Combining Real Estate and Stocks with Cody Yeh

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Podcast Transcription

David Dubeau [00:00:09] Hey everyone, this is David Dubeau. With another episode of the Property Profits Real Estate podcast today zooming in. You got a fine young entrepreneur, Cody. Yeh, how are you doing today, Cody?

Cody Yeh [00:00:20] I’m doing fine. How are you doing, Dave?

David Dubeau [00:00:22] I’m saying, Yeah, that’s what we got on your hat. All of all over the place. Nevada’s awesome.

Cody Yeh [00:00:27] And as to why they’re back

David Dubeau [00:00:28] here, he is a real estate entrepreneur. He’s also a stocks and options guy, too. So we’re going to be talking today a little bit about how he combines the best of both worlds to create wealth for himself. So, Cody, good to have you on the call.

Cody Yeh [00:00:44] Yeah, thanks for having me. Very excited to chat about stocks, real estate investing and anything personal finance.

David Dubeau [00:00:50] Yeah, sounds good. So first of all, you came from Taiwan, you moved to Canada, where I believe you’re 18 years old. So your yes, first generation, you live in Toronto now, if I’m not mistaken. Is that right?

Cody Yeh [00:01:02] Yes. Yes. Where’s your land in Vancouver? Two years there ply two u after he went to school

David Dubeau [00:01:08] and got a degree as an engineer. So you’re a smart guy, too.

Cody Yeh [00:01:12] Well, I wouldn’t say smart. I’m just I don’t like reports. Somewhat good at math.

David Dubeau [00:01:18] Well, for those of us that are mathematically challenged, that qualifies as being a smart guy. So that’s cool. So you got one of those corporate jobs. You did that for a while and then you said, This sucks. I want to do something else. Tell me. Walk me through that process for yourself because you’re a young guy. It’s not like, yeah, you put 20 years in and then finally figured it out. What did that? How did that all come around for you?

Cody Yeh [00:01:40] Yeah. And I never sure there’s any other pockets. But the truth is, I talked to the higher management at the company I worked for, and it was actually part of their plan to let us young people and then pay us over time. And I was doing a lot of overtime from 2013 to 2019 and thinking that I could save up and get ahead. And this finance game, right, but I pay a lot of tax. But the thing is, the management were trying to let us work really hard, pay us a lot of overtime. But once you get to a certain level, they stop paying you overtime where they pay the wait time. So by that time, you are probably they hope that you already have a family, has some kids. So you are really you’re kind of stuck. You have too much liability to move, right? But I kind of realized that and I was chatting with the upper management, the kind of small I say, Yeah, that was our part of it at the game. And I’m like, I never, you know, I think that’s part of the game, but I realized that, hey, if that’s what we’re doing, but you know, as I move up the management role, then the more I was at work, the more stress I have. It’s not the other way around. So I’m like, Wow, this is not what I was looking for. And plus for people in my generation made that entire pension system. Well, first of all, should we trust pension system? That’s one topic. Next problem is, you know, can I keep doing this right? So I kind of make a decision and say, you know, I’ve been doing a lot of things on the side. I should probably look for different things besides just working 30 years. And really, the pension is different for us. It’s not like I worked

David Dubeau [00:03:14] for 30 years. That what I mean. I get it. You figured out that the game was rigged against you in the chorus. So what sparked that that initial search for something different? What was like your first revelation that there was something outside of

Cody Yeh [00:03:32] the corporate world? Yeah. To be honest, both my parents are not entrepreneurs, and no one really taught me this. But when I go out to a lot of real investing events and I see people who maybe be around my age or older and they seem to they are living a different life, right? And they might not start from there, but they work hard to get there. But it’s not because their end comes bigger. It’s because of other investments like real estate or stocks or, you know, just different vehicle, active business, small business you’re running. And eventually they can fire themself or not fire themselves or you hire people and leverage. So that’s how I see the three pillar that people are getting to where they are, but not just by working away up in the corporate right. So that’s kind of my aha moment. And I, I just don’t see myself doing that. And I just, you know, the definition of insanity is keep doing the same thing and expect different results. So I really keep hearing that. I’m like, OK, I going to do something different, right?

