Episode Details

Hello and welcome to the Truth About Real Estate Investing for Canadians, my name is Erwin Szeto, residential real estate investor since 2005, and in my experience, the investment that has gotten my over 350 clients ahead in life is direct ownership of real estate as they own the property, manage it themselves or hire a property manager, and grow their portfolios by borrowing cheap mortgage money. My team here at iWIN real estate has been coaching clients to do so since 2010 and it’s been a great run.

Yesterday, I was supporting one of my clients who I’ve helped acquire several properties whose tenant has not paid rent in 13 months even though they won at the Landlord Tenant Board five months ago.  He also shared with me how his rental portfolio was the highest source of stress in his life.

Another client, a real estate mortgage professional, he’s had minor basement leakage in one property in a brand new renovation and in his other brand new renovation, the tenant move out because the floors are out of whack having been installed onto of an uneven floor.  The tenant said the flooring edges are sharp and too dangerous for their baby to be crawling around on. My client is back and forth with the flooring manufacturer and the general contractor and it’s been months.

The truth about real estate investing is it can be stressful and there are challenges.  I have my own stories too for another day but this is not why I first got into real estate.  I started investing for an alternate source of income. I would side hustle as a real estate investor for a return of more freedom, more control over my finances and bring my clients along for the same journey.

It’s always my job as chief investment officer of my household and for my clients to find ways to optimize their portfolios including reducing risk.

In the current environment with inflation, rent control, dysfunctional Landlord Tenant Board, and elevated interest rates.  Add to that how anti landlord the politicians and media are, I don’t feel I’m in control anymore hence I see the writing on the wall.  Cherry and I are selling several if not all of our rental properties in Ontario to take profits, pay off debts, raise cash to take advantage of other opportunities mostly in landlord friendly locations in and around the top 10 cities for investment in the USA.

Both Americans from California and New York along with Canadians are making the move to red, sunbelt states.

The business environment in certain states where I will be targeting offers better numbers and less risk. No question.  At my stage of investing career, I’ve invested in over 40 houses, done many advanced BRRRRs but because I can cash flow better on single family houses in the US, 5-7 cap rates, the same cap rates past guest of this show do with apartment buildings after 5-10 years of renovating, turning over apartments.

I see no reason to take on so much risk when there’s an easier way.

I finally have easy financing, it’s actually easier to get a Mortgage in the US than in Canada. Scott Dillingham of LendCity, who I’ve been working for years to get me mortgage brokers on income properties shared with me in the summer he would soon be able to offer easy, commercial style mortgages for Canadians to invest in an unlimited number of American income properties.  No credit needed.

Investing in real estate without mortgages makes little sense hence I’d never taken US investing seriously but Scott opened the door, I walked through it and went all in on my due diligence.

I’ve never been so frustrated as an Ontario landlord.  For example, did you know tenanted properties for sale are getting next to no showings?  In my nearly two decades, I have never seen showings volume so bad for turnkey income properties at the same time the LTB is so broken, the allowable rent increase so far b