Table of Contents
Erwin Szeto [00:00:08] Greetings, my fellow real estate investors. Welcome to another episode of The Truth About Real Estate Investing Show for Canadians. My name is Erwin Szeto. I am a Canadian. Last time I checked. And how much better are birthdays in 2022 than the last two years? If Cherry’s second 20th birthday is any example. It was like a party, just like 1999. Apologize to the young people. It’s an older person. Turn to party like it’s 1999. It’s a Prince song. It’s like, never mind. The second one, this old man, Cherry, partied hard. She went to the spa. She had done some karaoke escape room and Lady Gaga concert. 50,000 other people. Some stupid, expensive dinners. And the best part? The part that I organized, which was the house party, complete with our use of our pool barbecue, fresh mango, sponge cake, etc., etc.. They hosted a bunch of friends and their kids, including one family visiting from Dubai. Everyone had a great time and it’s good to host everyone that our new host. It’s like the last two years never happened. As a present. Well I have a deviated golf town. Browsing and I picked out a very thoughtful gift set of Black Widow know the Marvel movie character Black Widow Collector golf balls for cherry. And when I brought them home, the kids were super jealous. Also, I got her a pair of golf shoes, as Cherry’s current golf shoes are basically garbage. They’re well over ten years old, extremely well worn. There were supposed to be a wait. You’d never know. By the look of them, the spikes on the bottom, the cleats have been all worn off. They were plastic cleats. They’re all worn off. Basically, the only redeeming value of the shoe is that they’re waterproof. But yeah, there’s no grip after all this level of gift giving. I will humbly submit my application as husband of the year. Sorry, ladies from the investment world. Have you heard of Tiger 21? That is the private network of high net worth individuals. The minimum to join for application purposes. What to pay them? Well, I’m sure you could pay them, but for the application purposes to be accepted, you have to have a minimum of $20 million in liquid assets worth of liquid assets. The average net worth of a Tiger 21 member is over $100 million USD. Why is this important? While for this group, historically, because I’ve been following them for close to a decade, they do a survey of their members to see what they’re liking for investments. Right. So historically, based on the survey results of their members, these really, really rich people, historically, the largest percentage of their investment was in real estate. So no surprise there. I’m a small fish, but that’s where most of my money is and that’s where I make my money. But recently that just changed. As now, stocks are now their number one. Take the number one, the largest percentage of their investment portfolio as they’re seeing real bargains in the stock market. That’s the words of the CEO of Tiger 21, real bargains. I’m personally a small fish, so I’ll keep the majority of my wealth in real estate and I am still shopping in the stock market. If you too want to learn more about how to invest like the ultra-high net worth. We’re sharing all the secrets at the Wealth Hacker Conference on November 12th. Live in person only at the Eternal Congress Center. We have some amazing speakers and vendors planned. Plenty of free parking. And just like last time, this will be the event of the year for entrepreneurs and investors alike. If you’re following me on social media or email or on my email newsletter, you’ll be informed of any promotions that we run. But see, note the prices going up, as in the discounts on the promotions will be to be declining. So if you buy closer to the conference, you will be paying more money. So and also the VIP tickets will sell out. So don’t delay. Your FOMO will be realized. The sooner you buy it, the more money you save. So go to WWW Dot Wealth Hacker dot CA for details on the event. Nonsense which show this week we have a really interesting interview of a gentleman, also a coworker of mine at Rockstar Real Estate, my friend Monte Dillon. He has a unique background of having worked his way up the corporate ladder, but in the financial services world, specifically in the compliance department. So his job was to follow up on complaints on their own staff and also likely audit other compliance staff I’ve met in my experience, they audit also what their staff own certain members of the financial industry, having disclosed what investments they hold to their employer. So that’s the point of the point of the compliance department here is so important to have saw firsthand who really makes money in the investment services world. Hence he started buying real estate. Monte shares how he started, like most of us do, hustling hard in search of cashflow, buying houses, duplexes for Airbnbs. Then later. Transition into new construction condos for honestly negative cashflow but way less headaches. To is a bit of a trader as well has he has divested some properties near the peak just so in the last 12 months is divested some properties and what property type. Eyes set on for his next investment may surprise you surprise me. Marty shares his experience in the current market of writing lowball offers and being on the receiving end of local offers as well. We recorded this in the middle of August, so you can expect some low balls are flying around. This is definitely a story of resilience, entrepreneurship and taking control of one’s financial future. And also, if you want a free copy of Monty’s digital book, go to Dylan Realty Systems. Okay, that’s D.H., I ll own Realty Systems here. Please enjoy the show. Hey Montu.
Montu Dhillon [00:05:55] Hey, I don’t earn.
Erwin Szeto [00:05:57] Good not golfing, but what’s keeping you busy?
Montu Dhillon [00:05:59] You know what? I have been passionate about golf for the last little while. Last couple of months. To tell you the truth, I haven’t been endorsing any condo projects in the last couple of months, and that’s because I’ve seen the potential for a huge pullback in the market since like March, April. And I’m not one to like, start a panic spread of telling people, Hey, the sky is falling, you got to sell your assets even. That’s what I’ve been thinking. But I just couldn’t tell people to start buying during the decline. So I’ve been keeping myself busy with golf. You golf.
Erwin Szeto [00:06:36] Poorly.
Montu Dhillon [00:06:36] Where?
Erwin Szeto [00:06:37] I haven’t hit anyone lately, so no, I haven’t had one lately.
Montu Dhillon [00:06:42] So I’ve been golfing for about 25 years. Never. Well, I have. I’ve been a terrible golfer for 25 years.
Erwin Szeto [00:06:49] Please tell me it gets easier.
Montu Dhillon [00:06:51] In five years. Well, here is. Here it is. You got to get professional lessons. So I went in and spoke to like a coach a couple of times to straighten myself out. And the difference is night and day. So and I have been telling myself for the last five years that when I earn it, I’m going to buy myself some custom clubs, banks. And so I think this this is the year this is the year when I’m getting fitted and getting myself some finally some good clubs. And it makes a huge difference if there’s any golfers out there listening to this stuff struggling, you know, just go get fitted. Different clubs perform differently for everyone.
Erwin Szeto [00:07:26] Not the same shoe fits everyone. I’m on the term professional help or bad idea?
Montu Dhillon [00:07:31] No, just this proper training. Everyone’s got to get straightened out. Yeah, that’s right.
Erwin Szeto [00:07:36] That’s a good analogy from us. Everything. I do have a business coach, I’m an investment coach. I like business. A lot of coaches and I.
Montu Dhillon [00:07:44] Think people are trying to like to buy real estate, just watching YouTube videos and trying to figure it out when what they really need is someone who’s run the laps before and can just hold their hands and guide them through the process. Right.
Erwin Szeto [00:07:56] That’s going to one year. We’re going to shoot a YouTube video for this. So we the same schmucks that people can’t learn from. But we’ve run some laughs, we’ve run some laughs. We know a little bit of our investing. So if we would like to be the good schmucks, then yeah. So what do you have an interesting journey in your in terms of real estate because you’re actually coming from the investments world, right. Can you tell us about first off, what year was that? And then was your experience working in the investment world because you worked in the financial investments world like large publicly traded companies.
