12 Lessons From Blackstone & Its President

[00:00:00] Welcome to The Canadian Real Estate Investor, where hosts Daniel Foch and Nick Hill navigate

[00:00:06] the market and provide the tools and insights to build your real estate portfolio.

[00:00:13] Welcome back, ladies and gentlemen, to The Canadian Real Estate Investor podcast. We

[00:00:17] usually like to start the show by reading reviews that all of you lovely people have

[00:00:21] left for us. But this is kind of going to be like that, but it's not exactly

[00:00:26] because while it's sort of a review, it's not a podcast review technically. Anyway,

[00:00:32] I'm not even going to try and explain this. I frequent a lot of subreddits about Canada's

[00:00:37] economy and real estate and housing, and I came across this post on r slash Canada

[00:00:42] housing. One of you listening to it today right now probably made it, I'm guessing.

[00:00:46] And I just wanted to express my appreciation for you doing that. And now Nick is

[00:00:51] going to read this post from r slash Canada housing on Reddit.

[00:00:55] So the title is You Need a Proper Public Education and Consultation.

[00:01:02] No, the title is something else. But read this and I'll get the actual title.

[00:01:05] Sorry, this is like a subheading within a very lengthy, within a very lengthy

[00:01:10] contribution by one of the users here. Anyways, the subheading, You Need Proper

[00:01:14] Education and Consultation reads, Hire Nick Hill and Daniel Foch to advise the

[00:01:19] government and create a series of media to educate the public on government

[00:01:23] initiatives to show that you are genuinely working as hard as you can and

[00:01:27] pulling out all the stops in order to solve the housing crisis.

[00:01:31] A good example of how to address the public with a complicated issue is

[00:01:36] Ray Dalio's How the Economic Machine Works on YouTube.

[00:01:39] All Canadians should understand housing as is the most important financial

[00:01:43] decision most of them will make in their lives.

[00:01:45] Now it goes on and on, but man, to find our names on a random

[00:01:53] sub Reddit of Canadian housing, pitching us as educators is both hilarious,

[00:02:01] humbling and really just awesome overall.

[00:02:05] So whoever suggested that and is putting our names out there in the world.

[00:02:11] Thank you so much.

[00:02:12] Yeah, it's a meatbat musketeer, which is great.

[00:02:16] That's, it feels like something you'd hear on Reddit.

[00:02:19] The title of the post is Please Critique My Ideas for Solving the Housing Crisis.

[00:02:24] I personally think that that idea is a good one.

[00:02:26] Great idea.

[00:02:26] Great idea.

[00:02:28] And it seems that people on Reddit didn't really think that, I'm going to give

[00:02:34] this an up vote because now it's got one up vote.

[00:02:36] But anyway, thank you meatbat musketeer.

[00:02:38] And I think, I think I commented on that.

[00:02:42] So anyway, if you want to give us a shout out, pump our tires somewhere

[00:02:45] on the internet anywhere when we find it.

[00:02:47] You don't even have to leave us a review on our podcast anymore.

[00:02:49] Just pump our tires somewhere on the internet.

[00:02:51] We'll find it and we'll give you a shout out on the show.

[00:02:53] So this is your sign to do that.

[00:02:55] I know you've been thinking about it.

[00:02:57] Anyways, back to the show.

[00:02:58] Dan, what are we talking about today?

[00:03:01] Today's episode is about the largest asset management companies in the world.

[00:03:06] This is usually you can get a TikTok video to a million views if you just

[00:03:11] start by saying the word, the word Blackstone because people are going to

[00:03:16] be happy because people hate them and think that they are part of the world

[00:03:20] economic forum, you'll own nothing to be happy, blah, blah, blah.

[00:03:22] And they probably are to be honest with you, but in that regard, they're

[00:03:26] very good at making real estate investments that are good.

[00:03:31] Right?

[00:03:31] So we're going to talk about its current CEO and the lessons we can

[00:03:34] learn and how they operate applied to real estate investing.

[00:03:38] Exactly.

[00:03:39] So if you don't follow financial markets or keep a close watch on the

[00:03:44] economy, you may have heard about Blackstone in the news, maybe on a YouTube

[00:03:49] video or a TikTok or Instagram reel with a slight conspiratorial tone to it.

[00:03:56] Maybe some ominous music, you know, maybe with a title, you'll own

[00:04:00] nothing and be happy or any of those kinds of things.

[00:04:03] And that company is Blackstone.

[00:04:06] Yeah.

[00:04:07] Sorry.

[00:04:07] I killed the, um, I did kill the reveal for you.

[00:04:10] I know you always like are very typical, a lot of care into these

[00:04:13] notes and I just ruin it.

[00:04:14] Boom.

[00:04:15] I know.

[00:04:15] Brute force right through.

[00:04:16] Yeah.

[00:04:16] Blackstone is the world's largest alternative asset manager with

[00:04:20] one trillion in assets under management.

[00:04:22] That's a trillion.

[00:04:23] Yeah.

[00:04:23] That's a what's like the three comma club.

[00:04:25] That's the four comma club.

[00:04:28] I'm still trying to get like a comma.

[00:04:30] Yeah.

[00:04:30] A thousand.

[00:04:31] I've got like an exclamation.

[00:04:32] Couple of negative commas.

[00:04:34] They serve institutional and individual investors by building strong

[00:04:38] businesses that deliver lasting value.

[00:04:40] They have some serious scale with 12,500 real estate assets.

[00:04:45] That's a couple for you and 230 plus portfolio companies.

[00:04:50] They have a global real estate portfolio of over $586 billion.

[00:04:55] A couple bucks.

[00:04:57] Trillion.

[00:04:58] Yeah.

[00:04:59] So why did this company start?

[00:05:02] And more importantly, why is there a Blackstone and a black rock?

[00:05:08] And what's the difference between the two of them?

[00:05:09] It is a little confusing to be honest with you.

[00:05:11] Right?

[00:05:11] Yeah.

[00:05:12] It's always like a, it's like a color and then like a, like a nature item.

[00:05:15] Yeah.

[00:05:16] Like a, you know, gray stone.

[00:05:18] Gray pebble.

[00:05:19] Gray hill.

[00:05:20] There's a gray hill in Ontario.

[00:05:21] Great Northern Ontario investors actually.

[00:05:23] Shout out to Liam.

[00:05:24] So we'll look at the man running the show at Blackstone, the CEO who

[00:05:29] made over $296 million in 2022 alone and the lessons that we can learn

[00:05:36] from his company and its leaders.

[00:05:40] But what is the difference between these two massive companies,

[00:05:43] Blackrock and Blackstone?

[00:05:44] Well, Blackrock, if you're looking for a more traditional investment

[00:05:49] term, they, uh, investment firm, sorry, they kind of fit that bill.

