How to Become a Millionaire in 10 Years by Investing in Pre-Construction Condos

Andrew La Fleur:
On today’s episode, we’re going to sit down with an investor who’s become a millionaire over the last 10 years through preconstruction condos. 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:
Welcome back to the show. Thanks for tuning in. Once again, Andrew La Fleur here, truecondos.com. If you want to reach me ever, you can do that by calling me or texting me. (416) 371-2333. You can also email me anytime, andrew@truecondos.com.

Andrew La Fleur:
So as I said in the intro, we’re going to be talking to a real-life investor, great client of mine. Goes by the name of Dave, call him Dave the Investor. Dave, he’s a very inspirational dude, and just looking forward to sharing his story and his words with you here. We had a great conversation, as we always do, when we talk about investing. Dave has become a very successful investor over the last 10 years by investing in preconstruction condos, and so I definitely wanted to bring his story to you. Hopefully in the future, we’ll get more real-life stories like this to you straight from the horse’s mouth, so to speak, straight from the … It’s one thing for me to talk about, “Hey, we’ve got lots of people who have been very successful at this.” It’s another thing for you to hear directly from them and hear, you know, what is it that makes them tick, and why do they do what they do and their strategies, their philosophies, their winning ideas that have worked for them, what has not worked for them as well.

Andrew La Fleur:
If you’re new to investing, as well, it’s great to just hear what helped them get over the hump to get started in the first place, because often that’s the hardest thing. If you’re a seasoned investor, it’s great to just hear from other seasoned investors to just, you always can pick up some tips, tricks, nuggets, just new ways of thinking, approaching things, new strategies. It’s all about continuous learning in this game of real estate investing.

Andrew La Fleur:
So without further ado, here it is, please enjoy my interview with Dave the Investor. Here we go. Welcome to the show, Dave.

Dave:
Very good to see you, Andrew.

Andrew La Fleur:
Yeah, great to have you here, and I’m really looking to hearing your thoughts and chatting with you today and just sharing your story and your, I think, what you’ve done and how you think and everything. Very inspirational. I want to get your story, your message, your life, what you’ve done just out to people, people can hear it. I think it’s going to be very inspiring for a lot of people.

Dave:
For sure.

Andrew La Fleur:
We always have a great time chatting real estate and preconstruction investing, of course, so that’s all we’re sort of doing here. Why don’t tell us a little bit about yourself. Where can we start? I mean, you’ve had a very interesting life. You’re involved in a lot of different things.

Dave:
Yeah. [crosstalk 00:03:01]

Andrew La Fleur:
You’ve got the sort of 9:00 to 5:00 day job, which maybe some people look at you and think that’s who you are, but you’ve actually got a lot of other interesting layers to you in your story and stuff. I don’t know. Where shall we start? Do you want to start with your first foray into real estate, or you want to go before that?

Dave:
Yeah.

Andrew La Fleur:
‘Cause there’s a lot goes into your mindset and how you think. I want to pull that out.

Dave:
Absolutely. That’s where we got to start, I think, the mindset. I think just growing up, I’ve always been enamored with the idea of real estate, just owning something, right? I’m not an immigrant, but my parents are. I think there’s that mentality, right, you want to own some physical land or a building or what have you. I’m also a child of the ’80s, so I think during that time, Donald Trump, Robin Leach, these sort of images were-

Andrew La Fleur:
Robin Leach, yes.

Dave:
Yeah. I might be dating myself now.

Andrew La Fleur:
Lifestyles. [crosstalk 00:03:55] Lifestyles of the Rich and Famous.

Dave:
I’m the youngest in my family, so I always say I kind of grew up quicker.

Andrew La Fleur:
How many siblings you have?

Dave:
I have an older brother and an older sister. So my sister’s eight years than me, and my brother’s four years older than me. So I think I kind of grew up a bit quicker in the sense of my references in the ’80s and just my thinking overall, because I’ve always been around older people. I think that’s kind of actually been to my benefit. Yeah, just I think I’ve always been enamored with the city. I used to watch a lot of ’80s action movies with my brother. Just the idea of the city, the excitement, that little maybe underbelly of seediness, the adventure, that always sort of appealed to me.

Andrew La Fleur:
Where’d you grow up?

Dave:
I grew up in the suburbs.

Andrew La Fleur:
In the ‘burbs, yeah.

Dave:
Yeah, so I grew up throughout different GTA suburbs. My thing always as a kid was I want to live downtown Toronto. I want to be the big city.

Andrew La Fleur:
Nice, yeah.

Dave:
I always had that idea in my head, right? I think that sort of shaped the beginnings of the idea of real estate and owning something. Then I think later on when I was in high school, I’m going to hit you up with another reference. My dad and I used to watch the old Harry Stinson One King West infomercials.

Andrew La Fleur:
Oh, yes!

Dave:
Yeah, those terrible, terrible infomercials.

Andrew La Fleur:
So far our lives are mirroring each other, growing up in the suburbs, wanting to live downtown, and watching infomercials with Harry Stinson in the ’90s on late night.

Dave:
Yeah, late night TV. It’s so funny, I remember. It was on channel 21 for me. That’s when channels were completely different. Again, we’re totally dating ourselves right now, and people are going to be like, “What are these guys talking about?” But I think I used to watch the old infomercial. Again, that same idea. You could buy a piece of real estate downtown, and it could make you money. That was other thing. Because at first, I had that idea of, I just want to buy a place and live in it, like most people. I’m not really thinking about rental, or I’m not really thinking about having multiple properties. But I guess, Harry-

Andrew La Fleur:
When did you first start thinking about buying real estate?

