Jordan: So, prior to buying this home together, where did you all live?

Laura: Before this, John and I rented a bungalow in Leaside for about two years.

Julie: Peter and I met in Switzerland, so we lived together in an apartment there before deciding to come back to Toronto.

Jordan: Did you always want to buy a house together? Or did you ever consider buying solo?

John: Laura and I had been looking in a couple of areas before Julie and Peter moved back, but nothing really appealed to us.

Laura: And unfortunately, with the crazy real estate market, the prices of houses for John and I on our own were not even feasible.

Julie: It was kind of funny. When Peter and I decided to move back to Toronto, we said to Laura and John, “Hey, do you want to live together?” We had the idea in our heads for a long time, and it just seemed to make sense for both couples.

Jordan: Do you all live in one space now? Do you share one kitchen and one bathroom?

Peter: Sort of. John and Laura have the second floor, as well as the third floor, which they rent out. Julie and I have the first floor and the basement, which has been turned into a beautiful bedroom, nursery and bathroom. Basically, all four of us live in the first floor space all the time, which gives us a lot of help with our young daughter, Ella. It works out perfectly.

Julie: Technically, the place is three separate units, though the doors never really get locked.

Jordan: So Julie and Peter live on the main floor and basement as one apartment, and John and Laura have the second floor and third floor, which they rent out. How did you decide who gets which apartment?

Julie: When we looked at splitting up the apartment, Peter and I knew that we were probably going to start a family soon after moving in. So we were looking for a slightly bigger place with a nursery. When we saw the place, the first floor and the basement made perfect sense for us.

Laura and John didn’t need the space immediately, and so the second floor seemed to make sense for them. We figured out that the square footage from the main and the basement was basically equal to the second and the third floor. The advantage to Laura and John of taking a smaller apartment was that they could get rent from the third floor to put towards the mortgage. Win-win for both couples.

John: Yes, and you two didn’t want to live through a renovation; you preferred something more turnkey. I wanted to put my own spin on the second floor.

Jordan: Let’s talk finances. How did you split up the initial purchase cost? Four ways? Two ways?

Laura: We split it two ways, 50–50 between the two couples. That includes mortgage payments and the down payment.

Jordan: And what about monthly expenses like property tax and utilities, how do you split those up?

Laura: Property taxes we pay quarterly and split 50–50. Julie manages the utilities and I handle Rogers. Again, everything’s split down the middle

Julie: When it comes to utilities, our places are very comparable in square-footage, so we ended up just splitting it 50–50. Even though Laura and John have a tenant, it works out for us to split it evenly.

Laura: And the tenant’s rent includes utilities. One flat rate.

Jordan: How about general maintenance issues and improvements around the house? How do you split those?

Laura: John and I completely renovated the second floor when we moved in. Because it was adding value to the house, and because Julie and Peter’s unit was already renovated which made the initial purchase price higher, we ended up splitting the renovation costs 50–50. Everything that we’ve done since we moved in, like replace the windows, has been split 50–50.

Peter: Julie and I, ideally, wanted to move into a place that was already “done”. But if we had ever had to renovate our floor, we all agree that it would be split 50–50.

Julie: Our rule of thumb is that anything that adds value to the property gets split 50–50. For example, if you break something in your own unit, you have to pay for it. Or if Laura and John’s tenant were to break something upstairs, they would have to pay for it because it’s their unit. Anything that adds value to the house or is a maintenance issue affecting the house gets split.

Laura: We run expenses through a joint bank account. We both deposit money out of our personal accounts into the joint account each month, and the payment comes out of there. We also add a little extra money each time for ‘miscellaneous.’

Julie: It’s a good way to set it up and manage the money.

Jordan: Have you ever had a situation where one couple wanted to do an improvement or a renovation and the other couple didn’t?

Peter: The windows. It was actually three to one. Laura, John, and I wanted to do it and Julie wanted to wait a bit. At the end of the day, we discussed it a little more and reached a unanimous decision.

John: Julie just wanted to do them in separate sections, starting with the ones that needed doing right away.

Julie: I like to see the big picture so I was worried about what would happen if we had to do something big, like the roof, at some point. But we did an analysis on the house and decided that the windows were most important, first and foremost.

Peter: She’s definitely the financially savvier one in our couple. So, at the end of the day, it’s a smarter decision for her to take control of the finances.

Jordan: Okay, now onto the tough questions. Do you have an agreement that would cover contingencies, such as if a couple gets divorced, someone dies, or a couple loses their jobs and can’t afford maintenance. What would happen in any of those situations?

