When Private Loans Go Bad & Bailing Them Out. Lessons from Managing $150 Million In a Downturn With Kyle Ford
Welcome to the Truth About Real Estate Show!
Thank you to all the kind listeners who leave five-star reviews on any platform, and shout out to all those listening on Spotify!?
I'm just returning from a retreat with my mastermind group and Entrepreneurs Organization’s conference in lovely Victoria, BC, where I met several successful, big-time real estate investors.?
Some do mid-sized development projects like removing the roof to add two units on top and digging and underpinning the basement to add two units to a fourplex to make it an eight-plex.
Another developer had hundreds of acres in the Niagara region, selling off pieces to builders.
Another builder, a developer from Mexico, does mid-rise mixed-use residential and assembles land for infill developments in Vancouver.
Another investor flipped hotels, bought them distressed from a bank in the US, turned them around and later sold them off. All big brand hotels you’ve used before.
One thing I really enjoy about connecting with investors from the Entrepreneurs Organization is how honest people are about the challenges they experience. That and there is a no-solicitation rule.?
Folks can do business together, but one party to a conversation must invite the other to pitch. Also, members must meet certain financial milestones signed off by their Accountant.
It’s not like those weekend workshops where a complete stranger asked me if I was interested in investing in their development project, their 2nd ever.?
I asked Demian, the Mexican Vancouver developer if he’d be a guest of this podcast.?
Naturally, he asks which podcast. He’s obviously not one of our 17 listeners. So I tell him it’s the Truth About Real Estate Investing Show for Canadians, and Demian searches us on Spotify.
To my pleasant surprise, our rating on Spotify is 4.9/5, with 49 reviews!?
All of a sudden, I’m feeling very confident, and Demian is honoured to be a future guest on this show!
So thank you to all who have left 5-star reviews on Apple Podcasts and Spotify. It does help me book excellent guests for this show so we may all continue to improve our collective skill at being world-class investors.?
We will learn from their mistakes, best practices, and what makes them tick.
Learning from successful doers is one of my favourite forms of leverage, and who knows what this recession will bring.?
From talking to big-time ballers, Eg folks who’ve made over $10M in real estate. They’ve got their eyes open for opportunities and those who are leveraged.?
Well, these times are no fun.?
That’s just the real estate stuff, and there sure are many successful people in real estate investing, which should come as no surprise.?
Note this was an entrepreneur’s conference, so there were many expert speakers, including the founder of 1-800 Got Junk, who does over $700M US in revenues or the founder of Hootsuite sharing his story and what he’s doing with his venture capital fund, writing cheques and mentoring young Canadian tech entrepreneurs.
The most mind-blowing speaker is an Ai expert who went viral as he was able to hack into his bank account in 5mins using an AI tool to fake his own voice to beat the voice recognition protocol.?
The CEO of the bank called Nicholas shortly after, asking for advice.??
I’ll also be inviting Nicholas onto the show and may mention how many wonderful listeners have given this show a 5-star review.??
AI in a real estate context is Nicholas showed us an awe-inspiring web page he designed for a real estate developer.?The content meaning the images and text, took him 15 mins to create using a number of Ai tools.?
This business model will dominate going forward; who can create a replicable business model using Ai to save time and money.??
Whoever is successful will put the slower, more expensive companies out of business, so you better believe I’m looking at all our businesses, including property management, on how to implement Ai better.
Personally, I’m always afraid of the future, which leads me to research and take action.??
Real estate investing makes a ton of sense to build wealth; it's less hard to do than most ventures, and it’s the right solution for most Canadians, most of the time if done correctly.
Speaking of being afraid of the future, I’m always worried about my kids, particularly being bullied.?
From my experience, being bullied was not enjoyable; it really hurt my confidence and self-esteem growing up, and I wouldn’t wish it on anyone.??
Hence I’m hacking my kids' self-defence but having them train the most efficient self-defence, Brazillian Jiu Jitsu.?
My kids are finally promoted from white belts to grey/white belts thanks to the delays caused by the pandemic and I couldn’t have been more proud.
My son being only 7, shares just about everything with his classmates. He has no filter, including that time I tore the back of my shorts trying to do a bum drop on the trampoline in front of my kids and family friends.?
Thankfully I was wearing underwear…
My son even shared with the class bully who takes Karate that he’s in Brazilian Jiu Jitsu.?The bully’s response? He has no interest in messing with my son. Mission accomplished. Proud dad moment, check!
