Table of Contents
Announcer [00:02:23] If you’re looking for the skills and tools to succeed in real estate investing, you’ve come to the right place. This show is about breaking through barriers, breaking through limiting beliefs and breaking through to the life that you want to live through the power of real estate investing. This is the Breakthrough Real Estate Investing podcast, and now here are your hosts Rob Break and Sandy MacKay.
Rob Break [00:02:56] Good morning, and thanks for joining us here again today. We are excited to have you back for some more knowledge and sharing and real estate golden nugget. So as usual, we are here with host extraordinaire Sandy MacKay.
Sandy Mackay [00:03:12] Thanks, Rob. Happy to be here again. To do another episode here and share some awesome stuff
Rob Break [00:03:19] to me as well. As usual, anyone listening should go over to our website. Breakthrough REIT podcast starts. Yay, there you can download or listen to all of the episodes that we have recorded over the past seven years, I believe right on the Dot. Now, seven years Sandy ago. Yeah, right. Mm hmm. So like, look how much more we know than when we started the going.
Sandy Mackay [00:03:50] That’s crazy. One hundred and thirty-five episodes, which, you know, doesn’t sound like a ton over seven years, necessarily. But we were doing one a month for a while when nobody else was doing this right?
Rob Break [00:04:00] Yeah, that’s right. And I mean, like just when we started this, the goal was for us to learn from all of our guests as we still do. And, you know, just to be able to bring people on smart people that know a lot more than we do and learn from them. And that’s still the case, and we’re going to learn some more today. So I’m really excited looking forward to that. But before we do as well, people should go over to iTunes and oh, wait a minute, we should mention a free gift on the website.
Sandy Mackay [00:04:32] They can grab that ad break through our podcast. I’d say the ultimate strategy for building wealthy real estates. And when you do that, of course, you get access to all of our contents, and you’ll never miss a show. You’ll never miss the opportunity to join us for some property tours or webinars or anything else we’ve got going on. So go grab that and get on our email list for sure.
Rob Break [00:04:52] Absolutely, OK. And go over to iTunes, leave us a rating review. We really appreciate everyone who comes on and tells us what they think. We don’t have many negative reviews, but when we do, we try to look at them and listen to them and see if we can, you know, fix things, get them back on track. For those of you who just have those little, little things that are bothering you about the show. But other than that, we really appreciate everybody’s most of the time. Five-star reviews of the show. It does help us get out there and get other people listening to us. So if you have a chance, go over to iTunes and leave us your thoughts. Tell us what you think. We appreciate that a lot.
Sandy Mackay [00:05:34] However, I don’t think we’d be here seven years later if it weren’t for the support of everyone doing that. So really grateful for all that supports and happy to keep things rolling into 2021 with the greater content.
Rob Break [00:05:46] Let me know if you saw that, Sandy. But Zollo, Zola,
Sandy Mackay [00:05:50] I saw, I saw you share that. Yeah, yeah, yeah.
Rob Break [00:05:53] We got put on their list of the top twenty-seven real estate podcasts as number five, so that’s pretty good. Cool to see that.
Sandy Mackay [00:06:04] OK? Remind people to go listen on Facebook and Instagram and or YouTube Live as well, because we do host these audio for seven plus years, we’ve been doing it on video for, I guess we’re getting maybe close to a year, eight, nine months.
Rob Break [00:06:17] So that would be a couple of years now. Time flies.
Sandy Mackay [00:06:20] Yeah. So people got to go jump on there too, because you can join us live and beyond while we’re actually here and you can ask questions, live with our guests and we’d love to see some more interaction that way. So make sure you go like our Facebook page or our YouTube channel, and you can jump into the action that way as well.
Rob Break [00:06:35] Exactly. Perfect. Yeah, please do that. We’d love to hear from you while we’re doing the show. OK, well, let’s get to our guest Sandy.
Sandy Mackay [00:06:43] Let’s do it. So we’ve got the amazing Nickey Calford here with us today and green talk with her a lot about analyzing markets, how you are able to invest in different ways, in different markets, different strategies, implements, et cetera. Nickey is coming with us to us today from beautiful London, Ontario. Welcome to the show, Nickey.
Nickey Calford [00:07:02] Thanks, guys. Yeah, I’m excited to be here and we’ll see how it goes.
Rob Break [00:07:08] Yeah, welcome. OK, well, let’s start off by getting you to share a little bit about yourself and your investing journey so far.
Nickey Calford [00:07:15] OK, so it’s been just a couple of years. I would say. I started when I was twenty-one, I started right out of college. I bought my first house and it said it was a disaster. And so luckily, I worked at Home Depot at the time and could. Be a fairly handy and renovated it up and then ended up selling it and flipping it. So then I continued on that journey for the next twenty-two properties and flipped a bunch, and now I’m looking at the Burr strategy, where I add some value out and then pull that revenue equity and keep going, right? So that’s the process.
