Mortgage Rates, Pros of Working With a Broker, Canada's Housing Predictions (W Jack Kerr)

Welcome back to another episode of Inside Canadian Real Estate. Today I'm here with my friend Jack Kerr. He's a mortgage broker, mortgage expert over at Donaldson Capital. Donaldson Capital is an incredible family run firm, a boutique firm specializing in luxury properties and cottages, construction financing. But they also handle all your traditional financing needs as well. They're well connected with A lenders, B lenders, private lenders.

They got the whole bit. And today we're just talking about all of it. We're going to be talking about interest rates. We're going to be talking about mortgaging options. If when I just gave out all those options of AB and C lenders, maybe you're like, what the heck does that mean? We'll talk about all that today.

So if you're interested at all in financing real estate or the options available for different kinds of projects, whether for your home or for your build, that's gonna come up today. So without further ado, let's get to the show. Thanks for calling man. Thanks buddy. I appreciate you coming down. I know it's a little a little bit of a drive, but not too bad.

No, not too bad at all. But today we're going to talk about a bunch of fun stuff. But before we do that, why don't I have you introduce yourself so everyone knows who we're talking to here today. Yeah. Jack Kerr, Donaldson Capital mortgage broker. I actually just completed my broker's license, so I'll be switching my my actual license to broker.

Nice exciting. It's been in the business for three years, recently made the transition to Donaldson Capital and we have a focus on high net worth individuals and then of course. A lot of my clientele are in the first time buyers, investors, first time in and matured investors and then we dabble in the again the high net worth clients not dabble, that's our main focus, right. I love that. But man, I mean that that segues me perfectly into like, what the heck is going on with mortgages and interest rates, man? You and me both, holy cow.

It's a daily, daily change as as you've I'm sure see all the time There's so much, so much news around it and. Conversations kind of our focus on interest rates right now in the market and what what's happening. Yeah. And yeah, over the last couple years, we've seen rates come to historic highs and they've stayed there for, for the for a bit and it's, it's very interesting. Yeah, it's wild. I mean so you mentioned like at Donaldson Capital, which seems to be a really, a really solid spot.

I mean, I've looked into you guys quite a bit. We're probably going to use you on a project like I mentioned, we've been going back and forth with that. You guys do have some unique products and some unique experience especially with that market and we'll talk about that a bit. But you mentioned you focus a lot on high net worth clients. So let's talk for a second, like broadly we're talking rates, mortgages. Do you see that high net worth segment of the market being affected as much more or less than like the general public is feeling rates right now?

They're they're not as as affected as higher interest rates yield of course little bit lesser purchase prices there's also more opportunities. So with the capital that they have, they're able to make moves in this type of market. Where others aren't. And again those interest rates they realize that are temporary where the first time buyer for example, that only has that, that certain qualification that they can purchase at, it's much harder for them where high net worth someone that's sitting on a lot of capital, a lot of investments is able to move their money and allocate it accordingly, right. Yeah. I mean if you're down to your last 10 grand, you lose half, you're at 5, you're in a painful spot.

But if you're at your 50 million and you're down 25, you still got 25. So it helps. I mean the only thing I think of that I always would wonder like with the high net worth is like they also there are involved in a lot more stuff like if they have that high end cottage, they have that nice home, maybe they have that vacation place in Florida. Like I was always wondering, do they maybe still feel it pretty badly if they're affected across the board or they are they still pretty insulated? Yeah. So someone that has a larger portfolio or if they're in variable rates, they've definitely felt that heat over the last couple years of rates rising.

So, yeah, they're not definitely not immune to it, at it by any means. They just have the means to be able to afford it or at least weather the storm a little bit better. Or someone that had a variable rate in 2020 or 2021 and now they're sitting at double or three times what they were then. They're a lot more affected if they have limited ways to afford that home or multiple properties if it's an investor that makes sense. So for for the general public, like let's let's again, I want to stay broad a little bit first, then we'll go deep. But if we can talk about just mortgages right now, general public, your home, your primary residence, what are we looking at right now roughly?

I know it depends on the lender and the bank, but what are we looking at right now in the range of rates for your average, you know, excellent credit score? I'm buying a house or I'm doing a refi like. What's that scenario looking like right now in terms of rates? Yeah, so if you're purchasing a home underneath 1,000,000 bucks, you can get an insured mortgage at roughly like 5.84%. It's not terrible. And then if you're refinancing your primary residence into a new 30 year M5 year fix, you're roughly 6.4 like 3 percent, 6.4% in and around Interesting, why is the refi higher?

'Cause you're a 30 year am, so it's uninsured, right? Right. It's a conventional mortgage, so there's no CMHC or or Genworth or Canada Guarantee Insurance backing it. Gotcha. So the lenders take more risks. So in turn, they of course charge a higher premium on that rate.

Gotcha. Now are we still seeing like the math is is weird 'cause I'm seeing people buy houses still? Like our neighbor across the street just just moved in. They bought 2-3 months ago almost 1.9 million, and I'm trying to do the numbers in my head. What kind of income you need to get approved at 30% down, let's say on 1.9 million? The numbers seem kind of crazy, like the income you need.

Like is there ways around this? Is there some sort of strategy people are using to get into this, or is everyone like a lot more rich than I expected? Yeah, that's a great question. I it's it's tough you're right like the income that you need and A and a dual income scenario like 250K annually to afford something like that. I mean I don't see a lot of people. I mean we sorry we do see a lot of people making that money, but the average income in Canada isn't that high that's a thing like I always wonder how they're they're they're doing these $2,000,000 deals with the interest rates we're at when they don't look, I mean obviously if you're if they're like business owners and they're super well off and if that's different but I'm talking about like I'm seeing regular people with regular jobs buying these crazy like I mean is it do you see a lot of people rolling equity, is that where we're at like they sold their place and they're kind of rolling a lot of that into the new place to kind of ease the burden a little bit of the financing.

Yeah, they are. But a lot of people kind of cap their equity on like in previous low interest rate times they refinance. So there isn't, there is some people that are even selling and they're not getting a lot of equity out of their home because maybe their mortgage was maxed out at 80% loan to value. There's different scenarios there. But if someone did have a very low equity position mortgage on a house and they're selling and now they can go into a bigger home and put a large down payment down. If they're underneath that 65% loan to value on a property, there's a lot, There's quite a few lenders that we can utilize that will extend ratios for clients.

Also alternative lenders, some sometimes known as B lenders, have different programs, especially with self-employed. We can use business income to help qualify them. Versus what they're showing on their T1 generals or if they're T4, so that can bring a higher yield of an income to be able to qualify them, right. Interesting, there's different ways to structure. We're also seeing multi generational purchases right where people are having additional cosigners coming right their parents. Or some income.

Maybe there's an income suite in the basement. Helps out with qualifying, right? Yeah. And that's what I always think of that, too. Like when people say like the people that say the market's going to come down, I'm like people will just put more families in a house before we start seeing those. Like like before demand disappears in the market, you'll just see more people under one roof that that's what's going to happen and it's going to drive the prices up I think even more we're.

Already seeing that a lot 100%. I I I just see it walking around like just looking on our street you see it. So it's definitely, definitely happening now for the average family. Like a big hot ticket issue right now is like I'm in a house, I'm on a variable rate. I've been on a variable rate and my now I've heard different things from different people to paying their lender. But I'm hearing these different stories of what's happening.

