5 Of The Most Important Changes in Canadian Real Estate

[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] Today's episode content comes from our most recent free webinar.

[00:00:17] If you want to see a recording of that, head on over to realest.ca and join the

[00:00:21] community where you can find a recording of that content with visuals and some other

[00:00:28] kind of things that will help you action on what we're going to be talking about

[00:00:31] today.

[00:00:32] Let's get right to the summary.

[00:00:33] So in case you didn't know, Canada has a housing crisis.

[00:00:39] How would somebody not know that?

[00:00:40] I don't know, man.

[00:00:42] Maybe they're housed comfortably living and ignorant.

[00:00:46] Yeah, comfortably living under a rock maybe.

[00:00:48] Yeah, good one Dan.

[00:00:50] Maybe like Patrick Starr.

[00:00:52] What?

[00:00:53] To live under a rock actually means something according to the Merriam-Webster Dictionary.

[00:00:59] To live under a rock means to be unaware of things that most people know about.

[00:01:04] For instance, if you don't know who Patrick Starr is, then you must be living under a

[00:01:08] rock too.

[00:01:09] Oh, are we talking about like the Patrick from SpongeBob SquarePants?

[00:01:12] He lives under a rock.

[00:01:14] Oh, I get it.

[00:01:16] That's why he's dumb because he lives under a rock.

[00:01:19] Okay, that is good.

[00:01:20] Well done.

[00:01:21] Wow.

[00:01:22] If only he had a podcast like this one to listen to or he could be so well

[00:01:27] informed.

[00:01:28] I knew you were going to do that actually.

[00:01:32] Just how good is this podcast, you might be asking?

[00:01:34] It's so good that TransAm Frank left this amazing review on Apple Podcasts.

[00:01:42] Great stuff, five stars.

[00:01:44] I don't listen to podcasts often, but this is a must.

[00:01:47] Informative and entertaining.

[00:01:48] Glad you explain acronyms and terms.

[00:01:51] I will stay tuned.

[00:01:52] Thanks, Frank.

[00:01:54] It sounds like you have great taste in both podcasts and automobiles.

[00:01:58] I thought I was the car guy here, but I knew you were going to comment on the GM.

[00:02:03] I mean, come on, the Pontiac Firebird is one of the greatest and most iconic cars ever

[00:02:07] made and it is undisputably the cooler of the F-Body platform.

[00:02:12] Anyone who knows that is someone whose judgment you can trust.

[00:02:18] Listen to TransAm Frank when he says this podcast is a must.

[00:02:22] TransAm Frank, I love it.

[00:02:23] Sounds just like a guy out of a sick 70s or 80s movie.

[00:02:27] I can just picture him with a little bit of a mullet and a sleeveless shirt driving

[00:02:32] a third gen T-top open, cruising down the highway, listening to the Eagles.

[00:02:39] It just sounds like good old America.

[00:02:43] You know what else sounds like America?

[00:02:45] Accelerated depreciation in real estate investing.

[00:02:48] Okay, well that was possibly the worst segue we've ever done and you just made

[00:02:53] a really cool car now kind of depressing.

[00:02:56] It wasn't even a segue, honestly.

[00:02:58] Yeah, I mean, because I guess no one has any idea what we're talking about still today.

[00:03:03] Yeah, so accelerated depreciation is on the list of things that we are going to

[00:03:08] be talking about today.

[00:03:10] And that is the list of five key takeaways from Canada's newest housing plan.

[00:03:19] And one is actually from the budget, not the housing plan.

[00:03:23] Okay, so the list is four key takeaways from Canada's housing plan.

[00:03:27] And one key takeaway from the budget.

[00:03:29] So why don't we just start with that one then?

[00:03:32] Sure.

[00:03:32] So we already did a whole episode on it.

[00:03:35] Why are we doing another episode on it?

[00:03:38] Because I kind of wanted to create a more evergreen version of this, you know,

[00:03:44] talking about the long term impacts of the capital gains tax.

[00:03:48] And those impacts would be?

[00:03:51] Firstly, I think we could see corporate owners rush to sell before the capital gains

[00:03:56] tax increase, which means that there could be some good deals before June 25th

[00:04:01] when the tax policy change takes place.

[00:04:03] Like if somebody's capital gains is going to increase by $100,000 on June 25th,

[00:04:09] as an example, shouldn't they be willing to sell for a $90,000 discount on June 24th?

[00:04:16] Oh, okay.

[00:04:17] I guess, I mean, assuming their only option is of course then to sell and either

[00:04:22] give them the $90,000 discount to you or the $100,000 to the government.

[00:04:29] Yeah, I mean, I feel like there's a lot of investors who hate the idea

[00:04:33] of paying more tax and so they might actually be willing to do that.

[00:04:38] I know that's my thought.

[00:04:38] I just thought maybe it may be worth lowballing everything

[00:04:41] corporately owned on the market between now and the 25th of June.

[00:04:45] Honestly, like that's kind of a logical idea.

[00:04:48] Is this financial advice?

[00:04:50] Yeah, no, technically not.

[00:04:53] Okay, so that's a short term impact.

[00:04:56] But what about these evergreen impacts that you were mentioning?

[00:05:01] So I think investors in the long term will be disincentivized from using

[00:05:05] corporate structure because the capital gains tax applies entirely to corps,

[00:05:12] but it has that $250,000 step up for individuals.

[00:05:15] So as we explained in the capital gains episode with the $250,000 portion,

[00:05:21] you are taxed at the original inclusion rate of 50%.

[00:05:25] But with the corp, the whole amount is taxed at the new inclusion rate of 66%,

[00:05:32] whereas as an individual, it steps up after 250k.

[00:05:36] Right, and if that sounds complicated, one piece of advice,

[00:05:39] go back and listen to that full episode on capital gains.

[00:05:42] It's only a few episodes back.

[00:05:44] And I think we'll probably have to do a revised and revisited episode on owning

[00:05:50] in a corporation versus your personal name because that is still one of the

[00:05:55] most common questions that we get, Dan, right?

[00:05:57] Like how do I buy it?

[00:05:58] Do I, you know, if I'm just buying my first one or if I'm buying my fifth one,

[00:06:02] do I move them into corps or do I keep on buying a personal name?

[00:06:05] So stay tuned for that.

[00:06:07] Yeah, I think we'll definitely have to do an updated version on that once this tax

[00:06:10] comes in as well as like once we actually see the legislature on it

[00:06:14] because I think there's going to be a pretty good opportunity from another one

[00:06:18] of my favorite things.

[00:06:19] But we'll get to that in a minute.

[00:06:21] Yeah, yeah.

[00:06:22] And we'll probably use that same topic, the owning in a court versus

[00:06:27] personal name as one of our free webinar topics as well.

[00:06:33] Yeah, that would be a good one with an accountant or something like that.

