Should You Invest In Stocks Or Real Estate? Part 2

[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.

[00:00:10] Okay, welcome back to the Canadian Real Estate Investor podcast today.

[00:00:16] I have gotten rid of Nick Hill and I have a much better and handsomer guest actually

[00:00:22] who comes from the capital region of Ontario.

[00:00:26] And we're going to be talking about the age old question of whether or not stocks

[00:00:30] or real estate are better investments.

[00:00:31] Simone, you might know him from a podcast that actually gave birth to our podcast,

[00:00:38] but is obviously probably in favour of stocks.

[00:00:41] So you might be expecting us to debate this, but it seems like we're pretty aligned.

[00:00:45] But anyway, so far we've had the discussion on their show where we covered access to leverage.

[00:00:52] These are topics that if you're listening to the Canadian Real Estate Investor podcast,

[00:00:55] you're pretty familiar with.

[00:00:57] We talked about the access to leverage and then also low barriers to entry being a good advantage

[00:01:02] to invest in real estate over stocks.

[00:01:04] But we also discussed how real estate returned about 5.11% compound annual growth rate on prices.

[00:01:11] That doesn't really account for yield, so your cash flow or mortgage payments.

[00:01:17] The stock market, I think the S&P 500 was somewhere in the 10% range, was it, Simone?

[00:01:21] Yeah, yeah, in the 10% range.

[00:01:24] I mean, obviously it depends on what time frame you look if you pick a peak and then you start

[00:01:30] from there after just before crash, it will vary.

[00:01:34] And same would happen if you pick really the bottom, it may be better than the 10%.

[00:01:40] Right. So yeah, so the next three things we're going to cover here are diversification,

[00:01:45] the liquidity of each asset class, so stocks versus real estate, and then

[00:01:50] things like maintenance and repairs and the idea of speculation.

[00:01:53] And then some of the other ones that we touched on a little bit earlier, but fees,

[00:01:58] so switching costs, tax structure. And we're really just going to try and boil it down to

[00:02:03] answer the age old question that I think a lot of our listeners want to know is

[00:02:08] what's better, investing in real estate or investing in stocks?

[00:02:12] Yeah, that's the question.

[00:02:14] Just spoiler alert, you might not actually even get an answer.

[00:02:17] Yeah, yeah, I think people have been listening to you and know you pretty well.

[00:02:21] I think for the most part, you're pretty nuanced. I'm like that too.

[00:02:25] I think you can make some pretty terrible real estate investment.

[00:02:28] You can make some really good one, right?

[00:02:30] If you know what you're doing and you're patient and you pick your deals properly.

[00:02:34] And the same thing can be said with buying stocks or investing in the stock market or

[00:02:40] other products that would be available in your self-directed brokerage.

[00:02:44] That's why we'll be focusing it a bit more here.

[00:02:47] So to go to where you were saying diversification slash concentration is the third point we have here.

[00:02:54] So to me, that's probably one of the biggest advantages of investing in the stock market.

[00:02:59] I know a lot of people that invest in actual real estate and

[00:03:03] they're just extremely concentrated. So I don't know if it's just the people I know or if it's

[00:03:08] real estate investors in general. Is that common to be very concentrated in real estate?

[00:03:15] I think it ends up being out of necessity because you typically

[00:03:23] requires a large amount of capital. And so it's not like most people, especially young people,

[00:03:30] it's not like we have millions of dollars. And so if you're 200,000 exposed to real estate

[00:03:36] because that's what you put a down payment in, you don't necessarily have another 200,000 laying

[00:03:41] around to invest in stocks to have diversification or to have a hedge. So I think some of it's probably

[00:03:47] by design like a lot of people like to invest in real estate and they want to be all in on it.

[00:03:51] But then I think a lot of it is also you just don't have a lot of money left over after

[00:03:56] making a real estate investment to diversify into other stuff. I think that's kind of

[00:04:00] a big part of it as well. As Nick would say, I have a solution bank of mom and dad.

[00:04:06] Yeah, exactly. Yeah. Well, and to continue just on that. So obviously, you know, it might

[00:04:14] like some might think that it's not relevant because real estate only goes up. But I think

[00:04:18] obviously we've seen in the past couple of years that that's not always true depending

[00:04:22] on where area in Canada yet you are there is a lot of risk to your graphical risk as well

[00:04:29] for just, you know, I think most people that listen to your podcast and listen to ours

[00:04:34] are overly concentrated in Canada. And that's just not for real estate, but that's also for

[00:04:39] a home country bias when it comes to picking different stocks to invest in. Of course, you can

[00:04:44] own real estate in other countries, whether you want to go down south to the US or even

[00:04:48] other location. But again, I think I think it's a fair assumption to say, well,

[00:04:54] if you're overly concentrated in Canada, so what if the economy takes a turn for the worse?

[00:04:59] What if inflation picks up and you aren't able to raise rents if you have real estate?

[00:05:04] Because depending on the location, I know there's different varieties of rent control

[00:05:09] in place in Canada. And what if interest rates increase? And obviously, if they increase and you

[00:05:16] have a variable rate mortgage, you're in a tough spot there. But also at the end of the day,

[00:05:21] most of our mortgage are just variable. They're just different length and variability,

[00:05:26] as a lot of people are finding out right now. And the next few years has that wall of renewal

[00:05:32] kind of starts happening. Before I go on, anything you want to add there, Dan?

[00:05:37] No, just that it's really funny when I do Twitter spaces a lot. And I often get people from the

[00:05:43] US real estate market like Cindy Stumpo, who's big on HGTV. She comes on a lot. And I remember

[00:05:52] just the surprise that they had when I was explaining how our mortgage system works. And

[00:05:58] we're talking about the economic downturn. And I do feel the US market economically and real

[00:06:03] estate wise is going to fare far better than the Canadian economy. I don't know what your

[00:06:08] perspective is on that, but we were talking about this downturn. And even if they had

[00:06:12] the same economic downturn, the fact that our rates reset every five years,

[00:06:15] unless you were like an absolute genius and took the 10 year in 2021, which I know a couple of people

[00:06:22] who did. And congrats if that's you, if you're listening, pat yourself on the back because you

[00:06:26] won the mortgage lottery. But in the US they have 30 year mortgages and you can exit whatever

[00:06:32] you want. There's no prepayment penalty. And so a lot of them hear us talk about our mortgages

[00:06:39] where we have to get a new rate every five years. And they're like, oh, you're idiots.

