Volition meetup 2019.04 - BOOST YOUR CASHFLOW!! EXECUTIVE FURNISHED RENTAL STRATEGY

@volitionproperties
www.volitionprop.com
Volition Investment
Mastermind
April 2019

@volitionproperties
Who is Volition?

Realty ManagementAdvisory
Mentorship &
Education &
Consultation
Acquisition of
Investment
Properties
Design &
Renovations
Leasing &
Property
Management
Renovations

@volitionproperties

@volitionproperties
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: SilverInvestment Award, Bronze Investment Award, Chairman’s Club, President’sClub, Top Producer, blah blah blah)
● $25M+ in personal holdings over 50 doors

@volitionproperties
We do normal stuff like listings and personal
residence too!
● Why list with us? Investor advantage!
○ Active buyers / investor list
○ REIN Investor Database
○ REIN Buyers Group
○ The BEST marketing
■ Virtual 3D Dollhouse, Drone, Lifestyle video
■ Multiple languages, foreign investors
● We can also help you find your dream home!
○ Top 1% of all agents
○ Extensive local knowledge of one of your biggest investments
○ Combination personal residence and investment property

@volitionproperties
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!!

@volitionproperties
FREE Monthly “REI Coffeehouse” Web Chat
● What: No format. No presentation. No
script. Q&A. Real people with real problems.
Occasionally guest speaker. Send in your
questions beforehand, and then we’ll chat
about them and get your questions answered.
● Why: “Meetup once a month isn’t enough! I
need more networking, more Q&A time, more
learning, more community, more like-minded
people, more engagement!”
● When: 12pm-1pm during your work lunch
break. Once a month (in between Meetups).
● How: Log on using Zoom.us (webcam &
microphone). Scheduled thru Meetup.com
(www.meetup.com/Volition)
(1. Also, if you have any suggestions on the format, content, etc., let me
know!)
(2. If you have a suggestion on the SPECIFIC TIME other than the
planned 12pm-1pm, also let us know!)

@volitionproperties
Thank you Peacock! Creeds!!

@volitionproperties
Our in-house Volition Ambassadors!

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Ming’s Market Minute

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TREB Market Data

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Market Update - Sales Volume

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Market Update - Listings

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Market Update - Average Resale Home Price

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Volition Market Data

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Toronto Downtown Core

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Volition Metrics - Downtown municipalities

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Volition Metrics - Downtown SF Detached

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Toronto - Everywhere else

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Volition Metrics - Uptown municipalities

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Volition Metrics - Uptown SF Detached

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Volition Metrics - Condos

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What’s News?

@volitionproperties
New Ontario Line to include more stops in downtown core

@volitionproperties
Buying a home? CMHC could soon kick in 10% of the cost, for a price
https://www.cbc.ca/news/business/budget-cmhc-home-buyers-1.5063204
The 2019 federal budget includes a tantalizing pitch for prospective first-time homebuyers — one that could see Canada's housing agency contribute up to 10 per cent of
the purchase price of a home and bring down the mortgage load for borrowers. The budget offers the program, known as the First Time Home Buyer Incentive, as a way to
help with housing affordability. The government is earmarking $1.25 billion over three years for something its "shared equity mortgage."
Functionally, it's more like an almost interest-free loan — one where the repayment plan doesn't require any payback until years in the future. In order to qualify, an
applicantmust have a household income of less than $120,000 per year and be able to come up with a five per cent down payment — the minimum requirement for an
insured mortgage with the Canada Mortgage and Housing Corporation (CMHC).CMHC is the Crown corporation that backstops the vast majority of Canada's housing
market by insuring the loans that finance it. This new program will make its role in the market even larger than it already is. In addition to those stipulations, the program
caps out at four times the applicant's annual income, which means it can only help homeowners looking to buy properties where the mortgage value plus the CMHC loan
don't exceed $480,000. But if a would-be buyer meets the conditions described above, under the program, the CMHC would kick in up to 10 per cent of the value of a
newly built home, or five per cent of the value of a resale.
The CMHC would contribute that much to the home purchase in exchange for a corresponding equity stake in the home. That has the effect of bringing down the size of
the homeowner's mortgage — but comes with a bill to be paid down the line. Precise details of how the program works won't come out until later in the fall, but today the
government provided a rough breakdown of how it might work for a prospective buyer. If a first-time buyer wants to get a home that costs $400,000, they'd have to come
up with a $20,000 down payment, under both the new rules and the old ones.
Normally, they'd have to take out a loan for $380,000 to cover the rest of the purchase price — but under the new program (if it's a newly constructed home), CMHC could
kick in $40,000 toward the purchase price, in exchange for a 10 per cent stake in the home. That brings the buyer's mortgage down to just $340,000 for the home, instead
of $380,000.On a standard mortgage at 3.5 per cent interest, that translates into a monthly mortgage payment more than $200 lower than it would have been for the 25-
year life of the loan. That's more than $2,700 a year in potential savings.