Laura: Our mom’s a lawyer, so we did talk about it, though we actually never ended up putting anything in writing, which may not be the smartest idea. For us, I think it’s a little bit different than going into a co-ownership with a casual friend or with people that you may or may not know. We trust each other, and hopefully nothing happens in the future.

Jordan: Okay, so what happens if one of you wants to sell?

Julie: We did talk about that because Peter and I knew that at some point we were going to start a family and would outgrow this place.

We said that if the time comes when one of us wants to leave, the option would be for the other to keep the property. If it were us, we would keep the property and rent out the units we live in. So if Laura and John decided to move downstairs, we would take over the second and third floor and rent them out.

If, for some reason, that wasn’t to happen at the time we wanted to leave, we would have to discuss Laura and John buying us out of the property or we’d all have to sell. Peter and I (Peter in particular) have always wanted to have a rental property. So it always made sense for us to think about it from that perspective,
if we did have to move one day.

Jordan: What has been the biggest challenge of co-ownership?

Peter: Cohabitation.

Julie: Really? That isn’t a challenge.

Laura: That isn’t a challenge.

Peter: We haven’t really had any major challenges living together. We’re just four people, four personalities, sharing space and it’s working great. But cohabitation is always a bit of a challenge. Thankfully, in our case, it has been a very, very small one.

Jordan: Honest answer. What have you found most rewarding about co-ownership.

Peter: Half the mortgage payment.

Laura: Yes, the financial rewards for sure. John and I would never have been able to afford a place in the beaches, in the city. So being able to purchase this beautiful house, and have the rental income from our tenant, was perfect for us. Plus, we’re all really close friends and family, so it’s great seeing our niece grow up, and then when our baby arrives next March, it’ll be even …

Jordan: Actually?

John: Yes.

Jordan: I was like, “What’s taking you guys so long?”

John: We just hit 14 weeks.

Laura: Had to squeeze that in…

Jordan: Oh, that’s awesome, congrats.

Laura: Thank you, thank you.

Julie: One of the great things about it for us, obviously, in having a kid, is the extra help. Laura and John come downstairs and help us out. We also have started an amazing thing where we split cooking dinner during the week. One couple does Monday and Wednesdays, and the other does Tuesday and Thursdays. It’s also nice to have people helping out with chores around the house. We love that.
The guys especially love being able to hang out together.

John: And bounce ideas off each other from time to time.

Jordan: Okay, last question. Are there one or two tips that you’d give to anybody else considering co-ownership?

Julie: Do it.

Peter: Yes, do it. And make sure when it comes to finances, you are very clear on what the plans are. Then be flexible with your plans, financial or otherwise, and just enjoy it.

Julie: Even though we didn’t do it, I would say that drawing up an agreement is probably a smart thing to do. Do it with people that you really enjoy spending time with because, although you have three separate units, you really do spend a lot of time together. For us, it’s definitely a benefit but it could be a downside if you didn’t like the people you were doing it with.

Jordan: Thanks for your time guys!

Co-ownership: The Good, Bad & The Ugly was originally published in Core Assets Real Estate on Medium, where people are continuing the conversation by highlighting and responding to this story.

Building a custom home can be a lifelong dream for many people but choosing a builder can be a daunting process. We sat down with Tom Komon from Komon Homes to discuss the importance of asking the right questions, and looking for more in a builder than just a low quote.

Komon Homes has over 30 years’ experience in the GTA and surrounding regions; experience that has taught them how to make the process work to everyone’s satisfaction. As a bonus, Tom discusses his passion: automation in the home.

Adam: Let’s start with a bit about your company.

Tom: Komon Homes is a custom homebuilder working throughout the GTA — mostly between Port Credit and Burlington. We build modern, traditional, and transitional homes, as well as some heritage and commercial projects.

Adam: You seem to be more of a general contractor. Do you also develop your own homes?

Tom: We do some developing on our own, both for personal use and for sale. Obviously, our clients’ homes are the priority but when we can squeeze in one or two for ourselves we enjoy doing it.

Adam: How did you get started in the building profession?

Tom: Growing up, my dad was in construction. He started with insurance claim rebuilds and basement additions, and then moved into homes. My brother and I took over from there. It’s kind of a family thing.

Before I started with him, I was in the structural engineering field, mostly drafting and modeling. That exposure to the other side of the business made me realize that construction was what I wanted to do. I wanted to get out of the office and be in the field. At the time, we were getting pretty busy, so I transitioned over.

Adam: At what stage do you get involved with your clients? Do you prefer to start at the land purchase?

Tom: Mostly, we follow a traditional process: the client gets a piece of land, and then hires an architect to design the home. We’re given a set of drawings to appraise and it goes from there.

