include as an investor making sure now is the right time that you have

your systems right, right? If you made some money, just spray and pray and and buy this and buy

that and sell this and sell that and rent out to whoever at crazy market rents, now is the time

to take a step back and say what's going to work over the next 10 years for me and play a safer

game or choose to play that volatile game, but choose it knowingly and build the systems that will

work for you, build the team that will work for you, take the time in a slower market to get the

fundamentals right again, because we're likely to stay in that healthier, slower, stable market

for a longer period of time. Yeah. I think we're working through a lot of over leverage.

I think this leverage is being wiped from the Canadian real estate system a little bit. We're just

getting some leverage wipes out, which is normal in any market, like a stock market, Bitcoin market,

like what happens with Bitcoin in particular is all these people buy with leverage and then as the

price dips, the price correction, because whatever event happens in the world, leverage starts

getting wiped out and then positions start getting four sold and then there's a bunch of four sellers,

which creates more four sellers and it wipes out the leverage from the system. And it's like a

forest fire like clearing it all out and then you grow back from that point. And it's kind of

happening, I feel like with Canadian real estate right now, where like a lot of us, myself included,

was over leveraged with the easy money when the easy money turned to harder money. And then I was

like, okay, over leveraged for this state of the market now. Let's cut some of that leverage out

and kind of try to grow from a more stable base again. And it's just the name of the game. When

money's 0%, and everything's going up like crazy, like you feel like an idiot for not investing.

And I mean, you are missing out. There's a huge opportunity cost. And then all of a sudden,

when rates changed everything, obviously that wiped a bunch of that out. But now we're seemingly

leveling off, right? Yeah. I mean, as a buyer, as a real estate investor, 75% of the deals that

we've done over the last 18 months have been, you know, taking advantage of not in a bad way,

but taking advantage of other people's over leverage or opportunities that have come up that

wouldn't have come up in a hot market. My prices are down. People are trying to get out.

People over leveraged. Banks have taken back properties. You know, estates that would normally pass

on to next of kin. Don't want it because they can't handle the debt burden that's there. And so

they're trying to, you know, offload those those properties. We've done some amazing deals on

properties like that. Interesting. Okay. Because there's still a mortgage on it. Some of them have

mortgage on it. Some of them, you know, just don't want the upkeep like this last property that we

purchased. There was some fire damage. There was a lot of work that needed to be done. You know,

75 grand isn't an inconsequential amount to put into that property. Even if it was paid off

for, you know, the sons and daughters of those who were passing it on, they may not have 75 grand

to put into the place and needed the work. You could not do anything with it without that work.

So maybe with prices not ripping like they were, there's less incentive to hold it as well. I hadn't

thought about that. And there really wasn't an appetite to hold it. Yeah. Because maybe you had a

lot of like accidental landlords that were like, well, maybe I should hold on to this thing.

Like it's gone up. Yeah. You know, my, your, their parent passed away and it's went up their,

their whole lives and now this thing's worth a lot of money. Yeah. Maybe I just hold on to this

thing and keep it as an asset and I'll learn how to rent it out or something, right? Yeah. And,

and not to, you know, speak badly of other investing tactics. But other things are hotter these days,

right? People are talking about precious metals. People are talking about Bitcoin. People are,

you know, thankfully NFTs kind of move past. But there are other things out there that are hotter

right now. And so, you know, if that next of kin is thinking about investing, maybe they're into

Bitcoin. They're like, do I hold this dilapidated rental property that I have to, that I just thought

that I have to put money into that I'm going to have to deal with tenants or just hold this empty

place or let me sell it and invest in something. Yeah. It's a smarter move for them. And it's a great

opportunity for us because we get a deal. So everyone's one on those cases. So for us, like, you know,

diversifying is important and we've got a bit of diversity. But as an investor for me right now,

it's about picking up those deals that are slow and low-burning and long-term investments.