[00:06:38] Yeah, we're doing these free monthly webinars, by the way, for anyone who

[00:06:42] hasn't heard about them on any of our social medias or if you're not in our

[00:06:46] realist.ca free or paid communities, you can go register at realist.ca

[00:06:53] and get notified when the next one is we are picking very relevant,

[00:06:58] very topical subject matter and kind of doing a deep dive.

[00:07:02] Either just going to be Dan and I or we will be bringing in an expert to help us

[00:07:08] discuss these important changes to real estate into the economy.

[00:07:13] Yeah, the only way you can join the webinar is on realist.ca and the only

[00:07:15] way you can see the recording is on realist.ca.

[00:07:18] So just join to get notified.

[00:07:20] There's really like it's a free free investors community.

[00:07:23] You know, usually I would cynically say, like, if something's free,

[00:07:26] you are the product being sold.

[00:07:27] Mwahaha. But yeah, no, I mean, it's just like it's a bunch of investors,

[00:07:31] 350 people now, I think listeners to the show just talking about real estate

[00:07:35] investing and practice sharing practical stuff.

[00:07:37] There's like a feed in it school group for those like people who know school

[00:07:41] SKOOL and for those that don't know.

[00:07:43] And I mean, Alex Hormozi, he knows we're both fans of Mr.

[00:07:48] Hormozi and his business practices, great cabs and his muscles.

[00:07:52] Yeah, he actually just bought, I think, what, like a 50 percent stake

[00:07:56] in school, something like that.

[00:07:58] Some big and he's like wearing the hat now all the time.

[00:08:01] It's cool. School is cool.

[00:08:02] School. It's cool.

[00:08:04] Yeah, OK. So the final impact I would see and this is the one I mentioned

[00:08:08] that I was going to mention is that capital gains could,

[00:08:13] you know, this capital gains increase could lead to one of my favorite ways

[00:08:15] to structure a deal. Can you guess what that is, Nick?

[00:08:18] Please say VTBs.

[00:08:22] You're getting good at this, honestly.

[00:08:24] It is VTBs when you sell a property that isn't your home

[00:08:27] that you regularly live in.

[00:08:29] You have to pay capital gains tax with assuming there's capital gains,

[00:08:32] of course, you know, if you're not like every other real estate investor

[00:08:35] in Canada who chooses to have capital losses.

[00:08:38] That seems to be the investing style.

[00:08:39] Buy high, sell low.

[00:08:40] They did not hear the Warren Buffett episode.

[00:08:42] With a VTB, you're paid out over time, which means you defer

[00:08:47] paying this capital gain taxes over the life of the VTB.

[00:08:50] Yeah, one of the things that we kind of compare it to sometimes

[00:08:54] when we're pitching this on our own deals is it's almost like getting

[00:08:58] a bit of a dividend stock in some fashion.

[00:09:01] Now, of course, this is through a tax program called the Capital Gains Reserve.

[00:09:06] This reserve is available for the deferral of capital gains

[00:09:11] on disposals of property when the proceeds are received

[00:09:16] over a number of years.

[00:09:18] Yeah, so the reserve can be claimed up to a maximum of four years,

[00:09:21] which spreads the capital gain out over five years.

[00:09:23] There's a maximum reserve that can be claimed in each year.

[00:09:26] The maximum is calculated as a percentage of the capital gain.

[00:09:29] So the maximum percentage would be in the year of sale, 80 percent.

[00:09:32] After the sale, the first year, 60 percent.

[00:09:35] Second year, 40 percent.

[00:09:36] Third year, 20 percent.

[00:09:37] Fourth year, zero percent.

[00:09:39] So 20 percent per year, if my math is correct.

[00:09:42] Yes, I suppose that would have been a much more appropriate way

[00:09:45] of explaining it. I'm like reading a table here.

[00:09:47] But yeah, 20 percent per year.

[00:09:48] No, we're breaking it down like a fraction. I like it.

[00:09:50] So this would also be a great topic for one of our free webinars,

[00:09:55] which again are going to be monthly.

[00:09:58] Yeah, this will probably be the first one after the capital

[00:10:01] gains tax comes in or actually, no, sorry.

[00:10:03] Sorry, it'll be right before. So this will be our June webinar.

[00:10:05] I'll do I'll talk about capital gains and like kind of how to

[00:10:08] look at like how to find somebody or like ask your realtor

[00:10:11] how to find what somebody's capital gain is to kind of try

[00:10:14] and use that as leverage to negotiate with them to be like,

[00:10:16] hey, look, if I close this on the 24th,

[00:10:18] here's the discount that I want because I know I can see

[00:10:21] that you're you're going to be your capital gains going to go up by

[00:10:24] tick tock. So so that I think is going to be a huge leverage

[00:10:27] position for people to have in the next month.

[00:10:30] I kind of want to do that one sooner.

[00:10:31] So maybe I'll add a little bit of it into tomorrow's webinar,

[00:10:34] the eighth webinar, but because I think people need time to do

[00:10:37] that. But it is already in the works.

[00:10:40] The web the webinar on V.T.B.

[00:10:42] And I was really motivated to do this one by Jamie,

[00:10:45] who's in our realist dot C.A.

[00:10:47] course, who bought like three or four properties using V.T.B.

[00:10:51] from the advice of the episode that we had the first V.T.B.

[00:10:54] episode that we did. He's like, yeah, I started listening to your podcast

[00:10:57] and I went and like showed it to my lawyer and then I found a bunch

[00:11:01] of deals and then I just did a bottom on V.T.B.

[00:11:05] So they're like, wow, shout out to Jamie.

[00:11:07] What an absolute beauty.

[00:11:08] And like it just puts such a smile on on our faces.

[00:11:11] It makes it feels like we're actually doing something here

[00:11:13] instead of just sitting in a dark room talking to each other.

[00:11:16] Now we hit home because he was like, I bought like literally three properties

[00:11:19] and we in realist, as we do for our members,

[00:11:24] we did a portfolio audit with him and went through all of his properties.

[00:11:28] And he was telling us about the V.T.B. terms and everything.

[00:11:31] I'm like, man, this guy is killing it was just awesome.

[00:11:34] By the way, I don't know if we've if we've said V.T.B.

[00:11:37] vendor take back otherwise known as seller financing.

[00:11:40] There's several episodes that we've done about it.

[00:11:42] And if you want to know more, hey, tune into the webinar.

[00:11:45] Make sure you go. So that'll be our June webinar.

[00:11:47] Yeah, it'd be first week of June.

[00:11:50] So the moral of the story here is that if a seller's capital gains

[00:11:53] exposure goes up on the 25th of June, then their financial

[00:11:57] financial incentive to give you a V.T.B.

[00:11:59] should also go up on that date and their financial incentive

[00:12:02] to give you a discount should be should exist prior to that date.

[00:12:06] So in plain English, the seller's willingness

[00:12:09] to give you that vendor take back will be higher after that date.

[00:12:15] Yeah, they should be more motivated to give you a V.T.B.

