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How to Invest for the Millennial Generation with Don Campbell

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How to Invest for the Millennial Generation with Don Campbell

Noted Canadian real estate expert, best-selling author, and founder of REIN (Real Estate Investment Network) Don Campbell returns to the show for a second time. Topics discussed on this episode include the Canadian economy, the current state of the Toronto real estate market, how Don obsesses and invests strategically for the millennial generation, AND we talked about how Don loves to invest in condos – find out why and what he likes to buy.

Click Here for Interview Transcript

Andrew: Don Campbell, noted real estate expert, author, and the founder of REIN, the Real Estate Investment Network, is a huge fan of investing in condos. Find out why Don invests in condos and what type of condos Don invests in on today’s episode.

 

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

 

Andrew: All right. It’s my pleasure to welcome back to the show returning guest Don Campbell, expert, author. You know him, you love him. Don, welcome back to the show. Great to have you.

 

Don: Oh, great to be here again, Andrew. That last one was so much fun that I couldn’t pass up the second chance.

 

Andrew: Awesome. Great, great. Why don’t you tell us … you know, you travel a lot, you’re all over the place, but most of the time you seem to be on various farms.

 

Don: It seems that way, doesn’t it, recently? We’re recording this in the spring, and the springtime, anybody who has any acreage whatsoever knows that it’s a busy time.

 

Andrew: A crazy time.

 

Don: You’re just working your buns off at the moment. There’s that, or I just did a big event in Toronto talking about, you know, not to buy into the story that this is different this time, this boom is going to last forever. Just trying to bring a sense of reality to what kool-aid people are drinking out there. Yeah, I’ve done lots of traveling. As I stand here, as you know, Andrew, why we’re a little bit later on the recording is now our chickens are hatching. [Inaudible 01:34] don’t count your chickens before they hatch? Well, I’m now getting [inaudible 01:38] of chickens and not just the eggs, so there you go.

 

Andrew: Wow, there we go. Yeah, we got delayed a little bit. Chickens were hatching, and I have never received an email like that. “Sorry, I need to delay the recording, chickens are hatching.” That was good.

 

Don: I’ve heard of doing my homework before, but not chicken hatching.

 

Andrew: Yeah, that’s great. Well, I wanted to ask you about your farm and your projects related to that, but let’s jump in and talk real estate first. Why don’t we start with the Canadian economy? I know you’re a big student of the economy. I know your pals with one of my favorite guys on the subject, Benjamin Tal. I don’t know who else you follow. Maybe you could tell us who else. Who do you follow, who do you listen to when it comes to the economy?

 

Don: Yeah, I’d gladly do that, and here’s an interesting thing, is that I listen to, follow and pay attention to people that I know and trust, and people who I think have a different opinion than me. The recency bias and the bias towards finding things, news articles, et cetera, that support our own beliefs, is so strong that if you don’t fight it, you can become really caught up in an echo chamber, which means what you’re believing will never change, even if the market starts to change.

 

Benjamin and I had a wonderful dinner and had some workshops about what’s going on, but I look at everything from the guys at “Capital Economics,” who’ve been calling for a Canadian real estate collapse for the last, what, seven years, and anybody who’s listening to that … and they may be listening to this podcast … have missed out on some very good returns on their capital. I will listen to them, so I don’t get caught in my own bias.

 

If I’m talking with Benjamin Tal or something, we will bounce our ideas back and forth, just to see and check are we in the real world or the myths-and-beliefs world. That’s the lesson the listeners can take, is honest to goodness, get out of your echo chamber. It doesn’t matter whether it’s political, economic, real estate, whatever it is. Make sure you’re always testing your thoughts.

 

Andrew: Yeah, absolutely. So much of real estate investing is psychological, isn’t it? I mean, we look for things. I guess it’s human nature, we look for things that support what we already believe. We attach ourselves to people who already believe the things that we believe.

 

Don: Even to the point now with the way, quote, “The Angry” have taken over the world … and if you go to Donrcampbell.com, I’ve done a whole social experiment on “The Angry” and how that’s affecting the world and the economy, et cetera. We almost are drawn. If somebody has an opinion that’s different than us, we’re almost drawn to making them wrong. They may be wrong, but making them wrong publicly, like, “How dare you think like that. I can’t believe that you voted for this guy, or I can’t believe that this is happening, and you think that … you’re just a shill.”

