Table of Contents - EPISODE 22: INVESTING IN THE US WITH CHAD URBSHOTT
Rob Break [00:00:00] Breakthrough Real Estate Investing Podcast, Episode 22. Hello and welcome to the Breakthrough Real Estate Investing podcast, we put this show together to inspire you and help you break through to the life that you want to live through the power of real estate investing. My name is Rob Brake, and here with me today is No. One, because Sydney is off doing real estate agent stuff and couldn't make it. So this interview that I have coming up here with Chad Erbe shot. But before we get into that interview, I just want to mention again that everyone should go over to breakthrough r.i podcast. Check it out and get our free download the seven freedom activators that you can trigger in your property. Starting right now. It's a free gift to you on how to manage your properties. Better make them work for you instead of you working for them. Also, please go over and leave a rating and review on iTunes, which is another great way that you can access the show. And one more thing I wanted to mention is you can look Cindy and I both up on Twitter at Rob Breakthru and you could find Sandy at the Sandy MacKay m a c why? So this interview that I have coming up was originally supposed to be part of Episode 21, which was the episode about the Toronto Investor Forum. And Chad Urbshott shot is one of the speakers that you can expect to see there this year in 2015. But, you know, we just got talking and it went actually pretty long, you know, by itself. It made up a full show. So I thought, hey, why not? Let's just turn it into an episode all on its own. And Chad, what he does is a lot of us investing. So you're going to learn a lot about what he's doing down there in sunny Florida as opposed to where we are up here while at the time of this recording freezing our butts off. But, you know, I guess it comes with the territory. So here it is, my interview with Chad Grapeshot. Hey, everyone, it's Rob break from the break through real estate investing podcast, Sandy is off doing real estate agent stuff, but I am here with Chad Erbe shot one of the great speaker presenters at the 2015 Canadian Real Estate Wealth Investor Forum on March twenty eighth and twenty ninth at the International Center in Mississauga. Hey, Chad, how are you doing?
Chad Urbshott [00:03:03] I'm great, Rob. Thanks for having me on the show.
Rob Break [00:03:05] Oh, it's going to be a lot of fun here, so I guess we'll jump right in. I do want to just tell us a little bit about yourself and what you do.
Chad Urbshott [00:03:12] Sure. Well, first of all, I would want to let you know that I'm calling from sunny Florida where it's relatively warm compared to the Toronto area right now. So part of my business is is situated down here. So I'm down here fairly often, at least once a month or more. So, you know, I get the pleasure of looking out and enjoying the sunshine and no snow at the moment. So, yeah. So I guess maybe I'll start out where I where I started out, like maybe I got into real estate. I stumbled upon the rich dad poor dad book and I read a few of the series in that one thing that I still remember to this day that it said in the book is, you know, there's opportunities all around you. You just have to keep your eyes open and know where to, where to look for them. And one of them said, you know, there could be just a small newspaper ad in your local paper, like something as simple as that. Give the number of call. You've got nothing to lose. So sure enough, I'm within a month. I'm looking at the local newspaper. I live in Oakville. It's called The Old Beaver. The ad said something about learn how to invest in real estate without having to swing a hammer or worry about long term kind of problems, issues, that kind of thing, fixing toilets. And all I said was called the number. So I thought, well, this is exactly what dad poor dad said. Look out for the opportunities I call the number. And it was a 24 hour recording, I guess. And it just said to leave your mailing address, which I thought kind of strange. I thought, what? Why would they want my mailing address? But they said they would leave, they would send us a package. So I left my address. And sure enough, a couple of days later, a package arrived in the mail and had a bit more information about what this real estate investment program was. And they were offering a class and it was free to whoever they mailed these packages out to. So I attended the class and it was on Saturday morning, I remember, and it was two guys and there maybe five or six people in the room. And the very first thing they did was hold up the rift that Port had book, if you could believe it. And I'm like, oh, this has got to be a sign. This is, you know, definitely. Definitely so. Yeah, it basically just evolved from there. I don't know whether I'm allowed to mention other groups on the show or not, but. Sure. Go ahead. Yeah. OK, so they're their names are Tom in Nicaragua and I'm sure a lot of your listeners have probably heard of them. They own Rockstar real estate brokerage and it's in the Western and the main focus is on rent to own properties. So that was back in 2007 when I started out sort of doing the rental stuff and, you know, got a few properties under my belt and everything was going great. But I was interested in bigger deals, I guess, you know, one or more cash. And then I got into looking into student apartments just because of the cash flow was much better. So I invested in a student apartment. It was a 10 bed in London, Ontario, which was fantastic cash flow at the time as well. I guess over the years, you know, I was always looking for different opportunities where I could increase my my cash flow and just increase equity. So I was looking for opportunities that that I could find to do that for me. I think it was three years ago I attended the Real Estate Wealth Investor Forum in Toronto. And there is there was a few people there who sponsors that. We're doing presentations on investing in the US. So I had never even considered investing in the US. I thought that would have been crazy to do such a thing from from another country. But, you know, a lot of people on properties down here in Florida and, you know, have vacation homes and some of them do is vacation rentals. But I never really considered doing them as just, you know, just buying them in as a as a real estate investment, pure investment. Well, attended a few of the presentations. And, you know, that was I was just blown away by what I saw. I just couldn't believe the numbers I was seeing. You know, the price to rent ratios were probably like one third to one half of what most Canadian properties were at the time. So I thought, wow, this is this is something I think I want to get into.