[00:12:17] The more capital gains they owe until they hit a maximum,

[00:12:19] which I think is like 800000 capital gain.

[00:12:21] I think that can be spread out over five years because that is

[00:12:24] what would put you into the highest tax bracket.

[00:12:26] That could change, though, with the new inclusion rate.

[00:12:29] So I'll have to redo the math once the policy comes out.

[00:12:32] Yeah, yeah, exactly.

[00:12:33] We'll redo the math and put it in the webinar

[00:12:36] with some some cool easy to read visuals.

[00:12:38] OK, done. Yes, sir.

[00:12:40] OK, on to the next one here, Dan.

[00:12:44] Yeah. So should we do the other tax one, accelerated depreciation?

[00:12:49] You know, no, let's give them a break and come back to that one.

[00:12:52] Enough too much taxes for now.

[00:12:54] What other options do we have?

[00:12:55] So we have your top five list that you sent me, which is that one,

[00:12:58] the accelerated capital cost allowance for apartments.

[00:13:00] Yeah. Number two, offering low cost financing for homeowners

[00:13:03] to add additional suites.

[00:13:05] Number three, further incentivizing density to existing homes.

[00:13:08] Number four, modernizing housing data and number five,

[00:13:10] helping municipalities legalize housing and streamline approvals.

[00:13:14] Great choices if I do say so myself.

[00:13:17] Let's let's do the low cost financing one.

[00:13:20] Sure. So the plan says Canadians from coast to coast

[00:13:23] want to be part of Team Canada response to solving the housing crisis.

[00:13:28] It was pretty high that they did that.

[00:13:30] Like I thought it was a little bit.

[00:13:32] Many homeowners have like, you know what?

[00:13:35] Actually, I'll give them credit because they're acknowledging that

[00:13:37] like like seriously, until this came out,

[00:13:40] people were demonizing investors as like it's you know, like

[00:13:44] there's two things that need to go into the production of an economy,

[00:13:47] labor and capital. Right.

[00:13:48] And like everybody else wants to pit them against each other.

[00:13:50] And like even even Marx, who like came up with the ideas of labor

[00:13:53] and capital, gives like this glowing review of capitalism.

[00:13:57] Like he proposes Marxism and communism after.

[00:14:00] But like the first half of his book, Das Kapital is or might be the other one.

[00:14:04] I can't remember the other books name is now.

[00:14:05] But like honestly, of people who have like described

[00:14:10] capitalism as like very guys, a fan of capitalism, by the way,

[00:14:12] like he just thinks that like it will lead to communism anyway.

[00:14:16] Setting that aside, those concepts come from like capitalism versus communism.

[00:14:20] But they're necessary to developing things like housing.

[00:14:24] And they're finally acknowledging that the like investors,

[00:14:26] the capital portion of the equation need to do this,

[00:14:31] need to need to play this role in order to get housing created.

[00:14:36] I mean, it's never been more clear.

[00:14:38] We've we've talked about it for almost two years at this point.

[00:14:42] Right. And, you know, that's the it's kind of that goes back to the

[00:14:45] the battle between the public and private sectors as well.

[00:14:49] Now, this is starting to change recent municipal zoning reforms in Canada's

[00:14:54] major cities, including reforms through the Housing Accelerator Fund

[00:14:59] agreements are creating new opportunities for homeowners

[00:15:02] to quickly add additional suites

[00:15:05] to their properties in order to support densification.

[00:15:09] New rental suites will provide more homes for Canadians

[00:15:13] and could provide an important source of income for seniors and families

[00:15:18] who would be able to afford continuing to age at home or age in place.

[00:15:23] I can tell you just from my personal family,

[00:15:26] I know that Nona does not want to leave home unless she has to.

[00:15:30] New suites can also be built free of barriers

[00:15:33] to accommodate physical impairments of an aging family member

[00:15:38] or a parent sibling or even a child with a disability.

[00:15:43] Yeah, so one of the pieces I left out when I started talking about Marxism

[00:15:47] while I was reading the first paragraph there, I tend to digress like that.

[00:15:51] But a lot of homeowners have extra space that they can convert

[00:15:53] into a rental suite, such as an unused basement garage

[00:15:56] or could be a garage that could be converted into a laneway home,

[00:15:59] which I've done that.

[00:16:00] I converted a detached garage into an admittedly illegal detached ADU,

[00:16:08] not financial advice.

[00:16:09] And historically, the cost of renovating combined with municipal red tape

[00:16:12] has made that both difficult and expensive is what they mentioned.

[00:16:14] So Budget 2024 will propose this Canada secondary suite loan program

[00:16:20] to be delivered by CMHC, the Canada Mortgage and Housing Corporation,

[00:16:23] which will enable homeowners to access up to $40,000

[00:16:26] in low interest loans to add a secondary suite to their homes.

[00:16:30] Details of the program is supposed to be shared in the coming months.

[00:16:33] Yeah, and just as an aside, you know, again, we've mentioned numerous times

[00:16:37] the extra space, right? Canada builds big houses

[00:16:40] and a lot of those houses either sit empty or mostly empty.

[00:16:45] So everyone seems to be complaining, though,

[00:16:48] that that's not enough money to add a secondary suite.

[00:16:52] I mean, I'm probably one of those people.

[00:16:54] So like, let's actually just think about this.

[00:16:57] Like in a best case scenario, what can you get with $40,000 today?

[00:17:01] That's like kind of part of building an apartment.

[00:17:03] I mean, like maybe a kitchen and a bathroom.

[00:17:08] Right. So OK, that's actually good enough.

[00:17:11] Like that's really like the bones of an apartment.

[00:17:13] Like, you know, like a condo in Toronto now that's being built

[00:17:16] is just a kitchen and a bathroom. Right.

[00:17:20] Little bit of space for a bed.

[00:17:21] And you can sit on the floor somewhere in there as well.

[00:17:23] But yeah, it's about it. Yeah.

[00:17:25] I mean, it does like like the depressingness of that being

[00:17:30] like the what I'm calling a housing unit is not lost on me, by the way.

[00:17:35] Like the fact that we are at the point of the housing crisis,

[00:17:38] that those are our condos and that we are talking about putting sheds

[00:17:41] in somebody's backyard with a kitchen and a bathroom in it is like I get it.

[00:17:45] It's sad. But let's just like really boil it down.

[00:17:47] A kitchen and a bathroom could be good enough in that case.

[00:17:51] You know, if you're an investor out there right now,

[00:17:53] it sounds like I should be shopping for a house that only needs a kitchen

[00:17:57] and a bathroom to add an additional suite rather than complaining

[00:18:00] about not getting enough low cost financing.

[00:18:03] Well, you may be right, Dan, but this is the Canadian real estate

[00:18:07] investing market that we're talking about here.

[00:18:08] And there is no place for logic. OK.

[00:18:11] So this is one of those things that we've been talking about

[00:18:12] for a while, though, like the government will keep supporting

[00:18:14] adding units to existing dwellings because nobody is building

[00:18:18] high rise right now because the economics of high rise do not work.