[00:05:53] The Blackstone group caters mostly to high net worth or ultra high

[00:05:58] net worth individuals and exclusively manages alternative assets.

[00:06:04] It's funny how real estate is an alternative asset.

[00:06:06] Like I feel like it's like the asset.

[00:06:08] I just think alternative, like alternative rock kind of thing.

[00:06:12] I'm like, I mean, I don't know why this always goes there.

[00:06:16] Just nickel back in your head constantly.

[00:06:20] Cool.

[00:06:20] Yeah.

[00:06:20] I mean, true Canadian patriot right here.

[00:06:22] Yeah, exactly.

[00:06:24] It reminds me of that meme where it's just a Chad Kroger holding the graph.

[00:06:28] Look at this graph.

[00:06:30] That's literally me.

[00:06:30] That's a summary of my, my Instagram and Twitter.

[00:06:34] Look at this graph.

[00:06:35] Okay.

[00:06:35] It really is.

[00:06:35] Okay.

[00:06:36] So that's Blackstone, Blackrock.

[00:06:37] Blackrock is headed by its global executive committee, which does sound

[00:06:43] a little conspiratorial with its board of directors and leaders close behind.

[00:06:47] This group includes founder, longtime chairman and CEO Larry Fink.

[00:06:51] Blackrock employs over 16,000 people across the world.

[00:06:56] Blackstone, which is another type of rock.

[00:07:00] So it's confusing divides its operations into four sectors, real estate,

[00:07:05] private equity, credit and insurance and hedge fund solutions.

[00:07:10] These divisions are run by senior managing directors who are overseen

[00:07:13] by a group of six executives.

[00:07:14] One of them is company founder and CEO Steve Schwartzman, who we

[00:07:18] have also done an episode on.

[00:07:20] Yeah, exactly.

[00:07:21] Until recently, Blackstone's clients were exclusively

[00:07:26] institutional level investors.

[00:07:28] Now when we say that think like pension funds versus, you know, me,

[00:07:33] you probably most people listening to the show.

[00:07:36] However, in the last couple of years, the firm has shifted its focus

[00:07:39] and is now being generous and allowing ultra high net worth individual investors.

[00:07:44] Yes.

[00:07:45] Thank you so much Blackstone, but we're not here to talk about that.

[00:07:48] We are here to talk about its CEO, John Gray.

[00:07:52] I think we are going to talk about them at the end.

[00:07:53] We are.

[00:07:54] Yeah.

[00:07:54] So sorry.

[00:07:55] The way that this works, we're going to talk about it, but John Gray,

[00:07:57] we're going to go through his kind of, I think there's 10 principles

[00:08:01] that he is used to grow the business and run the business.

[00:08:04] And then we're going to actually look at what Blackstone as a company,

[00:08:07] they have kind of their seven principles that they follow.

[00:08:11] So we're going to look at both the man in charge as well as the

[00:08:14] company and its kind of foundational, foundational principles that it follows.

[00:08:20] So Dan, start us off.

[00:08:21] So in 1992, Gray, one year after I was born,

[00:08:26] Good year.

[00:08:26] Should have been 91.

[00:08:27] What's this guy thinking?

[00:08:29] Gray joined Blackstone's mergers and acquisitions and private equity group

[00:08:34] and joined its newly formed real estate private equity group the following year.

[00:08:39] He became co-head of the real estate group in 2005 and global head of real

[00:08:44] estate in 2011, overseeing a portfolio of hotel office, retail, industrial,

[00:08:48] and residential properties in the U S Europe and Asia.

[00:08:51] Gray was named in fortunes 40 under 40 in 2009.

[00:08:56] Then in 2016, he ranked number one on the commercial observers

[00:09:03] power 100 and that is for the most powerful people in New York city

[00:09:07] real estate.

[00:09:08] So quite the accomplishment fast forward to 2013.

[00:09:13] Gray helped create a business venture through Blackstone called invitation

[00:09:17] homes to buy foreclosed single family homes and turn them into rentals.

[00:09:22] The Wall Street Journal reported that Gray went on quote, the biggest

[00:09:27] home buying spree in history.

[00:09:29] And do I know a lot of guys that like to do that?

[00:09:32] Yeah.

[00:09:34] I think we actually know the guys who did that biggest home buying spree

[00:09:36] in Canada and that didn't end very well.

[00:09:38] No.

[00:09:39] And actually that's still up in the air is our one of our maybe full deep dive

[00:09:43] into true crime side of the podcast here.

[00:09:46] So in no crime, actually, and associated with that was sorry, no crime, but

[00:09:51] it just didn't end well kind of under the yeah, whatever we'll leave it

[00:09:53] there in just 2022, 2022 alone.

[00:09:58] Blackstone president John Gray made $296 million.

[00:10:01] Here are 10 lessons he lives by number one, avoid the classic

[00:10:07] developer sin.

[00:10:08] What might that be?

[00:10:09] Financing long duration assets with short term debt.

[00:10:13] A lot of people like to do this.

[00:10:14] Like they like to use private financing, get in it quickly.

[00:10:19] Lots of leverage maturing in a short time has claimed the

[00:10:23] careers of many developers.

[00:10:24] So true, man.

[00:10:25] So like investors too, it's like, Oh, I'm just going to, it's okay.

[00:10:28] I can put this 10% private on this and it's a one a one year term.

[00:10:31] Man.

[00:10:32] I got, I got smoked on a, on a, I remember Johnny and I were like,

[00:10:36] Oh yeah.

[00:10:36] Rates will probably be like my interest rate call was a little bit later than I,

[00:10:42] then I knew rates were going to go up and I thought there was a little bit more

[00:10:44] time and then that so, so anyway, we had a one year with a B and we ended

[00:10:49] up and we're like, Oh, we'll just go to an A after a year.

[00:10:52] We have to stabilize it and whatever.

[00:10:55] And ended up say stabilizing it and taking it out with an A at a higher

[00:10:59] rate than the B was originally.

[00:11:01] So pretty funny.

[00:11:03] Anyway, and that, that, and that didn't claim the career of me, but I can see

[00:11:07] how it has claimed the career of many developers and investors.

[00:11:10] Like literally like right now.

[00:11:12] Many happening right now before our eyes.

[00:11:15] Yeah, for sure.

[00:11:15] Exactly.

[00:11:16] Number two is actually on that note in Canada, this is especially important

[00:11:20] because all of our mortgages are technically short term, like all of our,

[00:11:24] all of our debts are on five year terms.

[00:11:27] Like what he's referring to is like get it's commercial finance.

[00:11:30] So it's a little bit different, but you can get five 10 year stuff in the U S

[00:11:34] but like if you're buying a house, especially in the U S you can do it with

[00:11:36] a 30 year term or 30 year mortgage term, not 30 year amortization.

[00:11:41] Like we just covered it in one of our recent episodes.

