Table of Contents
Podcast Transcription
Erwin Szeto [00:00:08] Greetings, everyone. Estate investors and stock investors, a.k.a. wealth hackers, as I like to call them. How’s your summer going? Best summer since 2019. I certainly hope so. Terry and I are having a blast and have much to be grateful for. One of our accounting clients, AJ Cowan and Manpreet Hazare Superpower Couple, I think must know. Ajay is a retired engineer and he went full time in real estate and around the mid around 2015. Manpreet is extremely popular real estate lawyer. She’s done some of our deals. We’ve referred to her clients in the past. They are a superpower couple and they’re tearing things up in the multifamily space. No surprise there. Everyone knows them. They invited us to I don’t know why they invited us as little folks. Jerry and I met in my kids, invited us to church in Shaw, which is a private 500 property summer resort, and they’re all vacation properties. So it’s a three season resort. None of these properties are winterized. Some of them are trailer. Some of these are like a trailer park, but a bit nicer. A lot of these houses are quite nicely renovated and the house is quite nicely renovated. Their property is not quite on the beach, but we met on the beach. There is a beach within this summer resort for some fun in the sun and a catered barbecue dinner back at their house, which is also in their resort. They’re celebrating their 10th anniversary and partying in style because it’s kind of like we’re partying like it’s 2019. So with COVID restrictions, a lot reduced. The entire thing was done outdoors. So that’s very nice. The day was awesome for many reasons, other than, of course hanging outdoors. CHEERING I get to meet and network with some movers and shakers from the key spark community real estate investors with as little as 40 doors to 400 doors and growing. Normally, I’m pretty socially awkward at these types of events, like regular, regular, like weddings and anniversary parties where I don’t know anyone, but in this case we all had real estate in common, so it was cool to mix family fun. And kids were there during the beach, enjoying the barbecue, enjoying the. Cover at. The at this resort, pretty much all the property owners on one or two golf carts. So my kids and I took ages actually as actually we took Manpreet Sacko kart golf cart for a ride. It’s a bit nicer than your typical golf cart. Anyways, I posted on my Facebook, but it’s fun to combine family and fun and business and learning. Hopefully I wasn’t prying with all my questions. I asked a lot of these investors a lot of questions, but they’re up to where they’re seeing opportunity. As I’m naturally inquisitive, as you can probably tell from the show, and I firmly believe that learning is through listening, not speaking. That’s why you don’t see me speaking much. No. Letting the people who know what they’re doing talk and hopefully are invited to markets via meetups. It was a lot of fun to learn a lot and so little time. Hopefully you’re all out there maximizing your summer in time as time is your most precious resource. So you home. How much folks are traveling these days are trying to expect to continue as a record. Airbnb reports their earnings today it’s August 2nd I imagine they’re going to chill it. And just from experience in talking to other Airbnb investors, they’re all pretty booked. So it sounds like, yeah, travel is hot these days and I expect the trend to continue. So how do real estate investors capitalize? Well, today it just so happens we have an Airbnb expert who manages 100 doors for Airbnb use and only owns one. Only one is one of those properties. The other 99 are not owned by him. He manages them for other landlords. Avery actually recently bought a 250 acre property. He’s going to develop into a vacation resort. Similar ideas where I was just talking about ambitious example but wait to hear the numbers. They will astound you. I met Avery Birch at a conference in Quebec City just a few months ago as having real estate in common and being fellow of seven figure entrepreneurs. We connected right away. So we’ve been we’ve been texting, we’ve been chatting over Zoom booked with them, I think tomorrow as well to just chat about some other business opportunities. But do you see what extent I go to bring you my 17 listeners? Interesting. Yes, Avery’s definitely interesting. Ever since COVID restrictions loosened, I’ve been enjoying going back to conferences and networking events with likeminded investors and entrepreneurs. So if you’re looking for the next Can’t Miss Conference, you’ll want to save the date. Saturday, November 12th, all day for the Wealth Hacker Conference, live and in-person. There’s no Zoom option. There’s no virtual option near the airport with plenty of free parking. Just go to WWW dot hacker dot CA for details. And also, if you’re following me on social media or on my email list, you’ll see opportunities for to save money. We have promos running from time to time, but the truth about the conference pricing, the sooner you buy, the more you save. Because the prices will just consistently go up until the date of the event. And if you’re one of those who likes the VIP experience, those tickets will sell out. So you probably won’t take advantage of cheaper prices and making sure you actually get a ticket so you avoid disappointment. We’ve hired speakers and sponsors for all the things that you need to. On the most efficient path to your financial goals. So you may have more freedom in your life and how you spend your time can be building your own business or a folio could be retirement, can be travel. Whatever it is you’re going to take away some have some takeaways from the conference. Lifehacker dot CA for details. After interviewing Avery, maybe I’ll diversify into Airbnb a bit because with all the experience, every share today and offering is we get an insider’s look into what which property style for every Airbnb offers the highest return, including what every avoids and also every share is a story about how he identified properties to start managing for, especially for your younger investors out there who don’t have a lot of capital. Again, Avery does not own the vast majority of the properties he manages, so he actually gives some tips on how he got started. I don’t see why anyone; any young hustler cannot do the same. Please enjoy the show, Avery. Let’s keep you busy these days.
Avery Birch [00:06:00] What keeps me busy running a skid steer building or roads that new property.
Erwin Szeto [00:06:05] Okay, I’m city folk here to explain what that means.
Avery Birch [00:06:11] I am running this piece of equipment to build roads because in 11 days we have our grand opening for our adventure getaway resort. I don’t know if the video is there, but I’ve got about 300 acres of wilderness at a lake and trying to get people in to see it.
Erwin Szeto [00:06:26] All right. So shameless plug. We do have a YouTube channel, folks. So if you want to see every we are doing this video and every background is stunning. So check us out on our YouTube channel as well. So Avery, what it is in your background?
Avery Birch [00:06:40] So what we’re looking at behind me is I’m standing on the peak of a mountain overlooking a lake, and we’re looking at Nova Scotian waters. It’s about 40 minutes away from the main city and it’s just untouched forest of what we’re trying to promote to get people outdoors.
Erwin Szeto [00:06:58] It sounds amazing. Okay. So we are Canadians. That’s really about let’s first show what’s. The main city, Halifax? What is it?
Avery Birch [00:07:06] Yeah, we’re based out of Halifax, Nova Scotia.
Erwin Szeto [00:07:09] And I love Halifax. It’s funny because like when talking to people, we’re asking people about travel, like, oh, I’m going to Nova Scotia. And like, that’s very much like leaving the country. It’s like I’m from Ontario. It is. It’s very different. Totally, totally different. Like car stop for pedestrians.
Avery Birch [00:07:30] It’s funny, we’re trained at a very young age to do that. So that’s quite for yeah.
Erwin Szeto [00:07:35] And so yeah, again, I love Nova Scotia, I love the vibe. So we are introduced through a mutual friend at a conference. So we both members of entrepreneur’s organization, for those who don’t know the stating facts, I’m not here to brag about anything. Members of Entrepreneurs Organization are required to have a seven figure business US dollars, so that’s $1,000,000 of revenue. US per year and every you built amassed a pretty sizable real estate business. You tell us more about it.
Avery Birch [00:08:05] Absolutely. We’ve been operating for about five and a half years at this point. And over the course of this time and through a pandemic, we’ve become the number one and the largest Airbnb operator in Nova Scotia, in Atlantic Canada. And along the way, we’ve now grown to have 100 different properties under our management, and we’ve got a staff of 20 people that run the show. Now we’re growing and developing, which is why I’m standing on the peak of a mountain because it’s the only way to get cell service. But we’ve moved from managing and to creating.
Erwin Szeto [00:08:45] Okay, so we’ll get into the development because I want to get into it, but I want to help folks understand how you dig into managing 100 different properties so you own all of these properties.
Avery Birch [00:08:57] We don’t own any of the properties. And I’m one of them. Well, we just got one.
Erwin Szeto [00:09:01] One of 100. Okay. Got it. Yeah.
Avery Birch [00:09:03] No, we don’t own any of them. We have their management contracts with the people who own the spaces, or we’ll take on commercial leases in the right zoned areas and turn them into essentially a boutique hotel. But we’re essentially catering to people that come into the city for seven days to 20 days. That’s our clients.