[00:18:22] Yes, that is very correct.

[00:18:23] And they follow that up with the next point here in the plan,

[00:18:28] which is to further incentivize

[00:18:32] further incentivizing density to existing homes.

[00:18:37] And I guess in that,

[00:18:41] like it says, recent municipal zoning reforms in Canada's major cities,

[00:18:44] including including reforms to the housing accelerator fund agreements,

[00:18:49] are creating new opportunities for homeowners to redevelop properties

[00:18:52] to add density.

[00:18:53] This could be in the form of adding a secondary suite

[00:18:55] or entirely rebuilding what was a small bungalow into a triplex

[00:18:58] with a home for three families.

[00:19:01] Yeah, I mean, I know you and I are both big fans of this idea

[00:19:04] and know several people that are currently doing this with

[00:19:07] or without these government incentives.

[00:19:09] So to give effect to these zoning reforms,

[00:19:13] we intend to make targeted changes to mortgage insurance rules

[00:19:17] to encourage densification by enabling homeowners

[00:19:20] to add density to their current homes or properties by, among other things,

[00:19:25] increasing the applicable insured mortgage limit.

[00:19:28] That that statement, that whole paragraph there is really a

[00:19:32] between the lines kind of thing.

[00:19:33] Read that again for me at the end there. Yeah.

[00:19:37] Enabling homeowners to add density to their current homes

[00:19:41] or properties by, among other things,

[00:19:44] increasing the applicable insured mortgage limit.

[00:19:48] So they start that paragraph by saying they intend to make

[00:19:51] targeted changes to mortgage insurance rules to encourage densification.

[00:19:55] OK, these are important things.

[00:19:57] Again, nobody's really latched onto this yet.

[00:19:59] And then they say they're going to they're going to increase the amount,

[00:20:02] like I guess.

[00:20:04] Yeah, I think they're going to increase the amount

[00:20:07] that you can spend on an insured mortgage.

[00:20:10] So they'd be like increasing the amount

[00:20:14] if you're buying a multiplex or adding units to make your property a multiplex.

[00:20:19] Yeah, and that could really unlock a lot of opportunity

[00:20:22] for what is one of my personal favorite

[00:20:27] entry level or entries into real estate investing, which is house hacking.

[00:20:34] Yeah, I think it's it is kind of sad,

[00:20:35] like, you know, kind of to go back to that point of like that we

[00:20:38] this is where we're at in the housing crisis,

[00:20:40] where one of the only ways that you can afford a home is by adding another unit to it.

[00:20:45] Yeah, I mean, look, it's it's sad.

[00:20:48] But we've also been saying that this is going to happen for for two years.

[00:20:51] Basically, since we started the podcast, we've we've been saying this.

[00:20:56] Yeah, for sure.

[00:20:57] Would you say we told you so?

[00:21:00] Well, I mean, that would be unsportsmanlike.

[00:21:03] I would never actually say that live on on the podcast.

[00:21:06] So it sounds like offline.

[00:21:08] Yeah. So yeah, I know you do all kinds of sports and like things off offline.

[00:21:13] Offline, off camera.

[00:21:14] Yeah. So it it sounds like there will be more financing for multifamily

[00:21:19] homes and adding units, especially for owner occupiers.

[00:21:21] And the easiest way for the government and CMHC

[00:21:24] to get lenders to play in that space is by removing some of the risk for them.

[00:21:29] And in doing that, it is increasing mortgage insurance, like making those loans.

[00:21:35] Well, if you insure those mortgages, then they're lower risk mortgages.

[00:21:38] So yeah. And as you said, right, especially for owner occupiers.

[00:21:41] And that could blend nicely with the garden suites,

[00:21:45] laneway homes, DADUs, whatever you want to call them for people

[00:21:49] who want that separate apartment detached from their house.

[00:21:53] So not that basement suite, but essentially take that basement

[00:21:56] suite and put it in the backyard.

[00:21:58] Yeah, I guess as as a municipality started proving these things

[00:22:02] and getting them built, I think that's going to be a big theme this year on the show.

[00:22:06] And perhaps a free webinar topic.

[00:22:09] It will be a free webinar topic in the future as well, probably kind of

[00:22:12] in the middle of construction season, because we're really like we're really

[00:22:14] in like the first year, early days, like we're really in the first major

[00:22:18] year of the construction season of garden suites.

[00:22:22] And so a lot of talk over the last few years about them, not a lot of action.

[00:22:25] And by and by no means am I saying that the people out there

[00:22:28] that were trying to act upon them were not doing a good enough job.

[00:22:31] They just had a hard time getting things done.

[00:22:33] It's we're in early adoption.

[00:22:35] Like this is literally like we're in like day like you're like you're

[00:22:38] you're the first like five Uber drivers.

[00:22:40] Yeah, you're you're you're you're ordering DVDs from Netflix.

[00:22:44] Yeah, yeah, yeah.

[00:22:46] Yeah. So make sure you sign up at realist.ca

[00:22:48] for future webinar announcements, because again, we want to be able

[00:22:51] to like really share some more of these granular details and opportunities.

[00:22:55] Yeah, for sure.

[00:22:57] And friend of the show, Mike Kardash,

[00:23:00] who we mentioned in our Vaughn, he's our Vaughn meetup post.

[00:23:04] We mentioned in the meetup episode where to meet the best people

[00:23:07] and find the best deals Vaughn meetup post.

[00:23:10] He's been doing some really cool stuff in this space.

[00:23:12] And then, of course, good friend of the show,

[00:23:15] Joey, who is also a realist.ca member and a contractor,

[00:23:19] did a session for us in the course.

[00:23:21] He's building two laneway homes right now for his own investment properties

[00:23:26] and going all in on helping other people build them in the GTA.

[00:23:32] Or I should say the GTH.

[00:23:34] Yeah, definitely emphasis on the age because he's a Hamilton guy.

[00:23:37] Yeah. And there's a couple of other groups that we've been talking to,

[00:23:39] like a tiny home group out of Ottawa that I think will be on a notable

[00:23:42] television show sometime in the future that would be cool.

[00:23:45] Like, I think we just want to we really want to bring these people

[00:23:47] into the into the sphere and create opportunity for our listeners.

[00:23:52] Because to me, it's like we've been saying on the show for so long.

[00:23:57] Like if you're if you own a bad investment, usually the best outcome.

[00:24:00] Like let's say you're at the top of a decision tree.

[00:24:02] It's like my investment is not performing. OK.

[00:24:05] You have two options.

[00:24:06] Well, before you only had one option, which was like probably sell it.

[00:24:09] Right. Or like at a loss. Yeah.

[00:24:10] And we have been talking about, you know, is there ways

[00:24:14] to make an investment, not a bad investment?

[00:24:17] But it requires capital. Right.

