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Podcast Transcription

Sandy Mackay [00:00:49] Breakthrough Real Estate Investing Podcast Episode 42.

Rob Break [00:01:05] Now. Hello and welcome to the Breakthrough Real Estate Investing podcast, we put this show together to inspire you and help you break through to the life that you want to live through the power of real estate investing. My name is Rob Break, and here with me again, all worked up about some more real estate talk. Is Randy Sandy McKay?

Sandy Mackay [00:01:36] Randy, what does randy mean?

Rob Break [00:01:39] Randy about some real estate talk?

Sandy Mackay [00:01:41] Okay, I like that one. When you come up with these, you come up with these, like on the spot.

Rob Break [00:01:46] No, come on can come up with that one on the spot. I dream of real thought into that one. That was a good one. My wife’s like, I don’t know, nobody’s going to laugh at that. But yeah, they will. So I guess John was that funny.

John Kim [00:02:04] That was not funny. Funny.

Rob Break [00:02:09] How’s life treating you, Sandy?

Sandy Mackay [00:02:11] A really good man. Everything’s good. We’re working on a couple of projects in Hamilton, and I’m busy. That’s good, though.

Rob Break [00:02:20] What are the couple of projects you’re working on?

Sandy Mackay [00:02:22] Well, we have three or four unit properties. Actually, one or two of them were closing on in a week. So we’re just kind of getting things prepared. And the other one is kind of the bean demos, the big projects been demoed and then we’re doing starting working on the finishings now. So we’re probably a month and a half to two months, so probably July that once finished these other two starting so busy.

Rob Break [00:02:44] Wow, that sounds like a lot of work, actually.

Sandy Mackay [00:02:46] Hmm. That’ll be nice property. So we’re excited.

Rob Break [00:02:49] And what are you going to do? Hang on to them. Yeah, yeah. Hang on all of them. So you’re going to have three or four places.

John Kim [00:02:56] Yep, nice.

Rob Break [00:02:57] That’s great.

Sandy Mackay [00:02:59] Mm-Hmm. Mm-Hmm.

Rob Break [00:03:00] You mean I’m just I’m looking for the next deal, I guess, to pick up for myself. We just finished up the three that I was working on. Three on the go. Two is still a lot of work. You know, I was it was tough to fit in the real estate agent stuff at the same time. So now I’m going to focus on that a little bit and that’ll be good. I think so. I’m pretty excited about that. And I am also very excited about today’s guest, John Kim, who sandy just 14 months ago had zero rental properties, and now he has seven duplexes to rent, owns and two more properties pending close. So, yeah, in 14 months, it’s very impressive. So welcome, John.

John Kim [00:03:47] Thank you for having me, guys.

Rob Break [00:03:48] How are you today?

John Kim [00:03:50] I’m doing good. It’s a good day to buy properties.

Rob Break [00:03:53] It’s not raining.

John Kim [00:03:55] It’s not really. It doesn’t matter in sunshine. There is. Every day is a good day to buy more properties.

Sandy Mackay [00:04:02] Yeah, nice. You got to be tired after all that. That’s a lot of work for the last year or a year and a bit.

John Kim [00:04:07] You know, it’s funny, I stay up until 3:00 in the morning and, you know, not because I want to make money, it’s just because I’m just so hyped and pumped up about, you know, investing in properties. I never I never thought that I’d be this excited about buying properties, but it just keeps me up nice.

Rob Break [00:04:23] And we’re going to talk more about that. That’s great. I’m actually really anxious to hear all of this story.

Sandy Mackay [00:04:29] All right. So as always, we want to recommend everyone go pick up our free after seven free time activities you can trigger in your property starting right now. That’s available on our website. Breakthrough Rate podcast Dot S.A.. Totally free and lots of value. I think in there for everyone to enjoy and learn from profit from put into action with their properties or are just kind of getting started and learning how to go about managing, binding, renting a property? Well, good value in there. It’s all free, so go grab it.

Rob Break [00:04:59] And also, one more thing that I want to say is we don’t talk about this very much, but you can also reach us at info at Breakthrough Aria Podcast UHS-II. So if anyone just wants to email us, they can get us that way. But if you go over and sign up for the seven freedom activators, you will be put on our mailing list. And so that’s really good too. So everyone go over and check that out.

Sandy Mackay [00:05:21] Yeah. And you know, I guess we should mention that we should mention the email a little bit more. I mean, people can reach out to us if you have any recommendations for the show. We’ve had some really good recommendations through that. Just let us know. I mean, we’re always looking for what you guys want to hear. You know, you can reach out and not say anything but real estate. I mean, we’re here to help out. And of course, we want to recommend you to go rate and review us on iTunes. It’s another way that helps us bring you more valuable content. Leave us a five star rating if you enjoy the show. Let us know about it and let others know what we’re all votes and that really helps us grow. The show helps us reach more people and get people for the show, but our guests and so we really want to recommend go do that. Really appreciate everyone who has already done that. We’re forever grateful. Yeah.

Rob Break [00:06:04] And again, speaking of five star reviews I’ve got, we’ve got three more since last time we did a show, so I’m going to read those right now. Yeah, so five stars Glen Perry says, I love it. I’m a university student living in Victoria, B.C. I learned a ton from this podcast that is really shaping my views on real estate, and I’m sure it will serve me well in the future. Thank you for putting it together. You guys are great. First Wave Twenty One Twelve says a great variety of learning. I’ve been using this podcast to help sculpt my knowledge of the Canadian real estate investing industry and narrow down the strategies that are conducive to my goals. I am thoroughly impressed with the variety of information and resources these two guys have made available to an aspiring investor like myself and awesome podcast exclamation point and one more. This one is from Mississauga Dan, he says. Excellent source for Canadian real estate investors. This is an excellent podcast with a Canadian perspective and relevant knowledge of the Canadian market. I’ve gone through the entire line up and have multiple episodes saved, which I am constantly listening to for reference inspiring content that forces you to take action and get started in real estate. Investing just two points for improvement needs some better audio recording equipment, which is absolutely true, especially when we have people guess on phones. Sorry, that was my little interjection there, because I know we do have some pretty bad audio. At some points we will. We will clean that up for sure. We’re looking into it. Sometimes the guests are louder and clearer, so it makes it difficult to follow the whole conversation when you can’t quite hear the host speaking also needs more editing. For example, on the last episode, I heard some blowing their nose, I think. But other than that, great content more than one episode a month would be great. I understand you are both busy, so that was good.