[00:06:44] How could you build your economy around that? Did you not learn from us in 2008? Because it was

[00:06:51] adjustable rate mortgages, the ones that actually had that bump up in the mortgage after a three-year

[00:06:56] period that actually really were the final straw for that economic sale.

[00:07:01] Was it like three months or something? I thought it was like a teaser rate. Yeah,

[00:07:04] it was like a short, I don't know, I'm just thinking I watched the big short not too long ago.

[00:07:11] That's a great one. That's a mandatory annual rewatch in our house for sure.

[00:07:17] Oh yeah, once in a while I just go there. But yeah, no, that's a good point. And I think we're

[00:07:21] seeing economies around the world that do have that kind of shorter term fixed rate

[00:07:26] reliance on that. They're all starting to roll over. I mean, I'm pretty sure

[00:07:31] the UK is in a recession right now. I'm not quite sure with Australia, but I think they're

[00:07:36] probably struggling there as well, especially being overly dependent on China as a trading partner.

[00:07:42] And I know they have a pretty high valuation when it comes to their housing market.

[00:07:46] But yeah, that's definitely a big risk. And obviously with the US and you tack on

[00:07:51] all the fiscal spending that's been happening in the US, I think they're adding what about

[00:07:55] like two trillion in debt per year at this rate. And whoever you think will come in next

[00:08:01] election, whether it's Trump or Biden, I don't think they have any significant plan to be reducing

[00:08:07] that at least in the next in the foreseeable future. For sure. Yeah, I mean, I think a lot of

[00:08:13] Nick and I were just talking about this on our show. It's like even conservatives aren't really

[00:08:18] fiscally conservative anymore. Like I think Trump's government did spend a lot of money in

[00:08:22] the US and in Canada. It's the same thing, right? Like I think we may end up in a position

[00:08:27] where some austerity might be necessary to because of this debt service in a new higher

[00:08:32] rate environment. But it seems like there's not really any actual accountability attached to

[00:08:37] sovereign debt. So most or at least most of them don't feel that way, because it's the next

[00:08:41] person's problem. And so they just like, ah, whatever, we'll spend whatever we have to

[00:08:45] to keep getting elected, I think. Yeah, and hasn't blown up, right? So they're like, well,

[00:08:49] it hasn't blown up yet. So might as well continue because unfortunately, not a lot of

[00:08:54] people want to vote for reduced government spending. That's just the reality of it. Yeah.

[00:09:00] So I think we're probably outliers there. Except Argentina, I suppose, I suppose,

[00:09:04] which is an interesting case study, I think we're seeing right now.

[00:09:08] Yeah, definitely. We'll kind of get back to diverse creation versus concentration because

[00:09:14] if not, we're going to have to do a three-parter. So with the stock market to get back to that,

[00:09:20] you can definitely invest in a broad range of assets. So people might think it's only stocks,

[00:09:25] that's actually not true. You can through the ETF form, you can have access and exposure to

[00:09:30] all different kinds of asset. It's also you can really diversify easily. You can pick an index

[00:09:37] ETF and have just one that will give you broad exposure to businesses around the world. Some

[00:09:43] example for that that are traded on the TSX. There is VQT, this is a Vanguard Global ETF and

[00:09:50] XEQT, which is BlackRock. It'll give you access and exposure to thousands of stocks worldwide.

[00:09:56] I personally like XAW and I own it. This is just because it allows me to again diversify

[00:10:02] worldwide but exclude Canadian stocks. You can even buy some all-in-one ETFs that invest

[00:10:08] across a broad range of assets like stocks, bonds, I know Fidelity even has a Bitcoin allocation to

[00:10:15] some of their all-in-one ETFs. You can buy ETFs that are specific exposure to commodities like Gold,

[00:10:21] Copper or even Bitcoin. You can even buy real estate on the stock market by buying REITs.

[00:10:27] REITs can actually give you a lot more diversification than you could get with buying actual

[00:10:33] real estate unless you're obviously extremely wealthy and you're worth tens of millions of dollars

[00:10:40] or probably more. You can probably afford to buy different multiple real estate assets that give you

[00:10:47] some diversification in some subsectors of real estate but I don't think that's realistic for most

[00:10:52] people. Yeah, for context like how rich do you need to be to buy an office building

[00:10:59] in Canada is like I think the owner of Zara, Manteo Ortega purchased Toronto's Royal Bank Plaza for

[00:11:06] $1.2 billion Canadian dollars. Sorry for the interruption but that's how rich you would need

[00:11:12] to be if you wanted to own the kind of assets that you would be able to get exposure to from REITs.

[00:11:18] Yeah, so I was talking more about these little office walls but yeah, that's definitely

[00:11:23] some prime real estate but yeah it's not cheap and we're seeing a lot of these building. That's

[00:11:28] the reason why you see large pension funds owning them is just because you need to have a lot of

[00:11:34] capital. So definitely it does give you more opportunity to diversify and not be as concentrated

[00:11:41] and concentration. I mean it's a bit like leverage like we talked in the last episode.

[00:11:46] It can't really work for you in your advantage so if you look at Jeff Bezos,

[00:11:52] I mean he made all of his money because he was super concentrated in Amazon stock and now he's

[00:11:58] one of the richest man in the world so it can definitely work in your favour in that way.

[00:12:03] But if your concentration backfires on you and the investment doesn't go as planned,

[00:12:09] it can cripple you as well. So I almost see this as similar to leverage in one way because

[00:12:16] it can be a big positive or it can wreck you. Those are kind of the two outcomes.

[00:12:23] Yeah for sure and I think real estate in that regard, it does set itself apart ever so slightly

[00:12:31] in such that you can often work yourself out of a hole on a real estate asset. We encourage a lot

[00:12:37] of people to avoid investing in real estate because it's a lucrative job but like a lot

[00:12:42] of people buy themselves a job when they buy an investment property and they don't realise this.

