97: Breaking Down the 2024 Goodman Report and What It Means for 2025 with Goodman Commercial's Mark Goodman

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Welcome back to the Colonial Real
Estate Podcast.

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I'm your mortgage broker host,
Taylor Atkinson.

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And I'm your real estate agent
host, Matt Glenn.

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What's happening, Taylor?
Well, I got out and voted this

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week.

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Yeah, you really voted.

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I'm not.

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I'm going day of.

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You're waiting until, yeah.

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Yeah.

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Yeah, so we're recording this, but
on the 24th of April.

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And what, voting's 28th?
Like, are we going to know the

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results that night?
I think we'll know the results, or

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at least have an idea.

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We thought the same thing in the

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provincial election, election, and
it took like another five days.

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That's true.

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Yeah.

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So when we listen to this,
everyone might be scratching their

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heads still, but I think we'll
know an answer.

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I actually think the provincial
election had, it seemed like a

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more technology advanced voting
system.

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This one, like I got there, I
didn't know if I was coloring in

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the circle, putting an X, a check
mark.

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I was trying to read instruction.

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I asked the lady, she's like, oh

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yeah, no, just the check mark.

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So someone manually has to go

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through and read all these.

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It just seems like such a crazy

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system, but.

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That's crazy.

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Yeah.

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If you're confused, mark.

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you're confused, that means that
like 50 % of the population is

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confused, dude.

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I feel like there should be a

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better system that removes the
human error, you know, like a

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digital system.

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Well, if you have a digital

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system, Well, if you have a
digital system, isn't it hackable?

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Don't they like the human error?
Yeah.

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Okay.

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At least then you can get a

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recount.

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Like, I don't know.

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I don't know what the best thing
to do is, but there are

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instructions, obviously.

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Yeah.

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As we're sitting right now, as of
today, and who knows really what

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the polls mean.

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I don't know how they really come

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up with this stuff.

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Yeah, nobody ever asked me.

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Do you know how the polls work?
So right now, liberals are at 42 %

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and conservatives are at 38%.

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But I think it's trending

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slightly.

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Liberals are coming down slightly

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and conservatives are coming up.

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So it's going to be like split.

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Yeah.

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Pierre was way ahead and then

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Trump got in and has been pissing
off Canadians.

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So then Carney came way back and
was ahead and now they're kind of

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evening out, I think.

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So yeah, we'll see.

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Yeah.

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It's interesting for me

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personally.

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for me personally.

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I feel like I'm in an echo chamber
because yeah, I see things one

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way.

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Well, in the real estate industry,

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I think we are in an echo chamber
for sure.

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Well, in the real estate industry,
I think we are in an echo chamber

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for sure.

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Yeah.

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One thing I got to say is I like
that we have like a 35 day

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election.

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Like man, I would not want to be

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dealing with this for 18 months.

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I like that.

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It's just like get your point
across and get people out.

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You know, that's actually like a
good positive spin because on the

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final question of the debate, spin
because on the final question of

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the debate, when they asked them,
you know, what do you like about

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this election?
And they were like, you know, I

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wish I could have gone out.

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And they all said the same

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response.

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I wish I could have met more

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people and I wish the election was
longer.

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And I was kind of like, yeah, I
guess they haven't really had like

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a fair chance, but really.

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Goddamn politicians, go out and

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meet people when there's not an
election.

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Yeah.

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Have a town hall for Christ's

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sake, if you're so worried about
that.

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Yeah.

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Right.

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And also, I feel like we've been
talking about an election for like

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a year now.

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It's been inevitable.

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Yeah.

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Honestly, it's nice that it's not

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in everyone's life forever.

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So like, it's kind of just, here

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we go.

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Then we just live with the

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consequences next week.

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Well, exciting times.

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We'll see.

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Yeah.

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Well, on this show, we had an
awesome guest, Mark Goodman.

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He has the Goodman Report.

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He's based out of Lower Mainland,

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based out of Vancouver.

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He's been in commercial real

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estate, I think mostly multifamily
for the last 20 years.

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And, you know, his dad.

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was an agent prior to him.

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Really cool origin story.

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Like his dad basically did a

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mailing list, you know, like
making envelopes, door knocking,

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personally handing them out.

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And Mark's evolved it.

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to where it is now, where it's a
semi -annually, annually, you

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know, project and then does
monthly mail outs as well and

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stuff like that.

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So really good resource, has his

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own podcast, puts out cool
LinkedIn stuff.

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So we wanted to speak to somebody
that sees the industry down there

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because, you know, we're hearing a
lot from like Vancouver and

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Toronto of like the trends of
certain asset classes.

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So yeah, he was a great resource
to talk to.

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We'll And he is very stoked on the
possibility of a Canadian 1031

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exchange.

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So that's kind of interesting to

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hear.

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of interesting to hear.

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I mean, it just seems like a no
-brainer.

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So if anyone doesn't know what the
1031 exchange is in the States,

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basically, it allows you to defer
capital gains if you reinvest it

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into the economy.

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So you sell a property or

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potentially a business, there's
capital gains.

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As long as you reinvest that back
in, it's great for the Canadian

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economy.

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It's great for that business or

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investor.

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It gets things moving.

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When you sell these properties,
you don't have massive tax bills.

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gets things moving.

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When you sell these properties,

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you don't have massive tax bills.

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You just buy another property.

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Things move.

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I haven't honestly read up a lot

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on why we wouldn't want this
besides less government revenue, I

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guess.

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But it just seems like a positive

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to me.

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Yeah.

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But I think the government revenue
will be there at some point,

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right?
When you do stop deferring those

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at some transaction.

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But if the economy is doing better

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and GDP is growing, the
government's going to be making

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more money.

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So it's more of a long -term plan,

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right?
But honestly, I hope that one goes

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through.

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And the GST on homes.

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Let's cut that too.

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Let's get some homes moving here.

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Yeah, there's been some great
promises over the last month.

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So we'll see who holds up their
end of the bargain here.

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Probably nobody.

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nobody.

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Yeah, here you go.

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The election's over.

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Here's the hose.

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This is a great episode.

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It's a lot of fun to talk to.

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Obviously, you can tell he

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podcasts himself because he's on
it.

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Yeah.

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This episode, like every episode,

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is sponsored by Century 21
Assurance Realty.

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We got our fingers in all the
pies.

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around the province.

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We're a great brokerage to work

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with.

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Kind of like a cooperative

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environment.

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Obviously, when you're a real

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estate agent, you're your own
person, you're in your own

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business, but we have added a
cooperative spin to it and it's

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worked out well for our agents.

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So if you're an agent looking for

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a new brokerage or to change
things up, give us a call.

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Or if you're a buyer or seller
looking for an agent, call one of

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our seller agents up or just call
me.

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Enjoy the show.

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is a Okay, welcome to the Colonial

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Real Estate Podcast.

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Mark Goodman, how are you doing?

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I'm great.

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How are you guys?

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Great.

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Well, we like to start our show

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just so our listener can get to
know you a little bit.

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What's your perfect Friday look
like?

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The perfect Friday.

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That's a great question.

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Showing up to work with a subject
removal, with a bank draft for a

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deal that's gone firm, firm day
Friday, and perhaps a closing as

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well.

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That would be a great Friday,

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coupled with perhaps a nice non
-stressful lunch, walking distance

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from my office.

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And then maybe a massage during

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lunch if I can carve out some
time.

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That would be good.

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And then heading home and relaxing

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and maybe a little socializing
that evening, I think would be

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great.

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I think you nailed it, Mark.

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Honestly, that sounds like a great
Friday.

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Let me know when you have one of
those.

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Yeah.

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It's been a while.

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Normally, it's just grueling,
intense whack -a -mole, you know,

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solving problems all day and then
wolfing down lunch in 10 minutes

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and dealing with difficult people.

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Yeah, our listener can't see, but

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you've got a map of Vancouver on
the background there.

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Where is your office?
We are located in Vancouver in the

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South Granville neighborhood.

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So we're on 10th and Granville.

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It's really the center of the
city, and we're five minutes away

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from downtown Vancouver, just over
the bridge.

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We have perfect access to the west
side of Vancouver, east side of

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Vancouver, over to Richmond.

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So we're very central.

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That is a nice location.

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location.

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That's actually a stellar
location.

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Yeah.

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I've followed a lot of your posts

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on LinkedIn and Goodman report
that you put out and you've just

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finished, you know, your kind of
final Goodman report for the year,

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I guess.

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Yeah.

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I would love to focus on that
because Vancouver is such a good

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indicator for kind of the rest of
the province, really, with trends.

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Can you break down kind of common
trends, any changes over the last

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12 months, good or bad?
Sure.

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And just kind of give us the
insight.

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Well, now that you've asked, I
happen to have hot off the press

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our year -end report 2024, which
is packed full of stats and

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commentary.

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00:07:05,220 --> 00:07:07,160
themes for 2024 and many of which

266
00:07:07,160 --> 00:07:08,760
are carried over to 2025.

267
00:07:08,760 --> 00:07:10,640
So I'm going to read some of the

268
00:07:10,640 --> 00:07:12,320
highlights just because I can't
remember them all.

269
00:07:12,320 --> 00:07:13,360
There's been a lot.

270
00:07:13,360 --> 00:07:14,680
That is a comprehensive book.

271
00:07:14,680 --> 00:07:17,890
How many pages is that report?
You're right.

272
00:07:17,890 --> 00:07:19,290
It is.

273
00:07:19,290 --> 00:07:19,890
It's 20 pages.

274
00:07:19,890 --> 00:07:20,170
Wow.

275
00:07:20,170 --> 00:07:22,590
Full of stats and anybody can

276
00:07:22,590 --> 00:07:23,970
download it online, goodmanreport
.com.

277
00:07:23,970 --> 00:07:28,150
We put out two a year, the mid
-year report and the year end are

278
00:07:28,150 --> 00:07:28,810
big seminal reports.

279
00:07:28,810 --> 00:07:31,110
And in between, we publish a lot

280
00:07:31,110 --> 00:07:31,690
of articles.

281
00:07:31,690 --> 00:07:34,730
The hard copy mail out goes out

282
00:07:34,730 --> 00:07:36,370
twice a year.

283
00:07:37,840 --> 00:07:38,240
Fantastic.

284
00:07:38,240 --> 00:07:40,240
Yeah, it started in 1983.

285
00:07:40,240 --> 00:07:42,720
And when I joined the business in

286
00:07:42,720 --> 00:07:43,520
2002, we took it online.

287
00:07:43,520 --> 00:07:44,800
So we have quite a large

288
00:07:44,800 --> 00:07:45,020
following.

289
00:07:45,020 --> 00:07:45,800
So the themes.

290
00:07:45,940 --> 00:07:47,060
2024, I characterized with a few
bullet points.

291
00:07:47,060 --> 00:07:48,100
Inflation finally under control.

292
00:07:48,100 --> 00:07:49,680
But interest rates went up, and

293
00:07:49,680 --> 00:07:52,920
then they went down, and then they
went up.

294
00:07:52,920 --> 00:07:55,580
So it's been that kind of roller
coaster.