Sandy Mackay [00:08:02] I guess some constructive criticism. That’s OK, too. We’ll take it.

Rob Break [00:08:05] You know what that was? I remember I called you Sandy after that came out and I said, I have no idea how I missed that. I’m blowing my nose on the show. So I believe you put up one where I’ve edited that.

Sandy Mackay [00:08:19] I think that

Rob Break [00:08:20] no one else gets to hear that. I was very I was very sick that week, but I still the show. OK, so everyone, thanks for all those reviews and keep them coming. Love to hear what you guys think. I actually have a tip of the day, Sandy. All right. And this is something that I’ve come across a couple of times here. I think it’s worth mentioning. So if you’re adding a second suite to a house and you’ve bought a house of baseboard heat and you’re planning on converting it to gas, we should consider doing all of the H-back before you apply for your permits to register and add the second unit because we’ve run into this a few times and once you’ve put in your application. Now they want each vac system for each unit. And that’s something where. Now you may be required to install two completely separate heating systems, but if you convert to gas first, put in your one furnace and have that up and running, then most likely you can use the quote unquote existing furnace or both units. And it’s a little bit annoying when I know there’s a couple of clients that I’ve been working with, and they run right in and get their applications started, and then they want to switch over from baseboard to gas and they find out, No, now you’ve got to do

John Kim [00:09:35] a lot of extras.

Rob Break [00:09:36] Yeah, yeah, a lot of extras and two furnaces and two systems. This is something to look into, something to think about. I don’t know. Have you ever run into that problem, John?

John Kim [00:09:45] No. But you know, I’ve got a property that that has electric bass parts, and I’ve been looking at the solar panels, actually. And one of my tenants is actually as he installs commercial solar panels, and I had a conversation with him. He told me about 25000 to 30000 of investment. You can make up your cost in about six years, and these solar panels actually last about 20 years. So, you know, after six years, you’re in the money now.

Rob Break [00:10:15] Do those solar panels actually generate the power for your house?

John Kim [00:10:20] No, no, no. It’s a separate unit, so they lacked electricity that you consume from the from the from plug, you pay your normal bill as normal. The solar panel generates electricity and you actually put it into the grid and you get paid by the utility company. So there are two separate things. You know, you start the it’s nothing’s changed in terms of utilities for your property. It’s just your property is now generating extra income through the solar panels.

Rob Break [00:10:51] So it’d be a lot more interested in doing that and not say it’s a bad idea. I haven’t done my research on it, but I’d be a lot more interested in doing it if I could power my own house with the solar panels.

John Kim [00:11:01] You know, it’s essentially it’s the same thing.

Rob Break [00:11:04] Well, I guess I don’t know. Well, I mean, it sounds interesting. It’s something to look into. I haven’t looked into it very much, but I mean, if you can recoup those kind of costs, that sounds like it’s well worth it.

John Kim [00:11:15] Well, you know, just a last comment on the solar panels. I know there is some kind of I program these companies have where they will put up the free solar panels up on your roof and offer you three $3000 across 20 years. And after 20 years, that solar panel become jurors. I looked into that, and that’s the kind of silly, because after these solar panels are manufactured for a life of 20 years. So basically, they give you $3000, and after 20 years, when it becomes yours, it’s virtually useless. Right? If you have electric baseboard properties, so having solar panels installed on your property and expands into the twenty five thousand dollars as an expense, then actually, I think it actually appreciates your property because, you know, when someone an investor or homeowner comes into the property wanting to buy it, you know, you’ve got a clipping up there that’s going to generate income for you.

Rob Break [00:12:09] Hmm. Makes sense. Yeah. Well, John, why don’t we get into your interview then? Sounds like we’re almost doing that already? Sure. Tonight’s guest is John Kim. Like I said before, he went from zero properties about 14 months ago to now having roughly eleven point eleven properties. So that’s a very impressive stunt. I’m going to call that a stunt. So a little bit about John. He graduated from university with the commerce and economics degree. He is been married for 21 years. So if two kids, 15 and 17, you have a boy and a girl, right? That’s correct. Which is which?

John Kim [00:12:49] 15 is the girl and 17 is my son.

Rob Break [00:12:53] OK. It says here you somehow ended up in it. So you’re not really sure exactly how that happened.

John Kim [00:12:58] No, because you know, I graduated from the University of Toronto. Yeah, I was going to pursue my career as a chartered accountant. But it just it wasn’t for me. You know, I saw the personality of an accountant. Then my personality is more, you know, I am a people person. You know, not to say that when you get into it, it’s the people. It just that’s where it ended up. It was weird how it unfolded, but I’ve been like that ever since.

Rob Break [00:13:27] Yeah. So now you’ve been doing it for 22 years, and it sounds like you enjoy that as well.

John Kim [00:13:32] No, I love my job. I can’t believe they pay me for what I do. And same thing with this real estate, you know, I don’t I really don’t do it for money, but it’s a great source of income, that’s for sure.

Rob Break [00:13:42] So, yeah, and like you mentioned, you have a good career and you’re doing well financially. So why did you decide to get into real estate investing?

John Kim [00:13:50] Well, at certain points in our lives, in our marriage and all that, we’ve lost our jobs a couple of times. You know, I don’t like living in fear of losing your job and you’re also in this rat race. So I enjoy my job today, but I know I didn’t always enjoy my job. Every day you wake up, you got to get the kids ready to go to school, go to work, come back, you’re exhausted. I want to try to get out of that. And there’s many more reasons why you would want to create some kind of a passive income. I mean, my wife and I, we threw the idea of getting out into real estate back in 2013 14. But, you know, because of because we’re part of this rat race, we never really pursued it. We knew it was a good idea, you know, to generating passive income and adding this sense of security to our finance and also securing your retirement. And you know, the my kids are getting a little bit older and I got a I got to serve up the money for their university, which is going to cost about twenty five thousand dollars a year. So, you know, real estate was a form of generating great passive income

Rob Break [00:14:57] and they each need cars and that kind of thing.

John Kim [00:14:59] Oh yeah, that’s right.

Sandy Mackay [00:15:01] Drinking money.