Some people are saying my mortgage is going up. It's going up every month or it's going up or whatever. Some are up for renewal. Oh my God, it jumped. Some of them are saying no, it hasn't gone up, but just my amortization. Can you, if you can but like speak to that because I actually went over myself like clarity and like what?

What is exactly going on there with people's mortgages that are supposed to be climbing? Why are some are climbing? Why are some not? What are what are the options banks are giving these clients right now? Like why is it different across the board? Interested in hearing about that because I'm trying to figure it out myself.

Yeah. Like specifically on a variable rate, you mean? Yeah, where? Where variable rate has gone up exactly, but their payment hasn't necessarily gone up exactly. Yeah. So there is certain lenders in in the space at the bank and as well in the broker channel that work on kind of a stat, it's called a static variable.

And what happens there is your payment stays the same but the interest and principal. Changes. So as rates go up, the amount of principal you're paying every month goes down and the amount of interest goes up. Now at a certain point, when interest rates get to a, it's called their trigger rate. That's when you do have the an option and they they send you usually a letter or call you and tell you that you have to increase your payments in order to pay some principal, because as of this point you're just paying interest only, right? And then that's where you get into these extended amortizations, which you've seen in the news where it's showing 40 or 50 years amortized on mortgages, which really isn't not allowed on residential mortgages through offseas.

So there's something, there's some stuff that they're doing in the back end to try and figure out how to do that. But that's that's where they ran into trouble is on these static variable rate mortgages where your payment doesn't change as variable rates go up, right. That makes sense because that's what I've been hearing from a lot of people was that was that they're on variable and for some reason their payment didn't go up for a while, but now it is. So they basically hit that Max amortization. It's all interest, which kind of sucks because you're basically paying rent, you're renting money. That's what you're doing.

I mean, you own the home at the end of the day. So if you needed to sell it, you're still going to get some equity out of it. But hopefully, but you're not paying any principal. Yeah. Yeah, you're right. Hopefully and we're getting a lot of.

So you know I'm in the business like yes, I'm a real estate agent, but also I'm in the investment side and our family has a house flipping business where we do a good volume of these deals and a lot of our deals lately have been coming from people that that's happening to. So they've hit that cap of amortization, the payments now climbing, but it's significant enough that they can't get out of it. They're just like I can't make this payment. The problem is, the biggest issue we're seeing is we have those people come to us now and we try to figure out, great, what do you need for your house to get out of it? They need more than the house is worth.

And when you talk to them as why, why do you want that number, It's because that's what they owe. Maybe they've remortgaged, maybe whatever the case is, they bought at the wrong time. They've burnt their equity, whatever it is exactly. And and they can't get out of that. Like, is that a problem You see a lot? And how do you kind of advise people to stay out of that?

Like, how do you avoid doing that as a homeowner of getting that position where now you're totally screwed, you owe more than the house is worth, and you're stuck? How do you avoid that? I mean, that's a really tough question. I mean, if you're in a situation where you have to tap into that equity for whatever you said, any of those reasons, I mean, a lot of people will do what they have to do to keep their house, right? I mean, of course, we advise not to do certain things, maybe not to get into risky second mortgage situations or third mortgage situations. Those can be very risky and high rates.

So again, we just try and mitigate that, but there's a lot of people will just do what they need to do in order to save that house. So if they're seeing a decrease in cash flow because of whatever reason and they need to add a second mortgage to be able to pay off debt or just give them some cash flow to be able to pay the first mortgage, that's really that's probably the worst thing you can do. But people do do it. Getting a mortgage to pay the mortgage, that hurts. Yeah. So do you see, Because I like, I'm going to be judgy now.

Do you see more people doing it for smart reasons coming in and saying no, I actually do have something to pay or I need the money or do you see discretionary like no reason I just like and this is more like when we were top of the market, I was imagining in my head people are just going well, I kind of wanted a new car and a new pool and a new thing, a new vacation. Like, do you see a lot of that or is it more like legit reasons like I actually need the money for? I see a lot of legit reasons. If it's someone that's just wishing to purchase new things, especially in this market, that we would not suggest doing that. I mean like you said it, when rates were low and people were taking money out of their house really to to kind of fund a lifestyle, that happened more or they were just taking equity out because rates were so low.

So they could and it didn't affect their payment that much. So then they're sitting on cash or they're buying toys and whatever like the things you said. But yeah, these days we're seeing a lot of people that if they are doing refinances or second mortgages to help with cash flow for whatever reason, there is some type of plan there. Right. To either pay out that mortgage, either with a sale or maybe some other investments that are coming in, whatever the case may be. It's like a it's like kind of a lifeline.

It is that they're trying to buy time usually get nice. That makes sense. It is actually interesting because I like, I'm genuinely wondering this stuff because I'm seeing all these different scenarios play out. I'm kind of wondering why are people doing what they're doing or how is it playing out. But it does seem like, and because that you kind of answered my next question because that's what I was going to ask, was like it seems like a very bad idea to get a second mortgage to pay the first mortgage if you don't have a plan. Because then if you get that second one, it still can't make that payment.

Like what are your options then? Like is there a third mortgage to pay the second mortgage? Like how do they get out of that? Yeah, I I mean, again, I don't work on a lot of those files. Those are pretty risky stuff. And again, it's tough to find lenders that would do that scenario because it maybe you're already behind on your first mortgage or they can see that you're really strapped for cash.

But most of the time when someone's doing a strategy like that, it would be a very clear exit. Maybe they're listing their house in the next three months to six months. So they need a little bit of cash to be able to pay, pay some of their monthly, monthly bills and then also take out some equity to maybe update the house, do some fixing around to be able to get top dollar. Yeah, that would kind of be the only scenario that I would suggest doing that if you are already strapped for cash to begin with. Makes sense? If you were going to maybe sell that house, yeah.

You have a plan? Yeah, I like that. Or or some investors, if they have another equity like position in another home, they're going to list that that investment property, right? You know you have money coming. Yeah, you have money coming in. I like that.

Yeah, let's cover. There's a few things I want to cover because I feel a lot of people have misconceptions on this too. But when it comes to getting a mortgage, yeah, it's not just a bank. A lot of people think it's just, I go to the bank for mortgage there. There's a lot of options out there. I think that's one of the value propositions of why you work with a broker and why I'd like to work with a broker.

Typically a lot of people ask me why, like why have a broker can pay their fees. But I don't think they understand that there's there's a benefit to not just going to your bank like if you're at CIBC and saying, hey, I need a mortgage, what can you give me? There's actually that after shopping around because there are options and we've thrown around terms ready like A lenders, B lenders. Can you kind of talk about that landscape a little bit, like what kind of lenders are out there? How do we tier them? What do we need to know about that?

Yeah, I think the one thing I want to touch on there is the fact that working with a mortgage broker, good broker should suggest that you always talk to your bank first or at least at some point. Because your Bank, of course, they have your, your full portfolio, they they know you as a borrower and they're going to offer you a specific rate. That then that's what you want to shop, shop around on. So then you come to me as a as a broker and you say, hey listen, my bank's offered me 6.2% on a on a new purchase and I say OK, let's see what we can do. So then we come up with a solution where we can offer 6%. So then you know that your your bank's offering this and we're offering that and you're getting the best solution out of that.