Sandy Mackay [00:07:57] And that first one, like how did he said it was a disaster? Why don’t you tell us more about the disaster parts? Because I think we all learned from a lot of the failures really?
Nickey Calford [00:08:04] Well, yeah, I actually luckily made money off of that line, which kept me kind of hungry and kept going with it. But when I walked in the carpet, disintegrated in my hands, we didn’t need a key to get in because the front door was broken, the toilet was not attached to the sewage underneath it. Just kind of like drained into a crawl space below the house. There were cracked pipes in the kitchen cabinets, that sort of thing. So you can picture 21-year-old girl that had zero experience with any of this stuff and kind of live. A fairly sheltered life started in on this and just put a ton of elbow grease in. I think that one day it was super-hot that summer, and so I worked all day painting and everything else, and I bought a kiddy pool because there was no air conditioning in this house or anything else. So I bought a kiddy pool, put it in the backyard and I filled it up the day before nice and cold. I was like, OK, I’m going to just finish painting this one room and then I’m going to go take a break, put my feet in this little kiddy pool and cool off. And I was looking forward to it, and I go back, and the pool is gone. Someone had to pull out of the backyard and like, four days later, I see this kid on his bike carrying my kiddy pool down the street. And I was like, oh my gosh, can you like? It wasn’t nailed down in that neighborhood. It got stolen, but I ended up turning it around. And it’s funny. Every time it comes back on the market, it brings back all those memories of how my first experience with that flipping came about. So it’s kind of cool.
Rob Break [00:09:53] So you didn’t keep that property. You saw that
Nickey Calford [00:09:55] I sold it almost a year later, and I actually had it rented out for six months while we were. But we had bought a second property and we’re flipping it. So because of capital gains, the way it was set up at the time, we had to keep that property for a year as my primary residence. So at the time, my boyfriend, I each had one so we would flip from one house to the other and always keep it as a primary residence.
Rob Break [00:10:24] What got you to the point where you looked at this piece of junk and decided, yes, like, I’m going to tackle this, I’m going to take it on. This is not too much work for me. I’m ready. My first one as a toilet that drains into the basement.
Nickey Calford [00:10:40] I’m stupid. No, I’m just kidding. I think the biggest part was my budget. So at the time, I think I made twenty-one thousand a year full time there, so I can only approve for sixty-five thousand. And that gave me a total of four houses available in the entire city. So I kind of pick the best of the worst and was like, all right, I work at Home Depot. How hard can this be? I run seminars on how to do things and I can decorate and whatever else. Let’s just do it. So that’s how that came about. And turned out, not too bad.
Rob Break [00:11:25] Did you have other people like was their influence as far as the flipping stuff? Or where did you get the inspiration or decide to go into that?
Nickey Calford [00:11:33] So I think my parents were flippers per se, but they always bought, you know, the ugliest house on the street. And my mom was an interior decorator, so she would make sure that the house looked good. So that was one of the things that we just kind of saw it growing up, talked about it, you know, always helping build things. What floor Zain with my dad? I had two younger brothers as well that we kind of all helped out with all these products. So it was just kind of what we did. And so it wasn’t totally out of my realm to be like, OK, well, I could fix that. Somehow that got me.
Rob Break [00:12:14] But all right, so that’s good. I mean, how did that influence growing up? I think is I guess there’s like sort of two ways that people come up. It’s either with their family or they get that inspiration from some kind of a book or something. It’s nice, it’s nice to hear from somebody who actually grew up with that kind of thing, you know. Well, apparently the influence
Nickey Calford [00:12:41] that was the days before HGTV, right? So we were kind of we didn’t have that influence where a lot of people have that now.
Rob Break [00:12:48] How old are you
Nickey Calford [00:12:51] when she was
Sandy Mackay [00:12:56] 65? I was going to say 65000 that that wasn’t necessarily yesterday. We find those same price points, huh? How? How? Like, obviously now the price points in London would be. That was in London, right?
Nickey Calford [00:13:10] Yeah. So that was before a lot of flipping was happening at the time. Properties were appreciating at about three percent per year. So not huge where it’s like twenty seven percent now. But it was a pretty steady three percent. So to get any good profits, you had to buy property back then. Luckily, I lucked out on that one. I sold it a year later. I think I made eleven thousand, which is pretty good considering I was a sixty-one thousand dollars property and just rolled it into the next one. So that property actually came up. I want to say less than six months ago again, and it was priced at two hundred and fifty. I think it sold for two seventy.
Sandy Mackay [00:13:54] So and what is that? Is that like a single-family townhouse?
Nickey Calford [00:13:58] No, it was a single-family house. Two bedrooms. The basement. You had to like Ben right over just to get down to the stairs. We could hardly get the washer and dryer down in there but worked. But it’s just a cute little house. It still has the same flooring I installed in it. It still has, you know, this the same fences and stuff that were there. So it’s kind of interesting how it’s appreciated without them doing a whole lot since kind of is like, OK, you should have just held on to it. Never sell anything because it’s going to appreciate over time, right?