295
00:07:55,740 --> 00:07:58,180
Capital gains last year, that
looming deadline, and everybody

296
00:07:58,300 --> 00:07:58,600
freaked out.

297
00:07:58,600 --> 00:08:00,580
I think it was June or July.

298
00:08:00,580 --> 00:08:01,700
I can't remember.

299
00:08:02,060 --> 00:08:02,520
June, yeah.

300
00:08:02,520 --> 00:08:03,920
It was insane for us.

301
00:08:03,920 --> 00:08:05,920
We had five deals close within a

302
00:08:05,920 --> 00:08:07,540
week of the deadline, $90 million.

303
00:08:08,020 --> 00:08:09,880
Some of our clients, in theory,

304
00:08:09,880 --> 00:08:12,620
would have saved a million bucks
just by making sure they didn't

305
00:08:12,620 --> 00:08:16,020
get captured by that increase in
the inclusionary rate to, I think

306
00:08:16,020 --> 00:08:19,260
it was 66 .7 % instead of 50.

307
00:08:19,260 --> 00:08:19,760
Yeah.

308
00:08:19,760 --> 00:08:23,350
So, and now, as you know, both
Polyev and Carney have suggested

309
00:08:23,350 --> 00:08:26,550
they'll do away with the capital
gains tax, which I think is a

310
00:08:26,550 --> 00:08:27,250
great idea.

311
00:08:27,490 --> 00:08:28,690
Capital gains increase.

312
00:08:28,690 --> 00:08:29,090
Increase.

313
00:08:29,290 --> 00:08:30,050
Yes, yes.

314
00:08:30,050 --> 00:08:30,570
Yeah.

315
00:08:30,810 --> 00:08:32,510
If we could get rid of the entire

316
00:08:32,510 --> 00:08:34,250
tax, that would be good too.

317
00:08:34,650 --> 00:08:34,970
Yeah.

318
00:08:35,309 --> 00:08:36,590
Residential Tenancy Act changes.

319
00:08:36,590 --> 00:08:39,309
There were more changes to the

320
00:08:39,309 --> 00:08:43,450
act, which further eroded property
rights in British Columbia.

321
00:08:43,450 --> 00:08:45,430
Big theme.

322
00:08:45,430 --> 00:08:46,290
Astronomical development cost

323
00:08:46,490 --> 00:08:49,490
charges, also known as DCCs, were
approved for 2025.

324
00:08:49,490 --> 00:08:51,870
That's been a real problem,
particularly in this environment

325
00:08:51,870 --> 00:08:54,570
where we have still very high
construction costs, soft costs,

326
00:08:54,570 --> 00:08:54,890
long entitlement periods.

327
00:08:54,890 --> 00:08:58,310
So that really was the death knell

328
00:08:58,770 --> 00:09:00,750
for the development land industry,
which continues today.

329
00:09:00,750 --> 00:09:03,030
Another theme, court -ordered
sales receiverships continue to

330
00:09:03,030 --> 00:09:03,310
grow.

331
00:09:03,310 --> 00:09:04,250
Big news last year.

332
00:09:04,250 --> 00:09:04,930
It continues this year.

333
00:09:04,930 --> 00:09:05,330
Court ordered sale.

334
00:09:05,330 --> 00:09:09,980
Our client is Deloitte and we are
going to be marketing a condo site

335
00:09:09,980 --> 00:09:11,100
in Burnaby that is under
receivership.

336
00:09:11,100 --> 00:09:15,560
Some of the other themes, new land
use policies in flux.

337
00:09:15,560 --> 00:09:16,580
So we have TOA.

338
00:09:16,580 --> 00:09:18,260
transit -oriented area development

339
00:09:18,260 --> 00:09:18,740
policies.

340
00:09:18,740 --> 00:09:22,000
So there was a deadline that was

341
00:09:22,330 --> 00:09:27,370
imposed in 2024 by the province to
mandate that all the

342
00:09:27,370 --> 00:09:30,630
municipalities within BC comply
with their new rules, which is

343
00:09:30,630 --> 00:09:33,230
essentially doing away with
restrictions or having a minimum

344
00:09:33,230 --> 00:09:37,090
height and a minimum density
around transit nodes.

345
00:09:37,250 --> 00:09:38,170
to build.

346
00:09:38,170 --> 00:09:40,210
And it basically is the province

347
00:09:40,210 --> 00:09:43,270
understanding clearly that the
cities aren't building fast

348
00:09:43,530 --> 00:09:43,790
enough.

349
00:09:43,790 --> 00:09:46,090
They're not building high enough.

350
00:09:46,090 --> 00:09:49,590
They're not building enough and
trying to relieve some of the

351
00:09:49,590 --> 00:09:54,860
pressure because we have a housing
affordability problem.

352
00:09:54,860 --> 00:09:58,340
That caused a lot of confusion
because not all municipalities

353
00:09:58,340 --> 00:10:00,220
complied with the deadline.

354
00:10:00,220 --> 00:10:02,540
and also the devil's in the

355
00:10:02,540 --> 00:10:02,640
details.

356
00:10:02,640 --> 00:10:04,640
So, for example, the province came

357
00:10:04,640 --> 00:10:11,500
in and said, you know, you have to
have a minimum height and a

358
00:10:11,500 --> 00:10:13,620
minimum density, and there's
certain tiers of density depending

359
00:10:13,620 --> 00:10:17,700
on how close you are to a transit
station.

360
00:10:17,700 --> 00:10:23,260
So they could mandate that, but
the city controls the minutiae,

361
00:10:23,260 --> 00:10:25,860
like what are the frontage
requirements?

362
00:10:25,860 --> 00:10:27,820
Is there inclusionary zoning,
below market zoning?

363
00:10:27,820 --> 00:10:32,010
Is there a pace of change?
They may restrict how many

364
00:10:32,010 --> 00:10:34,030
developments could go through per
year.

365
00:10:34,030 --> 00:10:37,430
Are there a maximum amount of
towers per block, which we have

366
00:10:37,430 --> 00:10:40,270
seen in the Broadway plan?
So Vancouver did OK because

367
00:10:40,270 --> 00:10:42,390
Vancouver was able to replicate
and really mirror the work that

368
00:10:42,390 --> 00:10:48,170
they did for the Broadway plan and
use that program for the TOA,

369
00:10:48,170 --> 00:10:49,350
transit oriented area policies.

370
00:10:49,980 --> 00:10:51,560
But other cities haven't.

371
00:10:51,560 --> 00:10:54,300
really been able to comply or have
everything flushed out.

372
00:10:54,300 --> 00:10:54,760
So there's clarity.

373
00:10:54,880 --> 00:10:55,580
So that's still causing a lot of

374
00:10:55,580 --> 00:10:56,240
confusion today.

375
00:10:56,240 --> 00:10:58,460
When a developer wants to look at

376
00:10:58,460 --> 00:11:01,960
a piece of land, they still don't
have clarity on how they could go

377
00:11:02,220 --> 00:11:03,000
about realizing redevelopment.

378
00:11:03,000 --> 00:11:04,780
Are there some cities that are

379
00:11:04,780 --> 00:11:07,220
like standing out worse to deal
with?

380
00:11:07,220 --> 00:11:07,640
Yeah.

381
00:11:07,640 --> 00:11:09,920
Until recently, Burnaby was real

382
00:11:10,080 --> 00:11:10,240
tough.

383
00:11:10,240 --> 00:11:10,660
Okay.

384
00:11:10,660 --> 00:11:13,700
Basically said they didn't want to
deal with it.

385
00:11:13,700 --> 00:11:16,800
So it's always changing in flux,
but yeah, that's been a challenge.

386
00:11:16,800 --> 00:11:16,960
Yeah.

387
00:11:16,960 --> 00:11:17,140
Okay.

388
00:11:17,140 --> 00:11:20,880
So what we have in Vancouver for
most developments now is 20 % has

389
00:11:20,880 --> 00:11:24,040
to be below market or affordable
rental.

390
00:11:24,040 --> 00:11:28,940
what we have in Vancouver for most
developments now is 20 % has to be

391
00:11:28,940 --> 00:11:30,380
below market or affordable rental.

392
00:11:30,380 --> 00:11:33,940
And a lot of cases, unless you're

393
00:11:33,940 --> 00:11:39,660
in the highest density area, which
typically is around six and a half

394
00:11:39,660 --> 00:11:43,620
FSR or 20 stories, even then it's
hard to pencil out because that 20

395
00:11:43,620 --> 00:11:47,340
% below market is a drag on the
pro forma and the rents have to be

396
00:11:47,340 --> 00:11:48,480
20 % below market.

397
00:11:48,480 --> 00:11:50,680
or at the same rents that the

398
00:11:50,680 --> 00:11:53,240
tenants were paying before they
moved out, whichever is lower.

399
00:11:53,240 --> 00:11:57,660
The tenants have the right of
return to come back at the same

400
00:11:57,960 --> 00:12:01,440
rent, but you don't know how many
tenants are going to come back

401
00:12:01,440 --> 00:12:04,160
after two or three years of going
through the development process.

402
00:12:04,460 --> 00:12:06,000
So there's a lot of unknowns.

403
00:12:06,000 --> 00:12:08,040
There's a lot of risk.

404
00:12:08,040 --> 00:12:12,460
The other notable factor in 2024
that has continued into 2025 is

405
00:12:12,460 --> 00:12:05,760
softening rental rates.

406
00:12:05,760 --> 00:12:07,220
It's been really significant.

407
00:12:07,220 --> 00:12:10,480
I can't remember the last time.

408
00:12:10,480 --> 00:12:12,020
that we've had such a pronounced

409
00:12:12,020 --> 00:12:14,940
change in rental rates,
particularly in the higher rent

410
00:12:14,940 --> 00:12:17,300
areas or where rents were pushed
pretty high.

411
00:12:17,300 --> 00:12:21,580
And so that's causing a lot of
havoc in the market because in

412
00:12:21,580 --> 00:12:23,500
addition to high construction
costs and long entitlement times

413
00:12:23,500 --> 00:12:26,240
and all the risk and uncertainty,
which comes along with being a

414
00:12:26,240 --> 00:12:28,840
developer, now you have to rejig
your performance because, you

415
00:12:28,840 --> 00:12:34,400
know, some developers were banking
on $6 plus per square foot in

416
00:12:34,400 --> 00:12:34,820
rents.

417
00:12:34,820 --> 00:12:36,540
And that has really come off.

418
00:12:36,840 --> 00:12:39,280
So many opine that it's because
there's more supply in the market.

419
00:12:39,280 --> 00:12:40,540
Perhaps that's one factor.

420
00:12:40,540 --> 00:12:41,660
I think it's more to do with just

421
00:12:41,660 --> 00:12:43,380
a really tough economy and people
losing their jobs.

422
00:12:43,380 --> 00:12:45,260
And fatigue has really set it in
the market.

423
00:12:45,260 --> 00:12:46,620
Like not everybody can afford
these crazy rents.

