Condo Conversions, Analyzing 200M Portfolio and Geothermal Heating with Kasey Wong

Microphone 8 35

Podcast Transcription

Georges El Masri [00:00:00] Ladies and gentlemen, thank you for tuning in. I’m your host, George El Masri, and you’re listening to the Well Off podcast where today I interviewed Kasey Wong. Kasey is a big time investor who owns a lot of apartment buildings, and we touched on his recent land acquisitions. Last year, he bought three pieces of land in the Toronto area that he plans on building apartment buildings on. So we touched on that a little bit. We also talked about a recent apartment building that he purchased. I believe it was a nine unit building, and he plans on splitting it up into condo units. So taking those nine apartments and making them individual condos and then selling them. So we rent some of the numbers on that, what he expects to make and profit. So I think if you guys are interested in the whole conversion process, this will be a cool one for you. And then finally, we touched on analyzing a $200 million portfolio that he was looking to purchase. Somebody was looking to sell all of his units. Everything he owned, all in one shot, didn’t want to separate them. So Kasey was looking to see how he can make the numbers work and kind of talked about that. So that’s a huge mindset shift for a lot of people to come up with. $200 million is a big deal for most of us. So if you want to kind of understand how a big time investor thinks this is a great episode for you, and if you do appreciate it, I ask you to leave us a review on the Apple Podcasts platform and also to subscribe and leave a comment on YouTube that would be greatly appreciated. I appreciate all of your support throughout the last few years that we’ve been doing this podcast, and if you want to connect with me, if you’re interested in looking at opportunities and well in St. Catharines or Hamilton, I’ve always got something on the goal, usually three to five unit building. So I’m happy to share some information with you. You can go to California to find more information and connect. Enjoy the episode! Welcome to the Well Off podcast, where the goal is to motivate, inspire and share success principles and here for the second time. Kasey Wong All the way from its cubicle. Was it Toronto? Young and

Kasey Wong [00:01:56] young finch? Young Steels?

Georges El Masri [00:01:57] Yeah, cool. Thanks for joining. So a lot of people probably know that you invest in apartment buildings and whatnot. And if you remember the last time, we started off by talking about your childhood where you grew up? Oh yeah, you were sharing a little bit about that. So I’m not going to ask you to share once again but tell me a little bit about what you’ve been up to. How things are going. I know you just had a call with a super, so you’re obviously still active, still very much into the business and whatever. So yeah. Tell me a little bit about what you’ve been up to.

Kasey Wong [00:02:27] Yeah, for sure. In the last, probably our original podcast was about a year and a half ago, and I’m still doing what we’re doing. Still apartment buildings, still in the, you know, tri city area. I moved out to St. Catharines. We bought another property just recently and in Kitchener, it’s in the last year and a half. Actually, we bought three or three properties, three pieces of land in Toronto. So we’re continuing. This is during COVID times. So we’re in the wet November 26 to November. Twenty six Black Friday. Yeah. So yeah, definitely where we have not stopped, we’re continuing. But you have to be fluid because like these prices has gone crazy. Expensive, right? Even during COVID, there is opportunity, but you really have to dig more. So in the last year and a half, I’m still doing. I’ve got a tenant superintendent come new super didn’t get along with the old super and parking issues, and George heard my call. I’m still sort of involved, you know, high levels saying, Hey, you guys work it out. I want to see, you know, some type of progress. And, you know, let’s move forward from this, but I’m still involved in in the day to day action. There’s nothing wrong with taking a few phone calls for me. I enjoy it. I like working with people. But yeah, that’s comes with the territory. I’m not going to brush things aside. If there’s issues, problems, you have to deal with it. Just like any business, just like your Georgia and real estate, you have, you know, client issues or problems with the property or somebody, you know, the first step or the concrete step is broken. You’ve got to fix it because potential buyers may trip and fall things like that. Everything gets you get pulled into is sucked into it. Now, I guess what really happened in another sort of the last year and a half two years COVID time, you know, it’s everything has. You have to be fluid; you have to have there is opportunity out there. So we’ve seen a lot of opportunity. Prices has gone skyrocketing high in the secondary market. Definitely some of the Toronto condo market really, you know, soften at that time during COVID. But after COVID. And right now this is twenty one. In November, we see the prices, you know, inch back up, right? So it’s very dynamic in a way that, yeah, you do see a quick little shortfall, but you have to be flexible enough that you can take, you know, you can ride that downturn or if you’re in that market. In this opportunity as well. So the last year and a half, we bought three piece of land because we’re looking at developing and these are these are good opportunities in prominent location in Toronto, Lake Young and Steel’s Canadian steels Jane and Tests. And those are three key areas vacant land and in whippy, downtown core whippy. So those are four pieces of land that we’re looking to develop get density up and potentially build.

Georges El Masri [00:05:28] So you’re looking at building apartment buildings?