This is funny. So yesterday we were in Cabbage Town Toronto filming a YouTube video with Victoria

Suen. And she had taken, she was the architect for this project. It was a single family home,

turned into a four plaques. And this home was built I think in 1880. And so big century home, you know,

it had had like two extensions had been put on over the years at some point. And this owner was

living there. And the contractor and Victoria were telling us on the YouTube video just how crazy

it was. Like it was just deferred maintenance for like 50, 70, 80 years that just hadn't been done.

And like the ceiling was being held up by an aluminum ladder that the guy had like tied ropes to.

And there was a leaking like ceiling and skylights and stuff. And he had this crazy like

just rigging, rigging a jig plumbing system where he had the rainwater coming into a bucket and

then tubes like leading it outside. And they're like it was a complete disaster. There was dead rats

and squirrels living in the walls. There was a live rats and squirrels living in the walls.

This guy had just lived there in this massive home. And there's like birds flying around the home

like it was absolutely crazy. But the past away I guess it passed down to the next of kin. And

they were like we have this home. Incredible location. Just like on the street with a few

century homes and then just surrounded by condos. Right. Like everything had been built up around it.

And so they decided to convert it to a fourplex because it didn't make sense a few years ago.

But now they had this home. And they just fully gutted it and had to put support beams

and kind of do all the work and stuff. But now it's this amazingly cash flowing fourplex

generates over $10,000 a month. I think it was just over $11,000. I haven't rented it out yet.

So there's a projected rents. But they're projecting one of the units which was a three-bedroom,

two-bathroom plus a den to just crush it. Because that to your point earlier,

unit does not exist in Toronto. And it was just in this incredible location where you could have

a family and be right in the thick of downtown, work your downtown job, walk to work and have

this three-bedroom unit. And unique from all the different condos around it where you have to wait

for an elevator to get to the 12th floor. And maybe two of the elevators are broken that day

and you're waiting to get up. Where it's a walk out. If you've got a pet, you just walk your dog,

you're in this kind of cool established neighborhood. Just a different type of unit.

Yeah. And that's a perfect example of there's an opportunity in every market for every style of

investor. That person, it's going to need more cash than our Thunder Bay property. For 75 grand,

you're not going to be able to do that. But the right investor will have the pockets and the leverage

to do that type of job. Yeah. There's the institutional investors that are buying up 100 condos.

Who are these institutional investors you keep referring to? I haven't heard about this.

Yeah, I mean, I don't know the names, but there's a number of investment firms out of the U.S.

that have always had their eyes on Toronto that are starting to come up. He's mother.

U.S. guys. Yeah. Yeah. And there's local guys that are, you know, developed.

Is there cracking down on that in the States? You know, like Trump, I know was talking about,

I don't know if anything passed, but wanted to cut down on like black stone buying up single

family homes and stuff. Yeah. But to like a point, probably an hour ago, but there's inventory,

right? And something has to happen with this inventory. And we're not in a market where it's just

going to sit empty forever because money isn't cheap anymore. So are they buying like condos?

I'm just turning them into rentals. Yeah. Okay. They're buying condo blocks. Isn't like single

family homes? No, I mean, there are those that are doing that. Yeah. I don't think it's as prevalent

here. No, but what's happening now because of the dynamic that happened is developers built these

condos for end users and investors. I think it was, it was the number 80% of every new condo development

was being sold to an investor and turn into rentals. So all of a sudden, when those investors,

the market softened, the numbers didn't make sense anymore. People were walking away from deposits.

People were just closing and then trying to get rid of it, can't close. All of that inventory

is now sitting there. So what does the developer do with it? They can take it back. They can drop

price. They can get into the rental business themselves, which some are doing. I've seen that. Yeah.

Or there's a US hedge fund or some firm that comes up. And they'll eat the negative cash flow.

Yeah. But because they're getting rid of the inventory, right? They can't just sit on that

inventory forever. And if it was a quick dip and then it's going to spike again, they would have

held on to it. And they're easy to manage, too. It's not like a bunch of single-family homes.

