2. Real Estate Investing and Affordable Housing

In today's episode, we dive into real estate investments in New Brunswick. Nick is a real estate investor here in New Brunswick, with a special interest in creating affordable housing opportunities for New Brunswickers.

Nick and Micaiah chat about what it's like to build a real estate business, the unique program he’s built to make the operations of his business run smoothly, hiring the right person for assisting in a small business, and a cool project he’s been working on to create affordable housing opportunities as an investor, here in New Brunswick. All of this and more on today’s episode!

To get in touch with Nick: nick@foxhillcorp.com
To get in touch with Micaiah: Gosman.ca/contact

I'm your host, Micaiah Gosman and The MGR Podcast is where I talk with Real people, about real money and real estate. To connect with me you can visit my Website or follow me on Instagram or Facebook

Transcript

Hey and welcome back to the MGR podcast where we talk with real people about real money and real estate today we got a super exciting episode planned for you today we got a special guest Nick McCollum he uh runs some real estate investing here in ferton New Brunswick and he uh has a lot of knowledge in investing and and property management and development and and a little bit of everything so we're going to chat with him a little bit today and I'm super excited to uh have him on and uh he's going to share a lot of good uh good stuff with us today so let's Jump Right In so Nick my man how you doing doing good man thanks for having me on the show it's good to be here yeah I'm super excited to have you here today so you know we're going to ask you a little bit of everything today and I'm just excited to kind of dive in Nick and I have been good friends for a long long time and you know I mostly know I know a lot about him but uh I want him to share kind of where he's from you know what his uh what he's doing right now and uh his goals for the future so uh so let's get right into it Nick uh tell me a little bit about uh about you about where you're from a little bit about your family and uh and uh just a little bit about uh about you yeah sure so I am a what am I I'm a husband dad real estate investor um my day job is as a computer New Brunswick which is about an hour away from here um which is where you grew up too that's kind of how we got to know each other way back in the day right um I went to University at the University of runs got a degree in math and then uh took a couple jobs after College as a first an investment Analyst at a a stock market research newsletter and uh then as a computer programmer after that um my first foray into real estate I was think I was about 22 or 23 I got into house hacking so I uh bought a house that had four bedrooms two two guys moved in with me between the rent that they paid me and some money that I had to kick in the mortgage and everything was really easily covered and um kind of quickly realized that real estate was not as crazy hard as as I thought it would be so shortly after that got interested in some multif family investing and now we're up to by the end of the next month we'll have about 40 units under management so that's our story in a nutshell we can dive deeper into any of those if you want yeah that's awesome that's awesome so where uh where abouts are most of your units and stuff and where are you trying to Target here in New Brunswick specifically yeah so right now they're all in frederickton New Brunswick mostly because we've built up like an internal property management company inside our organization that we can use to manage all of them we wouldn't be to going outside of fron but we would either have to decide between partnering with a property management company in the new go or trying to buy enough units in that Geo to spin up our own division uh in that region where we're investing yeah yeah and You' done you do quite a bit of research pretty consistently on on like the major cities in New Brunswick to try and you know make sure that you're getting the best return on your investment you know whether it's in monton St John or fton and you have found like you showed me some research in the past where um at least for landlords and and stuff like this uh ferton has some of the higher rents and some of the best opportunity kind of thing in consistency would you say yeah there's a few things that make frederickton stand out between the other cities in New Brunswick so I mean in New Brunswick there's basically three big cities frederickton St John monton um and they all have different things that anchor their economy in frederickton it's basically it and government fton is the capital of Neos because we have a lot of provin Offices here and stuff and um I'm just a lot more bullish on the it and government sectors than I am on you know St John's very tight to the energy sector because Irving Oil is there and so because of that that economy fluctuates with the price of oil and that's just not something that we're as