Kasey Wong [00:05:30] That’s right. And buying it to keep we’re not selling these as condos. Working with the government, getting affordable housing is not the affordable housing that most people think. It’s not the, you know, the wealth they have to say. It’s not like 0W or ODSP. It’s going to be assistance for people, perhaps with disability. I don’t want to get delve too much into the sort of our little strategy that we’re trying to deal with certain groups in in the vulnerable community

Georges El Masri [00:06:00] is that are you doing that to like to help out or you’re doing because there’s also, I think, incentives for the government for

Kasey Wong [00:06:06] sure, both that you’re helping out. But there’s also an opportunity for business as well. Government can’t do it alone and we as private business, we can’t do it alone, either. There has to be some type of synergy, so that meshes well together. So they’re providing some, some grants. Some I don’t know specifics right now that but there are some grants out and some loans that they will provide with great interest rates in for us as a developer. But there is, it’s twofold. They’re helping us and we’re helping them. So definitely it is that synergy for that affordable, affordable housing for vulnerable groups. So that’s what we’re looking at these vacant land deals in Toronto. Then let’s take a look at Kitchener. So in Kitchener, we just purchased a 29 unit townhouse complex. OK. So to be very specific, it’s like my operating expense will be a lot lower. When I say townhouse is that it’s not one roof, one heating system and so on, so forth. You get my flow when I say that this means that my operating expense, my utility bills, my heating, my gas, my electricity main ones will be paid by the tenant, right? So that’s great. But what happens is that the price per unit is going to be a lot higher, right? So we’re buying it that at nine million at 29 units, so it’s a little over 300000.

Georges El Masri [00:07:47] So that a newer building?

Kasey Wong [00:07:48] No, it’s an older building.

Georges El Masri [00:07:50] How did they separate all the utilities?

Kasey Wong [00:07:52] It was built that way. Oh, right. So it should have been built in 1960. You? No, probably in the 1970s.

Georges El Masri [00:08:00] OK, so it’s not like 100 years old.

Kasey Wong [00:08:02] No, no. Yeah, yeah, OK. So those are those are the ones that I’m looking for. 1960S and 70s built apartment buildings, which one roof, one boiler system and everything in between. But this one in particular, the price points go up whenever you’re separating it into townhouse. It’s because your operating expense will be a lot lower. You should be operating at a bowl probably about 20 to 25 percent of operating expense of that revenue. Yeah.

Georges El Masri [00:08:30] What would that be compared to if you had to cover the utility or some of the utilities?

Kasey Wong [00:08:34] It could go up to like 40. It should be about 40 to 45 percent, right? OK, if you add the 40 percent, then you’re good. Yeah, great. So this one will be about 20 to 25 percent. We got to take a look at and see how every building is going to be different. Every building is unique. So let’s say nine million operating expense will be a lot lower. But our exit strategy is that we’re going to kind of minimize it and then sell it out after five years. And right now, the kW area, the townhouse complex is probably selling court like condo. Townhouse is probably selling in a low for hundreds

Georges El Masri [00:09:08] and times 29 and 29. What would that be the total that you’d be selling for?

Kasey Wong [00:09:14] I’m not. I’m not even sure right now. I don’t really do the math until where we’re at the cusp of selling it. But right now, let’s say your listeners can probably do that calculation.

Georges El Masri [00:09:24] The below should be around 12 million somewhere in that.

Kasey Wong [00:09:26] Maybe, yeah, yeah. OK, like what? 30 times 40 is 12 million a. So we bought it for nine. Maybe we can quickly flip it over 12 million. That’s what we did for the London project at 89 right out. OK. So in about a year and a half, I think we flipped up most of them and we still have a couple of units there. Great. I think for us, like hindsight’s 20 20, like we should have kept it. There was a little downturn, a little slowdown in the market. And then after that probable year, it just took off again. Right. Hindsight’s 2020. So you look at it and say, You know what? I should have held it for another year and a half to two years, and we would have probably. Made another two or $3 million dollars, yeah, right. But it’s OK, we made good money for that. We paid our investors. I think it was a straight loan of twenty point or something for the London project and then for this one where we’re doing this straight buy hold, we have a five year term, then we’ll see where the market is because we know that we can sell it. And I said, like for like low for, I think for three or four Forties, a low for Kitchener townhouses. Yeah, we don’t know what five years will where it will be. So every day when you’re looking at properties, right now, it’s very expensive and you have to know what you can do to it. You have to kind of dig a little deeper. If it’s a townhouse complex, can you sell it? Is it? Can you kind of minimize it? It’s just that all these I think I just before this or I was talking to Jordan and saying these podcasts or these YouTube videos are doing really well because it seems like everybody’s flooding into this apartment building investment area where people want to get the 30 40 unit buildings. It’s just gone crazy.

Georges El Masri [00:11:10] Well, one thing that I was thinking of when you were talking about transforming the apartment into a condo, would you get resistance from the municipality? Because from my understanding, a lot of places, they want more apartments, they want more rental units. They don’t necessarily want more condo units, right?

