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Podcast Transcription
00:00:00:07 – 00:00:27:23 Scott Dillingham Welcome back to the Wisdom Lifestyle Money Show. I’m your host, Scott Dillingham. Today I have another very special guest with us. Gary from Team Goran is with us. Gary is a real estate agent and he works with a lot of different investors and we’re going to talk about if it makes sense to still purchase in this market as far as an investment property and if you can still find some good cash flow. So Gary, before we get into the meat and bones of the show, why don’t you tell everybody a little bit about yourself?
00:00:28:05 – 00:00:30:02 Gary Arora First of all, thanks for having me, Scott.
00:00:30:02 – 00:00:30:10 Scott Dillingham You’re welcome
00:00:30:10 – 00:01:12:02 Gary Arora I appreciate it. I’m a real estate agent, with ReMax. Everybody knows ReMax and Team Goran Windsor. If you’ve been to Windsor, you will see our bus shelters everywhere. I work with a lot of investors. I started recently, but I have a good success. I mean, I would say it’s it’s good success so far. I’ve sold over 22 homes this year and over 12 million worth of real estate. I work with a lot of investors and it’s awesome. There’s a lot of investment opportunities here, a lot of cash flow properties, normally. So, most of my clients are from GTA and they’re surprised when we draw down the numbers and see how much money they can make by just buying near university here.
00:01:12:11 – 00:01:18:21 Scott Dillingham No, that’s cool. So, let’s go back even a little before that, though, I want to hear about your childhood. How did Gary grow up?
00:01:19:00 – 00:02:17:19 Gary Arora So I grew up in a middle-class family. You know, we used to rent for a long, long time. So I remember how my parents were so happy when they bought their first home. I was, I think I was around 14 years old back then. So, you know, it was a long time that they saved a lot of money to buy that house and they were represented very well because, back home, we don’t have, you know, a professional who knows what’s happening out there. So you’re kind of on your own and you have to figure it out yourself. So from that side, like, you know, I understand how important home buying is and how important it is. Like it can help in your retirement. There’s a lot of stuff you can do with that. I came here when I was 18 years old. I studied business accounting. So I understand business. I understand numbers and, you know, accounting is like since I was in grade ten, I was always good with accounting. I struggled in science and all that stuff, but numbers was always on my hand.
00:02:17:19 – 00:03:31:11 Scott Dillingham That’s awesome, and that makes sense. That’s why I think you’re so good at working with investors because you know the numbers and you sit down and you analyze properties and we’re going to get into some. But first, let’s talk about like what cashflow is. So I know a lot of the listeners of the show, they understand what cashflow is, but, you know, there’s brand new investors looking for it and when we talk about cash flow, we’re speaking after all, expenses paid. So I’ll give you an example. So one of my clients was a new investor. He only factored in his mortgage and his property tax when he factored in his property’s cash flow. So that is how a lot of amateur investors do it, which is okay, it’s a good guideline, but you want to factor in vacancy, you want to factor in property maintenance, you want to factor in these things when you run your numbers. So when you see your net result, you can actually see what the property is costing you or earning you. So a lot of questions that I get asked lately from buyers and clients is, you know, can they still make money in this market? And I know recently you had a duplex purchase with an investor. Can you dive into some of those numbers and what that looked like?
00:03:32:01 – 00:04:41:16 Gary Arora Yeah, for sure. So one of my investors is from greater Toronto area as well. We bought a duplex, he bought a duplex here. I presented him and he’s going to make after like all the expenses he’s on track to make around $1000 to $1100 in positive cash flow. So when I say positive cash flow, you know, sometimes people get it’s a fine line something people just calculate mortgage and they don’t add other expenses, such as, as Scott said, vacancy rate, you have property taxes, then you have insurance, right? Then if utilities, who’s going to pay the utilities? If you are having a grass removal company doing stuff for you. So there’s a lot of factors that comes after that. So as Scott was telling that example, so we just bought it for $475,000 and on track to make around $1000 positive cash flow and it’s still possible cash flow properties. I know it’s hard in bigger cities like London or Toronto, but you know, in Windsor it’s still possible. It’s a house hack, some people are buying house and renting out their basement and their mortgage is not even what they were paying in rent before.
00:04:41:21 – 00:04:56:20 Scott Dillingham Which is incredible. So $475,000 for a purchase of a duplex, is that common? Are they often around this price or was that just was it a lower price property, bad neighborhood, good neighborhood? Like, could you elaborate?