John Kim [00:15:04] Well, especially with this, especially with the daughter, right? They love Shoppers Drug Mart. They love to love shopping. You got to love that extra money.

Rob Break [00:15:13] Hmm. You mentioned that you guys talked about it a few years ago, but didn’t get into it. So at that point, did you start doing research on real estate investing or did you just jump right in headfirst? Like, how did it all come about?

John Kim [00:15:29] Well, I think back in, I think early part of 2014 or latter part of 2013, my life, my wife actually lost her job and having a conversation pretty weird to her losing her job. We thought it was a perfect opportunity to get into real estate. My wife, at the extra time she started doing Google searches about investment properties and we landed on this course called Rich. That is, I guess, the early part of 2014. We attended the there a free seminar and got lured into pointing out 500 bucks for just for a bigger pay, basically. And we ended up actually paying additional $20000 for courses offered by ripstop. But yeah, yeah. But you know what? Honestly speaking, I have absolutely no regrets whatsoever, because if I didn’t pony up that twenty thousand bucks, I wouldn’t be where I am. So I actually think which that I learned everything from rich that I learned a little bit. I didn’t even know what they were talking about. So it really, you know that it helped me, though it didn’t really help me in terms of knowledge. It’s stuff that you could pick up in a book.

Rob Break [00:16:41] So you’re talking about it more is like an accountability thing since you’ve spent that money.

John Kim [00:16:46] Absolutely. And, you know, basically with real estate, it’s both feet in. You know, you could talk about it all you want. You’re not going to generate more passive income. But just by talked about it, you’ve got to basically say, OK, I’m good, I want to do this and get it to fit into to real estate investing. Mm hmm. And, you know, with spending twenty thousand dollars, I felt like if I didn’t do anything, I thought that that was the driving force, really?

Rob Break [00:17:10] Yeah, I guess it doesn’t. It probably wouldn’t feel all that great. You know, Wife loses her job and then you go out and spend 20 grand. Don’t really make any use of it.

John Kim [00:17:19] Yeah.

Sandy Mackay [00:17:20] John, you walk us through a little bit about your first deal.

John Kim [00:17:23] Well, my first deal was an article read to own investment vehicles. That property, which was the first property in March of 2015. It’s great cash flow, but it didn’t really make me feel like an investor. It wasn’t all that exciting, but you know, they were very happy because it more than paid for the rich dad. Poor dad, of course. However, our real first property I closed in May of 2015. After purchasing that property, I felt like, OK, this is good. You know, this is an investment property. It’s a property that I could actually call my own. They are rent to own if that deal goes from start to finish. You know, the tenants will take over that property and it’s not really your property. There’s no sense of ownership there, but those are my first property. It was it was pretty scary, actually, because I wasn’t I didn’t know what I was doing. I was basically trying to find a straight line in a circle, didn’t know who to talk to, what to do. So my wife and I, we went out to meet other investors, or we were in search for other investors attending meetup groups and talking to whoever we could find.

Rob Break [00:18:37] So what attracted you to a rent to own in the first place that as your first investment?

John Kim [00:18:43] I think it’s, you know, rich dad, poor dad. They had this course called lease options. Oh, and that was the most familiar thing. And you know, they talked about rent to own, and that’s probably why we were leaning more towards rent to all. But, you know, after they were doing the first deal, I turned to my wife and I said, That’s really feel like we’re investors. Does that? Really, a property that we own, it’s just manage it right to all is a great investment strategy for cash flow. If you do, I’ll rent to own. I think you can generate anywhere between 600 to a thousand dollars per month on cash flow. And at the end of three years, you’ve got 50 to 70 thousand lumps sum cash, which is great.

Sandy Mackay [00:19:27] Did you purchase the property first or did you find the tenant first for that red zone?

John Kim [00:19:32] No, we found the tenant first, and then there’s a different way different strategies of getting rent to own. I like the idea of finding the tenant, having the tenant find the property on their own instead of forcing a tenant into a property.

Rob Break [00:19:46] Yeah, yeah, we hear that a lot. I would say if you were stuck with a property and didn’t exactly know what to do with it or you wanted to start a rental own with one of your own properties, that might be different, but there’s a lot more things that need to fall into place if you’re going out and you’re buying the property first.

John Kim [00:20:02] But I think personally, I like having rent to all in my portfolio. I got to rent to own and I plan on having a couple more rent to own. It just it’s a great source of cashflow. And if I have one per year and you have one rent to own expiring, at least you have that lump sum of cash that comes out every year.

Sandy Mackay [00:20:22] So what are some challenges you faced starting out, John, and how did you overcome them?

John Kim [00:20:26] Oh, you know, I think going back to my first property, it’s the scariest thing or the most. The biggest challenge for me was knowing end to end process, what to do, when and how, who to hire, who to go to and where to go to for your questions. It just a feeling of loneliness until you start joining like investor groups. You know, I get a lot of reading about the legalization process, visiting the municipality website, the landlord tenant board websites, talking to other investors. Like I said, the trying to get out to some of their meetup groups, going on tours and slowly forming a team around you and, you know, mortgage brokers, lawyers, real estate agents, etc. But it’s, you know, when you get your first property, I can relate to people that are a little apprehensive about or unsure about what to do with their first property because I was there not so long ago, it was just what is it? Eight months ago, I had my first property and I knew what I was, I was in a daze.

Rob Break [00:21:35] So wait a minute. So between the first deal and the second deal was six months

John Kim [00:21:40] that the first, the first real property closed in May of 2014 and in 2015, which was about a year ago,

Sandy Mackay [00:21:53] I

John Kim [00:21:53] sold the next property that I purchased was closed in November of 2015. So after that, it was just I was on a rampage

Sandy Mackay [00:22:03] bitten by a machine. Yeah.

John Kim [00:22:05] You know, from there, I bought a property in December, January, February, nothing in March. Three properties in April and one property in May.

Sandy Mackay [00:22:16] Wow. John, are you generally someone who like takes action really quickly like that? Or is that kind of a sort of something that you would typically like throw your life? Or is that something changed?