Erwin Szeto [00:09:25] So what’s. That like? It’s covered in the news is often, you know, we’re a tenant, like a regular tenant. We’ll sign a lease for the landlord and then without the owner knowing to operate an Airbnb, is that what you accomplish? If you duped a hundred homeowners into renting out to you and you convert them into Airbnbs?
Avery Birch [00:09:44] I wish I was that interesting. So yeah, I hear that story a lot. Our very first property, I would say I wasn’t very exact what my intentions were. However, once I had that one, I could point to it for all the wants to. And say, look, we’re successful. This is what we plan to do. Please let me do this. And then later, I’ve become very close friends with the person who gave us the very first property. So we’re all good. But yeah, it was a it was an interesting start. And then from there were 100% above board. And landlords love us because we were just super, super diligent. So we treat their spaces like nobody else does. Sort of funny, actually.
Erwin Szeto [00:10:29] What’s the terminology for this? There’s all these new terms like house hacking, for example. I only learned like two years ago. Is there a common term for this?
Avery Birch [00:10:37] Yeah, in the short term, rental space called Master Lease. So you Google that. Most of it is short term rentals. You can learn all sorts of things about it. Essentially, we get a lease furnished, we rent for a markup. We’re catering to clientele that need to be in for different things than a year.
Erwin Szeto [00:10:55] Interesting. Okay. Okay. Just to put out a joke, because it’s in my head, I have to say it is in real estate here. Master bedroom is no longer the master bedroom. So that’s the principle or the primary bedroom. So maybe we say maybe you and I here will start the term primarily funny.
Avery Birch [00:11:14] James. Yeah, let’s do it. Hey, you ready to.
Erwin Szeto [00:11:20] Start promoting it? We have primary leases, and then you’re coined the term.
Avery Birch [00:11:25] Sort of like a bitches thing over the primary lease. Here’s what we do. That’s great. You put it like that.
Erwin Szeto [00:11:32] Yeah. It’s very politically correct because we’re inclusive on this show. The capitalist socialists, we love them all here.
Avery Birch [00:11:39] We’ll switch as of today.
Erwin Szeto [00:11:42] What is the typical property? Is their typical property. Are you talking about apartment buildings, 30 units, or you’re talking about like single family homes? But on, you know, on Main Street, Halifax.
Avery Birch [00:11:50] Anything goes. The only one that we don’t touch is condos. Some cities as we want to scale out our condo cities and some cities are apartment cities. For instance, Calgary is primarily condos and Halifax primarily apartments. They’re completely flipped on each other. So all types of apartments. What types of single family duplexes? Basically anything but condos is everything and they each have different things. We looked at and we’ve got tools that we analyze, but every different property has a different strata. And what we start seeing over time is that different properties, they only have so many buckets that they fit into. So one thing develop the strategy for X and we see X come along and again we just rent and repeat. Yeah, I think that’s a good answer to that.
Erwin Szeto [00:12:38] Tell me about. Okay, so what would you do like a regular single family home and a suburban or actually do you have a preference? Do you prefer a more urban setting or suburban or rural? Are you probably a model for each, don’t you?
Avery Birch [00:12:52] Yeah, it’s in different growth cycles of the business where the preference has changed at this point in our lifespan. We’re now looking for very unique accommodations, something that we can really put our mark on and no one else can duplicate. In the past we’ve really focused on commodity. So I think Airbnb is built into two buckets commodity and wants or niche. So for a commodity, there’s no brand loyalty except to Airbnb or BRP or the platform that we’re a brand. Within a brand, there’s no loyalty to commodities. People need to be in the city; therefore it will stay busy. Supply just always cuts. It never stops unless the pandemic then going to get scrap or niches and what’s like what we’re building. It’s not a commodity. People don’t need to be here. They want to be here. Therefore, loyalty means people come back because it’s unique. So there’s two buckets that we really look at. I don’t know how we got here, but one fact.
Erwin Szeto [00:13:57] I see, that’s a good point. But the journey, like you didn’t know what the journey would look like from the beginning.
Avery Birch [00:14:01] No clue. You’ve just been established. We have one like let’s get five, let’s get 25 to 50. And then different said, okay, I think we got an idea of what we’re doing now.
Erwin Szeto [00:14:11] Interesting. Other than condos, is there any other property style that you don’t want?
Avery Birch [00:14:15] There’s no style. It doesn’t work. It just comes down to working with your neighbors and the rules on the environment. So condos have the most challenging environments, therefore we don’t even look at it. There’s so much opportunity that there’s no need for us to ever spend time there. You can you can rent a condo. It just takes extra work that we don’t want to do.
Erwin Szeto [00:14:36] Right? Yeah, I guess I live near Toronto, so it’s a big it’s all condo. People want to do it, but it’s because they want cash flow otherwise. But then your neighbors are not happy.
Avery Birch [00:14:49] Yeah, it’s extra work. Whereas in an apartment building it goes through the management and they make a call. So when we come in and build a great relationship, we’re there, we’ll take it. And we’re starting to get into a situation where we don’t. Save a hole for him that keeps it nice and separate versus next door. It can be frustrating forgetting the mission of doing a whole floor or a whole building. Got it. Game changer? Totally game changer. Then we have complete oversight and really helps.
Erwin Szeto [00:15:20] That makes a lot of sense because for example, if I’m on a guy’s trip and we know we’re going to be rowdy, will ask, don’t tell him we book our rooms, be put in a section where no one else’s is right. You’re trying to do the same thing. You’re trying to isolate.
Avery Birch [00:15:33] It’s a great idea, right?
Erwin Szeto [00:15:35] I’m an empathetic person. Right? When I want my sleep, I want my sleep. I don’t want to be disturbed. So please put us somewhere. We’re not going to bother anyone else.
Avery Birch [00:15:42] And if you said that to us, we would know exactly. What about you? No one ever says that. That’s actually very polite.
Erwin Szeto [00:15:48] If it’s a checkbox you put in maybe one of your forms. We do need a place where you come.
Erwin Szeto [00:15:54] Out for that. I mean.
Erwin Szeto [00:15:57] Acre property where the nearest neighbor is half a mile away.
Avery Birch [00:16:01] Oh, I’m going to add that. That’s incredible. You need to be loud. I’ll be able to talk.
Erwin Szeto [00:16:06] And maybe just be a group. You’re like, Oh, sorry, we have nothing for you.
Avery Birch [00:16:11] Or Be quiet or, you know, we’re.
Erwin Szeto [00:16:15] It’s like a filter for, like, parties that say you don’t want them. Actually, can you do cater for party? Do you have any options for that?
Avery Birch [00:16:22] We don’t. It’s not our bread and butter and some of our research along the way. We’ve found some really cool spaces that do and they can charge a premium. The one that I’ll never forget, as I saw one in Montreal when we were looking at growth there and it said party had in it and the walls were stainless steel and the rest was tile. It looked like at the end of each reservation they came in with a and pressure washer and just sprayed the whole place like, like it was expensive, but it was like it was geared for parties. It’s like a bachelor pad place. I don’t know if Halifax would support that. Maybe it’s just not a brand, but I got it.
Erwin Szeto [00:17:03] And then this seemed like a pretty hot topic or hot button issue for people to who are avoiding doing short term rentals. And also it often makes headlines as well. How do you prevent? And when I’m beaten to find party, I mean, like excessive drinking, excessive substance abuse, excessive noise and property damage, of course.
Avery Birch [00:17:22] Yeah, sure, sure.
Erwin Szeto [00:17:24] We’re talking about, like, you know, five people having a beer watching hockey night in Canada.
Avery Birch [00:17:29] This was disrespecting the state.
Erwin Szeto [00:17:31] Yeah. Yeah. Actually, I was literally on the golf course yesterday and as I said, the golf pro. But do you ever have problems? Yeah, we have to call the cops. Like, what are people doing? Excessive drinking, reckless driving with golf carts. These things happen.
Avery Birch [00:17:45] I think it depends on the location. We’re mostly focused on commodities at this point, and we’re just starting to build our nation. I suspect we’re going to have more of that now that we’re diving into that market. But if it was a golf course, that to me is not a commodity that is niche. So probably more people of means that want to have parties will probably go versus on the commodity side, just because people need it, they’re not going out to party. They might be relocating within the country. They’re temporarily students. Very few people come to our spaces to just have a weekend away only in peak season. But there’s two things that really keep parties or people who just respect the space away price and minimum stay requirements. That’s a game changer. When we’ve had we’ve had problems in the past. There’s got to be at least one and it’s almost like clockwork. But I think we might have snapped the habit. It was like once, once every year or four years in a row was a big ole drug party. And we’d have to go.
