Building Wealth in Ontario: Real Estate Investment Hotbeds, Home Rental Tactics, and Immigrant Success Dynamics (W/ Joseph Costanza)

Welcome to another episode of Inside Canadian Real Estate, and today I'm here with my good friend Joseph Costanza. We've met way back when we were doing stuff out in the Hamilton area and he is a real estate investor as well as a consultant and service provider. He works with a lot of different investors in a lot of different ways and he really helps them, especially when they're getting into the game, understand how to make individual real estate investments profitable, especially if they're going into single family homes. They're doing any sort of legal duplex conversion. He's the guy to talk to, to get you through that process and help guide you through otherwise a very difficult kind of first time activity.

If you've never done it before, it's intimidating. So we're going to be talking about that today and we're going to be talking about some of the investments that Joseph has going on as well himself and what else he's working on. So without further ado, let's jump right in. Here's Joseph Costanza. Perfect man. Thanks so much for joining me.

I appreciate you coming out today. No problem, no problem. Why don't we just, I know it has been a while. I mean, it's funny how how paths cross over time and how you kind of like meet someone, don't know where you're going to meet them again. But like me and you have completely changed since we first met. We're kind of in completely different places doing sort of different things, but our paths once again are crossing many years later.

So thanks for coming out, man. No problem, no problem. Why don't we start with a quick intro? Just tell everyone who you are. Name work what you do and we'll start from. There, yeah.

So my name is Joe. I'm a architectural designer by trade. I've been investing in real estate for probably about five years, really been involved in real estate to some capacity for the last 10 years or so. So not a new realm for me at all. Started a new business kind of in the same space and sort of now I'm kind of discovering entrepreneurship a little bit more and that's sort of where I'm at with life, looking at buying some more investment properties, looking at liquidated a few stuff this year, but mostly right now focusing on building the business. I like that, yeah.

So let's go into your kind of origin story. You have an interesting one and I think it's relevant to a lot of people cuz a lot of people are making and their or at least in their head want to make that jump from corporate to kind of doing their own things, starting their own business. You kind of had to navigate that and I'm sure there was quite a process in doing that and some things that you have to realize and like how you decided when to do it and how to do it. So let's talk about first that like your background and kind of the corporate world, what you were doing and how you transitioned into the business world. Yeah, so I went to school for architecture.

The idea was really, I'm going to become an architect, sort of starting out within architecture, I realized really, like right after school, I realized really quickly, it's like, I don't think I can work for somebody. But I also realized it's like, OK, well, I want to get my license, so let's just put in my hours. I get my license, then I'll do my own thing. Then shortly kind of after that, I realized, shit, I don't want to actually get my license. And then so I worked in the industry for about 10, well about seven years and then left the industry, the architectural industry to work in construction project management. So it was managing large construction projects for shy of, well, just over three years, right, being on site, managing guys on site, doing a lot of that stuff.

In the meantime, while I was doing that sort of before I transitioned into that, I was really investing in real estate. So I was buying like single family homes turning into duplexes, turning into triplexes focused more on the Hamilton area, done a little bit in other markets as well. But it was the kind of primary focus was was in the Hamilton market with interest rates rising and everything kind of changed right. So use especially with the pre construction condo phases, a lot of construction has sort of slowed down to a point where not as much staff as needed. If slowed down maybe projects have gone cancelled. And naturally when you have management staff on certain projects and projects get cancelled, seniors guys get moved over to the other projects and then it becomes a like a congestion of people on to certain projects.

So I am beginning let go unfortunately it was a job that I really liked but I was also kind of already in the headspace where it's like I want to do my own thing. It was just like what's that thing to kick me out the door, what's that thing to really push me. I had had that thought and I was like OK, I'm going to be here at the company that I was working at for another year, year and a half and and I'll leave do my own thing already kind of like set in my head. So it's like kind of got the kick out of the door, kind of like got a little bit of a push. I'm sure you know the last year with the market and everything it's been a little bit challenging, but I'm sort of exploring that world of entrepreneurship.

I think a lot of real estate investors kind of get into real estate thinking hey, or get into investing in real estate thinking oh, like I'm being an entrepreneur. But at the same time like investing in real estate is a level of entrepreneurship. But I don't think it's like it's not the full, it's not the full really depth into it. Like you're not really worrying about hey marketing and all this other like they're to an extent you can be. Yeah, yeah, yeah. But I think like the typical person who's like, oh, I'm a real estate investor or whatever and they're just doing like a buy and hold long term.

You're not really an entrepreneur. You're more of just like you're you're investing in real estate. Yeah, yeah, right. It's a it's a valid point. And by the way, I think to that point, one of the markers ends up being which a lot of people don't agree with and they'll they'll not like to hear. But it's true is when you build teams, building teams, especially with employees, is when you really start to notice the difference between working for someone and really being an entrepreneur.

Because you become responsible not for work, but for the systems and people that complete the work, which is what completely changed. And like you're actually responsible, meaning you're paying them, you're signing the checks, the money comes from you, the risk comes from you. Their well-being, their feelings, their motivation all comes from you. And that that's a real big change in like dynamic. Otherwise you're kind of still doing a job, you're just you're doing it for yourself. But it's not necessarily entrepreneurship yet because you're not creating new yet and it takes a long time to get there.

Like when I started the marketing agency we talked about before, which I built and sold, it took I think three years, two or three years to hire one employee like the first person. But when I did, it was like, oh, this is a whole different, like I'm not responsible for me anymore. Now it's their feelings, their motivation, their performance. Like you're you're now, I'm not a marketing guy, I'm an HR guy essentially and it changes the whole field. So sorry, sorry to interrupt, but no, no valid point. I think that's a great.

Point. Yeah, yeah, I think, well, it's the whole thing. It's like you're now now you're responsible for something, right? Or or at least someone, right. So it kind of completely changed the game. I'm learning now a little bit more about entrepreneurship.

Obviously now being on my own, really looking at, OK, well where do I need to put my time and effort, where I think I as a in before, I don't think I really had much of A focus on that. So that's sort of what I've been up to recently is really just focusing on building the business. Very good. Yes. I didn't, I didn't know about a couple of those steps. So that's an interesting kind of insight.