John Kim [00:22:26] No, you don’t. Honestly speaking, I wasn’t really even interested in real estate. My wife mentioned it and I said, Sure, you know, I was happy with my job and, you know, I can’t believe they paid me for what it what I did at work. But once my wife got me started, she turned my wheel. That was it. You know, it was a terrible, terrible one. I just I loved it so much. And you know, I loved every aspect the good and the bad about real estate. You know, some people are people, people, but I enjoy every aspect from the start of like searching for the property, purchasing. It’s a thrill working with the tenants, dealing with the tenant issues. You know, at the end of the day, I realized the part that I enjoy the most is targeting the properties and seeing the smiles on the smiling faces of young families going into the property with this model, whether they’re young or not, but that they’re excited about when they’re selected as the tenant. And that’s gratifying.

Rob Break [00:23:24] He’s very enthusiastic.

Sandy Mackay [00:23:26] I know. Yeah, yeah, I love it.

John Kim [00:23:29] No, no. I’d love to know what they’ll tell you. Honestly, Bill 140. It’s just, you know, it’s set out there to provide affordable housing for people. And really, that’s what it is. I love the fact that you’re making money helping other people.

Rob Break [00:23:45] Mm hmm. What is Bill 140 John?

John Kim [00:23:48] Well, Bill 140 is about I don’t know the details. I knew when I was studying it, but it’s just a law that came out back in 2014, was it that basically said the province basically said to me, Valerie, you have to provide a certain number of, I guess, affordable housing because, you know, there’s is growing. There’s not enough houses

Rob Break [00:24:11] that allowed us all of Ontario, but each municipality had unlimited time to adopt this bill anyways. Some of them still haven’t done it, but well,

John Kim [00:24:19] their time is coming because I mean, I believe the I think they have to adhere to that bill 140 pretty soon. I know there are certainly some municipalities that are against the bill, but really they don’t have a choice. That’s why this is a great time to become an investor. Invest in properties.

Rob Break [00:24:37] Yeah. And what it does essentially is allow you to add a second suite into a single family home. Right, right. And that’s something you really like to do, isn’t it?

John Kim [00:24:46] Oh, I enjoy it. You know what I like? I said in the beginning it was all about creating passive income, but now it’s not about passive income. It just I. I never realized how exciting it is. In fact, I feel like my job is getting in the way of this real estate. And, you know, I’d rather be doing this full time than getting involved with my own, my daily, I guess. Hopefully, they’re not listening to them. But you know, I enjoy this Wednesday. They lot more than my work and I love my work.

Rob Break [00:25:18] What types of properties do invest in? Like, what things are you looking for when you’re out digging for new properties?

John Kim [00:25:25] What I’m looking for new properties. I’m looking for properties to generate income. I know I never, I never. I didn’t. I said that money is not the important thing for me, but anytime anyone buys a property, it should cash flow because cash is king. The reason I say cash is king is because the fluctuations in markets the housing market could go up, it could go down. But if your cash flow and it’s generating cash really the flow, you’re not solely dependent on the fluctuation of the market. So I mean, the types of properties that I look for is, you know, it could be from turnkey to multi-unit properties. I was still looking for rent to own deals, I think, and the last properties, I’m thinking about flipping it off. So Flex single family home, large, I’ll even look for single family homes, not even to convert it to multi units. But the thing is, at the end of the day, the numbers have to work. It has to cash flow if you’re buying it, if you’re buying a property and it doesn’t cash flow, I don’t care whether it’s the multi-unit, it’s not worth purchasing that property. Now there’s a lot of people that weigh in on mortgage pay down, though the three areas that I look for is cash flow, mortgage pay down and appreciation. And a lot of people weigh in on just two, which is the mortgage pay down and appreciation. And they neglect cash flow, but cash that has the cash flow. I know in different markets, especially in Toronto, it’s hard to cash flow in Toronto, but the appreciation this strong.

Rob Break [00:26:59] It’s one thing to say, you know, Mortgage paid out an appreciation that’s great. Right? And if then if the property carries itself, then that’s one way to look at an investment. But we both know we’ve been here for a while and saying it’s the same out in Hamilton that you can buy properties that are still cash flowing and cash flowing very well. So if you know those are out there, that’s obviously the kind of thing that you should be looking for. You can’t just go and buy whatever property somebody throws in front of you, especially when that’s part of the excitement. John, you get to run the numbers and go, Wow, look at this place, actually. You know, I’m going to make three or four hundred dollars every month if I buy this one or this one over here. You know, it’ll carry itself. And it may do well with mortgage paid out in appreciation, but why not look over here where you got cash flow as well?

John Kim [00:27:48] Yeah, absolutely. You know, I’m partial to the esthetics of the property. It’s got to be sturdy. It’s got to be easy. You’re not going to buy a property that’s one down. But esthetically, I really don’t care. I mean, I’ve got most of my properties are a nice one. I’m getting quite quaint with Joshua. And when I see a property, I already got numbers in my head. I know roughly how much, how much rent I can generate with that property. And I plug in the plug in the numbers, and if it’s cash flowing, I don’t care how it looks. That’s a property for me because it’s got a cash flow. There was this one time I was looking into a property over in London because my son was going to go to Western University and the property over there really cheap. The only problem with that is, you know, cash flow as well. But the appreciation is not very strong. You’re going to have more mortgage was paid out again, you’re going to have to edit the three important components. So, you know, when you’re purchasing one, I’m purchasing property. When I’m looking at property, I don’t get emotional. I don’t care. I really don’t care how much the price is. What’s inside it, just a matter of what I think is going to be able to generate the income that is going to be able to generate. Once you don’t need it, you don’t need to go out there and buy a calculator. It’s all the resources are out there on the internet in terms of like how calculating the land transfer tax, the legal fees, the typical legal fees is going to be $500 to $2000. You got your search fees, plug in your numbers, you get your profit tax, you get your insurance and a mortgage. Mortgage calculators are all out there. Plug it in, and if the numbers work, that’s a property for you. So now the thing is because the market is so hot these days, you have to have a ceiling. You can’t just say, Well, you know, don’t get emotional till it’s five more thousand dollars. I can get this property. Now you have a ceiling. And if it goes past that, they say there’s too many properties out there to be, you know, spinning wheels on one property or killing yourself on one property.

Rob Break [00:29:44] Yeah, if all of a sudden the purchase price goes up because we are seeing a lot of bidding wars and stuff like that out here, and if the property prices go up, you need to know where it doesn’t make sense anymore. Absolutely.