[00:24:18] So I think we're starting to get to this fully integrated world

[00:24:21] where you get groups like Calvert, who we've had discussions

[00:24:24] about financing this stuff.

[00:24:26] You get groups like the tiny homes or like Joey or whoever

[00:24:31] who are finally building these end to end solutions

[00:24:34] that make it possible to like really, really do these for every investor.

[00:24:38] And now all of a sudden, the investor can rent that out and cat

[00:24:42] if you can put term debt on it, like a long like a long term mortgage.

[00:24:45] So you build it with construction financing,

[00:24:48] you know, then go get a new appraisal.

[00:24:49] The bank is willing to lend against it.

[00:24:51] Ideally, like this, I'm hypothesizing because again, we're so early in the game.

[00:24:55] We don't know this is taking place yet.

[00:24:57] The rents service the cost of building it.

[00:25:00] And now all of a sudden, you've created housing and created cash flow.

[00:25:02] Like that's a win win solution.

[00:25:04] Some might even say a team Canada solution. Right.

[00:25:07] Yeah. Yeah.

[00:25:08] So so Joey will likely be coming on the show later,

[00:25:12] like kind of down the road once he's in the middle of building them

[00:25:16] and like going to really walk us through what that looks like.

[00:25:18] And how to execute them properly.

[00:25:19] We may actually start off with an episode kind of comparing garden suites

[00:25:23] versus basement apartments from everything to, you know,

[00:25:27] from personal preference to return on investment of those two different types

[00:25:31] of ways of adding a unit because I'm doing a basement addition right now.

[00:25:35] And Joey's doing the guard, the two garden suites.

[00:25:39] So I'm just interested to see, you know, like which one's more headaches,

[00:25:42] which ones, you know, which is like the big thing with a with a basement

[00:25:46] suite is like it's intrusive to your tenant in the house.

[00:25:48] Exactly right. I mean, it's the you are living with someone else

[00:25:54] in that same structure.

[00:25:55] And and the other thing is they don't have to be mutually exclusive.

[00:25:58] You can also do a basement suite and a garden or lay.

[00:26:02] Yeah, I guess my thought would be more like the construction, though.

[00:26:04] Like if if you have a tenant,

[00:26:06] if you're like, let's say like mine's a walkout bungalow.

[00:26:08] So so the other people are going to be they're living through construction.

[00:26:11] So I either got to either have to like do a renovation,

[00:26:15] which is not like a path that I would want to go because it's you know,

[00:26:18] it's under fire right now.

[00:26:19] And it's not like it's not really a worthy cause of a rent eviction.

[00:26:23] Or I have to basically like offer them maybe a rent abatement,

[00:26:25] like a discount on rent to be suffering through all that noise.

[00:26:29] Yeah. Camera drills and stuff going off in the basement.

[00:26:30] Right. Solution impact guns like is, you know, all listening to that all day,

[00:26:34] especially with people working from home and whatever.

[00:26:36] Like you're not going to have happy tenants upstairs.

[00:26:38] So they're hopefully not podcasters or they'd be.

[00:26:40] Yeah, exactly. Right.

[00:26:43] Yeah. OK. Really interesting stuff.

[00:26:46] Let's get back to the top five less.

[00:26:49] We're we got three left, I think.

[00:26:50] You're right, Dan. I think I grouped one of them in.

[00:26:53] So I think we only have two left.

[00:26:55] And an honorable mention, of course.

[00:26:57] So we've covered low cost financing for homeowners and additional suites,

[00:27:02] which we just covered and further incentivizing density to existing homes.

[00:27:08] OK, now I guess we can finally do the accelerated

[00:27:11] capital cost allowance for apartments. OK.

[00:27:15] So finally, I get to nerd out a little bit here back to the tax.

[00:27:19] It says we are going to create the next generation of Canada's rental stock

[00:27:22] and get them built faster by introducing a temporary accelerated

[00:27:26] capital cost allowance tax measure that will be proposed in budget 2024.

[00:27:31] Now, increasing the capital cost allowance rate

[00:27:34] from what it's currently at is four percent to ten percent

[00:27:39] will incentivize builders to get more projects moving

[00:27:43] by increasing their after tax return on that investment.

[00:27:48] So as an investor, your cash flow and your after tax cash flow will go up.

[00:27:53] How do we want? Yeah.

[00:27:54] I mean, yeah, it's kind of a point.

[00:27:56] Yeah. Eligible new purposeful rental projects will be

[00:27:59] would be those beginning construction on or after April 16th.

[00:28:04] So this is already in place.

[00:28:05] Like literally, if you started a construction today, it would qualify.

[00:28:09] And before January 1st,

[00:28:10] 2031 and that are available for use before January 1st, 2036,

[00:28:15] which is crazy, like just the idea of something being completed in 2031.

[00:28:19] And then it's like, you can't why is there no tenants?

[00:28:23] I don't know. Yeah. Well, hey, it's just, you know,

[00:28:25] it's also just funny looking at the dates, January 1st,

[00:28:28] 2031 and January 1st, 2036, like where are in the world?

[00:28:32] Are we going to be at that point in time now? Listen.

[00:28:35] So I've mentioned this on the show before, someone who spent a lot of time

[00:28:39] in my early days as a aspiring real estate investor,

[00:28:44] listening to bigger pockets and other United States based podcast.

[00:28:50] There is something this is something I heard a lot about in the U.S.

[00:28:54] And it sounds like investors use it a lot to improve their properties

[00:28:59] through ideas like the accelerated depreciation and bonus depreciation.

[00:29:05] Yeah. So it is a little bit different there,

[00:29:07] but let's quickly explain that just to create some context,

[00:29:10] because this is really one of those things that is used

[00:29:14] to get people really investing in their properties.

[00:29:17] It's not just for housing in the U.S., it's like anything.

[00:29:20] But accelerated depreciation in the USA,

[00:29:23] it is known as straight line depreciation.

[00:29:25] It's the basis for many tax advantages within real estate.

[00:29:27] Depreciation can be such a hefty benefit that some individuals look

[00:29:30] to front load it and take as much depreciation as possible

[00:29:33] in the early years of ownership. This is called accelerated depreciation.

[00:29:37] Okay. Interesting. Now, in order to accomplish this,

[00:29:41] a cost segregation study has to be performed.

[00:29:45] The purpose of said study is to identify the non-structural elements

[00:29:50] and land improvements and separate them from the structural elements.

[00:29:57] So the structural elements will get depreciated over 27.5 years.

[00:30:00] So like the bones of the house.

[00:30:02] We're talking like foundation.

[00:30:05] But non-structural items like wall coverings, carpet fixtures,

[00:30:08] and other are reclassified as personal property.

[00:30:10] And personal property can be depreciated over a shorter period,

[00:30:13] like five to seven years.

[00:30:15] Okay. Interesting. I guess the shag carpet is not as

[00:30:19] integral to the structure as the foundation.

[00:30:21] Who would have thought?

[00:30:21] Yeah, something like that.

