Understanding the local laws and regulations is a critical step for any real estate investor who is looking to expand their portfolio into a new market. This is especially true when considering an investment in a different country or province, such as Alberta or Ontario, where the legal landscape may differ significantly from one’s current location.
In this episode of The REITE Club podcast, join guest Svetlana Pessotski a real estate broker in Toronto as she shares how she used her creativity and entrepreneurial spirit to soar amidst the uncertainty of the pandemic, building an impressive portfolio and network in Calgary while offering tips to investors on customizing their lives.
In this episode, you will be able to:
Uncover the perks and promising future of Calgary’s real estate market.
Unlock the advantages of Alberta’s landlord-friendly policies and rental assurance programs.
Identify the potential of preconstruction condos as lucrative investments in Calgary.
Recognize the significance of thorough research and due diligence in real estate ventures.
Discover various investment approaches and regional markets to diversify your portfolio.
From the perspective of engaging in active research and diligently learning about the region’s specific legislation and property management requirements, it can set the stage for a successful real estate venture.
Recognizing that every market has unique challenges, Svetlana encourages listeners to fully grasp the local laws and guidelines, which ultimately helps protect investors from potential difficulties down the road.
Passive investing is an investment strategy that seeks to generate consistent returns over time without the need for constant monitoring and decision-making. It involves allocating funds to a well-diversified portfolio, typically designed to track a specific market index or sector.
In this week’s podcast episode, you will be able to: 1. Discover the potential opportunities in private equity investments amid the shifting real estate landscape during COVID-19. 2. Uncover the significance of diversification for a thriving investment portfolio. 3. Discern the differences and implications of passive and active investing in real estate. 4. Explore various investment options tailored to suit distinct financial situations. 5. Recognize the value of education and relationship cultivation for informed investing decisions.
Our guest is Steve Blasiak, an insightful and experienced private equity investor who passionately shares his knowledge in the realm of real estate investing. Steve has successfully navigated the ever-changing real estate market, particularly amid the COVID-19 pandemic, by adapting and embracing new opportunities.
Passive investing can allow investors to achieve steady growth while minimizing the time and effort required to actively manage their investments. This approach often involves holding onto assets for an extended period, letting time work its magic on the investments, and generating returns through compound interest.
This strategy and approach may not be for everyone, as some individuals might prefer the control and potentially higher returns of active investments. However, for those who are open to a more hands-off approach, there is a wide range of investment options available, such as real estate investment trusts (REITs) and private equity funds.
By patiently allowing time to work on their investments and diversifying their assets, investors can potentially reap significant benefits over the long-term.
Steve’s expertise in private passive real estate investments has enabled him to thrive during challenging times, doubling his sales and helping his clients diversify their portfolios. With a keen eye for identifying lucrative investments, Steve’s approach ensures that his clients can achieve their financial goals while mitigating risks.
James Knull, a realtor based on the West Coast, discusses strategies for cash flow properties in Western Canada in light of recent interest rate hikes. One suggestion he has is increasing the down payment, which can offset some of the costs associated with higher monthly payments.
In this week’s podcast episode, James discusses two strategies for increasing cash flow from rental properties: increasing rent and adding short-term rentals. Additionally, he suggests that self-property management can help reduce expenses.
There is a collection of buildings in Vancouver that are now opened up to allow executive rentals on a month-to-month basis. This has increased the amount of available rental inventory in Vancouver. In Edmonton, Alberta, it is easier to rent on a nightly basis due to fewer regulations. In Vancouver, it is still possible to rent on a nightly basis, but it is more difficult.
It is competitive to buy multifamily buildings in Edmonton right now because there are a lot of people who are interested in investing in them. However, there are also a lot of people who are trying to tie up buildings who don’t actually have the capital available to close on the building.
Multi-family realtors in Edmonton spend a lot of time vetting buyers to make sure that deals are likely to go through. This is because the due diligence process for a commercial or multi-family property can take a couple of months, during which time a lot can change in the market. As a result, serious buyers need to be organized and ready to move quickly.