Sandy Mackay [00:14:34] Well, we talk a lot about that and in terms of like flipping versus holding. And the real wealth is always really in the holding the properties. And yeah, you can make quick cash and it’s OK, but that tends to go away pretty fast. Typically, even if you make it, it tends to disappear really fast for most people. So the really the long term really strategy in real estate to me is always to find a way to hold them and hold them long term and just for savings. It’s just it’s a force and the appreciation goes up and down over time. But you get years like this past year or 2017 or other years where it just makes it such a huge difference to your wealth. And yeah, you’ve used multiple strategies over the years, but you would have done a lot of flips, right? Is that being that been something you think that was the right strategy for you at the time? Or was there? What do you feel about your journey doing all those flips?
Nickey Calford [00:15:25] I think I didn’t really have a whole lot of guidance and there wasn’t the podcasts. There wasn’t the internet presence wasn’t there back then, you know, when there were dinosaurs and that sort of thing that we hid from. But so I think I did what I could with the income level that we had. And it was very I think the big change came about five or six years ago where it was like, OK, the mindset was I always had to use my own money. I always had to use my income to a prairie, like to get approved on these properties. And it was my primary residence all of the time. So we were really limited to, you know, the full-time hours as a full-time job to versus being able to invest in everything else. So it was really limited to my income level, whereas the last couple of years it’s looking at how to leverage things and use properties to grow that wealth and partner with people and look at different strategies and the property out. So get that equity in it and put it into something else. So it’s I think in the last five years, my mindset has grown into an investment so much more than it did for me, you know, just two years before that.
Sandy Mackay [00:16:47] So what about what about your journey beyond the state actual investment side of things? You know you were? What’s been your path to transitioning now as basically full time in real estate? How did that journey look from going from Home Depot life? Twenty-one thousand you mentioned. What are you doing today
Nickey Calford [00:17:05] Yeah. So I had a career, I was a single mom, and I had a really good career. I worked for Union Gas for a long time. The benefits, pension and all sorts of good benefits of having that good career, but it just didn’t fit inside my life. So I was I was a certified home stager, and I was flipping houses on the side always had like a side going on. And it got to the point where that was really holding me back. I couldn’t. There’s just only so much time in a day and I couldn’t spend eight hours there. Your mom and flip houses and run a business and that sort of thing. So it looked at it and it was really as much as I was a great income and security. It was really holding me back to get forwarding the goals. So I ended up getting my real estate license. Learning more about it, being able to do that. And when I looked at what my career was, I actually dropped that back to part time at Union Gas and Real Estate full time. He took that dropping to look at that time that I was spending at Union Gas, it was actually costing me more money than what I was making there. When I looked at what I could be doing and everything else kind of fit together, staging flipping houses and buying investment properties and a real estate license all work together, whereas, you know, gas was actually working against me. So I looked at, OK, how do I replace that income? Put that in the bank. And then once that your income was in the bank, I dropped it and jumped in. It’s a real estate full time with two feet. So and then today things are completely different. It doesn’t scare me to you to work in real estate to be 100 percent in the way it did when I first started looking at it.
Rob Break [00:19:07] That’s great. Now we sort of skim by. I wanted to talk a little more about. First of all, congratulations on that. That’s a big, a big accomplishment. So I don’t want to just graze over that. We’ve talked to so many people that do this. It almost seems normal to me now to hear that I’m like, Yeah, yeah, it makes sense. Like, everybody’s doing that. And we talked to come on like, you know, but it is a huge deal and it’s and it’s something to absolutely stop and think about it like what an accomplishment that is to just be able to jump into real estate full time and leave that other career behind. I think a lot of people have that goal, but not everybody’s, you know, I guess not. Some people have too much fear to take that extra step and go ahead and take the leap. And I would say, you did it the smart way you saved up some money, you saved up that your salary and then and then took the jump. So congratulations. Thank you. I wanted to talk more about what strategies you’re using now.
Nickey Calford [00:20:15] So right now and I work with a ton of investors through throughout with you and I constantly get people like, oh, you know what? Tell me about flips, how to get into flip markets. And right now, London, as well as most of Ontario, is in the market to flip properties. And so I’ve made the switch to more of that BR strategy because it’s a great market to burn things in. You buy it right. You take those tenants out. You renovated and then refinance it and hold it and then take that refinance money and repeat it into your next property. So that works because the appreciation is there, as well as the renovation costs and the rental rates have gone up quite a bit from over the last few years. So you’re winning threefold there and keeping that property long term, which talking about my first property is the way to go anyways and being able to refinance and buy more and really works out. So that’s kind of what we’re suggesting right now in today’s market because we are seeing such a great appreciation. So if you can buy right that’s what the plan is now.
Sandy Mackay [00:21:36] So what about you? What about for flippers who were curious your thought on it? Because I kind of agree it’s a tough market in most cases for flipping. But what if the market keeps going up like it does, then you can always benefit from the appreciation there, right? Yeah, as part of that flip process over a six months a year.