00:04:56:23 – 00:05:12:08 Gary Arora So it’s we all know what’s happening in the market, right? Some people have good points. Some people are looking at it in a bad way, right? So when we sit down, when we discuss numbers, market has come down by almost 20% since beginning of this year, which is crazy.
00:05:12:08 – 00:05:12:18 Scott Dillingham Yep.
00:05:12:18 – 00:05:46:09 Gary Arora Which is a lot. Right. So there’s almost more than 1800 listings in Windsor and if we compare it to January, there were around 500. So it’s more than three times. So there’s a lot of options, a lot of desperate sellers who are just trying to get out of the market, who were maybe new investors who don’t understand that, right? I personally am not taking a lot of listings right now, but it’s definitely not a good time to sell, right? If you’re selling investment properties, you’re better off renting. So there’s a lot of options to choose from and a lot of desperate sellers and buyers are taking advantage of it every day.
00:05:46:15 – 00:05:56:19 Scott Dillingham So you’re saying then, if I’m hearing you correctly, so if you’re a real estate investor, you don’t think now is a good time to sell because the rents being so high?
00:05:56:19 – 00:06:07:15 Gary Arora 100%. You’ll see a lot of cancelations right now because people are realizing it and they’re renting out their properties. Flippers buy and hold. Don’t sell right now, it’s a no brainer.
00:06:07:15 – 00:06:24:13 Scott Dillingham But so let’s say, so let’s look at from the other angle. So you’re a buyer, so you think if I’m buying an investment property and there is one for sale or maybe, maybe it’s a regular family home, but it has the option to convert it to a duplex or anything like that. So you’re thinking now is a good time to buy?
00:06:24:13 – 00:06:57:15 Gary Arora 100% it is a good time to buy, yeah. Because I don’t know if you heard, but rental is crazy right now. It’s all over North America. In New York, rent is the most high. It’s $5000. Average bachelor cost around $5000 last time I heard, I don’t live there. Not sure what’s going on there, but I heard on the news. But I know GTA, especially in Toronto, rent is rising crazily because of the interest rate increase, not a lot of people can afford houses right now, so they are renting. So we are seeing multiple offers on leases right now.
00:06:58:08 – 00:07:10:05 Scott Dillingham Which is interesting and I know in certain markets and this is what I think is so cool about our market, but some investors buy and they don’t even want to make any money per month. They just buy for the appreciation.
00:07:10:05 – 00:07:10:17 Gary Arora Yeah.
00:07:10:17 – 00:07:31:11 Scott Dillingham But I love the fact that of a duplex $475,000 purchase price, which is very fair to get $1000 to $1100 a month I think is super, super impressive. Now this property. So say you are a Toronto buyer and you’re listening to this. Was this property in a good location or was it in a bad part of town? Like, could you elaborate on that?
00:07:31:11 – 00:07:53:10 Gary Arora So it was near university, which is a great location for family rental, but not so good for if you have kids and the school boards are not as nice there. But if you’re renting it to students, that’s a perfect location, right? But if you want rented to family, there’s different location. So you have to see what your long term goal is and we have to, you know, filter out accordingly.
00:07:53:15 – 00:08:22:17 Scott Dillingham Yep and I think that makes sense because it is true. You have to, I know even with us as a lender, right, if a client goes to a bank versus to us, they’re going to get more custom advice. So kind of what Gary said, right? It depends what you’re looking for, what type of tenants you want right? And then you buy in that location. So let’s say you don’t want a student rental area. Do you think you could buy a duplex in the area around like in Windsor, around that same price? Or was it priced that because of that?
00:08:23:05 – 00:08:53:14 Gary Arora So your cash flow will be less. I always tell people what your main goal is right? If you’re looking for the most cash flow, then there’s a different location. But if you’re looking for more appreciation in a nicer neighborhood, your cash flow will decrease. But your long term appreciation will be there. Yeah. So if you’re buying, let’s say if you want to buy a duplex with good appreciation, want to rent it out to family up and down or side by side. You can buy in East Windsor. That’s a good location to buy and it’s going to appreciate a lot as compared to West Side.
00:08:53:23 – 00:09:09:00 Scott Dillingham Yeah, which makes sense. Now, do you and I know it’s not very common and just curious because I don’t know. But say I’m your client and I bought a property. Do you help me to rent it out? Or what would you suggest for somebody who wants to rent out the property?