[00:12:47] This is especially true with vacation rentals and stuff like that and it's okay if you understand

[00:12:52] that it's a side hustle. Airbnb is a bit of a side hustle, not a ton but it's very lucrative

[00:12:58] but it's a little bit more work than a long-term rental. Real estate in a lot of cases,

[00:13:02] if you're in a really bad position, you can often get into a better position by putting work

[00:13:07] in but now all of a sudden you own a job and it's not the exact opposite of why you would be investing

[00:13:12] which is to make your capital, make money for you. And I think a lot of people forget to draw that

[00:13:17] line. The last piece I'll add on diversification is just because I hear a lot of people say this

[00:13:21] about like with bravado too. It's usually people who are like so sure that their investment

[00:13:25] is correct but Warren Buffett did say that diversification is protection against ignorance

[00:13:30] and it makes little sense if you know what you're doing. So a lot of that is knowing what

[00:13:34] you're doing, not just thinking that you know what you're doing. Yeah exactly and it's a risk. I

[00:13:39] think that's just what's important and I was having a discussion on Twitter. Sometimes I just get

[00:13:45] roped into these discussions but it can be a bit addictive. It's probably the best platform

[00:13:51] in the world for having discussions that you shouldn't be having for sure. But someone

[00:13:56] was showing their portfolio and they're literally 60% invested in the big five Canadian banks

[00:14:02] you know it's fine, it's their prerogative but my point and someone pointed out it's risky and it is

[00:14:07] true. It is risky because if anything happens you're very concentrated in one sector and I think it's

[00:14:13] just that's the moral of this story here is you know whether it's right or wrong that's up to

[00:14:19] you to decide but as long as you're aware that it does bring additional risk because

[00:14:25] your if anything happens to that one asset that you're overly concentrated in whether it's

[00:14:30] good or bad but if it's bad it will definitely have some negative outcomes for you. Yeah love it

[00:14:36] I guess maybe we should move on to liquidity in the interest of time here so I know we

[00:14:40] chatted a little bit about it in the episode that we did on the Canadian investor podcast and I

[00:14:46] was saying that you know it's really saved as somebody who's horrible at investing in stocks

[00:14:50] it saved me a lot of times because I've never been horrible at investing in real estate but

[00:14:56] if I was I wouldn't be able to sell it as easily and whereas with my stocks you know when they're red

[00:15:01] and I'm like I just don't really want to have to think about this anymore I just sell it you know

[00:15:06] I'm a buy high sell low kind of guy which is the opposite of what you're supposed to be doing so

[00:15:11] explain to me sort of your perspective on stocks and liquidity and how you would compare

[00:15:16] and contrast real estate against stocks in that regard. Yeah and I think the first myth here

[00:15:22] is that all stocks are liquid that's not true a lot of stocks will be liquid so meaning that you can

[00:15:28] get it in out pretty quickly so that liquidity just means that if you need to cash you're able

[00:15:33] to sell it very quickly I mentioned that because there are some ETFs that are not traded all that

[00:15:39] much there are like if you look at penny stocks oftentimes they won't have you know

[00:15:44] I'll have one trade in a day so that means that sure you can probably sell it but you may

[00:15:51] have to take a pretty significant discount so I think that's just important to consider obviously

[00:15:56] with real estate asset liquidity is unfortunately unless you're in a raging bull market but even

[00:16:03] then when you have you know you know an offer you agree to sell the building to someone

[00:16:09] you know this better than I do but oftentimes I mean even if you're very optimistic on the

[00:16:14] closing it probably takes at least a 60 day period to get the money in your bank account

[00:16:21] if you're in a raging bull market let's just say. Yeah I mean I think even an asset like

[00:16:27] a or a property type that would be highly liquid is still going to take a long period of time to

[00:16:32] sell like it's just not it's not an easy way to get money out you know what I mean like it's

[00:16:38] and that's it's both a blessing and a curse and I'll discuss this a little bit more because

[00:16:43] and I know you have it in here that it can be both a good thing and a bad thing right but you

[00:16:47] can't really pan excel real estate but the other piece that I'll mention this after we mentioned

[00:16:53] like we discussed that piece about potentially pan excelling and me being. Well unless you're a

[00:16:58] CPP investment board and you sell a building for one dollar. Yeah which is that's fascinating

[00:17:05] eh but I guess like you know you examine that one like Manhattan real estate I would guess the

[00:17:09] only reason is the demo cost of that building is more than worth more than the land value and

[00:17:15] and you know in the current market and they basically decided to get out of an asset class

[00:17:20] that is a huge question mark right now like we're seeing Brookfield's DTLA they just sold

[00:17:25] some of theirs for 50% of the debt that was on the on the building so that's like that's got

[00:17:29] to be a 25% mark to market right like scary. Yeah exactly and I think it's misleading I was

[00:17:35] joking when I said for one dollar because they sold it for the debt right and that was against

[00:17:40] their stake in the building so long story short the story is that I think there needed to be

[00:17:45] improvements done to the building and instead of doing the improvements they decided to sell

[00:17:50] their stake at a significant discount so I think it's always important to read beyond

[00:17:55] the headline because the one dollar is actually not that true they may be sold it for you know

[00:18:01] 40-50% of what they paid for which is definitely you know not one dollar but the one dollar is

[00:18:07] more of a token on top of the debt but that you know I think it just goes into our conversation

[00:18:13] here in terms of liquidity I mean it can be a good or bad thing you mentioned it for stocks I

[00:18:18] think the problem is people will see the prices so much so they can make some pretty rash

[00:18:25] decisions if they're panicking because they see the stock market being down 5-10% and then they

[00:18:32] just decide to sell and then that ends up being a pretty bad mistake because the stock market

[00:18:38] ended up recovering 6-12 couple years down the line whatever the timeline is so that's

[00:18:43] definitely a pro or a con I mean at the end of the day I think liquidity is a pro but I do have

[00:18:49] a temperament that is well suited for that I don't panic easily I take a step back if I want to do

[00:18:55] something I'll usually give it at least a weekend I'll do my research before I decide to do it think

[00:19:01] of the pros and cons but I know it's not as easy for everyone and the fact that real estate is not

[00:19:07] as liquid and you don't see the prices on a second-to-second basis like you would see for

[00:19:13] stocks or ETF or whatever is traded on the stock exchanges it can definitely be a

[00:19:20] pro the fact that it's not liquid for some people maybe people like you like you just mentioned

[00:19:26] well I don't I don't know if I necessarily panic sell I think mine is like anger selling like I see

[00:19:30] the red I just see the red and it's like I'm literally seeing red I get mad at the company

[00:19:34] I'm like how could you do this to me I gotta get out of here with both real estate it's

[00:19:39] like if I was angry at an asset I would go to the I would have to go there and start decluttering it

[00:19:43] and take photos and probably at some point during that like multi-hour process I would be like ah

[00:19:49] okay we can be friends you can stay in my portfolio you know where the stock it's already gone I

[00:19:54] can't even have the decision the ability to make well I'll just go buy it back at a higher

[00:19:57] price probably is when I want it back that's what I would typically do but so so the liquidity

[00:20:03] of real estate it is definitely an advantage because you can't really sell it super easily to

[00:20:09] crystallize a loss so it kind of forces you to diamond hand where you you know in other asset

[00:20:14] classes you might you might liquidate more quickly the the the issue with that and I think this is