James discusses the recent change to zoning bylaws in Edmonton that now allow for multi-unit dwellings in core neighbourhoods. This change was made in an effort to combat urban sprawl and make the city more sustainable. Investors are targeting these properties because they are cheap and offer a lot of potential for cash flow.
In this interview, James Knull talks about the importance of consistency in real estate investing. He also discusses the changes in Vancouver’s laws regarding short-term rentals, and how this can impact investors. Finally, he gives some advice on how to establish oneself as a serious buyer in order to be ready to purchase a property when the right one comes along.
The biggest fear that real estate investors have in getting into larger residential units is that they will be intimidated by the size of the investment. However, our guest this week, Seth Ferguson reassures us that as long as we have a repeatable system in place, the intimidation factor goes away.
He talks about his journey as a real estate investor, including the advice he received to invest in bigger deals. He attributes his success to his boldness, which has allowed him to do things that others may be afraid to do.
Seth is also the founder of The Multifamily Conference – the crazy guy who put together the first event in the middle of a global shutdown because a) he is stubborn and b) he is a firm believer that face-to-face networking is the foundation of real estate.
He specializes in multifamily real estate investing. In this week’s podcast episode, he discusses the benefits of investing in larger multifamily units as opposed to smaller units.
Larger deals are less risky and better because of 3 factors;
Better debt options
Increased cash flow
Economies of scale
He discusses the value add strategy for commercial real estate investing. This strategy involves buying an underperforming asset, making improvements to it, and then selling it.
It is possible to compete against the big guys when buying larger apartment buildings, but it depends on the niche that the investor is in. It is also possible to build a portfolio of smaller buildings that do well.
Seth also mentions that syndication is a good option for investors looking to acquire larger buildings. Syndication is a way for passive investors to pool their money together and invest it with a general partner, who then manages the deal to earn a return. He notes that the syndication model offers many advantages over traditional real estate investing, including the ability to participate in larger deals and the protection of passive investors’ initial capital.
He also outlines three steps that someone interested in large multifamily real estate investing should take. They should;
Determine what type of portfolio they want to build and research investment markets.
Assemble a team of experts and figure out how to structure deals and raise money.
Underwrite deals and create a deal flow.
It can take a long time to go from deciding to invest in real estate to actually making an offer on a multi-family property, depending on various factors. Seth Ferguson teaches people how to successfully invest in their first apartment deal. He says that the first deal is always the hardest, but that it gets easier with experience.
A 14-year real estate veteran, Seth is the host of a cable TV real estate show, the host of a real estate investing podcast, and the founder of Moguls Mastermind: an invite-only collective of the top real estate thought leaders from across North America.
He is the CEO of the real estate investment company Multifamily Real Estate Investments Inc which provides investment opportunities for high-net-worth individuals by acquiring and improving underperforming apartment buildings.
Jamil Rahemtula is a real estate investor and agent based in Hamilton, Ontario. He helps clients invest in various types of properties, including residential and commercial, and he focuses on student rentals specifically. He markets himself to clients by doing extensive due diligence on properties and screening them for value-adds that align with his clients’ needs.
He highlights that it is important to find an agent who is willing to do research and provide information on properties, rather than just selling based on emotion. It is important to be aware of what is happening in the market and to find an agent who is willing to do their due diligence in order to get the best deal possible. Asking the right questions is key, and investors should be aware of all expenses associated with a property before making an offer.
Jamil also talked about his own portfolio, which includes student rentals, multi-family properties, and commercial buildings. He suggests that landlords should focus on upgrading their properties to attract tenants who are willing to pay higher rents.
He shares that to attract certain tenant profiles he works by furnishing and decorating the rental units in a certain way. He mentions that they used to offer furniture rentals for a dollar a day, but they stopped because it became too cumbersome. They also mention that they sometimes offer to paint an accent wall for tenants who sign a lease at the right time.
Jamil’s first real estate purchase was a student rental property in 2008. He paid a premium for the property, but he still owns it today. He bought the property because he had been reading Don Campbell’s books and wanted to get into the real estate investing business.
He discusses how he handles student rentals and market turmoil and offers three tips for landlords of student rental properties: (1) ensure good internet service by testing in every room; (2) offer appliances like dishwashers and freezers (3) consider hiring a maid service.