 

I hear that all the time with everybody. I’m always called a shill, and I’ve rebranded it. Those people are the shills of the shrill. They just use that as their defense, because then they don’t have to do anything other than just make other people wrong. How is that forwarding how we’re thinking about the economy?

 

The Canadian economy has had some good upticks recently, right, if you looked at the headline numbers. Let’s look at the job growth, let’s look at the, quote, “unemployment” growth, or the “employment” growth. We looked around and we started to peel the onion, and we saw, “Wait a second. These jobs that have been showing up in the last 60 days, the majority, if you go down to industry, are in retail and government hiring.” I’m going, “That doesn’t sound like a sustainable GDP growth issue.”

 

We have to be very careful that we don’t buy into just the headlines. “Look at us, we’re better than America, we made more jobs than America.” Well, it’s a different game when you start to peel the onion, so really, really focus on pockets where actual sustainable jobs are. Now, of course, the hiring by government is really going to help Ottawa. That’s going to do very, very well. The City of Ottawa has got lower unemployment, more jobs, et cetera. In Toronto, Queen’s Park is doing their bit to spend your money. Oh, did I say that out loud? I meant …

 

Andrew: Easy, easy.

 

Don: … to support the economy in the region. Once you get out of those key government towns, you really have to look, and that’s why we’re so specific on which cities, neighborhoods, that you really have to [inaudible 06:52] kind of avoid.

 

Andrew: Yeah. Last time we spoke, I believe just over a year ago, is when the oil prices were just beginning to tank, and here we are over a year later and they’re still obviously very, very low. There was a lot of uncertainty at the time of how long it was going to last and what impact that might have, especially on the Western Canadian markets in particular, but the economy as a whole. What are you seeing? Is this the new reality now for a while? Have things sort of normalized, or is there still worse to come with respect to oil prices? Any positive, negative? Yeah, yeah. It’s such an important part of the overall economy.

 

Don: Sure. There’s only a couple of “have” provinces now, which when you do the math doesn’t make sense, but the money that flows into confederation instead of going out of confederation into the other provinces. One of them was Alberta, and of course they’re struggling, so that takes another “have” province out of the loop. You know, you start to do that math and you quickly find out that no matter what … everybody politicized oil and gas and all that kind of crap, but they don’t politicize automotive or Bombardier, which is odd. Don’t both of those things burn oil and gas? Just a question I had out there. You know, Bombardier, engines, automobiles.

 

Anyway, it’s a whole different world, the oil and gas industry. It’s fraught with not just supply and demand. A lot has to do with politics. A lot has to do with the trading in the back rooms. A lot has to do with Saudi Arabia trying to counterbalance Iran and their coming into the world under the new agreement with the U.S. You’ve got lots of stuff that’s in play, so for me to even think that I can forecast the future price of oil is nonsense.

 

The reality is that this is really driving a lot of cost-cutting in the oil production industry, and there are now a number … a very large number which I can actually send you, Andrew, and you can put in your show notes if you want … of companies that are now able to produce oil profitably at $30 to $60.

 

Andrew: Really?

 

Don: Because the cost-cutting has really occurred. Of course, cost-cutting costs jobs and jobs drive real estate, so now that’s why we’re seeing, at about month 20, 21, just as bang-on predicted, the Calgary real estate market is starting to accelerate in its average sale price drop and days on market, and even price sold versus list price. All those stats that really matter are really starting to show up, that Calgary is under pressure. Edmonton, not so much. They’ve got a lot more jobs there. It’s a government town and it’s got an NDP government, so it’s hired a bunch more people and so that’s kind of buffered it.

 

Inevitably, inevitably, if oil stays at $40 or below or even $45 or below, you’re going to see some more pain coming into Alberta. [Inaudible 10:16] the dollars into the federal coffers. That’s the reason that you’re starting to hear our prime minister talk about, “Well, maybe we should do a pipeline,” because the reality is starting to set in. You know, rhetoric doesn’t feed people, and they’re finding out that, “Oh, yeah, we’ve got to kind of feed people.”