interested in participating in um but yeah we do a lot of research and um frederickton was kind of a good fit not just because we lived here but because of the economics that are underneath it and then the next geography that we go to we'll do a lot of research on that yeah same type of factors tooo yeah yeah because I mean yeah it's not like you've always been from ferton that's like like I remember a couple years ago like you were in St John and you were in Sussex and I remember trying to convince you you know you can move back to ferton you know and uh and so it's you know it's always great having you around here because we we connect and hang out a lot so that's that's awesome but um so yeah so so you bought your first property back you know when you were 22 or 23 say now tell me a little bit about about that deal like what did you pay for it what was like you know what were the rents back then um you know eventually when you sold it a couple years later you know was it a good purchase you know to get help get you started into realate yeah it was awesome so uh it was a little Bungalow in Skyland anres in ferton for anyone familiar with the city you'll know where that is um it was four bedrooms when we bought it and uh one of the guys that was moving in with me was very handy in construction so he helped me finish up the basement we put in a fifth bedroom and um framed in kind of a new living area in the basement um um we bought I bought it for 185 with 20% down so do the math on that it was a little under $40,000 to get into it and then between the basement renovation and then just the wicked price appreciation that we got from being in the fedon area we sold it for 270 about a year and a half later and uh that was a lot of the seed money that allowed our real estate business to really take off yeah that's awesome now I mean a lot of people are probably thinking like okay you know you bought your first house you had you know $40,000 um you know as a down payment because you put 20% down and you probably you probably could have gotten away you know if because you moved into it as your personal residence you probably could have gotten away with 5% am I correct yeah so at that time I was still working at this stock market newsletter company and was very invested in the stock market followed it pretty methodologically um we so I knew I knew very well what types of returns I could get in the stock market and the way that I approached the decision on whether to do 5% down or 20% down was I basically looked at the extra money that I would have the 15% that I would save by putting 5% down and I said okay what kind of returns can I get on that in the stock market versus how much extra am I going to be paying on that 15% in terms of extra mortgage payments and your cmhc insurance fee and things like that and I decided to do 20% down because the ROI was better than stocks and it was like a guaranteed Roi because I knew exactly what I was getting into whereas stocks I could guess but uh you know two two months after I bought that host Co happened and stocks went down 40% so that ended up being good choice yeah wow yeah I mean all that stuff is so hard to predict but you know if you look at the numbers you look consistently at it and you just kind of follow the trends and and whatnot and you just be smart with it then yeah you get you get more lucky you know yeah um so okay so give me like I know that you've done like some different investing over the past couple years you know you've got a good system for maybe it's like savings and stuff like this now as like a university student because in a couple months I'm going to be doing a seminar with University students um just kind of talking with them about how they can begin to save how they can buy their first home what are some strategies or things that like University students should be doing like right now to kind of help start saving a little bit for that initial down payment yeah I mean the biggest thing is just budgeting there's no there's no magic hack to saving up money you just

need to figure out what you earn and spend less than that and put it away somewhere and not touch it um aside from that if you're looking to get a piece of real estate there's a few things you can do that will help you later on too you should be tracking your credit score um through a tool like Credit Karma which is what I use so Credit Karma alerts you anytime there's like a credit inquiry on your report so if someone is fraudulently applying for credit under your name you'll get notified of that right away it also allows you to see kind of what factors are impacting your score and exactly where your score is over time so for us for example if we're doing a big expansion and I have to apply for a couple loans all within the same month I will see how that dings my credit score live in Credit Karma and I'll get notification anytime a bank goes to pull my credit so if you can get a credit karma account it's free and then sign up for a credit card and use it responsibly you'll have a good credit score when you come out of college and that'll help you a lot too because there's not really any amount of savings that will overcome a bad credit score if you get of college um having your 20% down is not going to cut it if your credit's awful so yeah absolutely and you know I've got some friends and and family that um that have like graduated University or like are in University now and they don't have a credit card yeah and they're like being like man I want to buy a house and I'm just like man not having a credit card not having any kind of credit built up like it really dings you so like I know this isn't super real estate related but like what are your thoughts on like when somebody should get a credit card or like is is it that valuable to just kind of start doing that early yeah I mean so super valuable I think the sooner the better as long as you understand how they work really really well so some people don't really understand like it seems very basic to us but there are legitimately people people out there who don't understand that you have to pay back a credit card after you spend on it so if if you don't feel like you fully understand how credit cards work that's your first step now assuming you have a really good understanding of how they work I think the sooner the better um I mean in the United States you can excuse me you can put your child as an authorized user on your credit card the day they are born and it'll start building their credit so there are some crazy things you can do I don't know if you can do that in Canada or not but I have a friend who does that in the US and then in Canada I know you can get a credit card in your own name when you turn um 18 or 19 I think 19 and you should and just even if you just get the credit card and don't use it it'll help your credit a lot because what the the situation you described is what they call a thin credit file so your credit might not have anything bad in it but the file of your credit is so thin meaning there's not any activity that you've done historically over credit that lenders can't actually tell whether you're a good user of credit or not because you just have no activity you know it'd be like going to play basketball with someone who says they're a good player but they've never played before for you actually don't know they might they might be great who knows but I'm athletic I can I can make it happen but yeah so lenders like the the reason they use credit scores is because they want to see that you have a history of responsible Financial activity and a credit scor is one one tool to measure that yeah awesome awesome awesome so okay so you bought he mentioned uh earlier he said you know by the end of this month or next month um you're going to be at around you know 40 units here in pedon which is awesome and um so tell me a little bit about you know I've I've chatted before or um about like the birth strategy you know buy renovate uh rent refinance and then repeat kind of thing um so I mean it's a pretty common uh strategy amongst like investors and whether they're flippers or long-term investors and stuff like this so you know we've chatted previously about kind of how