The cleaner can also help landlords keep an eye on the property and report any needed repairs or illegal activity.
Real estate investors, are you aware that some of the recent Federal real estate laws could have tax implications?
One that is catching many investors off guard is the Underused Housing Tax.
Did you even know that in certain circumstances there is a requirement to complete a new tax form for each investment property, and failure to comply will result in a $10,000 fine per property?
Daniel DiManno, Partner at Capstone LLC Chartered Accountants outlines what to expect for filing this April 2023 and subsequent years, what your obligations are, and the implications of not filing or filing incorrectly.
The Reite Club recently hosted an event with Daniel DiManno, CPA, CA, discussing the implications of the Underused Housing Tax Act. Daniel noted that there are severe penalties for failing to file for rental properties by April 30th and that the act could be expensive for investors who are unaware of it.
He also touched on the new anti-flipping rules stating that if you sell a property within 12 months of buying it, you will have to pay business tax on the entire profit, rather than just 50%. There are exceptions to this rule for those who have to sell due to life circumstances.
But the main focus was the “Underused Housing Tax” which is a 1% annual tax that is being imposed on the value of residential real estate in specific circumstances. The tax is meant to target non-primary residences that are left vacant for long periods of time. The tax applies to properties that are not the primary residences of the owners, and that is left vacant for more than six months out of the year.
The new UHT return applies to foreign or domestic non-public corporations, individuals who are non-residents or non-citizens of Canada, trustees of trusts, and partners of partnerships. These people are required to file the return if they own residential rental property. Canadian citizens are not required to file the return unless they are part of a partnership.
This episode discusses the types of property that are exempt from the UHT return, as well as the types of property that are included. It also explains how to determine whether or not a property is considered residential under these rules.
If you own a property that could potentially be considered residential, it could be advisable to file a U H T return in order to avoid any penalties. There are various circumstances under which an individual would be exempt from paying the 1% tax on secondary residences in Ontario. These include if the property is the individual’s primary residence if it is rented out for at least 180 days of the year, if the property is seasonal or inaccessible, if it is undergoing renovation, or if the owner has recently purchased the property. If the owner of the property dies, the executor is also exempt from paying the tax for one year.
The new tax will be 1% of the value of the property, and the value is determined by the most recent sale price or the assessed value based on property tax assessments. The penalties for not filing the return or for not paying the tax on time are quite substantial, and they increase based on the number of months that the return is outstanding.
The Canada Revenue Agency will penalize individuals who do not file a UHT return for each unit they own. The penalties will be multiplied if the individual owns multiple units. The deadline for filing the U H T return is April 30th.
There is some debate among tax experts as to whether or not joint tenants or tenants in common will be considered a partnership for the purposes of the UHT, but it is generally believed that they will not be treated as such. The filing deadline for the UHT has not yet been announced, but it is expected to be sometime in the near future.
Daniel DiManno provides valuable information on the requirements for filing for the CRA including the need to get a RU number, including the need for businesses to call the CRA and obtain the number. He also discusses the implications of a husband and wife owning property jointly with a third party, and how the joint venture would be required to file.
This podcast interview with Andrew Choubeta was eye-opening as he outlines the real estate portfolio he is building in Ethiopia. He talks about how he saw potential in Ethiopia as an investment opportunity, and how it has turned out to be very lucrative for those who have invested there.
Andrew is building a diversified portfolio between agricultural land, apartment blocks, and duplexes/triplexes. He mentions that leasing land is common in Ethiopia and other African countries, and can be for a significant period of time, which gives some reassurance to investors and that it is usually possible to renew the lease.
Some key takeaways include;
The importance of learning the local language when investing in a new country
Benefits of getting on the ground and experiencing things first-hand
Networking and connecting with people in the country
The importance of finding a business contact who can help with the nitty gritty details of investing in a new country.
Some people are choosing to invest in Ethiopia, despite the perception of the country being unstable and dangerous. They believe that Ethiopia is still a great investment, due to the low prices of properties and the increasing number of tourists.