Montu Dhillon [00:08:26] In the early 2000. So I do have a background in investments. I was stocks and options licensed. That was my previous life. I had the plan to build up a huge stock portfolio and let that say make a million bucks in stocks and then just collect 6% for the rest of my life. And I thought I could live off of that. Lo and behold, a lot of changes in a decade, right? So I was working with investment advisors and portfolio managers and I was, you know, trading for myself. And I just I had a position in the compliance department in a couple of companies like CIBC and Dundee Wealth, where we’re now, they’ve become echelon partners. I found that I was able to climb the corporate ladder really quickly, especially in Toronto. I come from Montreal, where the salaries were a lot less than Toronto. So when I came to Toronto in like the mid-2000, my salary practically doubled and then it would jump by like 30 40% because I would just change, change locations change careers, careers change employers every couple of months, right? Because it was so competitive they were offering the headhunters were like really aggressive and they were offering immense salary increases. So my salary went from like 35,000 in Montreal to, well, almost 100,000 plus bonuses, which those bonuses and the insurance and the stock options, those are the golden handcuffs. That’s what I learned. So my journey in trying to. Make as much money as possible and retire early. I learned that I could not break a glass ceiling no matter how hard I worked because I was working for somebody else. They subdued my earning potential. So there was a level that I was trying to reach a director in the company I was at, and I had climbed to the position of manager, director, junior director was right after that, and I just could not get it done no matter how much work I put into it, no matter how many connections I made. Apparently with this company that I worked for, they only allowed people with like an MBA to reach the director and higher level to become a VP. You had to have an MBA, which was strange to me because I mean, I knew some directors and they didn’t look like they had MBAs. You know, I hope there aren’t any directors listening to this and feel slighted, but I mean, there’s smart people and average people. And I learned that in the investment industry there are some incredibly brilliant minds who have amazing analysis capability, but those are few and far between, and most of them are just average people. In fact, I think every industry is just average people, and there are only a few that really step out that are the cream of the crop that stand out from the rest. You know, the top 9%, as I like to call them, it exists everywhere, in my opinion, even in real estate, you know, even dentists, doctors, lawyers. I’m sure we all know some bad lawyers.
Erwin Szeto [00:11:39] Good, bad and bad. And everything is great in every industry, too.
Montu Dhillon [00:11:43] So although I couldn’t break this glass ceiling, I thought my earning should not be limited. I felt I should be making 300,000 a year. My salary at the time was 90 something thousand was bonuses of like 20,000 bucks. So it was just, you know, north of 100 K. But I was like, no, I want to deal in is a 300 K minimum earner. You know, 3 to 500 should be my lifestyle. I think that’s what we all want because that we don’t just want the money, we want the freedom that money provides. So I decided to get a motorcycle and crash it and break about 24 bones in my body.
Erwin Szeto [00:12:24] This is terrible plan.
Montu Dhillon [00:12:25] Yeah, it was. It completely backfired on me. Right? So lying there for three months and not able to sleep lying down, I had to sleep in a recliner. And that’s when I realized that, okay, I cannot I was dreading going back to my workplace. It was just the most horrible environment with office politics. And some of the characters were just, you work with Troll? Yeah, at least in this office there was a couple of trolls and I really did not want to go back to that. So I said to my wife, Darlin, I have a crazy idea.
Erwin Szeto [00:12:57] Better than a motorcycle.
Montu Dhillon [00:13:00] Better, better than a motorcycle. I’m going to be we’re going to buy some real estate. I think that duplex is if we have a portfolio of duplexes, it’s the cash flow. If we can get, say, five duplexes that are cash like a thousand bucks, we’re going to replace my salary. Yeah, that’s all I was making. And I was making like 5000 a month after taxes. How the hell did we survive on that? You know what I mean? So that started my epic journey. And I found I got the television personality from.
Erwin Szeto [00:13:33] Tom.
Montu Dhillon [00:13:33] Mcgilvray. I found him. My wife brought his book to me and I read it and I was like, Who is this clown? He’s got his picture all over this book. This is I’m not paying attention to him. He’s so egotistical. Then I watched a show, one of his shows, and I was amazed at how humble and charming and good hearted he was. And I think this guy’s got it figured out. Okay, let me read his book. So I read his book and I was like, All right, this is what we going to do. We’re going to get some duplexes, Mcgillvary says, and will be financially free income properties.
Erwin Szeto [00:14:05] Income properties, a suite of basements before anchor properties his first show is all about.
Montu Dhillon [00:14:10] And then I’ll slowly leave my job and we can do this. And, you know, I got license, got my real estate license, started doing that part time and working in in the financial industry full time. But, you know, to you and me, I wasn’t doing much work full time. I was just focusing on real estate, trying to figure out trying to get crack this code. And then one day I stumbled upon income for life for Tom and Nicaragua.
Erwin Szeto [00:14:41] Chinatown in Nicaragua.
Montu Dhillon [00:14:42] Real estate, rock star, real estate. And I read their book. And being the skeptic, I was, I was like, Tell him I was so angry. And I was reading the book. I was like, This does not work. This is the dumbest thing I’ve ever heard of. This is not going to work. And I was I was yelling at it every day to my wife, hey, look, look what these guys are proposing. There’s no way you can do a rent to own. It’s just won’t work. By the end of the book, though, I got to admit, I was sold as like, you know what? I think these guys are right. Do something. We got to try it. It just it’s just math and math doesn’t lie. So let’s do it. Let’s try. I’m going to go to one of their free training classes, and, uh, yeah, that’s where I met Tom Kreitzer. So I didn’t join the rock star brokerage right away. It was just, you know, part of my journey trying to. I accumulated a whole bunch of, like, houses, whole bunch, you know, I bought fixer uppers, converted them into with legal basements, have like a two unit dwelling. I got bought me a four plex. I did one rent to own, which ultimately didn’t work out. And then at some point, because of all the work I was doing in my houses, I was like, I got to get property managers and all the tenant issues that I had the tenant profile in these duplexes. And for plex’s they didn’t really make a lot of money and they often had problems paying the rent. So one day someone told me that the best thing they ever did was buy a pre-construction condo. And I and I was like, No, it doesn’t work. You know, houses, land is where the money’s at. That’s what you want to get. But, you know, because I had extra assets and I was able to get a mortgage at the time, it’s really hard to do that now. I decided to go ahead and buy a pre-construction condo. What ended up happening was I made like 150 or $200,000 within that timeframe. From start to finish actually was over just from start to closing. The value was up 200,000 and I sold it a year later. And then after all my realtor expenses and paying taxes, etc., I my profit was about $220,000. I didn’t have to fix up any houses. I didn’t have to clean up any cockroaches. I didn’t have any toilets to clean, which is what I was doing previously, you know, getting tenants into my homes. I didn’t have to do any of that. It was just I found good builders who knew how to build and deliver. And then I just started doing that over and over. I just found the pattern, made a few mistakes, figure out what the right pattern is. And then I would just go into business with those people who had the good projects. And then it was just like, Hey, you sign a few checks, it gets cashed a couple of months later. And then on closing, you get a mortgage. You can either sell it, but I found the sweet spot was selling the condo about a year to a year and a half after closing. Why is that? The sweet spot? Number one is that there’s, you know, tax benefits. You get your HST rebate, you lock that in your value of the unit with a tenant carrying it for a year. It for some reason I haven’t figured out why, but the value jumps within that first year. Lots of theories as to why because you know, the building is still in renovation and then renovations are all done.
Erwin Szeto [00:18:07] All right. People want new, but they want now.
Montu Dhillon [00:18:09] Exactly right. And they’re willing to pay for it. Right. So as an investor, if I’m willing to carry it and even sometimes even at a loss. So these some of these units, the cash flow negative about three or 400 bucks a month. So I’m sacrificing about 4800 a year, $5,000 a year. But in the end, on the flip side, when I sell, I’m making 200 without the struggle of having to maintain real estate, maintain houses, fix a leak in the basement, which I have tons of experience doing, believe me.
Erwin Szeto [00:18:41] Similar to this. Let me pass you there because there’s a lot to unpack because your skim through the whole part. You worked in the compliance department, in the investment industry.
Montu Dhillon [00:18:49] As.
Erwin Szeto [00:18:49] Uncle Vanya. Yes. What did you see? What can you share? So because you saw it, you saw the skeletons in the closet.
Montu Dhillon [00:18:56] Such shenanigans, right? So what I learned back in those days was there are good advisors and there are bad advisors. I like to surround myself only with good advisors, people who know what they’re doing. But as I manage the compliance department, I saw all kinds of shenanigans. I saw one fellow. This was unbelievable. It was just outright fraud. He would he took his clients’ money. And when the market this one stock tanked, they went from $300000 to $50000.
Erwin Szeto [00:19:29] And the clients invest the.