David Dubeau [00:04:30] So what was your first? What was your first stab at it when it comes to doing something different than, you know, trading hours for dollars?

Cody Yeh [00:04:40] But I start playing with stocks in 2011, when I was in school, second year and 2016 to 2018 I was trading. I was day trading in the Asian market because of a 12 hour difference. So I can actually have a second job really. And when I’m not doing day trading, I’m actually attending a lot of real estate seminars. That’s when I said, OK, I need to save up more for my down payment, right? And that’s when, you know, I then save up enough. I just put in 50k in my. My mom’s investment in Toronto now, it turns out to be genius, but at times you say, I don’t want to use my first time home buyer. I don’t have enough money for a down payment for a half million house. So here, man, I want 50 percent that she’s a fine, right? And after that, I keep saving by my single family home and to my duplex after that. And I just keep accumulating, right? And then we all know what happened for the past few months when this video comes out, maybe even higher, but just all the property kept going up in Ontario and the GTA area.

David Dubeau [00:05:39] So, yeah, it was. It’s definitely a good run, that’s for sure. So that’s awesome. All right. So you’ve got experience in both real estate and stocks. Tell me, in your opinion, what are the pros and cons to both of those because you do both, right? Yes, I do both. Yeah. So tell me from your standpoint because I’m a real estate guy. Yes. And you know, I tend to bash stocks and bonds, mutual funds and all that kind of stuff. But that’s like, that’s because I’m not knee-deep in it. You know, like you are and I have an investment time and got good at it. So yes, from your standpoint, what are the big benefits of real estate? Big benefits of stocks? And how do they fit together?

Cody Yeh [00:06:24] Awesome. Great question. The benefit of stock and option is you have better liquidity, OK, and a seller’s market. Yes, you can sell your house fast, but usually and stocks are option, you can have a click away. Then you can get your money back. Might be a good thing. Might be fast. Might be a good thing. Might be a bad thing. Right? So that’s one thing. That’s a major difference now in real estate as inherently leverage three to five times, right? Because you put down 20 percent, sometimes five percent to 35 percent, depending on if it’s first time home buyer or a commercial, right? So you inherently leverage three to five percent. So because of that inherent leverage, the appreciation is magnified by three to five percent. So if you have the cash flow three times, if you have someone paying down your mortgage, the appreciation is a lot brighter. So it’s good to build wealth like that in the long term, assuming if the price stays the same will go up right now on the other side. Stock in options where I generate the cash flow because special and GTA area, it’s hard to find a house right now with our bidding war. Not to mention, you know, if you want to buy something and have a positive cash flow, good luck. You probably drive one hour, one half hour if you want to file MLS. If you find off market wholesale and I do wholesale as well. You better make sure you do our own homework because don’t trust everyone, right? Do your own comps and all that? But it’s very tough unless you put in some money to add value to the property that maybe you have a chance, right? Turning to illegal duplex. The Duplex two triplex or something that adds value or buy a really rundown house, right? But if you don’t do that, it’s hard to find that cash flow. And that’s where the stock and option comes in. You know, on top of your full time job or your full time business running, you can use stock and options to generate the cash flow to fund to buy more real estate. So when you buy more real estate as a real estate goes up, you refinance out and put it in the trading account, generate more cash. So now, instead of just having a choice of doing joint venture raise capital, you could potentially instead of buying one house, one property per year. Now, you might be able to buy two or three because you have another source of income. Right to generate that extra, it’s not just sitting in the bank or sitting in a mutual fund. Yes, it’s not earning a lot. You have another vehicle that generates a lot more cash flow than you can. You know whether that’s, you know, reduce our you work to give you that lifestyle or, you know, increase a lifestyle or just save more. See faster, better return and then put it into real see. To me, that’s a good circle, right? Active business stock option. Real sandblasting. To me, that’s the full circle of it.