Kasey Wong [00:11:28] But we’re not. I’m not even sure yet. So we’re working with our planner. We’ll see how it goes. We are like the first. The first buyers will be our tenants, so we’re going to help them buy it right. And to be honest with you, I think we’re bypassing the real estate agent to rate so the commissions on that. But it makes sense, right? I can give them a better deal. The tenant buyers work with them directly with a mortgage broker with the bank. So that’s definitely a possibility, Ray.

Georges El Masri [00:12:03] So one interesting thing about that, I’m not sure if you’re familiar with like this type of stuff, but I remember there was one building in Mississauga that was it was an apartment building that was converted into condos, and a few of the tenants there had the right to stay as tenants for as long as they wanted, regardless of if the new purchaser was going to move in. If a family member was going to move in, they couldn’t get out. It was like written in the condo board documents. So have you come across anything like that or is it too early?

Kasey Wong [00:12:32] It’s too early right now. I’ve heard that as well from another, like another corporation. Yeah. For us, it’s not a real big deal. It just pulls back into our current portfolio.

Georges El Masri [00:12:43] Well, the funny thing is that those units at the time, this was like two years ago, the units that were you had to assume the tenant because a few people were trying to sell. Those units were going for like 220000 in Mississippi. And the ones where they were vacant, they were selling for like five fifty. Wow. It was a crazy, ridiculous amount. So I was looking at one of the units and I remember we offered the tenant 30 grand to get out. We just couldn’t do it because the owner, the owner at the time wasn’t willing to pay them to leave and we couldn’t pay them until we became owners. And it was too risky to, like, take over that unit

Kasey Wong [00:13:19] with a tenant

Georges El Masri [00:13:20] explaining that he might hold us hostage and say, No, you know what? I want 100 grand now. What are you going to do? Right, right?

Kasey Wong [00:13:26] Yeah. In that case, you just perhaps walk away right and left to the current owner. Keep it right.

Georges El Masri [00:13:31] Exactly. That’s what we

Kasey Wong [00:13:32] did. Yeah. So you don’t have to get into that. There’s other opportunities out there, even for that at that investor, like he’s probably holding it. You can probably just hold it for another 10, 20 years, right? So there’s nothing wrong with that either, right? Just, you know, it’s not the best utilization of his money, but he’s still holding an asset that’s still growing or producing income, right? Probably not to the highest and best use of that income or that capital, but also, it’s building up capital. It’s building up equity as well. Yeah, right? So there’s always, you know, we find there’s always opportunity, but it seems like every opportunity. People think that they can’t do it or it’s too expensive. And they and they sort of, you know, give up where it’s kind of weird. Is that way back in the nineteen ninety 1970’s, right? Like my parents moved over to Malvern, but they when they purchased that house, it was a government lottery system. I think I told on the previous podcast. That’s what people do. People move outwards great or find new opportunity. It’s always like we had to move. We have to shift to vacant land in Toronto to develop or we’re looking at this opportunity, the 29 townhouse complex in Kitchener. So there’s always opportunity, but it doesn’t look like it’s an opportunity at the time. Right. There’s a lot of work. There’s a lot of costs. It’s nine million for twenty nine. Units, so it just seems like everything is so expensive at the time.

Georges El Masri [00:15:04] But we’re a lot of people would look at that and say, You’re crazy, why would you pay that much for that? Yeah, I’m sure that happens all the time. And then you just have this idea in your head and you figure out this is what I could do. I believe that this will work and you just got to go for it. That’s right. Other people will pass up on it.

Kasey Wong [00:15:18] So good point. You just brought this into my head. Is that just last week, Friday, I was I was touring this portfolio of 11, eleven hundred and six units and one thousand one hundred six units, and this is a kW, C Strafford and Woodstock. OK. OK, so this family are just it. Just do brick some. So this is this family that’s held us in that since the 1960s and 70s.

Georges El Masri [00:15:44] So units still for one thing.

Kasey Wong [00:15:45] Yeah, yeah. But it was overtime. So it was since the 1960s and 70s. So looking at this portfolio and the agent was, you know, driving me around well, we started at, I believe was like eight and nine o’clock. So to be in Woodstock. I live in Toronto, so it took about an hour and a half to drive there quickly got there and it was nonstop 69 units, 69 buildings, excuse me, not even Unit 69 building. So it was it was getting the car started. Quite like building there, like you’re taking pictures. I’m taking some pictures. Common Area Boiler Rooms. And so I’m looking at everything. Of course, there’s other detail. This is just the first initial showing. So it was nonstop, essentially from nine to about five, right? And then just looking at these properties, and I think I was thinking to myself as I would, well, definitely the small players will get into this because it was $20 million or so, 200 million. Yeah, George. $200 million, right? So they’re asking, is I actually wasn’t too. It is just shy of 200 was like $194 million.

Georges El Masri [00:16:53] I just want to sell everything. They don’t want to sell.