So you were in the architectural kind of space for a bit, ended up in the project management side. What did you like, 'cause you mentioned you liked project management a lot and it was a job that you liked. What did you like most about that side of the business? I like being involved in construction. I think I've always liked being involved in construction. You grew up in it.

I grew up in IT. I've always really enjoyed kind of the management aspect and being able to make decisions that make a positive impact on the project that you're working on. And I'm very, I like being involved in my hands and stuff like that. So being kind of being able to be on site and being in office and kind of jostle between the two has really, really worked well for me. And so that's really what I loved about it more than anything else. Yeah, I like that.

No, I can definitely relate to that. And coming from, again that marketing background, part of why it got stale to me over time and why I got more interested in real estate was the tangible parts of like real estate itself. Like getting actually hands on with the property, going somewhere that's physical, seeing something change in front of you, like an actual difference where a house looks like crap when you get in and you leave and you see the word wow, like I really transformed that. Being able to touch and feel and evolve in your progress, I think for me too was always something really appealing and what provides that the most is the construction side of it.

And that's also why now I'm getting more into development. It's like now I'm getting tired of just OK, buy a house, renovate a house. It's not enough anymore. I'm like I want, I want to like see land go from trees to structure Like that to me has always been an obsession too. So in that way we're alike and I think that that that's a great point. So that was the thing that attracted you most of project management.

How have you incorporated that those elements now into the business that you're doing? Like have you found ways to do more of that before yourself? I think there's still early stages, still trying to build it at the moment, still trying to figure out what that looks like to be honest. And I'm not trying to rush the process either, no. So it's a it's a slow, it's a slow build right now. So I guess the answer is no.

But we're I'm looking for areas where that can kind of come into play obviously as a service like I do provide like a like kind of a project management aspect. Yeah. But a lot of times I'm dealing with maybe a little bit smaller projects or projects that are people are coming maybe they're doing their basement or whatever at this at this point. And so a lot of the times like just a GC, like a general contractor will be able to handle that maybe a little bit better than I would, yeah, because of the more of the scale, right. Right, right, right. Right.

So interesting. Yeah. Yeah. Let's talk about that new business you have now. What's it called again? It's Zed A Suites.

So we focus on on right now the primary focus on helping investors build and scale their portfolios through any sort of renovations, permits, stuff like that. Nice. So you're working with individual investor clients and they're coming to you for kind of the full suite of services they need. Is it, is it because they already own property and they're coming to you because they're trying to, whatever it is, do a legal conversion or what not? Or are they still in the looking for property stage and you're kind of guiding what they should be looking for? A little bit of both, yeah.

To be honest with you, I think coming out with a background that I do have which is obviously investing in Real Stay for the last five years, doing a a handful of projects myself as well as doing others for clients and and whatnot. Because something I probably didn't mention, I was also doing this business kind of on the side for the last five years or so. Just kind of like dabbling, not really taking it seriously, just kind of like hey, you need help with this project, I'll help you out. And that kind of went on for a little bit. So I've done this for a while for other clients. I've done this for the probably the last five years, helping people.

So there's an aspect of it where it's like like clients are coming to me with a project that they already have. And then there's another aspect where clients are coming to me and going to hey, I don't really know what I'm looking for, but I have an idea. This is what I'm thinking. What do you think? And like, I'll shoot the shit back and forth with them on, like what the numbers look like. My primary focus is when I'm helping investors, it's like, OK, let's start with the end in mind, like how long are you planning to hold this property for?

Is this a flip? Because if it's a flip, it's a completely different mindset we have to take with the project. If this is buy and hold that we're planning for 10 years, OK, let's make the decisions that make the most sense for that 10 year mark, right? Because I think a lot of people get into it or a lot of people get into real estate investing or buying properties and they don't have a clear understanding of where their entry is, where their exit is. Because there's a different mindset where it's like I'm buying this property, the goal is five years and we're going to sell it in five years versus I'm going to buy this property and I'm going to sell it in 30 years.

Like you have a different mindset going into it or you should at least in my perspective, if you're buying something for 30 years, you you want to, if you're going to do a renovation, do a quality renovation if. And that's that's not to say if you're buying something that you're going to hold for five years that you don't do quality renovation, but you maybe take a little bit off the table on terms of maybe the finishes or the, you know what I mean, like there's a different mindset you need to have. Whereas I think when you're going into something that's long, long term, you have to have a different perspective. And so I come at it whoever I'm working with, it's like what's the end goal with this property and how do we structure this renovation or this upfront cost to meet that end goal that.

Makes sense. So you're far beyond. In my mind at first, what I'm thinking is like a planner because like we work with planners now, the development stuff, You're far beyond that because you're taking a more wholesome approach. Like you're helping them with everything. How the finances make sense, how the deal makes sense. They're not just coming to you and you're assisting with, OK, yeah, here's what you need for drawings, here's what you need for this.

You're actually consulting the whole way through. Well, like, like I'm not the one making the decision, obviously, for them, like they're the ones making the decision. But I will offer, like I do offer my two cents, right? Like if they're planning to, but I don't know if they're planning to do a high end flip in an area where it's not a high end flip area. Like, I'll voice my opinion where I don't think like this is what I think you should do. Instead now they're they they take their own stance on it.

They're going to take their own decisions and kind of go in their own direction. But I just kind of give my investment understanding from my perspective, right? It's always nice. And I think you've probably been in the same situation working with in, in the family business. I've been in this situation working kind of as an investor. It's always nice to kind of have another set of opinion or have another view on it, right?

And sometimes that differs from yours, sometimes that aligns with yours, but it kind of helps to solidify your decision. And so I think it's important, especially when you're working with investors like I do, where it's like you need to be able to have that conversation and figure out what that looks like for them long term than anything else. No, I agree. That's a great point like because in our in the flipping business, which is kind of what my family does, it's kind of a higher volume flipping deal. I mean it's kind of down to a sign at this point because we've done it for a long time and they they do a lot of them. It's it's very turnkey.

Every time it's the same thing. But the cool thing in that process, like to your point is, I mean there's there's three of us essentially in the family that are involved to some degree. We usually get the decisions by bouncing those ideas around. It's like someone says, yeah, this what we should do. Well, no, but have you thought of this like this area is whatever. Oh no.