424
00:12:46,620 --> 00:12:49,120
So there's been a pronounced
adjustment there.

425
00:12:49,120 --> 00:12:54,220
And I would say now going into
2025, the most interesting or

426
00:12:54,380 --> 00:12:57,600
exciting thing that we've heard
from our politicians is the idea

427
00:12:57,880 --> 00:13:01,220
that we... may have rollover,
which would allow investors who

428
00:13:01,220 --> 00:13:05,040
sell investment properties to
reinvest their money and not have

429
00:13:05,040 --> 00:13:09,000
to pay capital gains tax, which we
refer to as the 1031 exchange in

430
00:13:09,000 --> 00:13:09,180
Canada.

431
00:13:09,180 --> 00:13:10,620
So that would be really

432
00:13:10,620 --> 00:13:10,980
interesting.

433
00:13:10,980 --> 00:13:14,200
And I think for anybody in the

434
00:13:14,200 --> 00:13:15,840
transactional -based business,
whether you're a mortgage broker,

435
00:13:15,840 --> 00:13:19,400
a realtor, or otherwise, I think
we would see a lot more liquidity

436
00:13:19,400 --> 00:13:20,740
and velocity in the market.

437
00:13:20,740 --> 00:13:23,280
I think we'd have to hire another

438
00:13:23,280 --> 00:13:25,360
couple brokers just to keep up.

439
00:13:25,360 --> 00:13:27,200
That would be a good problem.

440
00:13:27,200 --> 00:13:29,860
Can we just talk about the
benefits of that program?

441
00:13:29,860 --> 00:13:33,020
just talk about the benefits of
that program?

442
00:13:33,020 --> 00:13:36,940
So yeah, as the listener knows, I
mean, this has been going on in

443
00:13:36,940 --> 00:13:37,600
the States.

444
00:13:37,980 --> 00:13:39,680
first entry, 1031 exchange.

445
00:13:39,680 --> 00:13:42,080
You sell, you can defer your gains
essentially as long as you

446
00:13:42,080 --> 00:13:45,600
reinvest into real estate, which
is just a fantastic idea in Canada

447
00:13:45,600 --> 00:13:49,980
because if we want more supply and
this allows movements of property,

448
00:13:49,980 --> 00:13:54,280
it can be a second house as well,
like a vacation cabin, something

449
00:13:54,160 --> 00:13:57,460
that you're going to pay gains on.

450
00:13:57,460 --> 00:14:00,080
You can roll that over into

451
00:14:00,080 --> 00:14:00,600
something else.

452
00:14:00,600 --> 00:14:03,260
Is this going to be the next

453
00:14:03,260 --> 00:14:07,040
catalyst to actually put some more
units on the market?

454
00:14:07,040 --> 00:14:09,240
It would be huge.

455
00:14:09,240 --> 00:14:10,520
would be huge.

456
00:14:10,520 --> 00:14:13,300
Yeah, there are so many scenarios.

457
00:14:13,300 --> 00:14:15,560
I read an article, I think, I

458
00:14:15,560 --> 00:14:19,030
don't know if it was in business
in Vancouver, where they have a

459
00:14:19,030 --> 00:14:21,630
case study of a business owner
that owns an industrial site

460
00:14:21,630 --> 00:14:22,510
somewhere in the Fraser Valley.

461
00:14:22,510 --> 00:14:24,170
They want to sell the property

462
00:14:24,170 --> 00:14:25,270
because they want to expand their
business.

463
00:14:25,270 --> 00:14:26,050
But if they sell the property,
they're going to get hit with a

464
00:14:26,050 --> 00:14:28,550
massive capital gains and the cost
benefit doesn't work out to sell

465
00:14:28,550 --> 00:14:29,150
the property.

466
00:14:29,270 --> 00:14:29,830
Yet they're struggling because

467
00:14:29,830 --> 00:14:30,510
they need to expand their
business.

468
00:14:30,510 --> 00:14:32,840
At the same token.

469
00:14:32,840 --> 00:14:35,180
That land, the highest and best

470
00:14:35,180 --> 00:14:36,740
use is actually rental
development.

471
00:14:36,740 --> 00:14:40,860
And so if they sold their property
to a developer, now we would have

472
00:14:40,860 --> 00:14:42,120
much needed rental housing built.

473
00:14:42,120 --> 00:14:44,120
So win -win for everybody.

474
00:14:44,120 --> 00:14:46,380
Win -win for the community.

475
00:14:46,380 --> 00:14:47,360
Win -win for the renters.

476
00:14:47,360 --> 00:14:47,740
More supply.

477
00:14:47,840 --> 00:14:50,140
Win -win for this business owner

478
00:14:50,140 --> 00:14:52,280
that they can go on and expand
their business and hire more

479
00:14:52,280 --> 00:14:52,480
people.

480
00:14:52,480 --> 00:14:52,780
Yet.

481
00:14:52,780 --> 00:14:54,980
The government's got their hand
out.

482
00:14:54,980 --> 00:14:56,320
It doesn't make sense.

483
00:14:56,320 --> 00:14:57,860
So you've basically frozen the

484
00:14:57,860 --> 00:14:58,220
market.

485
00:14:58,220 --> 00:14:59,220
That's just one example.

486
00:14:59,220 --> 00:15:02,040
But I think to have a healthy,
balanced market, we can't penalize

487
00:15:02,040 --> 00:15:04,260
people for continually risking
their capital and trying to make a

488
00:15:04,260 --> 00:15:04,380
profit.

489
00:15:04,380 --> 00:15:06,040
And if you keep taxing people to

490
00:15:06,040 --> 00:15:08,280
oblivion, we're going to lose the
entrepreneurial spirit here in

491
00:15:08,280 --> 00:15:11,740
British Columbia and Canada, and
people are going to take risks and

492
00:15:11,740 --> 00:15:12,720
move their money elsewhere.

493
00:15:12,720 --> 00:15:15,120
You know, it's funny as I just

494
00:15:15,120 --> 00:15:17,860
dealt with this, my own business
where he had a land assembly where

495
00:15:17,860 --> 00:15:19,620
there was four houses for sale.

496
00:15:19,620 --> 00:15:19,740
Yeah.

497
00:15:19,740 --> 00:15:24,740
And then the fifth one, the corner
one was kind of like the money

498
00:15:24,740 --> 00:15:27,060
property to the whole thing was a
rental property.

499
00:15:27,060 --> 00:15:30,530
So the four owners, all owner
occupied want to live there.

500
00:15:30,530 --> 00:15:34,130
And then the rental property on
the corner, I approached them and

501
00:15:34,130 --> 00:15:38,670
said, do you want to sell like so
that we can build an apartment

502
00:15:38,670 --> 00:15:40,450
block?
And they said, no, because if I

503
00:15:40,450 --> 00:15:43,650
sell, I'm going to get killed on
capital gains.

504
00:15:43,930 --> 00:15:44,490
That's right.

505
00:15:44,490 --> 00:15:45,710
So they just didn't sell.

506
00:15:45,710 --> 00:15:46,830
So the corner was still there.

507
00:15:46,830 --> 00:15:47,890
The other four sells.

508
00:15:47,890 --> 00:15:52,300
And now they're building like 16
townhomes when it would have been

509
00:15:52,300 --> 00:15:53,260
like 72 unit.

510
00:15:53,260 --> 00:15:53,900
That's right.

511
00:15:53,900 --> 00:15:55,360
Building all because of the one
person.

512
00:15:55,360 --> 00:15:57,000
And she's right.

513
00:15:57,000 --> 00:15:58,300
She would have effectively not

514
00:15:58,460 --> 00:16:01,180
made any money because of that.

515
00:16:01,180 --> 00:16:03,720
Makes more sense for her to just

516
00:16:03,720 --> 00:16:06,840
keep the property as like a duplex
rental of two units there.

517
00:16:06,840 --> 00:16:10,000
And it's not always on the big
scale too, right?

518
00:16:10,000 --> 00:16:13,400
Like a lot of people think this
legislation comes down and it's

519
00:16:13,400 --> 00:16:14,440
going to just support developers.

520
00:16:14,440 --> 00:16:16,420
But even if somebody has a small

521
00:16:16,420 --> 00:16:18,940
condo that they've been renting
out for years and years and years,

522
00:16:18,940 --> 00:16:22,560
you know, they're better off just
to refi and defer those gains and

523
00:16:22,560 --> 00:16:23,580
keep it as a rental.

524
00:16:23,580 --> 00:16:25,060
But what if a first time home

525
00:16:25,060 --> 00:16:26,780
buyer wants to buy an affordable
condo?

526
00:16:26,780 --> 00:16:30,700
Well, if they, you know, remove
this capital gain or do a

527
00:16:30,700 --> 00:16:30,820
rollover.

528
00:16:30,820 --> 00:16:32,120
That allows somebody to buy that

529
00:16:32,120 --> 00:16:34,060
as a home, an owner -occupied
home.

530
00:16:34,060 --> 00:16:34,480
So yeah, huge opportunity with
this.

531
00:16:34,480 --> 00:16:34,560
this.

532
00:16:34,560 --> 00:16:35,280
What's the argument against this?

533
00:16:35,280 --> 00:16:38,680
Because when I look at it, it's
just positives across the board.

534
00:16:38,680 --> 00:16:41,160
Why would they not do this?
I couldn't think of a real reason.

535
00:16:41,160 --> 00:16:43,180
The government is used to
extracting their pound of flesh.

536
00:16:43,180 --> 00:16:45,480
government is used to extracting
their pound of flesh.

537
00:16:45,480 --> 00:16:48,360
And our whole system and Canadian
government is based on a very

538
00:16:48,360 --> 00:16:49,940
onerous tax ethos.

539
00:16:50,200 --> 00:16:51,840
Things are changing now because

540
00:16:51,840 --> 00:16:54,400
now we realize that we have to
compete and we have to attract

541
00:16:54,400 --> 00:16:55,940
capital and we have to bring back
investors.

542
00:16:55,940 --> 00:16:57,460
And I think foreign investment
would be very healthy for the

543
00:16:57,460 --> 00:16:58,140
economy.

544
00:16:58,140 --> 00:16:59,240
And Trump's putting on the

545
00:16:59,240 --> 00:16:59,520
pressure.

546
00:16:59,520 --> 00:17:01,170
Maybe he's doing us a favor in the

547
00:17:01,170 --> 00:17:04,210
long term that we can't be reliant
on the United States and that we

548
00:17:04,210 --> 00:17:05,270
have to grow up and look.

549
00:17:05,270 --> 00:17:07,290
at alternatives and create a more

550
00:17:07,290 --> 00:17:08,349
healthy, balanced economy.

551
00:17:08,349 --> 00:17:09,450
Because if we don't, we're in

552
00:17:09,450 --> 00:17:09,930
serious trouble.

553
00:17:09,930 --> 00:17:10,089
Yeah.

554
00:17:10,089 --> 00:17:12,670
And the beauty of this program is,
you know, if you're reallocating

555
00:17:12,670 --> 00:17:14,930
that capital back into Canada,
like that's the key point.