So that puts of course you at ease knowing that you're getting the best option because typically you think your bank would give you the best rate. But that's not always the case, and typically it's not. Yeah. And then you wanted to know what kind of the differences between your, your tiers. So of course you have your, your prime lenders, your large banking institution, those are known as your your A banks. You have your monoline lenders that are built in there as well, which are your banks that just deal in mortgages and they're usually accessed through the broker channel only some of those lenders would be M Cap, which is one of the largest, largest mortgage companies in Canada.

First National is well known and then? And then you have your, your B lenders or alternative lenders, we like to call them Equitable Bank, Home Trust. Those lenders of course they have extra appetite for extended ratios over and above that typical like 44%. And then you have your private lenders which is like AC category. But again some people use that private lenders as a tool to enter properties. Again, if you're an investor, private lenders can be a very lucrative asset to your, to your, yeah, portfolio.

And that that's channel that we've used a lot too. For sure. It's private lenders. I'm curious, like from the broker side, so pretty much we have 3 tiers. We have our our A lenders, it's our banks and like you mentioned, like the first nationals of the world as well. You have your B lenders and you have your private.

When you guys are setting up like these relationships with private lenders, is that typically an actual individual that you've built a relationship with or is there some way that's done it like an enterprise scale and there's this pool of private lenders you pull from? I think a bit of both. As a good broker, you should always be building relationships with like again high net worth individuals that want to lend their money on on mortgages. So those are found through your own center of center of influence if you want to call it. And then just as you expand your business, you find these people that want to lend in mortgages. And then there of course is a wide range of private lenders that are registered.

They have their mortgage administration license. They are mortgage investment corporations. And we go to them as brokers and bring them deals. We usually they have typical appetites that they want to see with deals. So we know which ones to go to for specific properties, right. I know we're working on or we're going to work on a construction file.

So that's only only specific lenders have appetites for those. So you're not going to just shop that around to every, every lender, you want to know which ones you can go to, right? No, that makes sense. And so when you're doing private lenders like you mentioned on the more like institutional side, those companies are those, this might be too deep, but are those companies cuz they're obviously raising capital themselves, so they're going individuals pooling capital, Are they typically like private equity styled companies? Is that how they're doing that and then you guys just borrowing from them? Yeah, typically interesting.

And so like me though, as an individual, if I said, hey Jack, I have 1,000,000 bucks I wanna put out on mortgages, You could also broker directly with me. You could get my money working on a deal. That's correct. And I can kind of set the criteria of what I'm looking for and tell you what I'd be willing to do or not do. And it's just to me, I don't have to have any sort of special license or business to do that. It goes through.

You. Yeah, that's correct. That's as long as you're considered a designated investor. So you just have to have a certain asset worth. Or or income. And then you can you can lend your own money.

Do you know roughly what that is? Yeah. Your income has to be above 250 KA year annually. 200 to 250 KA year annually, yeah, or 2 + 2 million in assets. Liquid assets, Got it. And is that the same if you're what?

If you're a corporation? Like I own a business, I have some extra cash I want to invest from there. Can it be done from there too? Yes. Oh, that's cool. And same criteria on the business or it's based on the individual?

Yeah. No, it's similar. Yeah, that's interesting business. That's very cool. See because that's not an option that I thought about a lot because we've been at low rates for so long. But now that we're where we are, I think that's a viable option for a lot of people like that are higher net worth and they want a safe investment.

Connecting with brokers like you guys and saying, hey I want to put my money to work makes a lot of sense now because you're probably getting what like 10% plus fees that like around. Yeah, rates, rates are always negotiable and it dictates on the risk of the the deal, right and your appetite. But yeah, definitely first mortgage is usually 10:10 to 12:00 and then second mortgage is anywhere from 12 to 14%. And how how long, like what's the appetite for the typical private eventually how long do they want their money out for like they're they're obviously not doing 30 year. Mortgages, so usually there's no amortization. It's interest only.

So then your terms are usually two, sorry, one to three years Max. On the private side, I mean, some people even do six months. And then there's lenders that we work with that have open terms. So there's no prepayment at all. You can basically pay that mortgage out at any time, which is beneficial. That's cool.

Yep. That's neat. Yeah. So really the private lending is a tool. Like from from the person getting its standpoint, it's a tool that's really just a bridge. It's I'm going to get, like we said before, I'm going to get something eventually, but I need this in the interim.

So whether it's like construction or it's an investment property or it's whatever, that makes a lot of sense. You're getting it 12 months and then once you get whatever you need to get, maybe you're doing your renovation, you're doing a build, you'd go back to AB or an A lender and refi out, right? That's correct. Very cool. So tell me about Donaldson Capital. I want to hear kind of you recently joined the team.

You're working with them now? What? What's different? What's special about him? Tell me about. Him.

So yeah, Drew Donaldson is the principal broker and he's been in the business now close to 20 years and he's created such a unique niche and being able to help so many people in the category of, again, high net worth people looking to either purchase their second homes in Muskoka. So we focus on the Toronto and Muskoka area and then there also is a factor there of your construction financing. So he specializes in construction financing. And again, we're boutique brokerage. It's just three brokers and nice. Yeah, it's very exciting, very exciting.

That's very cool. So with with everything that's been going on, like are you guys still seeing a lot of movement of them? Like how's Muskoka doing through all this? Like, are they just thriving still? It's interesting doing a lot of deals up there still and there's stuff moving it's. It's an interesting market, and that's for sure.

Yeah. Because I was going to ask you because I talked to a planner, I think through one of your referrals, I ended up talking to a planner. And he's like, we're super busy right now. We're doing X number of deals, just make proposals. We're swamped. And I'm like, why are you guys swamped?

Because in my head, I'm thinking everything's slowing down. He's like, no, no, no. Everybody's building stuff right now. That blew my mind because I'm expecting the opposite. I'm expecting them to be slowing down, but they're doing a lot of construction, which means you guys should probably be also pretty busy in the construction financing side right now. Yeah, that's correct, right.

So that's probably keeping me pretty. Busy it is. That's interesting. And and they're usually already have a primary residence, probably Toronto, the clients that you work with, yeah, the other and this is their secondary. Yeah, that's correct. Yeah.

Yeah, Drew's again he started in the in the Toronto market. So his clients have all of course grown up now were bought purchasing properties up in Muskoka. We do have an office in port car link. So we have a lot of Realtors up there. Trust us with their clients. And then of course, builders, we have a lot of builder relationships.

So then when they have clients that are needing construction financing, as you can imagine, there's some people that don't necessarily need construction financing. They pull equity or something from their investments. There's different ways that they can do that. But yeah, interesting. Is there anything you guys do that's like super cool or different from like another broker? Like if I had to say, here's something really different about you guys.

I mean, you specialize obviously in the areas you mentioned, but I'm sure there's other brokers to do construction, other brokers that do Muskoka. Anything unique about what you guys are bringing or offering? And just our customized mortgage solution strategy, just how we look at portfolios as a whole, just kind of structuring deals the best that we can for that client. There's there's just something to be said about someone just coming to you for a construction deal and not looking at the rest of their portfolio to see if there's other other ways to access that money without maybe doing a high high interest construction deal. There's just there's a lot to be said about that customize mortgage solutions and and how we we look at our clients and underwrite our deals.