Rob Break [00:07:21] So now what year was that?
Chad Urbshott [00:07:24] So that was I'm pretty sure that was three years ago. So back in 2012. Mm hmm. For the last three years, that's what my major focus has been ever since.
Rob Break [00:07:34] So how do you get in there and find like who do you have working with you down there to bring you the best deals, I guess? How are you tracking these down?
Chad Urbshott [00:07:45] So when I first started out, I actually actually one of the presenters at the forum was I guess you call it a guru, one of the gurus who you can you going to sign up for their seminars and they teach you all about investing and what have you. It was it was a I wouldn't say it was worth as money, but I did learn a boatload from join that program and how to invest in us. But the program was kind of more tailored to beginner investors. So I didn't get a lot of knowledge from that. But what it did teach me was how to Meydan. In the US, it was a Canadian based company that had figured out how to buy buy U.S. properties, investment properties. You've been doing it for years and years and years. So back when I started out, you know, the first thing to focus on or make it or tell you to focus on is building your team and then from one person on your team should be a realtor. And you need to find someone that is focused on real estate investing, not just the person that's going to buy you a home and then go on to the next one. They need you to want to find someone that understand the investing side of business. So I reached out to backing up a step. Another thing that they would teach you is to pick a market and just focus on it and learn it like the back of my hand. I've been coming out of Florida with my wife for a number of years because her parents have have a place down here. And so I thought I might as well focus on Florida, since I know the market fairly well. All the areas, the neighborhoods. So. So then I reached out to a few realtors. I just wasn't getting the time of day from them, you know, and ask them to represent me. And, you know, you send over an email, you make a few phone calls and they just we're not getting back to me. So at the time, they kind of give you a coach in this program. And my coach said, well, you need to find someone who is who's hungry in the business, you know, a fairly new realtor who knows how to invest in real estate, you know, as an investor as well. And someone that hasn't been around the block for 30 years and already has the Rolodex of clients that they cater to. So that's what I did when I found a realtor that, you know, fairly new in the business as well. And that was it. That took me a few months to find him. But once once I did, we started putting offers in trying to remember the exact numbers was anywhere between three and five a week. The market was so hot at the time. Well, still, as is probably even hotter now. But at the time, just we're not getting any offers accepted. It was mainly a function of how competitive the market was. And you have to know the right players. And it's kind of like an old boys club, I guess, down in different parts of the state. So I didn't that I didn't really realize until after getting it for a while. And, you know, having at least 50 offers out there and hardly any of them getting accepted finally did get a couple accepted. But they were I think we paid far, far more than we should have at the time because there they were distressed properties, foreclosures. And I'm realizing, well, these are the price of retail sales. Why am I why would I spend this much on a on a distressed property when I could find a better deal elsewhere? So that that kind of led me into what I focus on now. And that was there's got to be a better way of finding the better deals. So I fight well, I'm going to start looking into the county auctions or they're called the courthouse steps or there's a number of different terminologies down here, so. Basically, what that is, is it's a foreclosure that hasn't the bank hasn't actually taken it back, it it actually goes through the sheriff's sale first. And then if the bank gets enough, if they beat it, if whoever the third party buys enough on the property, then the bank will relinquish the property to the new buyer. But generally, two thirds of the time, the bank doesn't get enough money and they take it back to themselves and that's when it becomes a true foreclosure or scenario. I spent the next few months learning the auction buying business. It's a steep learning curve, that's for sure. And the one thing I did was I teamed up with a local person down here that already knew how to buy from the auctions. Have you experienced boots on the ground, knew all the areas, knew the good properties from the bad. So I teamed up with them and him and another guy who was a kind of like a consultant. That's a genius at finding these properties on the auctions through the auctions. And that's why we formed a joint venture partnership where I was kind of like the financing person and they were the boots on the ground and did all the the legwork. So that's kind of how I got started. And then where I was kind of led me.