I learned from starting out on the structural side that the earlier you could get involved the better. On big jobs like Bridgepoint Hospital where I did the working drawings, a proposal team was put in place before the job was even awarded. That can involve mechanical, architectural, HVAC, electrical, and engineering pros. As a team, they come up with the building plan that lets them build massive structures like these in 12 to 18 months.

When houses take three to five years to build, it’s usually because proper planning wasn’t in place from the beginning. We prefer to get involved at the first meeting with the architect so we can share in the preliminary discussions and establish a dialogue.
In the end, that enables us to streamline the schedule and build a home faster than meets the expectations of the client.

Adam: On that note, how do clients find you? Is it by referral?

Tom: Sometimes, it’s just people driving by and getting our name off of our sign at a building site. But the majority of our work has been either referral or through architects that we’ve worked with in the past. I’m always looking to make new relationships with new architects. That way, we get to work in a variety of designs. If you just work with the same architect, you’ll be using a lot of the same elements. We like to challenge ourselves and push the envelope, especially when it comes to innovation and technology.

Adam: When you first meet a client, what are some of their initial concerns, before they start a project with you?

Tom: I’d say the two things that always come up first are, ‘How much are you going to charge?’ and ‘How fast can you do it?’ People want their home built right away, with all the things they want it to have, at the lowest possible cost.

That’s where planning is so important. If we’re involved in the preliminary stages, we can help our clients customize the plans they want to fit their budget. If we’re not involved, the architect may design a whole bunch of things that could take the client way over budget.

Adam: So would you say that people are more concerned with cost than they are with time and quality?

Tom: Not exactly. They still want the quality but they want it done fast, and they want it done at the lowest possible price. It’s the same principle as buying a TV. You’re going to wait until that TV is on sale but you still want it to be a great TV.

It really comes down to honesty and transparency. If there’s something that I know is going to be an issue in the future, I’ll explain to the client what it is and why they should address it. It doesn’t put more money in my pocket to do that. In fact, it may cost us less to do something a different way than suggested. At the end of the day, I want the client to trust me.

Adam: How do you build that trust when you first meet a client? Do you take them around your past sites and let them experience the quality of your work?

Tom: It’s a challenge because for many people we’re talking about the biggest investment of their lifetime. They will have saved their money for years, and spent lots of time researching what they want to build. So for them to trust someone whom they’ve just met to take all this on — over a year, two year, or three year period — can be a big commitment. You have to show them the quality of your work, give them a sense of how knowledgeable you are, and explain how you plan to guide them through the process.

“I’d say the two things that always come up first are, ‘How much are you going to charge?’ and ‘How fast can you do it?’ People want their home built right away, with all the things they want it to have, at the lowest possible cost.”

Adam: What would you say is like the hardest part of your job?

Tom: At the end of the day, building any house has its challenges but the hardest part is managing personalities. Of course, our primary focus is the client but, at the same time, we have to consider our trades: the trades we’ve worked with in the past, new trades, and the ones we want to work with in the future. It can be a balancing act between getting what the client wants to fit their budget, and managing the trades so they’ll work with you again. Little things go a long way, like our sites are always clean. You’re not stepping over stuff to get around. Our trades often tell us, “your sites are very well organized and we like working here.” That’s important to us.

Adam: It looks like you do many different styles of homes, but what really excites you about building these days?

Tom: There’s a big push right now for not just the style of the home or the look of the home but the comfort. Automation excites us: lighting control, heated floors, HVAC systems, HRVs, even little things like a recirculating line for plumbing that gives you instant hot water when you want to take a shower.

Technology-wise, lighting control and automation are really big right now. Having the ability to set up lighting scenes in a home changes how we’ve historically thought about light fixtures. You’re no longer just walking into a room where all your lights are set to 100%. You’re walking into a room pre-set to make your tasks a lot easier.

Say you want to cook dinner. You can walk into your kitchen and push a button that says, ‘Cooking.’ Your countertop lights can be set to 100% for maximum lighting while you complete that task. When you’re done, you can push ‘Dining or Eating’. The kitchen lights will dim and the dining room lights will brighten up a bit. You’re setting a scene and creating a more comfortable atmosphere.

Adam: Is there an industry standard now for home automation and lighting and sound controls, or does every builder do it according to how the homeowner wants it?

Tom: From a rough-in standpoint, there are two different ways you can do it. You can go with a hardwired cable network system where everything from the fixtures is hardwired back to the electrical panel. Or you can go with a wireless system where you have a similar sort of keypad, but no real wires going to the button. I prefer to have everything hardwired, less interference.

