The BC NDP’s budget for 2018 was just announced and, as predicted, there are lots of policy changes targeting housing. The party’s stated goal is to bring stability to housing prices and return the market to one that serves local residents, but will these changes truly have an impact or is this a case of politicians steady politickin’?
Sandy MacKay and Rob Break, from the popular podcast “Breakthrough Real Estate Investing” join Matt and Adam to discuss investing tips and lessons learned in the real estate trenches.
Check out Sandy and Rob’s show BREAKTHROUGH REAL ESTATE INVESTING PODCAST
Vancouver Real Estate News, Market Updates, Insider Tips, Stats, & Analysis
About Sandy and Rob:
Sandy is a realtor who works mostly in the Greater Toronto and Hamilton areas. He’s been investing in real estate for about five or six years. Sandy was originally in the golf industry and got hooked on real estate after reading Rich Dad Poor Dad, which got him into investing and led to where he is today.
Rob is an investor-focused agent with Rock Star Real Estate in Southern Ontario. He got started in real estate by accident when he and his wife purchased a legal duplex next door to some friends of theirs. When they realized the basement’s rent paid for the home, they had an “aha” moment as they saw how much money it was making them. Their second investment property was a three-story, five-bedroom student rental in the home’s upper half (near the University in Oshawa), and the lower half was a one-bedroom basement apartment rental.
Rob then got into wholesaling properties, which involved private marketing on buy & sell websites (and putting up really ugly yellow signs – this is what works in the US!) You get an accepted purchase and sale agreement and market it to investor clubs. The key is finding the types of properties people are looking for (e.g. ones with basement apartments for rent). Rob enjoyed this, and it was what led him to investor groups in the area that helped him validate what he was doing. The Durham REI (Real Estate Investor Club) website helped him. He was not licensed and was not selling property, but was selling contracts. Rob then started adding legal second suites to single-family homes and helps his investor clients through the same process.
In BC, the purchase and sale contract changed, where if you re-assign the contract without the seller’s consent, the profit goes back to the seller. This could happen in Ontario at some point; the two provinces share some similar pains and affordability challenges.
On how they got into podcasting:
Rob and Sandy have been doing the podcast for four years. When they started, they had attended some networking events and were learning things at the same time. They spoke for about an hour almost daily to try and figure out the industry, and were listening to podcasts such as Bigger Pockets but found it was sporadic episodes without consistency. So, they turned their own conversations into a show and brought in guests. Neither were realtors then, but now it’s a great lead generation. Their initial intention was to learn and give others a platform to share. It’s grown much larger than they ever expected and it has a very active audience. This is similar to how this podcast started – Adam and Matt talking real estate nightly, over beer.
On their biggest takeaways from engaging guests like investors and industry experts:
One of the most re-occurring pieces of advice is no matter what your strategy looks like, take action. You can research and prepare for years, but you won’t get anywhere if you don’t do something with what you learn. Another is to surround yourself with the right people and team—have the right experts who will answer your call when you need them. They say you’re the average of the five people you surround yourself with most—make sure they’re who you want to be like (in this case particularly, in terms of income level).
On what they currently look for in an investment property:
They seek niche places in their market. If they can’t get financed by a lender, they go private. It’s property-specific and needs to be in the right location. Some people have bought something with another person and then asked for advice to legalize it—this is the core of what Rob does. He often has to advise they tear out the whole thing to abide by the City’s rules. People need to ensure the property fits the criteria [for rentals] before buying.
On the cash-flow situation in the GTA:
They’re still cash flow positive. It was bad towards the end of 2017. A broker they know uses “negative gearing” with no cash flow, and has a great speech about why it’s still effective. Rob still pulls a couple hundred dollars out [of his property] each month. It does depend on the specific area; many areas are not in this position, especially downtown. You can make some money outside the city.
On the general Ontario market:
Rob does not expect anything; everyone has a different opinion with reasons to back it up. Some say when the spring market hits, prices will go crazy and people will hold back offers; others say with all the inventory, prices will go down. They have to wait and see, though it has levelled off. Higher-priced ($1 million+) homes have dropped and the entry-level market is very strong. The condo market has continued to go up consistently and wasn’t as affected as detached homes.
There is not much inventory. The end of summer through to November had the most inventory over the past three years, but since winter there has not been nearly as much. Anything new is getting a lot of action and there is a lot of competition. In this sense, it’s parallel to the Vancouver market.
On some of the biggest mistakes they’ve made in their investment careers:
Rob’s biggest mistake was doing the exact opposite of the advice he heard at REI groups and read in books. He purchased one of the best houses on the worst street. It was a bad area of town; nobody wanted to be there, regardless of the nice duplex he had.
Sandy used to wholesale properties and he regrets not finding a way to buy them himself. From talking to a client, he learned they made over $100,000 in two months and would have gone 50/50 with him. The deals at the time had to be amazing deals; they should have been more creative and found ways to buy them for themselves. Rob has found that people want to keep you in your place—you’re of no value if you’re finding partners for yourself; they want the cheap deals. Rob has made mistakes by selling properties instead of holding—he wishes he had found a way to keep each one that he sold.
To find out more about Rob and Sandy: