From the insurance industry to syndication
Interview Series - March 2020 - Albert Shi
Before real estate investing, what did you study?
I studied both Finance and Electrical Engineering in McMaster University, then got a master degree of Actuarial Science in University of Waterloo in 2012.
Where did you work?
After graduation, I joined a Fortune 500 financial company as an intern and was trying to climb the corporate ladder. I gradually climbed the ladder and became an actuary director in that company with 6 figure salary in 2019, then I decided to quit the job and started my own real estate investment company.
What led you to real estate investing?
After joining the financial company one year, I could see where I would end on the corporate ladder when I retire. I didn’t want this predictable destination. But I had no idea what I wanted to do with my life. I felt I was going circles all day long without a purpose.
I started to search for personal finance books and found Robert Kiyosaki’s book <Rich Dad Poor Dad>. This book helped me understand important financial concepts, such as rat race, passive income, asset and liability. This is totally different from finance theory I learnt from university. Robert’s books helped me to find my interest. I want to invest in real estate, create passive income and long-term wealth.
How did you find your first property?
I started to chat with local realtors and compare different areas of Toronto. After getting basic understanding of investment process, my wife and I quickly invested our first rental property in 2013, which was an ordinary house and we rented it to a lovely young family.
How did you come up with the down payments to buy in the GTA market?
Both my wife and I are actuaries with decent salaries. We had savings and also got some financial aid from family for the first property. Then we sold it 2 years later with 300% return on initial investment. We acquired more rental properties with that profit.
How did you qualify for a mortgage?
Both my wife and I had full time jobs that can qualify for a mortgage.
How did you keep qualifying for mortgages after the first one considering the financing limits?
Once we were reaching the financial limits after acquiring several properties, we used other investment strategies to increase rental income and debt coverage ratio, such as legal 2nd suite and Airbnb. We also worked with B lenders once to qualify for a mortgage.
Why did you transition to the US?
Although I was trained as an actuary to be conservative and manage risks, I decided to go big or go home. I always wanted to invest in big multifamily properties as Robert Kiyosaki did. But I didn’t know how to acquire big properties in Toronto.
How should I start? I kept this question in mind and did my best to find an answer. I read all books I can find, listen podcast, attend seminars and trainings that are related to multifamily. Luckily, I met an investor in a local seminar who invested 40+ multifamily properties with over 7,000 units in Atlanta.
My wife and I flew to Atlanta to meet him, he was so kind and had two lunches with us to share his investment knowledge and experience. He even toured us in several of his multifamily properties. That was a truly eye-opening experience for us.
I’m forever grateful of him and I’m willing to help others like he helped me. He suggested me to do some research and compare US and Canada real estate markets.
Therefore, I visited several US cities and realized US has better investment returns, better financing terms, better tax rules and better tenancy laws. It was an easy decision for me to invest in the US.
How did you do it? How did you find partners in the US?
The next question was which part of the US. I researched all US states on economy growth, population/job growth, tax rules, tenancy laws, criminal rate, house price, rent growth, local developments and so on.
I chose Texas as my first target market based on those researches. Since Dallas is the largest city in Texas with 7.5 million population, I thought it might be easier to find deals and business partners there. But there was one problem. I didn’t know anyone who was living in Dallas. In this business, it’s not only what you know but also who you know matters. Therefore, I joined two investment clubs in Dallas that focus on multifamily to learn and meet new people.
I was living in Toronto and flew to Dallas almost every month to search for good deals and business partners. In order to accelerate progress, I lived in Dallas for one month. After reviewing more than 70 deals and meeting hundreds of people, I finally found my business partners and we acquired a 200-unit multifamily property in Dallas. I’m a general partner in this deal and I’m responsible for financial analysis, raising capital and asset management.
Purchase price is USD $24 million. This property is located in a nice Class B neighborhood that is 20 mins drive from Dallas downtown. It’s close to shopping center, highway, schools, parks, community center and lakes. It was an off-market deal. We were the only group who toured the property and submitted an offer.
How do you qualify for a mortgage there?
Commercial mortgages are very different from residential mortgages. Commercial mortgage lenders focus more on the property’s income instead of buyer’s income. For more information, feel free to visit my blog on residential vs commercial mortgages. Here is the link:
https://oakreinvestment.com/residential-vs-commercial-mortgages/
What were your criteria to select a market to invest in in the US?
I check economy growth, population/job growth, tax rules, tenancy laws, criminal rate, house price, rent growth and local developments. My target properties are 100-400 units Class B/C multifamily properties with cashflow from day 1 and value-add opportunities.
What percentage do GP and LP get in the 200-unit building?
General partners (GP) usually take 20-30% profit and limited partners (LP) take 70-80% profit and all initial investment. In our 200-unit multifamily deal, GP get 20% profit. The target investment return for our LP in this deal is 80% in 3-5 years, including quarterly cashflow distribution.
What real estate events do you attend and with what purpose?
I attend real estate events in the US and GTA to look for more deals and investors.
What are your goals now?
My goal is helping investors create passive income and long-term wealth through multifamily investing. Since I’m also an investor in my own deals, my interest perfectly aligns with my investor’s interest. I totally agree with Warren Buffett’s mindset” we eat what we cook”.
How do you promote yourself?
I promote myself through our company website, Albert Shi Knowledge Share Group, social media, blog and other real estate events. If you want to learn more about multifamily investment, here is our company website:
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