All Forum Posts by: Samy Kahoul

Hi Mike,

Congrats on the first deal!

I would recommend not to squeeze investor too much as if things go well he will have the appetite to come back with you and refer to outside people.

Absolutely consult a lawyer when taking investor money. And have a discussion on how to handle the different case scenarios when things go south. For me, investor profil has to fit the risk/reward ratios of the deal (Be clear with him, if this is a value add deal, stabilized asset etc... If his money is not a fit for the deal, it will be a big headache. 

In terms of structure,  one example:

1)Offer a preferential rate to the investor, i.e. 6% per year

2)Split 70%(investor) / 30%(you) after the preferential rate is given

3)Exit/Appreciation Also 70/30 after his money and rate has been paid 

4) x% management fee on gross (you)

If he is putting all the money down + signing on the mortgage, 50/50 doesn't seem fair. 

@Mindy Jensen Enjoyed the podcast, inspirational story from Jake & Gino!

Hi Jon,

Please don't move to another city for tax reasons, it doesn't make any sense specially early on in your career. Rather, focus on finding the industry/job you would have no issue waking up in the morning to go to. 

"Employees don't quit their job, they quit their boss" / Look for an environment where you can learn and get responsibilities. Personally, my first job was with a small trading firm, the salary wasn't great however I got opportunity to rotate different job roles + exposure to senior employees mentoring which in a big firm I would have never gotten, it was a priceless experience. the next job I took in the same industry but a bigger firm, I had an edge over the other employees because of that experience. 

So I would recommend to focus on the opportunity to learn, then the money will come. If you chase the money, it will never come. Money chases knowledge/expertise. 

Its great that you are already thinking of RE investment early on in your career, as someone said previously, try to build your assets on the side, till one day you can eventually jump ship and do it full time.

Best of luck :)

On top of the traditional same opportunities found in US real estate market, by investing north of the border you get exposure to the Canadian dollar. In the present context whereby its seems American leadership is trying to devaluate the US currency, it will add you some extra points on your RE investment. 

Will be going there

<<Here is what I learned, and here is what very few investors will tell you. The reason why is simple, most investors out there on podcasts, selling books, or on the web. R there for exposure. They need the exposure to bring in capital, syndicate money, expand there "circle">>

Yes I agree, however their is a great amount of valuable free content that can be used. As in all things in life, you either sell or get sold. Just need to be self aware,

<<Most investors are cheap, cut corners on the contracting side in the sake of the almighty buck. I recently seen photos of one of the largest flippers in the area who flips roughly 200 homes in my local markets. Frame over carpet on a concrete floor with your standard non treated 2x4s. This a basic no brainer clear violations of building codes.>>

Supply & Demand / their is a market for low quality products just like their is a market for high quality products. In terms, of a general consensus that profitable flipping is based on crossing the law, I wouldn't agree as these individuals in the long run would be put out of the market by regulators. 

<<90 percent of your contractors are crooks who will stab you in the back the first chance you can get.>>

It is up to the investor/project managers to put the contracts and systems in place to monitor the successful completion of the project. Systematically blaming the contractant is lack of leadership, and as a business we should not let room to our suppliers/contractors to take advantage. 

<<Bankers will lend you money on properties that are complete junk, as long as the comps ck out and the appraiser comes through. At the end of the day your portfolio is only worth what the properties will sell for.>>

No, the property is worth based on the cash flows/expenses. Buying in the hope of selling after doing some renovations is playing the musical chairs game, at some point the music will stop. Buying based on cashflow analysis is investing

<<For every investor that makes money there are 8 or 9 that lose money and thats in a strong market.>>

Not sure of the numbers, but yes its a game where we need losers and winners.

<<Neighborhoods full of rentals, typically go to crap, because tenants don't care and landlords don't want to dump money into properties where the tenants won't take care of them.>>

A landlord will not put money anymore in a property if he deems no more value can be created from additional investment

<<Big business and syndicates have taken over the most profitable areas of real estate. I remember a time where there were local builders in every town, and a man could make an honest living building homes. Now there are tract builders, nationwide corporations that a common man just can't compete with.>>

Yes consolidation in the industry, however big fishes and small fishes can coexist in the ocean, enough space for everyone

1)Investors who think only about the good days or RE investing as a sure thing are dangerous. Plan for the bad days, but take the calculated risk and contain the down side. 

2)Cash/Time/Expertise => Raw materials for success in RE / Up to us to mix the ingredients to get desired end result

3) Notice the patterns / Create systems / If we cant explain the rationale of how we made a profit on a deal, then it was not investing but simply fluke. Going in a deal without a plan/view/numbers is gambling. 

4) Before spending a $ in a project, look into all the things that can go wrong / and have a contingency plan. you are as strong as your weakest link, whatever can go wrong will go wrong (Murphy's law) / and thats alright as long as you see it coming.

5) Market risk is tolareted, capital risk never 

6)Book the loss, embrace the failure & move on.

The grass is always greener on the other side of the fence :) 

I do feel you with the point of view about how it seems in the US they have it easier/lower barrier to entry, Also it is true that prices are quite high specially in the core areas at the moment. however opportunities to make yields are still there in Canada. For example in montreal around 2015 we picked up a 22 unit rental, came in removed the bad tenants, renovated, increased rents, stabilized the property, refinanced (pulled the money out + its cash flowing great currently / within the span of 24 months). With the current interest rates + economy doing well, people are selling at incredibly low cap rates, however we believe that still value can be unlocked by buying underperforming "mom&pops" multi families. And this is by operating in a heavily pro tenant environment. we are mostly focused on buy/hold in core locations. As a society in Quebec, because of the rules in place we will not see the extreme business success/price volatility that can be seen in the states however when you couple the quality of life + country stability + hockey ;)  it still makes good sense to invest locally.  

As a vote of confidence some foreign firms (Akelius for example) have been penetrating the market Montreal/Toronto, buying buildings at incredibly high prices.  

The issue with these Multi family deals is the capital required, but if you find a deal where numbers make sense am sure you can find investors who will pay you commisssion for finding that deal. Another thing you can look into is rehabbing, in Montreal some good money has been made the past few years in rehabbing of apartments, I know 2 people who started few years back with the rehabbing of just one apartment, today they do big condominiums projects. 

Also do look into real estate governmental programs, I believe some provinces offer the opportunity for first time buyers to put only 5%down / Also by having the CMCH insurance down payment can be reduced 

As Steve Jobs would say Stay Hungry Stay Foolish. 

best of luck!

Incredible story! congrats with the job done

thank you Jeff & Juan appreciate the feedback, will keep you posted of how it goes!