[00:20:19] something that we're seeing in today's market is that it's not just and it goes back to the

[00:20:24] leverage conversation that we were having on your show it's not just the liquidity of the market

[00:20:29] like on the buy and sell side it's also debt liquidity like it the real estate investment

[00:20:34] really relies on the availability and cost of capital and this is what we're learning right now

[00:20:39] you're seeing a lot of people getting renewal offers from their b lenders or even their a lenders

[00:20:45] when you know so they get a renewal so you know you're in a five-year mortgage term or a three

[00:20:49] year mortgage term bank you were at two and a half percent or three percent rate and then all

[00:20:54] of the sudden you're up for a new the bank sends you something saying hey here's here's the rates

[00:20:58] we're going to renew you at and it ends up being like you know you were at two and a half and now

[00:21:03] all of a sudden they want to renew you at five and a half six seven and you you depend on the

[00:21:10] bank's willingness to lend you money at good rates to make your investment viable and then

[00:21:14] if you go shop that and try and go find a better rate you're probably not going to and so

[00:21:19] the viability of your investment depends not just on your own liquidity or sorry the

[00:21:24] assets liquidity but it depends on the liquidity of the people giving you the money to finance that

[00:21:28] investment and that's something that I think a lot of people didn't think enough about in the last

[00:21:35] two to five years and now are thinking a lot about Adam necessity. Yeah no I think that's a

[00:21:42] that's a really great point and at the end of the day too if you do need to sell and there's

[00:21:48] not a very big market for whatever real estate asset that you have you'll probably be able to

[00:21:54] sell but you will not be getting the price that you want right and I think obviously we talked about

[00:22:00] the CPP investment board and I think at the end of the day that's a calculation they made we

[00:22:06] will take a loss we want to sell it now we don't want to put more money in we'll take

[00:22:10] that money and invest elsewhere obviously that's a more high profile one but depending on what

[00:22:15] the more like the rates are because obviously that will definitely affect the price you can get in

[00:22:19] real estate you could be in a bit of a bind but again if you are then that's okay the FCAC so

[00:22:27] the financial consumer agency of Canada has a perfect website for you yeah exactly well and

[00:22:33] that's actually funny like because this is where and we'll get to the next piece here which

[00:22:37] is the the actual cost of owning and maintenance or repairs and stuff like that but the

[00:22:42] that their website really a lot of it comes from the the government of Canada's recent mortgage

[00:22:47] charter which was basically just a summary of rules that already existed of things that lenders had to

[00:22:52] do to accommodate you as a borrower and in that's the one piece when we talk about this

[00:22:59] availability and cost of capital where a lot of people are starting to go to these lenders

[00:23:04] now and say hey look I can't pay my mortgage and so you can you can almost stay in a real

[00:23:07] estate asset beyond its tenure this isn't financial advice by the way but you can

[00:23:12] you can stay in a real estate asset beyond its tenure as a good asset because of how how invested

[00:23:18] the the government and the financial system is and keeping that market solvent and liquid

[00:23:24] and so there are options for people who are in bad positions I don't think they're going to

[00:23:28] sympathize if you if you're like hey I levered up and bought too many pre-construction condos

[00:23:32] and I don't want to pay my mortgage anymore I think they're probably gonna say no but I think

[00:23:37] if you're you know if you're a bona fide person with financial stress that banks legally now in

[00:23:44] Canada have to accommodate you which is it's a whole separate conversation on the social

[00:23:48] contract of debt but maybe for another time yeah I think we we could probably go on for an hour

[00:23:56] and a half on that let's go to our next point so maintenance and repairs I mean obviously whatever

[00:24:02] asset you own on you know the stock market and whatever asset type you won't be called in the

[00:24:08] middle of the night by one of your tenants to come and do some urgent repairs or I think Nick

[00:24:14] even had to go because there was a bat once in one of his units yeah yeah yeah so that's definitely

[00:24:22] something you won't have to deal with obviously that I think is a plus or negative for real

[00:24:28] estate investing because if you are very handy and you can definitely bring some value here save

[00:24:35] some money bring some value add but I think not everyone is handy and I think a lot of people

[00:24:40] get into real estate is they do so thinking either they won't have to do a lot of maintenance

[00:24:46] and repair or maybe they even are too confident in their skills maybe that's a little bit of

[00:24:53] a part here but you I'm sure will have a better idea of that but my understanding is typically the

[00:25:00] average in terms of maintenance costs for a real estate property is about one to two percent of

[00:25:05] the value am I in the right ballpark or am I completely off no yeah I think you're pretty

[00:25:10] much playing around yeah I think you're pretty much bang on like and it would be akin to

[00:25:14] very similar to what your annual property tax ends up being so typically your expenses

[00:25:20] as a owner of real estate are boiled down to just just three categories really taxes maintenance

[00:25:27] and insurance and then obviously your mortgage but that those are your actual expenses and so

[00:25:31] we use a little bit of a sliding scale so we say if the property is like absolute

[00:25:35] garbage I would say expect to spend something like 30% of your gross income on maintenance

[00:25:41] taxes and insurance are just actual numbers insurance called insurance broker ask them for a

[00:25:46] quote taxes it should be in the listing but maintenance 30% for an absolutely horrible asset

[00:25:52] 20% for something kind of middle of the road and 10% if it's like brand new 10% of your kind of

[00:25:56] gross income that's sort of what we typically recommend people forecast that the challenge with

[00:26:02] this is you know you mentioned people under estimate or sorry overestimating their ability

[00:26:06] to do some of this maintenance themselves the other pieces a lot of people just can't

[00:26:10] estimate the costs properly because of inflation like and for context this isn't like an insult to

[00:26:19] mom and pop real estate investors because we have developers right now who are applying for CMHC

[00:26:23] MLI select loans and they did ran their construction budget and it was everything was fine and then

[00:26:32] three months later or six months later when the loan comes up and they're actually going

[00:26:36] through the underwriting process they're running their budget and it's and it blows the project to

[00:26:41] bit so even the best people these are people building you know billions of dollars worth of real

[00:26:46] estate even they can experience this challenge with forecasting for inflation psychology the next

[00:26:52] piece is that actually using maintenance as a way to improve the asset value this is something

[00:26:59] I'll talk about it a little bit more in tax structure but real estate is interesting

[00:27:03] in this regard and this is why we always talk to people or discuss it with our audience as

[00:27:09] you're running a business you're getting into a business of real estate and so you need books

[00:27:14] right because your asset is now you running a business so you need books and you need to know

[00:27:18] which line items can be expensed as operating expenses or op-ex and which line items can