[00:11:43] Your rate is your term.

[00:11:45] Yeah.

[00:11:45] Your rates locked in for 30 years.

[00:11:47] So if you're a genius that goes in and gets like a two, three percent

[00:11:50] lock that in for 30 years.

[00:11:51] So yeah, but in Canada, like the best you can do is get a 10 year.

[00:11:54] Yeah.

[00:11:55] Right.

[00:11:55] I think there's some 15s, but 30s pretty much don't exist.

[00:12:01] So again, number two here is literally again happening in real time.

[00:12:08] We're watching it.

[00:12:09] It is beware of these real estate warning signs.

[00:12:13] Two of them, lots of cranes and too much leverage.

[00:12:17] If you see these things pump the brakes.

[00:12:20] Now the city I know in Toronto that brags about having the most

[00:12:23] cranes in North America.

[00:12:24] And look at that.

[00:12:25] And I actually, the RLB crane index just came out and cranes were down.

[00:12:29] Like, I mean, we'll have to redo the index again because I've been

[00:12:32] like re-napping them.

[00:12:34] Yeah.

[00:12:34] So they miss like, I've said Miami is Eclipse Toronto and cranes in the sky.

[00:12:40] And everyone's like, Oh Toronto, most cranes in North America.

[00:12:43] Toronto has more cranes than the rest of the U S it's like, no,

[00:12:48] absolutely not folks come on, get it together.

[00:12:52] Anyway, lots of cranes, lots of leverage that could be.

[00:12:55] The slogan on the Ontario license plate.

[00:12:59] Honestly, sad, but true.

[00:13:02] Okay.

[00:13:02] What's the third one, Dan?

[00:13:03] Only work on something you really enjoy.

[00:13:06] Oh, and by the way, lots of cranes and lots of leverage that was like

[00:13:09] definitely more of a 2021 thing, 2022 thing.

[00:13:12] So in hindsight, you can see that this was bang on as a rule.

[00:13:15] Right?

[00:13:16] Like, so next time when we complete this cycle and you see lots of

[00:13:18] cranes and lots of leverage again, remember this moment be the boomer.

[00:13:22] Who's telling the kids, that'll be us.

[00:13:24] Don't be us.

[00:13:24] Slow down there, son.

[00:13:27] Yeah.

[00:13:27] And listen, the brakes weren't just pumped.

[00:13:29] They were like slammed on.

[00:13:30] Right?

[00:13:31] So I mean, literally Tiff fired that one morning shot, 25 basis points.

[00:13:35] It was like, Hey, I'm doing it.

[00:13:36] And then after that it was like, yeah.

[00:13:39] And then it was a 30 car pileup.

[00:13:42] That's pretty good actually.

[00:13:43] Great analogy.

[00:13:44] Yeah.

[00:13:44] Yeah.

[00:13:45] Good.

[00:13:45] Wow.

[00:13:46] This is the Canadian poetry podcast as well.

[00:13:49] Look at us.

[00:13:49] Only work on something you really enjoy.

[00:13:52] You will never be good at something you don't enjoy.

[00:13:54] Focus on finding something that gets you excited in the morning and

[00:13:57] chase being the best at it.

[00:13:58] It's funny.

[00:13:59] Like this is one of those woo woo kind of things where you're just like,

[00:14:01] but you know, Naval Ravicon talks about this a lot in the, well,

[00:14:05] the Almanac of Naval Ravicon is just a summary of his, all of

[00:14:08] his like tweets and stuff, but it's so true, right?

[00:14:10] Like you're, if you're going to like, you're just way more, more likely

[00:14:14] to succeed at something if you don't, if you like it, like, cause then

[00:14:17] you're going to put more time and energy into it and like enjoy it

[00:14:19] and do a good job and you know what I mean?

[00:14:21] And a hundred percent.

[00:14:22] Yeah.

[00:14:23] Yeah.

[00:14:23] I mean, look for me, this is a yes, it's woo woo, but it like to apply

[00:14:27] it to a very practical method of doing things is this is your power team.

[00:14:32] I don't like doing certain things in real estate.

[00:14:34] I love real estate, but I don't like doing certain things.

[00:14:38] So what do I do?

[00:14:39] I find people that do like doing that are better at doing

[00:14:41] and bring them on my team.

[00:14:42] And then everyone I'm working with is good at what they are doing.

[00:14:47] I don't have to be good at everything because that's impossible.

[00:14:50] So, I mean, I think this one goes a long way.

[00:14:52] Uh, number four here, take advantage of market inefficiencies.

[00:14:56] This is a big one in the early two thousands, John Gray, CEO of

[00:15:01] Blackstone realized that Blackstone could use cheaper CMBs, uh, to

[00:15:08] buy public real estate companies with this, they bought bigger deals

[00:15:12] and supersized the company.

[00:15:14] The lesson here is find inefficiencies and take advantage of them.

[00:15:19] Yeah.

[00:15:19] So, uh, a CMBS by the way, is, um, a commercial mortgage back security

[00:15:23] not to be confused with Canadian CMB.

[00:15:27] Yeah.

[00:15:27] So, but yeah, you can get CMBS debt significantly cheaper than, uh,

[00:15:31] private market debt that you'd be using to buy businesses.

[00:15:34] So he just basically used a blend of a real estate, do a user

[00:15:37] real estate strategy to buy businesses.

[00:15:39] And this is obviously textbook, somebody who thinks of real estate

[00:15:43] as a business, which is one of the things we really, really

[00:15:46] encourage people to do that, especially in our course on realist.ca.

[00:15:50] And actually, you know, it's so interesting.

[00:15:51] I was chatting with, um, the CEO of, uh, open room that, uh, the,

[00:15:56] um, landlord and tenant board database.

[00:15:59] And she was saying like, you know, one of their visions is really

[00:16:01] to, um, we're going to have her on the show eventually in the

[00:16:04] fullness of time, but, um, really just educate, like she said, a

[00:16:08] lot of people, landlords really suffer because they're running what

[00:16:11] they, what she calls a non-compliant business.

[00:16:13] And I just thought that was so interesting.

[00:16:14] Right.

[00:16:15] Yeah.

[00:16:15] So anyway, if you think about real estate investing as a business,

[00:16:19] you're going to do a lot better.

[00:16:20] And, uh, John Gray, who is good at this obviously is making that clear.

[00:16:24] Good at business.

[00:16:26] Pretty good at business.

[00:16:28] Yeah.

[00:16:28] I mean, I think I wouldn't even call some of these inefficiencies.

[00:16:31] I think, you know, Dan, we've, we've done a lot of coverage on

[00:16:34] the new housing plan, a lot of the financial products and, and

[00:16:38] new incentives that have come out with that for me, it's like, yes,

[00:16:41] they're take advantage of inefficiencies, but it's also take

[00:16:44] advantage of incentives and programs.