David Dubeau [00:09:09] All right. Sounds good. So in theory, this sounds very, very good. However, we’ve all heard of situations where people have lost their shirts in the U.S. stock market and with auctions. Definitely that’s even a yes or riskier strategy when it comes to investing in people like insurance, real estate. You know, you guys go, go, go volunteer right now. Don’t remember when the markets crashed, but they have. All right. Again, you never know. Yeah. So it was. No, I mean, in theory, it sounds good. But what? What are some, some ways that people can minimize not using Kathy Jarvis? Quick call, but are there ways to minimize your risk? Doing this is a

Cody Yeh [00:09:54] very good question, Dave. I love it. I love people from different perspective, right? Real estate special. Here’s the thing when in real estate, you do your fundamental analysis. For example, you first pick which market one invests in. You do all your research on population growth to GDP. Diversify, hopefully diversify industry. And you know, that’s really the big three and interest rate. Yes, you want to stay lower, but you do your sensitivity testing that’s ever increased by three percent. Can you still have a positive cash flow rate? So you do those things now in the stocks and option, you do the same thing. You do fundamental analysis. Yes, you generate cash flow, but the underlying stocks of that company is the stocks you believe that will thrive and 10, 20 years, that’s the same thing in real estate. The reason why investing is because I believe will thrive and 10 to 20 years. So same idea happened stocks. I’m not trying to get a quick one when people blow up their accounts because they get greedy as because they think this money is easy when the market goes up. So they think they’re genius, so they overleveraged. Then they can blow up their account. But if you stick to a good fundamental and you understand, Hey, don’t overstretch yourself, right? Overstretch yourself, just say in real estate a lot developer went bankrupt. Why? Because they stretch yourself too thin. They’re highly leveraged. They get too greedy where they want to get too many land and wait for it. But there’s a market downturn. They don’t have cash flow come in. They’re forced to sell the worst price. And this could happen in stocks as well. I’d say I only have $100000. I bowl another 200 K now. If market turned down a 20 percent that we just see in the last two weeks, hey, then someone will knock on the door. And it’s not just said banks. Banks may give you some time right now. The stock market, this is real. They will right now before them. You know, you probably heard about the margin call, right? If you don’t have enough money, someone will call you and say, Sir, please put in this amount of money by this time before the market today. But now they don’t do that if you don’t meet our requirement. Someone will come in or artificial tellers will come in and your position at the worst time possible. Right. And that’s why this is getting a very bad reputation because a lot of people treat this as a casino as somewhere they can make quick money. But they don’t have that mentality right mentality to say, we want to hold the stock long term and then have a short term pullback. Let’s just a real a pullback in twenty seventeen. That’s fine. I’m still cash flow positive. People are still paying down my mortgage and then the long term is rising right by a lot of people don’t have that when the market come down, the fear comes in and they sell out the worst. Whereas when the market go back up there, I Mr. OK, now it’s higher entry point that when they sold it, so now they buying righter? And now a pullback like, Oh man, OK, I missed it. OK, now sell at a loss, right? So they keep getting into that game. And that’s why I say it could be good. What could be back? Because as one click away, but you need to have the right mentality to do that, to win long term, right?

David Dubeau [00:13:01] Yeah, it makes sense. So Cody, you talk about stocks, you’re talking about options. I think most people understand what investing in stocks is all about. But can you give us a brief definition or description of what options are?

Cody Yeh [00:13:14] Yeah. Options as basically how you can use less money to control the underlying stocks. For example, if you only have that, say it’s almost a real estate. REI is fifth of the price of the housing. A controlling the house kind of end that way

David Dubeau [00:13:33] down payment kind of thing.