Yeah, because of condo. It's less work to manage. Maybe. Speaking as someone who's managed multi-family,

it can be difficult. Okay. But it depends, right? If it depends if it's purpose-built, it depends how

the systems are set up for that condo. And a lot of these have to shift their strategy because

they were set up as condos. They've got condo boards. They've got condo amenities. And yet,

a large percentage of the building is now being turned into rentals. A big proportion is going

to be affordable rentals now. And so the dynamic in a lot of these buildings is going to change. So

it'll be interesting to see what happens over the next few years. But my point is that the inventory

is there. There's housing stock that needs to get eaten up. And it's going to get eaten up by

someone. And our guess is the next 12 to 18 months, it's going to be rental inventory.

Yeah. Changing real estate market. For sure.

I wonder if people are sitting around in like Rome, you know, like 2,000 years ago talking about

the real estate market. They probably were. Yeah, they probably were. And I think the safe

business to be in these days, I would say, people may say the property management and leasing has

been relatively safe and stable. Like, COVID was a great time for the business because things were

renting and brands were high. And properties will always need to be managed. But I think the

service-based businesses that are servicing all of these properties, you know, the plumbers,

the electricians, the HVAC guys, these are the companies that are doing incredibly well now.

Because rental inventory is harder on the envelope of a building than home ownership.

Homeowners will typically take care of their stuff a little bit better and push the long

other than that house that was, you know, had rainwater buckets blowing out to the windows.

He was taking care of it just, you know, in his own style.

Yeah. But the, you know, the wear and tear on this inventory is going up. And so these companies,

we're seeing it on our end, a lot more service-based companies and trades are working with property

management companies to service this new, you know, supply of rental housing.

Interesting. Yeah. So because you're much more likely to hire it out and go fix it yourself as a

landlord. For sure. And if you're an institutional investor buying up 200 units, even if you're a

smaller investor buying up 20 or 30 units or just buying one or two, it's very likely that you're

having hands-off management. And that management company excels with, you know, quality trades

that can sustain our whole portfolio. We've looked for cleaners that can service all of Ontario

because we don't want 20 cleaners on our roster that we have to deal with. We aren't doing it

internally. So we want a provider out there that can be at the same scale as us. Interesting.

If we have a nature-back provider that can service the whole province, any property that we are

servicing, we call them up. And they get us better pricing, which means better pricing for our client

and so I think the whole industry is going to move towards that now. And we're seeing the

start of that aggregation of services. Oh, cool. Is there anything else you want to cover?

No, I think that was it. I mean, I think the big thing you pointed out, it was your point,

not mine, but pricing is key. And the fundamentals of rentals and real estate start with pricing.

And a lot of people have their head in the sand because they rented the place out at X two

years ago and prices have always gone up in their head as real estate investors. And so now it should

be X plus one, whatever it ends up. Yeah, yeah. And it's not the case anymore. And like I said,

demand is pickier. And so getting your fundamentals right starts with pricing. It is not a bad

market if you are conscious and realistic about your pricing. You can still move properties. You're

moving them. We're moving them. And you can get quality tenants. You just need to get your

fundamentals right? Yeah. Yeah. And at the end of the day, it's worth what the market will pay.

Exactly. If the market's not paying you anything, you might want to change the price.

Yeah. And so many people will say, well, this platform is not working for me. What platform

are you using? And the first question is, are you priced correctly? Yeah. Because I don't think

it's the platform. It's probably the price. My advice to people is always like dial in your ad

as best as you can. Yeah. And then price is the only lever left. Yeah. Like if your photos are

great, your descriptions great, everything's, you know, as good as you can possibly make it. Yeah.