The government is very welcoming to foreign investors and offers a number of benefits, including guaranteed loans. Additionally, the cost of living is very low and the laws surrounding property ownership and rentals are not as strict as they are in other countries, making it easier to invest in Ethiopia.
Because it’s getting harder and harder to find good investment opportunities locally many people are looking at other options outside of Canada. Andrew suggests that new investors look at Africa as a potential safe investment and that the biggest hurdle to overcome is the language and cultural barrier.
When Mathew Frederick, an investor of 38 years, faces looming recessions he tightens up, seeking efficiency and increasing revenue, but when COVID hits, he finds a new way to leverage the situation to his advantage, creating a compelling central conflict between his need to survive and his goal to make life better for himself and those he loves.
“What I’ve always done in these times is to tighten up. So a lot of people look at how I make more money. I first look at how I make everything more efficient. And then at the same time, I’ll actually look to increase my revenue as well. So again, I don’t worry as much about the situations I cannot control. What I can do is control me.”
Mathew Frederick is an experienced real estate investor who has been investing since 1984 and has gone through three recessions. He specializes in commercial real estate investments, including multifamily, strip plazas, and self-storage.
Having experienced three recessions in various places Mathew could be cautious, but rather than worrying about something he could not control, he chose to focus on what he could. He tightened his budget and used the time to learn, investing in himself so he could be prepared for the next recession.
He started out small, investing in two to three units, but then grew to thirty. He learned how to be efficient, and how to make his investments recession-, internet-, and pandemic-proof. After 38 years of investing, Mathew had become a master of knowing his expertise and adapting to survive any situation.
In this episode, you will learn the following: 1. How to survive and thrive during a recession by controlling your own actions and taking the time to learn. 2. The pros and cons of investing in different asset types such as multifamily, strip plazas, self-storage, and warehousing. 3. The importance of creating a system to delegate tasks and maximize your skill set.
Mike Beer is a full-time real estate investor and former IT executive who immigrated to Canada from communist Poland. He is currently investing in multifamily properties in Kitchener, Hamilton, London, and Toronto.
Mike grew up in communist Poland and his parents had to bribe officials with coffee to get passports to escape. At a young age, he had to take a leap of faith and jump into the deep end of the pool to get a swimming card, despite barely knowing how to swim.
This experience combined with his parents’ struggle and the scarcity mindset he grew up with ignited a drive in him to make money and he found that in real estate investing. Through his mentor and his team, he overcame his scarcity mindset and grew his real estate portfolio, eventually realizing he didn’t need a salary to survive.
His biggest lesson learned was to always find a property manager that specialized in the market you’re investing in to avoid costly mistakes.
In this week’s podcast episode, you will learn the following: 1. How Mike used his parents’ desire to escape from communist Poland to move to Canada as motivation to build a successful real estate career. 2. How Mike overcame a scarcity mentality and leveraged his team to buy multifamily buildings. 3. How to manage a portfolio of student properties in Hamilton to maximize returns.
The podcast this week discusses the reasons why people are looking to pivot to midterm rentals, citing reasons such as the control over the guest population that midterm rentals offer. It also discusses how the economy affects the short-term rental market, and how this can be an advantage for midterm rentals.
It is becoming harder to run short-term rentals, as municipalities are banning them or putting restrictions on them. Mid-term rentals are a good option for those looking to still make money in the rental market, as they are less likely to face rules and regulations. Location is important when considering a mid-term rental, as it should be in an area that is attractive to potential guests.
Guests Sarah Larbi and Aisha Govani explain that it is important to target guests and make connections with them in order to increase occupancy levels at a property. They also advise that property owners ensure that the finishes and renovations at their property are of high quality in order to attract and retain guests.
Sarah Larbi and Aisha Govani are the co-founders of Mid Term Rental Properties Inc. an executive and corporate property rental company. They offer a variety of services, including housekeeping, lawn care, and chef services. They are currently working on expanding their services to include preferred vendor discounts and meal delivery.
This episode has been brought to you in part by The REITE Club podcast – for sponsor slots contact Katherine at grow@thereiteclub.com BM Select – https://bmselect.ca/