Kasey Wong [00:16:56] That’s right. Yeah. So we, the wife and I, we’ve seen some opportunities. We’re talking to like a, you know, a person that has deep, deep pockets. And this gentleman had we met him after it was just last. No, just this, I think it was this week. The week I’m losing my mind. It was just like this week; I know we met him. So he has about half a billion dollars, so five hundred five hundred million. He owns golf like a golf club in Milton. He owns land in Milton. So he’s honestly, you wouldn’t even know this guy is that wealthy. He dressed so normal. He speaks like he lives in a in a barn, basically in Milton. The nicest gentleman. Very average, right? Not flashy. Doesn’t have, like flashy. You know, when you kids call bling or whatever they he doesn’t have any of that. So walks around offer, you know, go to his golf club, sit down. You know, we have a discussion, right? And he just mentions like 200, 200 million dollars, right? And then we’re saying that we can afford a lease. I think it was 20 percent of the portfolio right away. Rates are 20 percent smaller. The smaller ones, right?

Georges El Masri [00:18:19] Yeah. Necessarily want to hold on to.

Kasey Wong [00:18:20] Yeah. So these smaller properties was a 12 unit like 12 unit building ones. I think it was a small like 11 11 unit on two properties, so 11 units per building on two properties of 22 units. And it had a cluster of these, like all these small little buildings were about 20. I think it was maybe 20 these buildings. So you can quickly offload these, right? And we’re thinking that, hey, we can, we can. We can close small ones first, so don’t close the entire thing. Yeah, sell these ones and then also use that cash because there’s about a five to about $7 million of quick potential profit that we can quickly get to pull it into the next project or the following

Georges El Masri [00:19:07] portfolio exactly by part of

Kasey Wong [00:19:09] the exactly. Yeah. But bottom line is like it’s a good strategy. So you never know who like these, these older gentlemen, they have good strategy, right? Yeah, I wouldn’t have thought about that. So it’s funny that you don’t know who you are. You’re going to talk to. You know what strategy they’ll come up with, right? He’s an older gentleman. Then probably in 60, definitely late 60s and holding about half a half a billion dollars, $500 million, just cash. No inland, inland and inland in cash as well. So like when people mention like the agent want to ask is like, we don’t have that. We don’t have $80 million to or we probably need to buy 60 to $80 million for this project, right? And the agent looked at it

Georges El Masri [00:19:57] like to put down.

Kasey Wong [00:19:58] Yes, yes. As well as operating costs and so on, so forth. So you needed about six to eight and they look at us are our overall portfolios was. But it’s ours is decent, but not to that extent. Sure. Right. So we basically, hey, we kind of floated this name out and then the agent goes, Oh, OK, so you’re kind of in TDE. He didn’t want to show us his properties. Yeah, right?

Georges El Masri [00:20:21] Because he doesn’t want to waste his time. Exactly. He’s not even,

Kasey Wong [00:20:24] yeah, qualified. Yeah, yeah. So he didn’t want to waste his time. That’s bottom line. So after we sort of floated his name, he’s like, OK, come in, come with these properties. But we just found out. I think it was last year, I was last night, Thursday that we didn’t get it.

Georges El Masri [00:20:40] OK, somebody else, but

Kasey Wong [00:20:41] somebody else bought it. But George, imagine this. Like they put down $20 million deposit, one month of due diligence, and that was it. No condition. So it’s so not even due diligence closing in one month. No due diligence. No conditions. That’s crazy. So if you think about it, let’s talk about what, what I just saw is a $200 million portfolio. One thousand one hundred six units, OK. Spread across sixty nine properties. One player, OK, which is not a player. It’s probably a reach. Comes in at $20 million deposit, no conditions and close in one month.

Georges El Masri [00:21:23] That’s pretty insane.

Kasey Wong [00:21:24] Right. So right now, unless

Georges El Masri [00:21:25] they like, unless they’re getting an amazing capper, I don’t know what the

Kasey Wong [00:21:29] Capri was so low. It was like a three percent cap. But when I looked at these properties, these fit like dead on in what my niece’s right like exactly what I like to do. These are actually two to four story walk ups, right? I don’t usually like four story walk ups is like, Damn, how do you get that couch up stories? Eight. So just imagine two to two and have a total of probably two to four unit walk ups. No elevators. Some of them have pitched roof flat roofs and balconies. And that’s it, right? It’s so simple. All everything was dated. So common areas with was dated. Borders was dated. So you have, you know, each border would be about $30000. Balconies will be about twelve to fifteen thousand dollars. And you just that’s a. Expenditure, then your you’re painting and terrazzo floors, you keep those floors, you don’t change any of that. The guard bills in the stairwells because those are grandfathered as they don’t meet height restrictions. Yeah. Just paint. Right, right. And you’d have to just in case, because those borders are going to die any time because those are like 30, 40 years old. But they’re pushing it. The Warmington, all these buildings are well-maintained. They can probably go for another. Seriously, those boilers are probably might go for another five or even 10 years. Yeah, right. If you just maintain them. So looking at these projects, people are actually buying these at. You can run the numbers Renda per unit or the cap rate. But the captain, when we were running, it was a low three. I think it was, I guess, three point two.

Georges El Masri [00:23:05] Like, that’s the actual value or that’s what that’s asking for.