 

Andrew: Yeah, we’re kind of got to feed people. Benjamin Tal, one of the things he has said a few times is basically that low oil prices are actually good for probably 95 percent of Canadians. Do you buy into that concept?

 

Don: I think that it is, if it’s taken advantage of. Our problem in this country is that we don’t take advantage of it, because even with oil at its low price, here we are up at 80-some-odd, high 80s on the Canadian dollar, because the U.S. dollar is falling off. If we can’t sell our products worldwide … we’ve got people that are protesting just about every trade agreement that we have, even the new one that’s coming up, the Trans-Pacific Partnership.

 

Well, the Trans-Pacific Partnership, if you read it, if you actually read it instead of just read the headlines, there’s a lot of job opportunity for export companies, export companies which are based mostly in Ontario and Quebec, mostly, and therefore job stability is starting to show up. “But Don, what if somebody opens a factory in Mexico?” Well, it’s Trans-Pacific, so the factory would be in Indonesia, it wouldn’t be in Mexico.

 

At the same time, being that we’re a manufacturing and an exporting country, we need customers other than the U.S. I don’t know if anybody’s paid attention, but does anybody know that there’s an election going on in the States? All four of the candidates … well, I guess there’s three now, as of a couple days ago … are protectionist, which is buy America, do what you can to force the jobs back into America. By the way, that’s not good for us, especially [inaudible 12:21] export so much, including automotive. I think that everybody has to stop drinking the kool-aid that we’re not going to feel the effect of a presidential election, which we are.

 

You know, our economy is based on … you know, historically we’ve got lovely high-tech centers. We’ve got one in Vancouver, we’ve got big ones in the Tech Triangle, we’ve got finance in Toronto, but generally we’re hewers of wood and carriers of water and agriculture, and we’ve got petroleum now. Now, we have jobs that people get their hands dirty in, and the unfortunate thing is that it seems like we’re kind of forgetting that that’s what pays the bills, so we have to be very careful.

 

We had an expert on cycles … not real estate cycles but actual economic cycles … at the conference that I was just talking about in Toronto. His name’s Gil Dawson. He was the guy that was booed off the stage when oil was at 100-and-something dollars, saying, “Guys, don’t drink the kool-aid. It’s going to be … it’s going to bounce off of $40.” They literally booed him off the stage and sent him out at this conference, and inevitably, 18 to … I think it was 20 months after, that’s exactly what happened.

 

We had him out to start talking about how that affects Ontario, how that affects Manitoba, how it affects Quebec, how it affects Toronto itself, because Toronto is large enough to be its own universe, right, its own economic universe. At the same time, it’s not isolated. Most people … I think you can download that on the REIN Canada website. You’ve got to listen to it, even if you’re not investing anywhere outside of Toronto.

 

Andrew: Great. Yeah, I’ll include a link to that in the show notes for sure. Shifting gears to the real estate specifically here in the GTA, one thing you’ve said many years ago that’s proven to be true is basically the divergence that has taken place between the high-rise condo market and the low-rise markets in the GTA. Of course we’ve seen massive price increases year over year in the low-rise market, and the condo market has been relatively flat in the past few years. It’s going up, but nothing compared to the low-rise market. Now, it seems over the last six months or so, everything … condos, high-rise, low-rise, everything … seems to be going up at incredible rates.

 

Don: What are we, Vancouver or something?

 

Andrew: Yeah. We seem to be trending towards Vancouver’s insanity, but where do you see things heading in the GTA market and the divergent sort of differences between high-rise and low-rise?

 

Don: Well, it sounds to me like you want to talk dirty, right, and that’s because everything is driven by dirt, the cost of dirt. After our research, it was really obvious that we were going to have that divergence. You could see that dirt was becoming increasingly more in demand, at the same time as … you know the old saying, they don’t make it anymore … and they were stacking up the condos because you can do that. That’s the cool bit about density.

 

Great news about condos, as long as they are two-bedroom or larger, is that they are on a very good long-term upward trend, demographic demandwise. Bachelors and ones and those crazy micro-suites, those, I know they’re selling hot now. I get it, guys. I get that, well, it’s all people can afford, and I’ve heard all the arguments. If you look at basic demographics and economics, and people learning how to have babies, those are going to be in much, much less demand.