556
00:17:15,150 --> 00:17:16,869
Because right now there are
people, you know, selling assets

557
00:17:16,869 --> 00:17:17,609
and going elsewhere.

558
00:17:17,609 --> 00:17:20,329
Like the States or Mexico or

559
00:17:20,329 --> 00:17:21,750
wherever you want to go.

560
00:17:21,750 --> 00:17:23,800
wherever you want to go.

561
00:17:23,800 --> 00:17:26,720
Like, do you know how many BC
developers have pens down?

562
00:17:26,720 --> 00:17:27,880
They're done with Vancouver.

563
00:17:28,099 --> 00:17:29,420
They're moving to Calgary.

564
00:17:29,140 --> 00:17:32,120
Like if that's not a sign of the
times, I don't know what is, but

565
00:17:32,120 --> 00:17:36,320
they don't want to have anything
to do with taking risks here.

566
00:17:36,320 --> 00:17:38,400
And just to build anything here
takes years.

567
00:17:38,400 --> 00:17:39,680
In Calgary, you can get something
done in a year, you know, go

568
00:17:39,680 --> 00:17:43,480
through the entitlement process
and make some money and provide

569
00:17:43,480 --> 00:17:43,980
housing.

570
00:17:43,980 --> 00:17:46,320
Yeah, I'm sure this is a lot in

571
00:17:46,320 --> 00:17:49,830
your report as well.

572
00:17:49,830 --> 00:17:51,970
It's like the uncertainty that

573
00:17:51,970 --> 00:17:54,810
we've had over the last couple of
years is killing transactions and

574
00:17:54,810 --> 00:17:56,130
killing opportunity.

575
00:17:56,130 --> 00:17:57,630
And this is a great program.

576
00:17:57,630 --> 00:18:01,030
But to summarize it over what it's
just about a year now, capital

577
00:18:01,030 --> 00:18:03,410
gains inclusion announcement came
out.

578
00:18:03,410 --> 00:18:06,110
It was supposed to be implemented
in June, then maybe delayed and

579
00:18:06,110 --> 00:18:07,430
it's going to happen.

580
00:18:07,430 --> 00:18:08,830
It's not going to happen.

581
00:18:08,830 --> 00:18:10,410
And now we're talking about wiping
it out.

582
00:18:10,410 --> 00:18:10,990
altogether.

583
00:18:10,990 --> 00:18:13,270
Larger transactions take a long

584
00:18:13,270 --> 00:18:13,930
time.

585
00:18:13,930 --> 00:18:16,610
So if somebody put pen to paper,

586
00:18:16,610 --> 00:18:17,530
you could crystallize those gains
previous.

587
00:18:17,530 --> 00:18:20,890
You could reassign that asset in a
different corp and pay those

588
00:18:20,890 --> 00:18:24,850
gains, which was just essentially
a money grab from the government.

589
00:18:24,850 --> 00:18:26,770
But then it didn't happen.

590
00:18:26,770 --> 00:18:28,690
And then you still have that

591
00:18:28,690 --> 00:18:31,260
transaction that's going to play
out to sell.

592
00:18:31,260 --> 00:18:33,020
What if you sell before this
program doesn't get...

593
00:18:33,020 --> 00:18:33,620
It's wild how much money is left
on the table here.

594
00:18:33,620 --> 00:18:33,680
Absolutely.

595
00:18:33,680 --> 00:18:33,780
Yeah.

596
00:18:33,780 --> 00:18:37,400
Well, kind of to stay on topic
with your report, where are we

597
00:18:37,400 --> 00:18:39,280
headed in 2025?
What are the trends looking like?

598
00:18:39,280 --> 00:18:41,860
And can we talk about, I mean,
everything like what are cap rates

599
00:18:41,860 --> 00:18:43,200
in Vancouver?
How many transactions have been

600
00:18:43,200 --> 00:18:43,620
happening?
Vacancy?

601
00:18:43,620 --> 00:18:44,380
Just, yeah.

602
00:18:44,540 --> 00:18:45,680
Where are we going with

603
00:18:45,680 --> 00:18:47,620
everything?
Well, I'll start with like the

604
00:18:47,620 --> 00:18:50,860
notable trends in 2024 and how I
think it's going to play out 2025.

605
00:18:50,860 --> 00:18:53,420
So 2024 finally was a recovery
year.

606
00:18:53,420 --> 00:18:56,120
sort of, when compared to the
previous two years.

607
00:18:56,120 --> 00:18:58,420
So we've had two consecutive
years, 2022 and 2023, saw declines

608
00:18:58,420 --> 00:19:00,160
in transactions in dollar volume
in the Metro Vancouver multifamily

609
00:19:00,160 --> 00:19:00,480
market.

610
00:19:00,480 --> 00:19:03,380
And in 2024, we bounced back.

611
00:19:03,380 --> 00:19:06,200
We had an increase in transactions
of 33%.

612
00:19:06,200 --> 00:19:08,420
So we had 97 sales throughout
Metro Vancouver.

613
00:19:08,420 --> 00:19:09,640
compared to 73 transactions.

614
00:19:09,640 --> 00:19:10,920
So that's significant.

615
00:19:10,920 --> 00:19:12,240
But dollar volume was major.

616
00:19:12,240 --> 00:19:13,760
There was a major change.

617
00:19:13,760 --> 00:19:16,300
We went up 71 % from the previous
year.

618
00:19:16,440 --> 00:19:18,240
So 2024 saw $1 .78 billion in
total volume.

619
00:19:18,240 --> 00:19:21,160
compared to just $1 billion a year
earlier.

620
00:19:21,160 --> 00:19:24,460
So we've had a 33 % change in
transactions, but a monumental

621
00:19:24,460 --> 00:19:26,880
change in dollar volume.

622
00:19:26,880 --> 00:19:30,800
And that's because we had a few

623
00:19:30,800 --> 00:19:31,300
major transactions.

624
00:19:31,300 --> 00:19:32,960
We had three deals over $100

625
00:19:32,960 --> 00:19:34,860
million, which is really big for
our city.

626
00:19:34,860 --> 00:19:38,240
And so major pension funds and
institutions came in and bought

627
00:19:38,240 --> 00:19:39,280
some newer product in Vancouver.

628
00:19:39,280 --> 00:19:40,740
So that really inflated the dollar

629
00:19:40,740 --> 00:19:40,980
volume.

630
00:19:40,980 --> 00:19:42,560
I would say some other noteworthy

631
00:19:42,560 --> 00:19:46,820
trends in terms of buyer profile.

632
00:19:46,820 --> 00:19:47,960
For years, it's been very

633
00:19:47,960 --> 00:19:48,120
consistent.

634
00:19:48,120 --> 00:19:51,140
Generally speaking, 10 % of all

635
00:19:51,280 --> 00:19:53,040
the transactions in Metro
Vancouver were by pension funds

636
00:19:53,040 --> 00:19:54,660
and REITs, generally.

637
00:19:54,660 --> 00:19:56,780
Most of them out of Toronto, some

638
00:19:56,780 --> 00:19:57,800
out of Alberta.

639
00:19:58,020 --> 00:19:59,560
But for the most part, our

640
00:19:59,560 --> 00:20:02,640
market's been about 85 % private
investors, mom and pop, anything

641
00:20:02,640 --> 00:20:06,340
from a 10 -suite apartment
building right up to a $50

642
00:20:06,340 --> 00:20:07,180
million, $60 million deal.

643
00:20:07,380 --> 00:20:09,180
About 85 % were private and high

644
00:20:09,180 --> 00:20:10,700
net worth individuals.

645
00:20:10,700 --> 00:20:11,940
The other 10 % institutions and

646
00:20:11,940 --> 00:20:15,460
5%, give or take, were nonprofit
or government entities.

647
00:20:15,460 --> 00:20:19,670
And that has changed significantly
where government and nonprofit

648
00:20:19,670 --> 00:20:22,150
represented 19 % of all the
transactions last year.

649
00:20:22,150 --> 00:20:27,830
And that's due in part to a
provincial initiative called the

650
00:20:27,830 --> 00:20:31,210
Rental Protection Fund, where
they've allocated half a billion

651
00:20:31,450 --> 00:20:36,170
dollars to nonprofits in ways of
grants and subsidies for them to

652
00:20:36,170 --> 00:20:36,890
buy.

653
00:20:36,890 --> 00:20:39,970
this older rental housing that we

654
00:20:39,970 --> 00:20:41,790
see today throughout Metro
Vancouver.

655
00:20:42,380 --> 00:20:45,420
You know, I've been critical of
the program.

656
00:20:45,420 --> 00:20:48,620
They're not creating any new
rental housing.

657
00:20:48,620 --> 00:20:51,340
They're really just shifting the
building from one ownership group

658
00:20:51,340 --> 00:20:51,940
to another.

659
00:20:51,940 --> 00:20:55,980
And if you're one of the lucky few

660
00:20:55,980 --> 00:21:00,770
that it's part of a nonprofit,
you'll get your rent subsidized or

661
00:21:00,990 --> 00:21:01,790
frozen in time.

662
00:21:01,790 --> 00:21:04,510
But it's not really adding supply

663
00:21:04,510 --> 00:21:05,590
to the market.

664
00:21:05,590 --> 00:21:07,750
But in any event, I think it was

665
00:21:07,750 --> 00:21:11,550
very politically expedient for our
premier and province to roll out

666
00:21:11,550 --> 00:21:12,190
this program.

667
00:21:12,390 --> 00:21:13,450
If anything, one could argue that

668
00:21:13,450 --> 00:21:17,010
it causes more scarcity and more
demand because you've literally

669
00:21:17,010 --> 00:21:19,610
removed affordable housing out of
the public sphere for regular

670
00:21:19,610 --> 00:21:21,230
people into the nonprofit sphere.

671
00:21:21,230 --> 00:21:23,670
I don't think it's a very elegant

672
00:21:23,670 --> 00:21:27,130
and efficient way of... helping
affordable housing or creating

673
00:21:27,330 --> 00:21:27,550
affordable housing.

674
00:21:27,550 --> 00:21:32,310
It's kind of a blunt tool where

675
00:21:32,310 --> 00:21:36,250
you buy a building and the tenant
lucks out.

676
00:21:36,250 --> 00:21:39,770
You know, a lot of these tenants
didn't need to be saved.

677
00:21:40,150 --> 00:21:44,840
Many of them make a decent income
and they just happen to be living

678
00:21:44,840 --> 00:21:49,000
in that building that was
purchased by a nonprofit.

679
00:21:49,000 --> 00:21:51,480
And, you know, they'll stay there
for years.

680
00:21:51,480 --> 00:21:55,360
So in any event, that I think
really contributed to the dollar

681
00:21:55,360 --> 00:21:56,960
volume and the transactions in
2024.

682
00:21:56,960 --> 00:22:00,900
Institutional groups, pension
funds and REITs dropped a little

683
00:22:00,900 --> 00:22:01,480
bit.

684
00:22:01,480 --> 00:22:03,880
They represented 7 % of the

685
00:22:03,880 --> 00:22:06,840
transactions and private
individuals represented about 74%.