The systems vary based on cost and how much they can do. You can get one system to control everything from thermostats, lighting, audio, security, blinds, all from your phone within one app, or from one touchpad.

We’re finding more and more that automation is not really an option. We live in a high-tech society and these are things people have come to expect in their living situation.

Adam: Ok, let’s finish with a personal question. Do you prefer modern or traditional architecture and why?

Tom: I’ve never been a fan of the overly ornate, so I am not purely traditional. I like the clean lines of modern on the inside but the classical elements of a nice detailed eaves trough, or nice stonework on the outside. It’s really a fine line to mix the two, but once you do it, if you do it right, it looks really nice.

Adam: Perfect. That’s great. Thanks, Tom.

How to Chose the Right Home Builder was originally published in Core Assets Real Estate on Medium, where people are continuing the conversation by highlighting and responding to this story.

Buyers often struggle with the balance between budget and neighbourhood. For some, landing a home in their #1 neighbourhood generally means sacrificing size or style of house. Others will forgo their top hood to buy a more desirable home and property, but, in an up and coming neighbourhood.

Jordan: Thanks for talking with us today about your experience buying into an
up and coming neighbourhood. Where did you buy?

Will: Almost four years ago, I bought a great bungalow in Mimico.

Jordan: What attracted you to Mimico? Did you explore other neighborhoods when you were looking?

Will: When I started to look for a house, I was interested in the downtown core, but it wouldn’t offer the space I wanted. I wanted to have some lawn and property to take care of, even if it was small. I checked out other neighborhoods closer to downtown and to get the lot size I wanted, I was more comfortable moving a little further out. I liked proximity to the lake, bike paths, and my office. Mimico helped me get the house I wanted with the budget I had.

Jordan: Often buyers get stuck on trying to live in areas like Little Italy or Roncesvalles or Leaside — areas that are already really established. Of course you pay a price to live in those neighbourhoods. If you had it to do again would you come back to Mimico?

Will: I would totally choose Mimico again. When you move into an established neighbourhood, it’s already got its own characteristics and personality. With Mimico, I feel part of the growth and part of what it’s establishing itself to be. At this point, I would really not consider living anywhere else.

Jordan: Some people equate an up and coming neighborhood with sketchy people or sketchy areas. Do you see any sketchy happenings here?

Will: I think when I initially bought here, it might have been considered a little rough around the edges but it didn’t bother me. I like seeing a neighborhood with a full mix of white collar and blue collar people. A few years ago, the area might have not been so desirable, but now all the kinks are being worked out. The people in Mimico are great and it’s still got “the small village within Toronto” feel.

Jordan: In your opinion, what makes a great neighborhood?

Will: As cliché as it sounds, I think it’s the sense of community. I love that I cannot cut my lawn without chatting to a neighbour; it’s cool. I like having people around to talk to, not just nod at. Also good restaurants…places to go out at night… I have the paths right here. It’s awesome to be able to walk by the lake at night. So, when you have things you can be engaged in and people who are willing to engage with you, I think you have a good neighbourhood.

Jordan: Have you noticed a deeper sense of community in the time you have lived there? A change in the demographic? How do you see the community growing?

Will: When I first moved here, Mimico was a neighbourhood of older, established people. It was very, very quiet. Over the years, I’ve seen many young families and younger generations moving in. I’ve watched the community grow, seen people become a little more outgoing with each other, waving when you pass them, saying ‘hi’, things like that. It’s been a cool transition.

Jordan: Often when neighborhoods go through this transition like this, you see lots of renovation. As soon as a house sells, a dumpster appears in the driveway. Have you seen a lot of that around here?

Will: Absolutely. On my street alone in the past couple of years, probably 10 to 12 homes have either done some sort of top up or full demolition. In the surrounding neighborhood too, many homes have been bought and upgraded.

Jordan: That must make you feel good about the rise in value, comparing when you purchased your place almost 4 years ago with what it’s worth today.

Will: It sure does. And personally, I did the same thing. As soon as I bought, I had a bin on the driveway the very next weekend and demo’ed the basement. I just finished my upstairs so, yes, it’s been a process over the past few years but it’s also been the best investment I could make. I’m happy with the appreciation in the property but also the value of the neighborhood increasing. It’s been great.

Jordan: As you mentioned, you’ve seen new people and new businesses move into the community. What are some of your favorite restaurants, bars, coffee shops, things like that in or around Mimico?