@volitionproperties
Buying a home? CMHC could soon kick in 10% of the cost, for a price
The catch is that the homeowner eventually has to pay back the CMHC's stake in the property — but not until they sell (or sooner, but only if they want to). The budget is
far from clear on how much the buyer would owe; is it the same dollar amount the CMHC provided up front, or does the bill go up based on how much the house has
appreciated in value? Government officials say details of the plan will be hashed out in the coming months. Craig Alexander, chief economist with accounting consultancy
Deloitte, calls the program a "clever idea" and says the benefits should outweigh the downsides.
"You want to be mindful that the government doesn't put in policies that end up bidding up prices," he said, adding that, on the whole, the plan could help more Canadians
start climbing the housing ladder. The government is estimating the plan could create about 100,000 new first-time buyers over the next three years. But not everyone
agrees there's nothing but upside. Craig Wright, chief economist with the Royal Bank of Canada, calls the program "a solution looking for a problem." He cites research
from the most recent government census in 2016: roughly 67.8 per cent of Canadians owned their own homes that year.
That's higher than ownership rates in other countries — including the U.S., where the rate is 63.4 per cent and falling swiftly. Other world capitals such as Paris (33 per cent
home ownership rate), Berlin (37 per cent) and London (47 per cent) stand in stark contrast to Canadian cities like Calgary (73 per cent) and Toronto (66 per cent). Even
rent-happy Montreal has an ownership rate of 55 per cent, which is why Wright said he's not convinced Canada has a home ownership problem. Which is why he thinks
the program "is more about politics than policy." Worse still, he says if it's done poorly Wright said the program has the potential to undo some of the sensible market
cooling measures Ottawa has implemented in recent years: capping loan terms, setting minimum down payment levels and introducing mortgage 'stress tests' last year.
"Demand will show up now, while supply will show up later," he said. "And in the near term prices could move higher so ... you may make it less affordable to own a home."
Economist David MacDonald, with the Canadian Centre for Policy Alternatives, also says the plan doesn't really do much to help people buy a home more affordably.
"Taking out new loans from CMHC or retirement savings doesn't make housing more affordable," he said. "It just allows for another source of debt financing that must be
repaid."
The government says program details will be hashed out later but, for buyers, the repayment terms are the real wild card. Exactly how much will they have to repay
CMHC? And will that sum be affected by changes in the home's value? "If your house goes up 20 per cent, does what you pay them go up?" Wright asks. "On the flip side,
what if it goes down — do you have to make them whole?"

@volitionproperties
Analysis - Why is Toronto’s
Market Doing better than
Vancouvers?