your strategy is a little bit different um so give me your your strategy on on buying units you know what you're looking for and how your birth strategy is just a little bit different sure so I'll start just by describing like the conventional bur strategy and then I'll tell you our Twist on it because guarantee you there's people listening who don't know what that means it has nothing to do with temperature um but maai said it it's buy rent or sorry no no no buy renovate rent refinance repeat so the idea is you buy a building you renovate it so you invest some money and fix it all up make it nice you rent it and presumably if you did a good job on the renovations you can rent it for considerably more than what it would have rented for before you renovated it then you refinance so what that means is you go to your lender and you say Hey you originally gave me a mortgage for $100,000 on this property the rents are a lot higher now can you please give me a mortgage for $150,000 what that means is your original mortgage gets taken out paid off with the new mortgage and then they deposit the difference that $50,000 right into your bank account and this is where the next step comes in you repeat that whole strategy so you take that $50,000 you buy another property to renovate and many people use this strategy to pretty quickly build a considerable little real estate business with only one original investment it's what we did um there's a really popular website real estate investing website called Bigger Pockets that basically a whole um media empire built on how to educate people to do the birth strategy so if this sounds interesting to you give Bigger Pockets a a read it's a good resource for this what we've done that's a little different is we don't typically renovate the units very extensively but we just remage them so a lot of places we've bought from either the rents are just considerably lower than what like what the market rent is in frederickton so if you see if you regularly see listings for $1,000 for an apartment and you see a similar apartment for $500 and you can buy it generally There's an opportunity to raise the rent a little bit just to get them in line with what the average rent is for that market um and then there's just all kinds of other management things we can do to save money too so like we've seen you know we've bought buildings where the owner was renting a dumpster but it was within the region for city garbage removal so they didn't need to so there's like a couple hundred bucks a month that you can save and ultimately lenders they don't lend to you based on your rent they lend you based on your profits so um one thing we do is we enforce that residents always pay their utilities we feel it's better alignment of interests where if you want to crank your apartment up to 30 degrees you can do that but you have to pay for it not the landlord so uh just like little things like that so we our our strategy is basically buy remage rent refinance repeat and we've used that to build up to 40 units in four years or whatever it's been three years and we've talked a lot about that like how you know a lot of these buildings and because the market shifted so quick over the past couple years like in the rental you know cost you know got so much higher a lot of these buildings like you try and buy them and then you know the sellers want these top dollars because they saw you know one six unit sell for this and then another six unit selling for this so then they're thinking their six unit is worth the same amount when really it's only because those other buildings were you know had higher rents and so um yeah like we've talked about how a lot of these buildings that are you know overpriced it's usually due to just poor management you know and you know they're not keeping up with the market rents and and some people don't care about that like if they want to hold onto the buildings forever they just care about having good tenants that are just paying them just enough to get by and that's but if it comes down to you know wanting to sell it you know you can't be expecting people to pay top dollar if the rents are

stupid low because um the banks just won't lend most people when you buy multif family property you're not buying property you're buying a business and just like any other business they get valued based on how much money they make so in the same way that you would think one business that makes a million dollars is worth half as much as another business that makes $2 million real estate is the same way it doesn't matter how many units they are it doesn't matter how many bedrooms it all just comes down to how much money they make so yeah um yeah yeah yeah so what um so you know we've been working together for the past couple years and you know every year you're kind of getting more and more units which is awesome now what is your goal so this year how many how many units did you add to your portfolio this year yeah this was a big year for us just primarily because we uh of the original like three properties we bought we refinanced all them and used all that money to buy more properties um so at the start of this year we had 13 units we'll probably end the year with 41 units um but again that was largely from refinances and you should also note too that 18 of those units that we're adding are mobile home park pads which are way cheaper than Apartments so apartments in fedon usually go for two unit might be 240 that's that's low for two unit but as you get up into M real multif family like four five six units they usually go for 120 to $150,000 a door we're buying these mobile home park pads for like $30,000 a door so you might not want to count that as a door but it's a lease that we manage and it makes money for us so um and we really like the mobile home park business it's different than Apartments but it's a lot better we can talk about that later yeah yeah I'd love to come back to that and uh kind of talk about um that new kind of venture that you're taking on with the the mini home parks and stuff like that but um so what so you know this year you know okay maybe you added like 24 to 25 units or something or 25 leases um what's your goal for next year is it to kind of just get all those um managed better and just clean those up or are you hoping to add another 25 units next year yeah definitely not adding 25 units again next year um It's Been b but the the so I'll talk about our goals like for this year going in and then our goals for longer term um this year the biggest thing we wanted to achieve is uh build systems and processes that are going to allow us to scale up quickly without compromising a few things number one our bookkeeping so we want our bookkeeping to be real dialed in we want to know how much money we're making what our main expenses are and we want our filings with the government to be tuned in so that we don't ever get nailed on on audit or anything like that yeah number two we want to make sure our tenant experience is super good so until earlier this year if tenants had problems they would literally text me and that um that doesn't scale well at all as I'm sure you can imagine you know I have to be able to turn off from time to time too so and then number three uh we wanted to be able to improve our maintenance scheduling so um when work orders happened again it was it would just come to me tenant would usually text me and um I have a day job like this is still a side business for me that I'm not working full-time on so a lot of times I wouldn't get to it right away which would result in either you know bad outcomes for residence which I really care about or um occasionally like even property damage which I also care about in a different way so um to fix all that we've hired our first full-time employee so I have kind of a property management assistant now and she's taking over all of our bookkeeping all of our accounting and it's been awesome uh and all of our resident relations so that includes like just questions and answers but she also does all of our our leasing all of our work order um choreographing Etc so that's been great so that's awesome to to say that my big goal for this year was to hire someone and get them to systematize everything so now we

