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Erwin Szeto [00:00:10] This episode is brought to you by a rock star, Real Estate’s free 90 minute training class, where you can learn that number one real estate investing strategy that has created millions in cash flow for Canadian investors without touching a hammer. What will you learn at the upcoming free class? Well, I’ve been part of Rockstar since 2010, and you’ll be learning the number one strategy that we have implemented in Hamilton St. Catharines in the region to transact on hundreds of investment properties and producing several millionaire clients. This strategy works so well. Our client success has been noticed, resulting in our real estate team being awarded with Real Estate Agent of the Year in 2015, 2016 and 2017 by multiple publications. So don’t delay. Please go to Dubeau UWW rock star inner circle dot com slash Erwin. There are only a few seats left and there’s always a waiting list. Again, that’s w WW dot rock star inner circle dot com slash e r w i n welcome, ladies and gentlemen investors across the greatest country in the world. This is the truth about real estate investing show for Canadians where it is my job to bring you experts in the world of investing, so we may learn from their experience so we can duplicate their success and inspire you to take action for a better financial future for yourself and those closest to you. This week, we welcome back one of the greatest teachers of apartment building investing. Returning to the show, his former lawyer, former CMHC analyst for default management and underwriter for multifamily properties, Pierre Paul Turgeon. Pierre Paul Is one of the foremost experts in this area, as an author hired him as speaker at the Real Estate Investment Network and this past month, rock star your life, your terms event and he’s back to give you an update on oil. EDMONTON, Alberta Why apartment building investments made sense for any portfolio And if you feel unprepared like I when purchasing a building, pure Paul just happens to be launching an online and live in person hands on training. Coming up later this year, he’ll be making the announcement on the show. Links and details are in the show notes. So without further ado, I am pleased to announce to you, Pierre Paul Turgeon.
Pierre Paul Turgeon [00:02:07] It looks like you’ve got opportunities all along with the laws around Hamilton Delta towards Niagara. I mean, what’s the timeframe for that, you know?
Erwin Szeto [00:02:15] Erwin LRT that’s going to be a one year deal. Last year, the city only just voted like two three weeks ago to move forward with it. They’re actually they’re actually voting on whether or not to accept the money.
Pierre Paul Turgeon [00:02:29] Well, I tell you if I were in your area and I’m not just saying I wouldn’t come out, I would start looking at that market for sure, which is what I do out west anyway. Whenever you are ready, I am ready. I hope we how much time we got to give you the leader. You tell me you got a lot of questions. I’m not sure you want to get through all of them. So then I can reduce my answers, make sure my answers are short and succinct.
Erwin Szeto [00:02:56] We’re a long format race so I can do an hour. I can do 90 minutes. I think our listeners would appreciate that anyway.
Pierre Paul Turgeon [00:03:03] What’s keeping me busy these days? Well, as you probably know, Erwin, I’m in the process of we’ve just launched my online, of course, multifamily investing Canada dot com. Very exciting. It’s been four years in the making me working with a professional consultant who is based out of Europe. It’s putting all my knowledge online and so really, really exciting shooting videos or short videos so that you can do one lesson, review one concept at a time and then move on to the next one. All my tools, everything I got, everything I use when I buy apartment buildings, which can be used anywhere in Canada, the best lending and financing practices in the industry. I share everything I’ve got. And if even, you know, because I also have a life event, you may know also Erwin. My next one is in Edmonton in a couple of weeks at the end of May 2017, but also my first one in your town, Mr. Hamilton in Hamilton, December 15th, 16th and 17th. And part of the idea that you do a full inspection with a professional building inspector. I actually did a dry run just this past Friday morning with a very seasoned inspector. And so for the online version of the course, since people cannot come to the light event, we have a video of the onsite inspection as well. So that’s what’s keeping me busy the last few days. I am looking at buying very large, much larger buildings than ever before. Brand new. We’re talking the big leagues stuff. So we’re between 100 and depends on many phases of the project. Has a couple of phases, but somewhere between eight and 24 units for a new unit or the brand new project. If I buy the second phase as well, it’ll be 296 units. So but it’s the same principles that I teach, right? Just larger building lots, lots more money. $770 million. So exciting as well. Yeah, so that’s what I’ve been up to.
Erwin Szeto [00:05:01] Okay. And where are those buildings?
Pierre Paul Turgeon [00:05:04] So I’m still sticking to what I know, which is Edmonton at this moment. Just because you don’t earn a slump, but the market will improve sooner or later. It’s always cyclical, so I’m always hopeful when it comes to these things. So that’s still in Edmonton. Yeah, I stick to what I know.
Erwin Szeto [00:05:28] And how has the market been for like buying and selling of buildings in Edmonton?
Pierre Paul Turgeon [00:05:36] There’s very generally speaking, most people would tell you that there’s little action, so very few multifamily properties coming onto the market, just like in your area, by the way, GTA pretty much anywhere. So Edmonton is no different. People who own apartment buildings like to hang on to them. Why? Precisely because they can withstand economic downturns and get you through recessions. So the same thing is happening in Alberta, where it’s a bad market from the point of view that our vacancies are higher, not mine. That is, I can’t get into why that is because I think we chatted about that last year when we spoke to you. And I’ve got a strong marketing, pretty good, to be honest with you. So I maintain very low vacancies. But it does cost me money, though, so that marketing and I think we both saw at your Dubeau rock star event last Saturday, you have spent money on marketing is just the way it is in the 21st century. But overall, the market is not doing so great. The oil and gas industry seems to be recovering, meaning we’ve had the worst. We’ve seen the worst, but before improvements are felt into the rental market. Erwin it’s going to be another year and a half or so is my take on it. But right now, there’s generally a lot of vacancies, high vacancies, maybe 10 12 percent. In addition to higher vacancies, we have rental incentives that we have to give in order to rent our units because, you know, prospective tenants have a lot to choose from. And not only do we have to get rental incentives Erwin sometimes 100 to 200. We have to throw in extras like the Telos package with free internet, PVR or cable, and we have to upgrade those units so that they’re nice looking. So not the fun part of real estate investing. I plan for it like I always do, although I never planned for this recession and downturn to last this long. But I’m okay to be honest with you, not make as much money for the time being, but it’s part of the game we’re in. You can’t be in high gear all the time, so I’m okay, but I look forward to better days.
Erwin Szeto [00:07:45] Okay? In the Golden Horseshoe, we don’t. We’re not really experiencing rental issues. It’s actually been very it’s been very easy for landlords in that way that we can find tenants quite easily. But my question is what rental incentives have worked well for you? You mentioned Internet.
Pierre Paul Turgeon [00:08:02] Yeah, the internet. Yeah, definitely. I was having to Google Analytics, maybe we can follow up on that, having to do analytics as well. Have you ever enabled me to the websites that I have? I know when people are looking at my website, what time of the day, what are they using their mobile device and phone? So we’ve been experimenting with that. I also got a deal where I’m retargeting through red dots. So very cool. So all that funky stuff and don’t ask too many more details questions. I just people give me the principle of it, and then I say, Yeah, let’s try it out. But bottom line is, these new marketing strategies definitely have been working. Google AdWords as well, I should say, has worked as well. But again, not cheap, right? We know that I’ve also done blogging to draw traffic to my website. Mm-Hmm. That’s also helped. So those are some of the strategies, but it does cost a lot of money. But you know what? I can manage to rest the flow, which I am. I mean, I’m actually still cash flowing, right? I should specify that your listeners are Erwin because in our last interview, I told you that’s my training is in mitigating assessing investment risk as they pertain to apartment buildings, but as well as mitigating them. And one of the mitigation measures that I applied for. Exactly. I know there’s always going to be a downturn, so I make sure that I have a good debt coverage ratio. In other words, that I cash flow very well and I have a high break-even vacancy rate, usually in the range of 18 to 20 percent. So that’s why I’m able to get through this tough time. So, yeah. Can you? Yeah, sorry, go ahead.
Erwin Szeto [00:09:47] You can comment on what a breakeven would be in the golden horseshoe of Ontario if you were still yawning because I don’t know.