Speaking of mission accomplished, the Bank of Canada raised rates again by 0.25% to further slow the economy and real estate market. Just like they were slow to respond to all the government’s pandemic money flooding our economy, with inflation rates over 4% in 2021, the Bank of Canada looks to be overshooting on rates as we are now at 4.75% while inflation the last two months were below at 4.3 and 4.4%.
To me, it is what it is. The housing market’s recovery has been too fast. Some of my rich friends are having trouble accepting their offers in Toronto in the 2.8 to low 3 million dollar range.
The elevated rates should slow the recovery as financing gets more expensive, which means more tenants for us existing landlords. Not that we need any with the hundreds of thousands of international students coming each year.?
If you bought smart in a college or university town like we always do, you’re laughing.??
Speaking of buying smart, I would typically promote our iWIN Mastermind tour to Hamilton this June 24th, but it’s already sold out.?Stay tuned for next time!?
But our next virtual, online iWIN Meeting is Tuesday, June 25th, at 7:30 pm, where we will be sharing the highest and best use real estate investments for the beginner investor/developer to maximize returns while helping society: creating more homes and density.
Keep an eye out for the invite in our email newsletter. If you’re not on it, you’re welcome to join the over 10,000 hard-working Canadians already on it.??
Go to www.truthaboutrealestateinvesting.ca, enter your name and email address on the right, and you are all set!
When Private Loans Go Bad & Bailing Them Out. Lessons from Managing $150 Million In a Downturn With Kyle Ford
On to this week’s show!
You know about the downturn we just experienced, and like many of you, I was curious how private mortgage companies fared, so I reached out to Kyle Ford, whose company manages $150 in private mortgages.
Kyle tells it like it is; he shares how many mortgages went sideways, what the lessons were, how Kyle and his staff put time and money into taking over failed BRRRs and flips to finish projects and sell them off and make his clients whole.
Why? Because it’s the right thing to do.?
Treat other people's money better than you treat your own.?
If you won’t invest your money into your project and can’t pay people back when deals go bad, don’t use other people's money.?
If you don’t believe me, ask bankrupt investors how much those other people who invested in them hate them and want their money back.
Debt is the cheapest; like first mortgages, and VTBs, you don’t give up control; hence that should be one’s first option.
Back to Kyle’s interview, we journey back to when he was an alternative financing borrower investing in value-add real estate as his deals needed short-term money, taking courses on investing, including buying, renovating, renting out, and financing.??
Then the 2017 mortgage stress test happened, and Kyle had limited financing options but needed mortgage money.
As the saying goes, necessity is the mother of all invention. Kyle found other sources of private capital and started brokering his own deals, yada yada; Kyle will explain he now manages his fund with 150 million dollars under management.
As mentioned, it’s never all sunshine and rainbows; some borrowers went sideways, and Kyle shares how those deals went so we may all learn from Kyle’s lessons in a downturn.
Kyle also has a contrarian opinion of promissory notes, so you don’t want to miss this episode about the truth about being a private lender.
As we cover securitized investments, here comes the disclaimer I used AI to write and a separate AI tool to voice all for free.?It saves you all from hearing me stumble and mumble ???
Please enjoy the show!
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Disclaimer:
The information and opinions expressed in this podcast are solely for educational and informational purposes and should not be considered as investment advice. The hosts and guests of this podcast are not licensed financial advisors, brokers, or registered investment advisors, and their comments should not be construed as recommendations or endorsements of any specific investment, security, or strategy.
Investing involves risks, including the possible loss of principal. Before making any investment decision, you should conduct your own research and consult with a licensed financial advisor to determine the suitability of any investment for your specific financial situation and investment goals.
The hosts and guests of this podcast make no representations or warranties as to the accuracy, completeness, or timeliness of any information discussed in this podcast. The podcast is not responsible for any errors or omissions, or for the results obtained from the use of this information.
Listeners are advised to use their own judgement and seek the advice of professionals before acting on any information provided in this podcast. The podcast shall not be liable for any damages, including but not limited to direct, indirect, special, or consequential damages arising out of or related to the use, inability to use, or reliance on any information provided in this podcast.
Watch The Podcast Interview Here:
To Listen:
On Stitcher: https://www.stitcher.com/s?fid=87335&refid=stpr
On Google Podcast: https://podcasts.google.com/feed/aHR0cDovL3d3dy50cnV0aGFib3V0cmVhbGVzdGF0ZWludmVzdGluZy5jYS9mZWVkLw
Youtube: https://youtu.be/oyBG_yPIUvA?
For the full blog post, CLICK HERE!
Thanks for sharing this