can slot in more units and it's very seamless like it doesn't result in more direct stress for me and we set up a Compensation Plan for her where the more units we manage the more she gets paid so she like I win she wins everyone wins um we've also started adopting better software and stuff which we can talk about later but now all of our residents have a paper trail for every interaction that they have with us and I can I can see it our assistants can see it um once we start onboarding third party Property Owners to this system too they'll be able to see it too so like if you own a building that we manage you'll be able to go in and see the work orders if you feel like you know you have any reason to check in on us yeah that's awesome and that that's huge because I mean I know I know a lot of people when they're kind of growing their businesses you know like for me in real estate um like as a realtor my goal has been to kind of get to that point where um you kind of Teeter on that that line of okay I'm super busy and I can manage you know all of this myself but if I really want to scale things up take it to the next level and and also offer better Services you know there needs to be a time when you you know start hire hiring externally and so you hired you know an assistant for that kind of stuff you know I I hired you know some folks to do some website digital stuff you know social media marketing and stuff like that for me and it just it just makes a huge difference and like you said you know you're work you're still working a full-time you know job you know you have a wife and kids and you know and anybody that is doing real estate investing anybody that's doing Property Management they know that it's that also is a full-time job right so you you can kind of understand kind of where you know one why you need to do this and two you can kind of probably imagine the the load that it kind of takes off you you but um but you're still going to stay busy but uh yeah seriously so it's been good I you know for me a real weakness for me as a leader was like my refusal to delegate stuff over time and I was always I think had this irrational fear that I would hire someone and they would do a bad job and then I would have to fire them or whatever and um it all just comes down to expectations management so we've been pretty deliberate about saying like here's the things you're supposed to do here's the things you're not supposed to do um and we have like basically an internal Wiki that we Ed to keep track of all this stuff so it's been super good um it's also made me think about why we do things the way we do because she's smart she often ask me questions like you know why do you do it this way this kind of seems dumb maybe we should do it this other way that's like obviously faster and better so yeah yeah helped us to be a lot better she's actually I would say doing for everything that she's taken over from me she's doing a better job than I used to do of it so my fears did not materialize yeah that's she good that's awesome okay so we we were kind of chatting about goals and stuff so how old are you now I am how old am I how old are you how old are you I'm three years older than you I think I'm 25 so you must be 27 or 28 27 yeah yeah just about 28 and uh so so 20 so 27 years old and uh you know almost 28 you're going to have 40 units by the end of this year so what what is your kind of long-term goal like let's just say like that 50 Mark um you know at 50 years old you know you probably don't want to be grinding like you are now um so much but what's your goal kind of by that time and and kind of more long term yeah so you know I I I've done a lot of computer programming I've seen like the Venture Capital funded business model where you take on these investors who don't really care about you they're just in it to make money um not a fan of that I've also seen the business model where like some guy starts a business has no succession plan and then when he's he winds it down and doesn't have anything to say for 40 years of hard work right so I kind of aligned somewhere

in the middle where I would like to leave my kids a business to run if they want to when they're done so for me I am in the business of compounding our capital and our Investor's Capital quickly over the long term so that when my kids are old enough if they want to they can work in the business and if they don't want to that's fine too like we're not going to force it on them but uh I'm pretty passionate about entrepreneurship because it's fun it's creative you know one of the first things we learn about God in the Bible is that he he's creative he goes in and creates all these things and Entrepreneurship is a huge medium that people can use to express their creativity you can create new systems new ideas new businesses in real estate you can even build new buildings and it's very cool um so with that in mind I'm I'm not interested in building a small business I want to build a big business and uh for a long time we always said our goals were 30 units by 30 and 500 units by 50 so 30 units by 30 like check that's done um we may need to Revis the 500 by 50 there's literally no math behind those other than that they sounded cool so maybe they're not really good goals but hey we'd also like to start doing like some third party management and then to go back to the mobile home park idea like we have this 18 pad mobile home park that we're buying just outside frederickton and it's got 60 undeveloped acres so um this is kind of going to get us into the affordable housing business I'm sure you're pretty familiar with what Marcel Le bur's doing at 12 Neighbors and um he set it up his corporate structure is very different than what we're doing like he's running as a nonprofit um we're a for-profit corporation that has employees and stuff that we need to feed so it's a little different but we're kind of I think aligned on the fact that fedon needs a lot more housing and New Brunswick and Canada as a whole so um you know we hit last year almost record low housing starts so record low number of homes being built and we hit record high immigration so that's just like a bad combination and that's why prices are going so nuts on all kinds of housing like housing to buy housing to rent because there's just not enough places to live for how many people are coming in so yeah we wouldd like to get into the I think more into the mobile home park development space because mobile homes are cheap and um it gives tenants or res they shouldn't be called tenants they should be called residents because they own the homes but it gives them the opportunity to build something or buy something that they're proud of and that they own um without having to pay the Crazy Prices that like regular stick construction costs so yeah exactly let's kind of dive back into that and chat a little bit about U the mini home park that uh that you're going to be closing on in a couple weeks here and uh what your goals are for that and you know why it interests you and just talk a little bit about that yeah we really like the mobile home park business as a category because it's got a bunch of Tailwinds behind it that regular Apartments don't have so number one residents own the homes and they rent the land underneath the homes so they call it a land lease deal and what that means is that it is much harder for them to move out so the average tency is way longer in Canada the average tency in a mobile home park is 14 years whereas for an apartment it's like 18 months so there's just a lot less move in move out a lot less overhead because of that so that's great for us because we can manage more leases with less uh staff another benefit to that is just that the residents actually own something so from like a societal point of view I think it's a good thing for people to own the homes that they live in and mobile home parks are a very affordable way to achieve that um and then number three just like for the business it is operationally a lot cheaper to run a land Le steel than it is an apartment because you don't own a lot of the systems that are prone to breaking down so in an apartment you would typically get work orders related to like the plumbing system

