The Benefits Of Investing In A Multi-Phased Master-Planned Community

Andrew la Fleur:
On today’s episode, we’ll talk about the benefits of investing early in a multi-phased master plan community. Stay tuned.

Announcer:
Welcome to the True Condos Podcast with Andrew La Fleur, the place to get the truth on the Toronto condo market and condo investing in Toronto.

Andrew la Fleur:
Hi, and welcome back to the show. Thanks for tuning in. Once again, Andrew La Fleur here, your host. On today’s episode, I have a very special guest, Ryan Rabinovich, president of PSR Brokerage. Ryan is going to be, very soon, representing the builders Freed and Elad, who are the developers behind the master plan community known as Galleria In The Park. The former Galleria mall at Dufferin and dupont is going to be redeveloped into multiple condo buildings, community center, park, new infrastructure, new retail. It’s basically a brand new community there at Dufferin and Dupont in the heart of the city.

Andrew la Fleur:
This has been in the works for a number of years. You might’ve heard about it. You might be aware of it. The anticipation has been building for this project for a number of years now. We’ve talked about on the podcast in the past as well over the years, and finally, it’s here, the first opportunity to buy in.

Andrew la Fleur:
One of the secrets of condo investing that is fairly well-known but not necessarily by everyone and that is when you’re looking for a surefire win or easy way to definitely see some upside on your investment versus the typical opportunity, it’s when you have an opportunity to get into the first phase or the first phases of a master-planned multi-unit, or sorry, multi-building community. That’s exactly what the opportunity is that we have here with Galleria on the Park.

Andrew la Fleur:
There will be many more buildings to come, but obviously as an investor, if you can get in on the ground level at the first building or two, that’s the best place to be as the values always grow over time and the infrastructure is built out, the neighborhood is built out. It’s often also just a case of builders will set the price artificially low on those first couple of buildings to gain the momentum to get the velocity of sales they need to get construction going on the whole community.

Andrew la Fleur:
That is part of what we’re going to talk about on today’s show. You’ll also hear from Ryan and his very inspiring story of his personal journey in real estate investing and how he got started. He got started at a very young age. We dive more into that and what his thinking was at the time and what his advice is for new condo investors in particular. People, if you’re out there and you’re listening and you have not yet taken the plunge to get your first investment property, your first investment condo, then you’ll definitely want to hear what Ryan’s advice is coming from somebody who’s obviously built a big portfolio over the past couple of decades, but somebody, again, who started very, very early, much younger than most investors have. Looking forward to sharing this interview with you.

Andrew la Fleur:
Of course, if you’re looking for the floor plans, the prices, more information on the upcoming launch of Galleria on the Park in the first building and how you can purchase a unit here, just send me an email, andrew@truecondos.com, or you can always call me, text me, 416-371-2333. Without further ado, here is my interview with Ryan Rabinovich of PSR Brokerage. Enjoy.

Andrew la Fleur:
All right. Welcome back to the show, Ryan. Thanks for being with us here again. I think this is your third time on the podcast, so you’re in very rare company. Not Too many people have been on the show three times. You’re one of the veterans of the podcast.

Ryan Rabinovich:
Repeat offender.

Andrew la Fleur:
Repeat offender. Excited to have you back on. I thought I’d start again, I know you shared this story in the past, but I always find your story interesting, but also inspirational. You started off in real estate investing so, so early. Why don’t you tell us the story again of your first purchase, your first condo investment?

Ryan Rabinovich:
Okay. Yeah, definitely. When I was in my late teens, early twenties, I saved up some money and really wanted to get into the market. Ended up buying a pre-construction unit really early on, kind of waited in line for it and bought at, I think I was maybe 21 at that point or something like that. That, fortunately, has done really well for me, helped me built up some equity, had money rolling from that into other opportunities, and slowly built up my portfolio to what it is today.

Ryan Rabinovich:
It’s by no means massive, but it’s a good portfolio, and proud of the equity that we’ve built up over the years, and just proved to myself that I practice what I preach and I truly believe that real estate is a great way to build wealth. Over the last almost two decades, I’ve put my money where my mouth is, and I’ve been able to build some wealth that way and helped many other people along the way as well.

Andrew la Fleur:
21, buying a Condo. Very few people can be able to say they did that. What were you thinking at the time? Like what was your… Did you come from a real estate family? What was your mindset at the time as a 21-year-old? You just talk about it as if it’s no big deal, but it is a big deal, and very few people, very few people, like I said, have ever made the smart decision of investing at such an early age. What were you… Take us back to your mindset at the time. What were you thinking? What were people telling you at the time as well? Were you getting advice from someone in particular to do it, or was this something you thought of on your own? Did you face resistance? What was it like at that time?

