Table of Contents - Real Estate Investing QUEBEC style with Jean-Philippe Claude
Dave Debeau [00:00:09] Hey, everyone, welcome. This is Dave Debeau. This is another episode of the Property Prophets real estate podcast. As you can tell, I'm not in my usual surroundings. I'm on the road in beautiful Ajax, Ontario. And today is my pleasure to be speaking with Jean Claude, who is a very, very successful real estate entrepreneur, who is also a big part of the whole the biggest real estate club in Montreal. Correct me if I'm wrong, but I'm sure you guys are by far the biggest and the oldest. You might be the biggest club in Canada. I mean, from the numbers I've seen you guys have, it's pretty amazing glub immobilizer in Montreal and forgive my butchering of the pronunciation.
Jean Phillipe Claude [00:00:52] That's all right.
Dave Debeau [00:00:52] With a name like Debeau, I should speak French a lot better than I do. I get the idea. So please welcome to the call. Great to have you.
Jean Phillipe Claude [00:01:01] Yeah. Thank you for having me. Hi, everyone.
Dave Debeau [00:01:04] So, Jean-Philippe, why don't you tell us a little bit about how did you get into this whole crazy world of real estate investing?
Jean Phillipe Claude [00:01:10] And whereas I'm actually an engineer, so I graduated in two thousand eight as a mechanical engineer, and after that I was twenty five, I think back at the time. And I did start traveling actually I went twice, four months around the world, spent four months in the malaise and having a lot of fun. And then I came back and I said, OK, that's the game. So I don't want to work as a forty hour job. So I'm kind of forty hour job as an engineer. So I started looking at different options that was available to become financially independent and be able to travel much more and take control of my time. And basically I invested in the stock market since I'm 13 years old, under fake accounts from my sisters. So there was no Internet at the time. I had to call and pretend that I was a lady trading. So I was quite fun. Let's go have fun. And then after that, I saw also my parents, my friends on the clothing company since actually I'm born since nineteen seventy nine. And I saw them working a lot. So they say OK, this is not financial independence. And eventually there's one guy just told me like did you think about real estate investing. As I said, no. And the first jump I did when I came back from traveling instead of buying a house, I went and buy a triplex in Montreal, converted into a fourplex. And then I started following classes here and there and just started and expanded quite fast because this was two thousand and thirteen that actually started my real estate investment career. So that's what I that's just my story short stop.
Dave Debeau [00:02:46] OK, so from that first triplex that you converted into a four plex, whereas I take it, you know, because I know you focus on multifamily properties where your portfolio now and what do you like to buy?
Jean Phillipe Claude [00:02:56] A home holding new apartments. I own one hundred and eighty apartments in Montreal and close to Montreal, still going up, going much faster now. So still buying, still having fun. I still think it's the best investment in the world. There is nothing that beats that. So still happy. So it's been, let's say, five years. I'm a real estate investor since about five years ago. I said, wow,
Dave Debeau [00:03:20] well, that's that's a very, very fast progression in five years. How have you been able to grow your portfolio so big, so quickly raising capital?
Jean Phillipe Claude [00:03:31] Yeah, that's your specialty, raising capital. Because after my first deal, actually, I took money from my bank account to buy that triplex with the CMHC. So only 10 percent cash down after that. I had some pension from the city as well to renovate Metroplex into a four plex. So I made a little bit of money out of this. So I bought a seventeen plex just outside of Montreal with that money and then after that stuck. So basically what I did is start raising capital. So talk to a friend saying, what about if we share 50 50? So we share 50 50 of the equity. You pay one hundred percent of the cash down. And I do the job and I find the deals and that's that's where it all started. So you raise capital. You raise capital like you do actually. So you raise capital and you bring capital into the investment and that goes into the fast lane. Or you can go much faster.
Dave Debeau [00:04:21] Yeah, definitely. Well, congratulations on that. You've got very big very quickly. That's fantastic. And I love love the structure too. That's just so simple, right? You do find the deal. You organize everything, you manage everything. The other person brings in the cash and you split profits. Fifty fifty win win all the way around.