Erwin Szeto [00:18:55] You know.
Avery Birch [00:18:56] And it’s like it was like clockwork. There it is again. And. All right, the other thing. We got used to it, but never any damage. Very respectful people in Nova Scotia, they just wanted to have their time. However, it became loud and disruptive, so we had to kick them out. There’s rules around that if you wanted to dove into that subject, but you can get bring the police in. They’re not actually a tenant, so they’re a guest in your house means you can forcibly remove them, etc., etc.. So there’s mitigation. But why that happens over and over and over was price. It was in the winter when we were most eager to get bookings and we lowered the floor to low and then allowed it to be something attractive for, let’s say, if the space is $100, you know, for people ship kind of 25 bucks all the sudden. So don’t be the lowest priced in the market and it’s not worth it. It’s just not.
Erwin Szeto [00:19:49] That’s actually wonderful advice.
Avery Birch [00:19:51] That’s the biggest takeaway.
Erwin Szeto [00:19:53] And that’s pretty much all you need to do to scream.
Avery Birch [00:19:55] Yeah, yeah. PRICE There’s other things, too. Okay, another one other big screening tactic that our managers used is if someone is. Reserving a space within our city limits. I get a sense they’re from Halifax. Well, they better give us a good reason as to what they’re doing, and we’ll actually meet them on check it just to make sure they are with they are. Anybody else is not from Halifax. It’s all automated in. You’re coming here from Arkansas. You know, you probably need to be here. But if you’re if you’re from Halifax for one weekend, I’m like, I don’t know. I don’t think we believe you. So that’s a very small percentage. But both those two things, price and anyone from the local area, you meet them on jacket and if they’re carrying bottles of vodka and we’ve actually caught people in the process and say, no, no, they’re not doing that. You can cancel. We’ll give you your money back. Okay.
Erwin Szeto [00:20:50] And there’s no recourse for them to, like, leave like a one star review or something like that.
Avery Birch [00:20:54] They know. I mean, sure, anybody can do that. But in these scenarios, people know what they’re doing. They’re having a party. Anything that people have had party, other spaces of the best reviews because they felt that, which is sort of funny. Hey, we know we were really ridiculous to deal with. So you did great. Five stars. Okay.
Erwin Szeto [00:21:14] I think that’s in Nova Scotia. They don’t think it will happen in Ontario.
Avery Birch [00:21:18] It’s an East Coast hospitality.
Erwin Szeto [00:21:20] I think that’s a letter.
Erwin Szeto [00:21:23] And it’s funny because I booked an Airbnb for Ottawa recently and I know I understand their concerns. So they asked the only one town for like, I’m here, I’m coming from Toronto with my live, staying with my wife and my videographer. And we’re here for business, taking some meetings. You know, I’m 40 plus years old. You’re free to Google my name. You know, I’m not a partier. I didn’t say that. Right. Don’t say I’m not a partier. I think that’s probably a red herring.
Avery Birch [00:21:54] There’s something I. I just thought of. And one thing that’s always stuck with me for anybody who is listening, that wants to get into the Airbnb space or was already in it and has had a very unfortunate booking where people have been disrespectful. The percentage of that happening is so small. Anybody who has experienced that as an individual property owner or maybe two. It’s just it’s just bad chance that roll of the dice because we’ve got 100 units, we have one incident and 99% just fine. So it’s like 99.5% fine. So anybody who gets it with one space is truly unlucky.
Erwin Szeto [00:22:34] That’s all fascinating. Okay. Every time you have. But I have a lot more questions.
Erwin Szeto [00:22:38] So.
Avery Birch [00:22:39] Let me ramble.
Erwin Szeto [00:22:41] Okay. Question around management, then. Have you ever had a short term person stay and caused damage and you’ve had to go back to them to get money?
Avery Birch [00:22:49] Yeah, it’s always small things, never anything big. And these do it to the resolution center. Airbnb, they’ll cover it. You’ll always get it somehow. I mean, the larger the cost, the more annoying you have to follow up with Airbnb, but it’s all quite easy going to come back. This might take some time.
Erwin Szeto [00:23:07] Maybe it’s a cultural thing. I’m just impressed how little problems you’ve had, or it’s just good screening.
Erwin Szeto [00:23:14] I.
Avery Birch [00:23:15] I don’t know. We probably do have problems. I’ve just. I’ve got a good team, we got good processes and we’re just diligent. So it might just be Halifax. It’s a very special place. Yeah, it’s pretty smooth. It’s very smooth.
Erwin Szeto [00:23:29] For someone looking to start at a to say someone wants to do Airbnb, their own property. What do they need to start with?
Avery Birch [00:23:35] Find the place that is absolutely fine. The place is disheveled. That is not nice. That is not put together. No, seriously. The places that are nice means there’s demand, means the landlords of power. And why would they trust you? Places that are disheveled means they are not in demand. And if you come along making an offer, you’ll actually get looked at. And typically a place people who have to shovel places are small mom and pop landlords that you can actually have a conversation with the decision maker. So grab a disheveled spot for a low rent and then paint it. We used to not paint spaces because I don’t think I’d get tossed out of the design. Say, Hey, I want a two year lease on this spot. You can get the value back next season. So paint it, decorate it really well, celebrate its works in your listing and you’ll make the best margin and you’ll be able to get your foot in the door right away. Do not go from premium to start. I mean.
Erwin Szeto [00:24:34] Oh, I think I’ve made that mistake.
Erwin Szeto [00:24:35] To my man.
Erwin Szeto [00:24:37] Buyer review was nice.
Avery Birch [00:24:41] My very first space was the shovel, but we quickly after thought, okay, so I did start with the disheveled space and I’m looking back at it. That was the best decision. So now we do it time and time again. We look for places that are not perfect because we’re getting a good deal, we have a good conversation and it just goes longer. So now we’ll sound like five year places like.
Erwin Szeto [00:25:01] Right. But I’m thinking whether the disheveled place. The landscaping will likely need a lot of work as well, and that’s something you’ll take care of. A typical of the shovel property, especially rental properties that most of my neighbors often don’t like. Rental properties like, for example, the landscaping hasn’t been taken care of. So that’s something you take care of as well.
Avery Birch [00:25:17] Take care of it. Our goal is we never want to talk to the landlord. We run the property as if it was our own. So we’ve got we’ll bring in landscaping, will bring in all the cleaning. We’ve got our own maintenance. Like if we’ve got a problem, we just deal with it. And then after the fact, they hear some stuff we’ve paid for and we get some of those back now. Well, all right. We make them orange when we need and to service our customers. It’s a cost of doing business. That’s how this up. For a while I was looking at who owns what. Just at the end of the day, that’s the business now, the space we need to maintain it, it costs us. It’s unfortunate, but in the end the margin is still plenty.
Erwin Szeto [00:26:01] Huh. I just to clarify, is looking for to sell a property. Are you still looking for in good neighborhoods?
Avery Birch [00:26:06] Uh, whatever the data supports, neighborhood doesn’t matter.
Erwin Szeto [00:26:10] Right. Okay.
Avery Birch [00:26:11] There’s a, there’s a customer for every neighborhood.
Erwin Szeto [00:26:14] This is cool. I like the area. I, I find a lot of people again myself. I’m, I my decisions are largely data driven versus people are largely emotional. Emotional decisions like, again, like I have a realtor business, I’ve worked for people on the ground and I’m showing people invest in properties and people will say, I don’t like the kitchen. I don’t this is a good investment property, right? Something like that. I don’t like the color of a countertop and like. But they don’t understand. Like, you’re not the customer. You’re not the one who’s gonna be renting it. I know you’re buying it. You aren’t a customer that way, but you’re not looking at your audience for the for who’s going to be paying you rent. Right.
Avery Birch [00:26:48] So they should be looking at the numbers versus how the kitchen is set out. They’re not the one buying the kitchen.
Erwin Szeto [00:26:54] Exactly. Every piece of real estate ever I ever look at or recommend to a client, it’s because it’s all data driven decision. All I see is ones and zeros and dollar signs, right? I don’t care about anything else. Like obviously there are soft parts of it, like how I judge a quality, safe neighborhood with nice neighbors and stuff like that. But again, all I see dollar signs behind that is I don’t know if it’s a nice neighborhood, it’s an area and a school. I get more rent. So again, it comes down to a dollar figure.