Montu Dhillon [00:19:30] Client’s investment, their account. And he decided to create fictitious statements just on Excel. He sent them homemade Excel statements saying, Yeah, your account is fine, you’re your money’s good, you’ve gone up. And then I remember every time we would try to have a discussion with him in the compliance department, he would say his grandmother died. So it wasn’t just me investigating him. It was other officers that were trying to figure out what’s going on with him. And then when it was my turn to investigate him, you know, and put the bring the boot down. He was like, Oh, my grandmother died. Sorry. Can I get back to you in two days? And, like. Okay, sure. And then someone else tells me, Oh, my God, that’s his grandmother died. I must be the third time. I was like, Oh, okay, we’ve got a problem. So he ultimately disappeared. We think he left the country. There was the police went looking for him. They just couldn’t find him. So, yeah. And that person whose account was destroyed. Luckily, the company I worked with made them whole. Wow. That’s nice. Yeah, well, I mean, you know, $100 million a year profit, they could at least give them 250 K back and avoid a major lawsuit. Right.
Erwin Szeto [00:20:39] But again, you’re in the investments industry or financial markets industry. Why did you want to be a real estate investor and to be rich doing what these investment advisors are recommending?
Montu Dhillon [00:20:48] That’s a great question. That’s what I wondered. Like, why couldn’t I get ahead in the investment industry world?
Erwin Szeto [00:20:57] You’re an insider.
Montu Dhillon [00:20:57] Yeah, I was an insider.
Erwin Szeto [00:20:58] I paid less commission.
Montu Dhillon [00:20:59] To.
Erwin Szeto [00:21:00] Friends and Family Special.
Montu Dhillon [00:21:01] Right. So what I learned was the only people who are really making money in the stock world are the middlemen, the ones who are doing the trades, who are making the commission, which is ultimately the house, the brokerages. Right. The CIBC, the RBC, the big houses, they have their investment division and all their portfolio managers have pictures of their boat on the wall. They all do. I’m like, Wow, these guys, I really got it figured out. But what I learned was because their clients were not making the money that they were, I couldn’t continue with it. I believe in, you know, the rising tide raises all boats. And it was only their boat that was floating. No one else had a boat, frankly, and I couldn’t stand it. It really bothered me. So I said, You know what? I don’t want to be an advisor. I think the stock market is a rigged game where only the market makers make any money. So I said, I’m going to do something where once I figure out how to make money for myself, I’m going to help others do it. And so, like my client base in real estate and as you know, I am a real estate agent specializing in condos. My client base are the ones that I trade, whose boats I try to raise. And it’s been pretty good. It’s been a really good decade, I’d say.
Erwin Szeto [00:22:27] Now, not all financial planners and investment bankers are bad. We were talking about before recording. Yeah. And I, you know, I said there are some people I would never trust with their own money.
Montu Dhillon [00:22:39] You know.
Erwin Szeto [00:22:39] We’ve all lost money or something. I think some people are more talented at losing more money. And so I’m not against for certain people. That’s right. That’s the right thing to do. Let someone else manage your money. And also, same thing within construction. I think for certain people, that’s the right investment for that. Right. But I wanted to ask you, for example, in your journey, but you had a lot of single family mortgage card resale properties. Hmm. Use properties. Did that fund your condo investing?
Montu Dhillon [00:23:05] Yeah. Well, ultimately, it’s where I started, and it was those assets that grew. And then I was either able to refi or sell them. And then. And now. And I just thought to myself, you know what? I’ve made a profit. I don’t want to do it again because it’s really messy. I want to do something where I get something brand new.
Erwin Szeto [00:23:24] You don’t want to repeat that experience. You want the grief. You didn’t want the doing, the maintenance and especially the heavy maintenance.
Montu Dhillon [00:23:30] And it’s just because I’d rather do something else with my time. Right, right, right. Right. Now, I’m golfing a lot. I spend more time with my family. It’s my custom designed life that I feel I’m living. And I wouldn’t want to change that even for money. Right. So there’s one asset that.
Erwin Szeto [00:23:48] You see after you made out of money.
Montu Dhillon [00:23:50] Yeah. That’s one way of looking at it. This. But there’s one commodity I think that we cannot ever create. And that’s time where the time the clock’s against us. So and I also believe that money is the store of energy. And more than just that, it’s not just power. People think it’s power, it’s freedom. I think it’s just a store of energy. And when you unleash that energy properly, you create time for yourself, which is that’s the holy grail to me, and time to do what you want with who you want and remove the elements of your life that are unpleasant.
Erwin Szeto [00:24:27] Right?
Montu Dhillon [00:24:28] People, places, things. Right. Get rid of those out.
Erwin Szeto [00:24:30] I just see it so often though that it starts with hustle. Like you hustled in with 24 hour broken bones. You went out and hustled in order in order to fund an easier investment strategy. Right. Right. So, yeah, that’s why I mean, like, you know, that’s right for you. It’s not right for everyone. I have this weird Asian mentality that the more I suffer, the more money. I mean.
Montu Dhillon [00:24:53] It’s crazy. Yeah, well, don’t get me wrong. I still have houses in my portfolio. I’m still half and half.
Erwin Szeto [00:24:58] And you still hustle like I know you have you do you still have a. Are any Airbnbs left?
Montu Dhillon [00:25:03] Well, during the pandemic I had shut them down. But we are planning on reopening. Right? I have long term tenants in my furnished rentals, but now it’s I think it’s time to go back to the service, the tourist industry again.
Erwin Szeto [00:25:18] And you do it inside of Toronto country.
Montu Dhillon [00:25:21] Yeah, it’s been a bit trickier since Toronto Condo. Toronto, the city itself has shut down. Well, as soon as they shut down, they’ve limited the ease that Airbnb operators were able to operate. And before it’s a little more difficult, but those who know the system insiders are still doing just fine. They are still making six, eight, $10,000 a month in these condos. And there are opportunities, but they’re not for everybody because it’s hard work. It’s not a set it and forget it. A lot of people have to hire property managers to run their Airbnb and PMS. They take about 15 to 20% of the gross.
Erwin Szeto [00:26:03] And then what you do, you have a property manager.
Montu Dhillon [00:26:05] I used to write while it was running, right?
Erwin Szeto [00:26:08] Yeah.
Montu Dhillon [00:26:08] But now when I’m going to reopen it, I’m just going to manage it myself.
Erwin Szeto [00:26:12] You’re going to fluff pillows and. Well, no, you start toilet paper.
Montu Dhillon [00:26:16] Well, that’s the thing. Like, it’s so easy to hire a cleaner to do that. Okay, so you hire with our technology, you can just press an app and someone will go to your condo and do it all for you. But as for the guest communication setting, the prices, looking at the market, I’ll do that myself. I did it before I figured out how.
Erwin Szeto [00:26:36] Right. So you talked about limiting grief with your other investments. How do you keep an Airbnb investment with limited grief? You’ve read the same stuff articles in the media. I have a raging post-graduation party. Two people got shot. Whatever.
Montu Dhillon [00:26:53] Right. Well, the media likes to print what bleeds. Yeah, because it reads. Yes.
Erwin Szeto [00:26:58] That’s how media works.
Montu Dhillon [00:26:59] So I have found that 98% of the time you get amazing guests, very respectful, respectfully, just come in, they use your place and then they leave.
Erwin Szeto [00:27:09] So people like me, I’m not there to cause any trouble. Right? You have my credit card.
Montu Dhillon [00:27:13] I’m right.
Erwin Szeto [00:27:14] And I’m causing any trouble.
Montu Dhillon [00:27:17] So what I also did was I increased the deposit required on my Airbnb. Oh, okay. Increase your damage deposit to $1,000. Ultimately, it’s just a deterrent because if they feel they didn’t cause the damage, Airbnb is going to side with them. And lately, Airbnb has not been making owners whole. They’ve been a bit problematic because they’ve scaled and now they’re a publicly traded company. They seem to be putting less effort towards owners of properties. Mm hmm. But that’s like 90% of the time you’re going to have an easy run. Mm hmm. You’re just a hotel. You own a mini hotel, and you just send your maid in to clean it once in a while. You make all the money, and then just remember, it’s a business treated as a business and business. And I know you have experience. You guys ran your own Airbnb. So preaching to the choir here. But for the listeners, it’s a business. Treat it like a business and you’ll flourish. Treat it personally. If you get upset about what they did to your place, you’re going to want to quit and then you’re giving up all these potential returns that you could be making. You know what I mean? Mm hmm.