Pierre Paul Turgeon [00:09:55] No, I don’t. But here’s my promise to your listeners because as part of my life training events, I should mention that I do have a real tip that comes in to try to explain to novice investors what homework pretty much repeat some of the concepts I’ve shared with the Rockström members at your last event. And his job is to send Sandy listings. So by the time I do, my workshop in September again is September 15th, 16th and 17th. I’ll know the market a lot better because I’m making a point of knowing it and why. Case studies pertaining to the GTA area so right now can answer your question. But the point is it’s not area specific as well. I should specify Erwin, you just want to make sure that if the going gets tough, what’s the worst? What’s the worst vacancy I can tolerate before I’m unable to pay covered my mortgage payments, in other words? So it’s a very useful calculation, which we talk about in my trading, obviously. Actually, I give people a spreadsheet that does it on its own. So you want to have a threshold that’s high enough that you can sustain a hurricane season like that. But again, it all depends on your market conditions. And this moment are not especially Sandy MacKay. I mean, I follow it at a high level, but I couldn’t answer that number specifically. But my advice would have overall a generic answer to your question, though I would say to be have at least a break break-even vacancy rate that would be in the long chain 15 percent and upwards percent. Yeah. Okay. Well, let’s look at that way because yeah, people more of a real estate in numbers. Yeah. Well, I’ll know. They’ll know that answer by then. So that’s my promise to you. But like I said, it’s best to be safer than sorry. You know, real estate is real estate. You have ups and downs now in the GTA. You know, the market is rocky, but we also know that there are some concerns as well. But you know, for the multifamily properties, I don’t share those concerns, by the way. Read the concerns that are being, you know, we hear about in the media, don’t fit into multifamily properties. If all else fails, it’s going to be more the principal residences market and condo market, not the multifamily market.
Erwin Szeto [00:12:14] Do you want touch on that?
Pierre Paul Turgeon [00:12:16] Well, I mean, I’m just saying, you know, it’s a very low risk asset. There’s a high demand for this asset type. So if people if there are issues on and on the smaller rental product, you know, people when they lose their homes or principal residences market if you don’t have anywhere to go, whether they end up in an apartment. Mm-Hmm. Hence, to reasonable for I, you know, I like apartment buildings. They’re a lower risk asset to own. So that’s what I’m saying. That’s what I’m saying. So. So I don’t see any challenge, any anything negative on the horizon when it comes to GTI. On the contrary, we were just talking about the LRT that you’re going to have around the lake at some point. And I think if I were an investor and to be honest with you, I am at the point where I’m going to channel fairly regularly for speaking engagements and so on. And I’m not excluding the possibility of myself starting to look at the possibility of what you call it, the Golden Horseshoe. I think it’s worth looking at. Right. And you’re going to
Erwin Szeto [00:13:24] be you’re in Toronto to meet with money partners as well or, you know.
Pierre Paul Turgeon [00:13:29] Well, yeah, that’s I’ve had those discussions, right downtown Toronto. So yes, so I am changing there. But the point is all Erwin. Let’s backtrack for novice or potential novice investors on this call. I said that I try to fight. I’ve been focusing on Edmonton for the longest time because that’s what I knew best, right? So now I’m starting to be more open minded towards something else. So it’s good when people establish a sound base in one given market that they know well. And then once that portfolio is well established to start, maybe opening up their horizon and I would recommend people do that. But now I’m finding myself more and more often the GTA. So now I can see, and as you said, I may have potential very large investors. So it’s starting to make more sense. And because I see potential opportunities, ask me why to invest in Edmonton? I do invest in your lattes, of course, for obvious reasons, right? That we know. We know where there’s going to be value appreciation near an infrastructure such as an LRT. So around the golden horseshoe, it’s going to take a while, as you pointed out to me, but you want to be in when the prices are low and before the stampede occurs right towards those assets. So I woke up to that myself now, and this is a new thing, very new thing for me. But.
Erwin Szeto [00:14:43] Our listeners, any links that we talk about, for example, links to PurePulse courses, I’ll post in the show notes. So you guys, if who are driving, don’t worry, you know the pull over and write the stuff down.
Pierre Paul Turgeon [00:14:55] Yeah, yeah, yeah. Don’t do that. And again and else, if they come through your lake, we’ll give them a discount that we offered to the Rockstar member. So that’s something that you may want. And that link is multifamily investing Canada dot com slash Mr. Hamilton, Mayor Hamilton.
Erwin Szeto [00:15:11] And for folks again, listeners like I didn’t ask for this pure is out of the goodness of his hearts offering this to you guys, and I get nothing out of it to see, you know? And that’s the that’s again, the name of the show is the truth about real estate investing. And that’s the truth.
Pierre Paul Turgeon [00:15:26] Yes, it is the truth that concurred with that.
Erwin Szeto [00:15:28] So let’s get into the presentation. I say, give us a I think it was titled How to move up into apartment building investing, and I personally don’t own any apartment buildings. So some of these questions, I’m selfishly asking for myself what operating expenses should an investor inspect that differ from a single family home, for example, like a building super? I don’t have any of those in my properties
Pierre Paul Turgeon [00:15:53] that are sold. So you’ve got you’ve got you’ve got a property manager. So that’s a very good question. As a professional property manager is one operating item as well or in addition to be often called resident manager, somebody that lives in the building that collects the rent checks at the beginning of the month. We’ll do unit showings and evictions and all of that. So those are two expense items you should definitely and this is the darker side of things. And since your show is about being truthful and that’s part of my personal values, well, bedbugs or pest control, unfortunately, this is the 21st century with globalization. All of us, even the nice fancy hotels that we stay at on vacation or in Canada. I have issues with bedbugs, cockroaches and so on. But bedbugs and cockroaches are the worst two, and it’s not a matter of being a slumlord or not. I am definitely not a slumlord. I spent a lot of money on maintenance. But and oftentimes this is the truth where you Erwin when you do the valuation aspect of it, you go to a lender. They don’t include an operating expense item for pest control, but all of you should everybody invest in real estate and including smaller rental properties? I would say more so multifamily, because you’ve got more tenants, so more potential, greater potential has to be brought in. You know, people pick up old furniture at the dumpster, on the street, in the back alley. And there’s a reason what people throughout that furniture because it was full of bedbugs, right? And mattresses and so on. So let me let me, let me spend a little bit of time on that. And so the banks are strangely enough, don’t include that systematically into operating expenses. They usually include that in a generic expense item, which is called with and maintenance. Operating expense are an EMS repair and maintenance. And that’s a generic. But in addition, my advice is folks include pest control. You also include perhaps depending on where you live, but you know, something for snow removal as well. And you would also add something like this loss stuff that I, you know, I teach how the industry does it like my commitment to my students or when I speak on stages, I’ll teach you how it’s done according to the best standard and practices in Canada and the lending industry. But believe it or not, they don’t include pest control, and they should. Accounting, I would add, certainly, you know, you should have your books done professionally. So bookkeeper and an accountant. So that that’ll be another, you know, depending on the size of the property. But just to get your financials, that’s at least a couple of thousand dollars. Twenty five hundred dollars plus perhaps a bookkeeper because it’s cheaper to get their bookkeeping done by a real bookkeeper rather than an accountant, because the accountants fee is a lot higher than a bookkeeper. So that’s what it would include in addition to the regular expense items that would be your property taxes. And there you probably want to factor in a bit of an increase, right, because you provide numbers on a yearly basis like old and new numbers. But let’s say your tax assessment bill says your tax or X amount for this year. But what is it going to be like next year? So it’s good to index some of these amounts. Property taxes is one of those that can go up fairly, maybe two or three percent in a given year. So you want to index your property taxes insurance. We’re shopping very closely to find the best rates while making sure you get the appropriate coverage. What else? But there are many things we’ve talked about, so but those are some of the main expense items you have in there. Mm-Hmm.
Erwin Szeto [00:19:36] Mm-Hmm. Now used to work for CMHC and also, you’re operating right now in a down market. What? That’s the credit market been like. Are you able to still finance properties? And what some one thing, what’s something a novice investor might not understand is during major downturns? There’s no credit in the residential market, but it seems to be different for apartment buildings.
Pierre Paul Turgeon [00:20:00] Absolutely, it’s not it’s a very, very thank you for asking that question. And so it’s a very good question. Yes, financing is plenty available. The thing is the lenders don’t know where to put their money. So if you come to them with a good deal, absolutely the cost of money is still ridiculously cheap. Right? Let me give you an example for a two million dollar loan somewhere in that vicinity today. And I don’t want people to get scared of numbers. I don’t think I’ve talked about that also during our last interview. Don’t be fearful of numbers. Just do your homework, and it’s OK. You can do this right? So but my job is to be up to speed on things. So what our current financing available the financing parameters and $2000000 loan, you could get 17 structured financing for about 2.5 percent to Szeto Non-celiac insured, which is free money. Don’t you agree with me?
Erwin Szeto [00:20:51] Yeah, that’s why I’m laughing. That’s free money.