Nickey Calford [00:21:54] So basically what we’re looking at now, so the house is listed at five hundred thousand. Any aftermarket rental value is 650. We’re basically knowing that it means one hundred and fifty thousand dollars’ worth of work done. So if you were just to do that work, buy it a five hundred put a hundred and fifty thousand in. The market right now shows the comps at six fifty. So there’s no room for profit unless between the time you buy it and the time you put it back up on the market, there’s a huge appreciation. And that’s where, but that’s a speculation, that’s a risk. So if something happens at the market and you don’t get a huge appreciation, then you’re going to have to hold it for longer. So, you know, can be a benefit, but it’s riskier now in this market than it was before.
Rob Break [00:22:48] Well, I’ve always kind of said the people that asked me about flipping, it’s like if that’s going to be your full-time job, you know, you’re going to go to that job site and that’s going to be where you make your active income, then go nuts. Like, that’s great. You know, you take the money that you make from that and buy an investment property to keep and then you know that your day job, that’s fine. But I think if somebody is looking at it as a as an investment strategy like really, it’s, you know, it’s fleeting. It’s very fleeting. There’s no wealth building in flipping.
Nickey Calford [00:23:24] Yeah. So it’s a cool kind of like day job. Exactly.
Sandy Mackay [00:23:29] And you have to have some sort of like you need to have some sort of cost-cutting version there. You need to do some work yourself or something. And else, it’s very, very, very, very tough to. Obviously, there’s just that risk. Like you said, just the appreciation. As long as appreciation there, I guess it’s OK, but that’s a lot to a lot to rely on because know we’ve seen markets obviously go up and down. And it’s not always going to be there. What about any other challenges in the market currently? Like what? What else are you seeing for investors right now, given obviously pandemic type of life and things like that going on? What other challenges are out there?
Nickey Calford [00:24:04] So I mean, pandemic wise, showing properties and, you know, tenants can be a pain. We’re seeing a lot of that as investors are. Looking at landlord tenant board issues and that sort of thing that, ah, long term like have been happening for months on end. But I think there’s an opportunity in that when you find those properties that maybe do have the tenants that haven’t paid rent in a long time, you can kind of step in there. And if you’ve got the wherewithal to fight through that, you can pick up some really good deals on that, whether it’s condos or single families, that sort of thing right now is maybe the bonus to that negative side of the pandemic for an investor. The other thing we’re seeing a really low inventory rate right now. So investors that are looking to buy, you know, they’re starting out, maybe they’re going to be competing against more first-time homebuyers. So if they’re looking at buying condos or single-family houses to rent, that’s going to be a real challenge because there’s so few inventory in that and you’re competing with everyone in the market versus where if you go to triplexes or bigger multi units that need work that you can kind of renovate out, there’s a little bit easier path to do that. So it really depends on where you are in your kind of investment journey. That way, I think,
Sandy Mackay [00:25:40] yeah, seeking out landlords, maybe that are having some challenges. There’s always an opportunity in that. But there’s almost more of those potentially now, maybe even more so as we continue into 2021 with landlords that are struggling or having issues that they don’t want to deal with and maybe get a little sick of things. And it’s also really tough to list those properties, really, because it’s tough to get people through like you mentioned, right? So having showing challenges and everything is ultimately potentially in the right scenario, maybe a situation that’s maybe can lead to some sort of a reasonable deal or a better deal than maybe you’d find otherwise. Maybe it’s maybe certainly better compared to like a really simple, easy purchase today where you’re going to get a whole lot of action on it, typically because it’s definitely a seller’s market.
Nickey Calford [00:26:25] We had one that a couple of weeks ago, actually, that tenant refused access wouldn’t even let us go in to take pictures or listing anything like that. An investor ended up picking that up probably about seventy thousand under market value just because he was willing to take the chance. And I think he’s going to come out on top on that one for sure because he was willing to take that risk where no one else was.
Rob Break [00:26:49] What are your thoughts on where we’re going with this massive appreciation that we’ve been seeing in the mortgage rates that that, you know, everyone’s enjoying now super low, all time low mortgage rates like what is your what is your prediction going into next year?
Nickey Calford [00:27:05] Well, I think there’s a whole I think it’s going to continue on for one, I know we’re here in London, we’re a little bit further out from the GTA, but with everyone being able to work from home, our demand has increased. So the appreciation is going to continue going up when we have such a low supply and demand is really high here. So I think until we’re our prices are kind of more on par with Kitchener-Waterloo, Oakville, those kind of areas, I think we’re going to continue to go up. So and we’re quite a ways off of their prices still. So I think we have a lot of room and I think the appreciation is going to go up quite a bit.