Jean Phillipe Claude [00:04:39] Win win. Exactly. Yeah.
Dave Debeau [00:04:42] So John Philip. So a quick question for you, because you've got so many properties now over one hundred and eighty rental units, how many buildings are those spread out across?
Jean Phillipe Claude [00:04:53] More or less, 10? I would say I more or less time.
Dave Debeau [00:04:57] Now, do you self manage your properties? You have manage on site managers. How do you how do you manage your tenants in toilets?
Jean Phillipe Claude [00:05:05] That's a very, very good question. And it's always I do teach at the time, I believe and I also founded the Real Estate Investors Club. So that's a question that always comes to me. Do you manage your tenants OK? My answer is no, because I'm on the acquisition phase. So at one point in one of the event, we did an example of a person that manages our property, a person that doesn't manage, take the same time, the same amount of time and put it in acquisition. And it's just insane. The money is in optimizing isn't buying finding the atomizing and then when it's optimizing, when you squeeze the juice out of the property and you did everything you could to increase that revenue, then you give it to somebody else. You accept the fact that the property is not going to be managed as well as you would. So even if you have an employee, it's not going to be as good as you would. But at one point you got twenty four hour in a day. Where is your time best spent? It's spent in acquisition and finding deals.
Dave Debeau [00:06:10] Plus it's hard to hang out in the Himalayas if you're busy managing.
Jean Phillipe Claude [00:06:15] Yes. As well. So you buy you buy liberty because that's a funny story, because when I move from my fourplex, I bought a duplex just outside of Montreal and I kept my fourplex and I had to do the management because the cash was so low. You can't afford a management company. And I remember like the famous toilet call when I was actually having supper with my family and I had to go there, stop eating, going there, change the toilet. I said, no, that's not going to be I'm going to work my life. This is not going to be how I live my life, actually.
Dave Debeau [00:06:47] Yeah, no, that makes a lot of sense. So you don't believe you. You've done most you've done all of your your acquisitions in and around Montreal. You've got the club going. You've got thousands of people that are part of your of your club, which is amazing. So congratulations for that. What do you think are the bigger differences between investing in Quebec versus the rest of Canada?
Jean Phillipe Claude [00:07:14] Well, most of molted families are located in Quebec, so I love multi families because, I mean, you buy one building and you get 20 units to optimize that, say, if you take a 20 unit building, so you've got 20 units to optimize instead of buying duplex and triplex where you need to buy, need to go to Notari, need to go financing for a 20 unit. You just do it once. So basically, I love it from that standpoint. There's that also in Quebec, people are renting more there, less property owners. So there's a lot of apartments in Quebec. And to be honest, right now, Quebec is such a nice place. Montreal actually is such a nice place to invest because there is a vacancy actually is lower than two percent. So there's a crisis on units availability. So so you can do anything and squeeze those rents. Really high interest rates also are quite low. So back to Montreal, like everything is is going very well. And actually it's the first time I just read that in the paper today. It's the first time that in Quebec the that's the French word, the babydaddy, the gross to say it in English. But, you know, the growth of the growth percentage has been going up since eight months in a row, has not been seen since eight years now. And the rest of Canada is quite low. It's I think it's one point six and Quebec is going at three point six percent growth when you're talking about. Yes, exactly. I was searching for the time, though. So basically Quebec is just going very good. There's the market is the price is actually lower than Canada. So all the rents are lower. So we're actually pacing up back to the normal value because that was the language barrier at the at the beginning. So actually, investors were not coming. And yeah, everything goes really well. That's a very, very good market right now in Montreal.
Dave Debeau [00:09:05] Yeah, I've definitely heard that. That's no, don't I know that in other parts of the country, Ontario, British Columbia definitely come to mind. There are a lot of landlords. Are frustrated because it seems like the rules and regulations are so far in favor of tenants versus property owners, you have any similar issues in Quebec?