Kasey Wong [00:23:08] That’s the actual. OK. So we’re looking at the analy and that price there actually is it’s like 3.2. They say the cap, yeah, your capitalization rate was a low three, c low three, I can’t believe that people are buying low 3s. I want to buy it. Yeah, it’s crazy. The potential when you’re doing your proforma, you’re going to you’re going to space it out in a way in a five year time frame and then you’re going to calculate what the what the market rent was. So I called my ministry order like we were looking at because we’re analyzing this, what’s a potential rent kw Woodstock? Because I don’t, I just don’t know Woodstock and Strafford. So I was like, What is this right? It’s definitely a lot lower, but it’s the potential is still there, right? You can still drive the rents of some of these rents. We’re about eight hundred nine hundred and a thousand dollars, right? So you can drive it up to vote. Seriously, the market rent for one bedroom is like 4400 14:50 in Stratford. No, no, not sorry. Not in traffic. KW in Stratford is going to be about 150 to $200 less. OK, so let’s take $200 less.

Georges El Masri [00:24:14] Yeah, that makes sense.

Kasey Wong [00:24:15] And then your two bedrooms are probably six hundred right and he has three bedrooms. It pretty much spikes up to about eight. Probably about 1850 900, right? Crazy to think. And that is, three bedrooms are hard to find. So if you take a look at your mix, there’s definitely potential there. Right? Older, you know, tenants willing to, you know, someone estate. These tenant profile is either young or older, so it’s going to be your younger working class just started working, graduated about 20, maybe low 20s, early 30s, or you’re getting them up in the 60s, right, 60 to 80 years old as well, because

Georges El Masri [00:24:55] you’re probably not going to have a lot of families with kids and all that.

Kasey Wong [00:24:58] Yeah. So there is there’s always potential for turnover, even when we in our portfolio of the 65 units or the 36 or the 40. We always see a good. To be honest, it’s about 15 to 20 percent turnover rate. So that per year, not for the first year. So this one, yeah, this is the art of it. So first year could be about 20 percent. We sort of throw this number. My wife and I go 15 20 percent on the first year and maybe 15 percent and then 10-10-10 over the five years.

Georges El Masri [00:25:27] Yeah. And is that like with you doing certain things to create, you know, just like natural turnover, people want to leave?

Kasey Wong [00:25:33] Oh yeah, yeah. The first year, it’s always you always get the bad apples leave you given the unforeseeable ones and then people don’t like it. It’s like, Oh, I like this landlord who gave me this unfair, but you haven’t paid right?

Georges El Masri [00:25:48] I know, right?

Kasey Wong [00:25:49] It’s like you haven’t paid. But I still these are the government. These are the government forms is, you know, and it kind of, you know, in their face is the form actually says in bold, you can be evicted because this is nonpayment of rent, right? And they get all scared and then they get angry at us for sending us off this form. Please get angry at the at the provincial government because that’s what they tell us to use. So some of these tenant just natural turnover, a good probably 20 percent, depending on the area you can see more than the 20 percent and then the second third, like you can drop down to 15 percent, 10, 10 and 10. But sometimes we see the second year it turns over as well. But then when you see the third, fourth and fifth year sometimes is actually the original turnover. So people are just staying one or even two years.

Georges El Masri [00:26:34] So that especially if they’re younger, usually like they’re not going to stay long, it’s just right. Typically, the older people that stay long term.

Kasey Wong [00:26:40] That’s right. So exactly, George. So the third and fourth like fifth year, you’ll see that the natural turnover you ready got the bad apples or and you got the lift in that rent. Then you see just, you know, some of the newer ones that you renovated churn over and you’ll occasionally get the older tenants move, move, you know, move out. But that’s what you’re that’s what you’re sort of working with. That’s a strategy of the multifamily. It is a slow type of business, but over time, it definitely it definitely works.

Georges El Masri [00:27:12] Yeah, right. Yeah. Well, I’m sure that like the Rob, all the units you’ve had and whatever, you’ve probably dealt with certain issues that maybe made things a little more complicated, like, I don’t know, like fleas or bedbugs. Yeah, I don’t know what other, what other problems you may have come across. But how do you normally deal with those things that can slow you down that can make your project a little tougher?

Kasey Wong [00:27:33] Yeah, for sure. I’m dealing with that right now. A bedbugs. So this tenant, we’re talking to our paralegal. I used to do this on my own, but we have a good paralegal that is going to look into if the tenant brought it in. So if the tenant brought it in, like we told them what to do, and it seems like this is recurring. So they may have they may have to pay the pest control company for mitigating this or a limit, obviously eliminating this bedbug problems. So this morning on Black Friday, there’s going to be a dog sniffer that smells bedbugs and we can’t see if it is ice like we want to know isolate if it is this particular unit. And then. Talked about it to them, but

Georges El Masri [00:28:17] how would you be able to do that because the dog, like they’re going to just identify where the bedbugs are? Are they going to be able to tell who has more bedbugs?