or the electrical system or uh the haax system your heating and cooling Etc and all of that's owned by the resident so they're in charge of maintaining that and repairing it if breaks uh which gives them a pride of ownership and helps us keep our expenses down so in in an apartment building your expense ratio so like the percentage of your rent that goes right to expenses each year and this excludes your mortgage or any of your financing things so you can think about it this would be your profit margin if you bought a building cash so your expense ratio is around 35 to 40% so if your rents are $1,000 for a unit usually you would spend about $350 of that between Insurance property taxes and then maintenance and repairs on a landle deal like a mobile home park is usually 10 to 15% so it's just a lot cheaper to run them um but all of those reasons are big uh areas that make us bullish on mobile home parks this specific deal that we're buying has 60 Acres of undeveloped land that we can use to doze down and chop some trees down plant some grass and build more pads for more homes to move in in the future so um the existing homes in this park are on one acre pads so if we follow that Paradigm it'd be 60 more homes the industry standard for mobile home parks is 15 homes per acre so that's like extremely dense where the only thing separating the homes would be like a driveway we have some parks like that in fedon that I'm sure you can picture uh we'll probably end up somewhere between maybe three or four homes per acre maybe a little less uh we're going to work very closely with the municipality to see like what we can get approved for but um it's going to be a lot more affordable homes for the city of fton which we're really excited about yeah that's awesome and and you know it's definitely what we need kind of thing like like we chat a little bit before the break you know um there's a big boom of you know immigration and there's you know a decline in Housing and Development and stuff that's going on so you know being able to provide you know some more affordable housing and just more housing in general will hopefully you know balance the market out a little bit here in fton and um just allow for you know happier people I don't know yeah man nobody likes to be housing insecure the government I think has done an okay job at addressing this like it's very clearly a strategic priority for them I think they've been a little slow to act on some things but uh you know last year they introduced this new program through cmhc called the cmhc mli select program it's a mortgage insurance program that allows you to basically for multif Family Properties so six units and higher is their definition of multif family or sorry it's five units and higher um but they basically allow you to ensure a mortgage through CC with significantly better terms than You' traditionally be able to get uh from a bank and the motivation for this is to help encourage developers to build more housing so um with with mli select you can go up to 50e amortization you can do 90% or sorry 95% loan to value and um that that moved the needle a little bit seriously seriously now can you do can you do new builds and stuff with this as well or is it just for if you're just buying an existing building yeah to qualify for M select there's like a point system that you have to satisfy you have to get I think 100 points between three different categories and there's this whole rubric on the cmhc website um I would encourage you to just go look at the rubric because I'm not going to be able to remember it perfectly from memory yeah but the three areas that you can get points from are number one accessibility so for example if your building has an elevator you get a certain number of points if it has wheelchair ramps for every stairs uh for every set of stairs you get a certain number of points Etc another one is Energy Efficiency so if you have like High high efficiency heat pumps a lot of insulation you get points for those and an engineer would have to come in and measure those obviously and then the third uh points system uh