[00:27:24] be expensive expense as capital expenditures or capex because one is deducted against income

[00:27:30] operating expenditures are deducted against income and capital expenditures are deducted against

[00:27:35] capital appreciation typically the easiest way to distinguish distinguish this is usually if

[00:27:40] you're spending over a thousand bucks it usually ends up falling into the capex category although

[00:27:44] this is getting a little bit skewed now because things are getting so expensive like I've heard

[00:27:48] people say two thousand or five thousand and if it's over that it's it's a capital expenditure

[00:27:55] or the other thing is if it needs to be done immediately and the impact is immediate like if

[00:28:01] the benefit of it is realized within one year then it's a operating expenditure so like fixing

[00:28:06] plumbing that's leaking as an example that's an op-ex that's maintenance item but putting a steel

[00:28:11] roof on it on a property that's a capital expenditure and it's and again the final

[00:28:17] way to think about it is does it increase the value of the property putting a steel roof

[00:28:20] on a property would increase the value of the property it would be a capital expenditure

[00:28:24] and so there are ways that maintenance and repairs can actually be used as a way to create or to make

[00:28:31] an investment better by improving the the quality of it and improving the the the value of it

[00:28:39] and also improving the income by driving tenant satisfaction through op-ex or capex yeah I know I

[00:28:47] think that's a good point I mean we there's a company I recently sell was a real estate

[00:28:51] investment trust people may be familiar with it it's called Equinix so I sold it because a short

[00:28:57] report came out and I usually you know I always look at short reports for a business and I'll

[00:29:04] take note of it if I think it's an odd thing burger my thesis remains unchanged but this one

[00:29:09] that was one of the thing is they the allegation is that they're using a lot of the kind of

[00:29:16] maintenance capex which would be like almost operating expenses and they're classifying those

[00:29:22] at regular capital expenditure so kind of growth capital expenditure to provide value like you

[00:29:28] mentioned and the the allegation is they were using things like changing light bulbs as capex

[00:29:34] right amongst other things so yeah I think you were just telling me about this talk too

[00:29:39] because I was like trying to figure out the real estate exposure to nvidia right and it's and

[00:29:44] it's them are they in the videos like landlord yeah so data farms well they're more um yeah

[00:29:48] so they're a data reach center so they're more in an alternative I would say to

[00:29:53] the big cloud providers so like a Microsoft a Google Amazon web services so it's more of

[00:30:00] a way for companies to want more to have their own cloud versus or in being connected to these

[00:30:07] big clouds so there are some incur connection possibilities but yeah there is definitely some

[00:30:12] there was some accounting let's just say irregularities that were brought up and now there's like an

[00:30:19] internal investigation that's been prompted from that there's even the department of justice that asked

[00:30:25] for some information from them in the state so it's not looking great so I just decided to

[00:30:31] exit my position I told I talked about that a couple podcasts ago to contextualize that a

[00:30:36] little bit for Canadian real estate investors we're seeing a lot of requests for capital expenditure

[00:30:43] statements from the revenue agencies in Canada because because when you're claiming capital gains

[00:30:49] they want to see what if you're recapturing capex so you can actually recapture expenses

[00:30:54] that you put into a property so you trying to describe this as succinctly as possible it's

[00:30:59] almost impossible without a diagram but you spend money today let's say you put a new

[00:31:03] roof on the property and that depreciates right any of those capex is depreciate in value and so

[00:31:09] you get to realize that depreciation but if you sell then you have to recapture the differences

[00:31:14] between the money that you spent and the improvement that they would have made on capital gains

[00:31:18] I hope that explains it properly but you know it's not uncommon to have tax authorities

[00:31:24] requesting to see these things now and and similarly on operating expenditures I think that the

[00:31:30] I think that the government is to kind of return to this debt conversation I think the

[00:31:35] government is really looking for revenue right now and they ought to like I think that there is

[00:31:39] there is a lot of revenue out there and I think that they see real the real estate asset as

[00:31:43] low hanging fruit because I think that it's it's made a lot of people a lot of money

[00:31:47] and it's probably very under reported from a rent perspective like just just income but also

[00:31:54] capital gains flipping all I think that there's a lot of different things and so

[00:31:58] you starting to see it from a fin track perspective like a lot of a lot of different government

[00:32:02] agencies are now playing in the real estate space a little bit more fin tracks getting involved

[00:32:07] on the real estate side with the Canadian banks and I'm sure you familiar with those

[00:32:10] two fin track fines last year but also real estate brokerages and then also on expenses

[00:32:17] and capital gains we're starting to see oh and HST as well HST rebates like if people are

[00:32:23] abusing HST rebates claiming primary residence on a brand new home there the federal portion is

[00:32:29] being clawed back in a lot of cases so those are common things that we're seeing from a tax perspective

[00:32:34] oh that's interesting I wasn't aware of all of those but I guess I think that sums it up for

[00:32:39] maintenance and repairs we want to go next point here we have about 20 minutes left I think

[00:32:44] we'll be okay even if we go a bit over our usual time so the next one is gambling or risk of

[00:32:51] investing in something you don't understand so I think this is probably one of the biggest pros

[00:32:57] of investing in real estate although I'm pretty sure there's some people that invest and don't

[00:33:01] fully understand it but the reality is that a lot of people use the stock market to gamble

[00:33:06] especially since the pandemic I think a lot of people are seeing that they are behind whether

[00:33:12] they want to purchase a home and that's the only way in their mind that they will ever be

[00:33:18] able to get the down payment is to try and you know get into early like a meme stock for example

[00:33:25] to try and you know 10 extra money so they can put a down payment and again that's not what I do

[00:33:31] and it takes discipline to buy and hold stock but the reality is I see it time and time again

[00:33:36] people get into penny stocks hoping that it'll just double in value because they see the stock

[00:33:42] being a dollar a share saying thinking you know what if it just goes at two dollars I doubled my

[00:33:47] money without understanding the business that is just something that happens very frequently

[00:33:52] and you'll inevitably see bad news about the stock you own or even the broader stock market

[00:33:59] so again there's that risk where you just don't really know what to do and then you might either

[00:34:05] double down or completely sell at a loss and you don't have to look very far as well for

[00:34:11] videos of you know bros that are trading on youtube claiming they can make you rich by buying their

[00:34:17] course so they're trading stocks obviously I'll always say that if you know they really know

[00:34:23] what they're doing and if they really are that rich and they really own that Lamborghini or

[00:34:29] Ferrari or whatever car you they're showing off they would not be needing to sell you that course