Rob Break [00:12:19] So there's a lot of competition doing something like that, do you know? So when the banks take it back, let's say, do you know where the offer needs to come in to get it accepted, like you probably felt all this stuff out and and realize, OK, they need to get this percentage or that there's a system, I guess, that you've had to develop.
Chad Urbshott [00:12:37] Yeah, well, I realized, you know, when I was just doing the offers on these are all pretty obvious on the MLS realized after a while and searching around on different real estate websites and reading different blogs and forums when I knew that even though the higher off their highest offer may not necessarily get accepted, it's like I said before, sometimes there's an old boys club here, and that was at the time the hedge funds were really, really rampant, buying everything and anything they could at the time. So I was finding out that if, you know, a person came in like a hedge fund and said, well, we're going to take 100 properties off your hands. We want them at a certain price, even though the list of the MLS, they were getting them, even though someone else like myself, a small time person, came in and offered 10 percent more, they just I just wasn't getting them accepted because people were coming in and buying them in volumes so that that's where the competition kind of came in. I didn't really develop a strategy for buying them off MLS. That's why I went to start buying them or decide to start buying them from auctions. Now, there are two routes as well that I've looked into and have some success with, and those are through wholesalers. And there's there's tons and tons of wholesalers down here. And their properties are well, well below the fair market value as well. So so that's another strategy that sometimes use as opposed to going straight through the auctions.
Rob Break [00:14:00] So are you keeping like so when you find something, let's say through a wholesaler, what do you exactly do you do with it? Well, do you hang on to it and rent them out or are you selling them off to other investors? What is it you're doing with them?
Chad Urbshott [00:14:14] The very first one I bought, like through the MLS. And that's another point I want to make is down here. When you're buying distressed properties or foreclosed properties, you have to pay all cash for them because no bank is going to give you a mortgage on a an inhabitable property. So that's the number one roadblock, is you have to pay all cash for them. So when I bought, I finally got an offer accepted on MLS property and I thought I was quite excited that I finally got one a few months into it. And it was we got it rented out. The realtor, the timing is also property manager. So we got a renter made of already. I think she'd already had a renter in it, but he had to replace the renter within a month. I think it was I realized, well, since I'm paying cash for these, it didn't really do me any good because I ran on the money right away and I was only getting a, you know, maybe an eight percent return on my money at the time. So I thought, well, that was a backfire. But I thought, well, I need more capital in order to keep buying properties. So I ended up selling that. And that's when I started focusing on buying the auction properties with the intent of flipping properties. So buying them and, you know, get them in a good enough deal where you can buy them at sixty, sixty to 70 percent of the fair market value, rehab them and then sell them on the open market as a retail property. Well, the very first one I bought, the market is so hot down here that if you get a good enough deal on a property, you could turn on sell it the next day for five or 10 percent more than you paid for it. My partner and I down here, well, my partner was the one that led me on to this is you know, he said we don't have to hang onto these and fix them. We just sell them for a little bit more than we paid for them. I thought, OK, well, let's give this a shot. So, yeah, we put it up for sale and we had a contractor in one day two just to get a quote on the property to see what kind of work I needed. And I think we had a. For sale sign with just one of those that you can buy at Home Depot and a lady walked in off the street and asked if the property is worthy, if it was for sale. And we said, well, yeah, it is. You know, we're planning on fixing it up first. But she said, well, I read it as bad as is, you know, would you sell it to me as it is? And he called me up and he said, we, you know, we have this lady that's wanted to buy this property. What do you think? And I said, well, ask for she'll pay for it. Like, don't give her a number. And she came back and it was I can't remember exactly what it was. It was 20 grand more than I think we paid for it. And I was like, wow, that's incredible. Instead of a done deal, the sun are up. So so that's kind of how the strategy strategies involved in this. Right. We're trying to find the good deals. We can destroy them. Basically, they're almost like a wholesale deal. So Turnon just wholesale them to other investors.
Rob Break [00:17:04] No, you can do that before you close even on them now sometimes. Do you do that?