rubric element is affordability so if you have 10% of your units that are under I think the threshold is 30% of the median income in your municipality then you get a certain number of points if it's 30% of units you get more points if it's 50% of units you get more points so um for you buildings most people qualify solely under the affordability element just because it's much easier to qualify than to try to retrofit the whole building with accessibility or Energy Efficiency upgrades uh but for new buildings they typically have very high rents because uh you can't build new affordable housing that's just not how it works if you build a building it's usually a Class A luxury apartment and it deteriorates into class B or Class C over time um but they can qualify through Energy Efficiency or accessibility yeah yeah yeah now you're kind of we're now talk a little bit about that program I mean so a couple months ago when it was kind of introduced you know a lot of people I think were pretty excited about it and that kind of resulted in some backup right yeah so what I'm hearing from guys that I know that work pretty closely with the program is that that if you buy a building right now and put in an application to get one of these cmhc mli select mortgages your application will take like between six and 9 months to be reviewed and that's like you know you might not even get approved at that point yeah so there's a couple ways you can get around this if you are really dead set on buying a building number one you can buy a building all cash and then refinance it into this program afterwards and if you can get up to 95% loan to value you'd be able to get almost all of your money back so that's one option there's also some lenders that will allow you to get like a one-year repayable Bridge Loan so you get this bridge loan it's usually pretty high interest but it's uh oftentimes interest only payments and then whenever your mli select loan is approved you can use the M select loan to pay off the bridge loan and that's why it's called a bridge loan it's a bridge just from purchase until your real long-term mortgage gets approved and dispersed yeah and right now it's looking like one of those strategies is probably what you're going to have to take if you want to get into this program because you know most people aren't willing to give you a you know six to n month Finance condition in your offer you know so uh trying to purchase it you know just as normal a little bit cleaner and then um you know doing a ref find into this program later is probably the uh the route most people got to take unless unless they have you know an off-market deal that the seller is willing to wait for but um but yeah that's definitely um definitely the route that I imagine a lot of people are going to take so let's talk about so just today right before we getting prep for this uh podcast you know you're always kind of following the trends and what's going on uh whether it's on Twitter or or somewhere um what is it that you uh heard about uh new builds yeah so to date in Canada if you build new rental construction you have to pay uh or sorry the the buyer of that building has to pay HST so depending on your like that rate varies by province but it's the Canadian term for sales tax and in NE Brunswick where we are we have the highest HST in the country at 15% so if you build a new uh multif family building you sell it for a million dollars there's $150,000 of extra HST on all new housing which has made things a lot more expensive than they need to be so uh just as you said right as we were sitting for this call I got notifications that the federal government has announced that there's going to be no more HST on new rental construction which is awesome um I was talking to one guy who's a big real estate developer on the west coast and he said they have about a thousand units that were pending like they were not they were on hold basically that they're probably now going to be able to move forward with because they're going to have buyers who are willing to buy it at 15% lower price so that's going to cause a lot more new construction to get built in Canada which is

awesome yeah that'd be awesome and definitely what we need you know here in Canada and especially here in New brunic as as like you say you know new brunic is still one of the cheapest places to live in Canada so we got so many people coming in um and and it's it's awesome you know I mean you know New Brunswick is a beautiful spot you know we' we've lived here forever and um it's a beautiful spot beautiful place to you know grow up and raise a family but you know if we don't have the infrastructure and and you know places for people to live you know it could run into some issues so hopefully uh hopefully there'll just be some even some more opportunities for to incentivize um you know new Construction and building and development stuff and affordable housing like you've uh like we've chatted about in the past so yeah people give landlords and developers a really hard time but ultimately the reason why rental prices and home prices have become so mismatched is just that it's a supply demand imbalance so there's not enough supply for a lot of demand we had record immigration last year in Canada as a country and over the last two or three years since the coronavirus pandemic happened we've had this humongous influx of people moving to New Brunswick because all of a sudden they're nice cushy jobs in downtown Toronto could now be done anywhere so they would rather pay $1,500 rent in New Brunswick than $4,000 rent in Toronto and a lot of people came here because of that and people just developers just cannot respond to demand like that as fast as the demand can change so there's been a lot of housing insecurity over the last three years or so here yeah yeah yeah yeah know that's right so um so let's chat about a little bit about uh you know some tips for people that are kind of talk thinking about getting into real estate maybe thinking about buying maybe they're thinking about expanding their portfolio whatever it is and just kind of go through some processes that you go through um to to kind of look at properties do some underwriting on them you know when you're walking through doing tours and stuff buildings what are you looking for and uh so we'll chat a little bit about about that and then I want to chat a little bit about your property management software that uh that you kind of developed so so what are you kind of looking for on a building yeah so we basically look for um a few different things I'll describe it pretty broadly by saying a purpose-built multif family with um within driving distance to good jobs where the the in place rents are significantly below the market rents essentially so um I'll talk go through all those so I mean the the last Point's pretty self-explanatory so I'll talk about the other two but purpose-built multif family just means that it wasn't converted so we bought a building once years ago that was like an old very old large home in downtown fton one of the historical homes and it had been converted into like three units and none of the none of the core systems of the building were updated to reflect that so you had like three units that were sharing two water tanks and like you would have circuits going through the home that powered like half of one guy's living room and half of another guy's kitchen and um yeah the the maintenance burden on only a building like that is just tremendously higher than a purpose-built multi family building that was built as a 4unit building or built as a duplex um because anytime that a maintenance technician has to troubleshoot any of the core systems of the building it just takes way longer and it's just brutal so oh yeah I mean like we there's this so I did uh some Management on a building you know a couple months ago for for a little while and and it was a 4 unit and it was converted and you had to go the lights the overhead lights in one unit was connected to you know a panel in a different unit and then in the first unit it had like the laundry and dryer for the uh the washer and dryer for the building connected to that panel but then there were switches on one wall that were connected to a