John Kim [00:29:54] And there are properties out there. There’s people will be snoozing, just waiting for people to smooth or running out of money. One of the other

Rob Break [00:30:02] I would say this to someone the other day is just that if all of us investors would band together and stop this madness of the overbuilding that’s going on out here, where properties are going for 40 or 50 or $60000 over asking price, I feel like it’s I feel like sure, it’s the homeowners that are partly responsible, but also investors are still buying properties and granted. Well, I would imagine from some of the purchase prices that I’ve seen, they’re banking solely on appreciation when they’re when whoever’s getting these places, getting them. So if it is an investor, then that’s got to be what they’re doing. But I think we should all band together and just say, You know what? Nobody’s allowed to like twenty thousand over. That’s the limit. Anyone breaks the rules. I don’t know. We repossess the house or something like that. It belongs to our conglomerate now.

John Kim [00:30:55] Yeah, but it’s hard enough that you know what were. You can’t compete with homeowners because homeowners are willing to pay a higher price than invest it. But when you have investors competing against each other, it just drives up the price of, you know, when you purchase a house, you’ve got to be able to make that, you know, you purchase a house and you’ve got to make money on the buy. You just have to win all the properties that I purchased. I’m making money as I close is. And if people are driving at the price you’re killing. The most important part of that deal is the appreciation that the market’s going to go down right. You can’t purchase a house with two years of appreciation built in. And you know, at the end of the day, I feel that they’re going to lose their money. Yeah.

Rob Break [00:31:46] Well, I mean, they might not. Again, it all depends. It’s like there’s no point in trying to time the market. But right now, the way I see it is the prices are still going up. So and people put this question to me, all the. Time the market’s still going up, and they say, yeah, it’s going to go down like inevitably it’s got to go down, and I agree with that statement too. But when is it? Is it after we appreciate another 20 percent over the next, I don’t know, two years. And then it goes and then it drops down 10 or even 15 percent, or even if it’s the whole 20 percent. You know what I mean? So right. And long term, if you wait out that again, I don’t care if someone tells me my house is worth $200000 or $1. As long as it’s so cash flowing, I’ll just ride the wave and wait for it to go back up. If I’m ever planning on selling, which, you know, that’s not my gauge.

John Kim [00:32:39] You also you also have to look into some urban planning. I mean, I know Oshawa is a hot, hot market municipality right now. I think it’s one of the reason is they’ve got they’ve got the four, four or seven happening. They’ve got the Go station, the new Go station, they’ve got the airport, the potential airport and health services OPG. All these things are going to generate income and employment. And it’s that’s those are the strong reasons why I think Oshawa is doing so well and it’s got to keep on going. I know what goes up must come down. Sure. But I don’t think the town is anywhere near.

Rob Break [00:33:21] I love this kind of real conversation. How many places have you done where you’ve actually taken a single family home and turn it into legal two units?

John Kim [00:33:31] I’m working on one now, which is a single family home that we can give it to units. I’ve got a couple more that I need to close, that I’ll be doing a legal two units, so I, you know the ones that I will be doing before.

Rob Break [00:33:44] OK. OK. And so now five

John Kim [00:33:46] or something like that of all

Rob Break [00:33:48] those kind of things require a lot of renovations, though. Are you in there doing the work yourself?

John Kim [00:33:53] Well, for the big jobs, I think I will get the contractors. I’m trying to put a lot of sweat equity because I also want to learn. I enjoy it. I enjoy getting dirty. I enjoy doing every aspect of our investment properties. It’s just there’s only so many things that I am able to do. So I mean, and there’s certain things regards whether you can do it or not, you know, you’re talking about legal to you. That’s it. You don’t want to mess around with the city. You’ve got to get to a building permit, especially electrician. You have to get a master electrician that can pull permits. You know, when you have an investment property, you as a all of that property can’t pull the electrical permits. You have to get a master electrician to pull the permits to conduct the work. So I mean, I try to get involved as much as I can because first of all, I enjoy it and save some money.

Rob Break [00:34:41] Yeah, I guess. I guess if it’s me, I don’t save any money.

Sandy Mackay [00:34:45] I mean, it really is a great help.

John Kim [00:34:48] You know what? You know what? You’re absolutely right, though there’s you don’t you don’t save a lot of money. But the fact that I enjoy doing it, it’s no, it’s not really. It’s just taking me a little bit of money. Oh, sure it is. I also want to learn. I don’t want to just buy properties and leave it at that. I just want to go a little bit further.

Sandy Mackay [00:35:07] I think it does help going through at least one or two renovations being more involved, too. Anyways, I think Rob would just because you can you can learn, you can understand how the different challenges that a contractor will go through when you do hire them out. And I think you learn a lot doing it once or twice. Oh yeah, for sure.

Rob Break [00:35:23] I would recommend. Even if you’re not doing the work, try and be on site as much as you can. The contractor might get sick of you looking over their shoulder, but definitely something that you want to do is get in there and learn. Like John said,

John Kim [00:35:36] no, it’s just even the, you know, the initial legalization process getting the architect then going through, you know, having, you know, working closely with the architect who does the job, does the draft, you know, the before and after he takes that to the city. He schedules inspection and gets permits. The whole process, like I said from the beginning, what was overwhelming was the end to end process, and I think every investors should actually go through each and every process at least once. So he understands moving forward what needs to be done. You don’t have to do it every single time.

Rob Break [00:36:16] So how do you manage to get financing for all these properties? This is going to be one that people are really interested in, because that’s a pretty amazing accomplishment with 11 properties and basically the past year.

John Kim [00:36:31] Well, what I do is I largely I work. I started off with hillock, right? And you know, with the helix, I was able to, you know, are able to get mortgages. But, you know, I guess we

Rob Break [00:36:45] should actually break that down to a little bit when you say hillock. What are you talking about?