[00:34:36] so I always I always get a bit annoyed when I see those courses but it's really enticing right

[00:34:41] people will see that they want to get rich they might even see some complex strategies complex

[00:34:47] option strategies on social media or mainstream media like CNBC BNN and try to execute that

[00:34:54] themselves and at the end of the day they'll get wrecked because they just didn't understand

[00:34:58] their strategy and the risk around it and I've talked I know mostly about stocks but there are

[00:35:05] some very complex products that are accessible from one click of a button when you go into your

[00:35:11] online broker so that's definitely a big risk in my opinion because you do need more discipline it's

[00:35:18] very easy to invest large sums of money and in things that you don't understand that are

[00:35:25] incredibly risky and you can just go on you know wall street bets and they take pride into

[00:35:31] showing that you know they had two million dollars in their account and then they lost it all a few

[00:35:37] days later yeah for sure I think that there's also a tertiary understanding of real estate like that

[00:35:42] happens as a result of the fact that our economy is so exposed to housing and this is one of the

[00:35:47] reasons why I think people are so obsessive with it is because everyone touches real estate

[00:35:53] like or not everyone but I think like the I'm touching it right now yeah yeah but well

[00:35:59] so like that we interact with in our daily lives but we also interact with it in our work lives in

[00:36:03] Canada a lot like I think the most recent estimate I saw was something like 55% of the economy is like

[00:36:10] involved in some way in the housing supply chain I think 13% of GDP is is residential investment

[00:36:16] but that so that's just real real estate commissions and and renovations I believe like

[00:36:22] home construction but if you think about like the entire supply chain of somebody buying and

[00:36:29] selling real estate or real estate being produced right let's just use housing as an example

[00:36:33] there's a lender so there's those big five Canadian banks and there's this huge financial system

[00:36:37] that's designed around mortgages and then there's mortgage insurance and then there's

[00:36:41] planning so you have municipal government you know you have insurance you have contractors

[00:36:47] and people in the construction space that are building new units but also servicing existing

[00:36:53] units and so everyone's lived in a house everyone's worked in an office everyone's bought products

[00:36:58] at a retailer so they know how like it's a very easy picture to paint in your head to understand

[00:37:03] those asset classes as an investor but it's also very easy to understand almost at a more granular

[00:37:08] level because there there's a high chance as a Canadian that you're working in something

[00:37:16] that interacts with real estate on a professional level as well and so I think that that actually

[00:37:20] has really created not it's created a degree of safety because a lot of people understand the

[00:37:24] asset class relatively well but it also creates a higher likelihood that people are interested

[00:37:28] in investing in it right yeah yeah I think I think so as well and I mean there's something to say

[00:37:34] to being able to have a hard asset right and actually touch the asset like for the most part

[00:37:40] if you invest in anything that's traded on the stock market they're not assets you can touch

[00:37:45] obviously REITs you can but even then I mean usually it'll be a you know they'll have multiple

[00:37:51] properties chances are they don't even have properties in your city so it's a bit of yeah

[00:37:58] it's hard to say but it's there's also that psychological aspect of having like you know

[00:38:03] owning a hard asset and I say owning in air quotes because clearly you know in a lot of cases

[00:38:08] the bank owns more of it than you but still you're so you know that perception of owning it

[00:38:14] yeah for sure for sure maybe move on to to fees and then I guess taxes and legislative exposure as

[00:38:20] well so yeah so did you want to start the fees or yeah I mean I think it kind of goes into that

[00:38:25] liquidity thing from my perspective but and we discussed this more in depth sort of just

[00:38:30] accidentally on your show but I think fees are really the next layer of preventative

[00:38:39] you know panic selling that it's the switching costs in real estate are so high so there's a

[00:38:46] couple of things here number one is that means that you have to have a huge return to make it

[00:38:50] worth your while like a lot of people think of real estate in terms of oh my property could go up

[00:38:55] 10% on a year over your basis it's like okay well now you're just getting past the switching costs

[00:39:01] really like I would typically round up switching costs that high because you've got land transfer

[00:39:06] tax on the way in so there's you know you're almost like one to two percent you've got legal

[00:39:10] fees you've got a realtor fees that are baked into the purchase price that you have to pay

[00:39:14] on the way out right you've got carrying costs taxes etc and so all of a sudden you're the

[00:39:21] cost of exiting the asset of realizing that exit liquidity is substantial and so you actually really

[00:39:29] before you even start seeing a return you need to clear probably 10% and so if you and now

[00:39:35] so if you've got an 11% return congratulations you may be made 1% on your investment right

[00:39:40] and so it makes it a lot more difficult to realize real estate investments and it makes it

[00:39:47] it forces it to be a more long-term asset the other piece being locked into mortgages and

[00:39:51] stuff like that but I think that's a blessing but it's also a curse so I would just say

[00:39:56] it's it's a little bit of a it's a little bit of a thing where you have to really be

[00:40:01] willing to commit to real estate investment for a long time and similar to the liquidity thing

[00:40:06] I think both fees and liquidity prevent people from making investments a little bit more hastily

[00:40:11] and it forces people to think a little bit more when they're investing in real estate it's

[00:40:15] so easy to just be like read a reddit post like you're saying I can't even count the amount of

[00:40:18] times that I've like done this where it's like just some dumb stock that like somebody told me was

[00:40:23] going to go up like 400% on a Reddit thread and I'm like sure why not like got a thousand bucks

[00:40:28] laying around let's let's lose some money here right and I can't do that with real estate so

[00:40:33] that's why I stick to real estate yeah I know and that's a great point and I haven't shared

[00:40:38] this with you and people will probably appreciate but well you know like we were

[00:40:42] kind of looking for a new home because I have a young daughter and we have a home in Ottawa it's

[00:40:47] in a great neighborhood we have a big lot 100 by 50 so we have a lot of space I mean we were

[00:40:55] we're starting to look but again because of the 50k and switching costs essentially that

[00:41:00] we would impact if we sold the home I mean we're well into the profits because we bought it

[00:41:05] with 20% down payment before the pandemic so you know we have a lot of equity in the home

[00:41:11] but again if we are to sell it we'll have to buy something else and honestly right now there's just

[00:41:16] not that much inventory on the market and it's not making a whole lot of sense with having to pay

[00:41:22] that $50,000 fees to the point that we are exploring even the possibility of severing our lot

[00:41:29] building something new on the other part of the lot and then selling the other lot to

[00:41:35] hopefully kind of you know fund most of the new construction I'm not saying we will but

[00:41:39] it is something we are exploring because of those switching costs that are so high and we'd end up