[00:16:48] Cause we know for, for, for one thing that even with the MLI select

[00:16:51] program, great program helps a lot of people get deals done.

[00:16:54] A lot of developers don't know it, don't understand it.

[00:16:56] So if you can be someone on the forefront of understanding new

[00:17:01] financial products or new incentives, new policy, new legislation,

[00:17:06] whatever it may be, um, that gives you that upper hand and you can

[00:17:09] figure out how to utilize that and take advantage of it before

[00:17:12] it becomes common knowledge.

[00:17:14] Boom.

[00:17:14] There, there's your differentiating factor right there.

[00:17:17] Yeah.

[00:17:17] Your first job should have two characteristics.

[00:17:19] Number one, it should have a culture of meritocracy, which

[00:17:22] is you get rewarded for merit.

[00:17:24] So work hard, get rewarded.

[00:17:26] Um, number two, it should have a culture of teaching real estate

[00:17:29] is most effectively learned through apprenticeship and, um, I'm a

[00:17:33] testament to this cause I did a co-op program at, at the

[00:17:36] university of Guelph and I got exposure to a lot of businesses

[00:17:39] as a student and that, that was huge for me.

[00:17:42] You've got to expose it to a lot of different, uh, companies and real

[00:17:45] estate asset classes as well.

[00:17:46] And so I would agree with this real estate is very, very

[00:17:49] effectively learned through apprenticeship or immersion in the

[00:17:53] industry and actually for those of you who are real estate

[00:17:55] professionals or people who are like looking to figure out how

[00:17:57] to make money in the industry right now, I mean, like I'm not

[00:18:00] a wholesaling guy really per se, but, um, if you can, if

[00:18:03] you're an investor and you have some cash, you know, if you

[00:18:06] can find a good deal, like, and start exposing that deal to

[00:18:09] people who you want to be like, whether you're trying to sell it

[00:18:13] to them or bring them in as an investor or whatever.

[00:18:15] Um, like this is what, this is how I learned, like 80% of what

[00:18:18] I do.

[00:18:19] I literally was like, who are the biggest real estate developers

[00:18:23] in Canada that I want to represent as clients and they're

[00:18:26] like that.

[00:18:26] I want to be like, right.

[00:18:28] And I want to learn how to think like, and I would just

[00:18:30] offer them to do free work because there's always a

[00:18:32] developer looking for more sites, even in the bourse market.

[00:18:35] There's somebody looking that, and then you just say, Hey, how

[00:18:38] can I help you?

[00:18:39] And they're like, Oh, well, here's my exact mandate.

[00:18:41] Go find me these properties.

[00:18:42] And then you do it.

[00:18:43] Like it's really not rocket science.

[00:18:46] Really, really, really not rocket science.

[00:18:48] Yeah.

[00:18:48] No, I mean, I, I completely agree.

[00:18:50] I mean, I, I've said this every opportunity I can.

[00:18:54] It's I've sought out mentorship in every aspect of my life, real

[00:18:58] estate and non real estate related stuff.

[00:19:00] And I now in turn tried to provide mentorship and we both

[00:19:05] tried to do that through the course and the community and

[00:19:08] the podcast and the events and all of the other free and a

[00:19:11] little bit of the paid stuff that we do all really revolves

[00:19:13] around that.

[00:19:14] And, you know, most effectively learn through

[00:19:16] apprenticeship.

[00:19:17] Well, how do you find, how do you become an apprentice or

[00:19:21] become a mentee or a mentor?

[00:19:23] Well, you get involved with, with people that are doing

[00:19:26] it.

[00:19:26] And that's what we're trying to cultivate here.

[00:19:29] It's funny.

[00:19:30] Like whenever I have a deal, I just like send it.

[00:19:32] I have a list of like a couple of guys in the

[00:19:33] industry that I send it to that I just know I can get

[00:19:35] like the perfect feedback on.

[00:19:37] Yeah.

[00:19:38] Like one of my buddies, Jonathan Goldman, we went to his

[00:19:41] Christmas party and like whenever I have a deal, I

[00:19:43] always just send it to him because I'm like, I know

[00:19:44] I'm going to get exact market value, exact, like, you

[00:19:47] know what I mean?

[00:19:47] From no BS, no BS.

[00:19:49] And I, and I just ask what his thoughts are.

[00:19:50] I never like trying to pitch anything.

[00:19:52] So like, I think if you can do it doesn't have to be

[00:19:53] deals, but like people want to have their opinions valued

[00:19:57] and stuff.

[00:19:58] And it's one of the most effective ways to learn is

[00:19:59] just to ask what they think of something.

[00:20:01] Well, not only that, I think by sending people deals,

[00:20:04] you're also providing value as well.

[00:20:05] Hey, look at this thing that I found, you know, that

[00:20:08] social currency for that person.

[00:20:10] Now they can go away and say, Hey, you know, this

[00:20:12] person sent me this deal this morning, right?

[00:20:14] I mean, that's what makes the real estate world

[00:20:16] go round.

[00:20:17] Number six here on the 10 lessons from Blackstone

[00:20:22] CEO, John Gray.

[00:20:24] Luck is a core competency.

[00:20:28] Live a life that creates favorable results.

[00:20:33] Quote from a little known gentleman here, Thomas

[00:20:35] Jefferson.

[00:20:36] I am a great believer in luck.

[00:20:37] I find the harder I work, the more of it I have

[00:20:41] Dancy.

[00:20:42] I always thought that was a Dan Foch original,

[00:20:43] the harder work lucky.

[00:20:44] No, no, no.

[00:20:45] You sold from old TJ.

[00:20:47] Yeah.

[00:20:47] Yeah.

[00:20:47] Yeah.

[00:20:48] Old Tommy, Tommy and Jefferson.

[00:20:51] I mean, look, you've, you've heard us talk

[00:20:53] about this one before.

[00:20:55] Hard work is great.

[00:20:56] You need to be working hard in this economy,

[00:20:59] but, but luck, you know, luck doesn't exist as

[00:21:04] this like, you know, Hey, I won the lottery

[00:21:06] kind of thing.

[00:21:07] I mean, it might win and it might exist in

[00:21:08] that situation, but luck to, to experience

[00:21:13] success in real estate.

[00:21:14] You know, a lot of people attribute other

[00:21:16] bit to luck, but the more things you can do

[00:21:19] to expose yourself to more people, the more

[00:21:21] value you can bring, I guarantee you the

[00:21:24] more lucky you will find yourself, but

[00:21:27] really that's not luck.

[00:21:28] That's just you putting yourself in more

[00:21:31] of the right places at the right time.

[00:21:34] And if you can be in more places at more

[00:21:36] times, the likelihood of something good

[00:21:38] happening to you goes up.

[00:21:40] Yeah.