Chad Urbshott [00:17:10] Well, yeah, soon as soon as we get title to them, we start marketing right away. But we can't. Yeah, we can't actually sell them until you get the title. So generally it takes anywhere from two to three weeks to get title. They're kind of back up right now, so it takes a little bit. But once you buy from the auction, you have to pay within twenty four hours and then. Oh, OK. Right, because
Rob Break [00:17:30] I'm forgetting you're at the auction. So the hedge funds have actually backed off quite a bit too, haven't they. Yeah. Realizing that it's impossible to manage all of those properties once they've got them. I've heard that now you can get back in there a little better.
Chad Urbshott [00:17:44] Yeah. Yeah, you're absolutely right. They've I was actually looking on one of the public hedge funds. Well, why don't you call them public? But it was I think it was one that converted into retail was another financials not too long ago. And I was just amazed if you read into the fine print that over a third of their properties that they're holding your vacant right now still, you know, they've held them for how long they've held them, but probably at least a year. So, yeah, they're definitely having their issues with keeping them properly managed. And the returns aren't as stellar as I think they were looking on paper. So it's a lot of them have backed off now, mainly because the prices have appreciated enough that they're starting to turn around and sell them now. And, you know, they've made the returns there. But but, yeah, there's definitely some issues with with I think there are the growing pains. You know, they took on thousands and thousands not realizing that they're not as easy to manage as they you know, as a mom and pop investor that can, you know, keep the closer eye on their properties if they only have
Rob Break [00:18:45] and how many millions of investors funds to to have those houses sit there vacant as well to, you know, such a. Man, I just don't understand how people people with too much money, I guess.
Chad Urbshott [00:18:59] Yeah, exactly. Exactly. So but yeah. So it's becoming a little less competitive now. Another thing that happened was the inventory dried right up back a few years ago, people that, you know, either had their home foreclosed on or they were still making payments and their homes were underwater, underwater, meaning that their homes were less than their mortgages were. Many people could afford to keep their payments up, but if they sold, they would take a loss. So a lot of people are just hanging on to their properties until the market, you know, eventually appreciated enough that they could turn and unload them so that that caused a huge dry up in the in the inventory that was available. So that's one of the reasons that another reason the competition was so high at the time, finding now that. The markets appreciated quite substantially from the lows of 2011, 2012, a lot of people are able to at least break even on their properties. And also if they're, you know, looking for jobs elsewhere in another state, what have you, they're not as afraid to do now, do that now because they know that they can get out of their house without taking a huge loss on.
Rob Break [00:20:11] What do you think what's one of the things you like best about this strategy?
Chad Urbshott [00:20:15] Well, I guess the best thing is you can make a quick profit. You know, if you can like our our game plan all along is to get in and out, in and out of a property. If we're not fixing it up, that is like if we're just going to sell it to another investor within three months and we try to make the gross margin like three percent a month, three, three to four percent a month. So that's an annualized basis. That's about 40 percent. So that's the main thing I like about the strategy, is you can get in and out quick. I mean, there is a huge risk involved, but if you do all your homework up front, then you can minimize as much of those risks as you possibly can. You know, I've had I've definitely hit a few snags along the way that we're learning experiences. I guess you could call things that you know, you know what to look out for the next time. So they're kind of an education, financial education as well at the same time. So another thing I should mention as well is since the financing down here, it's the lenders are starting to loosen their purse strings. So the US citizens are starting to have less and less problems getting getting mortgages as long as their credit scores are good and they don't have any past bankruptcies. And what have you, however, for foreigners or call them foreign nationals or Canadians or anybody outside of the US, whether they're from UK or Australians, getting financing is like almost impossible now. There are a few banks that will lend the Canadians, but they only will do one, maybe two properties. And they're great programs. They're 20 percent down and basically same rate as you can get as a US citizen, but you're limited to one and they basically have to be over a hundred thousand dollars. So if you're looking at a property that's anywhere from 50 to one hundred, which is not, you know, it's definitely not unheard of anywhere in the US, then, you know, you're you're almost at odds getting yourself financing on the property. So there's a program that came out about a year ago and it's called the Portfolio Loan, and it's basically a commercial loan, same as if you're buying a commercial property or an apartment building. A lot of these lenders are realizing that people are buying up properties in bulk and they want to get financing on them. So the good thing about this is, is the loan is not based on your debt to income ratio or your credit score. And that's the main reason why Canadians or foreigners can't get a mortgage out here. We don't we don't want any credit in the US. So these loans are based on the interest rate, the performance of the properties themselves, same as a commercial building. The lender is going to look at how well it's performing, you know what the debt service coverage coverage ratio is and what the cash flow is. You know, those types of metrics versus how much income you have personally. So I sort of look into that about six months ago. It's another area that I'm looking into and I'm just putting together one right now. It's looking at purchasing anywhere between 10 and 15 properties and they're actually in the Ohio area. Reason for Ohio is the property. You get much better cash flow there than you can get. A lot of the southern states, you know, you can buy property anywhere from 50 to 75 grand and they rent anywhere from seven hundred to one hundred dollars. So it's a major, major, major cash flow. And you can wrap it up into a portfolio and they're doing as low as twenty five percent down and the rates are around six percent, which is, yes, a little bit higher. But, you know, it allows you to get into a large number of properties without having to pay cash for them.
