Table of Contents - Ex Financial Planner NOW Real Estate Entrepreneur with Kyle Ford
Dave Debeau [00:00:09] Hey, everyone, this is Dave Debeau with another episode of Property Profits Real Estate podcast today. My guest is Kyle Ford, all the way from, I believe, Kitchener. Is that correct?
Kyle Ford [00:00:19] That's right there.
Dave Debeau [00:00:20] All right. So if you're not familiar with Kyle, he is a real estate entrepreneur. He's also a mortgage broker and a reformed ex financial planner. So good to have you on the call. You're really looking forward to chatting with you, especially about what you're up to with the strategy on bigger building. So why don't you start off by telling us a little bit more about your background in a minute or two here. But I'm really curious from your perspective as a former financial planner, why did you make that switch and why did you change gears, practically change professions and start focusing on real estate instead of traditional finance, where your traditional financial planner in the past, where
Kyle Ford [00:01:05] years was a financial adviser with the major insurance company, one under the sun and one with a certain freedom day. So I won't name names, but a couple of major companies. Well, lots of good things to say about both organizations. But as a whole, working as an independent financial adviser, I was working with a lot of friends and family. I was working with people that I knew. And at the time I was twenty three when I started and I was the one doing their projections and doing the retirement calculations of their income planning. And pretty much no matter how I sliced it, they were taking a pay cut in retirement. And at twenty three years old, I wanted to retire early and with more money. So I knew that I saw some gaps there and these were people that were doing things right. They had their houses or doing things say. Right. They had to do what they told. They were told exactly. They had their houses paid off. They had lots of money in the registered funds, but the rates of return just weren't there. And as the advisor, there would be times where I thought I was doing a very good job and really, really setting them up on a good plan. And then somebody would fart in Egypt and their portfolio would drop 20 percent. And I just didn't like that. So I started looking into real estate. I started investing in real estate. And the returns on that side versus in the markets were night and day for me. And I just slowly transitioned more and more into real estate until January of twenty eighteen when I sold my financial business.
Dave Debeau [00:02:31] All right, very cool. And yeah, I do have a chip on my shoulder against the financial planning business. My brother was a financial planner for twenty three years. Same exact scenario, except he didn't get smart and get out of it as fast as you did. And again, that's the big challenge for the planners. Right. You do the best job you can for people and you know, things are going well. You look pretty good. But even when things are going well, especially here in Canada, the management expenses that get chopped right off the top are brutal so that even if you're doing really well, you're not doing all that well when you take that into account. And then if you're not doing well, if it if it takes the financial companies keep taking the management expense ratios out of your shrinking and shrinking and shrinking capital funds. So that was one of my big hang ups about the oil industry. I actually took the training and the course and the whole bit to become a financial planner. Then I kind of study a little bit about mutual funds and said, I don't like these things. I don't I don't think I buy any of these. Why do I want to schlep them to other people? So so hats off to you for kind of seeing the light and seeing, you know, at that young age the difference between the fact that is bullshit, that if people do what they're told they're supposed to do, that they're going to be able to be financially free. It just doesn't seem to work that way.
Kyle Ford [00:03:56] Yeah, and what are the things that became evidently apparent to me was you cannot get rich giving somebody else your money to manage. And that just that doesn't mean you don't have a great team of people, you know, accountants, lawyers, mortgage brokers, insurance agents, maybe a fee for service financial planner who's actually doing the plan for you, not investing your money. So I absolutely believe in getting people to help you, but I don't know anybody who's ever gotten rich off mutual funds. Yeah, I know some rich people who put money in the mutual fund, but that was because their business or their real estate that got them there. But I don't know anybody who's became independent, wealthy of mutual funds, but I know several people who have real estate. So that was the paradigm shift for me.
Dave Debeau [00:04:43] Yeah, that's also my friend. So, yeah. So that that kind of brings a big concept to my big idea to mind the pros and cons, real estate versus other investment vehicles, one of them being control. Right. So you talk about, you know, if you put all of your money into an adviser's hands, you don't know. Too many people have really become rich that way, especially in mutual funds. Beautiful thing about real estate is. We have so much more control over that asset versus stocks, bonds, mutual funds, pretty much anything else. You want to talk briefly a little bit about that?
Kyle Ford [00:05:16] Yeah, that's going back to the third and Egypt comment that I made some of those same friends and family that were my clients on the financial side are now investment partners on my real estate side. And when I'm talking to them today in the midst, if we can save the date, we're in the middle of a global pandemic at the moment. And as of now, my rent is one hundred percent collected. The value of my assets haven't changed. If anything, we're doing some value added renovations on some properties and we're still increasing those values by private borrowers or by private lenders. Pardon me. All of their interest checks are being paid on time at their 10 or 12 percent rate of return. So that. The control and the stability of real estate is really where I'm able to deliver on promises of commitments that I've made to people at the end of the day. There's always a risk of something happening, but I certainly am much more confident with the control that I could provide for my partners and lenders in the real estate world as opposed to the traditional financial model.