John Kim [00:36:49] I’m talking about line of credit against your property. If you if you have any lock, that’s there’s definitely different ways of finding ways of purchasing properties. The way I started was because I had a fair amount of line of credit. I was able to leverage that line of credit against the equity on my home. Right. So purchasing a property, but it’s not only about purchasing properties you can’t. There’s you can. When people buy homes, they can go to a mortgage broker. But not every mortgage brokers are the same. You can go to the bank, say, Listen, I’m interested in purchasing this property, an investment property, and they’ll give you the first mortgage. But if they don’t understand what they’re doing, they’re going to stop. You’re pretty short, you know, short of three, three, four, five and not even three or four properties. So you have to find a mortgage broker that understands investing. The other methods I use in getting properties is, you know, eventually your line of credit is going to be, you’re going to run out. And what you can do is get involved in joint venture to diversify. So you’re basically it’s almost like in stocks. You don’t you don’t put all your eggs in one basket, right? If you if you diversified, you can buy a little bit more. And you can get more properties at one property goes down or something happens. That property, you’re not losing everything. Another way is, you know, once you buy properties, you can do refinancing and trying to pull the equity that’s built that you were able to build. In that property, I’d like to say, Alala, a lot of this, but I’ve only been in this for 14 months and surprisingly even so, I’ve built up quite a bit of equity on my properties already. But I’m thinking like for two or three years, even from now, the amount of equity that’s going to be generating those in those properties, you refinance them. And if you don’t want to refinance them, you don’t go to the bank and get a new lock on those things and then it’ll give you more cash.

Rob Break [00:38:49] And you know what’s funny when you were talking about joint venture partners, it wasn’t that long ago to myself when someone would mention a joint venture partner. You just kind of think, man like that seems unreal. That doesn’t really even make sense. Who would want to invest their money with me? And then you quickly realize that some of them with a little bit of education, a little bit of knowledge behind them, someone that’s went out there and done those things. That’s another good reason to get out there and know what you’re talking about. Not just have a general contractor, take care of everything, but learn the processes and have some knowledge in that way. When you’re talking to joint venture partners about potentially teaming up, you’ve got something behind you. You know, something to show them,

John Kim [00:39:31] you know, joint venturing with another person on a property. It’s more than it’s more than just partnering up on a property. This is probably why this, you know, this real estate is so exciting for me is that every day I just, you know, rarely get to go through a day without talking to one of my joy partners. And it’s just a conversation. There’s always a conversation. I mean, if you can do with your wife, your partner, which is good, but there’s only so much you’re going to talk about without getting into an argument, right? That’s why I’ve got a joint venture partner, and I make it clear I make it pretty clear to my current venture partners is it’s all about honesty and transparency. And if you can’t trust and respect each other, it’s just going to go south. So but it’s getting into a joint venture or partnership with somebody. It’s exciting and it should be exciting, but you also have to be careful because you might be partnering up with the wrong person.

Rob Break [00:40:32] Well, said

Sandy Mackay [00:40:33] John, what motivates you? What gives you inspiration and drive

John Kim [00:40:39] apart from making money? I literally enjoy every aspect of investing in properties. It’s the thrill of looking for properties are putting in a purchase offer, accepting a deal renovation process, property management deal with tenants, the county working with numbers, absolutely everything. That’s what that’s what drives me. And, you know, helping people doing 10 interviews. I love everything.

Rob Break [00:41:06] So it’s actually the deal itself that motivates you.

John Kim [00:41:11] Yeah. You know, once it’s all done, it’s almost like you want more. It’s almost like a drug. You know, once it’s gone, you want to do another one. And that’s how I got so many properties. It’s just so celebrated. It’s great and you’re making money,

Rob Break [00:41:27] so you need to offer this drug to a lot of my clients. Yeah.

John Kim [00:41:30] And you know, if you if you focus just on the money, I don’t know how it works for other people. For me, I don’t I’ve never pulled a single penny out of this investment and I don’t even know how much money’s in there. All I know is I see the numbers going up, so I don’t. And it’s what the thing is. I don’t. I don’t focus on that. I focus on all the more I focus on my next conversation with my joint partner. When I focus my, you know, I make a lot of meetings with my team, you know, and when I want to say the team and talk about the lawyer, mortgage brokers, my JV partners, you know, everybody, it’s exciting. It’s yours, you’re making your own job. It’s how great is it working for yourself? No one telling you what to do and how much to make. It’s all up to you.

Rob Break [00:42:13] Yeah, it is wonderful to not have somebody say this is how much you’re worth an hour, and that’s it.

Sandy Mackay [00:42:19] I love hearing that actually, by the way, too, because it’s a you can sense the passion and it’s tough to just be motivated by money. I don’t think anyone really can be truly motivated only by money. That’s got to be something else to it. So that was a great answer. I love to hear that.

John Kim [00:42:35] Yeah, you know, just one more comment. And I’ve said this to my wife and everyone else. You know, if I didn’t worry about pay expenses, I’d actually do this for free. This is how old this is. How exciting this is, though. It’s how you make it exciting for yourself. It’s all up to you. If you want to get into real estate investing, you know what it’s like to feed in get involved and you’re going to realize how exciting this is when, you know, meeting people. I don’t, you know, I go out on some of these property, I guess invest in property tours, not to purchase houses, just to meet people and engage in conversation of what they’re doing. Because there is, you know, there’s so much to learn. I’ve only been in this 14 months and I’ve got a lot more to learn. But with whatever I learned, I’m able to share that. And you know what, being able to share that with other people, it’s exciting.

Rob Break [00:43:25] I’m going to put in a crowd cheer right there,

John Kim [00:43:30] so don’t you have like a crowd share button? No, I just

Rob Break [00:43:33] think I need one because that would be in the spot to use it right there.

John Kim [00:43:38] I love baiting people and anyone that expresses an interest in real estate investing. And I was just out this this weekend, I guess, for Mother’s Day and I was talking to my brother in law, you know, and my sister in law and you know about real estate investing that you guys, you guys can do this. It’s really it’s really easy and it’s not hard. If I can do it, you can do it and I can, you know, all you need is some good mentor that has your interest and anyone can do this. It’s so easy.

Rob Break [00:44:11] Very good advice. I love that. See, that’s the kind of motivation that we need, right?

Sandy Mackay [00:44:16] I was it’s it is. It’s I always say it’s simple. It’s not necessarily easy. You have to put in some work, right? Right. I definitely simple, though

John Kim [00:44:25] I think the first two months is difficult. Yeah. And you know what, if it took me 14 months to get 11 properties, you know, and I’m not the smartest guy and you don’t have to be smart in this thing at all. You just have to say, Hey, you know, this makes money, and let’s go buy it if that’s what it is. Basically, I mean, mind you, I think I have all my eggs in one basket. I’ve invested mostly in Oshawa. That’s because I’m more familiar with Oshawa. And wherever you invest, you have to be familiar with the municipality or the area. You know, you can talk to the real estate agent saying, Hey, what’s the rent like? What’s the what’s the property value like? You know, you have to get comps all over the place, but once you get your feet wet, it’s, you know, you can move around quite a bit.