Erwin Szeto [00:28:22] I don’t talk about enough. I call return to my grief. So just because I naturally think analytically of the story often shares. One time I had, like, a small piece of roof to Tesco’s over my front porch when my properties was a windstorm like we’ve had with some crazy windstorms. So it was blowing and just hanging off. Right? And my tenant has four kids. Single mom. And then I couldn’t just want to take care of it. So I drove and went out and took care of it. I got a ladder unscrewed it took it down, right? Call a buddy to pick it up because I couldn’t fit. My car was too big to take it away, but it took me 2 hours total right to drive out, take care of it like oh sucks. The weekends my weekend that I think about how much money I made on that.
Montu Dhillon [00:29:04] Property do you think about it, right? Yeah.
Erwin Szeto [00:29:06] You know that property probably appreciating rental five or six grand that month alone cost me 2 hours. So that’s like, you know, 2500, $3,000 an hour.
Montu Dhillon [00:29:15] Yeah.
Erwin Szeto [00:29:16] That’s worth my grief, right? So then. Then, like, okay, I’m okay. Yeah. Right. So, yeah, that’s why. I mean, like, return on grief figure what was going with that? Because Airbnb is not always easy. And also, like you said, you can’t get up, you can get upset, but then go back to quantify it. I was upset for 20 minutes. Yeah. And a cash flow of eight grand this month, right? Is it worth it? Think of how much grief people have at a day job to make. Eight grand a month, right. There’s probably a lot of grief for almost everyone. Yeah. Know, commuting, whatever. Office bullies, right? Yeah. Office trolls, as you mentioned.
Montu Dhillon [00:29:49] Office trolls.
Erwin Szeto [00:29:50] What was that? The name of the app that you mentioned that used for booking I made.
Montu Dhillon [00:29:56] It’s called Barkan. He’s got a Broadcom; I think the Arc Bay Arc. And that funny name. Yeah, you are just. You just say, hey, I need a cleaner. And they just send, you know, you get a whole bunch of people who are saying, yeah, yeah, I could. I could clean your place. This is my price. And you get some good cleaners and bad cleaners like everything else. And when you find a good one, you just keep them and make sure you pay them well. Right. If they if they want 100 bucks, say, look, I’ll give you 120 to come back. And, you know, I think effort needs to be rewarded, right.
Erwin Szeto [00:30:27] Because they kind of like what the market is, for example, like good quality people. Exact 20% inflation.
Montu Dhillon [00:30:33] Yeah.
Erwin Szeto [00:30:34] To make sure that your priority. Exactly right. Well, if you’re flow eight grand a month, then I’ll pay a little extra for cleaning. It’s probably worth it.
Montu Dhillon [00:30:41] Yeah. Right. People get bogged down in the details, and sometimes they run an operation like an Airbnb, a hosting operation, and they’re like, Well, I don’t want to pay 150 bucks for cleaning. Come on, folks. Here, you just made $8,000 this month. Just shell out the extra hundred 50. It’s a business. Every business has an expense, you know, if you want it. That’s one thing I’ve learned in the last two decades is when you throw money at a problem, it fixes it. Don’t rely on your own expertize. There are other people better equipped to take care of your problem and just give them money to do it. If money is just, you’re starting some energy and they can do it faster, better, quicker than you can. Like, you know, plumbers, for example, I knew a couple of things about plumbing and electricity with all the houses I’ve managed used to do it all myself. And now it’s I just find a plumber and they fix it permanently. Yeah, they cost electricians costs. But guess what? I’ve never gone back to those homes that I botched the electrical or the plumbing job myself. So now it’s one and done when you hire a pro.
Erwin Szeto [00:31:49] I think part of your grief issue is that you did a lot of the work yourself.
Montu Dhillon [00:31:51] Yeah, well, maybe it’s trying to save the money, right?
Erwin Szeto [00:31:55] I said it recently. It takes a village to raise a child. It takes a village to have a successful investment property. And all these people try to do it themselves. The same thing with raising a child to not do daycare, to not, you know, do schooling to. Yeah, it takes a village. Can’t do it by yourself. It’s just a lot easier if you don’t do it by yourself. Can you. Can you give us a bit of a break down? What percentage of your portfolio is new construction versus like everything else?
Montu Dhillon [00:32:21] Well, here’s the thing. My new construction is I trade it. So right now, my.
Erwin Szeto [00:32:27] If you’re not really an investor of new construction trader.
Montu Dhillon [00:32:31] I’m investing during the holding period. Did you hold any of this? So yeah, I mean, as you.
Erwin Szeto [00:32:34] Point out, my newbie on one year.
Montu Dhillon [00:32:37] Yes, yeah. Yeah. Because especially with, you know, the recent downturn, I advocated everyone to sell in like February. I was like, Hey guys, I think the market’s going to pull back, sell what you have while you can. I sold two properties, one last year, one this year in March or April. And I’m glad I did because I was predicting like a 30% pullback. At the same time, I was seeing a potential increase in condo prices because of just the laws of supply and demand. So the houses that I sold, they did come down and I’m glad I saw them. And I think versus last year.
Erwin Szeto [00:33:16] The parties were these both condos that you sold are homes or both houses. Yeah.
Montu Dhillon [00:33:20] What’s it? These low rise, one in 12th and one in Hamilton.
Erwin Szeto [00:33:24] Got it. Continue.
Montu Dhillon [00:33:25] So, yeah, I made out made up well with them. And now I’m sitting on dry powder because I think there’s a next opportunity that’s coming. So I’m a 6040 in my portfolio with new construction and resale and I am going to be adding. So I’m not a condo nut, you know what I mean? Like, I just saw an opportunity in condos in the last seven years and I capitalized on it. I’m an opportunist.
Erwin Szeto [00:33:48] You’re not you’re not an agnostic investor.
Montu Dhillon [00:33:50] Yeah, exactly. And I see the next opportunity right now coming in detached homes, because I think the carrying costs for them are sort of way too high. Everything above a million bucks carrying costs with current interest rates is like $6,000. Right. It with property taxes, insurance, all that we’re talking about six grand. How many people can afford that? So I think these homes, they’re going to be coming down because the demand is just not going to be able to meet that carrying cost. Luckily, I’m one of the few people who can pick up one of these units.
Erwin Szeto [00:34:21] And so you’re not an everyday investor.
Montu Dhillon [00:34:23] Yeah.
Erwin Szeto [00:34:24] That’s clear. And I was just because I want to I want to I always think context is important. You can afford to do this. You have the bankroll to do.
Montu Dhillon [00:34:32] Exactly. And so I think these homes and I think it’s not just me, I think a lot of other people going to be able to do that.
Erwin Szeto [00:34:38] So I totally agree. Yeah, because detached is what’s come down the most in price. Exactly. And also so my thinking is, again, it’s math. The per square foot cost of a bigger home is less than that of a smaller home. Right. A two story home cost per square foot is less than a bungalow, but the rent per square foot is probably the same. Is about the same. If at the same. So it was a bit of an arbitrage opportunity. So why wouldn’t I buy a bigger home and turn into a triplex, for example? This was my thinking. What was your thinking around detached home investment?
Montu Dhillon [00:35:11] So everything. Most detached homes.
Erwin Szeto [00:35:13] You want less difference.
Montu Dhillon [00:35:16] People are paying like $1.5 million, or at least they were. The average detached home is gone for about one five 2 million bucks. It’s insane. Absolutely nuts. And I think a lot of it was speculation and people got ahead of themselves thinking, you know, they’re listening to the wrong people thinking, oh, yeah, it’s going to go to 30. It’s going to keep going up to the moon. And then, you know, when the stock starts to shake, people are going to start dumping these things, these assets really fast. And you always want to go against the herd, against the grain. I’m a contrarian investor, and that’s, I think, where I’ve made most of my money in the shortest amount of time by doing the opposite what everybody else is doing. So sell high, buy low. But, you know, you just get that queasy feeling that you’re doing it wrong. When you get that wrong feeling, you’re actually right. Because guess what? 95% of people are wrong about money. Only 5% know what they’re doing. They actually understand money. It’s not currency or paper. It’s a store of energy. And once you know how to capitalize and hold it in reserve and then release it. So I hope people, all those of you who are smart enough and sold earlier this year, you’ve got some dry powder. You should be able to release it in a couple of months. We’re sitting here in August 2022 and I see immense opportunity in detached homes coming up in like October, November. And I think it’s just when the news is that, oh, it’s going to go even lower or detached homes are going to be under a million bucks very soon. That’s when we buy. Because most people are wrong and most people are going to be preaching that the market is going to tank, market’s going to drop even further. That’s when I jump in and buy.