Avery Birch [00:27:21] So there is a platform for that that we use that anybody else who hasn’t looked it up just make data driven decisions. There’s a company called Air DNA. We’ve all used it. If you haven’t use it, I should get some promo from this company. I recommend them to everybody, but it’s the only way to make decisions. You just literally can type in the address and it will spit out comparables. They’ll show you a seasonality chart, knows exactly how much you’re going to make by making this type of listing. So just you run across this much like this much. Here’s the neighborhood. Okay, that your work?
Erwin Szeto [00:27:55] Yeah. I’ve used DNA as well today. Daneyko. So everything is a great for I’ve used it as well. I paid for it as well so I’ve used a fully I actually find it pretty helpful just even just go look at to surf your neighborhood for every move you own to see what kind of availability they have as well.
Avery Birch [00:28:12] Yeah, and it’s funny, you can, you can surf and see how much your neighbor is making on their property because it tells you it’s scrapes the data and says this property is making this much money when you can see, oh, no, I know our neighbors making 70 grand on their basement. Sweet, interesting, interesting. Yeah. I don’t know.
Erwin Szeto [00:28:30] Yeah. Then obviously the term, the marketing term is hack. I’ll dig into why they get more rent than I do. I’ll go through their listing and understand, try to understand what features they have that maybe that’s why they get more rent than I do. For example, a friend of mine, he has British properties in Niagara Falls and his niche, his go to strategy is hot tubs.
Avery Birch [00:28:50] Yeah, right topic at all times.
Erwin Szeto [00:28:54] I believe he said that his properties get double the rental income of properties that don’t have hot tubs within his own portfolio. So he’s you better believe he’s getting a hot tub for every property, even though it means his maintenance costs go up, his cleaning costs go up. But the rent more than covers it.
Avery Birch [00:29:11] That’s actually a strategy of Vacasa, the world’s largest short term rental manager. They have a hot tub program where if you want a hot tub at your space, they will pay for it, cash flow it and take it off your monthly earnings. It’s not paid for. So they know how well hot tubs work, that they’ll put their money where their mouth is and buy it and then pay it back in an increase in revenue by 30%, on average.
Erwin Szeto [00:29:39] 30%. Wow.
Avery Birch [00:29:41] And market dependent. There’s also study about hot tubs, which ones do the best and near colder areas. Mountains and activity doesn’t make the same effect in a city or hot places, of course. So if he’s in the mountains, absolutely. Like if you’re on a ski, if you’re at a ski hill and you like a hot tub as a necessity of activity called. So it’s a triple whammy.
Erwin Szeto [00:30:05] Mm hmm. Mm hmm.
Erwin Szeto [00:30:06] I have this FOMO issue. I feel. I feel like I’m just questions I’m not asking.
Erwin Szeto [00:30:10] I’m sure my listeners.
Erwin Szeto [00:30:11] Are like, they’re full of other questions as well.
Erwin Szeto [00:30:13] And Erwin David asked this question.
Avery Birch [00:30:16] Then trying to with some of the really hard but then some of the hardest one, the most insightful that you won’t learn anywhere else.
Erwin Szeto [00:30:23] Oh, actually, I’ve ever did. Yes. To me, it’s a ridiculous story. So I just got back from Bellville, which is like to me that the vibe was like Niagara on the lake east of Toronto. Right. We rented out a shack literally called The Shack. It’s never very transparent what it was. And when we got to the property, my friend booked this and had no idea I was finding out when I saw the property. So it was actually the original house on the property. They’ve since the owners have since built a beautiful custom home. It’s probably over 3000 square feet with a pool and beautiful pad of another house on the property as well. That was probably the second house that was built on the property. We’re living in the original house on the property. Tiny, if you can call it really it’s a one +11 bedroom. And the attic was finished and had four bedrooms. The place, including the attic under 700 square foot for sure, as a kitchen has a bathroom, low ceilings, whatever. We paid $460 for a mate. So literally a shack.
Avery Birch [00:31:25] It’s amazing what we’ll go if the value is there.
Erwin Szeto [00:31:29] I don’t know what the value.
Erwin Szeto [00:31:31] You know, but.
Avery Birch [00:31:32] You had a shack in the woods but is a customer. It worked for you.
Erwin Szeto [00:31:37] And for that market. There was nothing else that was actually the last property available. That market was just there, nothing else. Specifically, this is Prince Edward County, so there was nothing else. The demand was just that high because like Maggie on the lake, it’s the weekend. I stayed at a hotel the night before all the hotels were sold out. The vacation demand was just that crazy.
Avery Birch [00:31:56] And the place wasn’t actually spectacular, but it was more supply driven.
Erwin Szeto [00:32:00] That’s what I would say. I think some people would think that’s a nice experience. When I saw the place like, Yes, we’re in the middle of the country, the lake is, you know, 100 meter walk away. Right. When I first saw, like, you know, let’s go back to the hotel just by the highway. That’s but again, I’m not there. Tell your customer, obviously, but they got their money, so I’m very impressed. Get on them. I’m a social capitalist. So you’ve got that money. Get on you.
Avery Birch [00:32:29] You earned it.
Erwin Szeto [00:32:30] Yeah. You weren’t like, I don’t feel robbed by any means. If this is the last place available to rent, you’ve earned it, right? I don’t know where my point was, but there’s to your point about niche, I actually think some people would have liked this experience, like a rustic experience and like, for example, I want my kids to like the cottages. My, my kids see these days are all a fully renovated. It’s not like for my generation. We went to our friends cottages when I was growing up, you know, the shack and all that. Yeah. Like, for example, the walls between bedrooms wouldn’t go all the way to the roofline, right?
Avery Birch [00:33:04] Oh, yeah, that’s whatever.
Erwin Szeto [00:33:05] Right. You know, I mean, so there’s basically no division between rooms, really. You can hear everything, you know? I mean, that was my that was my context for cottages. You know, they’re not winterized. Like the heating is done through a wood stove. There is no gas furnace, there is no air conditioning.
Erwin Szeto [00:33:23] Right?
Erwin Szeto [00:33:24] Am I right? Is there a market? There is a market for this experience.
Avery Birch [00:33:28] Making a big comeback pandemic ignited it and it was strong before, so going anywhere. But it put a tremendous pressure on the space, local travel and whatnot. So that’s what we’re doing. We’re building these tiny, you think, seven Irish carpets, but we’re doing 200 tiny just to get away. And the ones are nightly rates, much less. But it’s a getaway.
Erwin Szeto [00:33:53] Okay. Yes. Tell us about the development or your 200 square foot. What?
Avery Birch [00:33:56] Oh, cabin. It’s a small cabin, winterized. It’s got a propane stove on the inside. It’s right off of the lake, comes with hot tub, comes with hiking trails and four wheeling. It’s just this adventure getaway. So it’s not so much the space and the size of the space that matters. It’s what value does the person get for being there. One thing that inspired me for just how simple things can be is I once read the story five years ago that someone dealt with Igloo and what’s the park in New York again? The main one.
Erwin Szeto [00:34:34] Central Park.
Avery Birch [00:34:35] Central Park. They built an igloo in Central Park, put it on Airbnb for $6 a night and they had customers and sold out instantly. It’s like, Oh, that’s great. It’s you can do anything, anything. They took snow from a park that wasn’t theirs and they said, Come on in, we’re open for business, but it’s amazing. So we got shut down after a week, but, you know, they made a park. So there we go. Great. It’s again, it’s not the space. It’s the experience. Space is just a vast. All to have the experience for building tiny combinations of building accommodations like safari tents with really nice furnishings, nice stove inside. And what it comes down to is all the amenities that we get. So our turnkey cost for our safari tent is around 5500 set up, and then in peak season they’ll turn out 4000 or 500. So basically it pays itself off in about 40 days’ time it. Right. And then there is price. So we can invest that profit into the property and the amenities. And that’s what we’re doing here. It’s essentially a place for people to get out of the city, unwind, kick back, relax, and then get back to do what they do best to kind of peel back the onion and improve people’s lives.
Erwin Szeto [00:35:49] This is wild because again, you have. Because why I want to talk to you because again, you have a large data sample to draw from to make your decisions and to share on the show with our listeners, our 17 listeners. No one listens to the show, by the way. I don’t know what you decide to. Come on.
Avery Birch [00:36:04] I just like talking to you.
Erwin Szeto [00:36:06] Okay.