Yeah because that's the hardest. Anytime you're working with a lender like I'll say from the client perspective especially when it comes to doing things that are not conventional like you're not just buying a your house and and financing it, it it you have to get the right broker. You have to get the right person because like it's a lot of effort explaining like certain people just don't get it. They've not been in those shoes. They don't understand the scenario. They don't really know what you're trying to convey.

And I think having specialized expertise goes a long way and having a process that can account for all the variables goes a long way because not every broker is created equally and not every lender is created equally. And so I think that that's huge. Like if that like that's why when I thought like this project we're doing embrace project, we're building that custom house. I thought of you right away because I know you guys specialize in that and it's a different conversation than if I go to end of course a lot of brokers will say, yeah yeah we can do construction financing but they do like one a year and it's not what they do like and they think they understand, but they don't.

They're trying to explain certain scenarios or certain times or needs and they it just doesn't make sense. So when you go to someone that's specialized, it goes a long way. And I think that makes, I mean that that right there makes it worth it like trying to find something that does what you do. Yeah. And honing our craft to like market changes all the time. Different percent lenders change their.

Their appetite all the time. So just knowing that having the relationships, having the conversations, if you're doing construction deals once a year, that lender that you went to last time might not have an appetite for construction anymore. So construction's always being done at your firm and with your broker, those conversations are always being had, right, right. So with those relationships are strong. We know which lenders we can take those deals to and and get get you the funds quickly. Yeah, there was something else that I thought of, but it.

Kind of passed my mind. Escaped your mind. Yeah, it escaped. Fair enough. My next kind of point I want to go on there too is like right now like if you're giving sort of some guidance, like let's say there's some, could you focus on high net worth? I mean, obviously you probably can service anybody.

I'm sure you guys do a. Lot I service all clients Again, I've had people reach out and they're like oh, do you only deal with high net worth clients? Like I don't figure I don't feel like I'm in that bracket and it's like well no, absolutely not. I've like again, I'm from Barry. I have a a very unique. Situation where I have a large center center of influence.

So I have a lot of clients that I work with and a lot of friends that I work with and whoever needs a mortgage and needs guidance I'm there for. I think that's the biggest thing. But with it, like you said, those niches that especially Drew's been able to dial in on the high net worth, the construction and second home purchases, it just allows us to be the the. Focus the focus and the ones to go to for those needs. Yeah, I love that. So if we go, if we go general for a second and then I want to I want to go into your target market but I want to get some advice.

So on the on the general public side I am buying my first house which is which is happening. A there's there's debate on should I be because a lot of people are like maybe I'm going to wait maybe I'm not going to wait. But none the less I've decided to pull the trigger. I'm I'm trying to get into a place in the next three to six months. What should I be thinking about? What steps should I be taking as an individual right now to make sure that I'm going to be able to secure that financing?

I'm going to be in a good position. I'm going to get all my ducks in a row. What's my first step after I talk to my wife? Like, yeah, we're going to do it. We're going to buy a house. What am I doing next?

Who should I be calling? What are we working through you? Got to get the right team. So there's a couple of things to be said. They're definitely the right mortgage broker and then secondly, the right real estate agent. I think working with a realtor is ideal.

I mean going directly to a listing agent isn't always the best option because they of course have the sellers that they're working on behalf of at mind and then of course yourself. So you can do that. You can go to the listing agent of a home that you like or you can have work with a trusted realtor that is going to work on your behalf. I think the one thing to be said right now especially is there is some deals to be had. I think actually there is. Yeah, I think there's actually more than.

We we can actually see a lot of stuff is on MLSI know you do a lot of off market stuff I do on your your family business but there's a lot of properties on MLS and there's a lot of deals to be had. So I think there it is a good time to be looking for a house or at least to get prepared. So of course when you're working with a mortgage broker, knowing what you're pre approved for, knowing what your kind of your Max is, what your budget would be. And going off of that and then working with a trusted realtor, I think you can definitely find a really good deal on a home right now. Is there anything I should be considering as an individual? Like if I'm individual that I want to line up with my finances ahead of time that I should be aware of?

Like, for example, like, does it matter if I just got a new job last month? Maybe I just went off of my own and started a business? Like, is there anything that I should make sure I understand before I pursue that that maybe would blacklist me like, hey, don't don't get a mortgage right now if this, like, is there anything I should be worrying about? Always kind of kind of bring those conversations up. Again, every scenario is different, but you kind of brought up a couple. So if you're switching jobs, for example, if you go into a new position and you previously were at an or at another position in the same industry, usually that's OK we can use that income.

They'll sometimes look at what you what you made in the last two years as a two year history. If you're just out of school for example, and you just landed this new job, they'll look at what you're guaranteed salary is. Usually they want to see like your last two pay stubs. If there is a probation period, we can mitigate that as well, but they'd want to know if there's a probation periods, usually three months, six months. If it's government, sometimes there's a 12 month probation period, but there is lenders that we can work with with that. We just need to know all those details upfront.

So sometimes your mortgage broker, especially on our side, we ask for documents upfront, usually two pay stubs. If we can get a job letter from your employer, just to see what they'll write on there. If there's a probation, what your salary is? And then again those pay stubs to kind of match it, If you're going into self-employment and you previously, let's say you were worked for an electrician company and now you're going to open up your own business. Yeah, usually we need six months to 12 months of bank statements and that they do like to see two years of history for business owners. And then there's ways that we can gross that up on both the insured side and the uninsured side, but right.

But yeah, that's again, quite a lengthy conversation, 100% side, yeah. But there is again, every scenario can be worked with. I think that's the biggest thing. To kind of know that when you're a first time buyer or a new buyer, whatever the case may be that you just have to disclose all the information, talk with your team and your mortgage broker and find out if it's something that you can move forward with. I see, yeah. So it's a pretty broad conversation.

It depends on the needs obviously, for sure. But I think that does give a general idea. I mean, you want the best case scenario, you want as much income stability as you can, yes. But worst case scenario, what you're saying is it's always worth the conversation. There's always something we can do. It's just you need to know what you're working with.

And if there isn't, at least you have the conversation now. So you know, OK, I need six, I need six months of income or I need another 12 months. So then in that time you can focus on making sure that you continue paying your debts, obligations, your credit cards, your cars. If you can pay anything off, that's going to help your affordability, right, your debt ratios. And then you of course can build your down payment, right. That makes sense.

Yeah, that makes sense because I mean there probably always is a strategy if you're willing to pay for it. But I'm, I'm assuming like even if someone's in a tricky spot already, but they do need a house, like not in a negative way, but maybe like we said, they just started a business but like just now they're not going to have that two year history. But I'm sure there's always options like private lenders or B lenders that they can use to bridge and then always come back and kind of, yeah, fix. That with the B lenders in private, usually you need 20% to 30% down depending on the property. So I mean for a first time buyer that's usually out of the question.

Most first time buyers are looking to put 5 to 15% down depending on what the purchase price is. Yeah. So if you're looking at that, to come up with another 5 to 15% down payment is quite difficult to do unless you have maybe some family that can help out, yeah. So I know most of the time when we're working with first time buyers for example, and they need need a little bit more time to be able to build their employment history or their down payment, then we just need to work with that. I mean, we typically don't like to position a private acquisition like acquiring that property privately because of course you're carrying costs are higher, you're closing costs, right.