Rob Break [00:23:55] So, yeah, you know, I think I have one property that that meets that one percent rent to value ratio. Yeah, only one. So. Right, right. It's pretty possible to do that out there a lot.
Chad Urbshott [00:24:10] Oh, absolutely. One percent, it would be the bare minimum, you would I would consider it for any U.S. property there. You know, typically there anywhere between one and one and a half percent the rent ratio. Now, if you start getting about one and a half percent, then you're certainly getting to riskier type properties. Know, not so desirable, Ariels, lower income areas, that kind of thing. They do work for people. But you have to have you have to be local and you have to have either boots on the ground or be there yourself to kind of look over them, whether they have a property manager or not. They're just they're just a little bit more risky. So, yeah, anything above a one point five to two percent is they look great on paper. But, you know, the reality isn't always what we are seeing on paper, so.
Rob Break [00:25:01] Well, so there you go. There's a bunch of benefits, not only just the weather. So what are you I guess you're down there until they say, OK, Canadian, you've got to come back for a certain amount of time and then then. Then that's it.
Chad Urbshott [00:25:14] No, unfortunately, I don't have a visa or anything yet, but that's the next thing on my list of things to do. So I could stay longer than than they allow. Now, I just I come down here for a week at a time kind of thing and go back once every once every month or two. So I would love to be able to stay down here and call myself a snowbird or snowflake, I guess if you want to call that younger snowbird quite there yet. But that's that's the game plan in the long run and then eventually move down here maybe full time.
Rob Break [00:25:45] So, yeah, if I was going to advise you on anything, I would say don't come back this week.
Chad Urbshott [00:25:50] That's you know, I haven't actually put my return flight yet. So I'm watching the weather to see when the best time to come back. It's still looking too rosy up there at the moment, that's for sure.
Rob Break [00:26:00] No, it's not. Well, do you want to share one of the biggest challenges that you faced in your investing career?
Chad Urbshott [00:26:08] I'm sure? Well, you know, I've had I've had several challenges over my real estate investing career. But last year, 2014 was likely my most challenging year in real estate. I know. I know we don't have much time left, so I'll try to keep this as short as possible. So back in the spring of last year, I saw in this US investing group that I was part of. There's there's quite a few people that join up and do joint ventures together. So a couple of guys I got in contact with Rohit from from Calgary, they had a couple of interesting looking apartment deals in Ohio area and asked if I'd be interested or ask a few people if they'd be interested. And I reached my hand again. That looks like it look like some pretty good deals. So I got involved with them. Everything was going actually. The first property was it was a bit of a dog's breakfast. I guess to put it diplomatically, they needed a lot. A lot of work was only about 30 percent occupied in the rest of place, basically trashed. So we were looking at buying it, fixing it up and around, flipping it well. No insurance company across the entire U.S. would touch this thing with a ten foot pole. We just couldn't get insurance with it. And I think it was about two days before the due diligence period ended. And we actually had the clause in our contract saying that, you know, we had the right to cancel if we couldn't get insurance. Well, two days beforehand, we said we can't get insurance. We have to back out of the deal. We had a substantial amount in the court in earnest deposit down in the US or like a deposit to hold the property, substantial amount while the realtor on the other end, the seller's realtor was I think the deal had fallen through a couple of times before with other people. And I guess he just he just got fed up with this thing falling through. He ended up filing a lawsuit against us for breach of contract, which we hadn't. He was just being unethical, you know, when he filed it in the state of Ohio, knowing full well that we would have to come down there and fight it and hire lawyers. And anyhow, we ended up settling and we only got half our deposit back. So that was a bit of a learning experience. At the same time, on the other deal we were doing, we it was going well. We had the inspections done and we had appraisals done. Everything was going great. About two days before it was supposed to close like financial close. Our lender had basically disappeared off the face of the earth and we had given him some money up front, like an application fee, I think it was, which we learned afterwards, that you should never give anybody an application fee, regardless of how how professional they look. So he disappeared and we couldn't close. Luckily, the sellers on the other end, you know, we'd been we passed our due diligence period and signed off on that. But luckily, they were very understanding and didn't, you know, claim breach of contract at the time. The they understood that this was a scam that we got ourselves into. So the guy basically disappeared off the face of Earth, like I said. Well, the lender we had used was a broker that many of us had used for many deals over the past few years. Like a lot of