Erwin Szeto [00:36:08] So you could have done anything. And this is what you’ve chosen to put your own your own money into. Yeah. You start off you start off pretty early in the podcast saying what you want. You want unique. And this sounds very unique. And there’s no skill, nothing like that. It is just like.
Avery Birch [00:36:22] That’s coming on your screen.
Erwin Szeto [00:36:24] Sorry. You’re saying your build a scale.
Avery Birch [00:36:28] It’s going to be one run. It’s going to be just for me. But yes, we’re going to pump from that lake and put the water onto this and then go snowboarding just for me.
Erwin Szeto [00:36:39] But I mean, just for you. Okay, so you’re on. Take your ATV up the hill. Taking it up the hill.
Avery Birch [00:36:43] I’ve seen these things on YouTube where people can I can make an electric winch set up for, like, 5000 bucks. I don’t need a lift. I don’t need a fancy tall rope. I just need a motor and a polly. And then you’re done. So I. Thousand dollars I can get up.
Erwin Szeto [00:36:59] Will just be able to use this.
Avery Birch [00:37:01] Guy once to work the safety part out because I don’t think $5,000, which is very safe. So maybe, maybe we’ll invest a bit more, but it’s starting for me. And then soon just we’re doing a Nordic spa here, we’re doing rock climbing, skiing, all sorts of things.
Erwin Szeto [00:37:18] Nordic sports are really hot here, like everywhere.
Avery Birch [00:37:21] Everywhere. So the one secret sauce that we’re looking at is not exposed till it happens in the woods. Kill it and activity, kill it. Why aren’t all these three things in one place that we’re doing?
Erwin Szeto [00:37:34] It sounds like it’s gonna be like a bachelorette haven.
Avery Birch [00:37:38] Oh, yeah.
Erwin Szeto [00:37:39] Oh, so you help. You’re holding back on me. Why am I bringing this up?
Avery Birch [00:37:46] Well, serve all kinds of people. People who want private we can put over there. And people who want not private can go over there. Party city. This is this is this is huge. It’s like 300 acres over here. It looks like a screensaver. Yes. And back to the checkbox. You said, do you want noise? Yes. You want noise? No.
Erwin Szeto [00:38:07] One thing that has been or expires is it. Be quiet.
Erwin Szeto [00:38:12] Right.
Erwin Szeto [00:38:13] Yeah. So I actually go into what’s called a barn. Yeah. I’ve never been to one of these before. I’m going to a I think it’s a Russian thing. Parties from my ignorance to the listeners, we might have one of our 17 listeners actually knows what I’m talking about. Yeah, like a Russian spa where you are allowed to talk and socialize and even have an adult beverage, but like sauna and hot and cold treatments, whatever. And then my own experience up in Collingwood in Ontario, which is the private best ski, it’s the biggest public ski resort in Ontario, it’s a massive battleground destination, is mountainous to mount as a massive bachelorette destination in the summer and which is their off season because of Nordic spires and quote unquote, mountains. It’s Ontario. It’s not it’s not mountains like out Easter at West or Alberta. But yeah, it’s mountains and yeah, and it’s an hour from the city, but they draw and they charge a ridiculous amounts of money and they’re busy. Yeah. So I imagine that to be the same for you.
Avery Birch [00:39:13] You know, there’s actually really. You’re totally right. And thank you. This is a fun. There’s this conversation around re-occurring of building a business around reoccurring revenue is smartest way to build a strong company. For the longest time I started searching everywhere else to think How can I have a company that has recurring? And someone made it abundantly aware to me that we do have a recurring revenue business, but it only really gets activated in the niche parts, not the commodity part, because we’ve got the space that is accommodating, affordable and people will keep coming back over and over and over. So with that knowledge we’ve considered maybe we had a subscription or something, but and Airbnbs can be reoccurring revenue which is an incredible.
Erwin Szeto [00:40:02] Fascinating. And then. Okay, so for the novice, explain why not just build your own platform, have your own website, and do all your bookings on your own, on your own e-business business, whatever. Versus. Why would why would you host on Airbnb like, for example, what is Airbnb? What do you what to pay what you have to pay to Airbnb.
Avery Birch [00:40:20] Airbnb deals the customers, not the host. It’s the way that we don’t really feel it, but they’re marking it up 10 to 14% sort of theory. No explanation, but we never see it. So it doesn’t feel apparent. We don’t see it. We don’t hear it. We don’t feel it. So it doesn’t even happen. Other booking platforms like Booking.com builds the house, so we actually get an invoice saying, Pay this money. It feels different. So Airbnb did something right in their design that it’s a no brainer. And for the novice. The big lesson I learned years back that led to my growth to come here was sell in bulk and don’t sell individually. You’re going to spend the same on time. Might as well sound bold. Airbnb is the world’s largest platform. Why find that? I’m not trying to win that race, so not with them. We both do better.
Erwin Szeto [00:41:16] Simple. And what was your experience with other platforms like the BRP, for example?
Avery Birch [00:41:21] Yeah, we started on the Airbnb natively and afterwards wanted to bring another business depends upon what they’re doing and again gives the demographics of where the buyers are coming from. Most buyers in Canada or Airbnb, the largest building of the RPO, is US and Booking.com is European. So depending upon what customers are coming to your market, you might want to consider those two channels from our experience. So we went through setting up on booking and VR, Bio and Expedia and other ones. It really became so clear why Airbnb became a unicorn. They made it easy and the others made it unfortunately complicated for no reason. No reason. So that’s the difference. Airbnb is just effortless and that’s why it took off.
Erwin Szeto [00:42:11] So, okay, I have a lot of questions. There’s actually a question I miss. Apologies for coming back to it. So for your business, I’m sure that people who want to start this business, I’m sure they’re wondering how do I convince a homeowner property owner to rent? To me.
Avery Birch [00:42:24] That’s a good.
Erwin Szeto [00:42:24] One. What kind of assurances do you give them? Because again, I’m sure the same people have read the same headlines. You know, you want to Airbnb, you want to do What’s My Property? It’s going bachelor parties or people puking, throwing detective the window like other stories to get around student rentals as well.
Avery Birch [00:42:41] It’s a I actually coached someone on that question and really anything that you can offer is going to help it is going after the disheveled space is the best way because you’re going to get your foot in the door. It’s all about getting your foot in the door when we want, when we see a listing that we like well messaged to say, Hey, I love the space. Like I said, for viewing in person, you do the pitch, you don’t do the pitch before you meet, otherwise you’ll never get to space. So we don’t say, Hey, I like your listing. Can I Airbnb? It would answer that I.
Erwin Szeto [00:43:14] Don’t know a book. So in way I.
Avery Birch [00:43:17] Love the space I would love to view it. Then you’re there, you meet and say, Hey, you know, this would actually do really well for what I’m looking for. And here’s what we do. I can say what we do now because we’ve got that, but once you have one space, you can point back to it and have success. So again, I think the first one, it just requires a little bit of grit, a cool offer that a friend of mine came up with. For him, starting was an offer, I can tell you, six months advance rent right now. And I was like, Oh, that’s clever. So having these an offer.
Erwin Szeto [00:43:50] It’s a heck of an offer. Yeah.
Avery Birch [00:43:52] So like, you want to get your first space, make an offer they can’t turn down and call it marketing because every space out that’s going to be a lot easier. You can point to saying, I’m successful and I’m going to do it again versus in the beginning, I don’t know what I’m doing. Can I have this is the bad batch. So a six months upfront was one thing. And so money talks in real estate. So if you can put more down upfront, it’s fine just to believe and you’ll make it back. And then if you don’t have that money to put down, it’s really talking about character. It’s like, this is my job. I have stable income. I want to create a side hustle and get into property management. I’ve made a sure fire plan. Here’s my steps. This is why this space works. I’d love to have it. And then you just have a conversation with this negotiation. You’ll get turned down 4 to 5 times, but the fifth one is like a five places.
Erwin Szeto [00:44:46] Got it. 4 to 5.
Avery Birch [00:44:47] I think the fifth place I got it was not like KFC. I didn’t think it was of the five.
Erwin Szeto [00:44:53] Yeah, so much better than that.
Avery Birch [00:44:55] Yeah, well, that’s not hard. This is bread.
Erwin Szeto [00:44:57] So of the 100 property, 200 properties in our doors, how many clients do you have? Are some of them bigger and have a sizable portfolio or a lot of these like mom and pop landlords like one three properties.