Ryan Rabinovich:
I can’t say that I was really talking to a lot of people about it. None of my friends had saved enough money at that point to even have that a consideration so was never a topic of conversation between my peers and I. My mom started to dabble in real estate sales in those years. She’s been someone who was very inspirational in my life because we came here as new immigrants, and part of the way that we built our own family wealth was when we came to Canada, we lived in a motel for the first few days in Canada. Then we upgraded to a basement apartment with no windows and slowly evolved from that.

Ryan Rabinovich:
When my mother, after a couple of years in Canada, she was able to buy an apartment. That apartment went up in value, and then we upgraded into a small home. That home went up in value. I kind of saw it happening in my mid-teens, and I saw how we’ve experienced the benefits firsthand of the real estate growth, investing in real estate and its growth. It was always in the back of my mind.

Ryan Rabinovich:
There was an opportunity that came up close to where we lived up in Vaughan. I just thought that the price, I thought, made sense. I fell as a victim to a bit of a hype. I was the fourth person in line, and the line ended up being huge. I never wanted to even leave that line. I slept there for a few nights to make sure I maintain my spot in line. I just felt, it felt really natural. I can’t say that I was overthinking it. I wasn’t. There was no one that pointed me to it. It just kind of happened for me. Fortunately, it worked out, and it gave me the appetite to go out there and find more opportunities like that.

Andrew la Fleur:
Now, you mentioned, again, you talk about it casually, but most teenagers are not thinking about real estate investing. Most teenagers are not observing the process of wealth accumulation through real estate and equity paydown and things like that as you were thinking about and that which led up to you purchasing a place at 21.

Andrew la Fleur:
Just curious, do you think being an immigrant and coming to Canada as opposed to being born here, do you think that played a big factor into your mentality and as you look back at, maybe like you said, a lot of your peers and friends were not even in an any position to even think about purchasing real estate when you did your first one at 21. Can you speak to that at all? Do you think about that at all in terms of the immigrant mindset versus the born-in-Canada mindset? How much of a factor is that do you think in being a successful real estate investor?

Ryan Rabinovich:
I mean, I’m now surrounded by both immigrants and second and third-generation Canadians. I don’t think that I would attribute that to kind of the immigrant mentality. I think that it’s just more on how you are wired as a person. I started working at a really young age, and I’ve always been motivated by professional accomplishments, not necessarily by money. That was more of a measuring stick, but have always been motivated by personal growth and opportunities to learn. I was willing to work for it, so started working at a really young age and was able to save up a little bit of money slowly over time. As I got into my mid-teens, I started my own business that has done fairly well for someone who’s 17, 18 years old, and-

Andrew la Fleur:
What business was that?

Ryan Rabinovich:
It was a window cleaning company.

Andrew la Fleur:
Hmm.

Ryan Rabinovich:
Then just found myself with a little bit more money than my peers. Not hundreds of thousands of dollars, but a few tens of thousands of dollars. I wanted to really… we were raised in Vaughan after we moved to Canada, and I wanted to stay in the neighborhood. Again, an opportunity came up within that neighborhood, pre-construction, so it gave me three or four years to really save up and top up my down payment and have some time to qualify for a mortgage. When that came up, it felt really natural for me to do that.

Ryan Rabinovich:
Much later in life, I ended up taking control of the unit, taking ownership of the unit. I closed on it for the first few years. It was tenanted, which also has been amazing, had some great tenants over the years. Later on, that place served as the starting point for the life that my wife and I have built together. We’ve moved there and have lived there for a couple of years ourselves before kids. We still own that apartment today. It’s been about 16 or 15 years since it’s been completed, and it’s almost fully paid down, which is incredible. We’ll have a full asset, no mortgage on it, that’s worth significantly more today than it was when I bought it. That’s the magic of real estate. I’m a believer now, of course, and have swayed many people to take the same route that I have over the years.

Andrew la Fleur:
Are you glad you didn’t become a window cleaner?

Ryan Rabinovich:
Yeah. Yeah.

Andrew la Fleur:
Are you glad you pivoted into a selling and buying the buildings as opposed to cleaning the windows on them?