people in our group, she took it upon herself to chase this guy down. She got the FBI involved and they tracked them down. And funny enough, he was down here in Florida and we weren't the only ones who got scammed. Apparently, he'd been doing it for years and scam dozens and dozens of other people out of their money and they basically threw his carcass in jail. So, yeah. So you ended up getting our our application fee back through the broker. But, you know, we had spent a lot of money on due diligence, like the inspections and appraisals. And so, you know, which, of course, we didn't get back. So that was, you know, like I said, that was a trying time at the same time this was going on. Sorry to drag this out, but this is you know, this is, like I said, one of my most challenging years. I had a property that I had purchased down here in Florida through the auction. It was a property that was in Miami. Long story short, the guy that owned it before was raising dogs in the property, and he had collected thousands and thousands and thousands of dollars of fines for raising dogs and the property, one for not having a vet license, not having a business license. It just went on and on and on the day before it was supposed to close, we had it sold and was going to make a nice, tidy little profit. The lawyer from the other end had called up and said he found all these violations on the property that didn't show up on title, but they were you know, they resided with the the county or the municipality. So the title is clear, we could have sold the property, but if anybody were to buy the property and go to fix it up and get a permit on it, then the city would not allow until all these violations were paid off.
Rob Break [00:31:12] So why why is it just out of curiosity? Why is it those violations went with the property and not the owner?
Chad Urbshott [00:31:18] That I'm still scratching my head on that one. I we my partner and I hired a lawyer or the lawyer that we used for all of our deals down here. We got him in on the case. And they they I guess over the years, especially since the recession, so many people were losing the properties of foreclosures. And all of these violations existed on the properties with the former owners that, you know, the cities were in dire straits as well, like losing so much revenue from, you know, losing taxes and what have you. They decided they implemented a new it wasn't it wasn't really passed. I still don't understand how this works, but they they somehow got it through the government that they were able to catch any violations regardless of where or how it occurred. It was with the former owner. It got attached to the property, whether he was still there or not.
Rob Break [00:32:13] But it's still so frustrating because then why if it doesn't show up on title, that would be so aggravating.
Chad Urbshott [00:32:19] Well, it oh, it was the most aggravating thing to go through. So that closing luckily we had an understanding buyer at the time. They got delayed probably two or three months fighting with the city or the government. We ended up getting the fines reduced fairly significantly. But the amount of money you had to spend on the lawyers fees in order to get it down was kind of a way did. Well, when they don't weigh the cost, how much should they reduce them? But in the end, we ended up getting it sold with the violations taken off. But I think we ended up losing a bit of money on that property or I think we lost a few grand kind of thing. But anyway, like I said, there was another learning experience, quote unquote. And then if you can believe it, while this was all going on. So this is all happening at the same time. So you can imagine I was pulling my hair out for, you know, in the spring of the year last year, just things were happening at the same time to me, same time my my student apartment in London, Ontario, which had 10 beds, property manager just didn't end up getting it rented. He got zero out of the ten rooms rented. And most leases, universities, they go for a year. You know, they go from usually typically from me to May. Well, coming up upon me, he they didn't have any of the rooms rented. He can believe it. So I went from having a fully occupied student residence to zero overnight. Basically that at the end of April, you know, you can as you can imagine, the carrying costs of that place were fairly significant. So it was a twin money going out the door and all these other calamities. I had to go on at the same time and then to have to go into cash, negative position and major cash. Negative position was a bit of a challenge, I guess, at the time. And I had actually planned on selling the property in the summer just to get some of my equity out of it and sort of using it for more of my investments down here in the States. And, you know, no one in their right mind wanted to buy an empty property. So it basically sat empty the whole summer. And I didn't get it sold until I say I think it sold until November. Another story, how it thought of the deal fell through three times when I did get it sold. So, yeah, last year was definitely trying. But you know what? I've you know, I wouldn't say a lot of people in my position would probably quit. Like my wife still ask me, like, why are you in this business? But, you know, in fact, like, those were all learning experiences. And I've learned so much from mistakes that, you know, this year I'm more motivated than ever to make it the most successful year I've ever had.