Sandy Mackay [00:27:48] Yeah, London’s like one and being a pretty big market too. It’s like one of the last. It’s probably the first one that seems affordable, I would say, as you drive down the far one there towards Windsor and Detroit in that I think it’s probably the first one that feels a little bit affordable. Still, Kitchener-Waterloo seems. I know Hamilton, a lot of people feel it’s out of reach for a lot of people that are like first time buyers. And that probably I don’t know if it’s kind of somewhat like Peterborough or maybe Rob your way, but it feels a little terrible, even though it’s
Rob Break [00:28:16] mean germs get in there, I think. But I mean, I see again, I feel like I’m looking at it from like, what might I have an anchored type of attitude towards that? I’m anchoring myself in the way that things were like last year. And then when you see this incredible appreciation, it’s hard to imagine being on par with myself when I entered the investment market, right? Somebody else who had been in it for 10 years might have been just pulling their hair out, saying, oh my god, I’m never going to find a deal again. But when I started out, I was thinking, you know, these are great prices that, you know, there’s only up from here. So I think it’s tough and it’s all about perspective, I suppose. And I think that there’s I mean, I mean, if you listen to our interview with Dion back that we did a couple months ago now, he explains that look at it as your child’s nest egg or whatever. Not. But look at it as an investment for your child’s future, right, instead of maybe even something that’s going to possibly make you money every month. Hopefully, it does. I think that there’s still deals like that out there, but people take their hard-earned income and they put it into a fund for their children. You know, if you look at it that way, it’s going to return exponentially regardless of the prices. At now, it’s just it’s really tough. It’s hard to say. But I do think that there’s opportunities everywhere. You just got to look a little harder for them now.
Nickey Calford [00:29:50] Maybe I think two people were really set on, oh, I need this amount of cap rate. I need this amount here. And you’re like, wait a minute, let’s just look at the numbers. If you can just get it to break even or even if you’re one hundred two hundred bucks a month into it in two years, the rental rates are going to be that much higher. The appreciation is going to be that much higher and it’s going to go back to those great numbers. So people were very much like, no, I have to cash flow x amount before and are now looking and going, oh, there’s nothing available, and yet people are still coming in and buying it, and they are still making money on it in the next five years. So you have to kind of it’s not a short term, you know, quick fix right now. It’s making it look at that a little bit longer term, but you’re going to make money. It’s always gone up historically. I mean, there’s these little, tiny bumps in the road, but on long term, it’s always going up. And anyone that was around 20 years ago is like, I should never have sold those properties that I had. They’re worth so much more now. Right. So just get in the market now is the key.
Sandy Mackay [00:31:05] That one that was probably worth 250 or 270 is that now it’s not going to back to 65 grams. No, it’s probably not. To underground, let alone 65.
Rob Break [00:31:16] Did you make a little bit of money selling it?
Nickey Calford [00:31:19] Yeah, I did. So not only that, I think covered itself for the six months. So there was that and then I made some and rolled it into the next property, which we made a hundred thousand on the next one. So it made sense. It gave me that extra. I mean, when I started out at twenty-one, I had four grand to work with right as a down payment. So it got me to roll into the next one and we were able to make much better money on the next one.
Sandy Mackay [00:31:49] What are some other things to consider, like you were mentioning there about even being maybe negative cash flow? But I mean, and I agree, I’m definitely a big believer in cash flow. I think that’s important. If you’re building out a portfolio, it’s less important. So I find if you’re just buying one or two properties, right, and you maybe have one child and you’re buying one property for their whatever you want to call it, education finder, wedding gift or something, I don’t know, but it’s less important than buying for cash flow. If you’re buying 100 properties, as you know, you don’t want 100 negatively cash flow properties, but all depends on your specific situation around. And there’s so many ways to do this. Game is not one generic path. There’s not one generic like strategy. There’s not one great market that’s better than everywhere else. What are some of the other factors there to consider when their people are looking at different markets or different strategies? How do you actually figure out what I think a lot of people get lost in this person does it this way or that person is that way and a shiny object syndrome all over the place. But how do you actually figure that out? Have you in factor anyway? All those factors, what do you look for?
Nickey Calford [00:32:54] Well, I think it’s very personal to you, right? Like some investors are varying, just numbers driven. They don’t it doesn’t matter who’s in there, what tenants in there, nothing. It doesn’t matter. Others are. No, I want to be this type of landlord. I want to have this type of tenant, and I want to live in this type of area kind of thing. So it’s very personal, I think when we’re kind of looking at what’s available. But it’s funny. We’re talking about like the negative cash flow. I have one of my units. I think I’m now with the way taxes have gone up and everything else. I’m about two hundred and fifty dollars a month in the negative, so it’s a negative cash flow for me. But I bought that property two years ago. So if we look at, let’s say, two hundred dollars a month for twenty-four hundred dollars a year, that’s my twenty-four hundred dollars a year. I’m investing into that property. It has. I bought it for one hundred and forty thousand two years ago. It’s now we’re three hundred and twenty. So that to twenty-four hundred dollars a month or twenty-four hundred a year that I’m putting in has made me. Close to one hundred and fifty to two hundred thousand in in,
Rob Break [00:34:08] you know, equity, absolutely.