Well, then the only thing you have left is to play with the price, right? Which is a beautiful thing

because then you know, you just tweak that dial up or down. And that's that's what's going to get

it done. Yeah. And I mean, a whole other podcast about AI, but with AI tools out there now,

even compared to a year ago, probably when we talked. Yeah. Great point. There is no excuse for bad

photos, you know, non virtually staged photos and bad rental listings. Agreed. Like it is an

absolute baseline that all of that needs to be there. You could take the crappiest photo

of the crappiest unlit space and just throw that into chat GPT. Maybe not the free version,

but probably still, but pay your 10 bucks a month or whatever it is. And that photo will come out

beautifully lit, oriented correctly, and you know, softened so that it's appealing. Total

notes. And then you can stage it too. Right. With one click. Yeah. With one click. Yeah.

And you never would have staged that unit before. No. And but stage photos like do so much better.

Yeah. We used to pay hundreds of dollars for subscriptions for software that did it for us.

Yeah. And before that, we used to pay $20, $30 an image for virtual staging. Yes. And like,

now it's like, or you'd have to go on like five or dot com. Yeah. And pay somebody to stage it for

you. Yeah. You find someone a graphic designer to do it for. Yeah. Yeah. So it's a no brainer now.

Yeah. Agreed. I'm doing the same thing. If I've got a vacant bedroom,

I'm staging it on like Gemini, Nano Banana, you know, chat GPT. Yep. I'll play around with

different ones. Yep. And also editing photos. Your point. Another thing, Mike DeZormold was doing

that I started doing as well as it was wintertime. But you know, he had some properties that were

summertime. Yeah. So he puts snow on the ground and everything because you always wanted to match

the season. Right. So it looks like a current rental. Yep. So I have a couple places where I'm like,

okay, give it a light dusting of February snow. Right. Yeah. Cloudy day, make it a sunny day.

Yeah. Yeah. I haven't thought of that one. That's a great idea. Yeah. Your lighting isn't great.

Fix the lighting. Yeah. It'll actually throw like fake lights into the unit. Yeah. And the other

thing is is if you know that your unit needs a bit of work, use those tools to figure out what

looks good. Right. And so if you want to play around with the hue of the lighting, play around

with that virtually. Like there's no excuse to not use the AI tools out there anymore. There's

some crazy and depth ones. But even the basics will help every landlord. Yeah. If you're like

mid-Reno, you can put appliances in the kitchen that aren't in there yet. Yep. Done that on a few.

Yeah. If you've got a tenanted unit and stuff is everywhere, one prompt to remove all the garbage

in this unit. Yeah. And it's gone. Yeah. Yeah. Cool. Thanks for bringing that. That's a huge point.

You're going to be at the your life, your terms event on Saturday, April 18th. I will. Yeah.

Cool. You've got the crazy funky booth with the seats. Yeah. Can't miss heart. Yeah. If you're tired,

come sit in the fuzzy chairs and hang out and talk rentals. Yeah. We've got a free rent

estimator there as well. There's going to be a bunch of giveaways. So lease appendices,

clauses for your lease appendix. A lot of move out and move in inspections. Again,

things that people should be doing as standard. But all of the basics that you should be using,

we've got available for free. Okay. Awesome. Yeah. And if anybody wants to reach out, what's the

best way of doing so? Yeah. Just go to rent panda, hit the contact us button and give us a

shout. It'll probably be me giving you a call. And anything from leasing to property management,

paralegal help, software, or just advice with the rentals. We love to just chat with investors.

Across Southern and Northern Ontario. Across all of Ontario. All of Ontario. Yeah. Okay. Yeah.

Where do you where do you stop? If you go north of Thunder Bay. Yeah. Canora. We've done a couple

in Canora, but we kind of shied away from it. So generally the way that the model works in reality

is we have people placed across the province and each person covers usually like a two hour drive.

Got 100, 200 kilometers. So if you are in the very peripheral regions in a very, very small market,

we may not be able to service you. But in the large majority of markets, 98, 99% of the rental

population we can service. Yeah. Cool. Wow. That's awesome. Awesome. All right. Always a pleasure.

Thanks, man. You always share some great stuff. So appreciate you coming in. Appreciate you.

Thanks for having me out. Cool. Thank you.