Climbing Prices and Record Falling Rents, NOW WHAT?
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August 2020 - Volition Mastermind Meetup If you’ve opened social media in the past week, you’ve seen the headlines - “Tiny Toronto House - $1 Million!!” and “Record Falling Rents!”. Increasing asset prices and decreasing rents are not exactly the recipe for success. So, as a sophisticated investor, what can you do to position yourself to WIN in this market? This month’s guest speaker Jin Kim, long time real estate entrepreneur, is navigating the intersection of these challenges and is using two strategies. 1. A combination of short, medium, and long-term rentals to solve the cash flow problem 2. Investing in real estate in alternative ways - (think, development and private lending) But wait... isn’t that a lot of extra work?? Enter property management. Join us as we dive into topics like: · How cash flow is equal or higher (!!!) after being fully managed · How the short-term rental market is faring during the pandemic · General costs to switch from long term rentals to short term rentals · The risks and downsides of this strategy and how to mitigate them · How to create flexibility and switch between short and long-term rentals ------------ About Jin Kim Jin Kim is a real-estate entrepreneur and financial consultant based in Toronto. He specializes in urban transformations and infill developments with emphasis on creating high-value real estate portfolios and cash-flow generation. With more than a decade’s worth of experience in real estate investing and financing - focusing on value chain creation and property development - he provides strategic financial direction to various business partnerships. In the last 10 years, Jin has amassed a diverse portfolio of rental properties and infill developments in Toronto and surrounding areas. He is deeply passionate about creating personal economic freedom through real estate investing and sharing his knowledge and perspective with others. His financial and real-estate expertise is bolstered by an impressive background in IT management in the field of architecture and construction management, a degree in Structural Engineering from the University of Waterloo and a fine arts degree from OCADU. Living in the colourful neighbourhood of Little Portugal with his family, he is proud to call Toronto, home. He strongly believes Toronto is at the very beginning of massive transformations and is excited to be part of its growth. ---------------------- Join our Mastermind Meetup! http://meetup.com/Volition www.volitionprop.com info@volitionprop.com
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Climbing Prices and Record Falling Rents, NOW WHAT?
- 3. @volitionproperties www.volitionprop.com Thank you Creeds!! We’re still open for coffee takeout and dry cleaning!
- 4. @volitionproperties www.volitionprop.com Who is Volition? ● Certified Real Estate Investment Advisors ● Toronto’s Exclusive Investor Realtor for REIN Buyer’s Group ● Nominated for REIN’s Highest Award (Michael Millenear Leadership Award)… (and a bunch of other awards: Silver Investment Award, Bronze Investment Award, Chairman’s Club, President’s Club, Top Producer, blah blah blah) ● $25M+ in personal holdings over 50 doors
- 5. @volitionproperties www.volitionprop.com Realty ManagementAdvisory Mentorship & Education & Consultation Acquisition of Investment Properties Design & Renovations Leasing & Property Management Renovations We are Toronto’s leading full-service, bespoke Real Estate Investment Firm
- 6. @volitionproperties www.volitionprop.com Investor agents make the best “normal” agents! ● We can help you find your dream home and have it make financial sense ○ Does this property hold to long term appreciation fundamentals? ○ Does it require construction? How much are those things going to cost? ○ Can I have a secondary suite to help with cash flow? How much are rents? What tenant profiles will I get? ○ How can my primary residence help me qualify for investment properties in the future? HELOC? Secondary suites? ○ Top 1% of all agents ● We sell investor properties and single family homes ○ Active buyers / investor list, email marketing, social media marketing ○ Virtual 3D Dollhouse, Drone, Lifestyle video ○ Multiple languages, foreign investors Your home is the most important tool in your investment journey!
- 7. @volitionproperties www.volitionprop.com Private Volition Mastermind Chat Group ● Open to Investor clients & Advisory clients. ● Talk about news, tenant issues, share contacts, basically help navigate the difficulty of this investor world! Let us know if we missed you!!
- 8. @volitionproperties www.volitionprop.com Sign up for Advisory! ● 60 Minute complimentary Advisory Consultation ● We will help you determine ○ Where you are at ○ Where you want to go ○ Help you build a customized plan to get there ● Send us an email at info@volitionprop.com to schedule a session!
- 9. @volitionproperties www.volitionprop.com The Investing Maze The Volition Team!
- 11. @volitionproperties www.volitionprop.com COVID Predictions - Checking back on earlier predictions...