Nickey Calford [00:34:10] Yeah, right. So is that being that worth it? You know, what, other investment can you put in twenty-four hundred a year and come out with hundred? Right? So that’s when we look at that and we have to look at people’s comfort zone. OK, maybe they can’t do the negative of two hundred dollars a month. We have to kind of look at that and Terrell Taylor, each kind of investment to them in their comfort zone and their risk reward kind of rate.
Rob Break [00:34:41] So even when, like a lot of people should start to look at it the way in in that way, and a lot of people would say, well, I need to pull my money out as soon as I like, I’m doing the strategy. I want to pull my money back out. But you know, so most people set themselves up and being able to refinance like they get themselves into a mortgage product where they’re able to refinance when they’re done. But let’s say it’s that scenario where you were talking about where you bought it for five hundred and you put one hundred and fifty into it. And so now, you know, it’s only worth six fifty. So, you know, you might wait a couple of years to see that appreciation and still have the ability to refinance it once it’s gone up to 750. Right? Very, very powerful.
Nickey Calford [00:35:31] Yeah. Yeah.
Sandy Mackay [00:35:34] Well, there currently. So anything out? I know you’re working on something kind of interesting out there. Why don’t we talk about that one a little bit?
Nickey Calford [00:35:40] Yeah. So I have a really awesome property that it’s now 89 units. They’ve added in a unit as of January 1st, and it’s basically a low-income housing building. There’s two buildings on them. They’re both less than seven years old and they’ve got solar income. They’ve got really low expenses because they’ve got the rainwater recovery that does the employer heating as well. And it’s so super-efficient buildings and they’ve got these low-income housing grants on them. So they’re in this program for the next 20 and 25 years. The city has given this forgivable loan basically on these properties, and the plan is the city wants to keep them in the low-income housing program. So when those ones are close to their expiration, they’re looking at doing another influx of about one hundred thousand dollars per door. So when you’ve got eighty-nine doors and I think eighty-six of them are in the program, you’re looking at another $8.6 million cash flow lump sum put into these properties. So it’s a long term like when we talk about buy and hold. This is that long term property. So it’s got a bunch of different options with it where you know you like this low-income housing grant kind of end and slowly switch it over into market rents that would be by that point, probably three or four times what they are right now. So if you’re, you know, it’s making money now, I think it makes close to four hundred fifty thousand a year profit right now. Or you’re looking at putting it into regular market rents. Your market, your prices that are your rent is going to go up and your income is going to go way up. The other option is you could probably sell it off as condos. And right now we look at each one of those doors is probably over two hundred thousand per door if you condo ized it. So right now, even not that market value puts out about 17 million. And then the other option is to take on the low-income housing grant and just take in that extra 8.6 million. I thought it that end date and continued doing what you’re doing. So right now, it’s listed at ten point five million. It’s a really cool opportunity and we don’t see a ton of these buildings. I think we’ll see more as the housing shortage continues on. But it’s a real kind of interesting way to. It’s like, have this really cool building and have a lot of passive kind of income coming through
Sandy Mackay [00:38:44] as an interesting, interesting opportunity that don’t come up very often, but there is a lot of short term, so not short-term, low-income housing grants and things like that going on in different cities across Canada, I’m sure. Definitely. I know in Hamilton as well similar sort of not all opportunities like that to come up necessarily, but there’s similar things going on, definitely in the market. And can you do an a little more about what that actually like? What does that look like in terms of the rents? Are they a certain percentage of fair market or how does that work?
Nickey Calford [00:39:15] Yeah. So depending on the city and the contract that they put on, the rentals are set out like between 50 and 60 percent of market rents. So if they say, OK, a one-bedroom unit is a thousand dollars, you’re the maximum you can do is six hundred thousand or sixty-five six fifty. So it’s at six fifty. You can go up with the market rent increase every year, but it’s set. The original star point is at six 650.
Rob Break [00:39:48] I like the multiple exit, not exit strategies, but the multiple strategies at the end of that term. Yeah, it’s very cool.
Nickey Calford [00:39:57] Yeah, I mean, it has a lot of opportunity there, I think so.
Sandy Mackay [00:40:03] That’s I know that’s the longer-term outlook on it. I think it’s obviously hard that this amount of cash to buy something like that out of the gates. But there’s a lot of money out there, I think, to put something like that together and produce that. I think like, what is the negative side to it? Because it sounds obviously like a home run eventually, although it’s not remote. But if you were thinking about a retirement plan or someone a child’s education fund or something, twenty years maybe isn’t that far out. But what are the negatives
Nickey Calford [00:40:35] to something like? Oh, OK, so because of the low-income housing grant, the way it’s set up is that you can’t mortgage it. It’s already like a mortgage on there, although it’s 100 percent forgivable, so you’re not paying it back. It just it’s letting the time run out on it, so you can’t mortgage that portion of it. And if you do, it would be a third mortgage in behind it. So that’s the drawback on that. But have you had other properties that you could finance? You could pull the cash out and put it onto this one, so it of be a bit of a wash that way if you had enough equity in something else.