Pierre Paul Turgeon [00:20:54] It’s free model and even a conventional loan. Erwin like a nod to making sure loan will be one percent higher. It’d be about 3.5 percent. Now here’s the kicker with CNBC, and this is something I don’t know if I mentioned it on stage last Saturday at the rock star event, but it wasn’t really the purpose of my talk. But when you go CNBC, you can still amortize the loan over 40 years, so that frees up a lot of your cash flow. Yeah, yeah.
Erwin Szeto [00:21:20] And for our listeners who don’t know what’s the benefit of going CMHC insurance versus without, some people would think, Oh, it’s the mortgage asleep.
Pierre Paul Turgeon [00:21:28] Yeah, it’s the lower interest rate. It’s the lower interest rate by percent compared to, as I just mentioned, conventional financing, the rate would be 3.5, whereas versus the same issue loan would be 2.5 percent. But and there’s a but there’s always a notwithstanding clause there say it’s a pain in the butt to get a serious issue of loan. The process my former employer is very demanding.
Erwin Szeto [00:21:54] It should be. It’s our money.
Pierre Paul Turgeon [00:21:56] It’s the fact it’s yeah. Yeah, but. And the reason for that is it’s the process, right? It’s a bureaucratic process. Part of the reasons why I left the job. I was tired of being a bureaucrat, but at the same time, my r y greater. Because of that. There’s people that would argue that if you can extend the position period a little bit, you don’t have to go to four years, by the way, when I don’t go to four years. But I easily will go up to maybe 30, 35 years because, you know, so it lowers my mortgage payments or it boosts my cash flow. So my risk is lower because I have a greater cash. If you think about any real, see, that’s what Erwin your greatest risk is that of a cash flow not having sufficient cash flow, not cash flowing. So if I extend to 30 or 35 years and you know, I have a low interest rate, I put more money cash in my pocket and the month or if I face a downturn like I am in Alberta, well, I’m better equipped to do to face it because I have a greater net cash flow. So some of the things that to keep in mind, where’s a conventional loan? Their maximum amortization period is twenty five years. Hmm. So that means if you want to cash flow well, you may have to put more capital down, maybe than just your twenty five percent down. So is there some things to think about?
Erwin Szeto [00:23:16] What are you comfortable putting down? Do you do more or do you do less?
Pierre Paul Turgeon [00:23:23] So I like I like it, three to five percent down. And it depends on the market. So the key thing there’s always 40 risk factors. I sound like a broken record. I don’t want a broken record is old enough to remember that I don’t. But four key risk factors property risk factor, market risk factor of valuation risk factor and us or we the borrower or investor risk factor, right? So it all depends on the outcome of your analysis of the market risk factor. If you feel that there’s a higher risk in the market chosen market, more of the potential volatility than you would put more money down Erwin to not to deleverage the loan. Right. So but personally, because my market that I knew well, because I’ve been in limbo for many years, I’m at least I put 25 percent to 30 percent down for the above reasons to mitigate my market risk sufficiently. Right? Yeah, that’s like it wasn’t always the case, by the way, though, what your listeners to know the perspective that can go 19, 2008. Well, even sooner than that in Alberta, when we were booming, you could get away with, you know, less than that and try to in maybe 25, even 50 percent if the value was OK in today’s market with the risks that I see potential risks. I’m happy with 25 to 30 percent down right now.
Erwin Szeto [00:24:53] Here’s the two in my opinion, this is the most important question because I don’t think I don’t think novice investors understand how difficult this is. How do you get quality deals sent to you?
Pierre Paul Turgeon [00:25:07] Well, the talk I gave, let’s reiterate, was I spoke about that the rock star event last weekend was about planning your move. And if you recall Erwin, if I had a slide that if you planned correctly, all the doors were open, do you remember that slide was a I think about a bunch of doors all open, right? Yeah, that’s I. You know what? I don’t think I’ve made the state of that line while I was on stage, but I don’t have to look for deals where I’m at in my career as an investor because my reputation and my processes that I teach people how to replicate precede me. Just come to me. Isn’t that a cool place to be? Mm-Hmm. Now your question has another component to it. How do I get good deals? Yes. Well, the realtors and you’re one of them. Don’t take offense to this statement or what they want, but your job is in this area. I mean, no, but I mean, if you were, I know, and it was about to say that you’re not. But if you keep interviewing me, you’re going to become one.
Erwin Szeto [00:26:07] And after I take your course to
Pierre Paul Turgeon [00:26:11] they should, I’m right in your town. I mean, Hamilton. Yeah, yeah. Well, that’s eventually I’ll be targeting realtors because there’s mortgage brokers that take my course, by the way. But any different part of your question is how do I get people to send me good deals? Yes, huge. To some extent, let’s say you were a multifamily expert as a realtor. Right? Mm hmm. Your job is to give me something that looks like a deal. The way I look at it than people, you or your listeners may disagree with me, but the way I look at your job is or any of the multifamily realtors that I that I work with and I work with many of them. And by the way, I don’t pledge loyalty to your exclusivity to any of them because my job is to buy apartment buildings and invest in them. So whoever gives me the listing and I close on will get my business, but it’s my job. It’s not so much the realtors job to show me which ones are good deals. It is my job as the investor to make a proper risk assessment of the deal. So you never know until you get a listing and until you do, you walk through and you, you know, you crunched the numbers, whether it’s a good deal or not, because every deal has a personality of your own, that’s the same in your, you know, you sell smaller properties, Erwin, but it’s the same. Every asset has a personality. It’s in a different market pocket or, you know, it has its own peculiarities. So. But you know, and as I said, and I think you have one of those questions later in this interview, but every deal can have the potential of bringing you a great return. So you have to look at it on a case by case basis. Right. But the key is to be very clear what you’re looking for, which I clearly also stated in my talk last weekend. What kind of project are you looking for? What level of difficulty? What budget? And my job as an investor is to indicate to my real through all these parameters very clearly so that the listings, I ideally have been sifted through by the realtor upfront that I’m only getting what I’m prepared to handle. Mm-Hmm. If that makes sense. Mm-Hmm.
Erwin Szeto [00:28:18] And then what I’m trying to get at is like and being so and not trying to brag or anything, but I’m pretty high in demand and we’re trying to throw good. And anyone who’s high level, even yourself rate you, I’m sure you get out of the blue emails as people asking you random questions with like asking you nothing in return. It’s like, Hey, beer pong, can you think of this building? That’s it. Sandy like an MLS. But my question, the question I’m trying to get to is how do you not be a tiger? How do you let these experts know that you are serious? Because even if you had these criteria, you still need to prove to them that you pull the trigger, which is the hardest, which is a hard thing to do, especially for a novice investor.
Pierre Paul Turgeon [00:29:04] Well, I think commissioner that on stage as well. Erwin, you got to have the money pretty much as a novice investor in the bank account. I mean, I make sure I have the money before I write an offer, right? So that’s one thing, but by your demeanor or by your behavior, by being prepared. People know that you’re serious, but for not much invested that doesn’t have a reputation for seeing them like I do. I would be as bold as showing years. The money show that showed the realtor and you know that you have money show they’ve been showing that you got the funds to proceed because, as you know, that’s what I would do to show that to people and asking the smart questions that I was relaying from the stage last weekend, you know, by having answers to those six questions that I asked right on stage last weekend that I’ve come a long way. And people are doing your homework. And you know what market you’re investing in, why you have an idea for what apartment buildings in your chosen market are trading at. So, Dylan, you’ve done your homework, right? Absolutely will.
Erwin Szeto [00:30:06] That’s excellent. It’s excellent. Excellent feedback for our for our listeners. Oh crap. Everywhere I was going because I think people need to rebuild a reputation. There’s that as well. But people need to understand you can’t just go cold to a high level realtor who’s going to help you make lots and lots of money in. Just say I’m interested in buying a building and then not provide any other information, right? Because they get that all the time. They can get that like five, 10 times a day. But you need to stand out and make sure that you get the deal, right? And so you’ve provided really Szeto.
Pierre Paul Turgeon [00:30:43] Yeah, you’ve got to be prepared. You’ve got to be prepared, and let’s put emphasis on this Erwin. You’re right. I can tell you from experience, I’ve been coaching and teaching people to invest in apartment buildings for many, many years now. Mm-Hmm. And you get easily blacklisted if you’re unprepared and people will not tell you the deal because they don’t have the evidence that you can close on it, right? Hmm. Did you know, where did they want to make sure you’re not a tire kicker? And believe me, I could tell you stories with names of people that were blacklisted by a realtors in the industry, especially small markets like Edmonton, where everybody knows each other. So you want to avoid that at all costs. So you have to. You cannot do this overnight. You have to plan your move into multifamily investing. It’s a matter of doing your homework, right?