But have you seen this because the the one down the street sold for this. And this is a like we come to conclusions typically by having everyone's opinions voiced, arguing about it for 30 minutes and then finding out, OK, yeah, this is a better way that we have to go. And without having that, I'm not sure how people would make those decisions. So if they don't have that kind of support, then yeah, having Someone Like You in their corner helps a lot because you do typically need to bounce those ideas around with people who have experience and know what they're doing. And even in like when I get to new areas, like again, I keep mentioning new developments of brand new area for me.

But the first thing I did in our last project is hire a really good planner. We never use planners for anything else. Now I'm using planner and I lean when I hire people like my. My kind of signature style is always I hire really good qualified people that I trust that have a good tracker because I know know the work and then I delegate like crazy. Like delegate. Like if if they say this is the best way to do it, I don't go crazy challenging.

I don't argue it, it's OK do it the best way you think, what should we do with that Do it the best way you think. Like I start giving them that control because they know what they're doing, they have a tracker. I have no idea. So I like, don't be that investor to my is my point here of like thinking you can do it alone and making all your own decisions, not asking for help and advice or even worse, hiring people or working with people and then still not taking their advice. Like if you're new to this game, hire good people and trust them like they're going to help you, they're going to help you make the right decision. It's in their best interest to help you make the right decision.

They don't want to have you get screwed over. So if you're a new investor coming to the game, I think the services you're providing these guys, not just for new, I'm just like new and experienced investors. But I'm just saying especially for new investors, they need Someone Like You. Because if they don't have anyone like that, it's almost impossible to go through this. It's, it's not impossible, but it's definitely more challenging. And you're gonna make some mistakes, right?

And not to say that mistakes aren't gonna happen, mistakes can happen. But it's like having that experience and having that that knowledge to kind of bounce ideas off of, I think aids a huge amount in the process. Especially now with with such a weird like real estate market that we're in, it's like it's easy. Yes you can get things done but it's also very easy to lose money. Like it's very easy to buy too high. It's very easy to buy the wrong area.

It's very easy to over spend on your renovations or your flips. It's very easy to make a mistake and not be able to refi what you need out of a property and get stuck. Like there's a lot of things that can go wrong now more than ever. It's not like before where when you like, you know 3-4 years ago you buy the property and by the time you're done the rental, the things appreciated 15%. It's just not happening. 2020-2021, that was a different, like different time.

Like I think anyone who touched real estate during that period made made money, right? That's the just the reality. You have so many crazy stories. Yeah, I've heard. I've heard some crazy stories from like. Man, like even like it was one of those things.

You could make all the mistakes you wanted and still make money. Yeah. You still make money? Yeah. Like it was like we did one not not to diverge too much, but this is a good point on talking about the market. We did one in Barry.

It's a waterfront property. I think we paid 1.4 million for it. So it's right on the Barry waterfront, Kempfelt Bay. And at the time, we're like, holy crap, we were way overpaid. Like what are we doing? It barely needed a renovation.

It was in great shape. We never do that. We always buy distressed properties, typically under the $900,000 range. But it was like, you know what? It looks a good deal. The guy was really desperate.

It was a quick close, whatever, we'll do it. And we're like, you know what, it might not work to flip. We're going to Airbnb it, which we've never done before. Like I feel like I saw. Do you? Remember this one?

I feel like I saw this. It had the boathouse in the back. Or something like that, yes. OK. So we Airbnb beat it for like 6 months and then we're looking at the market going up and up. And I'm like, holy, like, let's just list it and see what happens.

They listed the thing sold for well over $2,000,000. It sold for almost $2.4 million. So it was like $1,000,000 margin in a matter of what, 6 months? That's ridiculous on accident. Like, it wasn't like we ran those numbers and knew that would happen, but the market was so crazy that it was like pricing was everywhere and the motion was everywhere. So you put something up, We got offers, offers, offers, offers.

You get a family coming up from Toronto that just sold their house for $4 million. Like we'll pay you whatever you want and you get that's how we were getting those numbers and then that's just does not exist that. Happened. That happened everywhere. I know it's not. It wasn't.

Just scary, I know. It's like everywhere I saw it, I was getting at that time I was I'd flipped the property in, if I'm, if I'm recalling correctly, kind of timeline wise, I was probably like 2021 ish. Yeah, right. At that time I just bought a property. I bought this property. It was a it was a not turnkey but it was a like a a done duplex in Hamilton at 7:50 four months later I'd gone by it was like I got it appraised and it was worth like a million and then we bought it under market already but it was just like and then that kept going up and then by the time I was like looking at it, it was like 1.2.

I was like no this that makes this makes no sense like the place was not renovated. Like we didn't do anything to the place like it's still old tenants in it And I was getting like offers at 1.2 and I was like do I sell like whatever we went to renovating the place and now it, it holds long term still making money on it. So it's not like and it's an asset that we want term, Yeah, yeah, yeah. And it's a potential five Plex in the future. So we're 'cause it's a big, big property. But yeah, same thing.

It's just like things were just going crazy. That's how I knew it was time to start selling stuff too. Like when you see that I was just like maybe I should get out now. We even sold my personal house at the time when we we paid, like we bought. We bought our house off market, obviously did the renovation. We were in it like 556 hundred a year later again we get it appraised appraising it almost $1,000,000.

I'm like that makes no sense. Like this is crazy. And then I'm looking at comps in the area like you're selling for $1,000,000. I'm like this is this is like this is all gonna I I remember telling my wife I'm like this is all gonna fuck collapse like this is this is going down like this is like this is not normal. Like you putting up this little crappy house with two bedrooms in Barry and they're getting 35 offers in 24 hours like this is not sustainable. We can't keep doing this.

I knew. I knew it was time. It wasn't even like that wasn't even the trigger for me, to be honest with you. I knew it was time when I was like, I have a, like a men's league that I play soccer with guys that I've used to play soccer with for for years. And I would go to this men's league and everyone was talking about they were gonna buy a house, they're gonna buy a house, they're gonna buy a house. And the guys are talking about buying townhouses for like a million million five.