There's usually fees associated with private mortgages. So that can really eat at what your down payment is if there, if there is of course above that 20%. Gotcha. Yeah, that. I remember when I bought my first house, I was self-employed, just kind of newer business owner and it was a bit of a scary process because it's not, it's not again it's not conventional. Did you work with your bank?

I worked with not my bank. I was referred to RBC, an agent, RBC specific person at RBC who dealt with self-employed people and small business owners. And it was the best decision because the first two people I talked to, one is at my bank and then another was a broker. This was probably like probably going back 3-4 years now they kind of had it was like no, no, this doesn't not going to work. The business is too new. It's not going to we we we need this.

We need that went to her at RBC, this agent that I worked with there and she was like, yeah, no problem give me this, give me that and give me all these options. I didn't even know were there. We did something called, I think it was called something like a stated income mortgage or she was basically able to take, like you said, the two years of business income at a gross level. Mix that with my personal kind of take home what I pull out of that and then find some average and multiply some weird black magic. She did and the only thing was she needed 30% down, which I did, but she needed 30% down that, which I feel like in any landing scenario, the more you have, the easier it gets.

The more you can put down, the more it seems like OK. Because there's less risk to exactly or lesser risk because they have more equity in the property you're buying their downside essentially that would have been there. So that makes sense. And and she orchestrated that and it was it was super cool. So I that's why I know it really does matter. Like in every scenario it matters who you're talking to because not everyone knows everything.

And especially I think if you're in that scenario of like hey I'm self-employed or just change jobs or I just start a new business, you have to talk to someone who's done that for a client before. Otherwise they might not know all the options that are available to them and they might be used to doing something in a very cookie cutter way. Yeah. And having the relationships with lenders, again like we have very strong relationships with our lenders on on all sides, right, all categories, which allows us to then run the scenarios by them. But again, when we bring them a deal, they trust that we're. Already adequating or like underwriting it on our side.

So we know what needs to happen. So when we bring them a deal, it's easier for them to say, OK, like we know your files are strong, these are usually good borrowers. What's the problem? Here's like what's your proposed solution And then we work together to make sure that we can get that client the best financing options right like even one of our trusted lenders TD some of the stuff that we can we can do with them again just because. We have such a great relationship, right. Yeah, that that does go a long way and I've I've learned that too.

It's like especially with brokerage, it's, it's who they know. Like I know a couple, a couple great brokers in the city and I know one of them that started, I won't mention names yet, but one started brokerage relatively recently in the last two or three years. And his play before he started his brokerage was basically he spent a year or two prior literally door knocking every like underwriter at every bank until he could find someone that was like, hey, this is what we're going to do. This is what I'm going to bring you. And he basically got not in his pocket in an in an illegal way, but just like in his pocket from a relationship understanding standpoint.

He got enough of those in place where they're like, sure, you get clients, you bring it to me, we'll get the deal done, that kind of thing. He got enough of those security and when he opened this office for the first time, they they blew up. They were super successful because they had a reputation of getting every deal done. And it was because he spent a year or two prior to even opening the office just on the relationships, which speaks to how important the lender relationship is. You can't just say I'm a broker now and just start shopping things around like the relationship matters more than anything. It's who you know and how much they trust you and your process is going to be huge.

So I think, yeah, going with an experienced broker is is, I mean invaluable if you're going to. Be in absolutely it is. And there's a lot of brokerages out there that have 100 agents and and they hire, they hire new people and again you it's great to start in the industry. I always tell people that the mortgage industry is one of the best businesses to get into. But if you're just there and just throwing deals, these lenders see a lot of deals from that brokerage and again if the relationship isn't there. It just kind of gets thrown underneath the paper.

And now this guy, was it like under the rug stuff, Like bad stuff that he was bringing to them? Like I don't be. Approved because again, there's so much of that right now too. I don't think so. I think it was all pretty. It was just in general he want.

I'm sure some of them were like, whatever. It was just about strong relationships. Yeah. He had some clients that maybe were stretching a little bit or maybe they had a lot like, like you know, that job changes, new businesses, that kind of stuff, stuff that was typically a little harder to kind of make a case for people that were maybe getting turned away by other brokerages because they were, they weren't conventional streamline. It's not like, yeah, here's my two years of income history of working with the city. Like they were more in the air a little bit, especially business owners.

I think he had a lot of success with that maybe weren't showing all their income or they take a lot of cash or these kinds of deals. He was able to make cases for these kinds of people and it and it it helped a lot. But I've learned in my real estate career whether it was buying my family home or the investment side that that that relationship with your lenders and your broker is is huge. Because it's we do live in a country either fortunately or unfortunately where leverage is a necessity. Like you can't really do real estate at scale or even buy your home like you're you're not conventionally when you see an average family home with three, four bedroom and even a suburb like Bradford still going for one point four 1.5 million, that's not something people would just take out of their pocket.

Normally we live in a country of leverage and so that leverage is basically gatekeep by the brokers and the lenders. And so if you don't have that relationship, you don't have that access and leverage, you really can't do real estate, right. It's so critical. So that's why even I want to have you on the show and I think it's so interesting is like really getting to know a good broker, having that relationship, doing deals and transactions with them, building a reputation with lenders that they start to know your name and all your business too. Because even though they know you guys, it's going to be even better once they know like if I'm an investor and I do a deal with you and we do three or four deals with the same lender, they start to know me too.

And it's the reputation of how I am as an individual, you know, customer. And your broker represents you just as much as you represent yourself 100 percent right? Like if so, you nailed the head on the counter. And I'm sure you guys are kind of picky too, because like you also don't want to bring client, like you don't want to bring me in and then I, I, I default like it probably looks bad on you guys too. Like you, you want to do your due diligence for just your own reputation. You want to bring good clients.

Right. And yeah, keep that relationship with the lender. I mean also the capital that they give out, if we're talking about private mortgages, they lend out $1,000,000 on a deal. Typically, I want to go back to them for future deals and usually short private is shorter term, one to three years. So at some point we want to go back to them and say, hey, we lent you 1,000,000 bucks, They paid out in a year and a half for two years. Now we want to come back and use that million bucks again like they want to continue rolling over the 100%, right, just as much as we want to keep using their capital.

So I think the, the number one golden rule in private mortgages, would you lend the money yourself, right. Like that's the thought that you always want to have. So if it's something that you wouldn't do yourself, then you shouldn't bring it to a broker or bring it to a lender, right? Yeah. Yeah, that that makes total sense. That makes total sense.

No, that's cool. And I mean it. It's just there. There's so much interesting stuff going on and the problem is it's such an in depth conversation too, like when you I'm sure we can go into any area for like an hour. But I I do want to ask you the one controversial question the the big money question, Where do we think rates are going? Oh, the big money question.

Trying to put it like man. Horseshoe or I, I have no idea. It's a tough question. I mean over the last couple years we've. All kind of ate the juice. Yeah, whatever you want to the kool-aid.

We drank the kool-aid. Yeah. Yeah. I'm kind of bad with sayings. My wife always laughs at me. I make up my own sayings.