686
00:22:06,840 --> 00:22:10,540
So there was a change there.

687
00:22:10,540 --> 00:22:14,020
In terms of value, if we look at

688
00:22:14,060 --> 00:22:18,120
Metro Vancouver across the board,
so that includes the city itself,

689
00:22:18,120 --> 00:22:18,940
neighborhoods like Kitsilano.

690
00:22:18,940 --> 00:22:20,720
Fairview, Marple, the West End of

691
00:22:20,720 --> 00:22:24,940
Vancouver, and then, of course,
the suburbs, Burnaby, North Van,

692
00:22:24,940 --> 00:22:26,000
Coquitlam, you name it.

693
00:22:26,000 --> 00:22:28,180
The price per unit was flat.

694
00:22:28,180 --> 00:22:31,280
So in 2024, the average price per
unit was $462 ,000, and the

695
00:22:31,280 --> 00:22:32,620
previous year was $459 ,000.

696
00:22:32,620 --> 00:22:35,020
So there was a 1 % increase across

697
00:22:35,020 --> 00:22:36,880
the board in price per unit.

698
00:22:36,880 --> 00:22:38,360
It's not the best way to look at

699
00:22:38,360 --> 00:22:40,120
value because there's different
pockets and nuances to different

700
00:22:40,120 --> 00:22:41,180
areas.

701
00:22:41,180 --> 00:22:42,660
And many of the properties,

702
00:22:42,660 --> 00:22:44,720
apartment buildings that were
acquired were for redevelopment.

703
00:22:44,720 --> 00:22:48,340
And so in many cases, developers
paid a lot more for the land and

704
00:22:48,340 --> 00:22:51,320
that really pushed up the price
per unit.

705
00:22:51,320 --> 00:22:52,840
So the devil's in the details.

706
00:22:53,580 --> 00:22:55,560
In Vancouver, there was a 17 %

707
00:22:55,560 --> 00:22:57,600
increase in average price per
unit.

708
00:22:57,600 --> 00:23:01,040
So we were at 570 ,000 a unit.

709
00:23:01,040 --> 00:23:02,440
versus 486 the previous year.

710
00:23:02,440 --> 00:23:06,680
Again, there's some sales where
the sites were purchased by

711
00:23:06,680 --> 00:23:11,500
developers that pushed the price
per unit to over a million dollars

712
00:23:11,500 --> 00:23:12,240
per unit.

713
00:23:12,240 --> 00:23:14,440
But it just gives you a general

714
00:23:14,440 --> 00:23:15,520
sense of where the market.

715
00:23:15,520 --> 00:23:17,460
I do not see any pronounced change

716
00:23:17,460 --> 00:23:18,260
in value over the next while.

717
00:23:18,260 --> 00:23:19,700
I just think things have

718
00:23:20,000 --> 00:23:20,200
stabilized.

719
00:23:20,200 --> 00:23:21,040
Interest rates have come down.

720
00:23:21,040 --> 00:23:23,500
The one trend that I think is
going to be very noteworthy is the

721
00:23:23,500 --> 00:23:25,800
amount of listings on the market.

722
00:23:25,800 --> 00:23:26,960
For the last three years, what

723
00:23:27,180 --> 00:23:29,600
I've heard from investors or
people considering selling is

724
00:23:29,600 --> 00:23:31,220
we're just going to wait.

725
00:23:31,220 --> 00:23:32,940
Anytime there's uncertainty, push

726
00:23:32,940 --> 00:23:35,740
the pause button.

727
00:23:35,900 --> 00:23:36,860
We're going to wait.

728
00:23:36,860 --> 00:23:39,420
We're going to wait for the market
to get better.

729
00:23:39,420 --> 00:23:41,040
We're going to wait.

730
00:23:41,040 --> 00:23:43,940
When interest rates go down,

731
00:23:43,940 --> 00:23:45,740
prices are going to go up.

732
00:23:45,740 --> 00:23:47,800
And what I try to communicate to

733
00:23:47,800 --> 00:23:51,480
people is that interest rates are
only one variable that dictate

734
00:23:51,480 --> 00:23:52,880
market value.

735
00:23:52,880 --> 00:23:57,920
It is not the Hail Mary indicator

736
00:23:57,920 --> 00:24:02,800
of how values are going to
manifest based on interest rates.

737
00:24:02,800 --> 00:24:05,460
What happened was people waited
three years.

738
00:24:05,460 --> 00:24:09,340
Interest rates finally came down
about 100 basis points.

739
00:24:09,460 --> 00:24:13,060
I mean, you would know better than
me.

740
00:24:13,060 --> 00:24:17,860
And what happened was there's four
times as much product on the

741
00:24:17,860 --> 00:24:18,000
market.

742
00:24:18,000 --> 00:24:21,100
So, you know, at Marpole, there is

743
00:24:21,100 --> 00:24:24,840
a dozen listings hanging in the
market for, you know, between 320

744
00:24:24,840 --> 00:24:26,040
and 380 a door.

745
00:24:26,040 --> 00:24:27,260
Nothing's been selling.

746
00:24:27,260 --> 00:24:30,080
It's been like that for a year.

747
00:24:30,080 --> 00:24:32,880
I came up with a few listings at

748
00:24:32,880 --> 00:24:34,560
$300 ,000 a door.

749
00:24:34,560 --> 00:24:35,860
It was crickets.

750
00:24:35,860 --> 00:24:38,480
We just sold one building for $260
,000 a door.

751
00:24:38,480 --> 00:24:39,780
And we made the market.

752
00:24:39,780 --> 00:24:42,200
And that kind of screwed things up

753
00:24:42,200 --> 00:24:43,660
for everybody else.

754
00:24:43,680 --> 00:24:45,000
This is supply and demand.

755
00:24:45,000 --> 00:24:47,120
The market doesn't lie.

756
00:24:47,120 --> 00:24:48,220
We just tied up another building

757
00:24:48,220 --> 00:24:50,440
around $260 a door.

758
00:24:51,080 --> 00:24:54,620
Well, three years ago, they were

759
00:24:54,920 --> 00:24:57,680
selling close to $400 a door.

760
00:24:57,680 --> 00:25:00,380
So there's been about a 25 % to 30

761
00:25:00,380 --> 00:25:00,900
% drop.

762
00:25:00,900 --> 00:25:02,120
per unit in Vancouver properties.

763
00:25:02,120 --> 00:25:04,320
We're seeing less of a pronounced
drop in newer purpose -built

764
00:25:04,320 --> 00:25:06,420
buildings or properties that had a
higher yield.

765
00:25:06,420 --> 00:25:10,260
So it's a much more sensitive time
today for cap rates.

766
00:25:10,260 --> 00:25:12,640
You're going in cap rate is very
important.

767
00:25:12,640 --> 00:25:15,840
Gone are the days where a buyer is
going to feel comfortable putting

768
00:25:15,840 --> 00:25:20,180
down 70 % and having a 30 % loan
to value, which by the way, I've

769
00:25:20,180 --> 00:25:24,640
done some of those deals at a two
and a half cap.

770
00:25:24,640 --> 00:25:26,580
Before 2019, cap rates were less
important.

771
00:25:26,580 --> 00:25:29,240
They were temporary because
entrepreneurs, people would go in,

772
00:25:29,240 --> 00:25:29,880
they'd rehabilitate these old
inefficient buildings.

773
00:25:29,880 --> 00:25:31,560
They would give notice, rehab the
building, and double the rents,

774
00:25:31,560 --> 00:25:32,940
also known as rent evictions.

775
00:25:32,940 --> 00:25:34,520
That game is over.

776
00:25:34,520 --> 00:25:38,220
And so you could be stuck with a
building and just wait for natural

777
00:25:38,220 --> 00:25:42,220
attrition, natural turnover, and
then you would go ahead and update

778
00:25:42,430 --> 00:25:42,750
the units.

779
00:25:42,750 --> 00:25:45,470
So cap rates are much more

780
00:25:45,470 --> 00:25:47,250
important today than they've ever
been.

781
00:25:47,250 --> 00:25:48,970
The lending environment is
different.

782
00:25:48,970 --> 00:25:50,570
Everything takes longer.

783
00:25:50,570 --> 00:25:53,150
They scrutinize the numbers more,

784
00:25:53,550 --> 00:25:54,070
less flexibility.

785
00:25:54,070 --> 00:25:55,910
We're still doing deals, but I

786
00:25:55,910 --> 00:26:00,070
would say that the cap rates that
we're seeing are generally in the

787
00:26:00,070 --> 00:26:02,130
very high 3 % to low 4 cap rate
range.

788
00:26:02,130 --> 00:26:05,930
Of course, there's nuances for
every deal, but generally we're in

789
00:26:05,930 --> 00:26:08,010
the high threes to low fours.

790
00:26:08,170 --> 00:26:11,290
We just closed on a building in

791
00:26:11,290 --> 00:26:13,680
Mount Pleasant, a really nice old
1960s building.

792
00:26:13,680 --> 00:26:15,460
It sold at a 3 .2 cap.

793
00:26:15,460 --> 00:26:16,820
which is lower than we typically

794
00:26:16,820 --> 00:26:17,200
see.

795
00:26:17,200 --> 00:26:19,060
However, the price per unit was

796
00:26:19,060 --> 00:26:22,640
330 ,000 when, generally speaking,
the market in that area was

797
00:26:22,640 --> 00:26:24,160
trading around 350 to 370.

798
00:26:24,160 --> 00:26:25,980
So in return for a lower price per

799
00:26:25,980 --> 00:26:27,980
unit, the buyer accepted a lower
yield.

800
00:26:28,160 --> 00:26:30,440
But over time, two or three
turnovers, you're going to get

801
00:26:30,440 --> 00:26:34,620
those rents up 50 to 75%.

802
00:26:34,620 --> 00:26:36,000
That cap rate will change very

803
00:26:36,000 --> 00:26:36,140
quickly.

804
00:26:36,140 --> 00:26:39,120
So it's not all about cap rate.

805
00:26:39,120 --> 00:26:43,480
But I would say it's much more
important today than it's ever

806
00:26:43,480 --> 00:26:44,040
been.

807
00:26:44,040 --> 00:26:47,000
That does seem a bit higher than I

808
00:26:47,000 --> 00:26:49,060
thought it would be in Vancouver.

809
00:26:49,060 --> 00:26:51,340
Do you feel it's going to keep

810
00:26:51,340 --> 00:26:53,340
going up?
I think things have plateaued

811
00:26:53,340 --> 00:26:54,000
right now.

812
00:26:54,000 --> 00:26:55,360
I think five -year money CMHC

813
00:26:55,360 --> 00:26:58,720
insured, you're probably around 3
.5, 3 .6.

814
00:26:58,720 --> 00:26:59,920
It's quite volatile.

815
00:26:59,920 --> 00:27:00,940
It's changing all the time.

816
00:27:00,940 --> 00:27:05,220
So you're going to need something
close to that in order for it to

817
00:27:05,220 --> 00:27:05,520
make sense.