Kasey Wong [00:28:25] Yeah, exactly. Yeah, yeah. So the extremity is going to, you know, pinpoint because it’s just dumb. They’re covered in bedbug bites. And then we’re going to take a look at the three adjacent units. There’s a lower unit, the two, you know, sort of with the adjoining wall on either side and the one straight above it, right? You don’t have to do the ones that diagonal. It doesn’t. There’s no real connecting walls, so we have to pay another $25 for the three units per unit. Twenty five, yeah. Just twenty five dollars in order just to check it. OK. It’s just a check. The dog will go in and sniff and see if there’s any bedbugs cheap. No, no, I know. But the other one is about, I think, two or three hundred dollars. Right? So they say two or three hundred dollars in the plus what is it? There’s some type of spray or some type of treatment that they have to do, the chemical treatment that they have to deal with.

Georges El Masri [00:29:22] So is it’s your first time dealing with. No, no,

Kasey Wong [00:29:25] no, no. So for us, it’s, you know, get the professionals in there and get it done like. But this is if this is a recurring right, they’re doing something that is causing it to come back. So I’m doing as much as I can. We have to document everything and then bring it to the courts. And he’s he this obviously tennis blaming me, right? Oh, so you have to yeah, you have to rectify this. I’m going to, you know, get the city involved. So city, you know, a city comes I have all my paperwork. I say, it’s coming from you or. And then we have to take this out as

Georges El Masri [00:29:57] evidence that, yeah, this is the source. Yes, problem. And we’re trying to help. But. Exactly.

Kasey Wong [00:30:02] Yeah. So this brings up another story. My other building, the tenant called the city fire on me. OK. And then, you know, want to ticket me for, you know, like smoke alarms or fire extinguishers and so on, so forth. I’m like, and then she comes in, This is in Kitchener again, and then she comes in and goes, Okay, there’s nothing wrong here, OK? And then they look at the tenants unit, you overloaded this, you have this. Essentially, he had his own what we provide, you know, fridge and stove. But he has, I believe, you know, those big freezers like they can fit a body in there, something like, obviously, the guy just wants, you know, I don’t know, he wants a big freezer. And then he overloaded the circuit and then the fire inspector goes, Not, you’re overloading it. This has to be gone. This can be. So he call it, you want it. You want to get me fined. But if I actually put it, they actually put a fine on him. Yeah. So I think it was like two or three days he had to get this all resolved. It’s funny. Fire. Yeah, yeah, it really backfired. I was like, Well, I’m just my super, and I was just like, laughing is like, Oh, like, seriously. So the thing is that as long as you do things properly, like from pest control, we had bedbugs too to the fire marshal coming in and perhaps sometimes giving you a ticket. You just have to stay on top of things to

Georges El Masri [00:31:25] ask you about that. So fire code. How often do you have fire inspections?

Kasey Wong [00:31:29] So before fire inspection, the smoke alarm inspections and seal detectors, so it’s before and after winter, we just had one.

Georges El Masri [00:31:36] So you have it twice a year. Yeah, but you have like so you have a company come out and do the fire inspection or you have the super

Kasey Wong [00:31:43] duper super will do it. So but they have to document it properly. One a couple of my supers, you know, didn’t code document it. So now we have to redo it, right? So document, as in they did it, they counted all the smoke detectors interconnected.

Georges El Masri [00:31:59] No, no. They’re the battery. They’re the battery. So they go into every unit test. Yeah, document

Kasey Wong [00:32:04] and get the tenant to sign off on it. OK. OK. Anything adjacent to the border has gas, right? So that has to have a sealed detector like it’s a dual like smoke and seal detector. So those ones who would have to, you know, be tested and signed off by both a super and the tenant? Yeah. OK. Um, but other that we do before and after we just say, hey, like go buy a whole bunch of smoke detectors, keep the receipt, whatever you don’t use, return and keep a whole bunch of batteries like nine volts. Like in in our storage room and stuff. But just do before and after, and they always get the tenant to sign off on it. Sometimes you can. I’m not sure if they would allow like a touch to say we didn’t sign off on it, but it’s probably better in writing. So you at least you can show it to the to the fire to say fire inspector that it’s been done.

Georges El Masri [00:32:53] Yeah, sure, right? Um, another. So somebody I recently spoke to, they were talking about geothermal heating for their buildings. Have you looked into that? Huh? Have you done any of your building?

Kasey Wong [00:33:04] We looked at a way back. This is even when I first started in in the kind of property management at that time, the payback period was like 30 or 50 years or like. It was so long that it didn’t. Even makes it so what geothermal is, essentially you get a big drill, huge drill deep, it’s probably like 80 feet or 100 feet deep and you circulate warm air from the Earth up to your building, warm in the winter and cool in the summer. So that’s what it is. The only thing is that when you start doing this, the cost is astronomical.

Georges El Masri [00:33:40] So initial costs set up the system. Yeah, yeah. And then the benefit is over time. Over time, your costs comes down. You’re saving going costs.