Ryan Rabinovich:
Yeah. Now I’m happy. But yeah, but that window cleaning business has really taught me a lot, and-

Andrew la Fleur:
What lessons did you take from that, being an entrepreneur at a young age? How did that set you up for where you are now?

Ryan Rabinovich:
It just taught me that you’re responsible for, really, your own destiny. You can always find someone to point the finger at when things aren’t going well, but ultimately, if you look at yourself in the mirror and really challenge yourself to find a solution or to overcome certain obstacles, you could convince yourself to do that. You’ll most likely be successful in doing that.

Ryan Rabinovich:
It’s hard. Sometimes you experience some lows, and sometimes you’re just feeling lonely because you’re running a… and not just a small company with a handful of employees and you have a lot of responsibility, but you challenge yourself and you grow from those times. If I would have to say the most valuable lessons there I’ve learned is to believe in myself and my capability of overcoming obstacles.

Andrew la Fleur:
Amazing. Great story. I love to hear it. Love to share your story and stories like that with people listening. I think it’s really important to hear for people who are investing for the first time, but also just remind ourselves as seasoned investors why it is what we’re doing and how it works and why it works and we’re not alone like a so many, like you said, as investors, whether you officially have a business or not, you are basically a business if you’re investing in real estate in a small way, and so-

Ryan Rabinovich:
Even, I always say, even end users, when someone comes to me and says, “I’m an end user. I’m looking to live in this unit,” if you’re intending to use it yourself, you’re an end user, but even an end user is really investor because when you’re looking to move into a bigger place or maybe downsize because circumstances have changed, you really still want to make sure that your home, your condo, your whatever it was that you owned is worth more when you’re selling it than when you bought it. Even end users, though the focus is a bit different, the underlying element is you still want that asset to perform really well over time.

Andrew la Fleur:
Yeah, great advice. Nobody’s buying any real estate thinking it’s ever going to go down in value. You want it to go up. You assume it’s going to go up. Absolutely. We want to talk about Galleria on the Park. I know your time is limited today, Ryan. I really appreciate you taking these moments with us here.

Ryan Rabinovich:
Of course.

Andrew la Fleur:
Tell us about the site itself. I know it’s been a long time in the making to get to this point. You’re about to launch this exciting new project, Galleria on the Park. When did Freed and Elad, the developers of the project, when did they first acquire this property again? Remind me.

Ryan Rabinovich:
I think the site-

Andrew la Fleur:
How long has it been?

Ryan Rabinovich:
… has been, at this point, I think it’s been about around four years or so. It’s been a long time coming for sure. You and I have spoke about this probably two or three years ago already. The excitement is definitely at an all-time high amongst the developers and between us and within the community. We’re just hoping that, ultimately, what was created is something that everyone can be proud of, all the stakeholders, which are the community residents, the city, the developers, and ultimately, the people who move into this brand new community.

Andrew la Fleur:
Why does it take so long for a project like this to go from acquiring the site to now starting the sales to starting construction presumably soon after this? Why does it take so long? Just curious from your personal standpoint being involved with it, is it a very frustrating process for you personally as you’ve been working on this for four years before you’re finally able to start to sell?

Ryan Rabinovich:
I wouldn’t say that it was a frustrating process by any means. I think the developers will probably testify that it was overall a very good process. The councilor and the district has been incredibly involved and has been great to work with. The local area residents have constantly been engaged in this process to make sure that what is created is something that they can be proud of and fits the community, doesn’t overwhelm it but actually compliments it.

Ryan Rabinovich:
Of course, the city is experiencing some difficulties with the volume of development applications, and that has an effect on the timeline for sure, but ultimately, developing a community of this scale, conceptualizing it, understanding all the various elements that are required to form this community, and then obtaining the appropriate approvals and the appropriate feedback from city and staff and councilors and, of course, the residents, all of that feedback is a very important part of the process. Yeah, it maybe had taken longer than we’ve anticipated, but now we’re at a point where we’re just excited to get going now that the project has formally been fully approved.

Andrew la Fleur:
I don’t know if, maybe it’s too early, but are you sharing any approximate price point, approximate price range yet of what buyers can expect for a Galleria on the Park?

Ryan Rabinovich:
We have an indication from the developers on how they would want to price out the first phase. It hasn’t been signed off on yet, so I can’t quite share it, but what I can say is that everyone around the table understands the importance of having a very successful first phase in a master plan community. We all believe that it really sets the tone for the future phases to come. The intention is definitely to provide the kind of value offering that makes it very easy for both end users and potential investors to be a part of the early stages of Galleria on the Park.