I'm like, you guys don't make enough. Like you guys should not be buying a property for 1,000,005. Like, they're like, no, no, don't worry. We have like we have a huge down payment that's coming from I was like and then the the second people started talking like Oh no family's gonna be taking a loan to like give it. I was like this is not like I'm like that's when I knew I was like when everyone else was talking about buying I had like a million a million five and it's like you guys maybe collectively make 200 maybe maybe it's like maybe I'd pull off a little bit and at that time I'd sold. I sold two places actually and now we just liquidated the the last one that was in the subway area, but.

We sold, we sold two that were in Sudbury at that time when everything was like going nuts. Man, I know it was a weird Did you did you watch The Big Short ever by chance? I did. Michael was a Michael Bury. That that's what that's reminded me of. Like they they had they were at a strip club and the strippers were talking about how they just bought her like 7th house or something.

And he like they're like looking at each other like wait, do you claim all this? She's like, no I don't claim anything like that. Like how'd you get 7 houses? Like like the bank didn't ask for anything and they look at each other like, Oh my God, we have to do something. That's what that's what that feels like. Then what are we your time.

So moving on because this is this is interesting honestly how this is going to kind of progress. So you said you're selling some stuff now you're kind of liquidating. I'm hoping that's because you see maybe some opportunities coming up, some things that are interesting you where you put your focus, your money. There's a lot going on in in the residential space. There's a lot of I feel like every week there's a new announcement from the government of some new program, some new initiative. My favorite one, which we have to make sure we talk about is those like pre done designs that they want to release the wartime housing stuff.

Yeah, I'd love to know your thoughts on that, but yeah, what are you seeing now moving forward? Where's your focus? Where do you think the opportunities are going? I think, well, I think the largely untapped focus right now that a lot of people aren't really looking at and that's because it's a little bit more cash intensive for people and a lot of people aren't comfortable doing private mortgages and stuff like that is the the single family to triplex option, especially in the area garden suites. I think that's kind of the direction that we're going to start seeing a lot of things going. I think as money starts getting a little bit cheaper, those options are going to start opening up a lot more and you're going to see a lot more of those permits going into the city for those developments.

There's not a lot of people that have access to new build. There's not a lot of people that have access to land, but there are people that have access to properties that they own, that have land on them that can be built on. I'm already seeing it with the clients that I'm taking on who are they're saying, hey, listen, I I want to do this in the future. Right now I have a single family home. I just want to finish my basement, rent my basement out to cover the mortgage that I have right now, right? And so a lot of my clients are really and like I know I've said I've, I'm focusing on investors.

But a lot of clients that I've had in maybe the last few months or so have really been homeowners that have come to me going, hey, I just need AI want to finish my basement and rent this out so that I can cover this increased mortgage cost that's gone up by $2000 a month, right. And so I think it's you're going to start seeing a lot more of those applications more out of not in not even as a like from an investor standpoint, even just people out of necessity to kind of pay bills and stuff like that. I agree. I think a lot of people are going into buying their house knowing they're going to rent out the basement ahead of time. Like, you know they're going to have to.

And I think which I support, I mean I I rather people be doing that and that's smart, very smart decision than waiting and not getting to the market at all or in my opinion like this is a video we did recently about I I said do anything you can to get to a detached home with as much land as you can possibly get in it. I don't care if it's like a 80 year old house, if it has a good lot, it's a good house, it's got good bones. I I'd rather people either get in that, rent out space, do it with two family members, do it with some friends. Whatever they got to do to get into that one deal, I'd rather them get into that than like 1 high rise condo. I think, I think that's that's key.

I think a lot of people are missing the boat on on jumping in 'cause they're like, oh hey, like I like. I'm not sure where the market sides, but it's like this is I personally, I think this is the time. If you are going to buy and you are going to like and you want to move in to something or you want to at least get into the game. Getting into the game is more important than not being into the game. Because whether the market goes up or down, that property eventually is going to appreciate over time just naturally. It's just the way the market works limited on space realistically.

And I think like you said people need to just have an understanding. It's like it's sad because people have to look at it from an investment standpoint. They you can't. Like it's not ten years ago where it's like I could just buy a single family home and live in it. Like for for some people that have options there. But for a lot of people they have to take a more of a more of a like a conservative approach where it's like I'm going to buy this property, I'm going to rent this basement out and I'm going to like kind of make my finances work that way.

And I think that's a better option than not being in the game, for sure. I I agree and I feel like and that maybe that's where you can help people too that are listening like if they're on the fence of like hey I want to get a house but I didn't think I could afford it. I think they should have a chat with someone like yourself that might be able to show them some options of hey if you actually look for this type of house and you do this kind of thing to it. It actually might make a lot of sense because I think I think that is the future and especially with detached homes man I'm I'm just such a big proponent right now of detached homes because of the fact that they take up the most land we're not building more of them like I was looking in cause Barry's kind of my typical area of operating.

I was looking at the development department online they have all their their list of submissions for for projects coming up like large projects submissions for plants. So it's all these plant plan of subdivisions that are being submitted for approval and I'm scrolling through like pages and pages of all these submissions and all I'm seeing coming up like new stuff towns condos towns stacked towns. I I didn't see one single dedicated detached home development in all of Berry on on their. Car, They're just sporadic and they're usually mixed in with other townhouse developments. Yeah. So it's like OK, out of these like 100 units that are coming up maybe 20 or are?

And that's gonna get smaller and smaller. That's gonna get less and less because you got to think from the municipality standpoint, they're all pushing the mandate now of housing. So I went to this, this big real estate conference right before the holidays. It was called Powerhouse Summit. So we had the leader of every provincial party basically speaking. And the whole theme of this was housing.

All of them. Density, density, density. We need more housing, more housing, more housing. That's the mandate across the board. If they get planned in front of them to build detached homes and you have this, you know whatever the amount of land is, you have 100 acres you can build on and someone's planning detached homes, like we can get 10 times that if we do stacked towns, they're not going to approve the detached homes. It's how it's not going to fit in that mandate.

So minus the few developers that can pull strings and still get those done, like the very high end areas of stuff, that's three, 4 million in King City going up or in Kleinberg still that's different. But from a general, like when you're talking about like what's actually being built across the province, the majority of time now it's it's very high density stuff, which by default is going to mean detached homes will become rarer and rarer and rarer, which means prices are going to go up and up and up. And that's nothing you can fix like that. There's never going to, Even when you hear people talking about, oh, we're going to, we're going to create more affordable housing.

