Another Trip Around the Sun. The Worst Year for Real Estate in My Experience.

It’s not all bad 🙂

Thank you to everyone who took time out of their busy schedules to wish me a happy birthday. The vast majority of messages came from the real estate investing community, and reading all the comments and seeing the names brought back a lot of memories—many from easier times for real estate investors.

My fellow escape-room-loving, nerdy friends attempted to be among the elite 4% who successfully escape... #FAIL

 

This mango cake tasted better than it looks

 

The Problem: The Changing Real Estate Landscape, for the Worse

Since the peak of the market around late 2021 to early 2022, prices have declined while the cost of operating a rental property has continued to rise. Rent control has squeezed landlord incomes, leaving many of my clients and fellow investors struggling. We real estate investors never signed up to backstop inflation for our customers, and not once has anyone said, "Thank you."

Some of my clients have endured nightmare tenant situations: one tenant owes over $30,000 in rent; another caused $20,000 in damages; and another had terminal health issues, not paying rent, leaving the house in such a disastrous state that it had to be sold as-is. Our client unwittingly became a social service provider overnight, and they’ll never be Ontario landlords again. Why buy and hold a move-in-ready property for ten years only to experience this kind of grief? This is not what my private citizen client signed up for.

In the areas where Ontario where majority of cash flow oriented investors invest like Oshawa, Barrie, Hamilton and Kitchener are well off their peak prices.  Duplexes especially. In Hamilton where the majority of my clients and my duplexes are located we're 20% off peak prices and we're experiencing low showing volume of our tenanted and vacant duplex listings.

Market rents are coming down on long-term rentals too as international students aren't coming to Canada in droves any more but our university (not college, we're not a fan of college student rentals) student rental rents have still climbed slightly, even over last year's historic increases.  I was finally able to get rent PLUS utilities on my McMaster University rental.  Those same tenants have already renewed for the following school year.  I feel bad for parents of university students as I review rental rates for upcoming listings we have near Brock and Western University at $700 and up per room. (Please let me know if you have anyone looking to buy a student rental near Brock and Western University :). University student rentals are my favourite local investment strategy for both cash flow and limited landlord tenant board risk.  From what I see in the local market, student rentals have the most demand from investor buyers.

This is the most buyer advantaged market I've seen other than 2008 and early covid but with the Landlord Tenant Board risk and cash flow, rents across the country are declining but not that far off historic highs, so overall housing affordability is still bad on the historic side.  So no surprise, I've never seen such low local investor buyer interest.

As such, Realtors and full time investors have returned or pursued other careers. My own team of investment focus Realtor/coaches has shrunk, it's just the original Tim Hong and I now servicing our clients and our clients mainly want to sell which is great us as Realtors, not so great is tenanted properties take a whole lot more effort, lead time and risk management in our experience but we love it.  We love seeing our clients take profits, take a load off their shoulders and enjoy themselves, usually it's travelling to exotic locations.

It's challenging but such rewarding work.

For months, we where taking calls from pre and construction condo investors but unless they wanted to take massive losses, in some case 20% or more of their purchase price as there is six months of condo supply downtown Toronto.  That's what's on market and can be tracked. I've been in the Facebook groups for private assignment sales and there are endless private listings there as well. 

Condos have always gone against my investment philosophy.  Land is a hard asset as it is finite, no one is making more of it vs. condos are in the sky and there's plenty of space above land to many, many condos.

Generally condo investors have no choice to hold, rent it out, negative cash flow a thousand or two each condo and pray the market recovers in two or three years.  I feel bad for new condo investors and at the same time, grateful our strategy of buying on land real estate for value and cash flow has worked.

The Guide: What Smart Investors Are Doing Instead

In my nearly 14-year career coaching clients in real estate, I have never seen challenges like these. Thankfully, our clients have fared much better than most, as they’ve renovated smartly to optimize cash flow. Nearly all of our clients own houses with basement apartments, student rentals, or small multi-family properties.

Rents are as good as they get in Ontario, which means our clients can weather this storm better than most.

I won’t sugarcoat it—this past year has been tough for landlords, Realtors, mortgage brokers, variable-rate mortgage holders, and even tenants, as affordability is at historic lows. My family and I included.

There is bad news is all over social media, many friends from the community send me the dirt on the furus: a word mash up of fake guru and these furus have made the national news: bad operators brokering shady deals, borrowing through promissory notes, accusations of Ponzi schemes, Securities Code violations and these same furus send legal threats against anyone who dares to share the truth. I've received several threats and you can guess by who.