[00:41:45] buying something like either similar or something that needs a lot of work do we want to get into

[00:41:51] that so these are all the kind of questions that we're facing well especially depends on the life

[00:41:56] cycle of that house for you like if it's not your forever home like a lot of people climb

[00:42:01] the housing ladder pretty effectively when values were going up over the last couple of years

[00:42:06] and it all like in life changes happen often enough that it can make sense for people to go from like

[00:42:13] one house to another house but eventually you know you look at that that cost and you're like okay well

[00:42:18] it would need we would need to stay in this next house for 10 years to make the to make those costs

[00:42:23] make sense is that something we're willing to do and if the answer isn't yes like just on the

[00:42:28] primary residence side of things then it often is just as advantageous to say okay well maybe

[00:42:33] we can go back to the bank and get a he lock and find it or and build a renovation and add the

[00:42:38] space that we need to so we're not no longer at risk about growing our house or maybe you can do

[00:42:42] something creative like what you're describing or a lot of people you know it's like can we stay in

[00:42:47] this house a little bit longer and maybe buy a house pre-construction that better suits our needs

[00:42:50] and we can kind of dollar cost average in the deposit there's a lot of different ways to

[00:42:55] look at it but it's it's good to hear that that you've actually looked at the switching cost

[00:42:59] because most people don't even look at them that's that's I think you know me but yeah if there's

[00:43:06] some good builders in Ottawa reach out to me yeah actually there's some you know there's there's

[00:43:11] quite a few builders I think that are sitting on excess inventory but that wouldn't wouldn't

[00:43:15] really solve your problem of no it was more obviously be kind of in the custom and that's

[00:43:20] the whole idea behind it right like it's very unique because we have a big lot but that's

[00:43:24] the whole idea behind it is being a bit more creative because obviously if you're building

[00:43:29] something you can really build in how you want versus switching switching costs you probably

[00:43:35] will have to renovate or if you're buying something renovated it's really rare that

[00:43:39] it's gonna be done to your taste right so there's all these things you have to take

[00:43:43] into account but going back to our discussion and not my personal anecdote it's easy for us to

[00:43:49] get sidetracked good thing we're not talking about Canadian mortgage bonds yeah because that's I was

[00:43:55] hoping to burn up when you said we were gonna have time leftover at the end I was hoping that

[00:43:59] we could dive into that but I don't think we're gonna have time left at the end we can do another

[00:44:03] episode on that that's okay but the fees yeah so the fees obviously like you mentioned can

[00:44:08] definitely be a pretty big part when it comes to real estate and when you're investing in stocks

[00:44:15] I mean the fees are relatively low with self-directored brokerages if you look at index ETFs with zero

[00:44:22] transaction costs I mean you'll probably pay you know less than 20 basis points in terms of fees

[00:44:29] obviously it'll depends on the time type of ETFs some are much higher but if that's $100,000

[00:44:36] invested if you're paying 20 basis point that's just 200 bucks a year in fee so it's very low

[00:44:42] but I'm also not naive and know that some people will end up getting bad advice I mean we saw the

[00:44:47] report from CBC recently that banks are pushing you know mutual funds with fees that are 2% plus

[00:44:55] and perform very poorly and if you're looking at that point at 2% fee on $100,000 invested I mean

[00:45:02] that's $200 or more $2000 or more in fees every year without factoring in the compounding effects

[00:45:10] and for people who haven't done the calculation before I mean it's fun just use a compound income

[00:45:16] calculator taking that same 100,000 if you invested and get 7% yearly return over 20 years

[00:45:23] that'll yield you $387,000 at the end of the period now you take the same 100k with an additional

[00:45:30] 2% fees and let's just say it's an identical fund well that brings your yearly returns to

[00:45:37] 5% and over 20 years that'll give you a 265,000 at the end of the period so that's a difference of

[00:45:43] you know 120,000 roughly over the time period and it's a big issue especially in Canada

[00:45:50] mutual funds are still very very utilized high fee mutual funds so that's really something that goes

[00:45:58] against investing in the stock market or you know whether it's stocks bonds whatever the asset

[00:46:05] you're investing in if you're paying high fees I think you're going to have a very hard time beading

[00:46:11] potential returns that you could get from investing in real estate I mean that's just

[00:46:15] the reality of it of course there are some low fee options but the reality is a lot of people

[00:46:21] are not invested in those options yeah I think um summarizes it really well on the fee side

[00:46:27] maybe we move on to the final piece of the puzzle so I think you know we discussed the tax

[00:46:33] piece a little bit when I was talking about capex versus op-ex but I think when you think about taxes

[00:46:38] in Canada it's definitely different than US tax structure around real estate you know they have

[00:46:45] stuff like the 1031 exchange etc but a lot of people this is where a lot of people really try and

[00:46:50] buy as much primary residence as they possibly can because it's capital gains exempt but otherwise

[00:46:56] you're paying capital gains and then there's different tax considerations but I also grouped

[00:47:00] in like I added to your heading here that it's also legislation because one of the risk categories

[00:47:05] in in Canada especially in Canada as we're learning recently in their effort to combat the

[00:47:10] the housing crisis there's a lot of these layers of legislation that get added

[00:47:15] for those reasons I mean we just heard about this tenant's bill of rights that was announced

[00:47:19] by the Canadian government yesterday there's but there's also been legislative risks where

[00:47:23] Airbnb has their income yeah that's the one that came to mind yeah yeah Airbnb's income has

[00:47:28] been been threatened by the government we have vacant homes taxes the underused housing tax in

[00:47:35] an effort to build a beneficial ownership registry and so a lot of this is is creating

[00:47:42] challenges for the for the real estate asset in Canada yeah I know that's definitely true I mean

[00:47:46] we I looked at potentially having a vacation rental and that was one of the big risks I

[00:47:51] identify was the Airbnb one you know maybe the prices go down so significantly at some point

[00:47:59] that it's a worth the potential risk depending on the location I know it's very it's very

[00:48:04] location dependent I think in terms of Airbnb regulation it's interesting like our yeah so

[00:48:11] the other regulations is is dependent so it's so the government won't allow you to claim

[00:48:15] input tax credits against Airbnb income in areas where municipal I don't know how they're

[00:48:21] gonna police this by the way but but they I don't think they figured they don't think they

[00:48:25] think about enforcement until later same thing with the the tenants rights thing but if your

[00:48:32] government if your municipal government doesn't allow Airbnb's then you can't claim input tax credits

[00:48:36] against your income there because you're breaking the bylaw again I really don't know how

[00:48:41] they're gonna fit how they're gonna execute that but I'm interested to find out yeah that's