Erwin Szeto [00:31:29] The investment community in general, I think, is quite small because we all real talk. And you know, I’m, you know, like six years ago, Lowball offers words. It’s pretty common for us to write offers like eight 10 percent under asking but if to do that in today’s market on our typical bread and butter, single family starter home like it doesn’t work and you’re just wasting everyone came here.
Pierre Paul Turgeon [00:31:54] Erwin. Hmm. Same here. And even more so because the world is even smaller. Of course, multifamily investing and including in GTA is no different. So if you lowball your offer too much, you’re not being seen as being a serious buyer. You’re being perceived as something that’s unreasonable. That doesn’t know didn’t do his homework because he has no clue, he or she has no clue of what apartment buildings are trading at. You know you’ve got a good value for now. Your offer has to be reasonable. Unless. But can I just say that there’s always a but to all of this, it’s business. One of the deals that I use in my course as a case study, that’s the main case study that we see from beginning to end. It was, you know, it was so dotted and inherited the building from her dad, who had built the building and he was Italian. The towns are good masons, you know, right? And it was a strong construction, but he passed away. So it was a good building to begin with, and he was not a slumlord yet. We did a lot of renovations into it. New roof. 80 percent of the windows replaced, you know, a lot of great improvements in the property. But his daughter inherited the building and then she went and hired. She went against the advice I gave on stage on Saturday, or when she went and used a multi real reactor. I had no prior experience in multifamily properties. So when the listing came out, guess what, Erwin? It was way below way below the value that I know it was worth. So right away, so because he was not a specialist multifamily realtor, so I jumped on it. By the way, be in operation. It was midnight the day that the offer process closed at midnight and I had a great realtor who had worked with me. We had closed on a few deals before. And she knew I was a pre-qualified investor and so we got the deal. But there were, I think, 10 to 12, not maybe a 10 or 12 offers. And we did it because I was a pre-qualified, experienced realtor investor and I had done my homework and my real took advantage for me. So you never know. There’s always a gem there somewhere, but you got to know what to look for, and I’m happy to report. That’s what I teach, right? With case studies, real deals, what? How to spot those things right?
Erwin Szeto [00:34:19] We can just Google you.
Pierre Paul Turgeon [00:34:22] Yes. Yep. Yeah.
Erwin Szeto [00:34:26] And if we’ve answered a lot of the questions I had prepared, we were talking about this before we started, before we started the interview. So I told you my capital, the capital I have, but I want to generalize the question for our listeners. How much capital should investor as an investor need to get started in the in the apartment building world?
Pierre Paul Turgeon [00:34:45] So I’m going to talk about a percentage you don’t want me to talk about specific market, right? That’s what you mean. Sure. Yeah. So I think I say to all of my students, assume when you start looking at properties that the deals assume that you’re going to have to put at least really five percent down as a down payment, plus at least some five to six percent in additional costs. So that’s your closing costs. Lender fees, mortgage broker fees If you’re going to have one, an environmental site assessment fee properties should be over legal costs and so on. So at least somewhere between 30 to 32 percent of the purchase price is what you need. Which again includes your down payment and all your costs of closing costs as a general rule. And again, as we mentioned, if you feel that the risk profile of the specific market, you’re investing in is greater, then you might want to add. You don’t want to put down 30 percent as a down payment, plus five or six percent in closing costs. But again, you have to customize that to the risk profile of the deal and the market rate. And of course, that doesn’t include if you’ve got an if you got a significant improvements to bring the property up to snuff, obviously, you know, roof, if you can’t and beggars, can be choosers. Erwin Let me let me point of clear fact and this applies to across Canada. Apartment buildings are an asset in very, very high demand across Canada and across the US and, quite frankly, across Europe as well. So this being said, when you negotiate an offer, consider the opportunity cost like a typical, more balanced market where this asset type is on demand. You might be able to negotiate the price down because you with the roof needs to be replaced. In today’s market, beggars cannot be choosers if your choice is to get into the multifamily market. All I’m seeing is consider sometimes not being too demanding, you know, negotiating the price down if your goal is to get into the market. Keeping in mind the long term benefits of being an apartment building owner, you follow what I’m saying or sometimes, you know, totally balanced market. Well, yeah, because you’re in one of those markets in Typekit, right? Beggars can be choosers, right? You want the deal? Well, then, you know, but crunch the numbers. And if it’s a matter of maybe significant capital improvements being required while maybe what I do is I raise the money up front with my investors, right? And I respect that approach to replace those major capital components and be done with it but be in the game because in 10 years from now, if you didn’t buy that deal and it was because, you know, the vendor didn’t want to negotiate the price down to enable you to replace the roof or the boiler, I think you might have regrets. That’s my take on it. But something to consider. Every button is different in every situation, and market is different, but generally speaking, that’s what goes on in this country, right?
Erwin Szeto [00:37:41] And I think that that’s more homework that the investor needs to have been, you know, my business is starter homes. We need to know what a bad roof looks like and then the rough cost of what it’s going to cost to replace one or an old furnace and stuff like that. Yeah. And you mentioned that beggars can’t be choosers. And one of my questions I had prepared is what kind of problems are you willing to solve in a property? Like what problems are you willing to not incur an acquisition?
Pierre Paul Turgeon [00:38:10] Yeah. And if you recall also, my talk suddenly depends on what you’re prepared, the level of effort required. The example I did was when I started buying apartment buildings that was still at CMHC. I had a full time job and young my kids were, well, maybe older than yours. But you are pretty young. So there’s only so much time I had to allocate to investing in real estate on the side. Right? So that’s what one thing that you’ve got to be to take into account what level of effort are you willing to put in? But generally speaking, you know, if it’s replacing a roof, that’s an easy one, right? That’s not a long term project. Yeah, you get it done. And within a week, the roof is replaced and it’s going to last you. It’s going to last you a good 20, 20 years, you know, twenty 25 years or so. That’s something that’s easily that I wouldn’t shy away from. If it’s some unit upgrades, well, most of us wouldn’t do wouldn’t upgrade all the suites all at once. It’s on tenant turnover rates or something like that I’d be willing to handle. But it’s also a matter of your budget. How much money have you got? But then again, if you’re at the beginning of a deal, then you can raise money according to deal with these things, so you wouldn’t want to shy away from anything. Any project, as long as you’ve identified what’s the level of effort, you’re personally willing to put in and adjust the level of difficulty of the project accordingly and again communicate that very clearly to the realtor that’s out there looking for, you know, to bring a deal. That’s what I would do. Of course, the best deals are those where the repairs and the improvements are cosmetic in nature, right? Facelift, lawn lipstick and rouge kind of thing where you paint the suites and you know those are the best esthetic. Repairs usually are the ones that are most beneficial in terms of return on investment. Mm-Hmm. Because when you replace a little bit of the depending on the size of maybe a 60 $70000 affair. So if you can stay away from those, but even if you cannot. So, you know, unfortunately you do all this because you’re very active and very successful auditor yourself or when every deal has a personality of its own. So it’s more a matter of how what level of effort you’re willing to put in. But those are the greatest, you know, the deals, if a landlord, it’s tired, that’s when you step in and you can improve the property condition and maybe increase the rents and benefit from the multiplier effect as well. Right?
Erwin Szeto [00:40:50] What is so what is the age range of the bill for the buildings that you’re buying? And then I’ll have some following quotes for that.
Pierre Paul Turgeon [00:41:01] Yeah, so it’s interesting. I don’t know if we touched upon that last time, I had an interview but did an interview. But in oftentimes you, there’s people in western Canada and in Alberta that look at a 40 year old building and say, Oh my gosh, the building is old. However, I just came back from your town. Yeah. And one hundred year old buildings are not nothing uncommon, right? It’s off the arm. Everything is relative, right? And know in my world, there you go. Yeah. Again, it’s even more relative as you go further out. So. So everything is relative. Basically, it’s I. But you need to show it. My world, the buildings. A lot of the buildings were built in the 60s, which is not also uncommon in duty as well. And you, you’ve part of the world. Mm-Hmm. But a lot of them are even more frequently older. What one has to keep in mind when you buy an older building your art and remember earlier you, we were talking about operating expenses. Yes. And we’re, you know, being specific. I said one key operating expense up here is your repair and maintenance item, right? Repair maintenances are in them. So when you buy an older building, expect your Arnhem expense item to be higher because the building is older. So when you do your due diligence and you get a building inspector, inspect the property, you got to make sure that he or she tells you, the building inspector tells you what’s the rdl demeaning economic life of these building components? Right? But you can rest assured an older building cars cost more in repair maintenance costs because told her that the building systems are not as efficient. You know, the furnace or the boilers are high efficiency, as you know, a newer building and all of that. So you’ve got to allocate a higher art expense item or are anum costs than you for a newer property. But in my world, they’re usually, you know, 40, 50 years old buildings.