I drank the juice. Yeah, you're not wrong. We did. We did drink the juice. So. Yeah, a lot of us did, right?

We were being told that rates were gonna stay low for a long time. So variable rates were one of the the most popular thing. Yeah, for the last two years or sorry, previous to last March, but. I think mid, mid to late 2024 we'll start seeing rates come down. We've seen the bond market continue to go up. It's at all time highs, 16 or 18 year highs.

So that affects fixed rates, our Bank of Canada of course effects our variable rate mortgages and I think 2024 maybe mid to late 2024 hopefully. We'll see rates come down. We may see another increase at the end of this month, then that's October. I'm thinking the same, yeah. I think a lot of people are bond market, usually prices in what's gonna happen. So the bond market's gone up by about half a point, maybe even more.

Yeah. In the last month. Yeah. So that's usually a good indication. Yeah. That rates are gonna maybe go up again.

I hope not. Yeah. Prime right now, 7.2. I did put an example of what a mortgage mortgage was in 2021. OK. So if you purchased a home in 2021 for 800,000, so I use an investment property, right?

So you're an investor, you buy your first investment property for 800,000, you put 20% down, you have a mortgage of 640, Your prime rate was 2.45% then and then you'd got a discount of 50 basis points as an investor. So usually on a on a residential primary owner occupied, you'd get.90% discount. On a rental, it was around 50 basis points, so.5. So your rate was 1.95, OK. That monthly payment was 2405 back in 2021. So and then we factor in your property taxes, 340 bucks a month, insurance, 180 bucks a month and then your month monthly rental income 4200.

So again, I'm from Barry. Typical duplex. Yeah, 4200 bucks is kind of Fair. Yeah, 222 up, two grand down. So that means your cash flow was 1280, right? Cash flow now rates are 7.2 prime, so you're you're then at 6.7, so your monthly payment is now 4190.

There goes all your cash flow. Yeah. So now with all of your expenses, with a 4200 a month rental income, you're -510 a month. Wow. And that was that was the flaw. We we, I used to be involved in a lot of that duplexes, triplexes, buy and holds and we got out of it.

Thankfully over the last two years I didn't know this was coming. But what I what I started to see was that fear of like, I mean what what you just described is actually like like the the earlier scenario where your cash flowing like almost 2 grand a month is a really good scenario because there's a lot of people out in like Hamilton in those areas like 2-3 years ago. They were overpaying and they were happy to cash flow 2300 bucks a month and I always looked at that like if anything changes in this market you're screwed. Like you're holding A7 figure asset to make $300.00 a month like and anything changes you go negative and you still have this asset, maybe prices come down.

It was just and they're trying to make a business out of that. Like there was this whole trend of people trying to become full time investors. On these $200 a month cash flow properties, yeah, it was literally getting thrown around. Everyone was doing. Everybody. And it was so dangerous and it was so risky.

And then this happened, that scenario you just described and those people that were cash flowing $200 only are now like -2 grand a month. And I just, I just talked to somebody today on the way here. He had six properties. He's now selling at least five of them because every single one of them is. He said he's losing $10,000 a month right now. That's crazy.

He's -10 grand a month. It went from a wonderful cash flowing real estate business to -10 KA month, right? Which does he have a good job to be able to like, afford that or is he like he's? A lot of pressure. I don't want to give away, like I don't give you too much. Don't know who he is, but he's self-employed so his income is up and down, so he has the ability to maybe make some more cash.

He does. And so he's basically biting the bullet, but he he's talking about selling. Anywhere from half of the portfolio now to to 90% of it to cover the offset maybe only keeping one or two. I was just going to say it's unfortunate for him to like bounce back from that cause A lot of investors like they're like, OK, well I'll deleverage right now and then I'll maybe hold some cash. Then when the market comes back, I'll start doing it again. And a lot of people are exiting single family or duplexes, total up to fourplexes because of the financing component.

Also just cash flow like, like you said, it used to be 200 to 400 bucks a month. They were like, happy about. Yeah. And then we got spoiled and everyone was like making 15102 grand a month in cash. So if you don't factor in your property taxes. Yeah.

And other expenses, you were making like 2 grand a month. Yeah. Yeah. So yeah, they were getting spoiled with that. And then, yeah, they get, they get burned. Yeah.

I know quite a few people that are deleveraging. And and again, you should, if you're in a situation where you have to like you're -10 grand or anywhere close to that. Yeah. Yeah, it's scary times. Imagine if you have a unforeseen expense. Furnace breaks.

Yeah, you're done. Flood. Yeah, whatever the case may be. Like if you're -500 bucks a month on that property and you're strapped on your primary residence, meaning you can't afford. Yeah. So that 500 bucks is, like really hurting you.

And then you have another 2000 or $3000 expense land on your table. Or someone doesn't pay rent for a couple months. Yeah. And you know, the land tenancy board. Like, yeah, good luck getting them out. Oh, it's impossible.

We had recently better triplex where someone hasn't paid in almost a year and before we get them out. Stop paying. We started the process and by the time we got him out, it was 12 months. And so it's a we're not in a country that's very friendly to landlords. It's very tenant focused, which sounds great and fair for you as a tenant, but it's actually not because it discourages investors, which means you if if no one's buying these properties to rent out, you as a renter have nowhere to live and it creates a problem. So it's not great And and rising rents, yeah, it affects our rent costs 100%.

That's not why we've seen sure we also see people not being able to qualify for homes. So that factors into the rise in rents, more renters and more people coming to Canada, we can have a conversation about that. But if you're not importing, not important. But if your immigration is bringing in over a. Million crates, Yeah, we're not importing people, yeah, but if if you're immigrating over a million people a year and you're not building enough houses, sure, that affects your rental. But but of course, if you're landlords can't get people out, they got to raise rents just to be able to bring in more cash.

Flow 100%, I mean that that's why I think that the solution to this housing crisis everyone's focused on the micro of like oh the rates or this or no, the solution to this, this, this, this real estate crisis we have, this affordability crisis is everything is both sides of the aisle coming together and realizing we need to work together. Investors, End users, tenants. They all have to sit together. Listen, we're in the same boat. If I'm renting, it's because either I don't want to put out a large chunk of capital to buy the house, I can't, or I can't. It's one of the two.

Fine. And. And if I'm an investor, I'm in this to make money. I'm not investing for charity. I'm not investing for fun. I'm investing the big money.

And we both have to understand each other. You need a place to live. It's convenient. I'm going to save you capital and I need to make some money. And in return, we both have to make sure we're comfortable doing that. The problem is we have this like disparity where the landlord and the owner, the investor is the enemy.

They're evil because they're they're they're making money on housing. And the renter is looked at as like this poor renter who we have to support and give everything they want. The problem with that is policies that that cater just to protecting the renter, although sound noble, do what we just said. They hurt the market for the investor. Less people buying, less people renting out creates a big if you don't have the money to buy a house and no one's renting them, where the hell do you live? Like that creates a serious problem.

So we have to be willing to say no, no, it's it's fine. We want investors. We want to please come make money, make money in housing, make money on rent. Because we need you to provide this, this solution. And if you encourage enough of that, it actually solves itself. Because the more investors we have buying property, the more competition, the natural competition there is that will help suppress rents.