Will: My favorite restaurant is Goodlake, down on the Lakeshore. It’s fantastic: the price is fair and the food is great. We needed that sort of “not high-end dining but not just a burger joint” kind of place so it was real treat when it came into the area. I also enjoy going down to Humber Bay Park. They’ve got Eden and a Firkin on the water. There’s so much development going on down there, I’m looking forward to more retailers moving in — a coffee shop maybe. 850 Pizza on the Lakeshore in the Brown’s Line area is another cool little place. And I can’t forget The Blue Goose. It’s a legend. Cash only!

Jordan: That’s what neighborhoods like this are all about. You get places that have been around for 50 years like Sanremo Bakery and The Blue Goose, then you get new restaurants adding to the mix. The combination of everything is what makes a neighborhood, right?

Will: 100 percent. You have the old and you have the new and when they jive and gel together it becomes even better. Another cool thing about Mimico is you can bike anywhere to get anything. You can breathe a little bit more in and around your daily activities. So yea, for me Mimico is just about perfect.

What’s it like to buy into an “up and coming” neighbourhood was originally published in Core Assets Real Estate on Medium, where people are continuing the conversation by highlighting and responding to this story.

Custom homebuilders know the importance of curb appeal and how much a garage door can contribute to it. We sat down with Rob Canizares from Maple Garage Doors and his client Nick Saccone from Nobility Homes to discuss garage doors and why they matter so much.

ADAM: Nick, you recently built a beautiful modern house (featured photo) and picked a unique garage door. How important was your choice to the overall look of your house?

NICK: The garage door always plays a role in home design. Because it takes up a large space at the front of the home, it should be as much a focal point as the front door, windows or exterior cladding.

ADAM: Why did you decide to go with transparent garage doors over something more traditional like wood?

NICK: I chose a transparent garage door because I wanted to be able to see out but not have someone view in. Also, I wanted glass panels to match the tinted windows on my house. I think I achieved a perfect match.

ADAM: Rob, you guys did a great job with this house. How did you get into the garage door business?

ROB: My father started the company in the 1970s. I joined as an installer about 15 years ago, and we quickly became one of the fastest-growing garage door companies in the city. I truly love what I do, and am proud to build on my father’s legacy.

ADAM: What makes you different from the typical garage door supplier or installer?

ROB: We carry a broad range of products and customize each garage door to the client’s home. Our quality standards and personal service set us apart from our competition.

ADAM: At what stage do you get involved with the homeowner or the builder? Do you help them pick their garage door before or after they build? How involved are you in the design?

ROB: My clients usually send me their drawings for the home. We’ll review the designs together, then select the door most compatible with the architectural style. I try my best to steer them in the right direction but many of them already know exactly what they want.

ADAM: What about cost — is wood more expensive than fiberglass or is glass more expensive than fiberglass?

ROB: Fiberglass would be our most expensive material. Steel is on the lower end in terms of cost, yet it has great durability. Wood would be a more mid-range choice. Each material also offers different insulation values, which is an important factor for our clients.

ADAM: From start to finish, how long does it usually take to install a door?

ROB: I always send a crew of two to each of our homes and the average install, depending on what’s involved, usually takes about two to four hours per door.

ADAM: Wow, that’s pretty quick! Lastly, what’s the process for someone who’s about to pick a new garage door for maximum curb appeal?

ROB: We would go through the various elements of the home together, and pick a garage door that fits in well with the design. The options are unlimited when it comes to style, colour, and adding valuable curb appeal to the property.

How important are garage doors for curb appeal? was originally published in Core Assets Real Estate on Medium, where people are continuing the conversation by highlighting and responding to this story.

For some people, building a custom cottage is the ultimate dream, but knowing how and where to start can be the hardest part. For Drew Donaldson, Managing Partner at Safebridge Financial, it was the easy part. Drew had extensive experience working with builders and private lenders in Toronto, so he knew how the process worked. When the opportunity popped up to buy some family land in Muskoka, Drew jumped at the opportunity and built a beautiful 3,500 sq ft custom cottage. His experience in the industry allowed his family to complete the project on time and on budget. Here’s how.

Adam: Can you tell me why you decided to build a cottage?

Drew: It was really about taking advantage of an opportunity. We weren’t in the market for a cottage at the time but, with a child under the age of two and another one on the way, we started considering a getaway for the family. My grandmother’s estate happened to be selling some property on Lake Rosseau in Muskoka. They had two plots of land, one on an island and another on the mainland. When they sold the island property separately, we realized that this was our chance to buy something we could afford on the mainland, even though it was smaller. We began painting a vision of what we could build.

Adam: Can you tell me a bit about how financing worked? Specifically as it relates to construction and land?