Erwin Szeto [00:43:00] It’s enough your money. I’ve seen so many investors. Too bad you didn’t offer your courses earlier because I’ve seen many new investors buy these 100 year old properties and everything has to be done. Roof wiring, plumbing all has balconies, windows, everything has to be redone and they have no idea what they’re getting into.
Pierre Paul Turgeon [00:43:25] This is doing. And that’s the only area, and that’s why, you know, that’s why, you know, I mean, I doubt for the training I do, it’s not my first rodeo, as we say here in Alberta. I mean, I’ve seen how projects default. I’ve seen what happens. And that’s why it’s cool for me to be able to teach this. Because not only that, because I think you’re listening mentioned that, but I used to be the guy within the prairie region at CMHC. Managing defaults, right? I think you’ll remember me saying this on stage Saturday. I used to be the guy made being at the backend of the business that CMHC went apartment buildings to default. So that’s why I’m a good person to teach this and only that now and then I moved on to the multifamily underwriting department, the front end of the business. So I have in this entire country, very unique perspective. I’m very unique in my ability to teach this to people because they’ll know what to look for because I’ve seen it done, been there, done that right. And that’s why I’m an expert idea of how to assess these risks and mitigate them. But in your part of the world where the buildings are significantly older segment? Yes, it’s a yes. And you know, I’ve got checklists, systems, right? You don’t you can’t skip a step unless you really, really, really dumb. But I walk you through the process with case studies and I tell stories, right? This is the beautiful thing about the, you know, when you take a live event, I share stories. Also in the online version, put too much lesser extent. It’s just a different modality of teaching. But during the live event, I teach my some of the things I’ve seen errors that previous investors have made, of course. And that’s a common one. And I clearly addressed that in my training. And when I speak around the country on this right, it’s a common flaw. Common mistake. Novice investors make that if you take my you, it cannot happen unless you’re super dumb. Yeah, well, I’m sure of that as well.
Erwin Szeto [00:45:26] Are you are you going to vet deals for you for your students? Is that part of the package?
Pierre Paul Turgeon [00:45:33] No, it’s a valid question. You know, other than the forum where people can go and ask you what is. So it’s not. It’s a one to one basis point, but they can go as always, delete whatever private information that they have confidential information, right? Then I will do it in an open Q&A kind of forum to do that. I don’t have at this point, a. A coaching program, per se Erwin, and the reason is because I do this across Canada and it becomes too demanding, first and foremost, people need to know I am an action taker. I am a full time multifamily investor. So teaching and doing online courses and all that is a sideline and buy it from experience in the past is, you know, in my earlier days when I was involved with it became very demanding. At some point then, you know, and I’ve got kids, we’re trying to create a lifestyle for ourselves. So it became too demanding. So I had to. That’s why I’m putting the course. The training once a year in Alberta, once a year now in, I think it’s going to become an annual one in Hamilton. I put up a tree program and the only course I can help people out while still maintaining a quality of life and know my lifestyle. I want the reason why to invest in state so that if people go on the open forum for the online or the live events, it’s going to be the same forum. I will be more than happy to go in and answer these questions from people. Yes, that’s part of what they’re buying within that training.
Erwin Szeto [00:47:09] Yes, very good. Now how far
Pierre Paul Turgeon [00:47:12] they’ll know what to do. You know what I’m saying? The Erwin I just want to. They will know what do they? We’ll know what to look for at the end of the day. It’s a numbers game. Yes, I’m showing you how to what to look for, how to plug in the numbers. I’m giving you the spreadsheet safe spreadsheet that I used to use at CMHC that I replicated Erwin. How’s that for a tool? And you know and appreciate I was analyzing so many deals like I’ve analyzed more deals than most of the larger, largest landlords in Canada. This is no joke because that’s all my job was for just day in, day out and we were timed. So the system replicated was designed to make sure you don’t forget anything because that’s what I had to do, it seems. I couldn’t afford to skip any step. So that’s what I’ve replicated. So, you know, I know where you’re coming from and I get this all the time, you know, are you going to get my own numbers, my deal? Well, I’ve told you what to look for. Then I told you what to make sure that you’ve verified and calculated the income very accurately, and I’ve told you how to do that. Then I’ve told you how to verify, calculate the operating expenses and the sum of which you know, the deduction of your subtraction of your operating expenses from you is going to give you and why. Then it’s just a matter of dividing that by the going cap rate and you’ll get, you know, you’ll get your value. So you know that it should be. I mean, I give you the lowdown so people have to trust themselves once they follow the process and have looked at every possible risk factor. Now, trust yourself, you’ll the right track. You’re going to literally like a rock star because most investors, as you just said yourself, you. But some of them didn’t do that properly the first time. Well, I teach you how to do this properly the first time around, right?
Erwin Szeto [00:48:53] And I count myself included in that group. When I started out, there’s many properties. I didn’t pull the trigger on that, but that passed many criteria and just didn’t pull the trigger. I was twenty five at the time, young and dumb.
Pierre Paul Turgeon [00:49:07] Well, but I mean, you live alone, right? You know better now. But like I said, I am higher. I give you the theory and I give you the practice. I will do deals in my training events and then I give you the same spreadsheet. It’s a checklist Erwin you can’t like. I said, I don’t mean this in a in a negative way, but you’ve got to be done if you don’t follow the checklist. I mean, God, God, which is good. God have mercy on you because it’s right there. It’s a checklist system, the spreadsheet that I give in my training course. And even if you don’t know, excel, it’s green cell. You put the number in, you have to put a number in. But the formula, all, they’re all there. You’ll get you’ll get. Divide the note I put in a way amount once you’ve calculated it divided by the cap rate and then you’re going to get the valuation, you had to figure that part of you. You don’t know how to use excel and don’t know how to use a cell, then you can play with it.
Erwin Szeto [00:49:59] Was that a good?
Pierre Paul Turgeon [00:50:02] No, I’m saying get a whack to that if you’re an expert using Excel spreadsheets, then you can go crazy and amended and adapted. That’s what my students do, by the way, those that have taken my course and they’re familiar with using Excel. They’ll make amendments. They’ll change it to tweak it to their needs. That’s fine. But I’m just saying I don’t want I don’t want people on this call for novice investors to shy away because, oh my gosh, numbers excel spreadsheet. I don’t know how to do that. Yeah, come on. Come on, come on. This is not a good reason not to go for it to take action. Not if you do my training. I’m sorry, but I’m not one for excuses. I’m like you. I’m an action D.A. and I don’t take no for an answer, ever. That’s my life. I live by that and teach my children that. And I tell you the way it is, and I’m like, You, I can’t. I’m all for the truth. I mean, this is what it is,
Erwin Szeto [00:50:52] and I want my listeners to know, like, they’re so lucky to be in this time of. I don’t know whatever, whatever it is, but there’s your course never existed before until just recently. And there’s nothing else really like it. So they’re really lucky to be, you know, investing at this time. Now my next question is from outside a major center, would you invest in? I ask this because in an Ontario apartment, buildings are hard to come by and I meet these investors all the time. They say I bought apartment building in X Y Z town and I have to say x y z because I’d never heard of it before. Yeah. Now what’s your opinion on investing outside the major centers?
Pierre Paul Turgeon [00:51:37] Yeah, yeah. And that’s a very valid question. I don’t personally at this moment, although this being said, you know, coming back from the Golden Horseshoe GTA area, you know, like I said a few minutes ago, I would now consider investing in that area because I know eventually that might be an analogy going all the way. It’s going to go all the way to Niagara I, right? Eventually. Erwin Is that the case?