[00:48:46] usually the case I find is there's new legislation and then you realize it can't really it'll be very

[00:48:52] difficult to actually enforce which yeah the vacant tax I think is the one that kind of comes in for

[00:48:58] municipality like we have to do it every year now in Ottawa but I just don't know how exactly

[00:49:04] they're gonna be enforcing that so remains to be seen but I guess on the tax subject I mean

[00:49:10] there is one thing that's a big advantage for people investing in in the stock market but

[00:49:16] it's not just stock market there's other eligible investments for that but there's TfSA and RSP and

[00:49:22] there are other type of registered accounts that offer some tax benefits obviously the first home

[00:49:27] savings account if you're looking to buy a home which I think it's a really great account

[00:49:32] a little kind of short plug for that type of account because it is essentially a RSP and TfSA

[00:49:39] together put in together so you get the tax credit plus you don't pay on any any taxes on the

[00:49:44] gains that you make within that account and if you end up not buying a home it's not the end of the

[00:49:49] world you can roll that over to an RSP so essentially if you don't end up buying a home it's essentially

[00:49:56] like you contributed to an RSP from the get go so I think for me if people are really thinking

[00:50:02] about needing a down payment to buy their first home I think it's a really good one to have even

[00:50:08] if you end up not buying a home the outcome for that is actually the bad the worst outcome

[00:50:13] is actually not a that bad of an outcome but a TfSA is probably in my opinion the best savings vehicle

[00:50:20] I mean we're very lucky to have that it's very flexible and again you pay the taxes up front

[00:50:25] you have that tax certainty associated with it and then all the gains within it are actually

[00:50:31] tax free so you don't have to pay taxes there are some small exceptions for example if you

[00:50:37] have you like dividend paying stocks that are outside of Canada typically there's going to be

[00:50:42] a withholding tax I'm not a lot of people talk about that but it is one of the drawbacks of the

[00:50:47] TfSA whereas the RSP there tends to be tax treaty for retirement accounts which that is and the

[00:50:53] other thing that people should be very careful about for the TfSA is that it's not meant to be

[00:50:59] a trading vehicle so the CRA if they kind of identify you as doing too much trading within

[00:51:07] that account they'll say that it's business income and you'll have to pay taxes on it

[00:51:12] unfortunately as the CRA typically does they're very vague on what is considered kind of high

[00:51:20] frequency trading or trade day trading within a TfSA so you just have to err on the side of

[00:51:27] caution they don't have that much guidance associated with that yeah it is interesting

[00:51:33] I think about this in terms of like it's kind of like the way tenants can if they decide they want

[00:51:38] to be like when we're talking about Airbnb a lot of people are in medium term rental situations

[00:51:44] like they use Airbnb for medium term rental but it's like in most provinces in Canada once

[00:51:49] the tenant decides they're a tenant like they can have the tenant's rights if they want right

[00:51:52] so it's all and it's kind of sounds like the same thing if the government decides

[00:51:55] that you're high frequency trading then you're high frequency trading right like

[00:51:59] the last piece that I'll mention and this is regards to the underuse home housing tax and

[00:52:03] I think beneficial ownership registry attempts that they have for other assets is

[00:52:07] the ability to own real estate corporately you know when you're talking about the execution of

[00:52:11] vacant homes taxes at a national level I think a lot of these I think a lot of people who are

[00:52:16] investing in Canadian real estate for perhaps more sinister reasons are just going to see

[00:52:19] that as a small tax right it's that's just like you know if you're if you're holding millions

[00:52:24] of dollars of Canadian real estate with the objective of not being found out for that reason

[00:52:30] you're just going to pay the five thousand or ten thousand dollar fine and move on and that's a new

[00:52:35] annual expense for your your asset and so that's one of the pieces that I think a lot of people

[00:52:42] it's like not a reason I would say people should be investing but a lot of people

[00:52:46] like investing in real estate in Canada because it's exceptionally private from a court you can

[00:52:51] you can hide behind one one property of one corp and basically there's no way for them to know

[00:52:56] okay so uh for anyone wanting to get in criminality that's well it seems to be I mean like but if

[00:53:03] you really examine I mean like there's there's been sufficient journalistic accounts of

[00:53:10] you know snow washing money laundering in Canadian real estate you know tax evasion in Canadian

[00:53:15] real estate stuff like that there's you know there's sufficient enough evidence that it's

[00:53:19] obviously a value proposition as to why people invest in Canadian real estate yeah I think your

[00:53:24] dog agrees so we'll have to keep that one in yeah it's too bad I if I had known I would have

[00:53:30] brought my dog so they probably could have a little bit of a discussion on fraud in real estate

[00:53:35] yeah wouldn't it wouldn't be a wouldn't be an issue if I didn't have to move halfway across the

[00:53:39] house to get internet so anyway when and it's funny because I know we'll wrap up here but

[00:53:45] I was literally saying how the internet problem is purely an it's purely an economic problem because

[00:53:50] it's just about the fact that we live in an oligopolistic economy and my choices are between

[00:53:55] Bell and Rogers and it has it's not a technical problem it's an economic problem yeah I know we're

[00:54:00] talking about that before we started recording well no I think that's a great place to wrap it up

[00:54:05] I'll let you wrap it up because this is going to be on that on your podcast yeah cool um yeah

[00:54:10] thanks a lot man I really appreciate having your insight on here as always I actually

[00:54:14] I know you cut yourself off on the personal anecdotes but I appreciated the personal anecdotes

[00:54:18] because it humanizes that even brilliant stock investors can face small real estate challenges

[00:54:24] on a regular basis and yeah if anybody who's who's missing the context of the first half

[00:54:31] of this episode make sure you check out Simone Braden's podcast they're the pod fathers and

[00:54:35] they have another guy named Dan on their show now as well who's actually a cooler Dan than I

[00:54:41] am I met him at the AGM's annual general meetings for Dan's we have annual meetings

[00:54:47] and he's a great guy so yeah everybody I would encourage everybody to go check that out

[00:54:51] and listen to the first half of this episode thanks Ben yeah thank you thanks for having me

[00:54:56] The Canadian real estate investor podcast is for entertainment purposes only and it is not

[00:55:01] financial advice Nick Hill is a mortgage agent with Premier Mortgage Center and a partner in

[00:55:07] the G and H mortgage group license number 10317 agent license M21004037 Daniel Foch is a real estate

[00:55:19] broker licensed with Rare Real Estate a member of the Canadian Real Estate Association the Toronto

[00:55:26] Real Estate Board and the Ontario Real Estate Association