Avery Birch [00:45:09] It’s mostly mom and pop. But then we started working. We started working with small to midsize property management companies. And at this point we have organic referrals because we do a good job and are accountable. So what’s actually happened on our side is just showing up. Number one, role of entrepreneurship just kept showing up and they’d start sending us. Spaces like this one just came online. You want it? So we’ll get first kicking the can because we are reliable. They always say we always maintain it and they don’t hear a peep. So we’re like our outsourced management company. It’s just easier to rent to us.
Erwin Szeto [00:45:50] Okay, that’s fascinating. So a project management wants you as a repeat tenant, a scalable repeat tenant. And they still they still get paid their regular.
Avery Birch [00:46:01] I guess.
Erwin Szeto [00:46:03] They pay.
Avery Birch [00:46:04] They can start cutting back on their service or taking care of most of that. Because we have to. It’s a nature of the beast. Like, we’ll work with them and we’ll offload as much as we can to save money. But at the end of the day, if I’m looking at $100 a night reservation for two weeks coming up and I’ve got a plumbing issue. No, that’s getting plundered today. So.
Erwin Szeto [00:46:26] Oh, yeah, they like us.
Avery Birch [00:46:28] Exactly. They like us because we run their property. They just forget it exists. So that’s why we keep getting more spaces. Oh, wow. Fascinating and so simple.
Erwin Szeto [00:46:39] And so fascinating. And there’s another question I missed is, are you worried about or any of these areas? Do you have issues with legislation? But you see my posts on Facebook, highly recommend everyone look at my Facebook and see me. Duff Got.
Erwin Szeto [00:46:54] You here.
Erwin Szeto [00:46:54] You keep doing what we. DUFF Golf balls in in Ontario. We have a lot of issues around a lot of condos. And then actually we’re seeing a lot of municipalities now banning short term rentals. London was the latest case where I bought I can recall of one is not allowed to rent out their property less than 30 days. Are you seeing any of that in your market or do you have any concerns? Can you still operate in that environment?
Avery Birch [00:47:21] It’s coming down the pipeline. There are certain neighborhoods like what it really comes down to is only issues come from respecting neighbors like that is where all the push comes from. So there are certain properties we have in certain neighborhoods that we’ve just flipped to do 30 day minimums and all this regulation we see around the world. What I keep repeating to people that ask only affects things under 30 days. And the reason why is because if you look at the Tenancy Act in your province, it states how many days sublet can exist in a sublet is anything after 30 or more days. So there was never any rules written or anything below it, and that’s why they’re all being written now. So if you have someone for 30 days plus, it’s already written to the provincial and federal code from decades ago. It’s not going to change very quickly, so that even might get bumped around in coming years after they push all the everyone to 30 day minimums, then we might address that as well. But that’s our strategy. So we really focus on getting those longer term reservations, people that come to stick around 30 days or 45 and maybe have some properties in downtown commercial zones. And if they want to come in and say, no, Airbnb is over a commercial operator, this is a commercial property and here’s our commercial lease. So this is what we do. We house people, but at the end of the day, regulations are only impacting areas that are zoned for residential, that are being flipped in Airbnb because the neighbors are annoyed. It’s all it is. And we look for commercial areas and we look for 30 day minimums in neighborhoods that that. So we’re proactively adapting to that, just expecting it. We’ve been making a slow shift for the last couple of years, so whenever it comes, it won’t affect us. But that’s the strategy.
Erwin Szeto [00:49:14] Can you elaborate on what you mean by you look for commercial areas.
Avery Birch [00:49:17] Like we’ve got apartments that’s above a pizza shop, it’s on it’s on the main strip. And while they are apartments, that building is known commercially so we can operate it. One that we took on was downtown. It was above a convenience store. It was apartments. And again, the zoning allowed us to make it into a boutique hotel. Zoning matters, we don’t actually dove into, like, setting all these things up with all these tenants and whatnot, but we look for the right safety net and if the situation comes forward or talk to them, we say, well, we’re on the right spot. So we haven’t had problems yet, but we have a we have contingencies for if it does come along. And that’s been our growth now it’s been focusing on commercial and zoned areas just to keep people to the race. So I look at an investment now, it’s like, okay, now I’m going to decide what we’re just did. We opened up a hotel. They actually got a 25 unit, abandoned hotel and then commercially zones. We just made Airbnb and we’re going to start doing more of these because they’re awesome. The margins are incredible. It just needs a really good interior decorator and you’re done.
Erwin Szeto [00:50:31] I’m going to apologize to everyone because I think my listeners are going to buy every single abandoned hotel.
Erwin Szeto [00:50:36] In the.
Erwin Szeto [00:50:37] Next 30 days.
Erwin Szeto [00:50:38] Across the country.
Avery Birch [00:50:41] You’ve got a show on Netflix about motel flipping. Now I can see why after we did our first one is motels. If you know the historical hotel in your mind, they’re never very appealing. So make it appealing. And you already have spaces and there’s a market for it. So they just don’t want to go online and they don’t look appealing. The effects of two things you had a bargain on you.
Erwin Szeto [00:51:06] It’s fascinating clean it up and that. Hot tubs. You’re probably good to go.
Avery Birch [00:51:09] To clean the Hudson’s.
Erwin Szeto [00:51:11] Bay.
Erwin Szeto [00:51:12] Oh, I can’t imagine the reviews if you don’t have a clean, hot tub. Oh.
Erwin Szeto [00:51:17] No.
Avery Birch [00:51:20] Bad thing in my mind.
Erwin Szeto [00:51:24] So everything you do, you ranked for me your preference for investment, then so unique would come or be at the very top, I’m guessing. And then blow out a commercial now and then below. That would be a company. Regular residential. Yeah. So that could be a can be urban. That could be suburban.
Avery Birch [00:51:43] Exactly. If I was going to rank in that order that that’s I never thought of it that way. But that’s exactly how we worked overtime. Right. So to do things that are niche and finding space to make that happen a little more challenging. That’s why we’ve jumped into now by parcel of land to build a tiny accommodation because we’re doing our thing. You can’t jump by just like an appliance. We’re off way expensive in the city either. Just so we’re going more to unique now because it’s stronger in the long run.
Erwin Szeto [00:52:17] Got it. I want to thank you because that’s a really helpful point, because from what I’m hearing from investors, often they look to Airbnb to convert whatever their rental is, what the current use of the rental is. For example, it could be condo, it could be a single family home in the suburban suburbia. And then they’re thinking to go Airbnb. But you’re saying that’s a bit lower on your on your preference level for an optimized investment?
Avery Birch [00:52:42] Exactly. With one arm of our business and we’ll keep growing that and that’s fine. But so here and here’s a really good example for the listeners that have been wanting to share. It blew my mind. One year ago, when I dove into it and why we started becoming developers is at an average city space it takes some here’s a number that can sort of translate across a majority of cities for an average space, not top tier. If you’re just going to say like, let’s go on the average, just take something like 18 days to break even and remaining 12 to profit. Yeah. So the margins. Okay, but you got to sell every one of those nights. So if there’s turnover days that you don’t capital captured, you’re just losing profit. So there it is. 18. Breaking even. 12 for profit. Over the course of a year, the summer is different. The summer peak season is like five days, two weeks break even. Can’t be right with our cabins. It is three, three days, mornings to break even. The rest of it. So it’s quantum. It’s a quantum shift. It’s almost like eight times better. So we can take converts. If there’s vacancies, we don’t need to lower our price. We’ve established this is what this is where. This is our price. It’s lower in the winter and that’s fine. We don’t need to sell. And that’s what sort of happens in the commodity space. Airbnb is during off season; it takes 18 days break even. So that’s not happening. And this is why we’ve made the switch is just it’s a lot more consistent than the cash. The margin goes from 30% to 6570 crazy.
Erwin Szeto [00:54:29] I have a feeling your winter months can be busy. Just what I see here. Like Ski has slammed private membership ski clubs. I think they’re all they’re doubled. Wow. Like they went from like no one no one was interested failing businesses to having like waiting lists now for private ski clubs, right?
Avery Birch [00:54:47] Oh, the pandemic will change.
Erwin Szeto [00:54:50] I don’t know what’s going to happen going forward. I don’t know if people will change. I mean, like, for example, even though we’re all this recession talk, for example, Amazon Prime just had their best Amazon Prime ever. Right. Which is like ready to go. Yeah, it’s the best ever. Even though we’re approaching, we still have supply chain issues. We’re approaching recession or we’re in a recession already. But just because I my guess is part of it is because they have so many new customers.