Dave:
When I was a teenager.

Andrew La Fleur:
When can you remember that’s a thought in your, “I want to buy something.”

Dave:
When I was a teenager. I used to flip through the old Star, the Toronto Star, the new homes. Back then it was just new homes. You know, sign of the times, now it’s-

Andrew La Fleur:
It was like 40 pages long.

Dave:
Yeah, of just ads, pure ads, right?

Andrew La Fleur:
Now, it’s like-

Dave:
Now, it’s like a little-

Andrew La Fleur:
Does even exist, or it’s one page or something.

Dave:
Yeah, because it’s just online.

Andrew La Fleur:
Newspapers, yeah.

Dave:
I used to flip through that a lot. My parents would see me sometimes and be like, “Oh.” Jokingly, they’d be like, “Oh, you’re trying to go buy a house?” I didn’t have a job at the time. I was 16, 17, right? I’m like, “Yeah, yeah, I want to.” But I think that’s also always been my mindset is, people tell me it’s impossible-

Andrew La Fleur:
Were other people around you of the same mindset, or were you just kind of doing it on your own?

Dave:
I think because I’ve seen-

Andrew La Fleur:
Were you following an example of someone else? Or was it just in your head?

Dave:
Later on, I was shaped by a few different things, which we’ll get into. But at the time, I think it was just one of those things of, my parents, I’d always seen them struggle financially. They were more working-class people or in the blue collar, where you’re working. You might have a great gig at, say, like a Magna or Bombardier, which my dad did, but then heavy layoffs with NAFTA and all that. I’d see them make career changes, take pay cuts, do night shift, do all that. I was always just like, “There’s got to be an easier way.”

Dave:
See, now at the time, everyone was like, “Oh, you’re just lazy.”

Andrew La Fleur:
I don’t know you super well. I’m getting to know you here. I’m looking forward to it, but that’s one thing you always go back to. There’s got to be an easier way. That’s how you think.

Dave:
Yeah. There’s got to be an easier way, because I think working hard is … I’ve heard someone else say this, so I’m not going to take credit for it. But working hard is kind of like a door prize. What I mean by that is, if you do something and you fail at it, but you say, “I really worked really hard at it,” that somehow makes you feel better. But I think there’s not enough emphasis on effortless work, doing something and making it look so effortless. I know it sounds cliché, but working smart and not hard. Because thing is like, if you could work 10% as hard, but get 100% more of the result, why wouldn’t you, right? I think that’s something that always stuck in my mind. So I’d always kind been searching-

Andrew La Fleur:
As a society, we kind of idolize working hard and hard work.

Dave:
Yeah, it’s been fetishized, right?

Andrew La Fleur:
Yeah, as opposed to we resent people, or we resent success in someone if it looks easy.

Dave:
If it looks easy, yeah. I think that’s really the thing. Successful people, even if something did come easy to them, they don’t want to say that, so they’ll just say, “Oh, I worked really hard.” It’s weird. Whereas, you and I talk outside of real estate, and we’d just be like we’re always exchanging information and stuff, and it’s just like, I don’t see that as work. So maybe that’s the other thing, too. Maybe to someone else, they see that as hard work, reading, compiling information, storing all this, right? Because I keep a lot of stuff, like I mentioned, in my head. I’m not really the write it down type of person.

Andrew La Fleur:
Yeah, you have this crazy gift of memory. Whenever something comes up, you’ll send me this text. Or you’ll find something on the internet that I said like 10 years ago or that some real estate bear said about me eight years ago or something. You’ll pull it up. It’s just like wow.

Dave:
So I’ve always had that crazy recall. I did well in school. I was the type of guy who did well in school without really trying. But then I always was kind of like this is pointless, because eventually you’re just doing this so you can get good grades so you can to university, get a job. You know the whole story.

Dave:
But the funny thing is, that’s not how the way the world works now. If you’re really trying to get ahead, what our parents told us about going to school, getting a job, and doing all that, doesn’t really jive anymore. You’re not really going to get ahead. You may kind of just subsist in this society, but you’re not really going to get ahead.

Dave:
Just back to the early days for a second. That Harry Stinson infomercial really sort of shaped my perspective. Then later on throughout university, I had listened to, I downloaded, I shouldn’t say this. I downloaded off a torrent site, Rich Dad Poor Dad. It’s funny, because there’s a lot to be said about that book now, like how much of it was real, how much was it not. It’s also been said that Kiyosaki, the author of the book, probably made more money from publishing than real estate. So it’s almost like he made the money off the books and then became a real estate investor, but the book makes it sound the opposite.

Dave:
But I think it’s beside the point. There’s one key thing that he says in that book, which has resonated with me to this day, which is, the rich don’t work for money, they work for assets. The assets are what make you money. I think tying it all together nowadays, I think we’re seeing it more and more. Whether it’s you own a piece of the business, or you own real estate, or you have maybe some stocks and bonds, in the end, I think the goal, the way to win at life is, you need to have your assets earning for you while you sleep. If you can do that, then you’ve essentially won at life, at least in one aspect.

Andrew La Fleur:
You won at money, at least. You might be a terrible person.

Dave:
Yeah, yeah. I was going to say. See, I kind of wanted to walk that back a bit. But I will say, money can’t solve all your problems, but it’ll solve your money problems. For a lot of people, that is one of their main problems, right?

Andrew La Fleur:
For sure.

Dave:
Yeah, if you’re not trading your time for money, maybe you can improve other aspects of your life, like say your fitness, your relationships, your other things. I’m the big person, time is actually currency. Time is the ultimate currency that you want, not actually the figures, not the money. Money is limitless, right? They’re just going to print more money. Yeah, so that’s another conversation. Yeah.