[00:30:22] So basically you're talking about all the components of a property

[00:30:26] and dividing them up and depreciating some of them faster than others,

[00:30:32] which makes total sense when you think about it.

[00:30:34] Yeah. Basically, yes. But this is the US.

[00:30:36] So in Canada, this would apply for capital costs that you would spend building a new apartment

[00:30:42] or adding a new apartment rather than specific items that you'd be segregating.

[00:30:47] The piece that's segregated out that's depreciating faster is that all of the

[00:30:50] components of that new apartment.

[00:30:51] And it also, and this comes from Bryce Waterhouse Cooper's website,

[00:30:55] their budget 2024 summary. It says it introduces accelerated

[00:30:59] capital cost allowance, CCA for, and relief from interest deductibility limitations for debt

[00:31:05] incurred to fund the construction of certain purpose-built rental housing.

[00:31:08] We're going to get to what certain means, but let's touch on bonus depreciation first.

[00:31:12] Right. So bonus depreciation, this comes from Forbes.

[00:31:17] Can I say friends of the show?

[00:31:19] Sure. Yeah. I think you can just pay Forbes to save your friends.

[00:31:22] You've been in Forbes, but then like-

[00:31:23] No, I haven't. I've never been in Forbes.

[00:31:24] Okay. Cause I was going to say, yeah, remember they reached out to us and they're like,

[00:31:28] you can have a full spread only for $2,500. I was like, yeah, not doing that.

[00:31:33] Anyways, I've been a long time reader of Forbes, so not throwing shade at them.

[00:31:37] And this is directly from their online website.

[00:31:42] In the right circumstances, front loading depreciation can be highly beneficial.

[00:31:47] However, in the short term, bonus depreciation has taken that accelerated benefit to new

[00:31:54] heights. Unless you're investing in a new development, bonus depreciation likely isn't

[00:32:01] on your radar. Historically, this benefit was only in the new development space.

[00:32:07] However, the tax cuts and jobs acts of 2017 changed all that.

[00:32:13] So for properties acquired after 2017, owners can take a hundred percent benefit in year one.

[00:32:18] This is U.S. again, but I'm just using this to contextualize because these things are

[00:32:21] credited with getting a lot of housing created. The property doesn't have to be new. It just

[00:32:25] has to be new to you. So that means that all of the personal property and the land

[00:32:28] improvement benefit no longer has to be spread over five, seven or 15 years. Instead it can

[00:32:32] be taken all in one year. Now that can equate to a massive windfall of depreciation in year

[00:32:38] one, but why would somebody want to do that? Well, there are millions of people who receive

[00:32:45] a significant passive business income as reported on a K-1. For those people, bonus

[00:32:51] depreciation can provide a material benefit. So for example, somebody makes $150,000 of passive

[00:32:59] income on a K-1 and from an unrelated business, they also have, let's say $70,000 of first

[00:33:05] year bonus depreciation from rental property. Instead of paying tax on 150,000, they can

[00:33:09] subtract the 700,000 of depreciation, which is like a tax loss and only be taxed on 80,000

[00:33:16] of income in that year. Depending on their tax bracket, they could see material reduction

[00:33:20] in that year's tax potentially to the tune of tens of thousands of dollars.

[00:33:24] So remember when we did an episode on MURBS, that's M-U-R-B-S, episode 161,

[00:33:31] the National Housing Strategy? Yeah, they used MURBS as like their

[00:33:35] acronym for like, if you talk to anybody in the real estate space that is-

[00:33:39] It's been around for a while.

[00:33:40] Yeah, they call multi-family buildings MURBS, which I think is actually great.

[00:33:44] I think it's like-

[00:33:44] It's cool. I'm going to start doing it.

[00:33:45] Yeah, we should start doing that for sure. Okay, done.

[00:33:48] Yes. Oh, anyways, back to MURBS.

[00:33:50] They're called MURBS now as guys.

[00:33:51] Yeah, get used to it. What you're describing, Dan, in the US is more close to what existed

[00:33:58] in Canada in the 1970s. Back then, that helped us reach record building of purpose-built rentals.

[00:34:06] We are slowly inching getting closer back to that tax incentivized development strategy here

[00:34:13] with these new proposed changes.

[00:34:15] Yeah, exactly. Record number of MURBS, which is multi-unit residential buildings.

[00:34:21] I agree we are definitely getting closer, though that program allowed people with high

[00:34:25] incomes to offset those capital gains against their actual income. More similar to the US

[00:34:29] example where we just mentioned people can deduct it against their passive income,

[00:34:32] not their active earnings. If you were like a doctor in Canada in the 70s making a bunch

[00:34:37] of money and maybe you're driving a Pontiac Trans Am we mentioned earlier-

[00:34:40] Course.

[00:34:40] ... rolling around top down listening to the Eagles,

[00:34:43] you could buy an apartment building and deduct it against your actual income.

[00:34:46] High earners were super incentivized to do it.

[00:34:49] And that's probably why so many doctors are legacy apartment building owners here in Canada.

[00:34:54] It is literally exactly why so many doctors are legacy MURB owners in Canada.

[00:35:00] Love it, MURBS. But that isn't it, right?

[00:35:03] Yeah, so this is not that. This would allow you to increase the tax deductibility of capital

[00:35:08] costs on an asset against the income from the asset which could be either earned within

[00:35:16] the corp or earned within your personal earnings. So I reached out to Macau Wach who is,

[00:35:22] I hope I said that right. I have a hard to pronounce last name as well so I apologize but

[00:35:27] I think it is right. He's a big tax accountant in the investment community and I reached out to

[00:35:31] him for an explainer on this for the webinar that we're doing on May 8th so that the

[00:35:36] recording will be available on realist.ca. I feel like I've plugged that so many times in

[00:35:39] this episode but we do, we want lots of people in there because we want to be like,

[00:35:42] if you listen to the show, you know we like to give away free information.

[00:35:45] We love it. So it's just another way for us to do that. Nick, do you want to read this for me?

[00:35:50] I would be honored. So the Accelerated Capital Cost Allowance, of course otherwise known as

[00:35:55] the CCA on purpose-built rental housing. The budget provides an accelerated CCA,

[00:36:02] that's capital cost allowance of 10% for new eligible purpose-built rental projects

[00:36:08] that begin construction after April 15th of 2024. So if you are listening to this,

[00:36:14] it's already happening and before January 1st of 2020-31 and that are available for use

[00:36:21] before January 1st of 2036. Eligible property will be new purpose-built

[00:36:27] rental housing that is a residential complex. So it has to be at least

[00:36:31] four private apartment units or fourplex or 10 private rooms or suites which I found interesting.