 

You’re going to see a real increase in … we’re already seeing rental wars, rental bidding wars in Toronto, which we’ve seen in Vancouver before as well and Calgary, actually, and so we are going to see those, the demand over the next ten years. I’m hoping that investors are thinking five- and ten- year horizons, not flip this house, flip that house, kind of thing. You’re going to see a demand really start to ramp up on two-bedroom, two-bedroom and den within walking of TTC or a train station.

 

It sounds obvious, but so did when I was talking about the divergence whenever that was, four years ago. That was on [inaudible 17:19] television or something, I think, but people go, “Oh, yeah, yeah, Don, whatever, whatever, that’s awesome,” and then they’re going to miss out. They’re going to be buying the micro-suites, they’re going to be buying the one-bedrooms, they’re going to be buying the bachelors, because they work and they probably cash flow a little bit.

 

They’re going up in value because right now we’re in that game called musical chairs where the music is playing. We’re all running around the chairs, giggling and laughing … ha, ha, ha, it’s all fun … and then when the music pauses … and I don’t think it’s going to stop, but I think it pauses, it has to take a breath … then you see the carnage that occurs when suddenly all the smiles turn to elbows, and people are pushing children out of the way to grab onto the next chair.

 

I hope that investors are paying attention to not just price increases, that they’re looking for the demographics that are driving it, the economics that are driving it. This 27 percent of the population … actually a little bit more in Toronto and a little bit even higher in Kitchener/Waterloo/Cambridge … 27 percent of the population is that millennial zone, right? They’re just kind of getting in the game, and condo living is good. Condo living is acceptable.

 

You know, they don’t have to have a car. The newer condos especially … the older condos not as much, unless they’ve been renovated … from a demographic point of view, that’s where your demand’s going to head. You’ll see increases more quickly, 10, 12, 14 percent faster, than on the bachelors and the ones.

 

Andrew: Now, do you think most of that demand is driven towards the larger suites? Do you think it’s going to be driven just by the fact that, like you said, people are getting married, people are having kids, families are started and home prices have just completely skyrocketed, therefore it’s just an affordable issue? “I can’t buy a house. Ten years ago I would have bought a house, but I can’t buy one now, so I’m going to be buying a condo. I need a two-bedroom.”

 

Don: Oh, absolutely. Also you’ve got to understand that when you start to really study the millennials … which is what we do, it’s kind of an obsession of ours … it’s that they’re going to have more jobs than us baby boomers had in our whole life. They’re going to have four or five times more different jobs, more contract-style jobs, more working-from-home jobs, so having that second bedroom or at least a space in which to go to when the kids are screaming and you have to get your work done.

 

You’re also going to see in the condo world, if you own a condo building or you’re in a condo building and you have a commercial space, all those “we-work” style hangouts for people who work at home or on independent contracts. That’s a massive trend that’s going to be coming into downtown Toronto and downtown Vancouver because space is so expensive, and that will buffer the demand for two-bedroom. At the same time, it’s not going to curb it very much.

 

Yeah, so what they’re doing is they’re going, “Are we going to move to Hamilton or Barrie or … ” well, I guess not Vaughan, but the new TTC going all the way out to Vaughan. “Is it going to be more affordable? Are we going to do that, or are we just going to stay where we want to live, downtown, and get a larger suite?” That’s generally what’s going to drive it.

 

You’re also going to see a little bit of downsizing … nowhere near as much of the downsizing that the big boys predicted ten years ago … from the baby boomers, because you finally are retiring and now’s the time you give up your neighbor, all your friends and your garden and your favorite barrista? I doubt it. A lot of people stay still in their home, finding a way to keep it.

 

The business is definitely going to be in the two and even threes. The weird bit is that nobody’s building them, and so even more so, the demand is going to outstrip supply, just watching what’s being built by all the developers right now. Of course, they’re trying to develop product that can sell in today’s market, and you get into the two- and three-bedroom and your cost per square foot and it starts to be a bit of a stretch. Hence the micro-suites, one bedroom and bachelor units, the studio I guess we call them now. How old am I? My goodness, calling it a bachelor unit.