818
00:27:05,520 --> 00:27:06,920
I don't think cap rates are going

819
00:27:06,920 --> 00:27:08,340
to drop or increase.

820
00:27:08,340 --> 00:27:12,260
I think things are going to be

821
00:27:12,260 --> 00:27:13,020
stable right now.

822
00:27:13,200 --> 00:27:16,240
And we finally have data points.

823
00:27:16,240 --> 00:27:19,440
Until recently, We had appraisers
calling us all the time, like, how

824
00:27:19,440 --> 00:27:23,460
do you value a property when the
last trade in this neighborhood

825
00:27:23,460 --> 00:27:25,660
was eight months ago?
And that's ancient history.

826
00:27:25,920 --> 00:27:29,140
The way we were pricing properties
is we look at what was currently

827
00:27:29,140 --> 00:27:31,500
hanging on the market, which was a
lot.

828
00:27:31,500 --> 00:27:33,400
And then you got to undercut the
price.

829
00:27:33,400 --> 00:27:36,680
And finally, we started getting
some sales and data points.

830
00:27:36,680 --> 00:27:39,540
You know, I'd say we're in a much
healthier environment.

831
00:27:39,870 --> 00:27:43,910
It's more balanced now, but it's
certainly it's not a seller's

832
00:27:43,910 --> 00:27:45,870
market anymore, which
traditionally what Vancouver real

833
00:27:45,870 --> 00:27:47,970
estate used to be.

834
00:27:47,970 --> 00:27:50,230
Buyers have a lot more choice and

835
00:27:50,230 --> 00:27:52,550
options right now, and they're
much more careful.

836
00:27:52,550 --> 00:27:54,630
You raised a good point there.

837
00:27:54,630 --> 00:27:56,110
raised a good point there.

838
00:27:56,110 --> 00:27:59,130
I think historically, we've always
looked at real estate and said,

839
00:27:59,130 --> 00:28:01,690
yeah, there's a value add with the
rent evictions.

840
00:28:01,690 --> 00:28:06,570
pre what was that 2022 i guess
something like that they changed

841
00:28:06,570 --> 00:28:09,440
it i think before 2019 the
legislation was such that allowed

842
00:28:09,440 --> 00:28:14,120
you to evict tenants for the
purpose of renovation yeah so you

843
00:28:14,120 --> 00:28:18,680
know now you nailed it you're like
transitory you have a renter move

844
00:28:18,920 --> 00:28:22,920
out you know just by attrition and
you can increase rent but you know

845
00:28:22,920 --> 00:28:26,580
something you said a few minutes
ago which we've seen in the

846
00:28:26,580 --> 00:28:30,000
okanagan as well rents have been
decreasing so our think before

847
00:28:30,000 --> 00:28:33,820
2019 the legislation was such that
allowed you to evict tenants for

848
00:28:33,820 --> 00:28:36,850
the purpose of renovation so you
know now you nailed it you're like

849
00:28:36,850 --> 00:28:39,170
transitory you have a renter move
out you know just by attrition and

850
00:28:39,170 --> 00:28:41,450
you can increase rent but you know
something you said a few minutes

851
00:28:41,450 --> 00:28:45,350
ago which we've seen in the
okanagan as well rents have been

852
00:28:45,350 --> 00:28:50,210
decreasing so our those units that
are on the market, are they still

853
00:28:50,210 --> 00:28:54,430
so undervalued that even if that
tenant moves out, there will be a

854
00:28:54,430 --> 00:28:56,010
rental increase?
Yeah, for sure.

855
00:28:56,010 --> 00:28:59,170
Like we had a client, this is a
bad news story and it's not

856
00:28:59,170 --> 00:29:01,390
typical, but it would be on the
extreme range of like, you know,

857
00:29:01,390 --> 00:29:02,910
bad investment decision or bad
timing.

858
00:29:02,910 --> 00:29:07,800
We had a client come in who
purchased a building in the West

859
00:29:07,800 --> 00:29:11,160
End in 2017, which was really a
very strong, it was peak, you

860
00:29:11,160 --> 00:29:13,560
know, interest rates were low, you
know, prices were escalating very

861
00:29:13,560 --> 00:29:13,840
quickly.

862
00:29:13,840 --> 00:29:16,000
And they bought this building at a

863
00:29:16,000 --> 00:29:17,400
very low cap rate at the time.

864
00:29:17,400 --> 00:29:19,520
You know, I figure it was around a

865
00:29:19,680 --> 00:29:20,340
2 % cap rate.

866
00:29:20,340 --> 00:29:23,280
And I've sold a ton of these

867
00:29:23,280 --> 00:29:24,140
properties at 2%.

868
00:29:24,140 --> 00:29:26,260
They didn't start the renovation

869
00:29:26,260 --> 00:29:26,800
program right away.

870
00:29:26,800 --> 00:29:28,540
And half the building had rents at

871
00:29:28,540 --> 00:29:29,980
$600 to $700 a month.

872
00:29:29,980 --> 00:29:31,740
You know, one bedroom today, you

873
00:29:31,740 --> 00:29:36,020
could be around $2 ,500, right?
They had these units rented for

874
00:29:36,020 --> 00:29:37,420
600, 700, you know, about half the
building.

875
00:29:37,420 --> 00:29:39,800
And then they spent a million and
a half dollars renovating the

876
00:29:39,800 --> 00:29:41,220
building, not the suites, but the
common areas, the exterior, the

877
00:29:41,320 --> 00:29:42,800
roof, the windows, which doesn't
increase your rent.

878
00:29:42,800 --> 00:29:45,280
Then they had holding costs and
their mortgage just matured.

879
00:29:45,280 --> 00:29:48,840
So it went up, you know, quite
significantly.

880
00:29:48,840 --> 00:29:51,700
So they're in a negative cash flow
situation right now and they're

881
00:29:51,700 --> 00:29:52,240
bleeding.

882
00:29:52,240 --> 00:29:54,320
And, you know, what do you do?

883
00:29:54,320 --> 00:29:55,200
It's been professionally managed.

884
00:29:55,200 --> 00:29:58,520
I looked at the rent rule.

885
00:29:58,520 --> 00:30:01,520
And even in the last two years,
the property has been rented out

886
00:30:01,520 --> 00:30:04,960
at $2 .30 a square foot when it
should be around $3 .50 or more.

887
00:30:04,960 --> 00:30:07,000
So their manager has been doing
them a disservice as well over the

888
00:30:07,000 --> 00:30:07,660
last two years.

889
00:30:07,660 --> 00:30:11,180
So it's really a bad luck

890
00:30:11,180 --> 00:30:11,600
situation.

891
00:29:50,500 --> 00:29:53,320
So they're into it for about $15

892
00:29:53,320 --> 00:29:54,320
.5 million all in.

893
00:29:54,320 --> 00:29:55,200
You know, renovation costs,

894
00:29:55,200 --> 00:29:58,620
holding costs, brokerage fees, and
so forth.

895
00:29:58,620 --> 00:30:00,780
They're into it for about $15 .5
million.

896
00:30:00,780 --> 00:30:01,740
Well, their property is worth.

897
00:30:01,740 --> 00:30:03,320
probably around $385 ,000 a unit,

898
00:30:03,320 --> 00:30:04,960
which is in the higher three cap
range.

899
00:30:04,960 --> 00:30:06,000
And it pencils out to about $8
million.

900
00:30:06,000 --> 00:30:08,760
So we're talking about a $7 .5
million loss since 2017.

901
00:30:08,760 --> 00:30:13,370
A lot of investors think, well,
we're only seeing that craziness

902
00:30:13,370 --> 00:30:14,050
in the land market.

903
00:30:14,050 --> 00:30:16,350
you know, we are having these

904
00:30:16,350 --> 00:30:17,110
massive swings downwards.

905
00:30:17,110 --> 00:30:18,350
Well, it's happening in some cases

906
00:30:18,350 --> 00:30:20,970
in the multifamily market as well.

907
00:30:20,970 --> 00:30:22,450
You know, it's a perfect storm.

908
00:30:22,450 --> 00:30:24,570
Your mortgage matures, your
interest rates tripled, you're

909
00:30:24,570 --> 00:30:26,590
softening rents, you're not
getting the turnover that you

910
00:30:26,590 --> 00:30:26,830
thought.

911
00:30:26,830 --> 00:30:28,490
This is not an easy game.

912
00:30:28,490 --> 00:30:31,070
You have to manage the manager and
you're running a business.

913
00:30:31,070 --> 00:30:34,110
And so unfortunately, there's a
few people getting stuck right

914
00:30:34,110 --> 00:30:34,710
now.

915
00:30:34,710 --> 00:30:36,730
Do you have the stats for what you

916
00:30:36,870 --> 00:30:38,770
guys are using for expense ratios
right now?

917
00:30:38,770 --> 00:30:40,770
Because I imagine that's increased
like substantially.

918
00:30:41,420 --> 00:30:42,440
We don't use expense ratios.

919
00:30:42,440 --> 00:30:43,720
don't use expense ratios.

920
00:30:43,720 --> 00:30:45,180
I find it a flawed system.

921
00:30:45,180 --> 00:30:46,140
I don't think it's a very elegant

922
00:30:46,140 --> 00:30:47,840
way to look at expenses and
compare apples to apples.

923
00:30:47,840 --> 00:30:48,940
And I'll tell you why.

924
00:30:48,940 --> 00:30:51,960
When I started in the business in

925
00:30:51,960 --> 00:30:54,860
2002 or 2003, expense ratios were
more common.

926
00:30:54,860 --> 00:30:57,940
And they were about 33 % pretty
consistently.

927
00:30:57,940 --> 00:30:59,020
The market was stagnant.

928
00:30:59,020 --> 00:30:59,900
It was flat.

929
00:30:59,900 --> 00:31:03,730
One bedroom units were $750 a
month.

930
00:31:03,730 --> 00:31:08,090
Price per unit in the west side
was $80 ,000 a door and cap rates

931
00:31:08,090 --> 00:31:08,730
were 6%.

932
00:31:08,730 --> 00:31:10,650
That was for about a year when I

933
00:31:10,650 --> 00:31:10,970
started.

934
00:31:11,250 --> 00:31:12,690
And what happened was rents just

935
00:31:12,690 --> 00:31:13,670
started increasing exponentially.

936
00:31:13,890 --> 00:31:15,330
And so your expense ratios

937
00:31:15,330 --> 00:31:15,910
logically dropped.

938
00:31:15,910 --> 00:31:17,670
Expenses didn't increase at the

939
00:31:17,670 --> 00:31:18,590
same rate.

940
00:31:18,590 --> 00:31:21,310
And then we had this renaissance

941
00:31:21,310 --> 00:31:24,470
of new purpose -built buildings
where now you weren't being stuck

942
00:31:24,470 --> 00:31:26,570
with legacy tenants, you were
renting at market.

943
00:31:26,570 --> 00:31:28,770
And market is not the CMHC
average.

944
00:31:28,910 --> 00:31:31,040
That's a snapshot of rents frozen
in time.

945
00:31:31,040 --> 00:31:32,480
Market was like way higher.