Dave Debeau [00:06:17] Oh, yeah, most definitely. Most definitely. Yeah, that makes sense. Just out of curiosity, how do you use investors? You bring them on with self directed Orestis and that sort of thing nowadays.
Kyle Ford [00:06:29] So yeah, big time. Big time. I'm major into RRSP lending. So as a mortgage broker I work on that side as well, helping helping people direct their funds into mortgage lending opportunities. We do creative stuff using the TFSA maximizer, so helping people lend on a deal or they got their RRSP and TFSA in it. I don't want to use the word manipulating, but directing the return into the TFSA as opposed to the RRSP. So taking some of those, you know, I never speak ill of the financial world because I came from that and I learned a lot there. I just I feel like I have a duty to focus on what I know is better now, so.
Dave Debeau [00:07:07] Yeah. And I'll bash the hell out of it for you. So don't worry
Kyle Ford [00:07:14] about
Dave Debeau [00:07:15] us. I love that. I love them. I love what you've done. So first of all, you and there's nothing wrong with I mean, you you went into financial planning and it's it's a decent profession albeit. But you saw the light. You saw the reality. I'd venture to say you saw a lot of the smoke and mirrors and bullshit that goes on. You got into real estate investing. And I think it's really smart what you've done because you've gone from being a financial planner to being a mortgage broker and an active investor yourself. So you're you're buying properties, you're building up your portfolio. You're bringing on investor partners into those deals. Plus you're a mortgage broker. So you're able to get people financing for all sorts of different properties on their own or to do whatever the heck they want in their own personal residence, even if they want to. And you're also able to offer investors a different vehicle through that channel as well, not even necessarily directly investing with you. So that's you've got a nice package suite of services that you're offering.
Kyle Ford [00:08:19] And becoming a mortgage broker was kind of an aha moment in my last year as a financial adviser, because if I tried to have a meeting to talk about your insurance needs, nobody wanted to go to that meeting. But if I wanted to talk but they wanted they were begging to meet with me and would work around my schedule if I taught them how to buy an investment property. So what started happening in the last year is I wasn't making any money as a financial adviser because nobody wanted that help. They wanted help with real estate. And the mortgage broker was a great way to monetize that. I was able to say I can show you how to buy an investment property. One of the most important things about that is setting up your finance it, your mortgages and your lending in the right way. I can help with that. So I was able to monetize the advice by lending the money to do the real estate deal.
Dave Debeau [00:09:07] And fair is fair, right? I mean, you've got to get compensated. It just makes sense. You know what? I want to ask you something, because you come from from this world financial planning and now mortgage broker services and you're very familiar with bringing in capital from investors, first as a financial adviser and doing it that way. Tell me a little bit about your take on mom and pop real estate investors like myself who are not financial planners, who are not mortgage brokers, who are not licensed and raising capital. What are some of the the things that the big mistake you see people making in that field? Or have you noticed in
Kyle Ford [00:09:50] a couple of the high net worth people? They're general, they're more concerned about preservation than growth. They're more concerned about losing what they have been growing at exponentially. So throwing 12 percent, 20 percent at somebody who is new to this is going to scare them because they've been programed to believe that the higher the rate of return, there is more risk. Who taught us that? Right. So that's what they believe. So, well, people are going after a new deal or a new lender, I should say all you're paying 12 percent. But look at all the money you're going to make. Look at all the money you're going to make. Unless that person really understands real estate, they may be thinking this is a risky deal, too, because it's too good to be true. Right. That's the Canadian way. If so, what I find is more important to them instead of talking about the high rate of return, let's talk about the security first. Let's talk what's most important to you, Mr. Mrs. Investor Security. You want stability or whatever income grade. Those are standard things that we hear. Does your current investments offer those things? And shut up, don't tell them that. Let them talk that most people believe that their mutual funds are secured by the bank. I don't know who's talking, but I can't tell you how many people say, well, it's secured by the bank and they don't even really know what that means.
Dave Debeau [00:11:14] So obviously, we haven't really taken a look at their mutual fund statement.
Kyle Ford [00:11:18] No, certainly not. So it's very important to break that down a little bit and say, let's talk about the security, your actual investments. And if I could show you something that offers more security, stable, consistent income, and it is a better rate of return, is that something that you would look at rather than just throwing? I got a triplex in Kitchener. It's 12 percent return because the guards is going to go up. So focus on what they're looking working with now. And if you can delicately try to poke a couple of holes in it and most of us who are that are listening to this know the some of the flaws in the conventional market or the commercial market so eloquently talk to them, poke some holes and then talk about the security more than the high rate of return.
Dave Debeau [00:12:05] I like that. That's great advice. Any suggestions for people about staying compliant with the Ontario Security Commission?
Kyle Ford [00:12:16] Yeah, don't mess around when you're lending, when you're raising capital, and I don't claim to be an expert in this, you know, make sure you're not guaranteeing anything. First of all, it's going to turn your investors off. When people hear the word guarantee, they get suspicious.
Dave Debeau [00:12:32] Spidey senses go off.