different unit and like when we had the electrician in there he was like look there's like nothing we can do and but like tenants were technically paying their own utilities and they didn't even know that they were really paying somebody else's you know utilities and so it just you know it just runs into you know issues down the road and then tenants find out and they're like no I don't want to pay for this guy's lights and then they're up there in their unit flicking the breaker off because they they found it is connected to somebody else's unit anyway but you know such is life yeah we we bought a building once where it was another conversion and they had actually split it onto three separate electrical panels and three separate electrical meters so you're like oh that's great but once we dug in a little bit some tenants were moving out and they had turned their power off let's just say they were in unit one when they moved out the tenant in unit 2 called me and say hey why is my power off like MB power had the meters labeled backwards for years since they had been split so you just run into a lot of trouble with conversions and we still own one conversion on Charlotte Street you know where it is and uh not super delighted to own that property for the long term so we'll probably sell it eventually yeah yeah yeah but it is what it is so so what's the next uh kind of criteria that you're looking for so obviously kind of purpose built multif family ideally you know everything's you know set up properly it's built you got you know four 2 six unit units you know tenants can pay their utilities they don't have to worry about you know random walls and electrical that's been put up so what's kind of the next thing you looking for yeah so the other two things I said were driving distance to jobs and um below Market rents the rents thing self-explanatory we've already talked about the bur strategy for that but the driving dist to jobs just really important because the number one reason tenants turned down an apartment is that it's too long of a commute to the where they work so um in the frederickton metropolitan area you're not really going to run into too many places that are not commutable their jobs but um you know the further you go from Freon the worse it is like we've looked at Oro Harvey areas around frederickton and there just like unquestionably less demand for those apartments than if you were downtown unless they have some kind of unique amenity like bunch of land with them where people can hang out and have bonfires and stuff but yeah the closer you are to downtown the better W with diminishing returns as you get like really close doesn't really matter if you go from say you know George Street to Queen Street that's not that much of a lifestyle Improvement for people but y y if you go from region Street to George Street that matters a lot to people H that's good to know I I didn't really even think too much about that you know because because the rental market is so you know in in such high demand I just figured oh you know just the rents the same everywhere but uh and then you got to consider that too it's like even if it is a little further you're going to get it rented but you have to consider when you're running your numbers that okay it's going to get rented but it's might be $100 less a month or $75 less a month you know for this particular unit because you know it's in five or 10 or 15 minute extra drive for the uh you know potential tenants and stuff so yeah and then other things to look at when you're trying to forecast the demand for an apartment is just like the amenities so people really care about having like on premise laundry uh or inunit laundry is even better but generally people are okay with on- premise we we own or we manage one building where there's no on premise laundry so there's like a nearby laundry meth that we have to tell them they need to go to and that is just a complete deal breaker for a lot of people so um that's a big one dishwashers are another big one things like that and then as far as keeping your maintenance burden low it's really important to make sure that the core systems of the building

have been upgraded if it's an old building so anything like 1980s or older you need to make sure that like the electric all been redone the Plumbing's all been redone and um it's incredible to me how many people will gut renovate a building but not actually update the system so they like rip off all the drywall while it's open they're in a prime opportunity to like okay now I don't have to do any demolition to actually replace the things that really matter but I'm just going to put cover them up with drywall anyway and leave these old systems in place so that stuff really matters yeah yeah and I mean you know and just doing all your due diligence and stuff when looking at these buildings you know get an inspection done and uh just making sure that there's you know if somebody says that they did work make sure that there's proof of that kind of thing y you know if there's permits that need to be pulled and stuff like that just make sure you know because you don't want to be running into that stuff later because you know everybody does everybody has a horror story but um um if you can avoid it you know as much as possible and just you know uh do the proper due diligence then yeah man people lie through their teeth it's pretty crazy like sellers will tell you anything the only person that yeah comes back to the old saying you know don't ask the barber if you need a haircut so don't ask the person selling you some real estate if it's in good shape because they'll just always tell you yes great shape great deal you know I put all this money in yeah yeah yeah don't ask the bar that's a good one I haven't heard that um so okay so we kind of touched little a little bit about you what you do for work you know on top of real estate investing you know and what you're doing now is kind of software development so you're working for um you know a company called uh you can say it if you want I don't it's passive yeah passive and uh awesome company they do like Investment Portfolio management kind of thing I use them personally they're awesome um you know but NYX works for them doing software development but on the side you also develop your own software and your own uh programs and stuff to use so tell me about this newest um um program that you developed developed for property managers stuff yeah so many years ago when I was first learning programming the the tutorial we went through was building like a real estate listing software so it was a it was a I took a course that basically guided you through building this app from scratch that was designed to list uh properties for sale with um pictures and with prices and things like that so when when we started doing our own property management years ago I morphed that sample cbase into something that kind of suited our desire because I didn't want to pay for any of the commercial systems out there then as we scaled up I was like okay it's time to go to something more professional and tried out a few different systems and they all sucked they were either super expensive or super hard to use or just like super slow like you would click something in 5 seconds later the page would render and just they all felt like technology from the 90s so over time I've kind of built up this internal tool we've used to manage all our properties I haven't really actually used it that much because now we have an assistant right but it's called raliz we're starting to commercialize that because I've had some friends who have said they want to use it for their companies so starting to onboard some customers but um handles all of our accounting all of our Leasing and the thing I really like about it is that since we built it it's very tailored to New Brunswick rentals and what that means is so like in New Brunswick when you sign a lease with a resident there's a standard New Brunswick lease agreement form that you have to fill out and file with the rentalman um this system's so far tailored to the New Brunswick market so if you have a lease that you want to sign for a property that's in the system you just you click the building you click the unit you type in what the rent