[00:36:36] So like a rooming houses are leaning into a little bit there. We do know the fastest growing

[00:36:40] household type in Canada is roommates. Honestly, I would be developing roommates, or sorry,

[00:36:46] wait past that point in my life. I would be developing rooming houses if it was easy to

[00:36:52] finance. That's the hard part. But again, we are still early days. There's an opportunity for

[00:36:58] hey all the financial geniuses out there come up with a cool financial product that can fund

[00:37:03] this kind of stuff. There's a lot of opportunity in the financial product space to

[00:37:07] start to fund some of these newer. Yeah, well 10 years housing types.

[00:37:11] Yeah, exactly. And I think the government moving in that direction, it wouldn't surprise me if we

[00:37:16] saw the apartment loan construction program had in that direction. We started seeing an

[00:37:20] insurance product or some sort of direct lending product from the government for

[00:37:23] rooming houses. So the accelerated CCA will not apply to renovations of existing residential

[00:37:29] complexes but new additions to an existing structure will be eligible. So you have to

[00:37:34] add a new unit. You can't just renovate, which is that's one of the big differences between what

[00:37:38] we used in the US where if you just do a renovation in the US and you do that

[00:37:43] cost segregation, you can depreciate a lot of those renovations faster.

[00:37:47] Projects that convert existing non-residential real estate into a residential complex

[00:37:51] will be eligible, which is fascinating because adaptive reuse is something that we've...

[00:37:55] Imagine at scale, if you're doing like, we always talk about it. It's easier said than

[00:38:01] done. The office building going to... Imagine you have now a 6% tax advantage to convert an

[00:38:07] office building to residential and all of those capital costs are being depreciated. That project

[00:38:12] just became... If it wasn't viable, if it was 5% unviable, it could have just became viable.

[00:38:18] Yeah, exactly. So the question is how much will this move the needle for builders

[00:38:23] and investors and push them into projects? That's the question. These are tax benefits

[00:38:30] that a builder won't benefit from until the project is complete. So if you tell me that

[00:38:37] you're cutting development charges or other key expenses during my project, I'm definitely

[00:38:43] interested and may move me to build that project that I may have otherwise not because

[00:38:50] it didn't pencil out. But if you tell me that I can depreciate my building over 10 years versus

[00:38:55] 25 years once it's built, I am not sure that that incentive is quite sexy enough for me.

[00:39:03] That's end quote. So Nick just read a quote from McAllen. I appreciate the comments because

[00:39:07] the last piece really makes the math easy to understand. At 10%, you can tax deduct the

[00:39:11] building over 10 years. 100 divided by 10 equals 10. Whereas before at 4%, it was over

[00:39:19] 25 years. So 100 divided by 4 equals 25 years, right? 100 divided by 4% equals 25 years.

[00:39:26] I feel like it will move the needle for some deals that are just offside that could benefit

[00:39:31] from that extra tax reduction to get cash flow positive. Yeah, I agree. And it also applies to

[00:39:40] with at least four private apartment units or 10 private rooms or suites. So again, rooming houses,

[00:39:45] which we should probably do a whole episode on. So stay tuned for that. Or fourplexes, which

[00:39:52] are commonly exempt from development charges, at least in a lot of areas in Canada.

[00:39:58] Yeah. So I think Toronto, Vancouver, Edmonton, the three cities that have actually released

[00:40:03] thorough proper fourplex up-zonings all waived DCs. So in that regard, what McAllen said about

[00:40:09] DCs being removed during the project would apply. So you'd get DCs and you'd get this

[00:40:13] tax benefit, which sounds like pretty solid incentive to build a fourplex from my perspective.

[00:40:20] Yeah, exactly. Now, if only MLI Select applied to below four units.

[00:40:25] Yeah. I mean, it would have been nice to see a change into the lower unit space. But I think

[00:40:34] they have to be careful. I would have been the one leading the charge to say like,

[00:40:38] and you know, they've probably even heard me say it on the show. It would be amazing if

[00:40:41] MLI was playing in the fourplex space. But I think that they want to try and avoid,

[00:40:45] like they want to keep the line there between what's a commercial mortgage,

[00:40:49] you know what I mean? And what's a large building and then what's like a residential mortgage,

[00:40:54] like you and I. Because most banks will still play in,

[00:40:58] a lot of residential lenders will still play in that space for term debt.

[00:41:02] Yeah. Yeah. So the hard part becomes the construction financing. But

[00:41:06] I think you are seeing groups like Foremost Financial as an example,

[00:41:10] doing really great work in the fourplex space. And I think we'll actually,

[00:41:13] if we end up doing a webinar on fourplexes, as this kind of develops a little bit,

[00:41:17] we would probably have Foremost come on to talk about financing for that looks like.

[00:41:22] But most residential lenders are still playing in that space, up to four units on the takeout.

[00:41:26] Like by takeout, we mean like the mortgage. So there's a construction loan,

[00:41:30] right? That's just like a loan that you use to have money to build the project. And then

[00:41:34] once that's done, you don't want to be paying like construction loans are expensive,

[00:41:37] typically in today's environment, 10 plus percent. Your deal is probably not going to

[00:41:43] cashflow on a 10 plus percent basis from the, like for longterm. If you kept a 10%,

[00:41:52] you're paying that forever. So what you want to do is put a longterm mortgage on it at a more

[00:41:56] normal rate and then that should reduce your monthly carrying costs. And ideally the rents

[00:42:02] would be able to cashflow that. Yeah, exactly. And so I guess what we're

[00:42:07] kind of saying here is fourplexes are looking pretty good. They seem to be one

[00:42:11] of the most optimized type of real estate buildings right now.

[00:42:16] Yeah, I think that would be correct. Like given that we're seeing two of three high

[00:42:20] rises being put on hold, this is kind of one of the only ways that we could see housing get

[00:42:24] built over the next little while in my opinion. Yeah. And truthfully, I think a lot of people

[00:42:28] would almost rather live in a fourplex than in a box very high up in the sky with long

[00:42:35] elevator rides and condo fees and all that kind of stuff. But anyways, let's move on to

[00:42:40] something near and dear to your heart, Dan and mine, but probably more yours.

[00:42:46] Yeah. So I guess the last piece is, and I don't even really know if I'm able to chat on this

[00:42:54] one, but modernizing housing data. I guess it's kind of confidential at the moment.

[00:42:59] And it is near and dear to my heart. And I guess I can just say, if you're going to

[00:43:04] RealtorQuest, you'll probably find out there. And then eventually once this kind of new thing

[00:43:12] comes out, we'll be doing a webinar later on it once it gets announced.

[00:43:16] Yeah. So you'll say a little something without saying much and I like it. So let's move on.

[00:43:21] The housing plan says all levels of government should be committed to a data driven response

[00:43:27] to the housing crisis. We are not a level of government, but we have also been saying that

[00:43:32] for quite some time. So to help budget 2024, we'll propose a $20 million for Statistics Canada

[00:43:40] and for CMHC to modernize and enhance the collection and dissemination of housing data,

[00:43:51] including municipal level data on housing starts and completions. This has been a bane

[00:43:58] of our existence because finding good and reliable up to date data has been very hard,

[00:44:05] especially when you're trying to put together content twice a week.

