671: Real Estate Investing Opportunities in Canada

SHOW NOTES FOR EPISODE 671: REAL ESTATE INVESTING OPPORTUNITIES IN CANADA

Despite global economic challenges, there are still great real estate investing opportunities in Canada!  In today’s podcast, entrepreneur, author and real estate investor Matthew Ablakan shares how he became a real estate mogul by investing exclusively in Canadian Real Estate.

What You Will Learn

• How to invest in real estate while still in high school – without a mortgage and without a full down payment
• Why it’s not about “timing the market” but it’s about time in the market
• Reasons why Canadian real estate is a good investment
• Why Americans have an advantage over Canadian citizens investing in Canadian real estate
• What pre-construction real estate investing is and why it can produce the greatest yield
• Why U.S. investors in Canada have a 30% yield advantage over Canadian investors

About Our Guest

Matthew Ablakan

Matthew Ablakan’s journey began at a very young age where trading Pokémon cards began to teach him a variety of skills such as how to Negotiate and the importance of Demand and Supply. As he entered High School, Matthew began to sell Jansport Backpacks, Hair Straighteners and Dog-Tags to his peers. He also began to dabble into Mutual Funds on a small scale and began learning more about Investing. Upon entering University, Matthew worked part-time jobs as a cook, waiter, and manager of a couple of restaurants in order to help pay for his tuition. This taught him taught him many valuable lessons in communication, hard-work, honesty and transparency. It was in those early years that Matthew began to learn more about Real Estate and Invested in his first Pre-Construction Condo at the age of 19 — with zero help from his immigrant parents and by using a flexible deposit payment plan and part of his student loan.

More About Matthew

• His parents came to the U.S. in the mid-80s from a communist/socialist totalitarian government state from the Middle East
• They came from the same country but met at a local church
• They wanted to pursue a better life for their future family
• They then had Matthew and his younger brother
• His parents were both teachers back in their home but their credentials did not transfer over
• So, they had different businesses, coffee shops, convenience stores, because it was a necessity to survive and support their family
• He would go with them to wholesalers of products they sold
• He saw how hard they worked
• When he got up to high school, he needed money and would sell things himself – like his parents did
• He sold hair straightener, backpacks, dog tags to kids at school
• He had 2 lockers – one for his books and another for the items he was selling
• At age 16, he was also investing in mutual funds and high-interest savings accounts

Investing in Real Estate

• While still in high school, he found out about pre-construction real estate opportunities
  • He would buy condos off of the floorplans of properties that were yet to be built (2 to 4 years down the road)
    • Canada has a lot of restrictions and regulations, so it takes a long time to get something built
  • It allowed him to get into a property without getting a mortgage
  • It didn’t require a full down payment up front
  • When he would buy at the price for that day, you lock that in for 3 or 4 years
  • He was able to continue to purchase using student loan money and money he had saved from 2 restaurant jobs and anything else he was selling
• He realized early on that real estate takes time
  • It’s not about “timing the market,” it’s about time in the market
• 11 years later, he still owns the condo
• Later on, he got into real estate sales
  • He continued using his earnings to purchase more properties and boost his portfolio of rental properties
• Today, he is celebrating 10 years in real estate
• He now has a group of companies now:
  • Millennials Choice
  • He has a real estate brokerage firm
  • A mortgage company
  • Life insurance agency/estate planning company
• He also is still actively investing for his personal portfolio
  • He bought 5 properties last year
  • He bought 4 properties this year
    • He’s looking for more properties this year

Investing in Canada

• All of Matthew’s properties are located in Canada – specifically the greater Toronto area where the government is pro-development and pro-jobs
  • Canada is young
  • Toronto is the best recognized city in Canada
    • It’s much cheaper than New York, London, Tokyo and other major cities throughout the world
    • There are lots of opportunities
    • Strong pro-immigration policy
      • 450,000 immigrants immigrate to Quebec every year (the providence where Toronto is located)
        • New immigrants rent before they purchase so there are lots of tenant prospects
  • Matthew mostly invests in single family properties
    • He has 24 properties
      • Single family homes
      • Row houses
      • Row houses/Townhouses
      • Condos
    • He also, recently, started investing in small multifamily properties and raw land to build small multis
    • There’s a lot of opportunity in land development
      • His main specialty at his brokerage is working with builders and developers
      • He has learned a lot over the last 10 ears in this area of specialty
  • The Canadian government is incentivizing investors to build low-income rental housing
  • A 500 sq ft condo in Toronto is renting for $2,500 a month, plus utilities

Canadian Debt

• Matthew believes you buy real estate because of the debt and the debt becomes an asset
• In the U.S., you can get mortgages for 10, 20 and 30 year terms, in Canada, the maximum is 10 years
  • Most people go for a 5-year fixed rate
  • He locked in all of his loans at 2 1/2% for 5 years
  • The ROI is great because of where inflation is today
• They have certain tax write-offs but no 1031 Exchange, except on personal residences where you don’t have to pay capital gains
• Investors have to pay capital gains tax unless it’s a commercial office space where your business is housed and you are selling it to buy another office space you will move to

Financial Freedom Club

• This is a club for his personal clients who want to take their knowledge and investment journey to a new level
• They have special private events (in-person and online)
  • They get to hear from successful real estate professionals that share how they have personally succeeded
• He has co-written a bestselling book with Kevin Harrington (Shark Tank) and Robert G. Allen (Multiple Streams of Income author) called Achieve II
  • If you want a free e-Copy of his book, click here!