Drew: At the time, there was just a boathouse with some living quarters on top but no cottage on the mainland piece, which was the challenge from a financing perspective. We were able to pay cash for the land, then arranged private money for the construction, knowing that we’d only need it for that phase. It was more flexible than institutional financing but the rate was higher, so once we got the cottage built, we refinanced to a Schedule A bank mortgage at a premium rate.

Adam: Were there stages of the building process? Did you have to get to certain points of construction to get the next financing draw?

Drew: I think in total there were 5 stages where they would release more money to our contractor: Completing the foundation, framing, drywall, etc. We let him know ahead of time when he could expect payment. Our private construction lender was very accommodating. He went out to view the property a few times; other times we’d send him photos and he’d release the money the next day. We had no challenges as far as liquidity on that.

Adam: What about style of cottage? How did you and your wife and family decide on the style of cottage?

Drew: When we originally started, we wanted to replicate the old island cottage that was sold. As we got into the permit and planning stages, we had to adjust those plans but in the end we went with a traditional Muskoka look over a modern one. We included a Muskoka room, hung a canoe in the kitchen, and did other things to make it feel warm and cottage-like.

Adam: Can you talk about any learning experiences that you had along the way? Anything you would advise someone else who’s looking to build a cottage?

Drew: We waited until the fall to start on the cottage build, knowing that we had all winter to get it completed. It turns out we didn’t leave enough time for the planning and permit stages, which caused some delays with the Township of Muskoka Lakes. Nobody’s fault, but several times they had a few questions and wanted further clarification on things. That delayed us putting the shovel in the ground until November rather than the end of September. Over the winter, we caught up enough to achieve our goal of May 2017 occupancy but, if we were doing it again, we would have allowed more time upfront.

Adam: Lastly, did you decide to go with a local contractor and how were you able to manage this all from Toronto?

Drew: We interviewed a few local contractors in Muskoka but we weren’t getting the answers we wanted, and they weren’t very flexible about where they’d source the materials. In the end, we decided to go with a Barrie, Ontario contractor who does a lot of work in the GTA, but also gets pulled into Muskoka. He was able to coordinate most of his trades up there at a slightly better price, even though occasionally we had to put them up in hotels. For us, the quality was just as good if not better, and we had full trust and transparency all the way through.

How did this family build their dream cottage on time and on budget? was originally published in Core Assets Real Estate on Medium, where people are continuing the conversation by highlighting and responding to this story.

2011 would be a momentous year for Toronto-based mortgage specialist Andre Persaud. Working as a financial planner and mortgage broker, Andre saw time and again the life-changing potential of investing in real estate. When Core Assets’ Managing Partner, Jordan Rasberry, a long-time friend and colleague, suggested that Andre and his wife Cathy give up their rental apartment in downtown Toronto and purchase an investment property, they were ready to listen.

Jordan: Andre, thanks for sharing your first-hand experience. Let’s start at the beginning. When did you buy your first investment property?

Andre: The summer of 2011.

Jordan: How many properties do you now own?

Andre: 3

Jordan: Where are they?

Andre: We have a triplex in the Junction Triangle, a former triplex that is now a duplex in New Toronto, and most recently we purchased a cottage in Tiny Beaches, Ontario.

Jordan: Why did you decide to buy your first investment property?

Andre: My wife Cathy and I had been renting an apartment in downtown Toronto for a number of years while I was a financial planner at Scotiabank. As we paid down our landlord’s mortgage each month, we finally decided it was time to start building our own equity. We were both young, paying off student debt, and didn’t like the idea of buying a small condo. We also didn’t want to take on the huge monthly expense of carrying a single-family home. You (Jordan) had just bought your first triplex and suggested we do the same. We figured this would allow us to purchase a house in a neighbourhood where we wanted to live, with income to help us offset our mortgage.

Jordan: A lot of people reading this probably look back to 2011 and wish they had gotten involved in real estate back then, before the market picked up the way it has in the last 5 years.

Andre: They wouldn’t be wrong, but it wasn’t exactly a cakewalk for us. Even back then, after we found the triplex we wanted — a really nice, older place in the Junction within walking distance of both Lansdowne and Dufferin stations — we were in a multiple offer situation.
As first time buyers, Cathy and I were way out of our comfort zone.

Jordan: But you hung in there and eventually bought the triplex.

Andre: We did. You (Jordan) kept us focused on the fundamental soundness of the transaction. Because you had a nearby investment property of your own, you were able to show us the strength of the area’s rental market and the long-term potential of the property, both in terms of appreciation and cash flow.

I think most buyers, especially when they come out of a bidding war, think “Did I overpay”?
I definitely felt that, but it didn’t last long. Sixteen months later, that property had appreciated by more than $150,000, which allowed us to go looking for another.