Kasey Wong [00:33:50] Yeah. So you can’t ask. The ongoing costs will be a lot lower. So you have a savings. Let’s say your normal heating bill is $10000. Now this drops to, let’s say, $2000, so you have $80000 savings per year. OK, so let’s say if $8000 savings per year and it costs, say, 300000, so 300000 divided by a thousand is how many years that’s going to be paid back. So that’s when you start saving after, yeah, after that time period. So let’s say it’s over whatever. I don’t know the math and that, but that’s what that’s where you going to calculate. Are you willing to hold that for that time period, for that 20, 30 years to start saving that money? So that’s what you’re looking at. It doesn’t make sense. Most of the time for me, I’m not holding it for 10, 20, 30 years or 40 years. Does it make sense for me?

Georges El Masri [00:34:34] Yeah. So this person that I had spoken to, they said that it made sense on their new builds because I think there were incentives for this type of thing. So maybe if you’re looking to develop the plan that you have, you said in Toronto and whatever, it might make sense for you to look into that program.

Kasey Wong [00:34:51] Yeah, yeah. Yeah. So definitely we’ll look into that to see if it makes sense, basically how much it’s going to cost and then the ongoing operating costs. So if it looks good in a way that you’re dropping your expense, your operating expense down to, let’s say if you build a building can operate around 20 percent, if you can drop it down to like 15 10 percent,

Georges El Masri [00:35:11] maybe if the government gives you an incentive to set that up. Oh, for

Kasey Wong [00:35:14] sure. Yeah, definitely. So that always goes back to your numbers. Does it make sense? Your cash outlay is to say, 300000 400000. How many? How much savings am I going to get per year and then justify that divide that out? Then you get your duration, your time of payback. So if that makes sense, are you going to hold it for that long? Of course, right? Everything’s a numbers game. So if it makes sense, do it. If it doesn’t, don’t do it right. Everybody is all like but the environment or whatever, but you’re not going to break the bank just to save the environment in a way. Do you know I’m saying, like everybody, everybody is not going to say here, you?

Georges El Masri [00:35:53] can’t do it. Sometimes you can’t because you can’t put yourself in a hole to, you know, you’re not a charity. Exactly.

Kasey Wong [00:35:59] Yeah, exactly. I know what you mean. Yeah, it comes down to the numbers. So even on, I’m sort of, you know, running rampant on this. But even renovating rate don’t over renovate. I said that way back in some, some videos and whatever it’s like, you can do whatever you want, like you can put like gold faucets, granite countertops and things like that. But if your market doesn’t call for it, don’t or renovate. You’re not going to get the better tenants

Georges El Masri [00:36:24] and you’re not necessarily going to drive up the rent, right? Like, there’s a ceiling on the rent. That’s right. Regardless of what you put in there, that’s what you’re going to get.

Kasey Wong [00:36:30] That’s right. Yeah, right. So everything goes back to your numbers, goes back to the market. So you have to, you know, do your research. If people are putting gold fastens granite countertops, then you have to do it. Yeah, right. If everybody’s doing it, you have to do. Unfortunately, that’s the game of that, that business. If your restaurant, if you’re McDonald’s and everybody puts pickles in their burgers or something, you’ve got to put pickles and everybody likes pickles or something. So as simple as that?

Georges El Masri [00:36:57] Yeah. So, yeah, we covered a lot of stuff. Is there anything you feel like we missed or that you feel like you want to share any, anything you want to communicate before we move on?

Kasey Wong [00:37:07] No, honestly, I kind of talk a lot. But did you what? How long has it been like? This has been like a good 30, 40 minutes.

Georges El Masri [00:37:16] Yeah, I think it’s been like 40 minutes. Wow. Yeah, something like that.

Kasey Wong [00:37:19] I don’t. Do you have any questions? Do you have any?

Georges El Masri [00:37:22] I think we covered a lot of the stuff that I was wondering like, I know you do a lot of you’re always working on something new. Yeah, I don’t. I don’t think so. I love that. You’re like continuing to grow to expand. Is there? Are you selling off any of your projects at this time? Anything, maybe smaller or anything that you’re not too interested in holding?

Kasey Wong [00:37:40] No, we’re not selling. We’re actually moving everything into a reach. Yeah. So we’re moving into a private reach and sort of growing it from there, growing the investor base from more from the accredited investors to the regular investors.

Georges El Masri [00:37:56] So you’re setting up a route that you’re going to be managing?

Kasey Wong [00:37:58] Yes, yes. So again, I’m operational. My wife will do that and we have a good lawyer that’s dealing with the Ritz. Yeah, but overall, it’s like, you know, I guess I’m not into that social media and all that. So a lot of people know. They want to follow in. See what we’re doing. That’s what we’re doing. I’m not sure what else I know people are on Facebook to Instagram, to YouTube, Steven Podcasts. But you know, for all these beginners or people getting into it, definitely this is a great way of advertising getting your name out. We should definitely do more of this.

Georges El Masri [00:38:36] You mean being a guest on podcasts?