Andrew la Fleur:
Okay. Yeah, I hear you. Obviously, still early. I mean, I’ll just say from my perspective for the benefit of the listener right now. The average new condo downtown Toronto is about $1,200, $1,300 a square foot. In the core of Toronto, it’s around $1,100-ish per square foot call it. My question for you is when you guys first acquired the site four years ago, if I had told you that the average selling price in the core of Toronto of new condos is around $1,100 per square foot, what would you have said at the time? What was the thinking when the site was acquired in terms of pricing versus what the reality is in the market right now?

Ryan Rabinovich:
I mean, I actually think pricing in the core is a significantly higher than $1,100 a square foot today. I mean, we’re seeing projects launching in the core $1,300, $1,400 a foot. Those are entry-level project in the core. We’re seeing some projects even touching $1,600 and $1,700 a foot in the core. I definitely think that the core right now had reached a point where many buyers have to take a step back and really stop and think before they’re buying real estate to make sure, number one, is this really a good investment, will I be able to close on it, what happens if the market turns, what’s happening in the neighborhood to make sure that the growth that I anticipate will take place, will actually take place.

Ryan Rabinovich:
There’s a lot of different variables in consideration, but if you would’ve asked me four or five years ago if I think that the average price in Toronto on a per-square-foot basis would be north of $1,000, I would definitely say that we’re still probably a decade away from that, and we’ve accomplished that growth in five years, so the landscape has definitely changed.

Andrew la Fleur:
Absolutely. It’s so interesting to see how the prices have evolved and so many factors that go into that, but… What are you most excited about… or maybe I should say what is Galleria on the Park for those who are not familiar. What is it, and what are you most excited about this project?

Ryan Rabinovich:
Galleria on the Park is a master-planned community located at Dufferin and Dupont. Dufferin and Dupont is a downtown location. Granted, it’s not a downtown core, but it’s that first ring right around the core. From a geographic standpoint, I think that the community is incredibly well-connected to transit. It’s right by the Bloor subway station going east and west. It’s close to Spadina and Yonge subway line, the line that goes up to Vaughan, down to Union Station, and up to Finch. It’s also on two important bus lines, and it’s about a kilometer away from UP Express. From a transit perspective, the communities, they’re well-connected. But what I would say the things that I’m seeing that I’m most excited about is just the destination that will be created here as part of the community.

Ryan Rabinovich:
If you’re not familiar with what the master plan community is, in this instance, there’s a significant residential component that’s about 3,000 residential apartments. The retail component is very significant as well. Galleria mall, which has onsite currently, had about 230,000 square feet of retail. We have 300,000 square foot of retail coming in, so there’s more retail actually being introduced into the area than being taken out.

Ryan Rabinovich:
Another incredible attraction that I think will get a citywide destination is the brand new park. There’s an eight-acre park coming in. Just to put that in context, Andrew, that’s 360,000 square feet park. Again, that is a very rare amenity, and in Toronto today, very few projects have that type of public space created and introduced as part of the project.

Ryan Rabinovich:
Finally, a community center that is so meaningful in size that it is sure to help the neighborhood come together and interact as a community, being a community center just under 100,000 square feet, making it one of the largest in the GTA, state-of-the-art programming, which includes athletic sports, sports courts. There’s swimming pools. There’s studios and classrooms. There’s even a daycare in there because we’re seeing a lot of young families transition into the neighborhood, and we’re seeing a lot of young families transition into the neighborhood, and all of these young families are seeking adequate childcare for their children, so having the daycare downstairs helps a lot as well.

Andrew la Fleur:
Very exciting. In terms of numbers, master plan communities, you said multiple buildings, retail, massive park, heart of the city, downtown core, how many buildings exactly are there, and how many units in total? I know these things could change slightly, but what are we looking at as of right now?

Ryan Rabinovich:
Currently, it’s eight buildings with just under 3,000 units in total.

Andrew la Fleur:
Eight buildings, 3,000 units. Incredible. The first building is about to launch very soon. What would you say to the first-time investor? Taking it back to yourself, thinking about yourself, maybe, if you were talking to your 21-year-old self and you were looking to make a first investment in the market, what would you say to that person? Maybe other half of that question, to the seasoned investors, somebody who’s already got several condos in their portfolio, and they’re looking to add another one this fall, what would you say to that person in terms of why Galleria versus other offerings that might be coming down the pipe? Speaking to the first-time investor first, what would you say to them about, about this opportunity?