The more rental units available, the less pressure on rental prices. Which ultimately is better for that renter, for that tenant. So those tenants need to be actually looking at investors like no, let's encourage it, let's work with investors, let's encourage investing, let's encourage building of more dedicated rental buildings and units. Let's give tax incentives to people doing multifamily. Let's help more of that happen because that will A, give us the housing we need and B, bring down the rental pricing. But that's not happening.

Everyone's fighting everybody. Everybody's the enemy. We don't want you to make money. So the renters hate the landlords, and the landlords in a lot of cases now are getting better towards the tenants. You're just living in my house. You're not paying rent.

You're not. That's not what we need. We need both sides to come together and say, OK, we do need each other. And the moment that can happen and then policy can reflect that cultural social change, I think we see real change 100%. But we're not there yet. No, I don't know.

It's going to take some definitely meddling in into both, both sides, right. We also need changes in that tenancy board like again, it's I think 6 months or even longer to get in and get a court case. And again that affects both sides, but it also again if we have more rentals, if we have a influx of good real estate investors building purpose built rentals, it allows us to weed out the ones that aren't are the bad ones, right, The ones that are bad tenant or landlords. Yeah, because there is, right, for sure. We all know that. And then there's bad tenants, yeah, which.

Exactly, yeah. Exactly on both sides it allowed to bet. Definitely be a better process. Yeah, no, 100%. 100% I mean, the only thing left on my mind here is when it comes to buying real estate. Right now, I kind of made AI, made a bit of a gamble.

It's funny because we trade real estate so often, whether it's for clients or it's our investment properties that I'm doing. I don't think twice about it, but when it comes to buying my own home for some reason, it's always a different feeling. I think it's because it doesn't make you any money. I just got to spend money to do it and I know it's not coming back anytime soon. But you know, I I did just pull the trigger. We we bought a precon deal.

I don't know if I told you this yet. I don't think so. We bought a precon in in Bradford. It's going to be done in about 12 months or so, probably probably going to be pushed, but whatever I might get pushed 12 months or so and everyone's kind of asking me, I get this question a lot of like why right now rates are so high, the mortgages so are going to be crazy, you're going to pay. I think I'm like if I put 30% down, the mortgage is like 6500 a month. Is that kind of where we're at?

And everyone's like, why would you, why would you do that? And this is a valid question. I want to address it because it's the question of timing. And I asked you before the big question of like where are rates going? And so to bring it back to that, I have an opinion on this and I'm curious on what yours is going to be or what you think of my opinion. But basically the reason why I'd say you should still buy now, I think if you want to make a move, a when you decide that you're going to buy a house, it's also a personal decision.

Do you need it? I need a place for my family or growing family. We need more space. I wanted a certain community. We want safety. I want security.

At some point I need to do it. So then I got to think about timing and we look at where we're at now. It's like, yes, rates are very high. The problem is it's very hard to catch a falling knife. You don't know exactly when it's going to go the other way. It could be 3 months from now, it could be 10 months from now, it could be three years from now.

So at some point you have to bite the bullet and say if I need to do this, I'm going to do it now. But you still want to be smart. And so the way that I thought of it is like we're at least in the worst case scenario, I think, and maybe tell me I'm wrong. I think we're somewhere close to the peak. I don't think we go from 7 to 14. Like I I don't think that's happening.

I don't think we can go much higher. Maybe we do. Maybe we go 7 1/2, maybe we go 8, maybe we go, maybe, maybe go nine. Oh my God, nine. Right. But I don't think it goes much beyond that.

And so I think even if you buy now at these high rates, which I think you should do because right now there's deals like you said, now people are negotiating. Now people are willing to take a hit and they're like you're getting way better deals now even from builders like we managed to to wrangle a deal from a builder in Bradford less than the starting price of comparable homes up in Georgina that haven't adjust. My next next question is what was the negotiation and what was your purchase price compared to like maybe it's high in 2022. Yeah, like you're getting, you're getting such a good deal on the House. So yeah, let's say rates do go down in six months.

Yeah. That same builder is probably going to increase the price of that home. Yeah, exactly. So you're locking that that home in now and if you're and if you're going to enjoy it yourself again, there's a lot of people that are getting into trouble with pre cons and trying to assign them yes or sell them before. I don't know if you I listed a podcast all the time and there's quite a few out there that talk about realtor specifically that talk about situations that they see especially in the Toronto GTA market where people are holding like a lot. I don't know if you there's one and I guess the guy bought like maybe 10.

Oh my God, Recon. And then he tried to tried to get mortgages on some of them he's already lost two. But he can't get mortgages, can't get financing because that's a problem too, is are you going to be able to get financing 12 months from now? So I know when you do work with a builder, they usually have a relationship with one of the banks which they lock in rates typically for the the duration of that build, either one to two years. Yeah. So it's always a good idea.

I always suggest my clients take those. Take those off those, yeah, cuz then once, 90 days or 120 days out from the closing date, that's when we start shopping around and seeing if I can beat that right, exactly and we probably will. Exactly. That's very cool, yeah. And you kind of hit the nail on the head with where I was going to go with that, which is like. Yeah you're I mean we we don't know where rates are going to go but we do know that right now prices are down.

Yes, we do know price or surprise that that's a certainty We're paying less now than we were 12 months ago. And so you might as well take the thing that's certain because like the way I've been saying it to clients too is I'm like, I'm like price is forever. What you paid will always be what you paid, right. Your purchase price won't change after you live in the house. No. Your interest rate will.

Interest rates are temporary. So that I think there's that saying that's floating around. It's not my invention, but I think it was something like. Like you, you're marrying the price, but you're dating your rates. That's how you marry the home, but you date the. Rate.

There you go. So marry the home date the rate. That's how I think of it is like listen at the end of the day we're getting a solid deal like this house we're buying a a friend of ours actually bought precon 2 minutes away, same area two years ago. We're paying the same date two years ago. And so it's it's cooled off significantly because if I did this six months ago, we were looking about $200,000 more. Yeah, that's crazy.

So if I save $200,000 but I eat a. Rate for like a year, big deal. We know we're somewhere at the peak, but the moment those rates do cool off, guess what's going to happen to pricing again? And you can't undo pricing. So if I wait for that beautiful low rate finally to buy a house, but now I'm paying three $400,000 more, you can't undo that. That's always part of the house.

And so I think that's why now is actually a beautiful time. It's a sweet spot. I think if you're trying to buy now, talk to your your brokers, your agents, your lenders. Get your stuff in order. And I think now is a really good time because it is as soon as everyone else catches on. OK, yeah, we're cooling off.

That's the last rate hike. Everyone's gonna rush again. At the same time, prices are gonna drive up again. And you missed the boat. Yeah. And you know better than anyone, Realtors do drive the market.

So when rates go up, when rates do go down, there's going to be an influx of people coming back to the market because they're going to, everyone's going to reach out to their database and saying rates are down, like now you need to buy. Yeah, which people are doing now, right? People are saying rates are high but prices are down. They're having the same conversation, but it's going to go the other way soon as rates come down. And I think we all know that, right? All of us see things and you can see history that when rates come down, prices come back up.