[00:44:09] For sure. I think one of my biggest complaints about policy in Canada is that we're putting a

[00:44:14] bunch of policies out without even really knowing what the problem is. That's how you

[00:44:18] end up wasting money, which the government has been criticized a lot for doing lately with many

[00:44:23] things. Yeah. And in order to diagnose the problem, you need data.

[00:44:28] And yeah, I think you use the word diagnosed because right now we're just going around

[00:44:35] treating symptoms, right? Whereas you really need to be understanding the root cause of

[00:44:42] the problem and perhaps the disease, right? Yeah. So maybe this warrants a follow-up episode

[00:44:48] when you were allowed to talk about what you were trying to talk about by not really saying much

[00:44:54] a couple minutes ago. Yeah. I feel like we've kind of like loosely mentioned this one a couple

[00:44:58] of times on the show, but it is something I'm excited to talk about when I'm able to talk

[00:45:01] about it. So yeah, let's for sure do that follow-up episode when we can. Now, Dan,

[00:45:06] we're almost at the end of the show here, but you did have an honorable mention, I believe.

[00:45:13] Yeah. So I think the mention of increasing density within 800 meters of a transit station

[00:45:17] is a big one to look for. And I talked to Minister Fraser about this. This is major transit station

[00:45:23] areas. You're seeing this happen at provincial and municipal level. I want people to think

[00:45:29] about what that would look like. A lot of cities in Canada aren't investable,

[00:45:33] Toronto being a good example where they do have MTSAs. I mean, yeah, you can probably

[00:45:36] you build a fourplex and maybe really, really cheaply convert a fourplex and maybe cash flow.

[00:45:44] But there are cities in Canada where your land cost or the cost of the house that you're going

[00:45:50] to convert to a fourplex is way lower. So I want you to look to cities like Toronto,

[00:45:54] who are a bit ahead in the policy side for what the MTSAs are. So let's talk about this.

[00:46:00] So this one's right out of Toronto's playbook, minimum density targets,

[00:46:04] the provinces growth plan for the greater Golden Horseshoe sets out the following major

[00:46:11] transit station areas or that's the MTSA that Dan was just mentioning. The minimum

[00:46:16] density targets for these municipalities, 200 people and jobs per hectare for subway stations,

[00:46:22] 160 people and jobs per hectare for light rail transit stations and 150

[00:46:29] people and jobs per hectare for GO train stations. Now, transit oriented development.

[00:46:36] This is the approach that locates growth within walking distance of rapid transit stations. It

[00:46:41] means compact walkable areas with a diverse mix of uses and incomes at densities that support

[00:46:49] that transit ridership. This allows people to access public transit quickly and conveniently

[00:46:56] from the places that they live, the places that they work, learn shop and play. Well,

[00:47:02] not a bad idea. I mean, it makes sense. Like if you have spent a lot of money on

[00:47:05] infrastructure, you might as well capitalize on that infrastructure. Like nothing like

[00:47:10] makes me more sad than like driving up the 404 in Aurora and seeing like this giant like multi,

[00:47:19] I think it was like over a hundred million dollar GO station just sitting there with no ridership

[00:47:24] because it's in a field. It's like what? Now that one was wrapped up in the greenbelt thing.

[00:47:28] They think they were trying to densify around the greenbelt. So we'll set that one aside

[00:47:32] for now. But so the last piece we'll get to here is the idea of major transit station areas,

[00:47:37] MTSAs. And in the webinar, I'm going to go through, we're recording this before the webinar,

[00:47:43] but the webinar will be out. You'll be able to watch the recording after when you hear this

[00:47:47] episode. But there's the city of Toronto has like an MTSA map. So these are generally areas

[00:47:51] within 500 to 800 meter radius of a transit station representing about a 10 minute walk.

[00:47:56] Each MTSA will be subject to a density target across the area as a whole. So as part of

[00:48:01] their plan, Toronto and city planning brought forward the draft 180 plus MTSAs across the

[00:48:08] city for the basis of consultation. So this is like one of those policy things that is

[00:48:15] worth looking at as an opportunity. Think about what would become an MTSA in the city

[00:48:21] that you're looking to invest in. Yeah. Yeah. This is not, I know we're mentioning

[00:48:24] Toronto, but this is far from Toronto exclusive. These exist in every major and second and third

[00:48:32] tier city. Yeah. I think it's just like look to Toronto as like kind of a leading indicator

[00:48:36] of where policy could go out in a lot of places. Like the cities that have the most urgent

[00:48:41] housing crisis to solve are going to have to be on the forefront of policy to do that. So

[00:48:46] Toronto and Vancouver seem to be doing this upzoning MTSAs, et cetera. So, you know,

[00:48:51] the housing crisis coming to a city near you, right? So you'll probably see similar policies follow.

[00:48:57] Yeah. Well, that is, that's it folks. A bit of a longer episode and I know we just gave you a

[00:49:04] ton of information to digest. Yeah, for sure. And these are all obviously really important

[00:49:09] discussions. Understanding these changes and how they affect real estate investing is definitely

[00:49:13] essential. I mean, exactly. Absolutely. That's why we're here, right? We are here to try to

[00:49:20] help you, our wonderful listeners navigate these treacherous and changing waters. For sure. And

[00:49:28] we're always here for any questions or further clarifications. I think we're typically going to

[00:49:32] encourage you to ask those questions in the realest.ca community rather than by email,

[00:49:36] probably moving forward. Because again, we want people to see the answers to these questions

[00:49:41] and then become kind of common learning opportunities rather than like something that

[00:49:44] takes place in private. Yeah, exactly. So until next time, our lovely listeners,

[00:49:51] stay informed, stay curious and keep listening. I think I tried to do that because you were on

[00:49:55] Burgundy thing last episode. You guys can just say, is that a, is that like our new sign off?

[00:50:00] I kind of like it. Stay informed and stay curious and keep listening. Stay classy.

[00:50:06] Remember to check out the webinar if you haven't heard us mention it 35 times already.

[00:50:10] Lose a review, write us an email, join the school group and we will talk to you soon.

[00:50:15] Thank you so much for listening as always. Yeah. You know they say 36 time is a charm.

[00:50:21] If you liked this episode, take a screenshot of you listening to it, post it to your

[00:50:25] Instagram stories, tag us, and we'll share it. This is a great way for you to meet other

[00:50:28] listeners to the show. Thank you very much and have a wonderful day.

[00:50:32] The Canadian Real Estate Investor podcast is for entertainment purposes only and it is not

[00:50:38] financial advice. Nick Hill is a mortgage agent with Premier Mortgage Centre and a

[00:50:43] partner in the G&H Mortgage Group. License number 10317, agent license M21004037.

[00:50:54] Daniel Foch is a real estate broker licensed with Rare Real Estate, a member of the Canadian

[00:51:01] Real Estate Association, the Toronto Real Estate Board and the Ontario Real Estate Association.