Jordan: What came next?

Andre: We were looking to grow our family so we wanted to find a larger triplex in a quieter neighbourhood. We wanted a neighbourhood with solid upside that was not on everyone’s radar.

Jordan: How did that sale pan out?

Andre: It was another multiple offer situation but it went really smoothly. Based on comparables and the interest the property was set to generate, we put in a relatively high, strategic bid that was $35,000 above asking, and ended up closing on it in January 2012.

Jordan: Has this property done as well as your first one?

Andre: Yes. That Etobicoke property is worth over a million dollars now. It has completely changed our lives.

Jordan: In what ways?

Andre: Well, for one thing, it became our primary residence. My wife, two year-old son and I live in the bottom two units and her parents live upstairs, which has been wonderful. But the appreciation allowed us to buy our dream home.

Cathy and I never grew up with a cottage to go to, so rather than buying a single family home here in the city, we decided to buy a 4-bedroom beachfront home in Tiny Beaches. We were excited when we found it, but I don’t think I realized just how satisfied and proud a purchase like that can make you feel. There’s nothing better than being able to provide your family with something like that.

Jordan: It will definitely be a place that you and your family will enjoy for many years. Now back to the Junction Triplex. Do you still own it?

Andre: Yes, we we’ll never let that property go. It has solid cash flow and, after years of improvements, it’s relatively low maintenance and located in a place that attracts amazing tenants with little effort.

Jordan: What has been your biggest headache as a landlord?

Andre: Renovations. We intentionally bought places that needed work, but were hoping for mostly cosmetic improvements. Our Junction property had a water issue in the basement. We tried many different fixes but never got to the root of the problem. Last summer, when our basement tenant moved out, we decided to gut the space and re-do all of the drains. This seems to have resolved the issue. Overall, it cost us thousands of dollars, but it also gave us the opportunity to renovate the basement, which has added value to the property and should allow us to attract better, long-term tenants.

Jordan: Speaking of that, do you have any tips for a landlord who is searching for tenants?

Andre: To be honest, we were taught well at the beginning and have never had any major issues. Our rule of thumb is to price at, or below, market value. You’ll likely get a tenant willing to pay more, but by reducing your asking price you will get a larger selection of tenants. Better tenants means fewer headaches!

Jordan: What do you find most rewarding about building your investment portfolio?

Andre: Buying the cottage. By starting young and leveraging our portfolio, we have been able to buy this awesome property and start planning for our retirement.

Jordan: So I take it you are going to continue to buy investment properties?

Andre: Exactly. We’ll be expanding our portfolio eventually, but for now we’re in a bit of a holding pattern. We are expecting our second child and just want to relax and enjoy the small things for the next little while.

Jordan: That’s great news! Congrats again! Last question: What would you say to potential buyers who are having a hard time reconciling your success in 2011 and 2012 with the market they’re faced with today?

Andre: You definitely want to focus on getting in sooner rather than later, but getting in was the best thing we ever did. You might have to be aggressive and less picky with your first property, but once you have it, you’ll be able to do so much. Our first purchase was great, and while we’ll always love that property, the real benefit is what it will allow all of us to do in the future.

From renters to landlords, learn how this couple flipped the coin was originally published in Core Assets Real Estate on Medium, where people are continuing the conversation by highlighting and responding to this story.

They may look like bankers but the guys behind Cameron Stephens Mortgage Capital don’t fit the typical mold. They’re a team of dynamic, creative financiers who likely assisted in developing your condo building. While you may not have heard of them, Cameron Stephens is playing a huge role in the redevelopment of Toronto and cities across Canada through highly-structured lending to the industry’s top developers. We sat down with Steve Cameron, one of the firm’s VPs to talk about his job and mitigating risk in a turbulent industry.

Adam: What is your role at Cameron Stephens?

Steve: I run the Business Origination group, which is responsible for sales. This year our target is $750 million in new business. The team consists of me and three Business Development Managers, the Vice President of Alberta, as well as the Senior Vice President of Origination and our CEO, here in Toronto.

Adam: What type of products do you sell?

Steve: We work in the land development and construction sector and, basically, sell money — capital to acquire land, develop it, and build on it. We offer bridge financing, acquisition and mezzanine financing, a take-out term product that is more commercial-loan based, and some small renovation and repositioning products. Mostly we look for deals ranging from $5 million and up, on any commercial asset located in Ontario, Alberta or British Columbia.

Adam: Can you walk me through a deal?