Jean Phillipe Claude [00:09:32] Yes, it's this thing, OK? It's the same. But again, you know, what's what's what's the good point out of it? So the market's so hot that you can negotiate with tenants. It's not unusual right now for a property owner to pay tenants three thousand five thousand dollars so they can actually leave your premises and rent that. So I just have an example to my last building I bought. And this is what I teach in class. Also right now, they pay nine hundred and fifty dollars for a four and a half and actually. They quit and I do nothing to the apartment I rented. Twelve hundred, so that's a two hundred and fifty dollars upside times, 12, 12 months times. Right now I'm unsure. It's it's it's around twenty two to twenty five times the net income. So the net income multiplier is about that. So actually that's an increase in price of sixty thousand dollars. That's sixty thousand dollars. And had value just for just a single tenant leaving. So even if you give him ten thousand dollars to leave,
Dave Debeau [00:10:37] get the heck out.
Jean Phillipe Claude [00:10:38] Get the heck out. You just. So yes, the rules are pretty strict, pretty much the same as the other countries are. And actually in Quebec it's worse because there is no deposit when you do sign a lease. So that's non-existent. No, that does not. That's the worst place actually for these rules. But again,
Dave Debeau [00:10:57] that is supply and demand. So we were talking before we started recording that you were saying and I corroborated this, that you saw a stat that approximately 50 percent of all multifamily properties in the entire country of Canada are located in Quebec, which the rest of Canadians might sound mind boggling. But actually, it makes sense if you look at the population base, the stat that that I've seen a lot is that 80 percent of all multifamily properties are in the Windsor to Montreal corridor, which is the correct corridor. So that makes sense because that's where the vast majority of the population of Canada is. But the other reason it makes sense is you're telling me that almost is it over 50 percent or close to 50 percent of people in Quebec are renters versus homeowners? Is that correct?
Jean Phillipe Claude [00:11:45] So it's more that would make sense. Yeah, I don't have the stats, but that would make sense, definitely.
Dave Debeau [00:11:50] Very, very interesting. So I got a question for you. I know you've got a big club and going in Montreal. Do you see much in the way of people, investors from other provinces coming in and buying properties in Quebec? Is that started yet?
Jean Phillipe Claude [00:12:05] It does start. Actually, we have a Chinese real estate broker at our next event who talks about that. So we're actually seeing that because of the tax, the foreign tax that doesn't exist again in Montreal. So it brings foreign investor coming in and also the city again, Montreal is going up. And so it's a good time. But I don't see actually Canadian foreign investor being from another province. Yeah, I don't see no other Canadian coming to Quebec. It's very, very little. Very little. So they stay in Ontario and they don't they don't actually come in by moonshots. I'll tell them. Don't tell them
Dave Debeau [00:12:48] it's a podcast. It's hard to say mum's the word there. But yeah, you know what? I would imagine for most English Canadians, the thought of investing in Quebec is intimidating for many reasons. The primary reason being, you know, if you're Twitter like me that doesn't speak French language barrier would be a huge handy for sure. Different rules and regulations, different language. You have a disadvantage if you don't speak the language. Would you agree?
Jean Phillipe Claude [00:13:16] Yeah, I do agree because it's a problem that's we've just started, like I said, the Real Estate Investors Club, which actually we teach in English for Quebec, because the problem is that real estate investors in Quebec, they do follow classes for like Canada, why Canada, why us? And they have a problem applying that. So we do teach this. And in the lessons we do teach, we do the translation from some of the terms and some of the like promised to purchase writings because sometimes you got to have a French seller in English other. But you know what? You can always be held by someone. I mean, it's it's I mean, it's getting more and more bilingual, like it's not used in my my parents time where there was Anglophone or Francophone. But now it's I mean, the younger generation do speak. The language is quite easy. So if you do want to invest here, somebody is going to help you. And yeah, but there's a different law system in Canada. Use the common law. And in Quebec we have the civil code from that. We still use that one. So it's different. But again, it allows us for a different technique. So there's different rules, different techniques also to buy with little more cash, for example.