@volitionproperties
Toronto vs Vancouver
Vancouver Current State
● Prices falling
● Seven months of inventory
Influencing Factors
● Challenges with money
laundering issues
● Higher non-resident investment
● Values were at 12 times income
● Weaker job growth and
population growth
Toronto Current State
● Toronto prices stable
● Two months of inventory
Influencing Factors
● Toronto proper, small
percentage of non-resident
investment
● Values at 8 times income
● Stronger on job growth and
population growth

@volitionproperties
Investment Retrospective

@volitionproperties
● Triplex Conversion
● Purchased Apr 2019
● Price:
● Reno:
● Rent:
● Expenses:
● Mortgage:
● Cashflow:
● Refi
● Appraisal:
● Rent:
● Expenses:
● Mortgage:
● Cashflow:
Real Life: "If you bought this 5 years ago..."
now

@volitionproperties
● Price: $1.16M
● Reno: $450,000 + $50,000 carry costs
● Rent: $8000
● Expenses: $1000
● Mortgage: $4134
● Cashflow: $2866
● Refi
● Appraisal:
● Rent:
● Expenses:
● Mortgage:
● Cashflow:
now

@volitionproperties
● Price: $1.16M
● Reno: $450,000
● Rent: $8000
● Expenses: $1000
● Mortgage: $4134
● Cashflow: $2866
● Refi
● Appraisal: $1.7M
● Rent: $8000
● Expenses: $1000
● Mortgage: $6069
● Cashflow: $931
● CASH IN HAND: $433,600
now

@volitionproperties
● Price: $1.16M
● Reno: $450,000
● Rent: $8000
● Expenses: $1000
● Mortgage: $4134
● Cashflow: $2866
● Refi
● Appraisal: $1.7M
● Rent: $8000
● Expenses: $1000
● Mortgage: $6069
● Cashflow: $931
● CASH IN HAND: $433,600
FREE RENO!!
now

@volitionproperties
● All calculated here!
● Our secret weapon!
● BOOKMARK IT ON YOUR
PHONE/LAPTOP!
Volition Investment Calculator

@volitionproperties
● Mini-Case Study: Agreement For Sale
Why work with Investor Realtor?

@volitionproperties
● Assignments
● Triplexes again?
● BIG REFIS / BIG APPRAISALS. Equity takeouts and reinvesting.
● EXECUTIVE RENTALS???
What are clients buying this year?
● Preconstruction?
● Condos? (and using EXECUTIVE RENTAL STRATEGY)
● Triplexes?
● Gut jobs?
What are the trends this year?

@volitionproperties
BOOSTING CASHFLOW

Making It Rain
Maximizing Cashflow

"Going From Working To
Retired”
A Blueprint For Real Estate Investors

Regular Consumer Investor Method

Sophisticated Volition Investor Method

@volitionproperties
Journey to $10k Cashflow – PREVIOUS MEETUP
THE THREE MOST IMPORTANTQUESTIONS
Where are you at?
● Tommy: $650k condo
● Gina: $700k condo
● Got married. Rent out both condos.
● Household income: $200k
● Cash $90k, Stocks, $25k, RRSP $10k
Where do you wantto go?
● “Want the flexibility to work when I want to (contract
work, retire early, do something else, etc.)”
● Think: FORM
● Modest goals: $5000/month ($60,000/year)
Whendo you wantto be there?
● When? They don’t know. (But they should know!!).
Typical answer. “I don’t know what is realistic to
expect” is a very common response.
● You need clarity on this!!

Sample Scenario
“How do I get $5000 cashflow in 10 years?”
Starting Point:
• Triplex #1 & Triplex #2
• Value: $1.2M
• Mortgage: $960k
• Rent: $5200
• Mortgage: $3800
• Expenses: $850
• Cashflow: $550
Questions:
• How do I retire?
• What's my path?
• What do I do next?

Strategy #1: WAIT for higher rents and increased cashflow (which
means buy in better areas!)
Wait 5 years with rents on the rise (5%) and expense rising at inflation
(2%). Tenant turnover is key to getting higher rents.
Triplex #1 & #2 Now:
Rent: $5200
Mortgage: $3800
Expenses: $850
Cashflow: $550
Triplex #1 & #2 After 5 years:
Rent: $6650 (5% growth)
Mortgage: $3800
Expenses: $950 (2% growth)
Cashflow: $1900 ($1350 more cashflow)
(BONUS: 12% of your mortgage has been paid down)

