Vancouver's Real Estate Market

[Hehe]

Originally Posted by westopher

What you want to do is buy something that makes you money, then after you make money, you sell it for more. All you need is a few million to start. It’s fucking simple. Hold on while I write a book about it.

True to a point. But this is not how we operate. You don’t actually sell. But rather, just leverage on it.

What I’m going to write next is how my family as a whole made our fortune. It might sound simple, but this is exactly how money works in our field.

Let’s continue to use our 50k a year example. The market now is demanding 5% cap, the valuation is 1m, we put 30% down and finance 70% of it. Remember that we got this in the downturn. Interest rate is around 4%, our cash flow leaves about 1% every year, it goes back to pay down the principal. Now fast forward 5years, for simplicity sake, we suppose we pay down about 20% of the 700k debt or 560k owing, market is booming after a few years of monetary easing because of the downturn a few years back. Interest rate drops to relative historical lows, say 2.5%. And because of the recovery of the market, the bank now only demands 3% cap. Just as the central bank is about to tighten their monetary policy, we re-finance it. Now, after 5years, the rent increases a modest 10% or 55k a year. The bank now values the property at 55k/3%=1.8m. We still need to keep it at 70% LTV, so we end up pulling out 1.8m-560k-560k still owing or roughly 0.6mil. This is roughly what we were able to make given the difference in cap rate that’s present in the market.

We wait until the market starts cracking again due to high interest rates, buy another 1m property that pays 5% cap. Put that 0.6m that we got as down payment, or if we could find, a 0.6m property, doesn’t matter. The point is, this property would generate a lot of positive cash flow. With all this positive cash flow, we pay down as much as possible on the debt that’s at the lowest possible rate because we took it out just before the tide was changing.

By the time we are done with the economy cycle, a great portion of the debt would have been paid since you have 2 properties to pay basically the financing of 1. With the cap rate requirement back low again, re finance both properties, rinse and repeat.

My parents and us (my brother and I) have been doing this for 3 decades. Thus, this is scalable and workable as it relies on the very nature that our economy is cyclical. Yes, the numbers are super simplified for simplicity sake. But this is the basic formula.

[BIC_BAWS]

Originally Posted by 68style

Well.. nevermind when your parents might be in the exact same industry and hook you up with all their experience and connections.

Goes back to accumulated advantages, those who had parents who held positions outside of office work / retail were exposed to career paths and options way beyond the average person. Or alternatively (and in this case), if the family business is successful and already has a replicable formula, you can continue to replicate and build upon it.

Hell I wish someone told me if I studied hard and was good at math, I could make $500K in investment banking.. but all the banking I knew about was at the retail level lol.

I feel like there are a lot of careers out there that we just don't know about and that simply just comes from exposure/network.

On another note, I heard of a story where there were indigenous teens that didn't even know tech was a career option and those who did know was cause a family member was in it. A great example of a lack of accumulated advantages.

[AstulzerRZD]

low key i think retail banking being a baseline new grad job is a vancouver problem more than a family one

had u grown up in Toronto, you probably would've done DECA growing up, your family friends would've at least been business analysts at a big bank, and you would've heard about IB if not PE

you might've even lived at the end of the Yonge line at Finch ... meaning you'd have subway access downtown

[BIC_BAWS]

Originally Posted by Gerbs

I just asked my friend who bought a $650K Condo before 30 solo. He's working 32 hours while studying for NP now. Life's a grind. He said there's a girl in ICU that works 7 days a week, night shift bonus and clears $250K.

Originally Posted by westopher

Dude first year nurses start at 37.67/hr. Anyone who’s telling you they are making 2.7x their salary via overtime is full of fuckin shit.
You aren’t even legally allowed to take that much overtime based on rules set by the health care authority. My wife has been a nurse for 15 years. If she took EVERY single possible OT shift available for a year she might make that at $20/hr more than a first year nurse.

Checked in with my friend for fact check lol, turns out 3-5 years in, miswording. FY closer to 140K. Point still stands, 170K on OT you should be making enough to save quite a bit with good financial literacy.

Came back with first 2 reddit results on Google:

"Also if you’re an RN/RPN you get an additional $2/hour working in hard to fill areas (ED/ICU/etc). A lot of the nurses I work with in the ED make $130k-170k."

"Yeah, you just gotta work a shitload of overtime. I work with a few RNs who cleared 200k picking up an absurd amount of OT."

[westopher]

There are a lot of premiums involved. Line premiums, night shift premiums, weekend premiums, but still, the idea of saying “you could just do this” then talking about 100 hour work weeks is pretty ridiculous. If you want to give up your entire life to work, go for it I guess, but I’d rather be dead than work my life away to be rich.
Or there’s the better option over and above both of those to just have a reasonable amount of money, and time to actually enjoy your life. Look at musk. Guy has 500 billion dollars and he’s a fucking LOSER. If I were that guy I’d have put a bullet in my brain on a livestream a decade ago so people would at least remember me for doing one thing that people enjoyed.

[Hehe]

Originally Posted by Eff-1

If anything, the last few pages have only reinforced something I always thought.

My parents with seven figure incomes taught me to be rich and I did it all myself.