 

Andrew: It’s okay.

 

Don: “Speak up, son.” That’s something that everybody’s got to pay attention to, is the coming 27 percent of the population … a little bit more in GTA or in Toronto itself, are these millennials, and that’s bigger or as big as the number of baby boomers, and you know what we did to the world. The millennials are next.

 

Andrew: Very interesting, yeah. In terms of the low-rise market, do you see anything stopping the seemingly unstoppable momentum behind the low-rise market in Vancouver, in Toronto? You know, 10, 15 percent growth in average prices year after year. I know you don’t like to talk about average prices, but reality is, you know, you can see, almost feel the prices rising every month, it seems. Do you see anything stopping that? At what point should we really be raising the red flag and saying this is a major concern?

 

Don: I think it’s a bit of a red flag now in some communities. At the end of the day, every … I looked up all of our notes from the ’80s and ’90s, to do it because of, once again, perspective, right, keeping perspective … and I look at it and say, “How is it ever going to be an average price over 250 grand? How is anyone ever going to afford,” you know, these kind of commentaries that have been going on forever.

 

Will something happen? Absolutely. It always stops. The market always stops at one point, and it’s generally right around the time when somebody’s going, “Ah, it’s different this time,” but stopping is not bursting the bubble and the market collapsing like the U.S. Stopping is everybody just kind of going, “Whoa, wait a second, this is getting a little bit untenable.” I think if you really want to see a psychological … as you mentioned, real estate is very psychological … a psychological tapping of the brakes, it is to see the Bank of Canada make the prime rate a quarter point or half a point. Now, it’s not going to make a massive difference in somebody’s payments, but psychologically it is.

 

Here’s the interesting bit, is that nobody’s talking about the dramatic mortgage rate increases that have occurred over the last year, 16 months. Of course the posted rates aren’t really changing, because you can’t do that, but the discounts that you’re seeing on variables, the discounts that you’re able to negotiate on the locked-in, aren’t anywhere near as they were 16 months ago.

 

Andrew: Right.

 

Don: In essence, the mortgage rates have gone up while the market has got hotter, so that once again goes to people don’t do math very well and they just respond psychologically. If they really wanted to slow it down, they would do a psychological ploy and increase the interest rate. Well, of course that screws up the underlying fundamentals called the Canadian dollar and the ability for us to export, so it’s between a rock and a hard place for these guys.

 

Will it pause? Absolutely it will. Will it be on Thursday? No, it won’t. It’s for me once again to say … I see guys doing this. “It’s going to go up and it’s going to stop in August of 2017.” I’m going, “Dude, you have no clue. It’s impossible to be that specific.”

 

Andrew: Right, right. Way too many variables.

 

Don: Investors and homeowners need to know that too.

 

Andrew: Yeah, yeah. Let’s talk about your own portfolio a little bit. I heard a great interview with you recently with Erwin Szeto over at Mr. Hamilton there. I’ll include a link to that one in the show notes as well so everyone can listen. That was a great one, and you talked a little bit about your own portfolio. One of the things that caught me by surprise … maybe it shouldn’t have … but you mentioned you owned a lot of condos. Okay, so maybe you could talk to us a little bit about your portfolio of the condos you like to buy or have bought, or what you have, and what are the pros and cons of condominium investing versus other types of property.

 

Don: As a benevolent dictator, owning condos is psychologically more challenging than owning non-condos, obviously, because then you have to defer to listening to discussions by 70 other people as they try to make a decision, which I’m really not very patient with. That’s the downside. The upside for me is the ease of management. The location, generally in these high-dense areas I’m targeting now … I used to target upper-lower, lower-middle-class income people that are the baby boomers who have good jobs, right, that kind of region.

 

Well, blessed am I, because I bought in the regions that used to be that, are now becoming really hot for millennials, which is the next giant trend. The difference is I’m going to have to be spending more money on the renovation, because the millennials won’t accept the same crappy stuff that us baby boomers did when we first moved out. I would never show you a picture of the first place I moved out to. It was disgusting. It came with a rake for the carpet, and you didn’t … God knows what was in there.

 

Andrew: Oh, boy.