Erwin Szeto [00:52:05] The goodwill? The goodwill? Yes, the go train,
Pierre Paul Turgeon [00:52:07] the go train. Sorry, that’s what I meant. So let’s see LRT to go train. OK, well, I mean, we know what impact that might have on real estate values. So I would consider something like this knowing what’s what may come in the future. But of course, until there’s a shovel in the ground and it’s all been approved and all of that. But I mean, again, this is not a short term investing business, not family building. I mean, I want to say this again, this is not gotten rich quick scheme, overnight scheme at all. I said this on Saturday. I mean, you know, once you have a few, but the good news is, you know, you can go and refinance and pull out money every expiry of your loan terms. But in small markets, there’s people that make a lot of money out of money. I am, you know, Berry, for example, is a good market. I mean, if you do your homework, what it all depends on the analysis of the assessment of the market risk again. You have to do it. My experience. But please appreciate my experience now is specific to Alberta. Alberta is fundamentally a rural province, right? We have Calgary, we have Edmonton. We have some small centers, but mostly it’s small rural areas. So there are the economic fundamentals are not nearly as diversified and as strong as some of the larger centers, whereas in GTA, you got a lot of little communities where people do super well. I should add Brampton, I mean GTA in general. So you got a lot of little markets that can do very well for you now if you go further north. Let’s say if I go out 400, you know, small cottage area, the market fundamentals are different and generally weaker. So what does that mean? So that doesn’t mean don’t go into those smaller remote markets, just adjust the mutation of the risk factor accordingly. Meaning what put more money down. If you’re concerned about the poor market fundamentals, just put money down. You know what I’m saying? Maybe this is where you would go CMHC with the longer amortization period, right? But every risk can be mitigated. The point is because I have to tell you now, let me expand even further into northern Ontario. I come from northwestern Quebec, which is half hour from the Ontario border. What’s up there? Places like Kirkintilloch, I could probably mention some names, which I’ll refrain from doing. Don’t know but hear me out there when people are being. I know a couple of guys that are killing it in Kirkintilloch A. It’s only an hour away from my own town of Narender. OK. Right? Bell. Well, OK. Listen, you because all know that more than that, percolating wanted to say blind spot 30. Maybe, maybe more. I know there’s money out there for street, those guys Erwin, I want people to know they’re killing it. However, in many cases, they’re not even leveraging the financing. They’re paying cash because the value for door is a lot lower. Right? But they know what they’re doing. I could go on to tell you about Saskatoon. I spoke at a great event two girls that are just like an epic alliance. If you’re interested in the Saskatoon market, they will take, you know, buy properties in the worst areas, but the mitigated the risk accordingly. So my point to you is you can go into any market as long as end with eyes wide open using a stand, which I’m more than happy to teach. You all know that right? Where you apply the same kind of template for assessing and mitigating the risk, you’ll make money anywhere. But, you know, because it’s just a matter of going in with eyes wide open, with having assessed the market risk there clearly and adjusted your mitigation measures accordingly. I mean, I know this fact because that’s my job to know all these things. Hmm. Personally, I stay away from those markets because I don’t know. Well, then what? That’s what I do.
Erwin Szeto [00:56:13] Right. So that’s the first step is you have to know that you have to know that market quite well before you make that decision to invest outside a major market. But yourself personally, your investments are all in Edmonton proper or you have some in the suburbs
Pierre Paul Turgeon [00:56:25] or anything they do best. Yeah, no, I don’t I don’t I don’t in my personal residence, which is an acreage, but that’s also a different story, but you know, I’m talking to you. Guess what I’m seeing when I look outside, I see those snowy Iraqis. Yeah, because we still have two coffins here and I see bumping the actual pumping oil. I see horses and all of that. So I have a prime piece of land, but otherwise for my multifamily properties, I stick to Edmonton because I believe in the market in the long run. I think you have a question or that, but my prediction is on oil prices. And if you want to talk about that, yeah, that would be a good segue way. You know, we are in a slump. I mentioned to your listeners and to you that I’m not having fun right now. My income is down because I have to give a rental incentives been all that. But overall, where do I think the market is headed? I mean, how did you get to work today? Erwin Did you get in your car?
Erwin Szeto [00:57:18] Yeah, yeah.
Pierre Paul Turgeon [00:57:19] Of course I did get to work today. Like, maybe we are
Erwin Szeto [00:57:24] going to the gym, to the gym to do my car.
Pierre Paul Turgeon [00:57:27] OK, well, you know what I’m saying? The world still runs on oil and gas. It’s not tomorrow. Electric cars are not going to be used by everybody for a generation or longer. And here’s the thing. Two things I want to add this is intel. You know, I always like to provide that intel. So first of all, proven conventional oil reserves are being depleted around the world, places like Russia and some other countries. So at a rate of 30 percent or so a year, Erwin the issue we have with oil right now is because we’re in an oversupply situation, right? We all know that because of fracking, the new technology came on board. Yes. But you know, the last couple of years, first of all, producers have stopped investing in oil production because of the low cost. As you recall, it went down to 33 percent at thirty three dollars per barrel. OK, we’re now at about $40 today. I even looked at the market today, but about that were four dollars a barrel. So but the last couple of years since the downturn, production has slowed down significantly. But I’m telling you, in some of these countries, the proven conventional oil reserves are going down or being depleted at a rate of 30 percent. So people have all seen the headlines in the last few months. We had some major transactions here in Alberta, Canadian Natural Resources Ltd., Central Lt’d bought shell. So I think the transaction was like something like 14 $15 million to match in that scenario. There’s need to know is the Canadian company, right? Well, integrated like the Suncor, OK, the pan of this world very well integrated. They bought a foreign owned assets like Shell. Because I have faith in the longer term market, because there are established oil and gas companies, well, mostly oil. And they’re well, well, they have good balance sheets, OK? We had also another large transaction, Conoco Phillips, but I’ve will look like one of those two for $12 million. So what I’m saying to you and one more thing I want to add I have a friend of mine who is doesn’t have to work a day in his life because he made money in the oil and gas. But guess what? He’s got another job now buying oil related assets for CP. Your pension fund. I know. So what does that tell you? What trust? What long term prospects do you think these large investors have in the oil and gas Erwin? It’s a very good prospect. So if you’re in it for the short term into buying an apartment building, you’re in the wrong business. Don’t do it if you’re in it for the long term. You know, you can wait it out and you sustain the downturns like I am right now. You’re going to be a winner if you seize the opportunities when they arose. So that’s my prospect. This being said, to answer your question more specifically, the status of the oil and gas industry, it’s changed what technologies have evolved in the last two years as well because these oil and gas producers were forced to compete with a lower price. Guess what they’re able to do to run and operate these wells more cheaply with less manpower? So one thing I’m not sure I’m going to see in Rob Break over the next few years, but I don’t have a crystal ball. Nobody can tell you this for sure, but I don’t see a significant in-migration like what we’ve experienced in the past as a result of technological advances in the oil and gas industry. But is it still viable as a business? Absolutely. I still believe in it. I still believe so. That’s my take on it for what it’s worth.
Erwin Szeto [01:01:00] Can we get into a bit of both economics and the importance of the oil prices to Canadians?
Pierre Paul Turgeon [01:01:07] Well, that’s about 30 percent of the Canadian economy, so it’s not the commodity commodities in general, but I think the oil and gas specifically, I think Jeb that said, I forget it now, but I think it’s about 30 percent of the economy, so it’s significant enough.
Erwin Szeto [01:01:22] I’ll put it up for the show notes. Think you know, I
Pierre Paul Turgeon [01:01:26] want to know if I find it all. I’m look. I’m shuffling through my paper to see if I have an A. But it’s significant. It’s in that range. I know that much.
Erwin Szeto [01:01:34] Why do you look for it?
Pierre Paul Turgeon [01:01:35] We need pipelines, guys. We need pipelines to get it to tidewater.
Erwin Szeto [01:01:39] It’s such a controversial subject and I don’t want to get political at all. But I just want to say, like, I’m a I’m a I wouldn’t say an environmentalist. I’m very conscious, though, you know, I recycle. I’ll take my garbage home if I were off wherever I am. If that recycle, I’ll take my garbage with me and bring it home, recycle that type of person. I’ve looked into buying an electric car if it makes sense, if it’s a pragmatic choice and it actually means like reducing CO2 emissions holistically, meaning at source that is reducing emissions. That’s something I’ll look into. But the broader point, I think it’s lost in a lot of these conversations around Keystone and oil sands is it is a big piece of our economy, Canadian economy. And without that piece, how are we going? How are we in Ontario and Quebec, in the East going to get our transfer payments that we used to? We’re used to getting to pay for our education and health care. I just want to make that point.
Pierre Paul Turgeon [01:02:38] Thank you, sir. It’s a very valid point, but it’s a very real point. But we could anyway. This is not the purpose of this call, but I do read every day. I mean, on this stuff, and there’s a lot of hypocrisy I will say around surrounding this. But the oil and gas industry is also guilty of not doing a good job of public relations. But if they were serious, people say it’s a no. But I mean, our nightmare in the states is basically, yeah, no. But they don’t explain to do a better job. So they’re paying the price for it, too now. But there’s a lot that goes on. I mean, this is not the purpose of this, but I’m strong, opinionated. You don’t want me to go there.