I think some people have in their mind that means that pricing's all going to come down. It doesn't mean that it's just going to mean they're going to make new options that are affordable, but it's not going to ever be able to bring down the cost. And even if it does, short term people are like, oh, but in O eight things went down. Look at the graph from 2000 to now, despite the crashes, it's way higher. Just even if you bought at the worst point after O 8, after the crash in 09, whatever you bought like at the worst point, if you bought right at the peak beforehand, it makes no difference. You would have still made a ton of money today, and that's the same thing.

Like maybe it goes down this year, maybe it doesn't, who cares? Even if it does, the point that you were just making is long term, it's always going to go up right? And I I I think that's an important point. Like we were talking about development before, like you're probably looking at denser development for your your, your land as well. You'd think you would. Oh really?

I would. We're actually doing detached only because it works. The land cost next to nothing, It was almost zero and the the finished value is close to $1,000,000. But you don't find your when you ran your financials, you didn't think that it would be better off going? It would be, it would be we. So we had the planners reach out.

Actually this is, this is a good topic. So we had this 20 acre piece of land and I was trying to think what do we do with it. At first I would love to do towns. That's what I want to do there. The problem is location. First of all was we're 20 minutes east of Bracebridge in the most rural part.

Internet is a challenge, everything is a challenge. It's a very rural spot. It's very like homesteader. I want to be off grid kind of vibe. And when we reached out to the the the city it was like so we had the planners reach out to the Township. What can we build here that you're basically not going to give us a hard time for like what what do you want to see?

They essentially said if you do anything other than single family you're you're going to be in limbo for a while. Like we have approved nothing out that way that's multi family. If you want to build a house, great, we got you. You can put a house in that lot that's good. You want to build anything else. We got to go through all kinds of of of of loopholes.

Now, we could have done it like not loopholes, sorry, jumped through a whole bunch of hoops, which we could have done it. But with our timeline and being our first development to mitigate risk, we're like, let's just, we've not built anything. This makes money. Like we're still going to make. Again, the land cost, nothing. The finished value is $1 million.

Our build cost is about half of that. So the profit's still there. I'm like, let's just use this as a lesson, what's the easiest, fastest thing we can build and make sure we get in and get out and then we'll take those lessons and do something more complicated. So I decided to do a single family home because it was the easiest thing to do and it would take the least hoop jumping, so to speak. But multifamily is what I would have wanted to do. Or, like you said, townhouses.

I just didn't feel ready to do it there and I felt like it was gonna be quite an uphill battle with that. Location, yeah, I think it's like to that point like it's also that's all that's also a marketing play that's a permit process like play, right. The if you're building something in an area that traditionally doesn't accept that type of development, then like you're going to have a more challenging process going through the city and stuff like that. Same thing is like if you are putting a high end renovation in a property in an area where they don't really accept high, like that is not a high end area, you're not going to get the same value out of it, right.

So it's like you kind of have to make it strategic to your location. But I think the the point of it is, is densification is becoming more and more profitable because not even because it's becoming more profitable because single family homes are becoming a lot less profitable for developers. So 100% single family homes are becoming less profitable. What it means is that the like you said before the single family homes are going to become less and less percentage wise according to the population and so that naturally will increase the the demand for those for those properties to that point exactly. Yeah. No, I I, I definitely agree and I see it.

It's it's like there's a multifaceted attack right now on on detached homes because it's both. Municipalities don't want them, they just rather have something else. The builders can't make money, so they're not going to do it. The average person can't afford them anymore. So like there's no market. There's no market in the sense of new builds you want to build.

If you get as much money as you can, have a new piece of land, you want to sell as many as possible in that land right now and you don't want to be building what's going to be considered luxury high end projects. That's going to limit your market, right, unless you're in the market to support that. So I think from all angles detached homes are getting hit right now in in the sense of there's not going to be a lot more of them. So yeah, if you can get into it, that's the moral of this, of this story is get into it by any means necessary. And I think even if you don't live in it, like, even if you're like younger and you're like, hey, I used to live at home, there's nothing wrong with getting four or five friends if you need to, buying a house and just like you said, get the basement done, maybe get an Adu or something in the back and rent it.

Just rent it. Because then you and your friends can chill out for two or three years. Then one day you're going to sell it. You can take your profits and maybe you guys all go out and buy something for yourself. But too many people, man. And I don't know if you see the same thing, but two people are just waiting.

They're waiting and they're waiting. I don't know what they're waiting for. Maybe, you know, I've. I don't know what they're waiting for. It's just I see a lot of inaction. Oh, I'm not ready.

Oh, things are too expensive. Instead of taking the time to figure out, how can I do it creatively? But like, what are my options? What can I do? Who can I do this with? It's like, well, I can't afford anything, so I'm just going to stop thinking.

About it. So I I have a question. Why do you think that is? Because I think I like I've grown up, like I didn't grow up around real estate, like I kind of forced my way into it. But I was also like already in the space because I'd worked for architectural offices. The people that I was working with had like dozens and dozens of of properties already.

So like very early out of school, I was immersed into this world of like real estate investment. And so my mindset very quickly shift despite my upbringing, my mindset really quickly shifted into I need to own land, right? And I presume you with kind of growing up in the industry or at least having an exposure to it, have that mindset. Do you think that people are just not exposed to it enough people's, maybe their upbringing has taught them, hey listen, you need to just buy a house and live in it, pay down your debt kind of idea or do you think it's something completely different? People are scared. I I think it's a mix of all of it.

I think part of it is, yeah, lack of exposure. It's not something that families are talking about enough. It's just and even if you have like early on, I didn't have that much exposure. Like my family got into real estate sort of later. But like as a little kid, like my family just owned a house. I didn't really talk about the investment side of it and it was never really a thing.

But I kind of what to me was a parent. Like, of course I want to own a house. Like my family owns a house. I like to own a house. You see how much money they make and then you like, you can see the appreciation. You can see the wealth building happening and friends and family that have bought and eventually sold and they retire.

And I was like, yeah, that's a good idea. We should get into a house and then eventually so. So first exposure. You have to be around it to know you want. If your families never owned a house, it'll just feel impossible. It feels like you don't need to do.