 

Don: Yeah, it was beautiful, but that’s not going to be acceptable now. I’m buying condos because it’s, hey, I don’t know, economically, fundamentally right. They’re close to transit, they’re high-dense, they’re in walkable neighborhoods. Walkscore.ca is so important right now and will become increasingly more important. The ease of management, because if I own three or four in a building, it’s easier for me to get a property manager, because by the way, I value my time.

 

I don’t want to manage my own properties, and I know people that are like, “Oh, well, it costs you 10 percent,” or percent or 4 percent, depending on the city and the type, “of your gross income.” I’m going, “Your time’s not worth anything?” That’s how I look at it. I don’t want the stress of all of that. It’s easier for me to do that because they’re more concentrated. It’s cheaper from an inspection point of view, because everybody should inspect their property at least once a year. Having them all located in these kind of more hubs, and you share the cost when the roof goes or the boiler goes.

 

Frankly, the real reason is I buy property that makes financial and economic fundamental sense. I have single-family homes. I have [inaudible 28:50] suites … legal, by the way … I have [inaudible 28:53] houses, which are I guess [inaudible 28:58]. I have row houses, I have condos in low-rise walk-ups, like three-story kind of things. I have condos in towers. I have … I’m just going through it in my head.

 

I have light industrial parks, but also light industrial condos, which is really quite interesting. You get the right covenant there and that can be a real cash flow king, but you have to have deep pockets to get into that one. I also own multi-family buildings, like 20- to 40-unit kind of buildings, but they’re all targeted based on …” don, why would you buy that?” Because the math worked. I never, ever, ever … and this is true from the beginning, and people think that I’m lying but I don’t care … is that I never have bought for capital appreciation. I’ve always bought for income replacement, for cash flow.

 

It has to fit the model, so that when it pauses, I’m not standing like … I’m not going to name the tower, but you might know one or two of the towers in Toronto where people bought in the presale, and by the time they got handed the keys, of course the price had actually gone down, and there was no way they could rent them out because they were way too expensive, because they were just thinking they’re going to flip them. Now you’re standing there with no Plan B or Plan C. All you have is Plan F, which is foreclosure, and that’s not good, so speculation versus buying for cash flow.

 

Then here’s the cool bit. You buy for cash flow, and you buy any of these kind of properties that are based on economics and in-migration and all that kind of stuff, and something happens like for instance in Edmonton. You’ve got such a giant buffer, economic buffer, built into it, that you don’t feel the pain that people who are buying that are just squeaking by ever do. I grew up in a risk-averse family. I’m the king of risk mitigation. It has not hurt my returns at all. It just means that it takes me an extra day or two to make a decision, that’s it.

 

Andrew: Nice. Nice. When it comes to condos, are you buying … if you were shopping for a condo today, that was my question. Older condos? It sounds like you’re buying older buildings in great locations and you’re renovating them.

 

Don: Yes, a hundred percent. I definitely take the last two if not three years of condo minutes and read them voraciously, looking for, okay, who’s the condo king here? Are they making smart decisions? This is before I buy. Are they making smart decisions? What’s their condo reserve fund study really say? Are they living up to it? Condo reserve fund studies, as you know, sometimes are overblown. “We have to replace all the windows in the next ten years, so let’s start saving $1,000 a month.”

 

It’s crazy, but at the same time I want to know that the building is well maintained, there’s no rental restrictions, limits or rental restrictions, because that’s the other thing. I see investors buying a building that they didn’t do that homework, and then suddenly it’s like, “What do you mean, I can’t rent this out?” “Sorry, the bylaw is the bylaw,” which actually when you think about it is constitutionally incorrect, but we’re not going to get into that discussion. At the end of the day, yeah, the due diligence just has to be done. Do they [inaudible 32:30] value as much? Probably not.

 

You know, for 20 years my thing is you have … I want real estate to fund my life, not be my life. If I wanted it to be my life, then I’d just buy a rack of single-family homes and manage them myself and feel like I’m busy. I’d rather, like I’m going to do here in a month and a half, fly to the UK and go to the Glastonbury Music Festival with me and 170,000 other crazies and hang out there, knowing full well the real estate is well taken care of, rather than looking at my texts every 15 minutes wondering, “Oh, God, I wonder what’s next?”