Erwin Szeto [00:37:01] I must say that for a while ago I thought.
Montu Dhillon [00:37:03] We never act on it because we here are neighbors. And a lot of my clientele, they miss out on opportunities because they’re listening to their neighbors who say you should sell your house for this price. But no, they’re chasing the market down. The house is not that price anymore, and they’re not able to sell it. So you’ve got to listen to the experts and try don’t listen to the other crabs in the bucket. When you get that feeling that you are right, despite everyone else, you’ve got to pull the trigger and you’ll find that, you know, a couple of months later, everyone catches up to you. And then by then, it’s too late.
Erwin Szeto [00:37:42] So tell me what you’re looking for to know what you’re looking for in a detached home.
Montu Dhillon [00:37:45] Okay. This is hard to get right now because, you know, I’m out there making lowball offers. I got some amazing stories. I’m out there making lowball offers right now on detached homes. And I am offending people. Oh, my God. They are. They’re taking it so personally. They respond with such vile anger, you moron. You think my house is worth this? So I’m just, you know, pitch in. Lowball offers two houses that have not sold. I look for something on the market that hasn’t sold in three weeks. So after two weeks, because they’re used to things being sold in two weeks, in the third and fourth week, if it’s dry, even sometimes two months. So I can see that it’s not selling. And then me being the opportunities that I am, I look for contracts that are about to expire, meaning the realtor is going to lose the listing very soon. So he’s motivated or she’s motivated to get the play sold.
Erwin Szeto [00:38:39] Right. That’s also been sitting, too. Yes, I’ve been sitting like. Yeah, three months to six months.
Montu Dhillon [00:38:43] Exactly. So my pitcher lowball offer a 300 K under ask under what I under what I think is reasonable and either the price or you know, we’ll meet in the middle or I don’t move forward because I have the money. They want my money and no one else is giving the money. So they’re either going to sell it to me now or they’re going to sell to somebody in three months for the price. I’m asking anyway. That’s how I see it anyhow. Right. So I’ve offended a lot of people, but I don’t care. It’s just a numbers game. And you’re a real estate investor, you know what I mean? And the worst was check this out. This is so terrible. A house appeared on my street and I wanted a house on my street because it’d be so easy to Airbnb. Very easy to manage. And they’re worth about 1.4 mil. And, you know, and so 1.3, because they had an unfinished basement and there was a lot of bad media at the time. I went in and I offered like 1025, like super lowball. And of course the sellers were offended. And I told them why.
Erwin Szeto [00:39:46] It’s $1 million and 21 million.
Montu Dhillon [00:39:49] $25.5 just north of a million. And it properly dressed, this house would have sold for 1.3. It just wasn’t dressed. Well, the agent didn’t really do a good job that. Yeah, she didn’t, she doesn’t really understand staging or marketing. Right.
Erwin Szeto [00:40:05] So it was terrible.
Montu Dhillon [00:40:06] Yeah. And I have that skill set, so I’m like, okay, let me just grab it. I’ll pay 1.1 for it. In my mind, I’m picking up 1.1 for it and I’ll dress it up and I’ll sell it for 1.3. I could even hold it for a year, put a tent in there while the market recovers if it sinks. So in retrospect, it was a bad idea to tell them all the things I found that are wrong with the house because that’s what pissed them off. They’re like, they took it so personally. So I found there was basement moisture. I found a crack in the foundation. I found all kinds of, you know, this is dated, that’s dated. And I said, this is why my offer is this. And they weren’t getting any other offers right. And I knew the market was dry. So they’re either going to take my offer or it’s going to sit and they’ll eventually take my offer if they get nothing else. Long story short, they wanted 1.2. They said we’re not going any lower than 1.2. A week later, they sold it to somebody else other than me for 1060. When I found that they had submitted, they had another offer on the table. I went in and offered a 1.1 million. I offered 1.1 and they took the 1060 because they hated me. They did not want to deal with the guy who insulted them right there.
Erwin Szeto [00:41:21] Eight for you there. 40,000 more assuming capital exemption contains exemption. $40,000 after tax money was the dollar value for their hate for you? Yeah.
Montu Dhillon [00:41:33] Exactly. So that’s something I’ve never. So now when I’m pitching my lowball offers, I’m not doing that anymore. I’m not, you know, telling them. But the basement moisture for the world to say is my offer if you want to take it or leave it, you know, and a key is don’t piss off the other agent as well, because he or she holds the door to your access to the sale. And if you want to. I know. Live and learn. You know, I’m a I’m a tough negotiator. So I and you know this about me, I call it like I see it. I don’t pull punches. If I see something wrong, I don’t keep it inside. I tell them as like, hey, that is kind of dumb, right? Don’t think you’re going to trick me. This is B.S. And a lot of people, they’re so sensitive. We live in a very sensitive world.
Erwin Szeto [00:42:23] And it’s sensitive.
Montu Dhillon [00:42:24] Yeah, but.
Erwin Szeto [00:42:25] Again, we’re dealing with individuals. You’re going to find them. Yeah, right. You could have found the most sensitive individuals on the street. Got lucky.
Montu Dhillon [00:42:32] Yeah. All right, so that’s what I’m doing. I’m. I think there’s a huge opportunity for low rise, detached semis. Towns are going to be coming up right now. It’s for detached sammies and towns are still going up in value. But I think they’re going to stop very soon in pullback. And meanwhile.
Erwin Szeto [00:42:49] The more starting the home, the more seems to be resilient. Yeah, right. Yeah. Condos are presumed pretty busy. Very resilient. Resale, resale.
Montu Dhillon [00:42:56] At this time. In August 2022 condos are up like 7% versus last year.
Erwin Szeto [00:43:00] Oh, my.
Montu Dhillon [00:43:01] Lord. Meanwhile, detached homes are down 3% versus last year. So condos have bridged the gap by about 10%. Right.
Erwin Szeto [00:43:09] And that’s trying to pretend detached down 3% year over year. But from peak, we’re probably down 15 or more.
Montu Dhillon [00:43:15] 24%.
Erwin Szeto [00:43:16] Okay. So, well.
Montu Dhillon [00:43:17] The average price from February to now or I should say using the July data, it’s down 24%, the average price of a home. So I figure detached on this somewhere in there. But I’ve had a lot of very smart investors who were working with me that said, Yeah, let’s sell. And they got out in like February, March, April, and now they’re sitting on some dry powder and now they’ve got some money burning a hole in their pocket and they’re thinking, Oh, well, what should we do? Or should we buy some cryptos or not? And I just hold on to it, you know, the opportunities coming and don’t, don’t follow the herd. There’s other people buying. Just wait.
Erwin Szeto [00:43:55] I know it’s weird, though, because then, you know, the 17 listeners that listen to this podcast, hear what we’re doing while everyone’s doing fine, the detached I need to do something else.
Montu Dhillon [00:44:04] You know, I mean.
Erwin Szeto [00:44:05] I get that too because I talked to like some really smart people. I’m like, wow, all these are people are doing this. I just following the herd, you know? I mean.
Montu Dhillon [00:44:12] The difficult thing is there’s going to be opportunities for detached homes. They’re still going to be six figures. So the market has shown us they’re willing to pay ridiculous amounts of money for a detached house. 1.7 1.8 million is on Richmond Hill, Markham, Oakville. That’s what they’re clocking in at. And that tells me that the market is going to be willing to do it again when the Fed ultimately has to cut their interest rates. We all know that they have to. You know, I.
Erwin Szeto [00:44:37] Don’t know if we all do.
Montu Dhillon [00:44:38] Yes.
Erwin Szeto [00:44:39] We all do. Because like the people who are like fearing the best in the world. Well, they’re the ones who just sell the 16%. Right. They’re thinking, right.
Montu Dhillon [00:44:46] These are the guys. They’re going to sell me their house for a fair 40% discount. And once that opportunity is there and investors are there to pick up the broken pieces, they’re going to. So I don’t think we’re at the market bottom yet. I think once the Fed, the US, FOMC, once they start to cut interest rates, that’s when the bottom is going to be like. You can basically ring the bell. That’s the bottom. Jesse Nobody rings the bell at the bottom, but I’m calling it when the when they cut interest rates, that’s the bottom of the market. Some people will still be preaching that we’re going lower, but that’s when I’m going to be buying.