Kyle Ford [00:12:33] This partizans go off. So using words like fixed and secured is totally OK. I'm going to offer you a fixed rate of return. It's secured on real estate. So if I don't pay you that return, you can foreclose on my property or power of sale, my property to recoup your investment. It's not guaranteed the market could drop and that money could not be there. But what I'm willing to do is personally guarantee that you can go after other assets. So in terms of staying compliant, I'm seeing a lot more people just blasting things out on social media and I don't claim to be an expert on it. But you need to be careful with what you're doing.
Dave Debeau [00:13:07] Yeah, I completely agree for sure. Yeah. So again, you talked about focusing on accredited investors. The other area that we're as mom and pop investors were not allowed to raise capital from the general public. The commission says that's a big no no, you need to be licensed, all that kind of stuff or get an offering memorandum, etc. We can focus on accredited investors or we can focus on people that are close friends and family and work associates, that sort of thing. Those are some the other options are we only got a couple of minutes here, left here comment. Tell me, because you do so much interesting stuff. But tell me a little bit about during the BR strategy with big buildings, because most of us are familiar with the the Burj strategy, with a single family home and maybe sleeping in a suite in it and then increasing the value, refinancing all that good stuff. Tell me what you're doing with with BR on a bigger scale.
Kyle Ford [00:14:01] So the building that a lot of people know that I've done is my 10 unit building in Cambridge. I call the town hall style apartments. So it's a center hallway with five on either side or two storey with full finished basements. I purchased the property for one point three million. I just had it appraised based on income for three point four million. Nice. Congratulations. And we rent to it for about one point two. So between interest fees, construction costs, total investment was two point five million with an income approach appraisal at three point four million. So very big upside. To talk about the deal and those numbers, I always like to break it down. I didn't start with the ten unit building. It started with a single family home. I fixed it up, refinanced it, rented out. Then I did a couple with Triple Xs. Then I started doing duplex conversions and I really honed in on my systems and processes to make sure that I understood what I was doing. Then when it came to the ten year project the year before that I did seven flips in twenty eighteen I did seven flips. So in twenty nineteen when I was going to close on this ten in a building, I looked at it as well. Now I'm just doing ten flips this year except all in one location. And instead of looking at it, it is a big massive project. I looked at it, it is ten single family homes. All I did was take my single family model and so Grant Cardone here. But I had everything. It was times ten, the ten units to get my projections, to get my numbers. And then what I actually found is the economies of scale of doing a big building versus single family owned by trades were cheaper. I ordered it was really cool. I ordered a fifty two foot trailer full of supply materials and when they were dropping it off, I was like, well, how do I get all my stuff out? We got to move everybody else's stuff. And they're like, No, sir, you have the whole trailer, like the whole trailer. So that was really neat. So the big question that people asked here was if you bought this building, how did you get the tenants out? Because it was fully occupied when I bought it. And I certainly I hate the word rent eviction. To me, the word rent eviction means somebody who's going to say they're renovating. They don't. They slap a coat of paint on, kick the tenants out and jack the rent. That is not what I did here. I did an N thirteen construction notice. The building was in significant disrepair. There was foundation issues. There were sewage backup issues, electrical issues, drywall flooring. We did start to finish soup to nuts. We renovated this whole building. So what we did, we treated the tenants with dignity and respect. We served on the notice. We offer cash. We help to move. We help to find new places. And we were able to within four and a half months, fully empty. The building was now. And yeah, it was it was pretty.
Dave Debeau [00:16:56] It's very impressive. That's awesome.
Kyle Ford [00:16:57] Yeah. Yeah. And I think the key is that a lot of people here, they go in and they try to be the big bad landlord. They try to be sneaky, they try to do shady things, be honest, upfront with people. These people knew the building was in rough shape.
Dave Debeau [00:17:10] They've been living there.
Kyle Ford [00:17:11] They've been living there. They do have a. The sewage backups. Believe me, they knew so and we were we treated them with dignity. We didn't try to do any. All my dad's moving in. I need the unit. And they knew we were going to renovate and increase the rent. They were well aware of what we did and we were able to come to an agreement for signs and lines from all 10 tenants. There's actually only eight, two of them left automatically right away and nine smaller tenants. They had some money in their pocket. They found a new place to live. And we went on from there.
Dave Debeau [00:17:42] Nice. Nice. Some. Time flies were having fun. And people want to find out more about Calford. What should they do?
Kyle Ford [00:17:50] Shoot me an email. It's Kyle Remak, real estate VRT, MASC, real estate, dot com. Or you can check out my website, Remak real estate dot com. I'm a licensed mortgage agent with mortgage giants. I specifically work with investors. So anybody looking for creative financing techniques, anything like that, I'll be happy to help.
Dave Debeau [00:18:08] So thank you very much. Everybody take care and we'll talk to you on the next episode of. Well, thanks very much for checking out the property profits podcast. You link what we're doing here, please head on over to iTunes, subscribe read us and leave us to review it. Very, very much appreciated. And if you're looking to create a regular flow of inbound investor inquiries about your real estate deals, then I invite you to attend one of my upcoming live online demonstrations. And you can check that out at Investor Attraction Demo Dotcom Ticker.