Steve: We did one recently in Kitchener-Waterloo where the client was looking for sites to build apartment buildings. We did a land acquisition loan to help them acquire a site with an old, under-utilized industrial building on it. Once they purchased it, they had to get proper approvals on the site plan and building permits for three towers. We arranged financing for them on the first tower, a construction loan of about $35 million at bank rates and bank terms.

When that deal was completed, it was purchased by a large financial institution, so we discharged the building and did a construction loan for the other two apartment buildings — Phase Two of the project. That was also at bank terms and bank rates, and the total debt consideration was just over $80 million.

Adam: Do you have any other examples of something more traditional in the GTA?

Steve: We did a great low-rise deal here in the GTA — a $16.5 million first mortgage land loan in Markham, secured against a 20-acre site. That loan was to redevelop 1,500 residential and commercial units across multiple phases. Construction on Phase One — 500 single-family dwellings on 35' to 40' front lots — commenced this year. This is an example of the “one-stop, full service” we offer our builders — financing for land acquisition, servicing and development, and construction. All in one.

Adam: It sounds like you get the behind-the-scenes view of the development market. Can you give us a sense of how developers are feeling right now, given the current situation?

Steve: Obviously, everyone’s a bit nervous because the media talks non-stop about the real-estate industry but, at the core, we’re not seeing any slow down. We’re not seeing prices drop and we’re not seeing anyone who wants to get out of the market.

A large builder in downtown west recently said, “It’s like we’re in the fourth inning of a nine inning baseball game; things are heating up but we’re not even close to the end of the game.” A lot of builders remain very bullish not only on the core GTA or core downtown Toronto markets, but also on the extended GTA. We see a lot of firms who have historically focused on ‘Toronto proper’ now looking north, east and west for new areas to develop.

Adam: We’ve recently heard about a cash crunch because land values and recent city levies are driving up the cost of development. Is developing still profitable, especially in the core?

Steve: Yes, it’s definitely profitable. But the cost to develop and the barriers to entry are getting higher and more competitive. Historically, someone could buy a site and develop it on their own. These days, many developers are partnering up in Joint Ventures to pool capital and generate enough liquidity to flow the deal through. It’s not as common to see one person do a massive tower like you did even 5–10 years ago. Unless you’re in a league of your own, it has become very difficult to keep up with the costs. Land prices have gone through the roof, and the city keeps raising its levies and its cost of doing business. So yes, I would say it’s becoming more difficult, but it’s not impossible.

Adam: In your opinion, what are some of the things that the government could be doing in the future?

Steve: The government has been pretty clear that they’re not going to move the green belt so density will continue to be vertical. That means builders have to get even more creative and maximize uses for infill sites. We’re going to see a lot of multi-purpose construction — office, hotel, condo, retail — multiple uses in the same development.

The other issue in Toronto is transportation. No one wants to sit in their car or on the bus for 2–3 hours a day, especially millennials. The city needs to work with metro links. We need to expand our subways, and run express trains from Guelph, from Kitchener-Waterloo, from up North, and from Barrie so you can get to the downtown core in under an hour. When that happens, those cities can expand into major urban centres as well.

Finally, the government has to deal with supply. We have a major supply problem in the GTA, and rent controls are not the answer. What the government needs to do is fix the approval process time. If we had a more efficient process to get more product released to the market, there would be much less competition, and prices would stabilize. There are something like 25,000 units held up at the city right now, and it’s only getting worse.

Adam: What’s your favourite part of the job?

Steve: First of all, I love the industry. It’s deal-driven and I love making deals. I also love the people I’m meeting: they’re entrepreneurial, ambitious, creative developers — young and old. Being in the finance world can be black and white but when you get the opportunity to be around interesting people and their great ideas, it’s inspiring and energizing.

Adam: Last question, why would someone use Cameron Stephens over a traditional bank or lender?

Steve: Developers use Cameron Stephens for many reasons. Typical Schedule 1 bank financing often comes at a low cost, but flexibility, speed, and deal structure is something the banks generally do not provide, and it frustrates developers. At Cameron Stephens, we specialize in helping builders put a complete financing package together that fits their exact needs and time-frame.

Often a deal has many ‘hot spots’, more than just the rate. Things like Loan amount (LTV and LTC), equity requirement, presale tests, covenants and recourse are just some of the major factors that make a deal work. Although “Traditional A Bank Lenders” can be aggressive, they’re usually only aggressive for the top 5% of the industry, which leaves a lot of room for shops like ours to service some amazing “boutique” developers and their projects.

Ever wondered where developers get their money? was originally published in Core Assets Real Estate on Medium, where people are continuing the conversation by highlighting and responding to this story.