Rob Break [00:41:14] What are some of the options that you’re seeing in the market currently for investors other than not, is there any other ones?
Nickey Calford [00:41:20] Yeah, I think the multifamily births are where I would suggest a lot of the investors are going in, there’s little less competition in that realm because the numbers do still have to work. And that’s kind of right now if you’re looking for something under the 10-million-dollar price range, that’s probably where I would steer you. Anything like the bigger multi-family as well. There’s a lot of those right now that when we look at the title of them, the last time they were purchased was sometime back in the 80s. So if you look at if they were thirty-five to forty when they bought those properties, those owners, a lot of them, unless they passed them down in the family, are in their 80s. So I think when we look at all across Ontario, there’s going to be a ton of opportunity coming up with those properties that people are going to start selling off. And, you know, a lot of them have older because they’ve had them for so long. Having super high rents in them wasn’t important. So I think there’s a lot of opportunity when those properties do get turned over to increase the value of them.
Sandy Mackay [00:42:31] A lot of baby boomers in that crowd might be in that in that group, right, which is a lot of people looking at doing something with them or transitioning out of the real estate game in some way.
Nickey Calford [00:42:41] Yeah, it’s time to retire, right? That’s why they bought them.
Sandy Mackay [00:42:45] Definitely hungry. I had another opportunity that I was thinking about. Oh, the other thing I was, I was thinking about too. And I just because I was talking with a mortgage broker today and I was just I’m amazed that the alternative lender opportunity is out there and the flexibility that they seem to have right now. I don’t know if it’s COVID related or it’s just the fact of the rates across the board are just so low. But I’m just seeing a lot of different opportunities for someone who’s like struggling to get financing, maybe because they’re self-employed or you’re in, you do your taxes a little differently than someone with a great looking T4. I think there’s some opportunities to maybe look, maybe restructuring your portfolio a little bit or just looking at some properties that maybe you weren’t looking at before because you couldn’t get financing in a Corp., for example, or you couldn’t finance it because you showed no income on your taxes. Are you certain areas? I’ve seen certain areas in Hamilton where lenders would never touch before alternative lenders, even if they were pretty good areas. There’s all that that be- lending group was very against it, and all of a sudden there was a few of them that are really, really itching to get their money in and out there and lenders. So I think there’s some opportunities in that a little bit as well, just with them. I know there’s a lot of people that are self-employed or in that bracket that that struggle with financing. At times that is getting a lot easier. Maybe not a lot easier, but it’s definitely seeming to be some opportunities there as well.
Nickey Calford [00:44:11] Yeah, we’re seeing all the time with buyers like they. They’ve got some pretty creative stuff that they’re doing to make these deals come together
Sandy Mackay [00:44:19] so that rates like in the low threes for B lenders, which is like two points lower than it normally would be. Yeah. So you’re almost like, you’re like, what we would call is historically low lending, conventional lending rates, what, three years ago? And so it’s crazy. It’s crazy. The numbers I’m seeing out there, it’s you just have to get in the market. I think that’s what it comes back to is people need to be finding ways to get in the market because obviously we’ve talked about the long-term benefits of all that and having that long term outlook and some examples here today, I think some element of timing the market in this stuff, but really, you just need to get in there and stay in there. And what better time when money is so incredibly cheap, and people are looking to a longer than what it seems? And you know, ultimately that prices are so high a little bit because of their money and how cheap it is and getting in today at 100 grand more than maybe a year ago, you’re probably paying the same month, the month or even less.
Nickey Calford [00:45:21] I think that’s the main key, right? The interest rates are so much lower right now that, yes, you’re going to pay more because the market’s gone up, but your payments are still the same rate for the most part. Your interest rates are so much lower than just don’t worry about that sticker shock that’s out there on the purchase price. Look at the actual numbers in behind.
Rob Break [00:45:43] Yeah, it’s a really good point, I think that people need to take into account, right like that, the only difference is going to be maybe a little bit more of a down payment.
Sandy Mackay [00:45:53] Yeah, a little more down payment, for sure. Yeah. Maybe the market goes down a bit. I guess that’s possible, but let’s say it keeps going. You’re getting appreciation on the 100 percent of that property, not the not the person you put down, right? So it’s just incredible the amount of wealth that can be built through that. I think that people just more than ever need to get rid of that fact of while the market’s really hot. I should just sit on the sidelines. Well, good luck getting in when the markets, if the market ever tanks. Good luck getting in because that means money is way more expensive, probably, or it’s a lot harder to get mortgages. That’s going to be why it goes backwards, right?
Nickey Calford [00:46:28] So well. And all the people that are investing now with the market higher are going to have that much more money when the market does tank and then you’re competing against them as well. So it’s the demand is going to be ten times more like it just it doesn’t seem to even out in that philosophy.
Rob Break [00:46:48] Yeah, I think by now and by then.