Rob Break [00:35:00] So now with the student rental, let's say, what was it? So what was it that made it not get rented out?
Chad Urbshott [00:35:07] Well, there's a couple of factors that that's happened. One was I'm I'm not pointing fingers or
Rob Break [00:35:14] maybe you should be like you should.
Chad Urbshott [00:35:18] Part of the reason was the property manager just didn't I don't think he advertised it as aggressively as he should have, even though I was pressing him from
Rob Break [00:35:26] you'd have to try pretty hard to not get even one room rented out. It's like, oh, sounds like a personal vendetta or something to me. Like, well, this
Chad Urbshott [00:35:36] the issue was at the time. So it's a 10 bed, but it's divided up into two units. So it's got to two units of five bedrooms. Yeah, it's a purpose built student apartments. So it's got like a common area and, you know, several bathrooms in each unit kind of thing. In the past, they had always rented them to groups of fives, so they were looking for groups of fives. And those are much harder to find than ones and twos and threes and even fours, so that's what their focus was. They were just trying to get a group of five because it's a lot easier for them just to get a group of, you know, one leaves and they're off to the races, whereas they should have been taking any and that was the willing to take one or two rooms. And, you know, I was telling them at the time, like by February, I said, let's just take anybody. Woolfolk restroom's over the summer if we need to. But no, they just they just decided to stick with the groups. So the second factor, apparently the the university has been educating students on the legalities of the Landlord Tenant Act. Technically, they don't have to give their 60 days notice until obviously 60 days are up, so the end of February. Well, these students were coming online. Some of them, I guess, were hemming and hawing on whether they were going to stay or not. And they didn't actually give their notice till the end of February. But the bigot, the third and the the biggest factor was the market just kind of got saturated with a new student accommodation in London. And it's not just London. I think Waterloo is starting as was the first to experience it. There's several big time developers coming in from not just the U.S., but some in Canada as well, like someone like that. Back streets that are building purpose built student apartment buildings, I think Waterloo's got four or five of them have sprung up the last few years. And these things are, you know, they hold anywhere from 500 to 1000 students. Well, in London, they built the first one last year and it opened during the summer of last year. So that that took a big chunk out of the the demand, you know, so so basically, those are the three factors, I think, that that came into play. But anyways, since I've sold it, it's someone local in my local investing group through the rocks and real estate. They they purchased it and actually they had no problem getting renting it again. So, you know, I think it was just a kind of a fluke last year that, you know, those kind of three factors came into play.
Rob Break [00:38:04] Yeah, well, I know for student rentals, you really have to find the right property management group that can really do a number on you if you don't.
Chad Urbshott [00:38:12] Yeah, yeah.
Rob Break [00:38:13] Oh, OK. Well, no, I guess you had a lot of probably you probably had a lot of successes last year as well, though, too. I mean, it's hard to look at those when you're pulling your hair out on all those the challenges that you come across. But that's. Well, can you do your main focus is buying on the at the auction. Is that your main focus now or is it out of state stuff that you're doing?
Chad Urbshott [00:38:36] So a little bit of both. So with the auction purchases, obviously, you have to pay all cash for them and it's a very capital intensive strategy to use. So my partner and I decided, you know, as opposed to just well, I was kind of running it myself. You know, we're doing one at a time. We thought it would be nice to do, you know, two, three, four a month kind of thing and keep rolling them over and over and over. So I actually developed a business plan like a full blown, I don't know, 40 page business plan or something like that that I put together to start a track trying to attract investors. So my my partner's son in law is from the UK and he's he's very well connected. So he's a he's actually agreed. Well, we're making him part of our joint venture. He's going to come in and he's agreed to try to bring some of his higher net worth acquaintances, I guess, on board. So raising some money through that that aspect. So so that's kind of what we're focusing on right now, is just raising a larger sum of money in order to start buying more of the auctions. So then my other real estate endeavor, I guess, is putting together these portfolio packages of houses. And in that, I'm I'm actually looking to bring in joint venture investment partners on board as well. So there's like everything in real estate, you know, you're using it for capital and joint venture partners. So, you know, I think everybody's kind of in the same boat. Once you get to a certain level, you're always looking for money. You're not looking for money, but, you know, you're trying to help other people invest. And just listen to your your podcast from last week with Joy Ragona. And we're going to I think it's pronounced right. Yeah, that's right. Yeah. Yeah. He had some really good insights on attracting joint venture partners. And, you know, I think I'm definitely started implementing some of the some of the things you mentioned on that show. So so that's kind of my focus at the moment, is the two different strategies buying from auctions and putting portfolios together. One thing I should mention, you know, when I went through the auctions and I'm currently selling them, I'm thinking, well, that's great, I'm making quick cash, but I'm not actually building generational wealth. So I was like, well, I got to start buying some properties and holding them. Plus when I started doing a bunch of research on how I could get financing down here, and that's how I stumbled upon a portfolio loan. So, you know, the the the model I put together is a fairly lucrative model. We like the cash on cash return. A loan is over and it's anywhere from 10 to 15 percent. And that's an accounting principle. Pay down or equity build up or anything. So so just cash flow alone. You know, you're looking at some pretty decent returns. They're very good. Yeah. Yeah.