946
00:31:32,480 --> 00:31:34,160
And so expense ratios started

947
00:31:34,160 --> 00:31:37,080
dropping to about 16%, 17 % on new
builds because the rents were

948
00:31:37,080 --> 00:31:38,260
quite high.

949
00:31:38,260 --> 00:31:39,560
Or you can have an underperforming

950
00:31:39,560 --> 00:31:41,620
building where the rents are
really low.

951
00:31:41,620 --> 00:31:44,560
And so your expense ratio is going
to be over 50%.

952
00:31:44,560 --> 00:31:46,240
So what we use is price per unit.

953
00:31:46,240 --> 00:31:48,020
Price per unit is a much better

954
00:31:48,020 --> 00:31:49,360
way of looking at buildings.

955
00:31:49,360 --> 00:31:53,020
And I would say like for an older

956
00:31:53,020 --> 00:31:55,300
building, you know, 56 year old
building.

957
00:31:55,420 --> 00:31:58,900
You're going to range anywhere
from $55 to $6 ,500 a unit right

958
00:31:58,900 --> 00:31:59,340
now.

959
00:31:59,960 --> 00:32:02,760
And maybe a little higher for

960
00:32:03,040 --> 00:32:03,840
newer purpose -built buildings.

961
00:32:03,840 --> 00:32:06,740
It depends, you know, if there's

962
00:32:06,740 --> 00:32:10,360
underground parking and an
elevator and, you know, the type

963
00:32:10,360 --> 00:32:12,980
of staff you have managing the
property.

964
00:32:12,980 --> 00:32:16,640
But we rarely look at expense
ratios.

965
00:32:16,640 --> 00:32:19,700
How many clients are you seeing
high level that are using MLI

966
00:32:19,900 --> 00:32:21,700
Select compared to just, you know,
conventional financing?

967
00:32:21,700 --> 00:32:25,600
I would say my gut right now is
about... probably 70 % are going

968
00:32:25,600 --> 00:32:26,340
for CMHC insured money.

969
00:32:26,340 --> 00:32:26,400
Wow.

970
00:32:26,400 --> 00:32:30,780
It's a much better interest rate
and longer amortization periods

971
00:32:31,060 --> 00:32:32,640
and it tends to work.

972
00:32:32,640 --> 00:32:33,780
However, for buildings that are

973
00:32:33,780 --> 00:32:35,380
underperforming significantly,
buyers are not going through CMHC.

974
00:32:35,500 --> 00:32:38,160
They're getting conventional loan
and they're trying to add value,

975
00:32:38,160 --> 00:32:39,760
turn over the building.

976
00:32:39,760 --> 00:32:41,800
In some cases, our clients will

977
00:32:41,800 --> 00:32:43,240
offer money to tenants to move
out.

978
00:32:43,240 --> 00:32:45,060
So the soft approach.

979
00:32:45,060 --> 00:32:47,400
So it's a win -win for the tenant,

980
00:32:47,400 --> 00:32:48,690
win -win for the landlord.

981
00:32:48,690 --> 00:32:51,830
And then when they get their rent

982
00:32:51,830 --> 00:32:52,310
roll, it starts looking better.

983
00:32:52,490 --> 00:32:53,790
They'll go through the CMHC

984
00:32:53,790 --> 00:32:54,270
process.

985
00:32:54,450 --> 00:32:55,010
So that's what we're seeing.

986
00:32:55,010 --> 00:32:58,190
I've noticed that the timelines
for getting CMHC insured financing

987
00:32:58,190 --> 00:32:59,710
right now are quite long, a little
longer.

988
00:32:59,710 --> 00:33:05,690
We don't like to have buildings
under contract for more than 30

989
00:33:06,390 --> 00:33:07,050
days.

990
00:33:07,050 --> 00:33:09,550
We try to keep it under 30 days,

991
00:33:09,550 --> 00:33:14,310
which is really not enough time to
get the rubber stamp from CMHC.

992
00:33:14,310 --> 00:33:17,920
Basically, we're seeing a lot of
bridge loans right now where

993
00:33:17,920 --> 00:33:18,420
mortgage brokers are.

994
00:33:18,420 --> 00:33:20,100
assisting our clients with

995
00:33:20,100 --> 00:33:20,940
conventional financing.

996
00:33:20,940 --> 00:33:23,740
They'll close with a CMHC approved

997
00:33:23,740 --> 00:33:27,100
lender, and then they'll roll it
into CMHC a few months later.

998
00:33:27,100 --> 00:33:33,860
So there's an additional cost to
it, but it seems to be the route

999
00:33:33,860 --> 00:33:37,080
that buyers are going today so
that we're not stuck waiting for

1000
00:33:37,080 --> 00:33:38,480
six months under contract.

1001
00:33:38,480 --> 00:33:39,160
That's interesting.

1002
00:33:39,160 --> 00:33:41,600
I mean, we're seeing a lot of...

1003
00:33:41,600 --> 00:33:43,080
Purpose built rentals in Kelowna

1004
00:33:43,080 --> 00:33:43,640
as well.

1005
00:33:44,000 --> 00:33:45,140
We did an episode recently.

1006
00:33:45,140 --> 00:33:49,300
We have about 5 ,000 units coming
on the market over the next few

1007
00:33:49,300 --> 00:33:49,720
years.

1008
00:33:49,720 --> 00:33:53,580
And, you know, it's about a 3 %

1009
00:33:53,580 --> 00:33:55,480
add to our current inventory.

1010
00:33:55,480 --> 00:33:57,060
And I believe most of those would

1011
00:33:57,060 --> 00:33:58,140
be MLI Select as well.

1012
00:33:58,140 --> 00:33:58,360
Yeah.

1013
00:33:58,360 --> 00:34:03,540
You know, it's a great program,
but is it kind of holding up that

1014
00:34:03,540 --> 00:34:06,080
side of the industry right now?
Like artificially, if things

1015
00:34:06,080 --> 00:34:07,910
aren't penciling at these cap
rates, it works.

1016
00:34:07,910 --> 00:34:09,810
But I guess if we were to compare.

1017
00:34:09,810 --> 00:34:10,989
MLI Select compared to the

1018
00:34:10,989 --> 00:34:11,889
rollover, the 1031 exchange.

1019
00:34:11,889 --> 00:34:14,230
What would you prefer if you had

1020
00:34:14,230 --> 00:34:15,679
to pick one?
Yeah.

1021
00:34:15,679 --> 00:34:17,600
Oh, Oh, rollover all day long.

1022
00:34:17,600 --> 00:34:18,300
Yeah, absolutely.

1023
00:34:18,300 --> 00:34:20,580
I mean, look, CMHC is in vogue
right now.

1024
00:34:20,580 --> 00:34:23,300
It wasn't always in vogue, but
they've got some decent programs

1025
00:34:23,420 --> 00:34:24,639
and it makes sense.

1026
00:34:24,639 --> 00:34:26,920
But, you know, if they're not

1027
00:34:27,000 --> 00:34:28,580
around anymore, there'll be
another mortgage product that will

1028
00:34:28,580 --> 00:34:30,699
fill the market quite quickly.

1029
00:34:30,699 --> 00:34:30,800
Yeah.

1030
00:34:30,800 --> 00:34:34,860
I do want to ask one more question
before we kind of wrap up here.

1031
00:34:34,860 --> 00:34:38,659
I know we've got to be cautious of
time, but how did the Goodman

1032
00:34:38,659 --> 00:34:42,150
Report start?
That's a great question.

1033
00:34:42,150 --> 00:34:44,889
Let's start with my father back in
1980.

1034
00:34:44,889 --> 00:34:49,429
Before that, he was a residential
realtor for 10 years at a national

1035
00:34:49,429 --> 00:34:50,630
company called NRS Block Brothers.

1036
00:34:50,969 --> 00:34:54,810
It was the big company in Canada,

1037
00:34:55,210 --> 00:34:56,630
and he was doing residential
sales.

1038
00:34:56,630 --> 00:34:59,250
I was just a kid.

1039
00:34:59,250 --> 00:35:02,170
He became the number one realtor

1040
00:35:02,350 --> 00:35:03,170
in all of Canada.

1041
00:35:03,430 --> 00:35:05,710
He won an award, and he was

1042
00:35:05,710 --> 00:35:06,530
working a lot.

1043
00:35:06,530 --> 00:35:08,050
Back then, there was no cell

1044
00:35:08,050 --> 00:35:08,470
phones.

1045
00:35:08,840 --> 00:35:09,460
There was no pager.

1046
00:35:09,460 --> 00:35:10,260
There was no email.

1047
00:35:10,520 --> 00:35:11,080
There was no internet.

1048
00:35:11,080 --> 00:35:14,080
How the hell did you do a deal?
It was couriers and rotary phones.

1049
00:35:14,200 --> 00:35:14,560
That's crazy.

1050
00:35:14,560 --> 00:35:17,240
That reminds me of that meme.

1051
00:35:17,240 --> 00:35:19,700
It's like, what did people do
before Google Maps?

1052
00:35:19,700 --> 00:35:21,900
It's like, they use maps.

1053
00:35:21,900 --> 00:35:24,280
Yeah, I don't even know how to use

1054
00:35:24,520 --> 00:35:25,260
a map now.

1055
00:35:25,260 --> 00:35:27,120
So, you know, back then they were

1056
00:35:27,120 --> 00:35:30,140
doing deals with... carbon paper
contracts on the hood of a car and

1057
00:35:30,140 --> 00:35:31,260
you were sending couriers for
documents.

1058
00:35:31,260 --> 00:35:32,380
There was no fact.

1059
00:35:32,380 --> 00:35:34,320
There was nothing.

1060
00:35:34,540 --> 00:35:35,780
And the MLS was literally a book.

1061
00:35:35,780 --> 00:35:37,640
a It was a book.

1062
00:35:37,640 --> 00:35:40,220
So, you know, that was 10 years.

1063
00:35:40,220 --> 00:35:42,800
He would smoke a cigar in his

1064
00:35:42,800 --> 00:35:43,240
office.

1065
00:35:43,240 --> 00:35:43,740
He had.

1066
00:35:43,740 --> 00:35:46,040
20 typist secretaries, and it was
a different time.

1067
00:35:46,040 --> 00:35:48,320
smoke And after that, he wanted
his weekends back.

1068
00:35:48,460 --> 00:35:51,080
He wanted something a little bit
more cerebral.

1069
00:35:51,080 --> 00:35:53,320
He started doing business with the
mogul Nelson Scalbania.

1070
00:35:53,320 --> 00:35:55,320
He sold a few buildings to him.

1071
00:35:55,320 --> 00:35:57,460
Many of your audience may not know

1072
00:35:57,460 --> 00:36:00,210
who he is, but he was the most
prominent.

1073
00:36:00,210 --> 00:36:02,050
flipper real estate cowboy in the
history of the world.

1074
00:36:02,050 --> 00:36:02,850
Google Nelson Scalabinia.

1075
00:36:02,850 --> 00:36:03,490
He was amazing.