Erwin Szeto [00:45:24] Any guesses or analogy. And I’m just not going to hold you to because we don’t know what she’s doing.
Montu Dhillon [00:45:28] Crystal ball, I think spring of 2023.
Erwin Szeto [00:45:32] Not even far away. Yeah, yeah. Okay. So we’re recording this August 20, 22. We’re talking six months.
Montu Dhillon [00:45:37] Oh, nine months, nine months because well, see, the harvest always comes later. So the failed harvest takes about 6 to 8 months to come to fruition. And right now, whatever we’re trying to harvest, like the supply chain issues that we have, people are getting laid off. A couple of my tenants just got laid off. So we’re in for a storm that’s coming. And to all my fellow landlords who were suffering during COVID and Mr. Doug Ford convinced all the tenants that, hey, you don’t have to pay rent, just buy food. You know, don’t worry, someone will pay the mortgage. So now you were in for that again. I think it’s coming. We’re going to see massive layoffs coming up. And I think this is a manipulated and triggered event. I think the Keynesians, they need to deflate the economy, I think to forcing us into a recession. And it’s going to be layoffs are going to be business closings. All the money that we have in all these assets, including the market, gold, bitcoin assets, it’s all going to be pulled out and it’s going to be like an exhale and everything’s going to shrink a bit. So those of us who have assets sitting on the side, dry powder, I keep talking about.
Erwin Szeto [00:46:47] That, but painful that dry powder with all this inflation going.
Montu Dhillon [00:46:50] On. Yeah. So what is inflation and loss of wealth? Have I been pondering this for a long time, months and months. And I came to the realization that we’re not really. For when our assets go down, we only get poorer if the things that we want to go up in price. Where our assets go down.
Erwin Szeto [00:47:10] Has gone up in price. Yeah, I’m sure clubs are way more expensive now than they were last year. The year before.
Montu Dhillon [00:47:15] Yeah. And if I if someone wants a Rolex now. Yeah.
Erwin Szeto [00:47:19] It’s been a good investment. We want to hang out in Canada.
Montu Dhillon [00:47:22] It’s gone up in value too. So if our income and our assets like the stock market or real estate, if that’s shrinking and the things that we want, if I want to buy like a Bentley, I don’t have just an example. I know a guy like I’m very humble. Like I drive a Ford mid-size SUV, right? If the things that we want are going up in value, we’re screwed. And I think that’s what we’re going to be seeing. So get that dry powder while you can.
Erwin Szeto [00:47:52] It for us. We refined five houses in Q1 this year because I saw a storm coming. Yeah. Yeah. So we don’t have we have debt related in dry powder. Okay. So some things unpacked. I want to go back to the detached example because I know you’re smart, you’re not talking about detached and not have at least three options on how to make money on it. Yeah. What were your plans for how to make money on it? I think you mentioned Airbnb. You said in passing you throw up a tent in one place.
Montu Dhillon [00:48:19] As a joke.
Erwin Szeto [00:48:20] So is that the Airbnb, the tents.
Montu Dhillon [00:48:24] But the plan is just is to renovate it and just improve it because a lot of these house, no one’s buying it because they’re not in good condition. So send a couple of books and a team of contractors in there, invest about 50 to 100 K into it and then put it back on the market properly staged and lovely. Second plan is to put a tenant in there to carry it through the storm. Maybe two years if things turn bad. Get a tenant in there too. And yeah, probably cash or negative about a thousand bucks. All right. I’ve run the numbers already, and plan C is just to, you know, clean and put it back on the market right away.
Erwin Szeto [00:49:03] Nowhere be the option.
Montu Dhillon [00:49:05] In the auction. Well, yes, that’s like the tenant the long.
Erwin Szeto [00:49:09] Got it whatever you want but the situation to have.
Montu Dhillon [00:49:11] Someone carry it.
Erwin Szeto [00:49:12] Yeah. Got it. Got it. And again, this is for people who can afford these investments. It’s not everyone can afford a negative.
Montu Dhillon [00:49:18] Well, here’s the thing. I think a lot of Canadians are a lot richer. Many of us have real estate that has gone up in value. I think we have money. HELOCs, etc.. And we have the dry powder. We just need to be fearless in releasing it. And I think a lot of people are not going to want to be wanting to release it that quickly. But other than detached homes, the other thing I’m looking at is, of course, new construction. But there’s certain things I look for in new construction condos. The deposit structure, it’s pretty important right now to have a favorable deposit structure. You want something around 15% with 5% occupancy. That’s what I like to see. Builder caliber is very important, believe it or not, as an industry insider for pre-construction condos, I think 40% of whatever was built that was ever was sold is not going to be built and there’s going to be a lot of cancelations or delays. So you really got to do your homework and choose your builders who have deep pockets if you want to see your project come to fruition. I’ve got my own algorithm, the old man to algorithm, which I have a couple of things that I look for. That tells me a builder is actually going to be able to complete it. And all of those things, believe it or not, is price. If the price is too low, you’re not going to get completed. I’m sorry. If you if you bought something for less than a thousand a square foot in Toronto, the builder might walk away from it.
Erwin Szeto [00:50:38] Yeah, right. And it’s catastrophic for many people for their pre-construction to not close.
Montu Dhillon [00:50:44] It’s going to be common.
Erwin Szeto [00:50:45] Versus yours versus my income property. I guess I’ve captured all the appreciation. Right. And they just you know, I had a friend here. He got he got interest. He got some interest money. And that was it on his condo.
Montu Dhillon [00:50:57] You got to be really careful. You got to be really smart.
Erwin Szeto [00:50:59] Oh, and just to clarify, it wasn’t canceled. They asked for more money.
Montu Dhillon [00:51:02] Oh, one of those deals. Yeah. One of the. Give us another 100 K or we’re not going to build.
Erwin Szeto [00:51:06] Oh you can have it. Yeah. Right. So at least he had options better than complete cancelation. He would have had you would have had some equity gain if he kept some equity gain. If you come up with the money.
Montu Dhillon [00:51:15] And that’s why the builder caliber so important. Because if the builder is not one of the up and up guys that can do that, you know.
Erwin Szeto [00:51:22] Well, but everyone knows this builders downtown Burlington, you probably know the one and we won’t be. But you know the one. I know the one. Right on the water in downtown Burlington.
Montu Dhillon [00:51:28] Starts with an H. Yeah.
Erwin Szeto [00:51:32] Sorry. It’s actually public because it made headlines in the in the paper.
Montu Dhillon [00:51:35] So we shouldn’t trash people.
Erwin Szeto [00:51:36] We should. Well, and, like, if the price is too low, I don’t blame them. Yeah, I don’t blame them. Like you priced it wrong. It’s just like property managers. When I see a property manager charge too little and.
Montu Dhillon [00:51:46] Like, how are you going to get.
Erwin Szeto [00:51:47] It? How are you going to make money at this? You’re coming for me somewhere else. I’d rather you just pay you here, and then you’re not going to come after me for when you do change a doorknob, right? Charge me $100 to change your doorknob.
Montu Dhillon [00:51:59] And the last thing that’s very important for new construction is the neighborhood. You want to have neighborhood amenities, which are going to attract people to the neighborhood that are going to float the value of the real estate. You want to have parks and libraries and commerce. The closer you are to downtown, the better protected you are from a from a drop in demand.
Erwin Szeto [00:52:23] Are we just talking Toronto or is this everywhere?
Montu Dhillon [00:52:26] Yeah. All cities do like.
Erwin Szeto [00:52:28] Do you like any other cities?
Montu Dhillon [00:52:29] Yeah, I do. It’s not just Toronto that I help people trade in. I like York. Vaughan, big fan of Vaughan. Richmond Hill. Big fan of Oakville. That’s why I moved here. And basically everything to the west of the DVP. I’m not crazy about the east side. Not just because it’s far away, but just the demographic isn’t what I would put in my own properties. But I like everything to the west, up to Burlington. Basically, Burlington Mississauga is getting very congested. Mississauga and Brampton. I kind of avoid for my own reasons. But everything else, like a topical, great, great city. There’s a lot of attractions attracting people to these areas so.