[00:21:40] That's my thought.

[00:21:41] Like being, if you want to be in the

[00:21:42] right place at the right time, you gotta

[00:21:43] be in a lot of places a lot of times.

[00:21:45] There we go.

[00:21:46] Maximize exposure surface area, man.

[00:21:48] That's all it is.

[00:21:48] That's it.

[00:21:49] Okay.

[00:21:50] Go where the tech and creative types

[00:21:52] are going in today's day and age.

[00:21:53] Tech and creatives are developing things

[00:21:55] that are changing our world with that

[00:21:57] comes money, innovation drives capitalism,

[00:22:01] find these places and ride the tailwinds.

[00:22:03] So where are they going right now?

[00:22:06] Where are they going in Canada?

[00:22:07] Where are they going in the U S I

[00:22:08] mean, like there's a lot of migration

[00:22:10] that we're seeing around pay attention

[00:22:12] to this stuff.

[00:22:12] Even it could be even like, it

[00:22:14] doesn't even have to be geographical,

[00:22:15] but like what industries are is AI

[00:22:17] going into, right?

[00:22:20] Yeah.

[00:22:20] I mean, like, look, that's why we

[00:22:21] cover and preach about prop tech all

[00:22:24] the time.

[00:22:24] That's why not only, you know, do

[00:22:27] we utilize, but we talk about them

[00:22:29] on the podcast.

[00:22:30] We have certain products for

[00:22:32] the people in our community,

[00:22:34] deal analyzers, project management

[00:22:37] tools and the industries on, on,

[00:22:40] you know, it going through

[00:22:41] Renaissance period right now.

[00:22:42] And what does that mean?

[00:22:43] That means there's a hell of a

[00:22:44] lot of change that's going to

[00:22:45] happen.

[00:22:46] And just like the original

[00:22:47] Renaissance, that means new

[00:22:48] technologies are being brought in

[00:22:50] and new technology and that the

[00:22:52] need for new technology is more

[00:22:54] apparent than ever with all the

[00:22:56] issues we're facing.

[00:22:57] We can't beat the housing

[00:22:59] crisis using the same old tools

[00:23:02] that we've used to find

[00:23:03] ourselves here.

[00:23:04] We need to adapt and overcome

[00:23:06] and we do that through

[00:23:07] technology.

[00:23:09] That was number seven.

[00:23:10] You just read Dan, I'm going

[00:23:11] to go to number eight and then

[00:23:12] we're almost done.

[00:23:13] John Gray's never going to go

[00:23:14] to Blackstone's and how they

[00:23:17] run their business.

[00:23:18] Number eight here is be aware of

[00:23:20] inflationary pressure.

[00:23:21] Avoid businesses that cannot

[00:23:23] pass on the increased cost of

[00:23:26] the customer.

[00:23:28] So like stuff like fixed rates

[00:23:29] or long term leases.

[00:23:30] Now this one's tricky.

[00:23:32] This one is sounds great in

[00:23:34] theory, but we've talked a lot

[00:23:35] about this housing here in

[00:23:37] Canada is inflationary from

[00:23:40] almost every aspect, from

[00:23:42] almost every sense of the

[00:23:43] word from materials to labor

[00:23:45] to actual inflation.

[00:23:47] It it's not so good, right?

[00:23:50] We've seen all of the pieces

[00:23:52] of a house be affected by

[00:23:54] inflation.

[00:23:55] So this one's tough.

[00:23:55] What's your takeaway on this

[00:23:56] one?

[00:23:57] Everyone seems to know what

[00:23:58] inflation is now.

[00:24:03] I think it's an interesting

[00:24:04] way that he frames it like

[00:24:06] avoid businesses that can't

[00:24:07] pass on the increased cost

[00:24:09] to consumers.

[00:24:10] That's like cost push

[00:24:11] inflation, right?

[00:24:12] I think that this is where

[00:24:14] real estate is tough.

[00:24:16] Housing is tough.

[00:24:16] If you're a residential

[00:24:18] landlord, you can't really

[00:24:21] like your pricing power is

[00:24:22] actually kind of stripped away.

[00:24:23] And so where he describes it as

[00:24:25] being fixed rate long-term

[00:24:26] leases.

[00:24:26] So if you're like a commercial

[00:24:28] and you have like a shopper's

[00:24:28] drug mart in on like a 25 year

[00:24:30] five plus five plus five or

[00:24:31] whatever, and it's all fixed.

[00:24:33] It's tough.

[00:24:34] In Ontario, you can raise

[00:24:36] rent at two and a half

[00:24:37] percent.

[00:24:38] In BC, it's lower than that.

[00:24:40] I think in Nova Scotia,

[00:24:42] it's like in the threes,

[00:24:43] maybe capped at three.

[00:24:45] In the prairies is no cap.

[00:24:47] The point I'm making here is

[00:24:48] that be aware of that

[00:24:50] like as a factor in running

[00:24:53] your business that, you know,

[00:24:55] tenants are incentivized to want

[00:24:57] and like it's not an us

[00:24:58] versus them thing.

[00:24:58] I'm not saying this like

[00:25:00] they're your enemy, but

[00:25:01] tenants are incentivized.

[00:25:02] Like they're consumers too.

[00:25:03] They're going to try and maximize.

[00:25:04] You just have to think about

[00:25:05] them as participants in the

[00:25:06] economy.

[00:25:07] They're going to say, oh, well,

[00:25:08] why would I leave if I,

[00:25:10] you know, this unit's only

[00:25:11] ever going to go up at two

[00:25:12] and a half percent, right?

[00:25:13] You even starting to see

[00:25:14] tenants now who are like

[00:25:15] shopping for units that are

[00:25:16] built before 2018 in Ontario

[00:25:18] because there's no rent control

[00:25:20] or there's rent control on those

[00:25:21] ones, but no rent control

[00:25:22] on newer ones.

[00:25:23] And so like this is a real

[00:25:25] factor in the economy right now

[00:25:27] where the housing market

[00:25:28] is so competitive that even

[00:25:29] like people are incentivized

[00:25:31] to hoard units as a renter

[00:25:33] because and hoards probably

[00:25:35] the wrong word, but people

[00:25:36] are incentivized to not

[00:25:37] turn over units as a tenant

[00:25:38] because the cost of them

[00:25:40] switching is so substantial.

[00:25:41] So this is one of those

[00:25:42] like really important

[00:25:44] externalities to be aware

[00:25:45] of when you're in an

[00:25:46] inflationary economy where

[00:25:47] rents have gone up almost

[00:25:48] double digits for the past

[00:25:49] three years.

[00:25:50] The next one on the list,

[00:25:52] find the right life partner.

[00:25:53] I always like see this stuff

[00:25:54] on like lists are used to

[00:25:55] and I'd be like,

[00:25:56] oh, it like doesn't make

[00:25:57] any sense to me.