Strategy #2: REAMORTIZE to reduce mortgage payments and increase
cashflow
Wait 5 years with rents rising at inflation (2%), expenses rising at inflation
(2%). But you reamortize:
Rent: $5200
Mortgage: $3800
Expenses: $850
Cashflow: $550
Triplex #1 & #2 After 5 years :
Mortgage: $3800
Triplex #1 & #2 After 5 years and
reamortize:
Rent: $5750
Mortgage: $3300 (reamortized over 30 years)
Expenses: $950

Strategy #3: GROW by refinancing and acquiring more properties
(Part 1/2)
Wait 3 years with increasing rents (5%), expenses rising at inflation (2%),
and property values rising (7.5%).
Value: $1.2M
Mortgage: $960k
Rent: $5200
Mortgage: $3800
Expenses: $850
Cashflow: $550
Triplex #1 & #2 After 3 years:
Value: $1.5M (7.5% growth)
Mortgage: $900k (7% paid down)
Mortgage: $3800

Strategy #3: GROW by refinancing and acquiring more properties
(Part 2/2)
Wait 3 years with increasing rents (5%), expenses rising at inflation (2%),
and property values rising (7.5%).
Go buy 2 more triplexes:
Value: $1.5M
Mortgage: $1.2M
Rent: $6000
Mortgage: $4700
Expenses: $900
Cashflow: $400 (lower cashflow BUT you own 4
triplexes)
Triplex #1 & #2 Refi at 3 years:
Value: $1.5M
Mortgage: $1.2M
Equity Takeout: $300k
Mortgage: $4700 (bigger mortgage)
Expenses: $900
Cashflow: $400 ($800 less cashflow)

Strategy #4: DIVEST and pay off mortgages for massive cashflow (Part
1/2)
Wait 5 years with rents rising at inflation (2% growth), expenses rising at
inflation (2%), and property values rising (7.5%).
Value: $1.2M
Mortgage: $960k
Rent: $5200
Mortgage: $3800
Expenses: $850
Cashflow: $550
Rent: $5750 (2% rent growth)
Mortgage: $3800

Strategy #4: DIVEST and pay off mortgages for massive cashflow (Part 2/2)
Sell Property #1:
Property #1 Value: $1.7M
Property #1 Mortgage: $845k
Property #1 Proceeds from Sale: $855k
Property #2 Current Mortgage: $845k
Property #2 New Mortgage (using Property #1 Proceeds): $0
(NOTE: Also need to account for tax, divestment fees, etc.)
Property #2:
Value: $1.7M
Mortgage: $0 (mortgage free!)
Rent: $5750

Strategy #5: REFI & RENO, using the equity to increase rents and cashflow
(Part 1/2)
Value: $1.2M
Mortgage: $960k
Rent: $5200
Mortgage: $3800
Expenses: $850
Cashflow: $550
Rent: $5750 (2% rent growth)
Mortgage: $3800

Strategy #5: Refi & Reno, using the equity to increase rents and cashflow
(Part 2/2)
Reno:
Value: $1.8M ($300k increase in value)
Mortgage: $1.2M
Equity takeout: $300k
Reno budget: $300k
Rent: $7750 ($2000 more rent)
Mortgage: $4700
Expenses: $900
Refinance:
Value: $1.5M
Mortgage: $1.2M
Equity takeout: $300k
Rent: $5750
Mortgage: $4700 (bigger mortgage)
Expenses: $900
Cashflow: $150 ($850 less cashflow)

Other Strategies to reach your goals:
• Trade Up. Crappier asset for better asset.
• Vendor Take Back mortgage (new properties).
• RRSP 2nd mortgage (for existing properties).
• Fix & Flip to increase investable capital.
• Buy, Reno, Rent, Refi, Repeat (BRRRR)
• Don’t cater to “lifers”
• Joint Ventures
• More bedrooms
• House Hack
• … only limited by your imagination!

Sales
&
Marketing
Explore
New
Strategies
Other
Revenue
Sources

@volitionproperties
The Main Event - Executive
Rentals!

@volitionproperties
Rick Aubry
● President and Managing Partner for Premiere Suites
● In operation since 1999
● Over 1,300 suites, centrally located in high-demand areas across 38
cities
● OVER 100 SUITES IN DOWNTOWNTORONTO!!