Andrew La Fleur:
Oh, boy.

Dave:
Maybe we’ll get into that [crosstalk 00:10:59]

Andrew La Fleur:
Oh, boy. He just printing money, folks. Here we go.

Andrew La Fleur:
Maybe tell us your story. What was your first property you bought, and how did that come about?

Dave:
So back to the newspaper thing.

Andrew La Fleur:
You’ve been think about it since you’re a teenager.

Dave:
So still thinking about it but broke, broke student. A couple other things had sort of shaped how I’d got into my first property. I was renting studios downtown. Well, I went to school downtown, Toronto University. I’d been renting studios, because there’s no campus housing, right? That’s your plug for student housing I guess, right? But as we know, there’s a shortage of it across the country.

Dave:
So I was renting studios. At first, I rented at the Pantages Condo, Young and Queen kind of area, right? I remember, I could rent it for $1100. This is around 2006. I could rent it for $1100 a month, or you could buy it for about $165,000, $170,000. Interest rates I think at the time were around, I want to say 6% to 7%. I remember crunching the numbers with my dad. I was like, “Dad,” I’m like, “We should just buy this.” I mean, “Could you buy this?” Right? I mean, I had student loans. My parents didn’t pay for any of my education, and they’re like, “We can’t buy you a condo. Are you kidding me?” But I’m like, “Well, you know what, though? If you break down the monthly cost, whether it’s mortgage or rent, it’s kind of around the same thing, right?” He was like, “You know what, son? We can’t do it.” He goes, “I would if I could, but we just can’t,” right? Again, I think that goes back really into finding another way. There’s got to be another way. It has to be done, right?

Dave:
So I rented there, and that was fine. Then the next year, I rented at One City Hall, so Bay and Dundas area. I think Concert built back. I rented that a year later for $1300. So already, I’m already seeing where this market’s going and how rents can escalate. I’m like, “Okay, now we really should have bought that unit at Pantages.” At the time, I’m broke. I’m like negative how many tens of thousands of dollars in just student debt.

Dave:
So I begin to take up online poker. I start playing. At the time, poker was really, really big. I started playing. Instantly right out the gate, I lose like $3000. I get a cash advance on my credit card, max it out. Now I’m in the hole, now I have nothing. Literally, literally I can remember my sister, who’s a professor, would come down and teach some continuing education classes at the school I was going to. I would literally bum off her meals for like the week. I’d be like, “Hey, could we go to Starbucks,” and I’d a sandwich and a cookie. I’d kind of get my meal. Then I think she kind of caught on towards the end. She goes, “Hey.” She goes like, “You’re literally buying like $40, $50 of food at a time.” And I’m like, “Well, that’s because I have no money, right?”

Andrew La Fleur:
That’s your calories for the next-

Dave:
Yeah, that was a big, yeah.

Andrew La Fleur:
… 48 hours.

Dave:
The literal definition of lean years, for sure. But again, I still had that idea, “I’d love to get a place, because renting it sucks. What sucks even more is when my lease term ends, I got to go back to the ‘burbs.” ‘Cause I think that was the thing that was killing me even more. I hated living in the suburbs.

Dave:
I did co-op work terms throughout the summer. What my life would look like is, I would go to the admissions office in the beginning of the year, have debt from the year before in tuition, and then tell them, “Okay, I’m going to pay it off right now, so can you admit me for this year?” I’d beg and plead, and they would let me do it. I’d use my co-op work term money to pay. When the co-op work terms died, or they ended rather, someone had told me, “Hey, you can go apply for EI.” So I applied for EI, and again, this is 10 years ago, so I’m hoping the statute of limitations has run out here. I burned through a bunch of EI money, and I took the last $1300, I was getting $600 biweekly or whatever it is, and I bought, at the time, a 30-inch monitor.

Dave:
Because what I had figured out with poker was, you could make money, but it’s like a lot of things at life, it’s like you got to scale. So if you’re playing one table at a time, you might make just minimum wage. At the time, minimum was like 9 bucks an hour, right?

Andrew La Fleur:
Right.

Dave:
But if you had a big monitor, and you played like 16, 20 tables at a time, you could make $9 an hour per table times 16 tables. Now, you’re talking like 100 bucks an hour. Now you’re talking some real cash, right?

Andrew La Fleur:
If you’re good.

Dave:
If you’re good, yeah. So I started to turn things around. I’d studied the game. I think I was saying, “I’m a student of whatever it is I do, whether it’s poker, or now real estate, or what have you?” I started to become profitable, and I said, “You know what? I’m going to go buy this monitor, and I’m going to grind out the summer while living at One City Hall, and I’m going to make some cash.” I tell you what, man. Within months, I was literally making tens of thousands of dollars playing poker in this little studio, dinky 330 square feet. People couldn’t even believe how small it was. I was sleeping on an air mattress, and I had this big giant monitor there. There just this glowing light emanating from the screen as I’m just clicking, frantically clicking away at [crosstalk 00:15:38]

Andrew La Fleur:
How many hours a day?

Dave:
So I kind of treated it like a job at first. I would play like seven, eight hours a day. I’d play in like three or four hours blocks, and the money was just rolling in. Then so instantly, I’m like, “Okay, I’ve got a bankroll now.” I think, just as an aside, one of the best feelings I ever had was, I had like $30K OSAP debt, paid it off in one shot,-

Andrew La Fleur:
Wow.

Dave:
… thanks to poker money.