 

Andrew: Absolutely, yeah, and that’s something that we talk about a lot on the podcast, is look, there’s lots of different types of property you can invest in. Single-family homes probably are going to give you the best ROI long-term, especially if you’re splitting them up and putting multiple units in them, but it’s a question of lifestyle, like you said. Do you want to make a great return and have no life, or do you want to make a good return and have a great life?

 

Don: You don’t have to live where you invest. I see people just so obsessed about, “I want to live in Toronto, I want to invest in Toronto,” and that’s great, but you know, you can get a way better ROI if you start to look out in some areas where you may never even have visited or have, in your world, a bad reputation. Live in downtown Toronto, have the view, walk down to all the great restaurants, but put your money to work.

 

Make your money work harder than you, and find some spots, whether it’s in Toronto … maybe it’s out in the Junction, the Junction Triangle, maybe it’s Leslieville, which is getting expensive, maybe it’s anywhere along the TTC … but maybe, just maybe, because the GO train’s going to be expanding and it’s going to go through Grimsby down to Niagra, maybe the unfound spot is to buy an older building with ten suites in it in Grimsby and just wait. You know, then live your life, get a manager, drive down there every couple of months, go to the Niagra Winery while you’re doing it, and then drive home. That sounds like funding your life, not being your life.

 

Andrew: That sounds like a nice Saturday right there.

 

Don: Doesn’t it? By the way, the Forty Creek Distillery there is really awesome too.

 

Andrew: Oh, is it? Good, good. Actually that’s funny, because that was one of the questions I did want to ask you, was is it better to buy close to home, what you know, so to speak, or is it better to diversify or just to go anywhere where the numbers are good? There are also, I guess, risks in going to places that you don’t know as well, but your philosophy is basically … well, go ahead, yeah.

 

Don: You can know an area better than the locals in a week of study, because you have no emotional attachment to that neighborhood or that street or that whatever, right? If you just take Scarborough, I remember when you could bus tour through Scarborough, and people in Toronto were losing their stuff saying, “Why are we driving around here? This is crazy.” I’m going, “No, this is where it’s going to happen.” Now, of course there’s still neighborhoods that may or may not work there, but people have made millions because they didn’t buy into past history, past story, and headlines. It’s the same thing.

 

I have an interesting philosophy which I have adopted from Mr. Buffett, and that’s put all your eggs in one basket and really watch that basket, so I [inaudible 36:07] geographic specialist. I don’t want to have a property in Halifax and a property in Montreal and a property in Barrie and a property in downtown Toronto, because the expense of managing that is so much higher than if I have all my properties … I’m just going to make Grimsby up again … but I’m going to put all my properties into Grimsby.

 

I know what’s coming. I know it better than the locals mostly, because I actually spend a couple of minutes on the interwebs and do my homework, and then I just obsess about Grimsby. Then when somebody phones to say, “Hey, you know we’ve got this thing in Oakville,” you kind of go, “No, I’m a Grimsby guy, sorry.” “Oh, you’re going to miss out.” “Yep, I am. Thank you.” [Inaudible 36:50] get in your way. If the numbers work, buy more, and if the numbers don’t work, then stop buying. You don’t have to buy. Sorry about that, Realtors, but you don’t have to buy.

 

Andrew: Yeah. Excellent, excellent. Don, it’s been great chatting. Why don’t we finish up, and tell us a little bit more about your passion project right now you’ve got working on the farm. What is it, and why are you doing it?

 

Don: Well, you know, birthday’s coming up in a couple of days, 50-something, and I’ve always had this thing that I really need to change the conversation around things, and I believe that we’ve done that in real estate. I remember 20 years ago, we were talking about economic fundamentals and reading headlines and everybody’s going, “What is this guy talking about?” Now, of course everybody attempts to do it, which is good. That’s exactly the goal, so I’m happy that you’re all talking about economic fundamentals. That’s awesome. It wasn’t happening 20 years ago.

 

Now what my legacy project is is I’m using the model of a high-tech hub. You know, they build those high-tech hubs where all the young companies together and are under one roof and they get the infrastructure, et cetera, and it creates its own energy? Well, I’m going to be doing that in agriculture. It’s going to be an agriculture innovation hub.