00:09:09:04 – 00:09:36:18 Gary Arora So to be honest, I don’t care renting it out and I get paid to do that, right? But I suggest to them to put on marketplace. It’s free of cost and people are having success in it, right? You shouldn’t be paying me to rent it out, when you can rent out on your own. If you don’t want to do it, we have a property management company who do it, but you can go marketplace if you have that time. If your job allows it, it’s very easy to do it. Instead of paying me to do it, you can do it yourself and save some more money.
00:09:36:18 – 00:09:39:19 Scott Dillingham Yeah and for those are not listening you mean Facebook marketplace.
00:09:39:22 – 00:09:46:15 Gary Arora Yes. Sorry, Facebook Marketplace, Kijiji and there’s all kinds of stuff where you can put out that for renting.
00:09:46:15 – 00:10:03:07 Scott Dillingham Perfect. So do you have a target or something that your clients look for? Like, are they looking for so much money per month that they want to get per property? Or is it a percentage of the home’s value that they’re looking for to get in rent? Like, what do you find clients are looking for?
00:10:03:07 – 00:10:20:01 Gary Arora Every client is different, to be honest. Everyone is different. Some people want more cash flow every month to offset their other payments and some people just want to hold for next 10 years, 15 years for their retirement, right? So everybody is different. It just depends on your need.
00:10:20:08 – 00:10:33:13 Scott Dillingham Yeah. So let’s talk about, let’s say a three bedroom and I know you don’t rent them all that much, but you see the numbers. What would you say that you’re seeing the average rent is for a three bedroom property in Windsor?
00:10:33:18 – 00:10:58:05 Gary Arora So it really depends if you’re renting out an older house in a decent condition, you can get around $2000/$2100 for a three bedroom. But if it’s a nicer, like let’s say, for example, brand new townhouses, they can rent up to $2500. I had a client in April. They bought a brand new, I mean, two years old townhome, four bedroom. We rented it for $2950.
00:10:58:05 – 00:10:58:21 Scott Dillingham Okay.
00:10:58:21 – 00:11:03:14 Gary Arora 4 bedrooms, right? Because it was newer. Some people like new things and they’ll pay extra for that.
00:11:03:14 – 00:11:16:12 Scott Dillingham Now, just for fun, since we’re diving into some numbers, what were, what’s an estimated purchase price, maybe from some recent sales, that you could get a townhouse for or do you have you seen any come across that have sold recently?
00:11:16:19 – 00:11:34:19 Gary Arora Townhouse or for newer townhouses? You’re looking around $650,000 to $600,000. There have been 20 years old townhouses that are selling for low $500,000 now, which is very rare to see. But yeah, there’s there’s deals out there. You just got to be patient and, you know, jump when there’s a right time to jump.
00:11:35:03 – 00:11:43:14 Scott Dillingham So no, so that’s cool. So if it’s around the $500,000 townhouse, you can expect $2000, maybe a little bit more in rent.
00:11:43:14 – 00:11:44:01 Gary Arora Yeah.
00:11:44:01 – 00:11:48:14 Scott Dillingham And if it’s a brand new around $600,000 to $700,000, you can get almost $3000.
00:11:48:15 – 00:12:08:23 Gary Arora Yeah. Just to elaborate more, the clients who bought it, they bought it for $750,000. And when I sat down with them, they were like, we want to buy a nicer, newer home and we want to hold it for a longer period. And we don’t care about cash flow. We just want to make sure if it can be break even or we can even pay a couple hundred bucks out of our own pocket.
00:12:09:05 – 00:12:25:04 Gary Arora So the needs were different. They bought in Lakeshore, which is growing rapidly. They bought it for $750,000 and they’re still making around $150 in positive cash flow, but they just want to hold it for a long time because it’s a newer property. Obviously, you know, people are going to be more attracted to newer house than an older house.
00:12:25:11 – 00:12:31:04 Scott Dillingham And that’s still impressive, $150 a month when your goal is not actually cash flow.
00:12:31:07 – 00:12:45:08 Gary Arora It is so I leased it within five days and I was surprised too, because I got a call, the clients who leased it they’re from Michigan. They’re moving here, right? A lot of people are. You’re seeing a lot of activity. I don’t know about you. Have you seen a lot of people moving from Michigan.
00:12:45:11 – 00:13:03:11 Scott Dillingham I do. I do. We’re doing lots of foreign like even foreign buyers that are preparing to move here. They haven’t yet, but they want to buy here. We’re seeing that. We’re seeing people move from more costly cities to this area as well. That’s it’s a big change.
00:13:03:11 – 00:13:03:16 Gary Arora Yeah.