It's something that like and you see that a lot like habitual renters where it's 3-4 generations of just renting. They don't know different like their family did it, their families happy, they do the same thing. It's not they think about but then even people that have the exposure, the other missing part is the education later to know OK well you know you want a house but maybe you have this learned helplessness of like well, but I'll never be able to do it. They're too expensive and not even going to bother you know and you hear that all the time. But you know my parents got so lucky they had it easy like things were so cheap. I'll never own a house.

These are too expensive. So you get this helplessness about them that they stop looking for answers. So part of it is you you need to have the exposure 1 to want it and then you do want it. You're going to have to have the creativity and education to know how to go about getting it. So whether they need to know these strategies like building a a legal duplex or building an Adu where they they don't know that's available and even when they do, they know how to do it. So I think education is a big missing component to that.

If we were somehow able to mass educate younger people and say, hey, you want a house, here's 345 creative ways that you could do it. Whether you do a joint venture with your friends, whether you bring in some family members, whether you do it as a rental. If they knew those were options and how to go about it, maybe we'd see more people actually pursuing that. Because you do see that a lot. I've noticed with more immigrant families, like first generation, immigrants are much more inclined to know to come in, find a house, get 2-3 family members, or rent out a basement. Or they know that, hey, I can make numbers work by being creative, but I find people that have been here for generations already don't have that.

It's a little more complacent. I think it's because they have no other option. There you go. Right. Whereas the people who've lived here in the entire life, they know, hey, I can just live with my parents, I can live in my parents basement and I'll be fine. Whereas people coming in from another country, they're going fuck, I got to find a way, right?

And when you when your back's up against the wall, you're going to, you're going to make a decision, whether it's the right decision or not the right decision, but you're going to find a way to make a decision. Whereas I think people who have lived here and who have had the luxury of growing up in this economy when there wasn't really hardships haven't really built that skin to be like, hey, I need to actually make this happen, yeah. They just want to work the same way they saw work with parents. I wanna work and I should be able to buy a house and if I can't screw it, I'm not gonna try it. I think in that sense, we're kind of spoiled. And I grew up in it.

Yeah, right. So I understand it. I have a lot of friends who are just like, hey, whenever my parents can afford to give me a little bit of money so I can buy my house, then great. And it's like, I've always shaken my head about that. Like I have a a buddy who just like he's like the only way I'm going to buy a house. If I if I buy it for all cash, I'm like, that's not really the way it works.

You know what I mean? Like, anyway. Oh boy, digress. But they'll be waiting for. A while now? Yeah, it's it's a weird, it's a weird thing.

And I I agree. I mean, you have to, you have to have the exposure, you have to have the will and you have to have the education. I think a lot of those components are missing and those immigrant families are just a lot more driven, so they're willing to figure it out. Like even I had a sales guy recently I bought a car from. Actually I bought 2 cars from him already. He's the first generation.

He's actually came in on a working visa. He's all alone. No family here, no friends here, completely alone. The rest of his family's in Australia or something like that. Anyway, point is, I'm talking to him. He's still a young guy.

He's probably like mid 30s. He's got two or three kids. We started talking about real estate and I find out he owns like 3 properties in Barrie. Two of them are rented out his house. He lives upstairs and like rents out the basement. And he literally started by coming in, getting one house done with with a friend of his.

He like a partner that he partnered with, They rented out downstairs. He lived upstairs. Then eventually he moved out of upstairs, bought another one, rented out the basement, lived upstairs and just kept doing that. And this guy's accumulated 3 properties. He's only been here for like 5 years. He knows nobody, has no friends, no family, just whoever.

He could meet at school and at work and he somehow managed to accumulate 3 properties when people that have been here for three generations are like, Oh no, I can't, It's it's unaffordable. I'll never be able to pay for one, right? Yeah. So it it's a mindset, it's an education thing. And I think if people were just if they could get rid of that, learn helplessness and say no, it is possible. I just have to find the way it opened the door to a whole different.

Opportunity and like, I want to be sympathetic. Like I think you're in the same way. It's like, I want to be sympathetic to those people. Like I'm more than willing to like have a conversation with those. Those individuals are like, I'm stuck. I don't know what to do.

I can't get out of my parents house. Like I'm more than willing to like sit down with someone and be like these are your options. Yeah, right. Like, forget this whole buying a single family home for for like whatever, 20% down payment, being able to afford the mortgage, yada yada yada like figure you you, you have other options available to you. It could be, it could be a rent to own. It could be, yes.

You know what I mean? Like there's other options. It could be like a house hacking, whatever those options are. But there's other options available. And don't pigeonhole yourself into thinking I need to do it the way it's always been done. Right by parents, right, right, 100% agree with that and hopefully that's something that we start to do.

Hopefully we do see more of that out of necessity because I think a lot of people, if they don't figure that out, are going to be left behind. And I know a lot of people are waiting for these new, like, affordable housing programs where the government's going to do all kinds of subsidized programs and affordable unit. You don't want that. You don't want that to be the thing you depend on because you'll be stuck there forever. That that's not despite how they sell it, that's not transitionary. You get in that box, you stay in that box and your kids will stay in that box.

It's not a good place. You want to find a way to do it on your own. Get into market, because that's what's going to set. You up for life? Yeah, right. We've become a little bit too dependent on government assistance.

Yeah, I mean, that's a different conversation altogether. Anytime you got to ask the government to do something for you, it's typically a bad thing and it's never going to pan out well. So very guested. But anyway on that note, the government is doing some interesting things. There's some interesting opportunities, There's a few programs I want to kind of talk about. So one is this whole this was last, I guess was the last couple years, but you can now, I guess across Toronto build up to or add or convert up to 4 units in Toronto proper, right.

And five Five. Now how recent is 5? 20 last year. Last year, OK. So you can do 5 units in Toronto and you can do what, three everywhere else in Ontario. So the certain areas are different, right?