Erwin Szeto [01:03:17] Erwin, I know you are. If I follow you on your post on Facebook, oh yeah. You mentioned you sawhorses in your backyard now your horses.
Pierre Paul Turgeon [01:03:26] No, no, no, no. I have. I don’t have horses, but they’re my neighbors. OK. As you know, I like to travel. I don’t want to have maintenance, but I do have chickens. And one got killed by a by the fox as I’m flying back from Toronto Saturday. So a little disappointed they were going to get less bright omega three eggs. No, I don’t have a I don’t have a horse. It’s not just chickens and a cat, but I’m in the countryside is beautiful, sinewy when I look out while I’m speaking to you.
Erwin Szeto [01:03:54] Very good.
Pierre Paul Turgeon [01:03:54] Very good living my life on my terms. Yeah, truly, truly is.
Erwin Szeto [01:04:02] And that’s why we invest. We don’t invest. To make money is to afford a lifestyle, and I don’t want that to ever get lost from people.
Pierre Paul Turgeon [01:04:12] Yeah, no, no. And you know, with that point, I saw Steve last week and you got to you got to keep, you know, what’s the vision for yourself and your family, what you want to do and how you want to live your life? And like Duff and I look up to you, Erwin, because you’re somebody who is generous with your time. You know, and with supporting charity. And for me, not only as you, as much as you, but I’m starting and I’m an I’m taking actions through my real estate, as I mentioned, you know, we support children, sponsored children in Africa and South America, and I intend to do a lot more as I go my Business Academy sphere protocol because we’re so blessed and so privileged. And the fact is that I don’t ever want to forget that every day my life. So for sure,
Erwin Szeto [01:04:53] and I’ll share with you just quickly, like telling my wife I haven’t mentioned to her to her before, but one of my bigger goals is to build this, to sponsor a school in Africa that it’s not cheap, but with the funds, they’ll build a school, they’ll build a library, sorry, and they’ll stock it with books. And I think it covers the donation we cover like four years of salary for their teachers. And I don’t even know how many students.
Pierre Paul Turgeon [01:05:21] So that’s specific. Yeah, yeah, yeah. I’ve been looking for them off. You’re well, you’re further ahead than me.
Erwin Szeto [01:05:26] Yeah, the party is
Pierre Paul Turgeon [01:05:28] like, come to your library and I might come to that village and build a wealth for those guys because that’s my wife and I will are planning on doing some missions. She’s a nurse, and so that’s something for us. It’s that that comes near because our children are getting older. So that’s something that we’re planning. What are you talking more about?
Erwin Szeto [01:05:48] is I think you actually had the right to name the school and Abby pretty cool. They make a trip out of that as well,
Pierre Paul Turgeon [01:05:57] but I certainly intend to the children’s response. In Africa and South America, that’s part of my goal, for sure. Hmm. Got a clinic in Manjari? What’s on my bucket list?
Erwin Szeto [01:06:06] Very cool. On the subject of helping people for MacMurray, for the listeners who don’t who maybe forget, former mayor was basically wiped out by wildfires. And so what did your what did your company? What did you do to help those people out?
Pierre Paul Turgeon [01:06:26] Yeah, we had some vacancies at the time and you know, you got to love Albert. I mean, I come from all these dreadful pull back and spend a lot of time in interior and school and so on. But here in Alberta, things went to go and get stuff. People get together and help out. It was quite nice. And us, I mean, it was the least that we could do with our properties. We, we, we offered free rent and free suites to two or three families. And I happened to be up there. I even went and bought because, you know, of course, the suites here, they’re not. You have a stove and a fridge, but no furniture. So we, you know, my property manager got some furniture. I went to the dollar store and Walmart and bought some dishes and filled up the fridge a little bit. So we were able to help out three families for, I think, three months. I think altogether to enable them to turn around and reorganize their lives. So that’s the least we could do this alone. You know, I’m one of so many, so many of us stepped up to deal with this crisis. So it was very cool to watch, very heartwarming. And like I said, I believe as owners and business owners, it’s our job to give back in that that we didn’t hesitate to do that. And so many landlords did the same. So it was beautiful to watch in that they were they were that tears. I mean, it was pretty emotional because, you know, these people call you, you don’t know them at all, but you trust that they’re going to take care of the unit and you know, and they have nothing like nothing. Also, the fridge is empty. No, we did what we could. So it was it was beautiful to see. Yeah.
Erwin Szeto [01:07:58] And as we’re talking about charity, I don’t think we were in the same boat. That life on our terms also means helping as many people as possible. So it’s not just about us.
Pierre Paul Turgeon [01:08:10] And, you know, Erwin, I stated my mission what it was right last weekend. You know, mission is to as I as a privileged person, as a former insider, this knowledge how to invest in apartment buildings. My mission is to democratize the access to multifamily investing to any investor, to anyone in Canada who has the courage, the will, the perseverance to do it, but so that they may create wealth, but something that I forgot to mention on stage. But I did show the pictures of the kids we sponsor in return because this is also part of my mission. What I do. Yes, I get a fee for it, but I mean, I provide very valuable knowledge. But when you create wealth through apartment buildings, the one that you request I have from my students is use that wealth to do good in the world. That’s what office is also for which to fulfill our own personal needs. But then what else are you going to do for the rest of the world? You know, we’re blessed right here. We have shelter, we travel, we’re healthy. You know, we all to the world to do good with the wealth that we create through investing. We’ve got a team that’s strong belief values that I have for
Erwin Szeto [01:09:11] sure, right? Because if we don’t, who’s going to, have it? Just a handful of questions because I know we’re running a time and I respect your time. Come and join. Venture structures of our abilities are much bigger than starter homes that I’m used to. Can you touch on what’s a typical joint venture structure for an apartment building?
Pierre Paul Turgeon [01:09:34] You know what? Don’t over. I live by the kiss principle. So keep it simple, stupid, you know? I mean, I think people overcomplicate that. But that’s one of the six questions that I, if you recall during my presentation that I recommend to us or you think about in consultation with your accountant and lawyer. But all I do is A. It is like a joint venture agreement, but it’s called a unanimous shareholder agreement. Mm hmm. Excuse me where the rights and obligations of the partners are laid out. And then every property we purchase is under a separate corporation. Mm-Hmm. And if you’re only going to buy one building, you probably don’t need to incorporate. I mean, again, you need to look at the tax and legal implications and can’t be sure whether you’re, you know, you’re a lawyer, your accountant, my, my purposes. Since you’ve asked me what I do, what I do, how I do what I do, and I keep it simple. But it’s just a regular US unanimous shareholder when we issue voting shares and common shares, typically because I’m the subject specialist and the expert, I have all the voting shares. People do this up front. And I would highly recommend Erwin. I have an investor questionnaire. You know, I said I met some large investors in Toronto last week when I was there, but that’s one of the things we’ve talked about, you know, have an investor questionnaire. Are to make sure that you clarify the investors’ expectations, expectations of timing of return on investment. All these things, because I haven’t had the I’ve only had one hiccup with one investor. Otherwise, all the investors are happy investors time and time again to come back and invest with me. So. But just a simple, you know, agreement. The shareholders agree unanimous shareholders agreement for all the rights and obligations are laid out. You have to spend money on this. It’s up short code that you can take because it has to be customer real needs, but their standard boilerplate unanimous shareholder agreements that you can have. And in this case, you know, it delineates who is in charge of running the operations and the property. In this case, it’s always me. I always say people may not like this, but you know, an afternoon down or I’ve been turned down, it’s more me that turns down these people. A lot of investors with very large amounts. Eight hundred and something thousand dollars because they didn’t agree with my process. But I run buildings. I don’t run democracies. You don’t have an expert team. Why would you want to run the building? I mean, so I don’t compromise when it comes to these things and it’s paid off for me. So that’s what it’s that simple. Nothing. If you think you’re going to do a lot of deals, buy multiple properties, then you might consider setting up a holding corp. Right to own your shares, not in your personal names, but in your corporations holding corporations name. So now you’re getting a little bit more sophisticated. I mean, you don’t, but I keep it simple, and I got to tell you, you did a lot of Westerners and people you would know. I’m not going to mention their name who got more sophisticated, and they keep telling me, I’ll keep doing it. Keep, keep, keep it simple as you’ve been doing, they almost regret having complicated things over that over time and they wish they were. They had kept it as simple as I’m keeping, and I hear this a lot, so it works for me. It’s not a race, you know, I keep what I’m doing.