Avery Birch [00:55:16] Sure.
Erwin Szeto [00:55:16] Right. And I think people have had a taste of more outdoor experiences. And I think that might persist. It may drop, it may come down a little bit, but I still think a lot of it will persist.
Avery Birch [00:55:28] Right. Yeah. There’s definitely some things that have become sticky. And one trend that we’ve noticed is people became more familiar with their products, their country traveling internationally might not be the question. And even now that we can, we’re still finding new spots. And, you know, within 3 hours that we really want to do, we’re not talking about exploring Canada. And if it was a thing like before the pandemic, people had this shift of I need to go to Paris. Well, you can just go to Collingwood actually. And now you’ve been exposed to it, although you’ve always noticed there. You’ve never actually been. Mm hmm. That’s a that’s a. Friend that sort of has stuck around and that’s been motivating us.
Erwin Szeto [00:56:12] And then we have barriers now. Just our airports are too busy. People’s luggage that we lost; I don’t really want to go too far. And then crossing a border, all the issues around Colvin, stuff like I personally don’t and I fight with my mum, with my kids. I definitely don’t wanna be crossing a border right at this moment because I don’t want to be, you know. So you test positive when you’re trying to cross, when you try to come back to terror. Now you’re stuck.
Erwin Szeto [00:56:36] With my kids.
Erwin Szeto [00:56:37] We’re all stuck here now. I can imagine what the expense is going to be. So I’m not really worried. Work. All right. Again, I’m so sorry to my listener because I’m sure there’s a lot of questions that they want to ask. How much does 300 acres cost in Nova Scotia?
Avery Birch [00:56:52] Oh, sure. Area. When I first was 250 and when I first got into this, I say, let’s figure out real estate. I was like, okay, that’s a good chunk of change. I don’t have it, but I’ll find it. What have later learned is that it is such a bargain, especially for anybody in the US. So this was 750 grand for.
Erwin Szeto [00:57:18] Us.
Avery Birch [00:57:19] Excuse me, his.
Erwin Szeto [00:57:21] This square foot condo in Toronto. So sorry. We need to reiterate this out. How much land did you buy it for? 750.
Avery Birch [00:57:31] Okay. We have small town of land, 250 acres. Well, small township. But we have like this whole background behind me. This is just a smidgen of it. You can see this. We have the dollars in the lake on this Canadian dollar. Yeah. And it’s got some cool zoning, too, that allows basically anything except fish processing and tires. I don’t know, but we can do anything here. Right.
Erwin Szeto [00:58:04] Hot tubs are.
Erwin Szeto [00:58:05] Good.
Avery Birch [00:58:06] No fish processing. We don’t have it.
Erwin Szeto [00:58:08] So no fish processing or tire processing. That’s. That’s your organization.
Erwin Szeto [00:58:12] Okay, that’s it. All right.
Avery Birch [00:58:14] Yeah, I know, but this was a cool investment. And later, after the fact, you realize just how good of a deal Nova Scotia and Atlantic Canada property is. It’s almost oceanfront. We looked at a piece of oceanfront, those 40 acre first six. The zoning was weird. We’re lucky alive but it’s still a 2% and buy our most popular surf beach where parts of the process looked at the 350 acre island that was connected by a small price so we could build a road that was 2 million island and it has like 14 kilometers of oceanfront. It’s crazy.
Erwin Szeto [00:58:54] It would you mind providing projections on what this 250 acre property is going to generate? So this.
Erwin Szeto [00:59:01] Is.
Erwin Szeto [00:59:02] Insane.
Avery Birch [00:59:02] Well.
Erwin Szeto [00:59:03] One of the one of the property taxes on Twitter, 50 acres.
Erwin Szeto [00:59:07] No more. No, no, no. Who cares? Please, cash.
Avery Birch [00:59:13] Probably accounting will sort it out. It’s so the easiest way to break it down is to say how much? How much does a space generate? Is the word a space is not a cabin, it’s not a dance tent. Whatever space, that’s matters because we’ve had scope creative and we’ve dialed back our cost per capital. Yeah. Any space in this atmosphere will generate 30,000 every year.
Erwin Szeto [00:59:41] Excuse to Twitter.
Erwin Szeto [00:59:44] To a two inch square foot.
Avery Birch [00:59:46] Brand new low end 25. And we really nail it with 45. But I think going to run. So for each combination we put up, we just run the math. All right. So we want to turn this into $1,000,000 operation. And the goal is to get to 40 spaces next three years. However, we’ve totally deconstructed our scaling model, and that’s part of our secret sauce, which anyone wants to talk about off this call, but essentially just driven down the cost to get to. I think you can get $1,000,000 business in our first nine months, which would be awesome, can only do that because we’ve done it before, but I want to do it again. And in under a year.
Erwin Szeto [01:00:31] As you mentioned, you didn’t have the money. How are you financing capitalizing this?
Avery Birch [01:00:36] There’s a really cool program that exist. We had it was a mix of private investment brought in total of 355 an investment the land cost 750 and to develop it out, we’re going to be one and a half million. So the bank saw it as.
Erwin Szeto [01:00:53] A half million.
Avery Birch [01:00:55] Yeah. As our project to build out and the bank saw it as okay you need, you need to have X amount, percentage of one and a half million and then they’ll fund the rest. So one method was we did a vendor take back seller financing to get part of that down payment to finance the rest of the friends and family. And then the banks came in in Canada, there’s federal Canada backed loan up to $1,000,000 the loan over 20 years really simple interest and.
Erwin Szeto [01:01:26] Well sorry which.
Avery Birch [01:01:27] Makes you that.
Erwin Szeto [01:01:27] Business devolving back to Canada.
Avery Birch [01:01:29] No, that’s the only one that doesn’t do it. But anyway.
Erwin Szeto [01:01:32] However, anybody will do this.
Avery Birch [01:01:34] We’ve got the most success at credit unions. I love credit unions. Credit unions will take a chance on you, whereas big banks just put your number on a computer and it says Sorry. Peter said no anyways that it was a mix of credit unions who know about federal programs and then better take back combined with private financing. It was a painful process, but we figured it out.
Erwin Szeto [01:02:00] All financing developments are painful. Process is a tough listener, like listener like the straight up shows culture of real estate investing. These things aren’t easy, you know.
Avery Birch [01:02:11] But this is crazy of we’re going to scale again though is vendor take backs that’s been our biggest hack to scale our business or anything that’s by our properties that we have landlords Airbnbs with. We’re using that to buy development properties. Let’s make a deal. Hey, I’ll give you your asking price. You contribute 100,000. This will pay it back over two years.
Erwin Szeto [01:02:36] Plus interest.
Avery Birch [01:02:38] And depends on discussion.
Erwin Szeto [01:02:40] Got it.
Avery Birch [01:02:42] It depends. It always happens.
Erwin Szeto [01:02:44] Right. And of course, to me, it means, of course, that you’re speaking directly to the owner. You’re not going through an agent, have a B2B discussion.
Avery Birch [01:02:51] When we went to the agent for this, to be able to.
Erwin Szeto [01:02:55] Have to get agent.
Avery Birch [01:02:56] Confidence. Oh, yeah. But it also came because we had went looked at or three properties and the last one we went to go make an offer on someone else took it on the night of my wedding and I was like, I’m done. I’m done. Searching for going back to the drawing board, picked five places and said, What’s our ideal space? We ended up with this one and by this point we had been done all of our research be exactly what we needed. We have been turned down multiple times. So when we came into this meeting, we just said, we want it. We’ll give you the price, but we need your seller to play ball with us for some seller financing. They can throw 100 grand our way. We’ll figure out the terms. And just sheer confidence after failing is what got it through. Because the first people, they didn’t have to come. Complicated, but sheer confidence in a very good agent. That’s how we got it done.
Erwin Szeto [01:03:53] Yeah. You want to keep that person’s number.
Erwin Szeto [01:03:54] For life changed for all.
Erwin Szeto [01:03:57] Its agents, in my experience, have no idea what vendor financing means. They’re learning in this market.
Avery Birch [01:04:04] It works a lot better. And in a buyer’s market too.
Erwin Szeto [01:04:07] Yeah. Yeah. Oh, and just out of curiosity and I’m sorry, I know we’re way over time, so I’ll let you go soon. Seriously, your trees are cut down and roads to build. How long are these properties sitting on the market? Like, for example, there’s 250 acres that you’re developing. How long? How long was it available for?