Dave Debeau [00:14:31] You know, it just makes sense, right? Different places, different rules. You learn the rules of the game. You play the game. Yeah, yeah, yeah. I love it. So in general, I'd like to get your input on because you might see this law. You must see a lot of newbie investors wanting to replicate what you've done or do their own version of getting into multifamily investing. What would you recommend for somebody who's just kind of hasn't done very much in the way of real estate investing before for them to get started with multifamily investing?
Jean Phillipe Claude [00:15:02] Well, I think the first thing, first thing, first knowledge, obviously, knowledge is the first thing first after that, if they want to jump into a multifamily, they need to know their sector. So you want to invest? I'm pretty sure it's the same in Ontario. Pretty sure the same. Actually, it's the same wherever you invest is knowing your sector when people are starting to invest in real estate. And I'm I'm guilty of that. Actually, when I started looking at real estate, I would open my MLS system and just scroll down with my mouse and look at the province of Quebec. Everything goes from Sicily, which is really far east and Ontario and looking everywhere. What happened? Nothing moves because you're too wide. I've seen it. Yeah, that's. You don't know your sector. So I've seen investors like building a portfolio of a thousand or in two bureaus in Montreal, so because they know the sector. So I think the biggest mistake from a starting point is to think big, thinking you're not going to miss a deal because you're looking big. But actually that's exactly the opposite. You're not going to be in the market. You're not going to know if you do renovate that apartment, how much it's going to be worth and you're not going to be able to price your building correctly.
Dave Debeau [00:16:18] Good advice. Very, very good advice. That's fantastic. Time flies when we're having fun, my friend. So if people want to find out more about you, more about the club, what should they do?
Jean Phillipe Claude [00:16:31] Just type in and Google Real Estate Investors Club. So basically we should come up there. So again, we're in the English division of the this time of year. That's the oldest in Quebec City since 2001. It's been coaching, I think four thousand five hundred people graduated from that coaching program. So a not a lot of investors started there. So presumably that's the English. And then you're going to have the Real Estate Investors Club. We have monthly events. We have some classes as well. But I mean, they're twenty dollars. There's always a speaker that that's in front. We had really, really good speeches, like from people holding two thousand dollars in Montreal. So that's that's very cool to listen to. So really, the Investors Club and
Dave Debeau [00:17:15] in Montreal and be the very Google, you guys will pop up
Jean Phillipe Claude [00:17:18] first. Yes, we should. We should we should
Dave Debeau [00:17:21] put the direct link in the show notes if they want to. Yes.
Jean Phillipe Claude [00:17:24] Yes.
Dave Debeau [00:17:25] Awesome. Jean Phillipe, thank you very much. Was there any questions that I didn't have time to ask you that I should have asked you?
Jean Phillipe Claude [00:17:32] Well, that's that's a good question. I think you're pretty good. Pretty good interviewer. I mean, you know, we like both of us. We know that real estate is the best investment in the world. Yeah. Just get to know your sector. Take action, actually. Take action. Take action. Sometimes people are following classes, reading books, watching podcasts, and that's pretty good. That's awesome. Watching, but take action after work. That's where that happens. I call taking action, like making promise to purchase shots to the net. I mean, if you don't shoot to the net, there's a hundred percent chance that you're not going to succeed. So I promise to purchase is just a shot at the net. So take a shot at the net and maybe the goaltender will block it or maybe it will go in. So take a shot.
Dave Debeau [00:18:15] That is a perfect example. That's his French Canadian. That's as Canadian as it gets. It's all about how can we get along. All right. Thank you very much, my friend. I really appreciate your time on the show today.
Jean Phillipe Claude [00:18:27] Thanks again for having me.
Dave Debeau [00:18:29] All right, everybody take care and we'll see you on the next episode. Well, thanks very much for checking out the property profits podcast. And you like what we're doing here.
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