Cody Yeh [00:13:34] Yes. But you know, there’s quite comp complex if you really want to get into it, but. The strategy I like to use is what I put the analogy where I buy off market deal, where you will walk up to your neighbor, you already buy the house across the street, you walk up to your neighbor, your neighbor is a free. His house price may go down by 20 percent because CMHC. Keep calling this since 2020. Right? But you do your homework. You do a fundamental analysis. You know you want to own that property. You still cash flow positive. If something happen, you can hold it long term. Good. Now, your neighbor is afraid his house price may go down 20 percent, so you walk up to him and say, Hey neighbor, I will, I will. We will sign an entrance. I’ll sell you insurance. If your house price goes down by 20 percent, I will buy your house at, you know that, say, 20 percent. I’ll buy it. OK, I’ll buy it. So you don’t have to worry about the tank more. But in return, because they sell you that interest, you pay me $10000. Now, next year come by right after house price stays, the same will only drop 19 percent. You know, we asked three appraisers to come in. They’ve only dropped no more than 20 percent. Guess why you keep that $10000? And then you know you can keep selling that interest to your neighbor. Now, if it dropped more than 20 percent, you’re already prepared for it because, as you know, as cash flow positive is a place you want to buy anyway, you know, a long term is good. So you buy at a discount 20 percent and you keep that $10000 they pay.

David Dubeau [00:15:04] So I just about options when it comes to stocks, not real estate.

Cody Yeh [00:15:09] No, I was using that analogy because you can actually

David Dubeau [00:15:13] if you can’t do anything with real estate, you can get an option on a property. Same here, right?

Cody Yeh [00:15:17] So you can do this and stock option. Mm-Hmm. And then there are hundreds and thousands of contract on highly traded stocks, for example. Not giving our stock advice, but let’s say all the Fang Group, right? Facebook, Apple, Nasdaq flies anything but all those big company, your thousands of people waiting right now for you to do that. They will pay you money when you sell them interest.

David Dubeau [00:15:40] And this is a before you can buy, you can buy an auction on somebody else’s stock portfolio. Yes. So basically, they’re betting on your betting on the value going up and you’ve locked in a price that you both have agreed on. And they’re hedging that might go down and they can sell it to you. You have to buy it at a higher price. Yeah.

Cody Yeh [00:16:01] So basically, this strategy is where someone on the other side, what the market, the Dow, afraid the market will go down so they pay you money for that interest. Now you’re like, Hey, I have a buffer of 20 percent, so it goes down by 20 percent. I’m happy to buy that. Whether that’s a property or that’s a stock, I’m happy to buy it at a discount, but you need to pay me that. So you’re just here waiting. So if the stock goes up, you make money stops these the same. You keep the premium stock goes down, you know, not, you know, not over 20 percent. You don’t have to buy the house. Right, right. If it goes below that, you just buy the house. The house you want now is at a discount price so

David Dubeau [00:16:43] you can exercise your option.

Cody Yeh [00:16:45] They can exercise and force you to buy it. And you just say, Oh, now I get the stock I want at a discount. Great. I keep all the premium they pay for this insurance. I keep it all. So I further reduce my cost of ownership. Right. So in a nutshell, that’s kind of like the charge for.

David Dubeau [00:17:01] So that’s obviously a heck of a lot more involved. I think you’ve got some, some education. There’s some ways for people to find out a little bit more about this. If you want to find out more about career and how you’re combining real estate and stocks and options, what should they do?

Cody Yeh [00:17:16] Well, yeah, I run a free webinar once every two weeks and it said WWE thought today slash free Dash webinar. I think you can put it in. And it showed no

David Dubeau [00:17:29] emotion dot com and then you can find a free webinar reception.

Cody Yeh [00:17:32] Yes, and they can sign up there. Yeah. And then they

David Dubeau [00:17:34] should put the links in the show notes as well. Yeah.

Cody Yeh [00:17:37] Yes. I’m not sure if I said it right,

David Dubeau [00:17:39] but that’s all right. All right, Cody. Well, this has been a lot of fun. Thank you very much for your insights.

Cody Yeh [00:17:45] Yeah, thanks for having me.

David Dubeau [00:17:46] All right, my pleasure. All right, everybody. Take care. And we will see you on the next episode of the Property Province Real Estate podcast. All right. Well, hey there. Thanks for tuning into the Property Profits podcast if you like this episode. That’s great. Please go ahead and subscribe on iTunes. Give us a good review. That’d be awesome. I appreciate that. And if you’re looking to attract investors and raise capital for your deals, then we invite you to get a complimentary copy of my newest book right back there. There it is the money partner formula. You got a PDF version, an investor attraction book dot com again. Investor attraction, book dot com. Take care.

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