Rob Break [00:41:15] Well, OK, you're going to be at the Investor Forum this year. What excites you most about that?
Chad Urbshott [00:41:20] Yeah, that well, I was actually most excited, actually, to get asked to participate in it, so there's a they've got these new panel discussions of, you know, just real life investors that just go up and tell their story. So that's one of the that's the panel that I'm on. So I'm excited to be a participant in that. And I don't know if you've seen a lineup of speakers. They got some amazing speakers this year. I'm quite honored to be in the lineup with the likes of Bruce Firestone and Don Campbell and some pretty big names in the real estate space. So that's that's definitely what's most exciting, I think.
Rob Break [00:41:58] Yeah, OK, well, this has been really informative interview, I thank you a lot for taking the time to come out and talk to me today. I look forward to seeing you there at the Investor Forum. It's going to be my first time there, but yeah. So I guess you've been there a few times.
Chad Urbshott [00:42:13] Yeah. Yeah. You're going to love it. Like I the last few years I've attended like last year when I attended I am and like I like to try to visit as many booths as possible to see what people are doing with different strategies or using. And I actually met. So these properties in Ohio that I'm looking at putting it in the portfolio alone, that's where I met the guy that was selling them last year, and that was almost a year ago. And I developed a nice relationship with them and built up a lot of trust. And we're actually looking at doing some something together down here in Florida. He actually he's from Florida, lives in Florida. So we're actually looking to put together something similar down here, doing a rental, turnkey rentals as well. So it's a it's a great venue for networking because it's it's just amazing and sounds like
Rob Break [00:43:00] you don't have a lot of free time.
Chad Urbshott [00:43:01] No, no. If if you had to remove the value, it definitely takes at least one day to hit every booth and chat with all the people. So it's it's definitely time consuming, but it is well worth it, in my opinion.
Rob Break [00:43:12] Well, where can people learn more about you right now?
Chad Urbshott [00:43:14] Probably the best place is sort of my LinkedIn profile or u r b t t. That's I think how you found me reached out to me. I also have a website my company called Equity Growth Capital, and the website is w e q you g r o w e h dotcom. So it's kind of corporate looking, definitely a much more personal feel to it, but it's kind of by design that way, looking for raising, you know, from overseas investors. What have you got a place you could find me if many of your listeners may or may not have heard of a site called Bigger Pockets Dotcom. I don't know if you ever heard of them either. Reub Oh yeah. Oh, OK.
Rob Break [00:43:55] So listen to their show to you. Oh, yeah.
Chad Urbshott [00:43:58] Oh yeah. Yeah.
Rob Break [00:43:59] Listen, they've got a fantastic show.
Chad Urbshott [00:44:01] Yeah. Yeah. So it's more of a US based real estate investing website. They've got some fantastic forums and I'm actively bidding on them all the time. We're actually debating, I should say they're almost more of a debate most days than anything, but it's fantastic. It's a great learning tool for not only us, but that, you know, we're all sitting. Investing is pretty much universal. Right. So it's just different local laws when have you between countries. So so it's a great it's a great free resource for learning as well. So I recommend a lot of people go to if they're looking to sort out.
Rob Break [00:44:39] And then are you on Twitter?
Chad Urbshott [00:44:41] I am not on Twitter. No, I'm not a Twitter guy, but
Rob Break [00:44:47] no, me neither. I'm trying to get into it, though.
Chad Urbshott [00:44:49] Yeah. Myself included. Yeah.
Rob Break [00:44:52] OK, well, you can find me on Twitter. I am at Rob Breakthru and Sandy is at the Sandy McKay McCay. Sandy, I am a sea kaixi. Thanks again, Chad, and thank all of you out there for joining us. It's time to invest in your breakthrough. So get out there and we will see you next time.