Dave:
I remember leaving the cashier’s office at my school, and I saw one of my student friends, and they were like, “Oh, I’m graduating now. I’m like $30K, $40K in debt, whatever.” And like, “What are you doing with OSAPmoney?” Then I just remember just telling him like, “I paid it off.” They’re like, “How?” And I’m like, “I played poker.” I remember just that look on their face. I’m like, “What?”

Dave:
I think that’s the thing. I’m experiencing the same things in real estate now that I did with poker then, which is that, I don’t think sometimes people can realize the gains that are being made. I feel like I’m oftentimes, I’m having to justify what is possible in this world, because I think sometimes people aren’t thinking big enough, right?

Dave:
So I had this chunk of money, and I said, “I want to go buy a place.” So only problem was, being a poker player, you cannot get a mortgage. It’s hard, right? Back then, it was actually easier. You could get non-qualifying income. Things were actually easier back then, but not for a poker player. So I teamed up with brother, which to anyone that’s listening, in terms of thinking about into real estate, but you can’t, I think teaming up with family is one of those things like, if you’ve got to do it in the beginning, why not? But again, as long as your values and everything are aligned, right, your timelines, your time frames, right? My brother and I are very close. We’re like friends, not just brothers, right? So he’s like, “You know what? I’ve got a job. We can get a mortgage. You could provide the down payment. We’ll split the profits 50-50,” etc., etc. It’s funny. We were looking at, now, one bedrooms at the time in Toronto downtown were around $250,000. We were thinking, “Okay, he’s the bigger brother. He’ll take the bedroom. I’ll do the sofa bed,” right? We’re already planning this out. We’re going to share a bathroom, and then back to that Toronto Star.

Dave:
This is around 2008, 2009 time. The landscape in the world was a lot different obviously with the great financial crash that we had. I think that’s the one time now in recent memory where we’ve seen Toronto prices actually decline. They couldn’t give away properties preconstruction at the time. There was a builder at the time that was offering a phenomenal deal, 0% mortgage, 5% down. It was the deal of the century, Andrew. I don’t think we will ever see something like this ever again. We were working out the numbers, and we were like, “To carry this is going to be the same thing as us buying a one bedroom.” This condo was a two bedroom plus den with parking, two full baths. So now we went from sharing a bathroom and me sleeping on a sofa to, I could have my own room, my own washroom, plus a den to play poker in. I was like, “Let’s sign me up.” Again, just to talk about prices, so this was 2008. Or 2009, excuse me, spring, when we made the purchase. Two bedroom plus den, two parking. Sorry, two baths, one parking, downtown Toronto right by Union Station, $391,000.

Andrew La Fleur:
Wow.

Dave:
Yeah. Any time I talk to-

Andrew La Fleur:
And you only needed 5% down.

Dave:
You only needed 5% down, so we essentially secured-

Andrew La Fleur:
And you said a zero-

Dave:
Yeah, 0% mortgage for three, yeah.

Andrew La Fleur:
… percent mortgage for three years.

Dave:
So we secured the property for $19,000 and the mortgage, the quote-unquote mortgage, at 0% was $1278 a month, which all went towards our principal. So at the end of the three years, we got this for three years. At end of three years, you now have to go out into the world and get a mortgage.

Dave:
Now, this is where the idea of, “Let’s get more properties” came in. Because when the three years expired, now the mortgage is around $320,000, or the balance. I go to a bank, and they’re like, “Oh, tell us about your property.” I’m like, “Well, I owe the builder $322,000 now at close.” They’re like, “Oh, but your property’s appraised at $485,000.” That’s on the lower side, because bank appraisals typically kind of come in a little lower. They’re like, “You have a tremendous amount of equity.” At the time, I didn’t even really understand what that was. Then it slowly started to click with me. I’m like, “Oh, wait a minute.” I’m like, “So I could now take some equity from this and go buy something else?” They’re like, “Yeah.” I’m like, “Okay, sweet. Sign me up.” I think that’s where I made that journey. I think you’ve got to get that first property, you’ve just got to get into the market at a young age.

Andrew La Fleur:
That was when the light bulb. You had that instinct. You were going for it for many years, but it wasn’t until you actually did it that the light bulb … It was a few years after you did it, when that banker looked at you and said, “You bought this place for $391,000, but it’s worth $485,000.” That’s when the light bulb sort of went off and said, “Whoa. Okay. Because of that decision I made a few years ago with $19,000-

Dave:
$19,500.

Andrew La Fleur:
… I now have a net worth of like $150,000-

Dave:
Like a hundred something. Yeah.

Andrew La Fleur:
… or $170,000.”

Dave:
Now at the time, I was still playing poker, so I was making good money, but then …

Andrew La Fleur:
Through those first few years, you were like a full-time professional poker player, essentially.

Dave:
Yeah, I played from 2008 to about 2012. Then I ended up going back to school to pursue regular life. The U.S. government had end up cracking down on online poker, so that really put a damper on traffic online. I decided okay, I’ll go back to school. Didn’t really like what I was doing there. Then I kind of just floating through life for about a year and a bit. My wife was just like, “You know what? While you figure your stuff out, just get a job. Do something. Have some income coming in.” So I did that, and that’s where I’m at now. I’ve got the typical government job, so to speak, just a sort of middling-level position.

Dave:
But I think that’s the thing though, is since that time, I’ve purchased more properties, and I’m sure we’re going to get into that a little bit more. Just this massive, as we like to say, ocean of equity that’s been gained from all these properties, I’ve essentially become a millionaire in five years. Not including my principal residence, obviously, because that’s obviously gone up a lot as well. It’s all thanks to investing in preconstruction. Good luck trying to save a hundred and something grand.