 

It’s going to be a hub as well as a school, and there are so many kids out there who don’t have … you know, farm kids, et cetera … who don’t have the grades or the time to go through and get an ag degree at a university, and we’re going to be able to provide them an opportunity for them to innovate, like find ways in which we can create more food in Canada on the acres that we have without monofarming, without all of that stuff. There are some brilliant minds out there, 18, 19, 20 years old, that have nowhere to do it because land is so expensive, and frankly they just want to go and figure out if duckweed’s going to feed the world or not, and I want to be able to provide that.

 

Later on today, as a matter of fact, Andrew, I’m going to go talk to a farmer who is nearing the end of his career, let’s put it that way, and he has really, really bought into the legacy story, and we’re going to see if we can cut a deal for another big parcel of beautiful ag land and start there as the school. It’s going to be greenhouses, it’s going to be container farming, it’s going to be duckweed to densification to square-foot gardening to slope gardening. It’s going to be quite … I’m very, very excited about it. At the end of the day when I’m 80, I’m just going to donate it to some university or college or city to keep running it.

 

Andrew: Wow. That sounds very interesting, very fascinating. Like you said, obviously you see a big need in this country for a platform like that, especially for young people to explore and to innovate. That’s really cool.

 

Don: If people go to Facebook and go to … what am I, the REIN man on there, I think, R-E-I-N … you can see some of the gardening stuff that we do there and the agriculture stuff that has inspired people across the country to even put containers on their condo decks, because even on your condo deck if you grow tomatoes or lettuce or radishes or anything, it just feels nice. You’ve done that yourself. You can go out and pick something that you, with your own hands, have created, and I think that we’re seeing a lot more of that.

 

We’re seeing more backyards with the raised garden beds. There’s going to be a whole course on that because I see people doing it poorly and getting poor results, and then getting frustrated and then just saying, “Oh, this stupid thing doesn’t work.” Yeah, I think we’re on early stages, because the millennials are really buying into it, and if that happens, well, look out. It’s going to be amazing.

 

Andrew: Yeah, it’s a big trend. Actually Daniels, the developer here in the GTA, they’re big on urban agriculture, and one of the things they’ve been doing on all of their new condo buildings for the past couple of years is gardening plots, as an amenity, and they’re very popular.

 

Don: Think about how expensive that is for them.

 

Andrew: Yeah. It’s just concrete and dirt on a roof, yeah, but it brings a community together. It’s something everyone in the building can take part in, and it produces something valuable, food.

 

Don: What they need then is an agrologist or somebody who knows what kind of dirt/compost to put that actually is going to perform, and it’s actually going to not be one of those things that it’s a great selling feature and then dies after three years.

 

Andrew: Yeah, they seem to have that piece in place as well. They bring in experts to guide the residents and teach them how to grow and be successful.

 

Don: Well, they need to be applauded and lauded, and that needs to get out into the world that that’s what they’re doing, because that is a trend that’s going to be not short-lived, for sure.

 

Andrew: Absolutely. Great. Well, Don, thank you so much again for your time today. I really appreciate it. Of course I’ll include links to everything we talked about in the show notes, and links for people to reach out and contact you. Any parting words, final words from you today?

 

Don: Yeah, I would like to leave people with that whole thing, two things. Number one is get out of your echo chamber. If everybody around you is saying the same thing and it supports your opinion, go get some more people to hang around with. Make sure that you are checking your data. Make sure you understand that the music does stop. It always stopped at some point. Are you prepared? Are you financially prepared for when the music stops, values aren’t going up, things aren’t selling as quickly?

 

Realtors, if you’re listening, put money aside, because this does end at some point, and it’s kind of nice that you’re not the one that’s going to be desperately having to sell the next condo just to feed your family. Yeah, those things are so important, and also if you’re listening to this and you see somebody who’s not smiling or having a crap day after you heard this, then please just smile at them or check in on them, because there are a lot of people that are struggling with many, many different things, and you can make a difference just with a smile.

 

Andrew: Awesome. Great. Thank you so much, Don.

 

Don: Cheers.

 

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