Some of these furus are still licensed and practicing which boggles my mind. Others have fled the country and white collar crime goes mostly unpunished so I don't expect any justice.

For anyone interested in Exposing Fraud & Failures in Canadian Real Estate, that is literally the name of a Facebook Group my new friend Matt invited me to.  You may want to join as it's an easy way to reference check anyone raising capital. Link: https://www.facebook.com/groups/588190593990235

The Transformation: A Smarter, More Profitable Path Forward

If you’re an investor, you know that mindset is everything. The right strategy and a growth mindset separate those who thrive from those who struggle.

"Your mind is like a garden. You can grow flowers, or you can grow weeds. Whichever you water is what will flourish." — Brian Tracy

This quote is a great reminder to be intentional about a positive mindset and personal growth. Since December, I’ve been working to improve on the right mindset by waking up early, meditating, journaling, exercising, and focusing on being my best self for my family and my community.

If you’ve read The Miracle Morning by Hal Elrod (or any of the dozens of other personal development books on the subject), you know what I’m talking about. It’s amazing how much you have to say "no" to in order to be up at 5 a.m. each morning—less social media, bad food, alcohol—all to protect my energy and ensure a productive, intentional workday. Some nights I go to bed before the kids LOL.

Where & How Investors Are Adjusting

Many investors are making the shift landlord friendly strategies like student rentals I already mentioned, there's rent to own or to landlord-friendly places like Alberta and U.S. markets, and this show is here to share such best practices, to guide you every step of the way. In my own business, we've helped nearly four dozen clients acquire or prepare to acquire income properties in these markets. These are some of the best passive investment deals I’ve ever seen—better returns with lower risks, less effort, and more scalability.

For a real estate geek like me, it’s a dream come true, thanks to technology, AI, and the expansion of institutional-grade property management services in business-friendly U.S. states.  I know many hate Trump and are sick of tariffs but I can't find the same investment advantages here in Canada.

Take my off-market deal in San Antonio versus the off-market deal I did near McMaster University in Hamilton:

Upfront renovations: $12,000 vs. $110,000 Property age: 20 years old vs. 100 years old Basement issues: None (no basement) vs. mold, cockroaches, and leaking that required waterproofing Tenant management: One stable tenant vs. seven university students who had never lived on their own before Utilities: Tenant-paid vs. inclusive (including a $2,000 water bill thanks to a leaky toilet) Financing: Cheap mortgage vs. B-lender at 10% because no bank or credit union would lend to us Regulations: No rental licensing vs. strict rental licensing a couple thousand to setup up, a couple hundred in added costs per year I can't pass on thanks to rent control Take Control of Your Investments

If you're frustrated with Ontario’s landlord laws, you're not alone. Many investors are making the shift to landlord-friendly markets.  In my professional opinion, the business friendly States in the U.S. make the most sense since my clients receive all the benefits of passive investing like a REIT but pay less fees, keep all the equity and control unlike any investment I've seen before and I'm here to guide you every step of the way in how to diversify, de-risk, including how to list investment properties for sale for maximum return, even if tenanted.

All signs point to rising rents and real estate prices in the U.S. markets I've targeted for my clients, we wouldn't be there otherwise, billions of dollars being invested to create high paying jobs at a scale greater than 10X Canada's and by industry leaders.  Even if you want to do it yourself, that's totally cool, we've had Glen Sutherland on this show and we'll have more from our Canadian community who have transitioned to the US investors and you'll hear from them on this show as I want everyone to know the truths about do it yourself investing cross border and I'm grateful to have friends who will come on this show and be so transparent.
I'm happy for anyone who continuously improves their investments, lives and achieving their financial goals

Final Thoughts. 

Thank you again, my 17 loyal listeners, for giving me this platform to make a difference in our community. If you'd like to get more tactical learning and real education

A great place to go is our iWIN Meeting on Saturday, April 26th (limited in-person seating + Zoom webinar). Thanks to our sponsors at SHARE and LendCity, lunch is covered.

Topics include: ✅ Short-term rentals & student rentals—What’s working now, and what’s not? ✅ The best landlord-friendly markets for Canadians (active & passive investing strategies) ✅ Property management in a recession—How to protect cash flow & avoid costly pitfalls ✅ How to sell a tenanted property for maximum ROI ✅ Mortgage market update—Where rates and terms are heading + CMHC MLI Select changes

The choice is simple: keep hoping Ontario changes, or step into a market where laws protect your investments and cash flow is king. See you there!