[00:25:58] And now I have like

[00:25:59] the right life partner.

[00:26:00] I do have the right

[00:26:01] life partner and it's

[00:26:02] like I've been in bad

[00:26:03] relationships and good

[00:26:04] relationships and this

[00:26:07] like the profound impact

[00:26:09] that it has on your life is

[00:26:10] like so it's like

[00:26:14] night and day, right?

[00:26:15] Like I just can't.

[00:26:17] And so like this is

[00:26:18] just a really interesting one.

[00:26:18] It says life is unforgiving.

[00:26:20] You need someone in your life.

[00:26:22] You can come home to

[00:26:23] and rely on and like, yeah.

[00:26:26] I mean, look, probably the

[00:26:28] least real estate related

[00:26:30] thing on any of the

[00:26:31] lists we've done.

[00:26:32] However, probably one

[00:26:35] of the most important

[00:26:35] I can comfortably tell you

[00:26:37] we get asked all the time

[00:26:39] and how to pick a business

[00:26:40] partner.

[00:26:41] I'm going into business

[00:26:41] with this person, etc.

[00:26:43] And going into business

[00:26:44] with someone having that

[00:26:46] business partner is a

[00:26:49] massive risk, a massive step.

[00:26:52] Could be very good, very bad.

[00:26:54] But guess what?

[00:26:55] It's business.

[00:26:55] You can walk away from it.

[00:26:56] You can sell it.

[00:26:57] It can dissolve it.

[00:26:59] A life partner is just

[00:27:00] a whole other thing.

[00:27:02] And I see certain people

[00:27:04] in real estate that come

[00:27:05] to the events together.

[00:27:07] And it's a beautiful thing.

[00:27:08] And I think without

[00:27:10] getting to woo woo

[00:27:12] makes a massive difference.

[00:27:13] And if I know it has in my life,

[00:27:15] I know it has in your life.

[00:27:16] We've seen it in each other's lives

[00:27:17] and in each other's life partners.

[00:27:20] And there's really

[00:27:22] not much more to say.

[00:27:23] That is probably the most

[00:27:24] important decision you'll ever make.

[00:27:25] And it will affect

[00:27:28] everything you do,

[00:27:30] whether you're positive

[00:27:31] or negative, whether it's

[00:27:32] your nine to five job,

[00:27:33] your side hustle,

[00:27:34] your first investment

[00:27:35] or your 50th investment.

[00:27:36] Make sure you got

[00:27:37] the right people around you.

[00:27:38] Your number one power

[00:27:40] team member is your life partner.

[00:27:42] Anything else before I close

[00:27:43] at the list here, Dan?

[00:27:45] No, I don't think so.

[00:27:46] OK, last one on the list.

[00:27:48] Again, this is John Gray's

[00:27:50] 10 lessons.

[00:27:52] Invest based on large scale themes.

[00:27:55] This one's cool.

[00:27:56] He provides some examples here.

[00:27:57] E-commerce, life sciences,

[00:27:59] artificial intelligence,

[00:28:00] green infrastructure,

[00:28:02] big data and more.

[00:28:04] So very interesting stuff.

[00:28:07] I think there are going to be

[00:28:09] tons of large scale themes

[00:28:11] evolving in the real estate space

[00:28:13] over the next couple of years,

[00:28:14] whether it's new construction material,

[00:28:16] new ways of assembling.

[00:28:19] So new labor methods,

[00:28:20] prop tech is disturbing the game.

[00:28:22] AIs disturbing the game.

[00:28:24] Lots to pay attention to there.

[00:28:27] So I love all those.

[00:28:28] But now let's move on

[00:28:31] to the second part of the show

[00:28:33] where we talk about Blackstone

[00:28:35] and their seven part investment process

[00:28:38] that every investor should know.

[00:28:40] Now keep in mind,

[00:28:41] Blackstone manages trillions of dollars.

[00:28:45] OK, trillions.

[00:28:46] They are actually the most successful

[00:28:48] investing firm of our day.

[00:28:50] Well, what's their secret, you're asking?

[00:28:53] They say it's their approach

[00:28:55] to investing and risk.

[00:28:57] Dan is going to start us off

[00:28:59] with number one of their

[00:29:01] seven part investment process

[00:29:03] that they think every investor needs to know.

[00:29:06] OK, number one quality

[00:29:07] of the underlying business.

[00:29:09] Great qualities.

[00:29:10] Is it unique, innovative, adaptable,

[00:29:12] high integrity?

[00:29:13] Does it have brand recognition

[00:29:15] and good financial management?

[00:29:17] I feel like this can scale pretty well.

[00:29:20] Certain elements of this can scale

[00:29:21] pretty well to the real estate space.

[00:29:23] Also if you want to consider yourself

[00:29:25] as an investible investor,

[00:29:28] an investible GP or general partner,

[00:29:30] do you have a unique strategy?

[00:29:32] Are you being an innovator in the space?

[00:29:35] Do you operate your business

[00:29:36] with high integrity?

[00:29:37] Do you have a recognizable brand

[00:29:38] that people can trust you?

[00:29:40] There's something on the line

[00:29:41] if you screw up that gets destroyed.

[00:29:45] There's coaches and investors

[00:29:47] out right now who are

[00:29:49] getting lit up publicly.

[00:29:52] But they had a recognizable brand

[00:29:54] and that's something

[00:29:55] that you have to lay on the line.

[00:29:57] That's just a whole different

[00:29:58] layer of security in something.

[00:30:00] If you and I started a big fund

[00:30:03] and did something wrong,

[00:30:05] you better believe we're getting

[00:30:06] in a lot of trouble for it

[00:30:07] and our lives are going to be

[00:30:09] very difficult.

[00:30:10] That's why we would never

[00:30:11] do something like that.

[00:30:12] Well, it is funny, right?

[00:30:12] Because I had somebody approach me

[00:30:15] at the Rockstar event.

[00:30:16] They were like,

[00:30:17] oh, do you have a fund?

[00:30:17] And I was like, no,

[00:30:18] I could never ever have

[00:30:21] financial accountability

[00:30:22] to hundreds of investors.

[00:30:24] Not that I'm not financially accountable,

[00:30:26] but it would be too stressful for me.

[00:30:29] The IR, the investor relations,

[00:30:30] that's why a lot of people are like,

[00:30:31] oh, crowdfunding or many JV partners.

[00:30:33] It's like, no, I think one JV partner.

[00:30:36] If you're going to have a business

[00:30:38] where you have a couple

[00:30:39] or you want a couple of GPs,

[00:30:41] you don't want a ton of LPs,

[00:30:42] limited partners.

[00:30:43] Just a lot.

[00:30:44] It's a lot, really.

[00:30:47] It's a lot of relationship management.