So like I think London you can do 4, Hamilton you can do 4, Toronto you can do up to five. Typically it's really only up to four. But if you are able to do like you can do a single family home as 4 and then an Adu S5, interesting. So a lot of people are going in that direction, but that's a little bit more challenging. Obviously there's a little bit more hoops to jump through when you're going on to the the higher end stuff or not higher end, but like the the more units you go to. But it's possible, with that being said, the rest of Ontario with within reason 'cause there are certain areas or certain small cities that can't really take on this, this increased densification with with respect to those areas, you can do up to three everywhere else.

Interesting. And that's part of build 23. Do you think they'll I've cause I've heard in I've heard in in I think it was Vancouver or British Columbia as a whole. They've pushed us even farther. Is is it? Is that true?

I don't know. So I I heard there's some pockets in Vancouver that are somewhere I I this is we're gonna have to Google this after unless Anthony wants to Google it in the background of how many units you can build in BC. But I know they've they've pushed it up I think higher. I don't know if it's the whole area or pockets. I've heard as high as six or seven in certain pockets and potentially then wanting to roll that out in other provinces, I could be making this up. So we'll have to Fact Check it after if I'm wrong.

But do you think that in Ontario we'll see that push even higher or do you think that's gonna be the cap we're gonna settle there and kind of just see where it falls? Very good question. I think we can see things go across the board to four. I just don't think a lot of the housing is a like I don't even know how we would do 6 and majority of those cause a lot of the time we're talking single family home conversions, right, Like you're talking taking a single family home, converted it into two or three units or whatever. I don't know where we would go to put up. It would have to be, I guess, purpose built.

Will that lead me to my next? Purpose built would be different. Yeah, that's a different conversation. But I wonder if I'll allow it, 'cause that leads me to my next question was like the thing I got really excited about too was that plan we mentioned earlier, reviving the Wartime Housing Act where they're going to basically have a portfolio of hey, here's a bunch of designs you can build. But when I looked into that program, none of those plans are for detached homes. So the only plans you're going to make available are like towns, stock towns, multi family, low rise apartment buildings, retirement and student housing.

I think was the categories. I'm curious when they come out with that, like let's say one of those drawings is for like an 8 unit dedicated build. Will they now allow? Hey, if you have any sort of, even if it's single family, zoning will allow you to build any of these designs on any single family lot, so long as it fits and meets the setbacks and all that. Like, will that ever be a thing, you think? I don't know.

I that's actually a very good question. That's what I'm wondering 'cause if so by I don't want to give away some strategy here. But if so, that could also mean the push in the value in detached homes and lots is going to skyrocket, because if that happens, every small developer in the city is going to want to grab these detached lots. Oh yeah, because they could just build whatever like you turn a single family home into into 8 units. I think it's going to take more like you're going to have this fall within certain set back requirements till. Right.

So it's not like you're going to be taking like a 50 by 100 lot, which is like a standard wartime lot and turn it into 8 units. Like I don't think that's going to happen. But like, yeah, sure, if you have a large enough lot, I think there's opportunity there. I think what the where I could see the government going with it is going, hey, listen this. If you want to buy in this lot, we will. We will build this and you come in as a partner with a bunch of all these other people who want to build be part of this aplex and then we can build, you can build this, right?

So it's kind of like getting in a group together or the government will get the group together because you're really just buying one unit, right. The government's building the rest and you're paying the government to build the government's paying someone else. But regardless, like I can see it kind of going in that direction because I can't see them unless maybe they I can maybe in some aspect seeing them saying, hey, you have this lot you want to buy, you want to build these 8 units, go ahead. But I can see it being more of a group activity rather than an individual person coming in going. I want to build all 8. Interesting.

Yeah, that would be, that would be interesting for sure. I I want to see how that pans out because I think they're going to have to do more like what we have on the table now is great, but I think still more has to be done. So the question is going to be what is that more like? How flexible will they get? Well, the thing, the thing about the wartime housing, when they did it, it was like it was very affordable to build when they were building wartime houses, do you know what I mean? And those things went up in and.

They designed them that way too. They also designed them to be done as cheaply as possible. And yeah, they were, but they were also done in like, yeah, easy squares, easy builds like picked out of a catalog and then within two months you had a house, right? Or whatever the time frame was. But I think it was like something like two months or something like that. Like they were just pumping these things out and that's why you see them scattered everywhere, right?

But can we do that now at an affordable cost? Then it comes down to how are the banks going to loan on these things? Are they going to give each individual person construction loans? Right. Like what is the, what does that look like? I think that's a large can the can the government finance these things?

Like, that'll be a question. Like, like, yeah, I guess theoretically they could. But like like what does the debt look like? What does the situation look like? Are they going to take them alone? Like you know what I mean?

Are the banks going to buy them out later? It'd probably have to be some knowing how they work. It'd probably have to be like some sort of Federal Bank partnership where the banks like the government's like, hey, we'll finance through some sort of program the construction of these things and then when it's done you guys can come back in and. That's the only way I think it makes sense. So I think there's a lot of question marks regarding how the process actually get rolled or gets rolled out. I think it's a good idea, don't get me wrong, but yeah, either.

Way opportunity in that space for sure, whether you're an individual that's going to be converting your house to get more out of it or you're an investor that has a bunch of these problems. What I think would be interesting is where they put the limitations on, because I don't think they're going to make this open for anybody to just jump. In. Oh, interesting. Right. I think where the limitation is going to come in, it's like, OK, if you own a house already, then you're not allowed to be involved in the program.

I think. I think you can start seeing things like that. But do you think they would exclude even investors because I don't think because I think if they want it to actually get done, they're going to have to allow investors because no one else is going to have the capital to do it at scale like the average person won't want to take on a full, but I'm talking for for that, for the wartime housing now like. But does it solve any? Does it solve anybody's problem if they allow the the the wealthy to be involved in the program? They if if they structure it in the right way.

So I I think it depends on what program. So like for example for like the apartment buildings, like if they give pre done drawings of like you know a 20 unit building like a low rise, it's going to have to be done by an investor. And what they're going to have to do is just as part of that program just like they have with the CMHC programs. Now for affordability, like if you meet certain criteria you get 5% financing up to like 50 years, whatever that is just like they do that they're going to have to have some sort of incentive. It's like hey, we'll let you build this 20 unit building but here's the criteria of what these rents need to be here.