1076
00:36:03,490 --> 00:36:04,610
Sold Wayne Gretzky to the Oilers.

1077
00:36:04,610 --> 00:36:06,050
But he was buying and selling.

1078
00:36:06,050 --> 00:36:09,730
He was doing about 600
transactions a year on a napkin.

1079
00:36:09,730 --> 00:36:12,350
He couldn't keep track of his
deals, making $20 million a week

1080
00:36:12,510 --> 00:36:12,650
on flips.

1081
00:36:12,690 --> 00:36:14,390
In any event, That propelled him

1082
00:36:14,390 --> 00:36:15,970
to move more into commercial real
estate.

1083
00:36:15,970 --> 00:36:18,890
He decided that there was a vacuum
of information in the apartment

1084
00:36:18,890 --> 00:36:19,430
market.

1085
00:36:19,430 --> 00:36:20,170
Nobody had information.

1086
00:36:20,170 --> 00:36:22,810
So he decided to start the
apartment building newsletter,

1087
00:36:22,810 --> 00:36:25,040
which got rebranded to the Goodman
Report.

1088
00:36:25,040 --> 00:36:28,880
And as a kid, it was truly a
family business.

1089
00:36:28,880 --> 00:36:32,360
So he would write the newsletter
on a pad of paper, send it to

1090
00:36:32,360 --> 00:36:35,120
someone to type up.

1091
00:36:35,120 --> 00:36:37,440
They would go to a printing press

1092
00:36:37,440 --> 00:36:39,940
and then the whole family would
get around the dining room table

1093
00:36:39,940 --> 00:36:42,140
and we would have to stuff the
envelope.

1094
00:36:42,140 --> 00:36:45,880
You know, how old was I in 1982?
Well, I was about five years old.

1095
00:36:45,880 --> 00:36:48,060
We were stuffing envelopes,
folding them, licking stamps.

1096
00:36:48,060 --> 00:36:49,880
And my father would write a note
to every owner, handwritten.

1097
00:36:49,880 --> 00:36:50,960
And there's about 2 ,300 apartment
owners.

1098
00:36:50,960 --> 00:36:52,540
So you can imagine it took a long
time.

1099
00:36:52,540 --> 00:36:54,420
But, you know, we had my
grandparents come over.

1100
00:36:54,420 --> 00:36:56,080
The cleaning lady came in.

1101
00:36:56,080 --> 00:36:59,180
My brother, we were folding.

1102
00:36:59,180 --> 00:37:02,700
And before you knew it, he was the
number one guy in the apartment

1103
00:37:02,700 --> 00:37:03,080
business.

1104
00:37:03,080 --> 00:37:05,140
And that continued for many years.

1105
00:37:05,140 --> 00:37:09,140
I started back in 2002, joined the
business, and the rest is history.

1106
00:37:09,140 --> 00:37:11,900
My father retired six years ago,
but we took it online.

1107
00:37:11,900 --> 00:37:14,760
And I said, you know, Dad, we
should really have a website.

1108
00:37:14,760 --> 00:37:17,680
And he goes, what do I need a
website for?

1109
00:37:17,760 --> 00:37:19,380
Everybody knows who I am.

1110
00:37:19,380 --> 00:37:21,060
I'm like, you should also get a

1111
00:37:21,300 --> 00:37:21,980
computer on your desk.

1112
00:37:21,980 --> 00:37:23,560
He goes, what do I need a

1113
00:37:23,560 --> 00:37:26,880
computer?
I got my secretary to do the

1114
00:37:26,880 --> 00:37:27,000
faxes.

1115
00:37:27,000 --> 00:37:28,060
But when we started gathering

1116
00:37:28,120 --> 00:37:29,240
emails, I remember our first email
blast.

1117
00:37:29,240 --> 00:37:33,000
Like right now we have... you
know, 150 ,000 followers through

1118
00:37:33,000 --> 00:37:35,720
our email distribution list and on
LinkedIn and Facebook and Twitter

1119
00:37:35,820 --> 00:37:36,220
and Instagram.

1120
00:37:36,220 --> 00:37:38,340
But back then I said, you know,

1121
00:37:38,340 --> 00:37:41,240
we're going to take the Goodman
Report online and we should get

1122
00:37:41,240 --> 00:37:41,880
emails.

1123
00:37:41,880 --> 00:37:43,340
I remember getting a thousand

1124
00:37:43,340 --> 00:37:45,460
emails through calling owners,
mailing them, asking for their

1125
00:37:45,460 --> 00:37:45,720
email.

1126
00:37:45,720 --> 00:37:47,180
They would say, what's an email?

1127
00:37:47,180 --> 00:37:52,020
And I was like, well, you can get
one on AOL if you remember those

1128
00:37:52,020 --> 00:37:52,160
days.

1129
00:37:52,160 --> 00:37:55,190
And I would walk them through to

1130
00:37:55,190 --> 00:37:55,290
subscribe.

1131
00:37:55,290 --> 00:37:57,770
So I did that for a few years.

1132
00:37:57,910 --> 00:38:01,350
And I remember I got a thousand
emails and now I had to send them.

1133
00:38:01,350 --> 00:38:04,150
And there was no bulk email
programs back then.

1134
00:38:04,210 --> 00:38:04,730
It was old school.

1135
00:38:04,730 --> 00:38:06,730
But you couldn't send out 1 ,000

1136
00:38:06,730 --> 00:38:09,650
emails through Shaw or Telus,
whatever we use, the ISP, because

1137
00:38:09,650 --> 00:38:12,560
they thought you were a spammer.

1138
00:38:12,560 --> 00:38:16,000
So I had to go meet with the IT

1139
00:38:16,100 --> 00:38:20,560
person at Shaw and ask them to
whitelist our ISP for 24 hours so

1140
00:38:20,560 --> 00:38:23,860
I could send out 1 ,000 emails,
which, by the way, was huge.

1141
00:38:23,860 --> 00:38:25,460
So our first listing, sending out
by email.

1142
00:38:25,460 --> 00:38:27,960
23 years ago, it was a building in
Chilliwack.

1143
00:38:28,380 --> 00:38:31,410
And I didn't even know where the
hell Chilliwack was.

1144
00:38:31,410 --> 00:38:34,470
I just remember it was a really
long drive.

1145
00:38:34,470 --> 00:38:37,530
And my father said, we don't
typically do stuff in Chilliwack.

1146
00:38:37,530 --> 00:38:41,230
It's too long of a drive, but it's
a nice building.

1147
00:38:41,230 --> 00:38:43,370
And my dad wasn't very
enthusiastic.

1148
00:38:43,370 --> 00:38:44,770
But we took a picture.

1149
00:38:44,770 --> 00:38:45,710
I wrote a description.

1150
00:38:45,710 --> 00:38:48,090
The IT department was on standby.

1151
00:38:48,090 --> 00:38:48,990
They whitelisted our IP.

1152
00:38:48,990 --> 00:38:50,890
And I sent out 1 ,000 emails for
this Chilliwack listing.

1153
00:38:50,890 --> 00:38:51,850
And the phone blew up.

1154
00:38:51,850 --> 00:38:52,990
It rang off the hook.

1155
00:38:52,990 --> 00:38:53,870
We got multiple offers.

1156
00:38:53,870 --> 00:38:55,530
And, you know, my father had been

1157
00:38:55,530 --> 00:39:00,680
in the business for 25, 26 years,
came running down the hall.

1158
00:39:00,680 --> 00:39:03,220
And he goes, this is fucking
incredible.

1159
00:39:03,280 --> 00:39:04,340
I've never seen anything like this
before.

1160
00:39:04,480 --> 00:39:06,380
This email thing is amazing.

1161
00:39:06,380 --> 00:39:07,980
This internet is amazing.

1162
00:39:07,980 --> 00:39:09,500
This is a good idea.

1163
00:39:09,500 --> 00:39:10,640
This is the future.

1164
00:39:10,780 --> 00:39:12,580
And the rest is history.

1165
00:39:12,580 --> 00:39:13,340
is history.

1166
00:39:13,340 --> 00:39:13,960
That was awesome.

1167
00:39:13,960 --> 00:39:15,080
Well, I mean, huge takeaway there

1168
00:39:15,080 --> 00:39:17,920
is there's a massive amount of
work ethic in your blood.

1169
00:39:18,100 --> 00:39:19,320
So I appreciate that.

1170
00:39:19,320 --> 00:39:20,900
We have fun every day.

1171
00:39:20,900 --> 00:39:21,700
was awesome.

1172
00:39:21,700 --> 00:39:22,460
have fun every day.

1173
00:39:22,540 --> 00:39:22,780
That's great.

1174
00:39:22,780 --> 00:39:22,920
Yeah.

1175
00:39:22,920 --> 00:39:23,100
Yeah.

1176
00:39:23,100 --> 00:39:24,280
I hope this was fun.

1177
00:39:24,280 --> 00:39:26,380
It was good for us.

1178
00:39:26,380 --> 00:39:29,200
And yeah, I really appreciate you

1179
00:39:29,200 --> 00:39:31,060
coming on.

1180
00:39:31,060 --> 00:39:32,520
Keep the report coming.

1181
00:39:32,520 --> 00:39:34,980
And yeah, I appreciate all the
information you're providing to

1182
00:39:35,120 --> 00:39:35,260
us.

1183
00:39:35,260 --> 00:39:35,600
Great.

1184
00:39:35,600 --> 00:39:38,800
Well, it was a pleasure to meet
you guys and be on your show.

1185
00:39:38,800 --> 00:39:40,300
I go to Kelowna once a year.

1186
00:39:40,300 --> 00:39:40,920
It's a beautiful place.

1187
00:39:40,920 --> 00:39:41,800
Time slows down.

1188
00:39:41,800 --> 00:39:42,100
It's hot.

1189
00:39:42,100 --> 00:39:42,380
It's beautiful.

1190
00:39:42,380 --> 00:39:43,080
I love the Lake Country.

1191
00:39:43,080 --> 00:39:45,020
And I'll come visit you guys the
next time I'm up there.

1192
00:39:45,020 --> 00:39:45,540
Sounds great.

1193
00:39:45,540 --> 00:39:45,780
great.

1194
00:39:45,780 --> 00:39:49,260
For your audience and listeners,
if you're interested, you can

1195
00:39:49,260 --> 00:39:51,380
subscribe to goodmanreport
com online.

1196
00:39:51,380 --> 00:39:53,660
We send you news, views, listings.

1197
00:39:53,660 --> 00:39:56,060
And I also have a podcast, the

1198
00:39:56,060 --> 00:39:57,480
Goodman Report podcast.

1199
00:39:57,480 --> 00:40:00,260
So we've had a few people on and

1200
00:40:00,260 --> 00:40:05,120
you can listen to that on all your
favorite platforms.

1201
00:40:05,120 --> 00:40:05,700
So thank you guys.

1202
00:40:05,700 --> 00:40:06,000
That sounds great.

1203
00:40:06,000 --> 00:40:06,280
Thanks, Mark.

1204
00:40:06,280 --> 00:40:06,800
Appreciate it.