[00:30:52] We have one deal that's in

[00:30:55] management mode,

[00:30:56] just trying to make sure-

[00:30:58] Navigate.

[00:30:58] Navigate the treacherous waters.

[00:31:00] Navigate a very tough market.

[00:31:02] That's just one investor,

[00:31:03] probably the best investor,

[00:31:05] human being could ever ask for.

[00:31:07] Honestly, the nicest investor,

[00:31:08] super understanding

[00:31:09] and just gets that it's a tough market,

[00:31:12] gets what happened in the market,

[00:31:14] gets that we've made the most

[00:31:15] out of a bad situation.

[00:31:16] I couldn't imagine having to do that

[00:31:20] A hundred times.

[00:31:20] And have the likelihood

[00:31:22] of somebody being very difficult,

[00:31:23] investor or being somebody who can't afford

[00:31:26] to have that money tied up

[00:31:27] longer than they anticipated

[00:31:28] or whatever.

[00:31:30] These are the things that you,

[00:31:32] the risks that you run

[00:31:33] when you want to use other people's money, right?

[00:31:35] A hundred percent.

[00:31:36] Yeah.

[00:31:37] So well said, Dan.

[00:31:38] That is the first of seven.

[00:31:40] That's quality of the underlying business.

[00:31:42] The second part of the Blackstone process

[00:31:46] is to look at the quality

[00:31:48] of the management team.

[00:31:50] Now, the qualities that they like to see

[00:31:54] are vision.

[00:31:55] They want to make sure

[00:31:57] that there is a good culture

[00:31:58] culture that mentees

[00:32:01] or people looking for mentorship

[00:32:03] have accessibility to it.

[00:32:05] Obviously communication is key

[00:32:07] and that you can remain calm

[00:32:08] in the eye of the storm.

[00:32:09] So what I want you,

[00:32:11] the listener to think about is,

[00:32:12] okay, this is Blackstone.

[00:32:13] They manage a trillion bucks.

[00:32:15] How do I take all these

[00:32:18] and apply them to my real estate business?

[00:32:20] Even if you're doing,

[00:32:21] you're probably doing a couple,

[00:32:22] but a couple less than a trillion dollars

[00:32:24] in assets under management.

[00:32:26] But that doesn't mean

[00:32:26] you can't still have a great culture

[00:32:28] and you can't still have a good vision.

[00:32:31] And that doesn't mean

[00:32:32] that you can't offer mentorship

[00:32:34] both inside and outside of your business.

[00:32:35] Trust me, it will pay dividends.

[00:32:37] Communication, no matter where you are,

[00:32:39] who you are, what you're doing

[00:32:40] is always key.

[00:32:41] And the ability to remain calm

[00:32:44] in tough situations is super clutch

[00:32:47] because we've seen a lot of that

[00:32:49] and the people that go into panic mode

[00:32:51] in the last couple of years

[00:32:53] and usually on the wrong side of things.

[00:32:56] Whereas the people that can be pragmatic

[00:32:59] and strategic and remain calm

[00:33:01] usually find their way out.

[00:33:03] Next one on the list,

[00:33:04] likely exit strategies.

[00:33:05] I love this.

[00:33:06] I apply this a lot to real estate investing.

[00:33:09] This is why I'm a big fan

[00:33:10] of bungalows as an example.

[00:33:12] You got to think of an asset

[00:33:15] and who you're going to sell it to

[00:33:16] or if you have to,

[00:33:17] but or when you're done with it.

[00:33:19] So either you're an investor

[00:33:21] and you outgrow something.

[00:33:22] So we bought a lot of small,

[00:33:24] some smaller buildings

[00:33:25] and you scale up to some bigger buildings.

[00:33:27] You probably don't want to hold

[00:33:28] all those smaller buildings anymore.

[00:33:30] When I was advising more small cap investors,

[00:33:33] I was helping a lot of people buy

[00:33:34] old raised bungalows.

[00:33:36] You're kind of like 50s to 90s stock

[00:33:40] raised bungalows

[00:33:41] where we put basement apartments in them,

[00:33:42] typical uptown duplex conversion.

[00:33:44] And I was always like,

[00:33:45] the bungalow was always the play

[00:33:47] because it was like,

[00:33:47] this has the most buyers

[00:33:49] at the end of the day.

[00:33:50] Who are you going to sell it to?

[00:33:51] Well, you're going to sell it

[00:33:52] to either first time home buyer,

[00:33:54] you're going to sell it to another investor

[00:33:56] or you're going to sell it

[00:33:56] to a senior who's downsizing.

[00:33:58] And so who are the likely buyers

[00:33:59] of the real estate asset

[00:34:00] that you're going to buy?

[00:34:02] What is the term of the debt?

[00:34:03] Have you modeled in what it would look like

[00:34:05] if your interest rate jumped up 3%?

[00:34:07] I sure hope so.

[00:34:08] Yeah, because I think a couple people did.

[00:34:10] A lot of people might have forgot.

[00:34:12] Pretty fundamental.

[00:34:13] Don't skip that step next recession.

[00:34:16] Okay.

[00:34:16] Yeah.

[00:34:17] What is the term of the equity capital?

[00:34:19] Like, do you have an LP who,

[00:34:20] like we were just talking about this,

[00:34:21] do you have an LP who might need their money out?

[00:34:23] Do you have draws?

[00:34:24] Like what's the deal with all that?

[00:34:26] Have you thought about all of these potential areas

[00:34:28] for liquidity, for need,

[00:34:30] for stress to arise in the deal?

[00:34:32] Right.

[00:34:33] Yeah.

[00:34:34] Great points.

[00:34:35] And again, that kind of makes me think

[00:34:36] we had just recorded something

[00:34:37] about the capital stack for the course.

[00:34:39] And understanding your capital stack

[00:34:42] as your deals get bigger,

[00:34:44] who gets paid out,

[00:34:45] who's got the least risk,

[00:34:46] who do you owe money to?

[00:34:47] All those things need to be thought of

[00:34:49] before you close on that deal.

[00:34:51] Not when you're in the deal

[00:34:52] or not when you're,

[00:34:53] worst case scenario,

[00:34:54] trying to get out of the deal

[00:34:55] and then you start thinking about these

[00:34:56] for the first time.

[00:34:57] Number four, factors that could reduce

[00:35:00] the value of an asset,

[00:35:01] credit risk, oversupply,

[00:35:03] over levered natural disasters,

[00:35:05] change in political regulations,

[00:35:08] public perception,

[00:35:10] and fixed rate contracts

[00:35:12] in an inflationary time.

[00:35:14] So a lot to unpack here.

[00:35:15] But essentially this is really understanding

[00:35:18] the risk and reward of whatever asset

[00:35:22] you are going into.

[00:35:23] Right?