- 12. @volitionproperties www.volitionprop.com Home Prices in Toronto Could Drop More Than 14% By 2023: Report https://torontostoreys.com/toronto-home-pri ces-fall-dbrs-morningstar/
- 13. @volitionproperties www.volitionprop.com TD Forecasting Toronto Home Prices to Increase By 7.8% in 2020 https://economics.td.com/ca-housing-update?linkId=87423709
- 18. @volitionproperties www.volitionprop.com Sales to New Listings Ratio
- 19. @volitionproperties www.volitionprop.com Average Rental Price - YOY Avg Rents
- 20. @volitionproperties www.volitionprop.com “It is clear that the core of Toronto is feeling the impact of COVID-19 more than the other areas of the GTA. As mentioned in previous reports, the influx of units previously used at short-term rentals, the growing number of new apartment completions (all tenures), and the cancellation of most on-campus classes at downtown colleges and universities are all contributing to the bigger declines.” Average Rental Price - Average Rent / Sq Ft
- 21. @volitionproperties www.volitionprop.com Toronto rental prices down for 8th straight mth
- 24. @volitionproperties www.volitionprop.com Volition Metrics - Downtown municipalities
- 25. @volitionproperties www.volitionprop.com Volition Metrics - Downtown SF Detached
- 27. @volitionproperties www.volitionprop.com Volition Metrics - Uptown municipalities
- 28. @volitionproperties www.volitionprop.com Volition Metrics - Uptown SF Detached
- 30. @volitionproperties www.volitionprop.com What is actually happening?
- 31. @volitionproperties www.volitionprop.com How to invest in multifamily without tonnes of $$$?
- 36. @volitionproperties www.volitionprop.com The Main Event - Jin Kim!
- 37. @volitionproperties www.volitionprop.com Jin Kim - Real Estate Entrepreneur ● Jin Kim is a real-estate entrepreneur and financial consultant based in Toronto. He specializes in urban transformations and infill developments with emphasis on creating high-value real estate portfolios and cash-flow generation. With more than a decade’s worth of experience in real estate investing and financing - focusing on value chain creation and property development - he provides strategic financial direction to various business partnerships. ● In the last 10 years, Jin has amassed a diverse portfolio of rental properties and infill developments in Toronto and surrounding areas. He is deeply passionate about creating personal economic freedom through real estate investing and sharing his knowledge and perspective with others. ● His financial and real-estate expertise is bolstered by an impressive background in IT management in the field of architecture and construction management, a degree in Structural Engineering from the University of Waterloo and a fine arts degree from OCADU. ● Living in the colourful neighbourhood of Little Portugal with his family, he is proud to call Toronto, home. He strongly believes Toronto is at the very beginning of massive transformations and is excited to be part of its growth.
- 38. Climbing Prices and Record Falling Rents, NOW WHAT? Jin Kim JinKim@k3ig.com (416)579-1129
- 39. What we are going to cover 1. The BIG Picture: Wealth Preservation vs Portfolio management 2. Why is it more relevant that ever to stick to the “old rule” 3. Thesis on Why I do what I do 4. Reason for real estate investing 5. Background: JK & Co - Who We Are 6. Why Now is the Right Time For Real Estate. 7. Why the Downtown Toronto Market. 8. Why The Long Term Hold (STR) Strategy. 9. Why The STR / Hoteling Strategy 10. See if It’s a Fit & Determine The Next Steps.
- 40. BRIEF HISTORY
- 41. Who is Jin Kim • Family man, Father of 2 girls • U of W Engineering • OCAD Sculpture • IT manager for Architectural & Construction companies for 12 years • 7 years in seminars • 13 years in real estate investing • Absolute believer in downtown Toronto*
- 42. Phase 1 – Long-term rental, out of town • Cash flow gets you out of JOB • No cash flow in Toronto • Southern Ontario, Multi-family rentals • Easy entry • Cheap • High cap = more work • Price vs Value
- 43. Phase 2: Value creation, Toronto • Infill development • Build to sell • Interior reno • Top-up • Extension • Underpinning • Luxury home • Re-zoning • Townhouse development • Mixed use commercial development
- 44. Phase 3: Value creation + cash flow, downtown Toronto. ONLY • Taking the best of the both worlds • Land + Customer • Key location – Land first • Massive upside • Downtown STR • Urban Transformation >> Boutique hotel like • High value land banking portfolio + cash flow • Hardware + Software
- 45. THE BIG PICTURE REALLY BIC PICTURE
- 46. Why Real Estate? General • Cash flow • Mortgage paydown • Tax benefit • Appreciation • Leverage • Slow moving • Time corrects mistakes
- 47. Monetary System • No real money, floating currency system. • Credit / Debt, Accounting system • And it’s washing away • Long term debt cycle coming to an end (80 to 100 years) • Real estate is a hard asset • Store of wealth/purchasing power • Hedge against inflation and financial panic
- 48. Impact of Pandemic / COVID-19 • CERB will end • Rent – down • Vacancy – up • No job to go back to • Lower wage • Rent default • Mortgage default • More businesses going out of business
- 49. It has happened many time before: Old Money • We are entering a “Twilight Zone” • Wealth Preservation: The way of ”Old Money” • Wealth over 300 years or longer • Beyond business cycle, war invasion, collapse of empire, revolution and natural disaster • Requires longer view, sense of history, and worst-case scenario
- 50. ”a third, a third, a third” • over centuries it is the hard assets not the paper assets that retain value through collapse and catastrophe. The old money knows this—they have seen it all before. • Land • Gold • Fine Art (Collectibles) • Value of land, gold, art is intrinsic • There is no issuer who can suddenly make land disappear or turn gold into confetti
- 51. Why Real Estate? JK Way 1. Hard Asset First – Land / Dirt 2. Can be ”Fine Tuned” - Very local (Different countries, Provinces, Cities, Neighbourhoods, Streets, Type of properties, Quality, Appeal, Tenant profile, etc. 3. Forced Appreciation – Reno, Change of Use, Re-zoning, SPA, etc 4. Be able to hold on to asset & Preserve wealth CASH FLOW
- 52. WHY TORONTO? WHY NOW?