Dave:
I think that’s the thing. I know a lot of doctors and lawyers and people that make very large six-figure salaries. Even they will be hard-pressed to save $30 grand or $50 grand, much less six figures.

Andrew La Fleur:
Because?

Dave:
Lifestyle inflation, right? Yeah.

Andrew La Fleur:
Exactly. Yeah, we talk about it on the podcast all the time. Most people, regardless of your income, are just living what I call subsistence living. Like you’re going back to our ancestors 400,000, 500,000 years ago, where most people were just farmers, agrarian living. You’re just making enough for yourself to live. There’s no refrigeration. There’s no storing for the future. You’re just hoping to make it to age 50 kind of thing, and then you kick the bucket. That’s your life.

Andrew La Fleur:
As much as we’ve progressed over the centuries, our mindset, I think, is still stuck in the past, in that, “Oh, look at us now. We’re so fancy. We make $100,000, $200,000, $300,000.” You could make a million bucks and still be broke-

Dave:
Yes, absolutely.

Andrew La Fleur:
… because your lifestyle just elevates with your income, and you just are consuming more and more. You’re throwing more and more money at stupid cars and other things that-

Dave:
That you [crosstalk 00:22:35]

Andrew La Fleur:
… are not assets, that you don’t own. They actually own you.

Dave:
That’s right.

Andrew La Fleur:
Again, how much you make is completely irrelevant to how much you’re worth and how long you are going to have to work.

Dave:
The other thing is, do those assets continue to earn, and do they compound? Because I think that’s the thing. Appreciation’s one thing. We’ve had these crazy, double-digit years the last few years.

Andrew La Fleur:
We’ve had a great run.

Dave:
We had a great run. Let’s just take a modest 3% appreciation of all the properties I have. You compound 3% a year, that’s way more than what I make in my day job. The best part is, we haven’t even talked mortgage paydown. I think that’s actually the thing with real estate. I think the number one thing is … In the past, a lot of investors’ll say, “It’s about the cashflow, it’s about the cashflow.” You and I have the ideas about cashflow. To be honest, it is a bit overrated, I would say. But what’s not overrated is mortgage paydown at these bottom, bargain basement, bottom prices. Or rates rather, I should say.

Andrew La Fleur:
Rates.

Dave:
Right? I mean, you’re attacking a lot of your principal on 20% down, especially when someone else is paying for it, i.e., your tenant, right?

Andrew La Fleur:
Yeah, it’s an incredible moment of history here with these rates that we’re in. A lot of people just don’t realize the opportunity just that’s created because of low rates, again. You know, 10, 15 years ago, people would have laughed in your face if they say, “The interest rates are going to be between 2.5% and 3.5% for a decade straight.”

Dave:
Yeah, I know a lot of people that are in the financial world. It’s so funny, man. We started this year off with, “Hey, rates are going up. What are you going to do?” And there’s a little bit like of that, they’re throwing shade, and they’re like, “Hey, what are you going do real estate investor?”

Andrew La Fleur:
Yeah, “Hey, real estate guy.”

Dave:
Yeah, rates are going up. And the funny thing is, I told them, “You guys actually really think rates are going up, huh?” They’re like, “Yeah, yeah. You know the Fed said it’s happening, and Canada’ll follow suit with the U.S.” I said, “You know what?” I’m like, “If you look at the way the world works,” I’m like, “I don’t even think they could raise rates if they wanted to.” These guys wanted to laugh me out of the room. That was in January. We’re recording this now in the summer of 2019, and rates have been cut-

Andrew La Fleur:
Around the world. People are cutting like crazy.

Dave:
Cutting like crazy.

Andrew La Fleur:
It’s a race to the bottom at this point. Everybody’s trying to get their currency lower than the other guy. Donald Trump is literally on Twitter almost every day shouting at the Fed to get rates lower, the dollar’s too high.

Dave:
The IMF has blogged about negative interest rates and how that could work.

Andrew La Fleur:
Some countries have, yeah. I just saw a headline yesterday. It was Denmark has 0% mortgages now.

Dave:
Yeah, 20-year mortgages, 0%. Yeah.

Andrew La Fleur:
I’m moving to Denmark.

Dave:
Yeah, that’s exactly [crosstalk 00:25:25] Yeah.

Andrew La Fleur:
Get some danishes.

Dave:
Yeah, yeah.

Andrew La Fleur:
How have your investments evolved over time? Have they evolved? Or is your philosophy really still the same? You’ve been active over the years. I don’t know if you want to get into other properties you bought specifically and how they have done.

Dave:
Yeah, we should.

Andrew La Fleur:
You’ve had a lot of great success stories along the way, other than just the first one. How have you sort of evolved as a real estate investor over the last decade? Then where do you go from here? What’s your projections, what’s your thinking, what’s your strategy moving ahead?

Dave:
For sure. So I think when we started, I think you gave sage advice back in the day. You talked about buying the smallest unit of a given type across the board. So really whether that’s the one bed, or a one bed den, two bed, I think that has been a super profitable strategy over the years. Again, for those who don’t understand why that’s important, just the whole idea that when you’re buying a two bedroom that’s smaller than … Say you buy a 700 square foot two bedroom versus an 800 square foot one, the rent on the 700 square foot one really won’t be that much less than the 800 square foot one. But the problem is, there will a price difference, a substantial one. Yes, even at these low rates, that may not be that big of a concern. But ultimately, you do want to at least have your asset at least cash flowing, or at least be cash neutral. You don’t want to necessarily having to be bleeding money month to month. At the time, that was the strategy. Specifically the strategy was get the smaller units, get the studios, the smaller one beds. Again-

Andrew La Fleur:
The units that you used to live in.