So stuff has to happen if you want to do it. And then for the smaller stuff like if you want to build like a like you know 4 townhouses or something, they might just mandate that you have to sell it and you have to sell it at some sort of market rate. So they're going to say hey, you got to build but it's built to sell. So you're going to finish this project, you're going to If you build these, purpose built townhouses will essentially comp 10% of it, 20% of whatever it is, and then you charge the customer the rest to keep them affordable. I think we'll have to come with creative programming to make sure that what gets built actually adds to because we we need, we need housing for ownership, but we also do need, no matter what, more apartments we need housing.

Just in general. Exactly. Yeah. So even if you can make it affordable to rent Fairpoint Plus. Right. Like Fairpoint, I think the, like deterring people from doing it would probably be a negative in that sense as well, right.

So yeah, I can see them putting all you need. I can see them putting a cap. Yeah. Like, I see them being like you can only do so many. Yes. Right, but who knows?

I can even see them getting a list of builders and just saying, hey, these are the 10 companies that can build these and letting them do all their. That's always. It's always a little on the shady side. Exactly. Which I think then people complain corruption, but yeah, that happens. It really all made money.

Like great, great golf. We're buying a house with great golf, like a personal house, Yeah. And they've amazed me with the process. And I think they'd be positioned to do something interesting here because they prefab the majority of all components of their housing in a giant warehouse and ship it out on site, day of installation. So for example they'll pour a foundation and then three days later you'll see a truck show up and that truck has big squares of paneling that have the exterior walls, the framing, the windows all in place already. They drop them on site and the same day a house goes up in one day, the same day the panels go boom boom boom boom boom boom boom they all fasten together and the house is done.

If those guys could get pre done plans for affordable housing that was cheap squares whatever it is or multi family town and they could prefab all those components really cheaply and effectively in a warehouse and just build at scale that would be interesting. So I wonder if we see some of those guys doing that so? That's what you guys are doing right now. You're buying something from. That is just for me, for me and my wife, like we, she really want to live in Bradford and I can't find nothing in Bradford that's that's worth a deal. So I have to buy something new.

And the only builder I trust is Great Golf, because we know people in great golf homes and I I know the company well and I know their building process well and they're very unique in that sense. And so we ended up going with them, which is not fun because it's very expensive. But Despite that, when your wife wants to live in a certain area, you kind of have to say. Yes, you just have to. Go with it. So I had to do that.

But watching their process has been like incredible. I've never seen a house go up in a day and at the quality that they do it at and even their flooring they laser cut. So when they do your house, they have a factory that laser cuts your flooring to the floor plan exactly in the factory packages it up. And then sends it. Ships it day of installation, never sits outside it. It gets to your house and goes in same day.

Yeah. So say and that's the same thing with the, the outside I was mentioning. It never sits outside. So you have no warping, no water, no nothing. And the moment those panels go up, they already have windows. The house is sealed from day one.

It's wild. Yeah, Never seen anyone else build like that. So it's, I think that's part of the future of building for people that want to scale. The builders don't want. To scale, I think it's got to go in that direction. That's how you get cost down because their cost has to be way lower than their competition building those at the scale they have now like they have a massive warehouse in Etobico that who knows how many square feet, 100,000 square feet, 200,000 square feet.

They have a huge warehouse and that whole thing is just pumping out components of everything all day fully vertically integrated. That's the future of building. And I think if companies like that can get behind this new affordable stuff, pre done plans, cheap building, get into the multi family space and somehow be involved in that. Or maybe it's even a partnership where investors like you or me can partner with them on components where they're providing all these elements that are pre done and we're just getting the houses up somewhere in. That has to happen if we're going to get cheap housing up. Because right now, despite what they do, materials are expensive.

Labor is hard to get. Labor is expensive. That's all gonna be hard to no matter how cheap you design the house, that's hard to get around. That's a fairpoint, right? Yeah. So anyway, lots of opportunity coming up there.

Did we miss anything big that I want to cover? Anything else you want to cover? That was like a big thing. People should know about opportunities. No, I think you touched on a really good point. I think people just need to get in.

Yeah. And that's just kind of like I think people have been saying this for a while. Obviously the sort of call it recessionary environment that we're in right now has that turn people away from it. But I think people need to really come back and and understand it's like they need to get into the market. And if you're going to get in, now's the time like the the market, even if it falls a little bit more than where it's at right now, it's still a good point, right? Affordability is only going to get worse.

I think unless we get to the point where we can build at scale quickly, like we discussed, affordability is only going to get worse. And so you should be really focusing on, like, I completely agree with you, single family homes, Push single family homes. But fuck, if all you can get into right now is a condo, Get into a condo. If nothing else, get in. Right. Get in.

Yeah. Yeah. Right. Ride the wave. And then you can always sell and get into something else later. Yes.

Right. Yes. 100% if the option is no real estate or a condo. Yes, condo. That's always gonna be the option. That was actually our first property, too, oddly enough.

Many. Where a lot of people start. But it does. That doesn't make sense too. No fairpoint. If someone wants to reach out to you, get in touch, get some help.

How can they do that? Yeah, they can reach out to me on Instagram, Joseph Costanza, or they can just reach out to me via my websites at asweets.com. Awesome. I love that. Well, thank you so much, Joe, for being on. I appreciate.

Your conversation? Thank. You a lot of good insight and hopefully we have you on again soon. OK, cool. Thank you, Sir. Thanks man.

Bye. Thanks for tuning into another episode of Inside Canadian Real Estate, guys. Don't forget if you liked the episode, if you found it enjoyable, if you learned something, if you liked our guest, if you liked our topics, don't forget to subscribe to Inside Canadian Real Estate on Instagram. That's where you'll find all of our clips posted. We're also sharing on YouTube, so just search Inside Canadian Real Estate on YouTube, follow along and please, please, please if you really want to help the show, because again, there's not a lot of Canadian content on real estate. We're putting a lot of money and time into this.

If you really want to help us expand, don't forget subscribe to the show on wherever you're listening to your podcast. Leave a review if you can, whether it's on Apple podcast or Google podcast. Spotify. Subscribe to the show. Follow the show. Don't forget to leave that review.

And please, if you found it useful, share it with somebody. Share it with a friend. We don't charge you for the show. We don't run any ads. All I ask is you share and help us get the word out. Thanks again guys.