@volitionproperties
MAKING THIS RELEVANT FOR
YOU

@volitionproperties
Financials for Biz Model
● 2bed/2bath
● 800-900sqft (the smaller, the better)
● 1 parking
● Specific buildings
● $850k
● $3035 mortgage
● $525 maintenance
● $25 insurance
● $4296.5 property tax or $358 month
● Cost: $3943 ---> $3950.
If $800k → Cost: $3764--> $3750
If $825k → Cost: $3853--> $3850
If $850k → Cost: $3943 ---> $3950
If $900k → Cost: $4121 --> $4100

@volitionproperties
● $200/night
● 30 nights
● 12 months
● $72,000
● 85% occupancy for the year = 61,200
● 72% rev share = $44,064/year or $3672/month
● Parking $15 x 30 nights x 12 months x 85% = $306/month
At 80% occupancy → $3456/month + $288/month = $3744/month --> $3750
Normal rent for this same unit:
● $3250/month
● Cashflow negative $600.
● And you'd have to lease it up yourself (or hire someone to lease it for you).

@volitionproperties
Conclusion:
● Target is $825-850k range
● Target is $4000/rent
● Target carry is $3850-3950.
● Target cashflow is $50-$150.
● Differential between this and regular rental is ~$750/month
How much you need for a 2bdrm:
$850k purchase
$170k downpayment + $30k LTT + $20k furniture = $220k

@volitionproperties
Pros:
● Toronto is on the rise. Rents on the rise. Occupancy is on the rise. $/night is on the rise ($210 instead of $200 --> extra
$183 --> $4200/rent, and then you're laughing).
● You only need to get thru the first few years, and then you can decide to continue or not. By a certain point in time, regular
rent will be good enough.
● Executive type of clientele
● Fully managed for you.
● Small M&R handled
● Furnishing is full-service
● You go from cashflow negative to cashflow neutral/positive right out of the gate.
● The likely "worst case scenario" is cashflow negative -$200 (unlikely to happen).
● The likely scenario is cashflow $50-150.
● The likely "best case scenario" is $4300 and cashflow $350-450 (90% occupancy and $205/night).

@volitionproperties
Cons:
● Rev share. No guarantees. But… if you don't make money, they don't make money.
● It's not "guaranteed" like a regular lease. But you get upside potential for this undertaking.
● Big M&R you pay far (no different, really)
● Another $16-20k required for furnishings in the beginning.

@volitionproperties
● 1bed/1bath
● ~600sqft (the smaller, the better)
● no parking
● Specific buildings
● $625k
● $2231 mortgage
● $350 maintenance
● $25 insurance
● $2719 property tax or $226 month
● Cost: $2832 ---> $2850.
If $600k → Cost: $2743--> $2750
If $625k → Cost: $2832 --> $2850
If $650k → Cost: $2922---> $2900

@volitionproperties
● $150/night
● 30 nights
● 12 months
● $54,000
● 85% occupancy for the year = 45,900
● 72% rev share = $33,048/year or $2754/month
At 80% occupancy → $2592/month --> $2600
Normal rent for this same unit:
● $2500/month
● Cashflow negative $350.
● And you'd have to lease it up yourself (or hire someone to lease it for you).

@volitionproperties
Conclusion:
● Target is $600-625k range
● Target is $2750/rent
● Target carry is $2850.
● Target cashflow is negative -$100.
● Differential between this and regular rental is ~$250/month
● 2bdrm + parking is better than 1bdrm

@volitionproperties
Announcements

@volitionproperties
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
● Sign up on the whiteboard
● We will reach out to you by Monday to
schedule a session with our Advisory team

@volitionproperties
What do YOU want to learn about this year?

@volitionproperties
Next Month - Street Smart Tour
● Wednesday, May 18th, 2019
● Loblaws Parking Lot

@volitionproperties
Networking Time!
● Please stay, have a drink / food and support a local business
● We will be here until 10pm
THANK YOU!!

Volition meetup 2019.04 - BOOST YOUR CASHFLOW!! EXECUTIVE FURNISHED RENTAL STRATEGY

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