[00:35:23] So are there way too much of that asset

[00:35:27] such as assignment sales in the condo market?

[00:35:31] Are you or other people

[00:35:33] in that space over levered?

[00:35:37] Are you really exposed to

[00:35:39] or close to a natural disaster range?

[00:35:42] That could be anything from a floodplain

[00:35:43] to forest fires or anything.

[00:35:44] We started to see this

[00:35:46] might not be relevant

[00:35:46] to some of our listeners,

[00:35:47] but others are probably shaking their heads

[00:35:50] and remembering some horrible times

[00:35:51] in DC and Alberta and in Quebec

[00:35:55] where wildfires ripped through

[00:35:57] and we're starting to see that

[00:35:58] across the western seaboard

[00:36:01] with California and even parts of Florida

[00:36:04] that they can't even get home insurance.

[00:36:06] So think about factors

[00:36:08] that could reduce the value of your asset.

[00:36:11] That should be again something

[00:36:12] just like you're thinking about exit strategies.

[00:36:14] Think about things that could have

[00:36:15] a potential negative effect, right?

[00:36:17] Because real estate,

[00:36:18] as much as it sounds like

[00:36:20] sunshine and rainbows, it's not.

[00:36:22] And bad things happen

[00:36:23] and you need to be prepared for them

[00:36:25] when they inevitably do.

[00:36:26] For sure.

[00:36:27] Yeah, I think the environmental piece

[00:36:30] is easy for people to be like,

[00:36:31] oh, like it's not going to happen to me.

[00:36:33] Well, no, like a lot of people are like,

[00:36:35] oh, like, you know, who cares?

[00:36:36] Like ESG, blah, blah, blah.

[00:36:37] But it's like, I mean, floods are not a joke.

[00:36:40] They actually happen

[00:36:41] and they seem to be happening.

[00:36:42] There was just an earthquake in New York.

[00:36:44] Right. Yeah.

[00:36:44] So these are things that need consideration.

[00:36:47] The next is quality of the business operation

[00:36:49] and this comes down to quality of the asset as well.

[00:36:51] Like, is it efficient, scalable?

[00:36:53] Is it in a good location?

[00:36:54] Obviously, the most important thing for real estate.

[00:36:58] Is the asset or the business sustainable?

[00:37:01] Will it weather the storm of different economies?

[00:37:04] And what's the infrastructure around it?

[00:37:06] And this infrastructure is a huge piece

[00:37:08] on the real estate side

[00:37:09] because you're starting to see

[00:37:10] and we just had this discussion

[00:37:11] with Minister Fraser.

[00:37:13] Obviously, the government is prioritizing

[00:37:16] development around major infrastructure.

[00:37:17] It makes sense, right?

[00:37:18] But like, you know, infrastructure also can be your water

[00:37:20] and sewer, but it can also be your transit.

[00:37:22] Major transit station areas is going to be a huge theme

[00:37:24] and we're going to be talking a lot about that.

[00:37:26] How to find these things.

[00:37:27] It's going to be in our webinar actually on May 8th, 4 p.m.

[00:37:31] Link in the show notes, realist.ca slash webinar.

[00:37:35] But we're going to talk major transit station areas

[00:37:38] is one of my big takeaways on that one

[00:37:40] and it's how to find those

[00:37:41] because like what then the discussion that I had

[00:37:43] with Minister Fraser, it was, you know,

[00:37:47] this these exist in small towns

[00:37:48] where they're just getting, you know, their first bus route

[00:37:51] and it also exists in, you know, downtown Toronto

[00:37:53] or Vaughan Metropolitan Center as an example.

[00:37:55] Like Vaughan Metropolitan Center is a great example.

[00:37:59] They put in a subway station

[00:38:01] on the Yonge line that goes to downtown Toronto.

[00:38:02] Now there's nine towers.

[00:38:03] Literally just a city appeared.

[00:38:05] So imagine that it doesn't have to be that scale

[00:38:07] but imagine that in, you know, the local bus line.

[00:38:10] Like I'm thinking Newmarket like Upper Canada Mall.

[00:38:12] There's like the go.

[00:38:13] It was a similar story of Vaughan Metropolitan

[00:38:15] and similar store to Burnaby in BC, right?

[00:38:18] But a SkyTrain station out there

[00:38:20] and then all of a sudden there's a full new city.

[00:38:22] Yeah. So pay attention to that stuff.

[00:38:25] Infrastructure and location, massive things

[00:38:27] and those play into the quality of the asset.

[00:38:29] Anything else you want to add in here?

[00:38:31] We've got one more and then we'll get out of here

[00:38:33] and Dan this one is a special one near and dear

[00:38:36] or hearts macro economic trends

[00:38:38] in the relevant geographic region or industry.

[00:38:43] We've talked about this once or twice.

[00:38:45] We've done some content on macro trends

[00:38:47] and how they are extraordinarily important,

[00:38:50] how to find them, how to analyze them

[00:38:51] and how to apply them to your investment thesis.

[00:38:54] So we got to look like things at economic growth,

[00:38:56] demographic trends, technological advances

[00:39:00] political and social stability

[00:39:02] and of course environmental and social changes.

[00:39:05] That's the ESG part

[00:39:06] but understanding the macro economics of a region

[00:39:11] that you plan on investing hundreds of thousands

[00:39:14] or millions of dollars in.

[00:39:16] I would consider that important

[00:39:18] and looks like I'm not alone

[00:39:21] because Blackstone does as well.

[00:39:22] So if both Blackstone

[00:39:23] and Nick Hill consider that important, you should too.

[00:39:28] That is it for me everybody.

[00:39:29] Thank you so much for listening.

[00:39:32] The link for the webinars in the show notes

[00:39:34] join the webinar, join our school community

[00:39:37] and there's a whole bunch

[00:39:38] of other great links in there.

[00:39:40] Meetups, merch, you name it.

[00:39:43] We've got it.

[00:39:43] If you want Dan and I to answer any questions

[00:39:46] or you want to work with us, reach out LinkedIn,

[00:39:49] Instagram, Twitter and the show emails

[00:39:54] in the notes as well.

[00:39:55] Thank you so much for listening as always

[00:39:57] and we'll see you soon.

[00:39:58] The Canadian real estate investor podcast

[00:40:01] is for entertainment purposes only

[00:40:03] and it is not financial advice.

[00:40:05] Nick Hill is a mortgage agent

[00:40:07] with Premier Mortgage Centre

[00:40:09] and a partner in the G&H Mortgage Group.

[00:40:12] License number 10317,

[00:40:15] agent license M21004037.

[00:40:20] Daniel Foch is a real estate broker

[00:40:22] licensed with Rare Real Estate,

[00:40:25] a member of the Canadian Real Estate Association,

[00:40:28] the Toronto Real Estate Board

[00:40:30] and the Ontario Real Estate Association.