I mean I it is nice that we have seen a little bit of a correction. The market in Canada and specifically has just been nuts over the last three years. And so we did need to see, we needed it, we needed it. It was getting crazy and unaffordable for a lot of people. And then fortunately it is still unaffordable and all like like the only thing we can say is that we just need to try and work with it. If if home ownership is in your future goals, then we just need to figure out a plan to get you there.

I mean there's always ways to increase your income because because that's the number one factor income and down payment and of course your credit. But but yeah, like there is always things that you can do. And I think, I think more people will have to be willing to also share space. I think you have to hey, can I go in with my my my brother and his wife and we can split this house up, live there for two years, make some money and then we can go our separate ways. I think more families and that's what you see a lot more in Europe. You see families living together, parents, siblings, brothers, sisters, friends.

It's more common here. We're kind of stuck on the idea of this isolated home ownership my home for me. But when you get to the prices we're at that might not be reasonable, especially for a first time buyer. And if you can pool 4 incomes instead of two, it makes it a lot easier, right. And so I think that's something people have to have to look at to 1 where the. But either which way, I think the next three to six months is a really good time to get in.

And I think precon is more attractive now than ever because you're arbitraging that rate. You're locking in the purchase price. You're getting the thing today that's good, which is the purchase price. But you don't actually have to like absorb that rate and those payments for potentially 12 months, 24 months, three years like some of the condos we sell through here, my my brokerage, we do a lot of pre con, some of these condos are three to four years out, right. So you're locking in pricing today, but you're not actually going to pay mortgage for three to four years, right? And you're hoping in four years we've come back to something more normal, right?

Yeah. And hopefully prices have came up. I mean that's always the hopeful, hopeful goal, right in any pre con is that prices have came up and you're going to get a good buy and then you of course get a good rate at that time. Yeah, in hopes right A. 100%, So I think it's a great time for pre con whether you're buying your home or you're doing investment. But either which way, I think now is a really good spot because once we miss this window, who knows when the next time is like we might climb, we we might climb for another three years, five years, 10 years, we don't know what the next cycle looks like.

Yeah, we just know right now it's slow and man sellers are are flexible, let's put it that way. Yeah, it's definitely a time to negotiate like buyers market. Yeah, so many different terms. I don't know if you saw that one podcast, Daniel Foesch. He was not just a podcast, but he posted it. How VTBS.

I think you mentioned we were talking about that, weren't we? Or was it? VTBS are at the highest they've ever been. Oh yeah, sellers are offering VTBS. For investors? Yeah, 100% investors are, even if it's gonna be a primary, it's very it's tougher to like add that financing into a primary or owner occupied, but there is ways that you can do it for sure.

The other thing, again, something just slipped my mind, but but yeah, negotiation right now to get a good deal, it's definitely there. Yeah, it's a buyer's market. You have a lot of option and it's crazy like when you look at most listings now, like sold listings, especially our like Simco County, most of us selling under ASK yes. And so people have there's room, you have lots of conditions. You can get your closing terms that you want. You can do everything that you need to do now.

You can do what you couldn't do last year. You couldn't even barely get financing conditions last year, yeah, or more so like the the end of 2021 and beginning of 20. 22 That's what I meant, yeah. By the way, COVID wiped my brain. So I have a missing year. Me too.

Everything is. Everything was two years ago. I feel like last year. I feel 'cause sometimes people ask, how long you been a mortgage broker? I'm like, yeah, four or five years since, like 3 1/2 years, but. Yeah, it's a time warp.

It's a it's it's crazy busy. I mean, even for you guys during that time at the Nuts. I know you sold a business and stuff, but you've been heavily invested in in real estate, so. Yeah, yeah I sold the marketing biz in that time so that kept me busy and then I I kind of went all in on real estate now, which has been I think it's a it's a it's a bittersweet thing because like we said the market's kind of weird but at the same time it's great. I'm I'm learning a lot more we're getting more creative. I've my skills actually coming to play now because like before every agent could just like put up a listing it sells.

Now they need to actually market position brand how do we promote and most agents don't know how to do that. So, and it's given me such an edge to take like the marketing agency world and bring that into real estate. And now is the time that that was needed more than ever. So it couldn't have worked out better. Yeah, I agree. So, yeah, thank you for bringing that up.

But that was a fun. Yeah. Selling last year was a big thing. So I'm glad I did. I'm glad I'm in real estate now. I can work with great people like you and do more deals and do fun stuff like this podcast.

Cool, man. Well, thank you so much for taking the time to actually come out and do this. My pleasure. I think it was helpful. Is there anything else you wanna leave everyone with? On a last final note, I don't, I don't think so.

I mean, we touched on so many good topics. I think the biggest thing is if you have any questions, reach out to yourself or me. I mean there's we're always great, great spots to be able to seek advice and and kind of point you in the right direction. So I think that would be the biggest thing is just be open to having those conversations. Yeah. Hard or good, whatever they are.

If you're going through hard times, definitely reach out to A to a broker to figure out what kind of the best solution is. Yeah. And then, of course, we work with Realtors to figure out if there's a good option to sell. Yeah, just 100%. Yeah, I think that's the biggest thing. I think that's a great point to end on.

I mean, conversations have to be had and I think a lot of people are too afraid to take the first step. They have all these misconceptions in their mind. They're they're they're they're in an echo chamber, basically, and they're afraid to reach out until they think everything is perfect. But that's not what it's got to be. They got to reach out, Talk to your real estate agent, talk to your your mortgage broker. Start telling them what you're thinking.

Tell them where you're at. Because together we can come up with a plan. And no conversation is not worth having. I think every every broker agent is happy to just have the conversation see where we can help and help you figure out your your your plan, whether you're an investor. You're like, hey I have this portfolio, I'm trying to figure out how to make these payments work. Is it refinance option, should I sell half?

What should I do? Or you're trying to grow, or you're just the first time house buyer? Whatever it is, whatever situation you're in, you should be. As soon as you get that like thought of, I have to be buying or selling anything right now. Have the conversations. Absolutely talk to the right professionals.

Don't be afraid to reach out. Our advice is free, right? Exactly. I don't charge anyone for anything until I close mortgage and then again most of the time the payments coming from the bank. So advice is free. The other thing I you mentioned real estate investors.

For them it's even a great time to buy right now. So if you are real estate investors and you're sitting on the sideline, your thinking is now a good time. I get again negotiation right now is in your favor. It is a buyer's market. So if you can cash flow property right now at the peak of rates as we said, we're probably there. Then when rates do come back down, you'll be able to cash flow even more.

Or if your exit strategy is to sell that home in a couple years after maybe you do some updates to it, you're going to see an influx in that value potentially. Right, agreed. And there's as rates go down South. So many sellers that are liquidating portfolios now that need the money and will take discounts like heavy discounts. So it's a great time to buy. Yeah.

If you if you have the position and you have the liquidity to do it and the right brokers right to get you the money, then it's a it's a great time to do it. I I agree, man. Yeah. So I just leave it on that, I guess. Beautiful. I think that's great.

Where can people find you? Of course, on Instagram Action Jackson Dash 20, I think. Yeah, it's funny. I've had that handle. We'll drop it somewhere belowdonaldsoncapital.com and then jack@donaldsondonaldsoncapital.com is my e-mail address. Yeah, anytime.

I really enjoy coming on today. Awesome. Thanks for coming on, man. Had a great time. Yeah, you too. Talk to you next time.

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