Erwin Szeto [00:53:14] So busy downtown lakeshore corridor all the way to Burlington. Is your preferred? Is your preference? Anything out of province?
Montu Dhillon [00:53:21] No, no. I looked at it. I looked at Montreal. You know, I’m from Montreal. I have nostalgic reasons for wanting to buy their beautiful city. But I the political environment is not great. I won’t even get into Calgary. Maybe I can touch on Calgary. I’m not a fan of Calgary. There is a lot of old.
Erwin Szeto [00:53:35] Guard work against maybe new.
Montu Dhillon [00:53:37] Construction, though there seems.
Erwin Szeto [00:53:39] To be a lot of new construction. I might be wrong. Social media is full of ads condo.
Montu Dhillon [00:53:44] I might be dead wrong about it. They might flourish. But they’re a one industry sector. And if something happens to oil, Calgary is going to tank again. Whereas Toronto we are. We have three major industries finance, technology and media, film and media. And if one industry takes a hit, there is a what do you call a float from the other industries that are going to help people and help the economy. That’s not going to happen with Calgary.
Erwin Szeto [00:54:10] Right. When I saw the mining had offices are in downtown Toronto for example.
Montu Dhillon [00:54:14] So yeah.
Erwin Szeto [00:54:15] There’s lots of high paying jobs downtown Toronto. So those are two very good things. And mine too. Again, you’re agnostic investor, you do everything you do. I remember we were talking over golfing. You do you still have any hold me crypto stock or options.
Montu Dhillon [00:54:30] I yeah I’m a I’m a fan of crypto. There are four big ones that I am heavily trading. I have a little bit of everything because to me, like I don’t know which one is going to take off and become the next one to the moon. But not a lot. But I do trade Bitcoin. Etherium Polkadot And this.
Erwin Szeto [00:54:49] Is not advice, by the way.
Montu Dhillon [00:54:50] Polygon Yes, not financial advice, folks.
Erwin Szeto [00:54:53] Sorry. One more time. Bitcoin does it? Polkadot.
Montu Dhillon [00:54:56] Polkadot. Okay, Ethereum of course. And Polygon, those are my four favorites because they have a trading pattern that, as you know, I have a background in trading. They have a trading pattern that I’ve discovered from technical analysis that mirrors Bitcoin and Etherium. Everything else is just sinks and makes a move on sensationalism or rumor or hype. But these four there’s something also something about the technology I really like. It’s found it has a real world use. I also have a dark horse Hedera. I’ve looked into it. I think this one.
Erwin Szeto [00:55:34] So if you spell it.
Montu Dhillon [00:55:35] I can’t spell it. But the symbol is h bar. HB Ah, the reason I like this one is it solves the problem that bitcoin has the speed and the, you know, transferring crypto assets across the world. It should be within seconds and hedera does that bitcoin very slow according to today’s standards. I mean, it’s 2022. We should be there shouldn’t have to wait, you know, 20, 30 minutes for my funds to be sent to Australia. That’s how impatient I am. You know, back in the day it would take 48 hours to send money to Australia, but now I want it done within 60 seconds tops and hedera does that. It’s I think what these guys have come up with is brilliant, not financial advice. Folks don’t buy too much of it, but I think that could be the next big one. And Etherium, I like Etherium more than I like Bitcoin just because of its real world use. And it’s got more that technology is better in my opinion, of course. And because of the high gas fees, it has a diminishing supply. So the supply is going down, it’s not increasing. And of course, there are some kind of merger going on coming up in September. We’ll see how that goes. But yeah.
Erwin Szeto [00:56:51] Can you share what percentage allocation of you.
Montu Dhillon [00:56:54] Portfolio, for example? Well, let’s just say I only recently started digging going down the crypto rabbit hole. It’s been about a year, maybe less than a year. It’s been about a year. And I had a goal to have 10% of my net worth in crypto. I’ve decided to just because it’s untested and anything can go wrong, it could go to zero. I’m reducing that to 5%. Got it. So my portfolio is 5% crypto, 5% insurance, a little bit of gold and gold is just.
Erwin Szeto [00:57:26] Part of it. So what kind of insurance is.
Montu Dhillon [00:57:28] Whole life, dividend paying and the rest real estate baby that’s real estate has been working for the last 14 years.
Erwin Szeto [00:57:37] So going on.
Montu Dhillon [00:57:39] Right now.
Erwin Szeto [00:57:41] Is look at what anyone paid for anything. Funny side news, the story. I have a friend who works for dreidel. So when you bought his for like 600, just high 600 square foot. Wow. Years ago. And that’s the only one he bought.
Montu Dhillon [00:57:54] It was like, man, you’re an insider. Yeah. You know, exactly. You have access to all their research.
Erwin Szeto [00:57:59] And like when they’re in New York and, you know, I was just like everybody else because I’m not I’m not in that industry right close to it, you know? When they hit $2,000 a square foot.
Montu Dhillon [00:58:09] We were like, You got to be kidding me, right? Everyone went nuts. Everyone went nuts. And there was a 1200 square foot for comparing to.
Erwin Szeto [00:58:16] But you know it. No one’s buying.
Montu Dhillon [00:58:18] That. Right. So we this this spring and summer, I was seeing resale condos selling for 1500 to 1700 a square foot.
Erwin Szeto [00:58:30] There are nicer places right there.
Montu Dhillon [00:58:32] Newer buildings, of course. Not the older stuff, but still it’s the resale. It’s not the new construction. New construction. We’re clocking in in 1700 square foot to start in downtown Toronto.
Erwin Szeto [00:58:43] I heard some new stuff. Selling. Selling for 17. Yeah. We don’t even know if it’s going to get built.
Montu Dhillon [00:58:48] Well, that’s the thing is, if they’re selling it for 17, that’s I think that’s reasonable with the cost of everything. And labor is very expensive now. So they have a chance of being completed. If you’re paying 1300 to 1700 per square foot for new construction. You’re safe or just safer? Yeah, because you never know. But if you’re paying less than 3000 for new construction, it’s I think it’s an it’s a nice rule because how can they do it? It’s expensive. They’re a construction loan. You know, they’re paying more interest on that loan. So you may not get built.
Erwin Szeto [00:59:24] And then same timing for an extension. Cano when interest rates start going down again. Yeah, a fall in spring.
Montu Dhillon [00:59:30] The good builders will keep doing a good job. Everyone else is going to be delayed by about a year or two. Right?
Erwin Szeto [00:59:36] Yeah. Because some builders will put one particular reputation and have us build it some way. Even built for a loss.
Montu Dhillon [00:59:40] Yeah.
Erwin Szeto [00:59:41] Crazy good on.
Montu Dhillon [00:59:43] Them. Well, there’s a there’s a storm coming. You know, there’s a big storm coming.
Erwin Szeto [00:59:48] We were talking before this, like the storm has been coming forever.
Montu Dhillon [00:59:51] There’s always a storm. You know.
Erwin Szeto [00:59:52] This one was just a bad one.
Montu Dhillon [00:59:54] And it’s not about waiting for the storm to pass. Right. It’s about learning to dance in the rain. And I think this is going to be what’s upcoming. People are not they’re not expecting it. And if you don’t learn how to thrive in the rain and still push forward and still have a way to get through if you’re just waiting for interest rates to bottom out, you know, or I should say peak out and prices to bottom out here, you’re not going to you’re not going to do anything. You still have to be an active, active person. Always look like right now I’m pitching lowball offers, even though I don’t think the market has bottomed yet. I think we’re going lower.
Erwin Szeto [01:00:34] Because real estate.
Montu Dhillon [01:00:35] Imperfect. Yes.
Erwin Szeto [01:00:36] Like people will take deals that are imperfect.
Montu Dhillon [01:00:38] Exactly. Yeah. So that’s it. You know, look for the opportunity here.
Erwin Szeto [01:00:43] Because we were looking at a deal, for example, where the bank was going to take back the property. So either take our deal or you let the bank take control. Or would you rather. Right. Right. You’re not going to be hammered legal fees from the bank as soon as they take that, start taking it back. And you’ve lost complete control. It’s no longer your house. You can’t. You’ve nothing. You have no power. Right. So choose, right? Yeah. This to us. To me, it was a fair offer, but. Yeah. Oh, gee, mine too. We’re way over time. Okay.