Rob Break [00:45:09] So is that your plan, then diversify move out to some different areas, type of thing?

John Kim [00:45:13] Yeah. But the thing is, I still love Oshawa. I saw his awesome. But you know, as good as it is, you have to spread your legs around.

Rob Break [00:45:21] You know, what’s funny is, I don’t know if you guys know this. But on the cover of Canadian Real Estate Wealth magazine this month, there’s actually a quote on the front it says why Oshawa should be your next investment location.

John Kim [00:45:32] Yeah, actually, I saw that that’s actually a guy got it right here, which is they made to an issue. Yeah. And yeah, it’s and, you know, in there it will tell you why Oshawa and it’s one of the things, it’s OPG. They’re increasing the workforce. There is the what’s got the airport that they’re planning on building there, that’s going to create traffic, you know, more employment. You got the gold station, which is going to again help people, you know, work downtown. You’ve got the four or seven for ease of commute. Like there’s a lot of things coming and ended health services are increasing here, which is generating more jobs. So if there’s more jobs, there’s going to be more people living here. It’s going to just, you know, people are going to need to live somewhere. And I know there is some new development happening up on the east north of Oshawa of, you know, you know, for big builders building so many properties.

Rob Break [00:46:28] John is also a paid spokesperson for the City of Oshawa, right?

Sandy Mackay [00:46:34] Where’s your business going on in the future? Do you look out in the future and have any plans for it? Or what are your thoughts where it’s going?

John Kim [00:46:42] Yeah. So I mean, I plan on moving forward and I want to keep on buying more properties and I don’t care how I do it, you know, I’ll going to find means eventually I would run out of my line of credit, but that’s not going to stop me. I’m going to look for other investors. I mean, I plan on getting about, you know, a few more articles and without my money, and I’ll just be a JV with someone else investing into it. But eventually, you know, with all these properties, I think it’s going to get it to it’s basically a doctor process, I think starting up a property management company over the next couple of years and start that up. And, you know, every time I get a little bit more money refinance, I get more money and buy more properties. Keep on going.

Rob Break [00:47:23] Yeah, because eventually the thought of managing all these properties yourself isn’t going to be all that thrilling. You may like it now, but when we’re when you do, I mean, jeez, even with what you got now, what? Five duplexes and five duplexes?

John Kim [00:47:42] No, nothing now. While five two six two seven duplex. I don’t know. I think seven, I think seven and a three, I have to convert. And then two are just Articles. But yeah, but I love doing this. I love you know what? I wish I told my wife, you know, I live in Richmond Hill, but I told my wife, I need to get a place so remarkable because I can’t keep on commuting. It’s killing me and I’m always there. I want to be there.

Rob Break [00:48:11] Yeah, so but at the same time, I guess there is a point where no matter how much you love it, there’s still a little bit too much to handle. So that property management company does seem like a logical step in the right direction. And for you, too,

John Kim [00:48:26] yeah, for sure. And you know what, you could make money with that too. You know, you offer your property management services to other investors that have, you know, just a few properties and they’re quite remote. And, you know, whatever, whatever’s going to generate more cash.

Sandy Mackay [00:48:41] I what advice do you have for someone just getting started in real estate?

John Kim [00:48:46] Well, this is the exciting part. You know, I don’t think anyone should underestimate themselves. They really they really they really shouldn’t because they can do it. I’ve done it. If I can do it, believe me, you can do it too. And, you know, like I said, when I started, I started with ground zero of knowing nothing. And even though even though I’ve been doing it, even though I got 11 properties on, I still don’t know a lot. But with whatever I know today, it is working for me and I am positive, cash flowing on every single one of my properties. Now all you need to do is you need to get out there and join meet up groups to meet up investor groups and, you know, surround yourself around investors and ask tons of questions and look for, get out there, look for look at properties and do whatever you need to do to get out there to get the time of that time with these investors. Just talk to anybody right to talk to any investors and try to form a relationship with the investors and pick their brain. But the best thing is look for, you know, when you find an investor, maybe they could be a mentor for you and you know, they’ll help you along the way. It just maybe you might have to take a lot at dinner or lunch or something like that. But you know what? It’s well worth it.

Rob Break [00:50:07] This has been an amazing show, John, and I’m super happy that you came on. Thank you. Thank you. I really appreciate you taking this time out. It’s been awesome. I love it. I feel like this is extremely motivating episode. I can’t wait to get it out there. I know everyone else is going to love it, too. Now, how can people get in touch with you?

John Kim [00:50:25] Well, they can email me, and I’d be more than happy to help out where I can. You know, like I said, I don’t know a lot, but with whatever I know should go, you know, it can help people get started at least, right? But they can reach me on my email at John Underscore Kim at Rogers dot com.

Sandy Mackay [00:50:45] And that’s J. That’s J. O H.

John Kim [00:50:47] That’s J or H and underscore Kate I am at Rogers dot com.

Rob Break [00:50:52] You know, you keep saying that you don’t know a lot, but you actually know, you know, you’re selling yourself short. You’ve learned a lot in a short time.

John Kim [00:51:00] Oh, no. I mean, you know what? I know what? I know what I know, and it’s serving me, serving me well. When we’re looking for a property, especially when we enter into a property, somebody presents a property to me and I go into the property. What are some of the things I like to share with people is that with some of the things that I look for is, you know, I look at the foundation of the property, though the walls, the grading, you know, you should be looking at the age of the roof, you know, the driveway width right there. You’re looking for water damage, separate pathways for the two units, the height, the ceiling into the base. And you know what? This is one thing I want to I like to share on this podcast is I know that most investors know that the ceiling height needs to be six feet seven, right?

Rob Break [00:51:45] Well, so you’re talking about in a basement unit, there’s a certain height requirement for fire code.

John Kim [00:51:52] Right for firefighters, say, as

Sandy Mackay [00:51:54] Ontario wide generally right.