00:13:03:16 – 00:13:14:11 Scott Dillingham No that’s awesome, especially on a townhouse and townhouse’s what I like about them is their yards are smaller. So generally speaking, the property taxes are a lot less too.
00:13:14:17 – 00:13:25:07 Gary Arora Exactly and also most of the townhouses, your roof fund is covered, your grass and snow removal that is covered as well. So it’s less maintenance for you.
00:13:25:14 – 00:13:27:16 Scott Dillingham Yeah. So then there is like a maintenance fee though.
00:13:27:18 – 00:13:48:08 Gary Arora Yeah. So you can have tenants pay it. It’s tricky right? You have to work that. So when you’re putting it out for rent, you can have tenants pay it. There’s a column where tenants can pay for the, you know, monthly association. It’s 80, 90 bucks or if you think you can rent it out for $3000, for example, you can pay out of your own pocket. You just got to run the numbers before you do anything.
00:13:48:09 – 00:13:53:11 Scott Dillingham Yeah. So just for fun, did your lease when you leased this, did it include it or not?
00:13:53:11 – 00:13:54:01 Gary Arora It did not.
00:13:54:03 – 00:14:13:02 Scott Dillingham Okay, cool. See, it’s a little trick. I have a little check that I do actually personally to boost cash flow. Now I do it when it’s, since we’re talking about tricks, but when it’s from like a 2 to 4 unit property, I will include high speed internet, but I’ll raise each unit’s rent $100 because that’s.
00:14:13:02 – 00:14:14:21 Gary Arora Yeah, sorry to cut you off. People pay.
00:14:14:21 – 00:14:15:02 Scott Dillingham Yeah.
00:14:15:02 – 00:14:23:20 Gary Arora Like tenants pay it happily, you know, sometimes I see if you put furniture, if you put nice furniture in the house before anybody moves in, people pay premium for that.
00:14:24:02 – 00:14:29:06 Scott Dillingham That’s true and you wouldn’t think about it, right? Because if they had to buy their own high speed Internet, they’d be paying 100 bucks.
00:14:29:06 – 00:14:29:16 Gary Arora Yeah.
00:14:29:16 – 00:14:54:01 Scott Dillingham So really, they’re not paying any extra. But the fact that I’m splitting it, I’ll have a router and it goes to all the units, right? You make a little bit extra cashflow. So there’s little tricks of the trade here, which is cool. But no, I love it. So what do you find an out-of-town investor, what do you find the hottest property type? Is it a duplex? Is it a townhouse? Do they want something larger like what do you find is the number one item they want to buy?
00:14:54:23 – 00:15:28:07 Gary Arora They look for a multi-unit, four plex, six plex, twelve unit, eight unit. You know, their main goal is to buy a multi-unit property. But once they come down here, we run down the numbers, they end up buying. Two duplexes or two triplexes, right? Because they recalculate and they’re making more money. They’re holding two properties are making more money that way, but it’s still depend on person to person. But most of the people prefer that when we run down the numbers they buy two property instead of one and they make a little more than what they would make in a multi unit, for example. Eight Plex.
00:15:28:19 – 00:16:11:05 Scott Dillingham Yeah and normally that’s not the rule, but I will speak to the fact that in Windsor a lot of our multi-unit properties are located in older or sort of less desirable areas. They’re not really putting them in the new and up and coming area. So I think that might be maybe why the numbers work better on a duplex. But normally if you’re looking in GTA, Hamilton like things like that, usually multiplexes will always yield you a greater cash flow. But it depends, right? And again, that’s why you work with professionals because by highlighting that to your client, you give them a better cash flow, but you also save them tons of money because the cost of an eight unit property is a lot more than a two unit property.
00:16:11:05 – 00:16:40:21 Gary Arora Yes, hundred percent. It’s a long term business, right? I can’t even count how many referrals I get just because, you know, once a client is happy, they give you referrals, you got to make sure they are happy and if they’re wrong, at some point, you know, if something else is making them money, I’ll tell them that if they don’t want it, that’s a different story. That’s their money. You know, at the end of the day, they have to buy whatever they prefer. But I always show them the numbers and, you know, sometimes they are like impressed by what they can get with $500,000.
00:16:40:23 – 00:16:57:10 Scott Dillingham Yeah. Which is cool. So let’s say, you know, I’m a new investor, I’m listening to this and I’m going to call you, I want to call you for some advice. What’s some tips that you would give to a beginner investor about our market or investing just in real estate in general that you could share.