amount is you put in some information about the tenant you can click generate PDF and it'll spit out the PDF for you to send to the rentals man and then you know it's in sync with your system you know that it's filled out properly a bunch of little things like that are big time savers for us and automations and saving time in Property Management cannot be overrated because what you're doing as a property management company is that you're basically running tasks at scale and they're all repeated it's all the same stuff over and over again and at the same time the biggest expense on any property management company is labor so if you can save people a lot of time with good software the software can basically charge you whatever the heck it wants because you're going to save so much on labor from your people being able to move faster and especially spend less time correcting errors that it'll be well worth it so that's kind of what we've been working on yeah that's awesome and you know I look forward to that I've kind of seen you know Nick's Nick and I have been chatting about this over the past couple months and stuff as he's been develop in it and starting to you know onboard some clients and stuff and uh you know I'm super excited to see where it goes I know it's going to be a big you know success and so you know if you want to check it out again it's called rentalizer something you know y uh that you can uh send Nick an email um but yeah it's it's going to be awesome and you know I'm super excited to see where that goes and and just helps you and all these other you know cuz I I deal with a lot of clients that are you know property managers and and like you said before at the beginning you know they're at that stage where the tenant has an issue you know they just text you you know in the middle of the night or they text you whenever and you know if you need you know a contractor in you know you're the one who's got to be you know texting and calling people looking up phone numbers and stuff like this doing all this and that so this is going to really help you know keep people automated keep people you know organized and you're also going to have like um um like some accounting software and stuff in there too as well right where you kind of can automate payments and stuff from tenants and whatnot yeah pay will probably come later just because there's a lot of like you know compliance and stuff you have to do to get onboarded with one of these big payment providers but um definitely accounting is kind of a core functionality of any property management company because when you're running property management at scale usually you have separate accounting accounts for every owner and then when you submit a work order like an invoice automatically gets created to build that owner for the work you did you can debit their account and credit your account Etc um but yeah accounting is like the core functionality everything else comes after that yeah yeah yeah yeah so this been do awesome so um so we're going to kind of conclude here in just a sec but uh you know Nick is always is always open to chat with you know anybody interested in real estate investing anybody who's you know maybe has a a pile of cash that's looking for a place to invest and stuff now if somebody wants to kind of potentially partner with you or something like that um chat with you maybe it's through just like you know a silent partner you know hard money lending or maybe they want a partner on you know buying a property is there a way they can contact you or do you want people to contact you or like um what what are your thoughts around that like if somebody wants to kind of get into it with you yeah you can email me my uh my work email is neck Fox hillc corp.com that's our holding company um and happy to talk shop help you guys out however I can yeah yeah that's awesome well Nick I really appreciate you coming on here and uh this this has been awesome it's super fun I mean we chat you know all the time but it's great to kind of you know um you know finally share some of your some of your

knowledge and information and stuff with with some of you know some more people and uh this is super exciting and we're we're definitely going to have you back on you know and I know that a lot of people are going to look forward to kind of hearing about um you know as you get into this you know mini mini home park and uh you know affordable housing uh development projects and stuff like that and um and yeah we'll talk some more about as you get into some of these bigger projects you know how you built this team of you know developers to kind of you know help you know build the roads you know make the pads you know get these homes in and how you're sourcing them and stuff as well um because there's going to be other people that are interested in kind of starting mini home Parks or maybe buying existing ones and growing them so you know I'm going to be uh I'm going to be looking forward to hearing about it and I know other people are too thanks so much for tuning in if you have any questions or want to learn more feel free to check out my website at G.C wherever you're listening from leave me a festar review and let me know what you'd like to see in future episodes also if you're a buyer or a seller and looking for some guidance in this everchanging real estate market I want to work with you so get in touch today through my website at gan.com realtor on Google and get connected with me through any of my social media platforms thanks so much we'll catch you on the next [Music] episode