Dave:
Yeah, the units I used to live in. I think that’s the thing. Yeah.

Andrew La Fleur:
That you saw even in those early days when you were renting them, and you said, “I should just be buying this thing.”

Dave:
Yeah, and I think the thing that I realized is you can buy these for like in the low $200s, and you could rent them at the time when we were buying them for like $1500, $1600 a month. Now, students can touch $2000 a foot, if I’m not mistaken, at the current market rate. Yeah, that was the strategy then. It’s been very well.

Dave:
Now, it’s interesting. I’m actually kind of going the opposite way. I’m looking at the bigger units. I think a lot has changed in my life in the last few years. I’m a father now. I got married a few years prior before that. I’m noticing the sheer amount of people that are wanting to live downtown, but they don’t necessarily have a means to do so, because there aren’t as many three bedroom condos available.

Dave:
It’s always been a touchy subject in Toronto. It’s kind of like, what comes first, the chicken or the egg? Builders don’t necessarily want to make those units, because investors typically don’t flock there. But then on the other hand, the end user is looking for that type of unit. If it’s not being made in preconstruction, then it’s hard to find, right?

Dave:
I don’t really know if there’s a solution to that, but I do know that the select units that I do see from time to time, I do feel that there was some value there. I think the other thing that we’re going to start to see more and more as people live in this sort of subsistence economy where they’re just getting by, is the prevalence of co-living. You and I have been talking about that a lot. Co-living is where you’re renting out a three bedroom condo to three different tenants, and they’re sharing the common area, the living and the kitchen and the bathrooms. I think that’s going to really explode in Toronto, especially as it becomes a tech hub, which it’s becoming.

Dave:
I don’t know if you saw, but Jack Dorsey, the CEO of Twitter, he was in town recently. He just tweeted yesterday-

Andrew La Fleur:
Yeah, this week [crosstalk 00:28:50]

Dave:
Yeah, he actually tweeted yesterday. He said, “The more and more I visit Toronto, the more and more I love it.” So thanks, Jack, for doing your part to get the word out. I think, Andrew, that’s the thing. I think from the macro-level, you and I see where Toronto’s going, and we know that the best is actually yet to come. Affordability-wise, I don’t know of that, unfortunately. Well, and I think that’s the thing, though. I was telling some people, “Toronto’s always at the top of these best places to live lists, but the thing is, it’s going to cost you.”

Andrew La Fleur:
For years, it’s been the best place to live and also cheapest place to own.

Dave:
Of the world cities. Yeah.

Andrew La Fleur:
50 years we’re going to look back and say, “Hm. Why did prices get so fricking high in Toronto?” Well, it wasn’t rocket science. We were best place to live and cheapest place to live for like 20 years in a row. Eventually, people caught on. Everyone came here. The city’s population exploded. We couldn’t keep up with supply. The rest is history.

Dave:
And yeah, just even more about just strategy with investments. I think the thing with preconstruction is, it allows you to use smaller deposits at times to sort of get a foothold. You’re paying basically for, you’re securing the unit tomorrow, but at today’s prices, right? I think that’s a big reason why, I think, preconstruction still has legs.

Dave:
When I started the year, I kind of thought, “I think the writing’s on the wall, and the golden goose has been killed, and it’s been a hell of a run.” But as I look at things more, as I’m taking a step back and just looking at the bigger picture, I think Toronto still has legs in terms of preconstruction investment. I was actually starting to start to look outside now. I was looking at the Hamiltons and the Ottawas. I’ve actually put a hold on that, because I do feel that we’re at a moment in time where we can actually still make some incredible gains.

Dave:
Just as an aside, I think my strategy is always, when I put down money for a deposit, whether it’s 5%, 10%, 20%, I’m always looking to at least double that deposit in time. I always say, “I’m putting down 10%, the market will give me the other 10%.” Now, someone can look at that and say, “Well, that kind of sounds kind of risky. You’re speculating.” But I don’t know. Are we? Because let’s look at the last 15 years even of preconstruction. Let’s look at all those condos that were sold in the early 2000s to now and the amount of gains you can make.

Dave:
I tell you. I go, I talk to banks. I’m looking at mortgages, I talk to different people. It’s crazy, man. They don’t believe the gains I’ve made until I’ve, literally have to write it out and show them. I’ll say, “Look, this is what I put down. This is what it’s worth now. This is my equity.” They’ll be like, “Wow, that’s crazy.”

Dave:
I think the bigger units, there is definitely opportunity there, the three bedroom units. But the only thing is, because it’s become prohibitively expensive, I think now if you’re trying to get into the market, you may need to partner up. Because it’s very hard, obviously, to buy some of these bigger condos. So yeah, so that’s sort of my two cents in terms of, I think, where we’re going.

Dave:
It’s interesting. I had no intention to buy anything this year, and yet I found two can’t-miss opportunities, I feel like. Again, maybe you can have me on three years from now when those are ready. We can really go into depth and talk about how those worked out for me. But I don’t think I’ve been more excited about two projects than the two that I bought in this year. Like I tell you, the year’s not even done, man. So looking forward to what fall has, and even 2020 and beyond.

Andrew La Fleur:
Well, now you’re in an enviable stage for a lot of people, where you’re playing with house money, going back to the poker analogy, right? You’ve got that equity, massive equity built up and cushion that you’ve built over the years. Like you said at the start, you didn’t work hard at all to see all that wealth come to you, you just made very smart decisions, and you took action where others did not. Now you’ve got house money to play with, and it snowballs, and it grows. A lot of people would just say, “Be content, and stop there.” And say, “I’m good.” Like you said, you’ve become a millionaire essentially through a few smart decisions over a few years. But you’re not stopping there, obviously.