Americans Who Want to Invest in Canada

• It’s not difficult for Americans who want to invest in Canada if they have a strategy and the right Canadian team in place
  • It’s just that there is a lack of…
    • Awareness
    • Financial literacy
    • Education
• He has clients today that are waiting until they can get a large enough down payment to purchase
  • In the meantime, they have family members who can co-sign/guarantee the loan today so they don’t have to come up with the large down payment
• It’s more a matter of…
  • Raising awareness
  • Becoming aware on the options available to you
    • For example, A,B and C lenders, etc. that can cater to each borrower’s situation
• He recommends that people do what they can to acquire properties today, build up their net worth and then move into commercial real estate
• Matthew never had help from anyone, yet he built his portfolio
• You need a long-term mindset!

Biggest Mistake

• His biggest mistake was not taking advantage of more opportunities early on
• He had limiting beliefs when he went into a project or property and would only buy one, when he could have bought more
  • In the meantime, the property doubled in value
  • His ROI was in the 100s of percent
  • And he knew he should have bought more than one
• He should have taken bigger risks
• It would have brought him to a whole new level
• He was too conservative in his approach

Biggest Successes

• He only invested in projects from reputable developers with good track records, who have been in the industry for a long time
• In Ontario, your money is protected by the government, third party insurance agencies, and by non-profit organizations
• He also bought at the very beginning of a project, bought a lot of off-market properties, always looked for cushion and equity already built in

Advice for Old Dawgs Looking at Real Estate Investing to Help Them in Their Retirement Years

• If you are an American investor, you have a huge upside as it pertains to Canadian real estate because of the strength of the U.S. dollar
• You already have a built-in 30% return on your money due to the rate of exchange
• Other benefits are:
  • Your funds are safe because it’s protected by the Canadian government, third party insurance agencies, and by non-profit organizations if you’re buying something that’s brand new
  • You don’t need a mortgage
  • You don’t need a deposit or down payment
  • He says the only risk is buying from the wrong developer – but with the safety factors, you’ll still get your full investment back if the investment goes south!

Current Business

• Matthew is just turning 31 but has been investing for 11 years!
• He has great clients
• 95% of his business comes from repeat and referrals
• He is excited about the opportunities yet to come over the the next 10, 20 and 30 years
• He’s very grateful for where he is at now!
• It’s a family business – his wife, brother, cousins, etc.

Investing in Pre-Construction Real Estate

• Many Canadian investors who invest in the U.S. don’t even know about the opportunities in their own country
• Pre-construction real estate investing is how Matthew got started
  • It works like this:
    • You buy off of floor plans — a single family home, a condo or townhouse
    • There’s a price you pay and you lock that in
    • You sign an agreement of purchase and sale
    • You have 10 days to review with your lawyer
    • There is a payment plan to fulfill the 20% deposit to purchase the property
      • Your deposit is guaranteed by the government
    • Then, you wait for the builder to construct the project – the entire project – even if it’s 300 units!
    • And, because it takes a while to build these projects, the units are appreciating in value because of…
      • Demand for housing boosting values
      • Supply chain problems
      • Inflation
      • Increasing costs of building materials and construction
    • Then you just wait to get the keys (3, 4 or more years)
  • His last 2 pre-construction purchases were in October 2021
    • 2 condos, side-by-side, prime location in Toronto, steps away from the University of Toronto
    • He paid $1,050 per sq ft
    • They are now trading for $1,300 per sq ft
    • Each unit has increased $150,000 in equity!
  • The only downside that Matthew sees is if a developer pulls out of the deal early
    • If he does, it will cost him millions of dollars and critically impact his reputation

Rap-It-Up

• Favorite real estate book: Commercial Real Estate Investing for Dummies by Peter Conti and Peter Harris
• Favorite business book: The 10X Rule by Grant Cardone
• Most valuable web site for success (other than your own): Purview
• Favorite app: Realtor.ca
• If you lost everything – all your assets – and had to start all over, knowing what you already know, and you only had $1,000, what would you do to re-launch your real estate investing business? I would probably take a seminar on “How to Raise Capital” (from) someone who has more experience in that area with capital and joint ventureships.  Ultimately, you need money/financing and I would learn how to partner with people with more experience than I do or who is looking for good deals – someone who has the money but doesn’t have the deals and where I would provide the deals and do the work.

How to Reach Matthew

• Instagram – @matthewablakan
• Website: MillennialsChoice.com
• If you want a free e-Copy of his book, click here!

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