Kasey Wong [00:38:38] Oh yeah. Be a guest or doing anything like that’s part of the sort of the new type of business, a new era and the new marketing route is getting known. We still do grassroots of I still connect with these older investors, right? Some of these, like these people that I met that I meet, are met. I met just recently. I had we had dinner with Jamie Schwartzreich. Jamie Schwartz’s father started Harpreet and signed a two sons in the same class, and they go to UCC and then we said, Hey, guys, I like very low key people. He works for four, for one of the banks, but these are the people that we meet, great people that have the 500 million or, you know, Jamie Schwartz who has connections, right? Yeah. And they’re not on podcasts or whatever. They’re not really out there. So you have to, you know, kind of, you know, shake the hand and start talking. Very honestly, you wouldn’t know that some people are, you know, doing very well for themselves and say, Hey, let’s have dinner. Let’s talk about business, right? You know that? And then connections, right? So Capri has about, I think they, you know, probably lower now in terms of units. I think they’re probably like 60 or 70000 units. Starlight is in Toronto or the sort of Canadian sort of arena starlets. Definitely, Daniel. Probably. Number one, no, he’s been buying like crazy, but these are the people that we sort of meet. And what I’m what I’m trying to go at this is that you don’t know who you will meet, but you have to be there, right? It could be your kid’s parents in a family function. We’ve met people through our lawyers, through our real estate agents, to our bankers, and we say, Hey, do you know anybody that would be interested in this or do you know anybody who’s accredited? And that’s sort of how it expands, right? I know people have that barrier of looking for capital, but that’s how you have to grow your sort of network. Right? People won’t. So a lot of these people, you know, don’t even have Instagram or rarely on Facebook, you don’t even have a Facebook page. That older gentleman who’s in Milton, I’m sure he doesn’t have that, but he probably does, I think. And somebody else, probably his grandkids or his children, that is doing it or he has somebody else that’s doing it for him, right? So you have to sort of be there, you know, start talking because you never know. It’s like you’re bankers. We open up a lot of doors, right? We said, Hey, it’s like, Hey, Tony, do you have somebody that’s interested, right? And boom, five doors just open. Yeah, great. And from those five doors, those people that you talked to another one person, it has another five doors. Yeah. Right. So you can see quickly multiply. Yeah, it snowballs and multiplies. But you’re looking at the deals and you’re looking for capital and networking as well.

Georges El Masri [00:41:47] So, yeah, you’re committed to it. You’re doing everything you can to make you want to make progress. And yeah, it’s working out for you, really. Also a good job to keep growing. And I hope that you will get those whatever amount of units you’re aiming for.

Kasey Wong [00:42:00] Yeah, yeah, we’re not. There’s not for me, there’s no specific aim. I don’t have a goal for four units. While I know my wife, you know she, she looks at it and wants to grow this portfolio. I’m kind of laid back in a way that, you know, I do what I do, making sure that, you know, the business is running properly. But to the listeners out there, do what you’re good at, right? Things that you’re not good at. Outsource it, right? Yeah, be out there. People will follow you or whatever. Like, there’s certainly a good coaching business because people ask me to coach. Just like, honestly, I’m not sure if I mentioned that in the other podcast. It’s like 30 or 40 people that ask me to coach them, and people are offering like 30 $40000. I’m sure I don’t know how much that coaching side of the business is, but if you just do the numbers, you have 30 or 40 people at 30 40 thousand. It’s almost like the commission for the agent, right? I’m not sure what that that. If somebody’s going to be buying a

Georges El Masri [00:42:59] whatever, that’s cool, though, they’re paying for your skill and they’re kind of showing you what they think you’re worth. Yeah, it’s interesting, but I’m sure like your focus is somewhere else. Yeah, our

Kasey Wong [00:43:06] focus is somewhere else, but that’s a potential 900 if you multiplied thirty times thirty nine hundred nine hundred thousand to for, let’s say, 40 times for those 1.6 million. Right, so, hey, guys, if you want to do coaching, there’s definitely,

Georges El Masri [00:43:20] but you have to have the

Kasey Wong [00:43:20] skill. Oh yeah, yeah.

Georges El Masri [00:43:22] You’ve spent how many years working on this and becoming improving and learning all these things. So definitely that’s what people are paying for.

Kasey Wong [00:43:29] Yeah. So there is a coaching business out there going to a guys run with it, get the experience. I just learn on the ropes. But I worked at cap rate. I worked at Brookfield. I want to see what they were doing. And then I just took off. You do your own stuff, but there’s definitely a lot of opportunity. Just be active and you just go for it, right?

Georges El Masri [00:43:49] Awesome. KC, as always, thank you for joining. I love hearing your story and your stories and you sharing all this stuff with us, so I appreciate you coming on problems. We’ll definitely do this again.

Kasey Wong [00:43:58] No problem. Thanks.

Georges El Masri [00:44:00] Thanks for listening to this episode of the Off podcast. If you enjoy the show, then I’d really appreciate if you left us a review on iTunes and let us know your thoughts in order for us to get a larger audience, it’s really important to have reviews so your sport is extremely appreciated. And also, don’t forget to share the podcast with your friends and family. Until next time, I’m George El-Masri. Have a great day.

Listen to The Podcast