Dave:
No, and I think that’s the thing. Because it goes back to thinking about thinking big. That yes, you could stop, but I think the only problem is [inaudible 00:33:05] the world doesn’t. Right? Inflation will just continue to become a thorn in the world’s side. Population, I mean, we didn’t even talk about that. What about the explosive population that’s occurring in Toronto right now? The hundreds of thousands of people that are coming to our region, and the greater Golden Horseshoe is becoming a sort of mega-region now. It already is, really. But it’s just going to get bigger and bigger. It’s almost one of those things of, you’re just trying to get a piece of the pie while you still can. I think that’s the thing, why I’m so aggressive still. Maybe even more aggressive now more than ever, is because I do realize, just like with poker, eventually the golden goose can be killed. There is going to become a time where it will not be financially viable to invest in Toronto anymore.

Andrew La Fleur:
Mm-hmm (affirmative)

Dave:
It’ll be on the level of a New York or a London, where now it’s just going to be a place where if you’re worth 50 million dollars, you go buy a 3 million dollar apartment in fill-in-the-blank city, because you can and you want to keep your money there, and you need a place to put your money. And I think, yes, eventually Toronto will be at that point, but I think it’s absolutely remarkable that your average Torontonian can still, whether it’s through a partner or maybe through other means, maybe tapping into equity they have in their current, existing home, can get a piece of what I feel is probably the best city in the world to live in. When you really look at the landscape across the world, Toronto’s probably one of … you could probably count on your hand right now, where are some of the cities you want to be in? Just due to geopolitically, economically, whatever, you fill in the blank. Whatever metric you’re using, Toronto has to be there.

Andrew La Fleur:
Except for weather.

Dave:
Yeah, except for weather. I mean that’s always the knock, right? Yeah.

Andrew La Fleur:
Other than that.

Dave:
Other than that. Yeah.

Andrew La Fleur:
Yeah, absolutely. We talk off the record a lot about the bear, the real estate bears as we call them, the naysayers, people who are just, “The sky is falling, it’s all going to come crashing down.” And, we’ve heard those things, you’ve heard those things for years and years and years. When you have those conversations with, let’s bring it to a personal level, when you hear those things or you have those conversations with your friends and family, what’s your message to your friends and family who are down on real estate investing or down on the market? Or who are the sky is falling types or whatever? Forget about the people on the Twitter-sphere and all that, they’re always going to be there. But maybe on a personal level, people in your own circle, what’s your message to them, or what do you say to them?

Dave:
I always bring it back to, I think the thing is, there’s two things. One is, do you want to be a lifelong renter-type person, right? I think if you’re living in your principal residence, I think those people are less apt to be a housing bear. Because after all, they are in the market. It’s funny, man. The narrative has changed so much, there’s a lot of emphasis now on young people to rent. They’re selling that idea.

Andrew La Fleur:
I’m noticing that. That’s a huge ideology movement, I want to call it, of renting is okay, and you shouldn’t idolize home ownership. I’m like, that’s the dumbest, most toxic idea you can put in people’s heads.

Dave:
Yeah, especially in Canada, where you’ve got the greatest tax exemption you’re ever going to find, which is your principal residence exemption. Even if you just buy the place you’re living in, you’re already going to do yourself a great service.

Dave:
That idea of what’s going to happen with housing or should I invest or what’s holding you back, I always say there’s a multitude of factors you can look at. Toronto obviously has a booming population. There’s a lot of job growth here. We’re doing a podcast right now in the midst of a tremendous, forget condo boom, how about the office boom? The best companies in the world are setting up shop, expanding offices here. I’m always very bullish on [inaudible 00:36:56], so when I start talking in those terms, people start to get it.

Dave:
I think the thing is, when people start to really break down, you could buy an asset for X and rent it out for Y, and it can carry, and when you factor in that this much money can be made by paying down the mortgage, your tenant can pay your mortgage down. If the property only goes up with inflation, that you’re going to be getting a double-digit return, which certainly beats putting your money in stocks or anything else that you could possibly put it into. I think that’s the thing, that’s the message, is that ultimately if you just look at where Toronto’s going, it’s probably never been a better time to invest, in my opinion. Of course, investing 10 years ago would have been great, but we don’t have a time machine, and we can’t go back. Yeah, so it just goes back to that mindset.

Andrew La Fleur:
But that’s interesting, right? I think that’s a common thing with people who are in our shoes, in the sense that they’ve been investing for a while, is a feeling like there is never been a better to invest than right now, versus the people who haven’t got off the fence yet, who haven’t gotten to the market. It’s the opposite. They’re thinking, “It’s never been a worse time. The best times are all over.” But if you’re listening to this and that’s you, you need to hear from Dave and people like Dave who actually have done it and been in the market for 10 years or longer. They’re saying, “No, it’s actually better now than ever.” You just have to know what to buy.

Dave:
I think that’s the thing, and that’s where it comes back to dealing with someone like yourself, just to give you a shameless plug.

Andrew La Fleur:
Boom, let’s hear it.

Dave:
It’s funny. I think 10 years ago, you could have literally bought anything, and you would have been successful. You could have bought in B areas. You could have bought the crappiest units, and you would have been fine. You would have made six-figure gains on every single property you made, right?

Andrew La Fleur:
Exactly.