It's impossible for anyone born with rich parents to position themselves as someone who "worked hard to acheive their own success".

You can keep trying, but it'll never happen.

It really depends on what your goal is.

What I’m sharing is just a method that has worked great for me, my families, my clients and my friends.

Not all of us went on like my parents to continue doing this for 30+ years while taking on 8 figure worth of debt. A good buddy of mine for example, got a liquor store (with property) in his home town in the US for 350k. He knew it was a good deal because the store was probably worth almost that much and it came with a liquor license which by itself, if he were to get one new from the municipality was 120k by itself and God knows how it takes to actually get one.

He got it, paid it off as fast as he could. Cashed out by re-fi when the time came and moved to Costa Rica to run a small airbnb.

Is he balling out of control? No. But it provided him the lifestyle he wanted instead of working in the office 9-5. Up to the last time we spoke, the liquor store was still paying decent money. Nothing incredible, but enough to keep him living La Vida loca in Costa Rica.

He could have kept going and make more, but he didn’t need to and nor does he want to.

I basically got out of it as well. I did mainly to work on other endeavors, but the last 5 yrs or so, I was mainly making money off my clients rather than continuing working on my own portfolio.

[GS8]

Originally Posted by Eff-1

If anything, the last few pages have only reinforced something I always thought.

My parents with seven figure incomes taught me to be rich and I did it all myself.

It's impossible for anyone born with rich parents to position themselves as someone who "worked hard to achieve their own success".

You can keep trying, but it'll never happen.

You described a lot of 'famous' youtubers

(I can't stand Tyler Hoover)

[Hehe]

Originally Posted by Badhobz

I don’t know people bother.

If you already have millions why go through the aggravation of dealing with these scum tenants. Just go enjoy your money you greedy fuck. You don’t need anymore.

I hated being a landlord. Yaletown condo was always causing me headaches. Dealing with these retarded tenants and their problems.

Originally Posted by bcrdukes

I think there is a fallacy where people believe that becoming a landlord, be it residential or commercial, will absolutely generate passive income, and this is where people get it wrong. You need to put work into it and treat it like a business or a career/job.

A lot of people dish out how successful they are but they don't necessarily share the aches, challenges, and pains of making it all work.

You guys are exactly right. Being a landlord is hard... but really only on the residential side of thing. But that's not always the case.

The whole reason my family went all-in into CRE was because of the simplicity. All you need are 2 people, a very very good RE lawyer and a good accountant.

They cost a lot of money, but the peace of mind that they bring is incredible.

When my lawyer draft a commercial lease agreement, she doesn't just layout the general stuff, but every single imaginable scenario all the way down to if a plane hit the property (I shit you not, because we are in the path of a regional airport runway).

My oldest tenant that is still with us has been renting our unit for 15yrs. We have sent each other (not including followup replies) 9 emails during this time frame. I could count the time he texted me regarding business matter (emergency that couldn't wait for email) with a single hand.

The most time we actually spent is every time that I'm in town, I'd buy him a dinner/coffee/beer and just chat about general stuff like how's family and business doing... the regular small talk.

The other part that's hard for landlord is that if you take it as a career/job, you need to be constantly scouting for opportunities. Maybe you are't buying/selling. But you need to be always up to date with what goes on in the area.

But that's also not 100% the case.

It's also a fallacy that you need to work hard. No... you need to work smart.

My clients pays me 0.5-5% on their transaction for me to consult on their cases (find them the property, negotiate the terms, structure the entity... etc) AND many of them pays me another 5-15% of their rent income just so that I take care of everything stuff for them.

Just like Hobz said... no one likes being a landlord, but it doesn't mean you always have to do everything by yourself. I don't either.

Whenever I'm about to buy a property in a city, the first thing I do is to find the best RE lawyer, the best accountant (if it's in a state I don't already operate), the best plummer, the best electrician... etc. Actually, that's not true. I find the best that can also accommodate me. So, everything is within a call away for me. If some shit happens at 11PM at night, I can have it dealt before the clock turns 12.

In short, these are valid points. But just find the right people and it can save a lot of problem. A lot of time we gotta stop thinking like Asian. "he's charging me how much for that shit?!?" Through the 3 decades that I have been doing this, one thing I learned is that I don't see paying these people as expense. I see them as investments. Their effort makes a difference on my ROI.

[Traum]

Originally Posted by westopher

There are a lot of premiums involved. Line premiums, night shift premiums, weekend premiums, but still, the idea of saying “you could just do this” then talking about 100 hour work weeks is pretty ridiculous. If you want to give up your entire life to work, go for it I guess, but I’d rather be dead than work my life away to be rich.

For someone who is just starting out in their 20's, it seems kind of OK, or maybe even borderline normal to be grinding hard for a few years when you are at that age?

Back in the dot.com boom, I had quite a few friends that went to the US to grind hard and make big $$$. A good number of them only did it for a number of years. I was stupid and lazy, so I only stayed in Vancouver and worked 3 jobs, and I could only handle it for 8 or 12 months -- whatever the duration of one of the contracts was -- I don't really remember. When you are younger, it is much easier to do pull off that sort of thing.

And of course, the money definitely helps. But you do have to be disciplined and not blow it all on useless stuff just bcos "you are rich" now.