Montu Dhillon [01:01:11] Let’s talk about your book. Oh, yeah. Let’s cover that real quick. So, insider secrets to pre-construction condo buying, renting and selling for maximum profit. Wrote this book a couple of years back. It’s when I was predicting a rise in the condo value when everyone else thought that condos aren’t going to be worth anything. So I just put my experiences, tips and tricks, not just about condos, but you know how to deal with your selling when you how to buy pre-construction, how to sell pre-construction assignment opportunities. There’s even a bit of little bit about some Airbnb, how to short term do a short term rental in my book. It’s really for people who want an insider’s experience in the condo investing world and how to find opportunities, cause not everything is a good deal. So I kind of outline like what types of properties, what type of condos to look for, what type to avoid, how to get a good deal, what are immediate delivery condos? Because sometimes builders, they have extra inventory that they’re paying to carry and they’re eager to get rid of it. So you can go in there and making them an offer. So if they’re asking, like, you know, 900 K, you can come. I say I’ll take it off your hand if you throw in a free parking spot for 800 K. And sometimes they do that. I got a couple of deals like that, actually.
Erwin Szeto [01:02:36] Are there deals available in the assignment market right now?
Montu Dhillon [01:02:39] I think, again, it’s about going against the grain. There’s going to be a lot of people selling assignments. So if there’s excess supply, where is the demand?
Erwin Szeto [01:02:50] Because this back up explained it wasn’t market. So you correct me if I’m wrong. So people have bought new construction and for whatever reason, they’re wanting to sell their contract basically without closing.
Montu Dhillon [01:03:01] Yes. Right. Yeah. They want to hand over their contract to somebody else. That person steps into their shoes and. Closes with the builder directly. So there used to be that assignments were very profitable because there.
Erwin Szeto [01:03:13] Was a rising market.
Montu Dhillon [01:03:15] And there are very, very little units available. So people were just gobbling them up. But right now, I think a lot of people are worried and that they’re going to be trying to sell their unit via assignment. It’s a great time to buy an assignment because there’s very few buyers. So you will get a good deal. But it’s not a good time to sell an assignment because you’re just going to get lowball offer. So that’s what we’re seeing. Like I had a couple assignment listings and all we got were lowball offers. Even though the value of the unit is very reasonable to what we’re asking, they’re just people are just coming in 200 K under four.
Erwin Szeto [01:03:48] Because you get up. Did you get.
Montu Dhillon [01:03:48] Emotional.
Erwin Szeto [01:03:50] Receiving.
Montu Dhillon [01:03:50] For five or. No, I did it. I was expecting it because I was that guy on the other side. Right. So that’s just the price.
Erwin Szeto [01:03:57] Of one, the give and take. You know, if you’re going to give it, you’re willing to take it. Yeah.
Montu Dhillon [01:04:01] Exactly.
Erwin Szeto [01:04:02] And then any update, because I haven’t really seen it in the news, weren’t there construction slowdowns like in certain groups on strike?
Montu Dhillon [01:04:12] Yes, lots of supply issues and then labor strikes. So all the new construction condos being built were delayed by another couple of months.
Erwin Szeto [01:04:20] Can’t you see all.
Montu Dhillon [01:04:21] I would say like 80%? Because every project that I had in my own portfolio that’s coming up for delivery, every builder sent me a notice saying, hey, we don’t know how long the strike is going to last were delayed. We’ll let you know.
Erwin Szeto [01:04:36] Do you know what they’re asking for in terms of more money?
Montu Dhillon [01:04:39] Yeah, more money. Less money. I don’t know. I’m not privy to that labor agreements.
Erwin Szeto [01:04:44] And just curious, because then that gives me an idea of how much labor inflation will be. But real.
Montu Dhillon [01:04:48] Estate. So labor is the builders biggest expense. So they have concrete, steel, lumber, all that to pay for. But labor is 40% of their cost. So to build, yes.
Erwin Szeto [01:04:59] 40%, including the labor as part of the whole pie.
Montu Dhillon [01:05:02] That that’s what that’s what they tell me. Right. So I don’t see their books, but they’re telling me there’s land costs, they’re soft cost, there’s closing costs, there’s materials cost. But labor is 40%. You are paying. So if you’re buying something for a million, 400,000 of that is to pay people to like. And it’s not just your unit. Remember, they’re building the entire building. They’re building the elevators are building the amenities. They’re building the foundation. They’re building the garage. So. Yeah. Wow, stuff’s expensive, man.
Erwin Szeto [01:05:32] That’s expensive. And that’s part of the reason why real estate’s indexed to inflation. Yes, right. We can’t just import labor. We can try to. But even whatever imports still expensive. But they came here to make more money. They come here to make less money.
Montu Dhillon [01:05:46] Oh.
Erwin Szeto [01:05:46] Wow. Okay. I want to any final words.
Montu Dhillon [01:05:49] I said people time. And if people want to get a free copy of my book, they can download it at Dylan Realty Systems dot CA.
Erwin Szeto [01:05:57] And he spelled.
Montu Dhillon [01:05:58] It Dillon dll0n real t r e a l t y systems dot CA.
Erwin Szeto [01:06:07] And we’ll have that in the show notes, folks. So if you’re driving, it’s okay. Yeah, well, the link in the show notes.
Montu Dhillon [01:06:12] And yeah, I wish people luck and fortune. Those who partner up with an expert are going to achieve their goals.
Erwin Szeto [01:06:20] Yeah, especially fear, because I talk to people all the time at real estate and I find I often find they don’t really know much what’s going on. It is literally golfing with someone just this week and they said to me.
Montu Dhillon [01:06:32] Oh, I know all these people who are.
Erwin Szeto [01:06:35] Who bought a property already, now they can’t sell their home.
Montu Dhillon [01:06:38] And I’m like.
Erwin Szeto [01:06:40] Well, they got some bad advice. Yeah, I said much worse than that. And he’s like, No one could predict this. And like I told my clients exactly this could happen. Yeah, right, right. I told me this could exactly be in 2017 again.
Montu Dhillon [01:06:52] Yeah. Right.
Erwin Szeto [01:06:53] So the advice from my mouth to our clients was, you know, in December, January, February, March, if you’re planning to sell the next four months, sell it now. Yeah. Right.
Montu Dhillon [01:07:03] That’s exactly what I tell people.
Erwin Szeto [01:07:04] Take the rest of the table. If I bought risk and I did, I did a sort of the same thing by refinancing. I’m too scared to sell and it missed their opportunity to follow.
Montu Dhillon [01:07:17] Yeah, I follow on all sides. Right. Following crypto right now, bitcoin at 23 grand I think David I missed the 20 so yeah.
Erwin Szeto [01:07:29] Well I thanks so much for doing.
Montu Dhillon [01:07:30] My pleasure. Always a pleasure hanging out with you.
Erwin Szeto [01:07:32] Erwin better.
Montu Dhillon [01:07:34] If you need any other advice and if you want to discuss what good projects are coming up in order to reach me and.
Erwin Szeto [01:07:41] I’ll be able to you about where you could fit of your golf clubs. You might want to take care. Before you go, if you’re interested in learning more about an alternative means of cash flowing like hundreds of other real estate investors have already and sign up for my newsletter and you’ll learn of the next free demonstration webinar I’ll be delivering on the subject of stock hacking. It’s a much improved demonstration over the one that I gave to my cousin Chubby at Thanksgiving dinner in 2019. He now averages 1% cash flow per week, and he’s a musician by trade. As a real estate investor myself, I got into real estate for the cash flow. But with the rising costs to operate a rental business, it’s just not the same as it was 5 to 10 years ago when I started. Never forget the cash flow reduces your risk. The more you have, the more limbs you can absorb. And if you have none or limited cash flow, you’re going to be paying out of your pocket like I did on a recent basement flood at my student rental in St Catherine’s, Ontario. If you’re interested in learning more investor for free from my newsletter at WWW. Truth about Real Estate Investing dot CA into your name and email address on the right side will include in the newsletter when we announce our next Free Stock Hacker demonstration. Find out for yourself with so many real estate investors are doing to diversify and increase our cash flow. And if you can’t tell, I love teaching and sharing the stuff.