Sandy Mackay [00:46:51] Yeah. Yeah. But I always buy always for the right. If that’s the right opportunity that fits your game plan, right, your strategy.
Rob Break [00:46:59] How can you help investors get started investing or build on their current portfolio?
Nickey Calford [00:47:05] So I think that once again, I try and touched on it a little bit, it all depends on what their little niche market is, right? What’s important to them? Where is the risk thing? Risk reward? What’s important to them? What area kind of, you know, a lot of investors, it doesn’t matter what area, it’s all about the numbers and what they can kind of sleep at night with, right? So I’m taking a look at sitting down with them and really digging down into their motivation and what’s important and what the numbers will look like. And, you know, maybe they only want to be in, you know, southwestern Ontario. Maybe they don’t really care. And it’s how do we get the most money, the quickest or, you know, my kids going to school in 20 years? What’s the best plan there, right? It’s looking at the exit strategy and what their risk reward thing is now and really digging down into that and matching them up with the right properties.
Sandy Mackay [00:48:02] That’s good. What areas do you help people into here, mainly in London, as the folks in any other areas?
Nickey Calford [00:48:08] So right now, where I may see mainly multifamily based rent, so we’re looking at everything on an Ontario. We’ve got a team across Ontario through Amran as well. So you get like-minded agents that can help in different areas. But we’re looking at the numbers across Ontario. So it’s not just a little geographic area. It’s looking at the properties that are right across and what cap rates are, where and why and tenant demographics and that sort of thing. And looking at it as a whole, right as the province as a whole
Sandy Mackay [00:48:48] is one more thing, one on London. What’s what is driving like? You mentioned a couple of things. Is there anything unique in the economy there that’s like driving people to go there versus a Kitchener-Waterloo or Hamilton or Montreal or some other areas in the country, like what’s specifically happening in London there because of it seems cool. I don’t know as much about it as you do. Obviously, I think it’s just it’s still a little bit cheaper than everywhere for some reason, but it’s got a pretty diverse economy, right?
Nickey Calford [00:49:16] Yeah. So we’ve got like all sorts of different things. We’ve got three different hospitals and two, like a university and a college. We’ve got a bunch of different larger industries like Dr. Ocher and 3M and General Dynamics. So there’s different aspects. I mean, it’s pretty well rounded when it comes to all sorts of different things. There’s lots of great schools and parks and that sort of thing. So it’s great. It’s also just on the cusp of that two-hour mark from the GTA. So the other thing that was huge speculation a few years ago, and I imagine it’ll come back into play in the next few years is the high-speed train to the GTA, which would turn that two-hour commute into 72 minutes, I think they said. So that cuts, you know, makes commuting. If you had two huge. The other thing to do is with all of those things, we’ve been put on the map in the last few years as one of the more economical cities to live in in Canada. So with that and the combination of being close proximity to major airports and that sort of thing, it it’s really kind of helped boost our market and make it profitable. I think the other thing too is because of that demand investors are seeing more profit too,
Sandy Mackay [00:50:41] is that high speed train. Is that Windsor all the way to Toronto or is that just London?
Nickey Calford [00:50:45] So just to London, and then it’ll go to Windsor, I think, like seven or 10 years later.
Sandy Mackay [00:50:51] So let’s say that comes back if that comes back into the fold with the whole virtual world and less commuting, perhaps anyways. But I guess we’ll have to wait and see on that, right?
Nickey Calford [00:51:01] Yeah. And I mean, COVID has changed things, right? There’s a lot of people working from home now where they don’t have to go to the office in Toronto all of the time. It’s not a daily commute. It could be a monthly once a month kind of thing or not, even where they are fully remote. And that’s changed a lot of markets across Ontario. Lemons really been put on the map for that, for sure, because of volume. And the city has, you know, it’s kind of a little big town.
Rob Break [00:51:30] Yeah. And this is definitely freed up a lot of time for people to instead of commuting, maybe they’re running numbers and looking for new investment properties. And if that is the case, how could those people get in touch with you?
Nickey Calford [00:51:43] Yeah. So you can email me anytime. Niki Telford at kW dot com or give me a call at five one nine six three six five zero nine seven and you can follow me on Facebook, Instagram, Twitter, Nickey Colvard or into a real estate team. And you can. Always contact me through the Emeran network as well.
Rob Break [00:52:09] A lot of ways to get in touch, and all of those will be in the show notes for anyone who goes over there, they can just click on the links and get in touch with the key right away. So thank you for joining us today and sharing all of this. Appreciate your time and yeah, thank you.
Nickey Calford [00:52:26] Yeah, thanks for having me.
Rob Break [00:52:29] Thanks, Sandy. How can. How do people get in touch with you?
Sandy Mackay [00:52:33] Two eight nine three eight nine six eight four six or Sandy MacKay Realty Network dot com
Rob Break [00:52:38] People can reach me at Rob at Mr Breakthrough Dot S.A. All right, everybody. Thanks for joining us again today and we will see you soon. Now.