00:16:57:14 – 00:17:24:15 Gary Arora Always understand your numbers. Numbers are really, really important and have some cash ready. You know, if you have $40,000, don’t just put all dump all that into an investment property, but buy something and make sure you have some extra money just because if anything comes up, repairs are if you need if the house is vacant for a month at least you can afford that. It doesn’t happen a lot, but you should always prepare for the worst time.
00:17:24:22 – 00:17:41:22 Scott Dillingham Yeah, I love it. Another suggestion that I make to investors since you all share one of mine is I recommend that they set up 1 bank account for all of their rental properties and have the rent go in there on direct deposit if possible, and all the bills come out automatically.
00:17:41:22 – 00:17:42:06 Gary Arora Yeah.
00:17:42:06 – 00:18:07:14 Scott Dillingham Because once you’re a landlord and you’re buying multiple properties, I find it’s hard to keep track of everything. Were if it’s all automatic. It’s super easy for you and then also, like you said, if you buy a place and you’ve got a vacant unit, right? But your mortgage payments coming out, you have a pool of funds to pull from instead of paying that out of pocket. So and I also find, too, the more rental properties you have, the easier it is.
00:18:07:14 – 00:18:07:22 Gary Arora Yeah.
00:18:07:22 – 00:18:13:01 Scott Dillingham So having one vacant unit really won’t affect you because you’ve got a portfolio of them that are fully rented.
00:18:13:01 – 00:18:16:10 Gary Arora Easy for taxes and everything too when it’s just one bank account.
00:18:16:11 – 00:18:50:10 Scott Dillingham Yep and then you can also see your cash flow rate because there’s some profits that you want to take. So I’ll set a minimum. I actually think I did. What did I do? I think I did about five grand per property that I require to hold in the account. So then at the end of the month, anything above that is mine, right? So then that’s my profit. So I can use that and do whatever I want with that or save up down payments and keep investing. So it’s a cool little strategy. So cool. So then again, so I’m a new investor, I’m hearing this and I want to call you, I want to work with you. How does somebody get in touch with you?
00:18:50:20 – 00:19:07:04 Gary Arora You can reach me at (226) 773-5067 or you can just search my name on Google, just put Windsor and I think the first couple of searches you’ll find me. My name is Gary Arora again, it’s G-A-R-Y A-R-O-R-A.
00:19:07:11 – 00:19:16:23 Scott Dillingham And then so they’ll find you there. I know. Being part of Team Goran, there’s tons of Google reviews as well. So if you search those reviews, I think they can even type in your name.
00:19:16:23 – 00:19:38:04 Gary Arora Yes. They’ll find tons and we’re the, I’m not sure, but till date we are the only brokerage with 1200 plus positive reviews, in Windsor Essex. I haven’t seen anything over 700 for anybody else, but I can say with confidence that we are the broker, with the most positive reviews on Google till date
00:19:38:04 – 00:19:39:17 Scott Dillingham Which Is impressive for sure.
00:19:39:21 – 00:20:22:10 Gary Arora That only shows that, you know, it’s not about just getting that deal done. I get a lot of calls even after closing, and I’m always answering my phone if I want to tell a recent story. What happened is I bought a property for my investor client and you know, he’s just starting out very new investor. So we sat down after, you know, he told me he was interviewing five agents, like he was talking to five agents multiple times and I was like, you know, it’s good to have feedback. I was like, why did you choose me? He was like, I called you at 1030 one night and you answered in two rings. So it’s all about being available. You know, everybody is busy, but you just got to take time. If I don’t answer, I give call in less than 15 minutes and I think that sets me apart as well.
00:20:22:10 – 00:20:32:17 Scott Dillingham Nice. No, that’s really, really cool. So awesome. So yeah, give Gary a call if you’re looking to get some investment properties in Windsor and Essex County. Actually, do you go past that or it’s just kind of Essex County.
00:20:33:13 – 00:20:49:22 Gary Arora So mostly Windsor. Essex, but I have partner that she works in Chatham. So if anybody is looking to buy in Chatham as well, I can connect you with her. I’m not the expert of Chatham area, but I have my partner who is expert. She lives in Chatham and she sells property every other day.
00:20:49:22 – 00:20:50:14 Scott Dillingham Jackie?
00:20:50:14 – 00:20:51:15 Gary Arora Yes, that’s correct.
00:20:51:16 – 00:21:05:17 Scott Dillingham Nice. Okay, cool. Awesome. So no thanks for watching the show today. I hope you’ve learned something and any questions. Feel free to give my office a call as well. If it’s mortgage related. At (519) 960- 0370. Thanks so much.