Avery Birch [01:04:28] As a question? I don’t think it was too long. I think it was maybe different. I think it was like 150 days. Okay.
Erwin Szeto [01:04:40] So anyone could ask you, quote unquote.
Erwin Szeto [01:04:43] Anywhere, could.
Avery Birch [01:04:44] See in some of the some of them, like the first one that had been on for years on and off. Although there’s a huge there’s a huge boon for people buying houses and markets. Some houses are on a day, most for day. That didn’t seem to affect large land parcels, small sized land parcels, maybe more affected, but medium, large, lots of opportunity. And the cost per acre is way less. So part of our fall off plan, if we failed, was we could cut a chunk out and sell it for some capital. So if you can finance a medium size or anything that’s like maybe ten acres in above less competition on it.
Erwin Szeto [01:05:29] Mm hmm. Hey, Avery, I apologize. I didn’t ask any early journey questions. How did you fall into this business?
Avery Birch [01:05:37] Oh, that’s. Yeah.
Erwin Szeto [01:05:39] I did. Before short term rentals.
Avery Birch [01:05:41] My whole life, I thought I was an entrepreneur. So I kept trying and trying and trying failed at about ten different things that had no connection or relevance, just being part of the story. And I was running a painting franchise, college press that it works kind of thing. And that taught me all the fundamentals, how to run a business. Then all those my failures started producing and one day a friend just mentioned that you should put your room on Airbnb. I tried it. I had two bedroom, one bedroom with my own rent. So I thought, well, this is great. Like, oh, yeah.
Erwin Szeto [01:06:16] So you’re house hacking. All right, so you have to.
Erwin Szeto [01:06:19] Have two bedroom. Okay.
Avery Birch [01:06:20] I live in a two bedroom. I had one. I rented the other room and one room for my rent. Okay. I’m living for right now. This is great. How do I do more? And then I go home. And when I look back later at why this really stuck for me and why I love providing it to others is it totally inhibits my core value of money. I just I can’t get involved in anything that I can’t have a little chaos then and there maybe allows that allows flexibility in my freedom best when I love promoting it to others because Nicole got the full 40 hour work based contract, you can get whatever you want. It’s whatever you want. It’s blank, blank out, big or small as you want to go to for.
Erwin Szeto [01:07:05] A very thoroughly enjoying this and use up your whole afternoon if I could. But I only asked you for an hour and if anything, I’m anything I’ve forgotten to ask, anything else you want to talk about but. Well, actually, no, I meant I, I said.
Erwin Szeto [01:07:22] I.
Erwin Szeto [01:07:23] Has to explain where the name of the of the resort came from. I don’t know if that’s the right term.
Erwin Szeto [01:07:29] Just torture’s.
Erwin Szeto [01:07:31] Peak.
Avery Birch [01:07:32] Order as well. There is a lake, a very well-known lake in Nova Scotia called Porters Lake, and this is right up against it. And that’s at the very end and it has a mountain on. So Porters Peak was just it gave us the right alliteration. Sounded good to say it was multifunctional so we can grow into it. Orders take spot orders keep rock money orders things our orders people there’s so many fits everything and we all we also get the natural SC for one people type in porters lake porters oh what’s porters take so we might get accidental visitors or just try to go to the lake.
Erwin Szeto [01:08:17] Frickin love it. It’s such a I studied business in school so I have a bit of a marketing business geek as well. But you borrow from an established brand, which is Porter’s league, to build it into your own business versus some people would do every resort package, you know, SEO value.
Avery Birch [01:08:40] Yeah. So when you type you go to Google and it’s almost already on Apple Maps maybe even done it.
Erwin Szeto [01:08:45] Fricken love it and then the URL is Porter’s peak dot COM. You got the best one. Good for you. And then like I mentioned before we start recording I thought was I thought it was Porter’s quote Porter speaks.
Avery Birch [01:09:01] Porter speak.
Erwin Szeto [01:09:03] I.
Erwin Szeto [01:09:03] Probably I’ll probably actually help people remember the name.
Erwin Szeto [01:09:06] Of.
Erwin Szeto [01:09:06] Porter Porter’s. Obvious there’s no apostrophe. Yeah, there’s Porter. Porter’s pique. Anything else or anything else you want to tell us about the development? I haven’t asked. Other than the Instagram is also Porter. Porter, speak up.
Avery Birch [01:09:24] Follow our Instagram. One of my co-founders, my business partner, Victoria, she runs the Instagram. And it is not only entertaining. It is also educational. And it’s also going to make you want to come here. So our Instagram is very lively. Please check it out. And this is something that we’re growing. We’re going to be taking this model across the country. A dream of mine as a company across Canada. And this is this is our next it’s our bread and butter. And you are interested to learn more or want to learn how to do it yourself? I’m happy to take your email and account and.
Erwin Szeto [01:10:01] You need to talk.
Avery Birch [01:10:04] I wonder if we’re not working together. I will happily help you because you know there’s no such thing as competition, space.
Erwin Szeto [01:10:12] Anything in this part, right? I don’t want people competing for your time.
Erwin Szeto [01:10:15] Okay?
Erwin Szeto [01:10:17] Competing with me for you.
Erwin Szeto [01:10:18] Time.
Avery Birch [01:10:19] Doesn’t exist. No time left on your bike.
Erwin Szeto [01:10:26] Of all this important slots in your town, we.
Erwin Szeto [01:10:30] Please.
Avery Birch [01:10:31] I’d love to take this offline. This is a fun chat. I want to learn more about what you do to Erwin fantastic podcast.
Erwin Szeto [01:10:38] I’ll start the recording about and then we can keep going and I want to bore the listener with what I.
Erwin Szeto [01:10:41] Do.
Erwin Szeto [01:10:45] For the listener. One last time. Use the Instagram Porter’s peak also Porter’s peak dot COM. If we thank you so much for doing this, I knew you were a big time man. Is this ever fascinating? I loved how we got into the weeds. You know, I was actually thinking like, how am I gonna tell the show? I think the title of the show is If you gonna listen to a podcast on Airbnb, you have to listen to this one.
Avery Birch [01:11:06] So that’s a great tool.
Erwin Szeto [01:11:08] Thank you so much for being a wonderful guest and being so open. Yeah. And you know, it’s hilarious how we met introduction. We were both at the same conference in our and my mutual our mutual friend met you there you already knew me well oh yeah. So you meet this every guy.
Erwin Szeto [01:11:24] Right.
Erwin Szeto [01:11:25] And if, if, if you weren’t there, I wouldn’t have never done the introduction to you. So my point I’m trying to get to is folks like you need to get out there, right? You can’t just sit back on your Facebook and Instagram and think you’re make people and make connections. All right. So. Yeah. Great point. Yeah. Going to shake the tree.
Erwin Szeto [01:11:44] And then you’re.
Erwin Szeto [01:11:44] Stuck with someone’s going to take up all you.
Erwin Szeto [01:11:46] Time.
Erwin Szeto [01:11:48] So I get the value. My 70 listeners getting all the value every month.
Erwin Szeto [01:11:54] This is.
Erwin Szeto [01:11:55] Amazing. Thanks. Thanks again so much for doing this. Let’s go to your other recording or any final words. Anything else you need other final words.
Avery Birch [01:12:03] Go out there and get your space started and you’ll never regret it.
Erwin Szeto [01:12:07] All right. Thanks so much. Before you go, if you’re interested in learning more about an alternative means of cash flowing like hundreds of other real estate investors have already, then sign up for my newsletter and you’ll learn of the next free demonstration webinar and I’ll be delivering on the subject of stock hacking. It’s a much improved demonstration over the one that I gave to my cousin Chubby at Thanksgiving dinner in 2019. He now averages 1% cash flow per week, and he’s a musician by trade. As a real estate investor myself, I got into real estate for the cash flow. But with the rising costs to operate a rental business, it’s just not the same as it was 5 to 10 years ago when I started. Never forget a cash flow reduces your risk. The more you have, the more lumps you can absorb. And if you have none or limited cash flow, you’re going to be paying out of your pocket like I did on a recent basement flood at my student rental in St Catherine’s, Ontario. If you’re interested in learning more, register for free for my newsletter at WWW. Truth about Real Estate Investing dot CA. Enter your name and email address on the right side will include in the newsletter when we announce our next free stock demonstration. Find out for yourself what so many real estate investors are doing to diversify and increase our cash flow. And if you can’t tell, I love teaching and sharing the stuff.