John Kim [00:51:56] But some of the things that people don’t know is, you know, sometimes they jump bulkheads right,

Rob Break [00:52:01] like a like a building coming down the center of the.

John Kim [00:52:04] Yeah. And it’s below. It’s below the six seven requirement. But you know, you can actually use that beam as a wall. And if you if you do cut out for a door, the height only needs to be six feet to a.

Rob Break [00:52:19] You know what? That’s good advice. I recommend that everyone just check it out. Validate. Yeah, yeah, sure. And I know I’ve heard that too, but I’ve yet to validate that myself, but that’s something that’s a game changer. It really is. If I mean, for what I’m doing, that’s definitely a game changer, right?

John Kim [00:52:38] I mean, yeah, actually, you should get it validated. And you know, I heard that when the I guess the representative from City of Oshawa was at a at a meet up group, and he had mentioned that. And I said, like exactly what you said, I said, Wow, that’s a real huge game changer because it makes a lot of impossibility possible.

Rob Break [00:52:55] Yeah. And that is exciting if somebody who can verify that I’m going to look into that too, actually, because really, how many properties do we look at and see that, you know, the potential is just not there without going into the whole raising the beam or anything like that, which we can all do. But if you can avoid those extra costs, then great. Right, John? Amazing. Thanks again.

Sandy Mackay [00:53:23] I love the. The main thing I’m taking away is just like, it’s really not that difficult, is this business right? And if you can do this in in 11 months, is that right, 12 months while you know, for 10? I think, you know, people just kind of take more action. That’s really what it comes down to, right? You know, you got to be willing to have some faith and just go for it. And anyone sitting on the fence about getting involved in real estate, I mean, you’re pretty great proof here that that you just got to jump in full on and just go for it. You got it. You can screw up a lot of things. It’s hard to. It’s really is pretty hard to lose in real estate as long as you get your fundamentals down, and that’s pretty much it.

John Kim [00:54:04] And like I said, you know what this is? This was not all that. None of this was premeditated. I mean, my wife and I, we talk about real estate and I wasn’t really even interested in real estate until I got into it. And I realized, Wow, this is awesome. This is so fun. I could. I could do this as a retirement and make tons of money.

Sandy Mackay [00:54:21] Yeah, exactly.

Rob Break [00:54:23] So what are you going to quit your job then?

John Kim [00:54:24] You know, this is the funniest thing is, you know, I did this and I actually told my wife, I said, You know what? Couple more properties. You could quit your job, and she doesn’t want to say, OK, well, you know what? That’s good, because as far as, like we said, that’s more money for me, and I don’t have to worry about spending. But you know what? It’s added, security is great. If we if one of us either loses our jobs, you know, I’m not going to, I’m not going to fight it at all. In fact, I might not even go back to my job.

Rob Break [00:54:49] Thank you, John.

John Kim [00:54:51] Thank you for having me, guys.

Rob Break [00:54:52] Yeah, thanks. All right. Again, before we let everybody go, if anyone is looking for an awesome investor agent in the hot Oshawa area, you can reach me at two eight nine two seven zero four six four throwing out the phone number first time. All right, Sandy, you got a you got a contract.

Sandy Mackay [00:55:11] Don’t call me for offshore stuff. Hamilton No. I’ll head up Hamilton all day long for one six five six seven three eight six. Yeah. If you want to reach out and talk about Hamilton investment opportunities, I’d love to help out.

Rob Break [00:55:26] And if you didn’t catch those phone numbers, you can just reach us. That info at Breakthrough Aria podcast Dot S.A. the same way as everyone’s been doing for the last few years. So thanks again, everybody for listening and we will see you next time. Thank you. Now. John, that was absolutely amazing.

John Kim [00:56:03] Like I told

Rob Break [00:56:03] I told you, Sandy.

John Kim [00:56:05] Yeah, that’s crazy. But you never talked about the Skype thing.

Rob Break [00:56:09] No, no, I didn’t want to like, I’m going to talk about that on another show.

John Kim [00:56:12] Sandy, did. Did you ever tell Sandy that

Rob Break [00:56:15] I might have said, Did I tell you I Skype walk John through a property and he bought it?

Sandy Mackay [00:56:23] I don’t think I heard that, although I’ve done the same face times. Someone, yeah, when they bought it. Yeah, well, they bought it with the condition on a one day inspection condition.

Rob Break [00:56:33] Now see, we went up to there.

John Kim [00:56:37] So you’ve done the scoping egg similar yet? Yeah, because you know what? I want to get to and I think first of all, you have to trust your gut. I trust Rob, right? But you know, if he shows me the place, I’ll let you know.

Sandy Mackay [00:56:51] So when someone knows what you like and you’ve done a couple of deals, maybe with a realtor, I think the realtor is unless they’re in India, they’re not going to sell your property that you hate because I didn’t do very well with it. I know there are. There are probably some realtors that would. Yeah, they’re good ones. Good ones understand the value of that relationship long term, right? So why would they why would they tell you to do something stupid like that? So if it makes sense, then you can see it. Good enough, right, and it all looks good. Then why not go for it? You know,

Rob Break [00:57:20] I don’t know if this is a good strategy or not, but I mean, I was walking Tom through that property over, you know what, a couple of days ago and I like Tom Smart Guy, he’s not going to buy anything he doesn’t like, and there’s certainly no way I could trick him into or talk him into anything. But, you know, as soon as I don’t like a property, as soon as I’m like, This isn’t this isn’t what you’re look like as soon as they get that thought, this isn’t what these guys are looking for. Then I just I point out everything wrong with it. Yeah, yeah. I would rather them not buy it and go find something that works for sure, you know?

John Kim [00:57:59] But you know what, in this in this market, you know, I’m fortunate to have you right because not all realtors are the same. I mean, I really don’t need a realtor that has the experience of investment properties because I can walk them through that. But it’s more than that. I realize it’s more than that. It’s, you know, you get me, you get me deals where, you know, avoiding bidding wars, right? Yeah. Like the last two properties, I didn’t have to get into a bidding war. How great is that? That was. Yeah.

Rob Break [00:58:32] So like although the last one, a little less so than the other.

John Kim [00:58:36] Yeah. Hayes Yeah. But oh, well, it’s still making me money at the end of the day. Like so I don’t care.

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