- 53. Why Toronto? • Low supply • Low interest rate • Higher affordability • “Silicon Valley North” • “Toronto is the most cosmopolitan city in the world, it’s like a shining beacon of openness in relative terms,” • 300,000 new arrivals, educated w money • 100,000 new build • Ontario receives 46.2% • GTA receives 77% (35% of all immigrant )
- 54. Why Toronto Now? • Believer in downtown Toronto • Toronto at the beginning of a massive transformation • Pandemic presents a massive opportunity Asset Grab Hold on to asset << Cash flow Financial system at the verge of reset
- 55. JK & Co – WHO WE ARE
- 56. Value Chain Creators • 1. Deal creation / Property Development • 2. Build / Construction Management • 3. Operation / Property Management - Hoteling & STR
- 57. Why Three Legged Approach? • Control over “Hardware” & Control over “Software” • Customized and Amplified Return • Building out a Upscale • STR & Co-Living Brand • Work with Investment Partners - Passive Investing
- 58. Investing Firm – Property Development • Opportunity creation • Crystal Clear Insight & objective • Business model • Find properties fit the model • Offer, tie up • Inspect, negotiate, close
- 59. Alternative Investing • Toronto real estate is expensive • Collective and Concerted effort • Leverage Knowledge & Experience • Hands off, passive investing. Real Passive, not just semi-passive • Working with investment partners • Equity partners – fixed return • JV partners – 50/50, equity and cash flow
- 60. Reno/Construction Management • Full Gut, multiplex construction • Various level of reno • STR Outfitting • (Pictures of Mackay, Riverdale, Stouffville)
- 62. Types of Property Management • Short Term vs Long Term • Furnished vs Un-furnished • Hoteling vs Renting • Primary Aim: Asset protection / Control • Equal or better cash flow after management • How to solve cash flow problem
- 63. STR - Control over asset • STR to stay out of legal issues • Work From Home: Supply desks & chairs, high speed internet, etc • Different neighbourhood and pocket • Types of properties: • Larger houses & Bigger cottages doing well • Apartments: LTR or MTM • Basement: LTR
- 64. Short term market during pandemic? • People always need short term rental • Traveling • Business • Relocation • Renovation • Between houses • Job and WFH • Trend of rental preference of type change
- 65. Short term market during pandemic?
- 66. STR Management • < Property Design and Set up > • Property suitability assessment • Optimal unit configuration • Property design • Sourcing Furniture, arts, decoration, etc • Reno/Contractors • All amenities (all house hold items, down to forks & Knives)
- 67. STR Management
- 68. Property Management – long term • Tenant communications • Lease renewal/terminations • Tenant notifications • Rent collection • Monthly ownership statements • Tenant move-in/move-outs • Property Inspection • Tenant Customer Service & Issue resolution • Property maintenance & repair • Property Improvements • Post tenant cleaning & Junk removal
- 69. WORKIN WITH OTHER INVESTORS • Strategic financial direction • Passive Investment • JV Partnership • Construction management • Property management
- 70. EXAMPLES
- 92. Personal Economic Freedom • I am no where close to where I want to be • However, I’ve been to some far out, deep ends. • I have a lot to share and we can work tother to make our journey more fun and enjoyable
- 93. THANK YOU! Jin Kim (416) 579-1129 JinKim@k3ig.com
- 95. @volitionproperties www.volitionprop.com Sign up for Advisory! ● 60 Minute complimentary Advisory Consultation ● We will help you determine ○ Where you are at ○ Where you want to go ○ Help you build a customized plan to get there ● Send us an email at info@volitionprop.com to schedule a session!
- 96. @volitionproperties www.volitionprop.com Next Meetup - September 16th, 2020 Life Insurance - The Basics and Beyond! What separates sophisticated investors from the lucky is risk mitigation. When it comes to life insurance, this is not as simple as having a basic policy. It’s much more complex and requires taking into account corporations, inheritance tax, estate planning, family trusts, etc etc etc. For those of you that have been pushing life insurance to the bottom of your to-do list because it’s too overwhelming, THIS IS THE EVENT FOR YOU! Our guest speaker Mary Sun will cover everything from basic to advance planning. Don’t miss this event!