Dave:
But I think now more than ever, working with an experienced agent like yourself, someone that’s not going to shill every project that comes across their desk, knows and has relationships with builders, specific builders, specific locations, I think that matters more now, now more than ever. We’ve seen condo cancellations. We’ve seen things happen. I think now is the time where you really need someone experienced to be working with.

Dave:
Also, again, you practice what you preach, right? You’re an investor yourself. We’ve bought in same locations, sometimes even the same building. We’ve both done very well. I think that just speaks to your level of experience and just the trust that we have as your clients. So I think they definitely, for the people that are listening to this, you need to be working with someone that is experienced and that knows the game and that is also an investor. I think now as I’ve kind of transition into a full-time condo investor, I only want to work with people, whether it’s my realtor or my mortgage broker, my accountant, whoever, that are also real estate investors.

Andrew La Fleur:
Yeah, that’s huge.

Dave:
Because like-minded individuals are going to be the ones that can help me get now to the 10th, the 15th, the 20th property. I think if you’re a more experienced investor listening to this, definitely your brain trust, the team that you’re working with, I would highly recommend that all of them are investors as well, because they’re going to start to see the things that you see as well.

Andrew La Fleur:
Yeah, absolutely. It’s just, yeah, there’s so many investors who are working with either mortgage brokers or accountants or lawyers, people like you’re working intimately with to help you achieve your goals. If they’re not aligned with you on your thinking, if they don’t have similar goals, sure they might be able to do the job for you, mechanically get it done. You want to be partnering with, like you said, with people who are aligned with your goals, who are thinking the same way as you’re thinking. That’s exactly what I do with my own team, and the professionals and people that I’m recommending to my clients as well is, “Look, these are people that I trust, and because they’re doing the same thing as me, they’re doing the same thing as us, they have the mindset, they have similar goals.” Ultimately, they see the world in a similar way. They’re optimistic about the market. They’re optimistic about Toronto, as opposed to they’re pessimistic, and they’re just waiting for the sky to fall kind of thing.

Dave:
The problem with the people that are waiting for prices to fall, prices will fall at some point, I’m sure. Things that cannot go up and up forever. But I guarantee you, when the prices do fall, if there’s any sort of correction, whether it’s 5%, 10%, 15%, those people that have said, “Oh, I’m waiting on the sidelines from my point to buy,” they’ll never buy. I think that’s the thing I’ve realized as well. Again, it sounds cliché, but time in the market will always be timing the market.

Dave:
I bought my first property when I’m 26.

Andrew La Fleur:
Bingo, yeah.

Dave:
10 years later, my net worth is well over a million dollars. I talk to millennials all the time. Now they’re 26, 27 years old. I tell them like, “Guys, if you just get that one property now while you’re still young, you’ll probably end up doing better there monetarily than you will in your career, unless you’re going to go become a surgeon or you’re going to become the next Elon Musk, or something.” But other than that-

Andrew La Fleur:
Even if you are a surgeon, like we talked about earlier, it doesn’t guarantee anything.

Dave:
Yeah, I know. For sure.

Andrew La Fleur:
Yeah, a smart real estate investor over a 25-year period making $50K, I’d put my money on that person rather than the surgeon who is buying a Ferrari every six months, different Ferrari every six months, right?

Dave:
No, for sure.

Andrew La Fleur:
Thinking back to when you first started, I mean you had a great mindset always, but is there any advice that you would give yourself, like thinking back to Dave before you bought that first property? Is there any advice you’d give yourself back then that you wish you had or heard in those days?

Dave:
I think the thing, Andrew, it goes back thing, just think bigger. Don’t stop at one or two. When my brother and I bought, we had that mindset of like, “We’d like to get another.” Because we understood that concept of, yeah, if you live in one, that’s great. But you’re not going to really get ahead unless you have one more. So the whole idea then was let’s just get one more. But knowing what I know now, I would tell anybody, “If you’re going to think outside of what else is in front of you and you want to really aspire to have something more in life … “

Dave:
Again, we don’t want to get back to that thing of that money is everything or possessions. I’m not a better person, because I have 10 condos versus one. But I think ultimately just in terms of your sense of security, building some generational wealth, obviously real estate can play a huge role. So I would say, think big. I was thinking, too, initially, “Hey, I want to stop at 10.” But why even stop there? If I could get 15, 20 more, if I could do it within my means, why not?

Dave:
So I would definitely say I wish, I know it’s going to sound crazy, but I wish I had gone even harder than I did in these last several years, because had I did, I think things would be even better for me. Someone can say, “Well, that’s easy to say, because it’s been hindsight,” but I think ultimately not thinking big, not taking risks, those are the kind of things that eventually will not help you in any way whatsoever. I always like to tell younger people who these days it seems like they’re more risk averse, like now more than ever. Back in the day, young people were the type of people that would live by the seat of their pants and want to do risky things. I always tell them, “Society rewards risk takers.” I’m like, “Yeah, you may fall flat on your face. You may crash and burn, but when you do hit, you will hit big.” Whereas playing it safe, I don’t know any successful person that’s played it safe. I know a lot of regular,-

Andrew La Fleur:
I like the way you put it.

Dave:
… average people that play it safe, and that’s fine. But if you’re aspiring to do anything else in this world than what you’re currently doing, you’ve got to think big, and you’ve got to take a little bit of risk and embrace it, right? The road is lumpy, right? Yeah.

Andrew La Fleur:
Beautiful. Dave we’ll leave it there. A great note to end on. Thank you so much for your time today. Love hearing your story, and I’m sure we’ll get great feedback from this episode. I wouldn’t be surprised is we got to get you back on the show again soon for an update.

Dave:
For sure. Thanks for having me, Andrew.

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