Erwin Szeto [01:12:58] And then one more time it is me. Well, sorry, one more time with a specific link for our listeners. And then what’s the offering as well?
Pierre Paul Turgeon [01:13:05] So, yeah, so it’s multifamily investing Canada dot com slash. I guess it’s a forward slash when it goes from bottom top left to top right. That forward slash
Erwin Szeto [01:13:17] multifamily, that’s just a slash.
Pierre Paul Turgeon [01:13:20] Yeah, slash. It’s always going the same direction, right? Yeah, yeah. Multifamily investing dot com slash r Hamilton. So Mr. Hamilton and going to give you for the next. So, you know, next, let’s say, till the end of May. $2. $250 discount something like that in the price, OK? Because now the prices, some of you may say it’s going to be high. It’s not, but it is. Twenty five hundred dollars. The regular price will give it to you for a 20 to 50. You know, I’ve got a quote here right in front of me. You know, maybe, maybe I’m not a good salesperson and I admit I know what I’m selling. What I’m saying is the best that there is in the country that much I know, but I have a couple of quotes here. It says, don’t try to cheat on your way up. And the other one is, if you don’t pay, you don’t pay attention. And these are courts of very successful people in business owners. Mm-Hmm. And the point is if you’re going to buy a multimillion dollar property and you’re not willing to put $200 into your, you’re training to do a good job and avoid a lot of mistakes. You’re not in the right mindset to buy multifamily property. And I, you know, call me a little stupid to say this on your show, on your on your podcast. But the fact that I just did it and like I said on stage the other day, Jonah fly with the Eagles, not think like a pigeon. And I know that much about successful people, you have to change your mindset. And I guarantee you I can choose the best standards and practices in the multifamily lending and investing business and carried out that much. I vouch for
Erwin Szeto [01:15:09] you if you want to be successful and if you want to be successful, learn from successful people. I’m looking at the numbers I see. I check the dates and works from my calendar, and if I sign up, you’ll see me in September. You know, you’re not getting ready to meet people.
Pierre Paul Turgeon [01:15:27] I hope so. I mean, you know. Yeah. Erwin, I’d love to. And you’re a special one. You, you can. You can call me anytime. I don’t say this to everybody, but to us. Thanks. But I hope to see you for sure.
Erwin Szeto [01:15:40] Erwin Excellent.
Pierre Paul Turgeon [01:15:42] And they want to reach me personally. Like I say, don’t look at deals because I have to do this within the context. I’ll go on a limb here and give my personal email. Well, they can go to my website, which is multifamily investing Canada dot com. You have. This is how you should specify that I did the trading, all my trading. I mean, I’ve been trying for a long time, but the last four years I worked with a professional consultant. A British guy who lives in Spain. That’s what he does. And the content of formatter is professional. We have a support department. So it’s actually support slash multifamily investing in Canada dot com. So support slash multifamily investing Canada dot com. If you have any questions, why don’t you send them to them? But we don’t do deal specific other than if you’ve taken a training, whether it’s the live training event or the online. If you have a deal, you’re willing to share with us on how to form the open fund. I will go in and answer very detailed questions or provide detailed answers as well. We do have a live workshop also in Edmonton, but probably by the time you issue this, it’s May 26, 27 and 28. May be too early for this podcast, but the next one is in Hamilton September 15th, 16th and 17th, 2017. So in this coming fall
Erwin Szeto [01:17:04] and final question? Well, first of all, thank you so much for doing this. I’m convinced I won’t take the course. Is there anything the listeners can do to help you out? I, for example, I listened to lots of podcasts and when the when the guests are profound and offer me a lot of value off, I want to like do something to help them out, maybe even to support a cause that they believe in. Is there something our listeners can do to help you out?
Pierre Paul Turgeon [01:17:30] Well, if it’s a cause, I mean, and of course, if you’re saying it could be a cause,
Erwin Szeto [01:17:36] it could be any that it could just even be a smile at someone. Smile a stranger tomorrow.
Pierre Paul Turgeon [01:17:40] I’m going to think of this. As you know, I started supporting a charity. It’s called Compassion Canada. The reason I get it’s Christian. I am a Christian belief, though I don’t practice any specific religion, but I still adhere to my Christian values. Very much so. So I support Compassion Canada because 80 percent of the money goes to the kids, the children they don’t want. We correspond a couple of times a year and they get a Christmas gifts and a birthday gift, but something that people forget to do for the world. And I should tell you that I do that every other month, giving blood and especially the summers approaching. I have that common blood type. Not that I’m a common one guy, but what is my blood type or RH positive or something? I give blood every other month as soon as I can give blood, and it takes me, you know, just an hour and a half people. You save three lives every time. Erwin, believe me or not, I’ve been doing this since I’m 16 years old. So, you know, the people have car accidents and so on, and we’re healthy. We eat well. So you go and give blood, you save three lives. So, you know, I save on average, about 80 lives a year. Isn’t that crazy? But I do this right, and I don’t even mention that anymore. You just bring this up to me reminding me of, but I do this like, I think you have to wait until, what about I think it’s 50 days and Erwin donations. What I do that all the time? Wow. And anyway, this is a good cost to support. Never thought of seeing this on state. I should, because people forget to do that, of course. Organ donation. There we go. I do that too. I don’t eat everything from dead. Yes, everything my wife knows. Yeah. There you go. It’s not all about ourselves through. And so thank you for asking this, though. You know it’s cool. It’s not all about ourselves. You know, sometimes we live in our own the world. I mean, gee, let’s appreciate what we got. I mean, I sound corny, maybe, but that’s how I live my life now.
Erwin Szeto [01:19:31] And that same, I feel that my donor feel that my donor card with the blood, though I’m scared of needles, but I’m also someone who will challenge their fears. So it is something that I haven’t gotten off my Asiedu yet and has to go give blood
Pierre Paul Turgeon [01:19:48] as big guy. You’re full of muscles as you work out of Facebook and stuff. You won’t feel a thing.
Erwin Szeto [01:19:54] Needles that is a long drive. You are bonkers.
Pierre Paul Turgeon [01:19:57] I read the chapters out. Erwin psuedo is going to donate blood soon. We got it all. You know, now we’re going to keep you accountable.
Erwin Szeto [01:20:05] I will do it. Oh, commit to doing summer. How’s that?
Pierre Paul Turgeon [01:20:10] All right. I’m going to save three lives. Erwin Sigrid, did you know right bread at home? Very close to where we are ourselves? There you go.
Erwin Szeto [01:20:17] It doesn’t cost anything.
Pierre Paul Turgeon [01:20:20] No. Awesome. Oh, you get rid of your bad blood, too. You feel better. You’re a temporary. I’m just joking,
Erwin Szeto [01:20:27] know no, I’ve heard that before too. It’s actually healthy because we as men, we don’t menstruate, so we need to turn over our blood and this is the only way to do so. There you go. Right.
Pierre Paul Turgeon [01:20:36] I have one more good reason for me to do this. All right. Fantastic. Erwin Listen, I’m very grateful for you to have me on this show. Know also my e-mail address is Pete. No, I said, you can go to my website, especially on family. That’s in Canada.
Erwin Szeto [01:20:52] Yeah, yeah. And I am indebted and not be able to answer my questions.
Pierre Paul Turgeon [01:20:59] Yeah, exactly. All right. It’s a fantastic Erwin. So thank you so much for having me again.
Erwin Szeto [01:21:04] All right. Thank you for coming on. Have a good day.
Erwin Szeto [01:21:16] If you go if you are like other investors, you enjoy hanging out with likeminded people. But where do you go? When I started out, it felt lonely being a real estate investor because my friends, coworkers and family were not much help.
Erwin Szeto [01:21:28] And what they had to share was often negatives, such as You’ll be a slumlord, or they estimate questions like Why does the bubble burst?
Erwin Szeto [01:21:36] So I went to meet us but stopped soon after as attendees didn’t take things seriously enough or lack experience to share. It was like the blind leading the blind. Later, I started these monthly networking meetings in Oakville, Ontario, called the Mr. Hamilton Inner Circle, where we have an incredible guest speakers. Like the ones on this podcast, I share the latest economic fundamentals that apply to our investing and best practice lessons you can only learn from being an investor. If you want to be a real estate insider, these meetings are for you. So if you want to come, learn and share, go to W WW Dot Mr. Hamilton Dossier Slash Inner Circle Register soon as I kid you not. We have a wait list each month for these meetings.
Erwin Szeto [01:22:15] Thank you for listening and I hope to meet you, sir. He.