Ryan Rabinovich:
To the first-time investor would, I would say whether it is a brand new community or an existing building, you want to be a part of the real estate markets. Toronto is evolving at an incredible pace, and every day that passes prices you out of the market more and more. If you have the ability and you are able to afford anything that’s even an entry point into the market, I would take that opportunity with both hands and pulled the trigger, so to speak, and take the first step and plunge into the market. You will be rewarded for it in the long-term.

Ryan Rabinovich:
For a seasoned investor, I would say specifically for Galleria, we had spent a lot of time looking into the data. Andrew, you and I have worked together for I think a decade at this point, and you know that I take pride in the data that we collect when we put a building out. We’ve done extensive research and explored how master plan communities perform, perform over time, and how standalone buildings perform over time as well, assuming that they’re in the same geographical locations.

Ryan Rabinovich:
What we found across the board was that master plan communities actually appreciate at a higher pace, at a higher rate than standalone buildings. We asked ourselves the question, why is that? Now, there are several reasons for that, but in my opinion, one of the main ones is when you buy in a standalone building, you have very little influence on the neighborhood. If you buy a building at Yonge and Bloor, you know the amenities of the neighborhood, you know that Yorkville is close by, you know you have two subway lines. It’s obviously a great neighborhood. With that neighborhood, the infrastructure there is not going to change, so however the market performs, give or take, that neighborhood will perform in line with that.

Ryan Rabinovich:
When you’re investing in a master plan community, you have the opportunity to buy in a building, and at the bottom of that building there is literally tens or sometimes hundreds of millions of dollars of infrastructure investments happening right at the bottom of your building. What that allows you to benefit from is a higher-than-average, higher-than-market-rate price growth because all of this infrastructure that’s getting built, as soon as it comes into play, the demand for this new community just goes through the roof. We’ve seen it time and time again.

Ryan Rabinovich:
To really simplify it, imagine owning a condo on the Yonge subway line before the subway was there, and then imagine how much that value would change, how much that value would grow if the subway was added the next day. It would be night and day. This was the same opportunity. When you’re investing in a master plan community, you have the benefit of having millions of dollars in infrastructure investment to help carry the value of your assets forward.

Andrew la Fleur:
Right. That’s a great point. Just, what are the top levels, what are the infrastructure investments? The park, brand new park, the community center, brand new community-

Ryan Rabinovich:
[crosstalk 00:30:23] park-

Andrew la Fleur:
… center.

Ryan Rabinovich:
… the community center, retail, new roads that will be created. Obviously, there’s a lot happening here, and you want to be a part of it.

Andrew la Fleur:
Beautiful. Great. Awesome, Ryan. Anything else? Thank you so much for your time today. Anything else you want to add that we didn’t cover, important things to know or something that we missed about Galleria on the Park?

Ryan Rabinovich:
I’d say we covered a fair bit of ground here today. I just, if anything, I would want to add two things that I think as realtors you really face today more than you have even two years ago. You’re being asked now regularly, I’m sure, two questions that you were never asked before, one of them being, is this site approved? I’m happy to actually report that the site is fully approved now. There’s no zoning risk in there.

Ryan Rabinovich:
The second question that you’re being asked is who are the developers? I know that you own a few investment properties. So do I. When you try and qualify a tenant, you’re asking for references, so it only makes sense, it makes perfect logic that when you’re buying real estate, you want to ask for the developers references, understand what they’ve done before.

Ryan Rabinovich:
I think Freed with their program at King West and Yonge and Eglinton is well known. Surprisingly Elad isn’t as well-known, but they’re a real company with incredible scale. They are a multinational firm with offices in Israel, Florida, New York, and Toronto. Their market value is just under $2 billion, which is massive. They have experience in master plan communities. They’ve delivered Emerald City, and the buyers that they were a part of that community have done really well over time. All of the lessons that they’ve learned at Emerald City, because we’re always learning and evolving, will be applied at Galleria on the Park. They’ve already acquired their next master plan community in North York, which will be launched in 18 months, so both developers, very, very reactive, and Elad obviously has a great track record with master plan communities.

Andrew la Fleur:
Excellent. Perfect. Yeah, great points. Great for people to hear that, investors, new and seasoned investors alike. Ryan, thank you so much. We’re really looking forward to working with you and your team on this exciting project very soon.

Ryan Rabinovich:
Thank you, Andrew. Looking forward to it as well.

Andrew la Fleur:
Great. Thanks. Talk to you soon, Ryan.

Ryan Rabinovich:
Take care.

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