EP 337 – Note Investing From Canada with Chad Urbshott

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NCS 337 | Note Investing In Canada

NCS 337 | Note Investing In Canada

 

Investor with a background of structural engineering, and managing director of Equigrowth Capital Mortgage, Chad Urbshott talks about note investing in Canada and how the mortgage markets differ from the US. He discusses how they deal with the limited banks around while giving us a look into the deals he closed as well as ongoing ones. Talking about how he conducts business from the North to the US, he shares about finding his team members. He also talks about his bread and butter in the note business, whether it’s cash flows or flips and fix, plus how he goes about funding transactions and marketing. Lastly, he answers some questions from the audience and provides great advices for those budding investors out there.

Listen to the podcast here:

Note Investing From Canada with Chad Urbshott

We are excited to have this episode because we’ve got a guy who’s doing some cool stuff taking advantage of opportunities from North of the border and that’s our buddy, Chad Urbshott. Welcome, Chad. How is it going?

I’m great. Thanks, Scott, for having me on. I’m excited.

I’m glad to have you. You were down in Texas for a sneak peek for our Mastermind, but then also you hung around for the Quest Expo. For our audience who don’t know who you are, tell them a little about yourself. What’s your background?

I’m Canadian. I started real estate investing back in 2006, 2007. I was by myself in Canada doing rentals, rent-to-owns, and then I transitioned into student apartments. That was fun having a couple of animal houses. I’m a structural engineer. I had a background in development as well. I got into developing some commercial properties and that kind of thing. I went to a seminar in Toronto and on the way down, a buddy of mine, a colleague who is also a real estate investor said he was interested in investing. He does it in Atlanta or something at that time. I was like, “Are you crazy? I can hardly handle my properties from half an hour drive away. How can you handle it from a two-hour flight away?”

When I went down to the seminar, there were three or four vendors there that were US-based and they were touting some of the numbers on rental properties. That was in 2011 or 2012, so that was in the bottom of the crash. I was blown away by some of the numbers I was getting presented with, buying a property for $50,000 and he was renting for $900 a month. The returns on the investment were phenomenal and that was an unlevered cash-on-cash return. I was like, “That’s incredible.” I was sold at that point. At that time, I’d been going back and forth to Florida for quite a few years with my family members. I thought, “Why not start investing in a place that I know?”

I started investing down in Florida. It wasn’t long before I realized that even though the market was saturated with foreclosures, it was hard then to find good deals, especially for newcomers. I jumped into the deep end of the pool and started buying foreclosures initially from the auctions and that was definitely a learning experience. It’s not something I would recommend to anybody. I learned the ropes the hard way on a few of them. I did that for a while. Then I met a guy down in Florida who was doing turnkey rentals up in Cleveland and I had no idea what a turnkey rental even was. I started doing a few deals with him.

I was the funding partner bringing in funding to the table. I got to know the Cleveland market and the Midwest Market. While doing that, I transitioned from buying foreclosure down at the courthouse in Florida to just doing fix and flips. It was another introduction to Bill Bymel from RSI Asset Management and his team. They’re doing some incredible things with luxury flips for some hedge funds. They had a good contractor that everybody trusted and did a good work. I worked with them and their team. I was doing that and jumped into the note business full-time switching back and up.

NCS 377 | Note Investing In Canada

Note Investing In Canada: The real estate market is so hot here that anything that does come up is typically a power of attorney.

 

I started getting interested in notes and educating myself and reading BiggerPockets and what have you. It was in 2015 or 2014 up in Toronto, someone was hosting a Meetup who was Canadian who was buying notes. I was like, “That’s exactly what I was looking for.” I ended up teaming up with that person and we did about six deals together. I was getting frustrated trying to find deals in the Florida market and so I jumped both feet into the deep end on the note side of things and I’ve been doing that full-time ever since.

Are you still working full-time too?

No, I gave up that corporate gig.

Where are you buying? Where are you investing? What markets are you investing and buying notes in?

If you go by state, I’ve got Indiana, Missouri, Michigan, Pennsylvania, Ohio, Florida and Illinois.

Six or seven states is good. Enlighten us a little bit about the mortgage market in Canada. Is it a lot of banks? Is it different? How is it set up there North of the border?

There are about six big banks in Canada. They underrate all their loans and home mortgages. They keep them on their books, they keep them in-house. They don’t typically sell them off, but sometimes they do. They keep most of them in-house. There is what they call B lender here in Canada where they’ll do not quite as analogous as a subprime loan or non-prime loan. It’s halfway between them. You still need a credit score of 600 and up. You need to put a lot down and the interest rates are going to be a lot higher. They typically package those up and sell them off into a mortgage-backed security. They are ensured by a CMHC, Canadian Mortgage and Housing Corporation, which is very similar to a Fannie and Freddie Mac.

There is no secondary market here for mortgages. The default rate is one-tenth of what it is there in the US. It’s about 0.5% or something like that across the board. Any loans I do that go into the default, they’re basically taken care of by the banks. The real estate market is so hot here that anything that does come up, it’s typically a power of attorney. Most provinces here have power of attorney, so it doesn’t have to go to the judicial route. The properties are sold within hours so there’s no market here for it. I’m sure there is, but I’ve never tried to tap into a small one. It’s nothing in comparison to the US. We’ve got the five banks versus the 5,000 there.

There’s a little bit of diversity when it comes to the lending side here in the United States. You were talking about a deal that you closed on that you bought. Would you want to share the details of that asset? You had one that you bought that the guy just signed the property over or you sold it in a couple of weeks.

There were two that I was talking to you about. There was one where I took the deed in lieu back. I listed it for sale over the weekend while I was in Dallas and got an offer. I purchased it back in November timeframe. It took about two to three months to get the collateral files. It was one of those ones I dragged on and on, and the seller kept saying, “It’s coming.” I ended up speaking to someone else at the hedge fund and they got it to me right away. I should have done that in the first place.

The first thing, I was doing the due diligence on that one. It was a bankruptcy seven. They had surrendered the property so I thought, “This is obviously going to be vacant, so probably I’m going to take it.” Then I got a pretty good discount compared to what the asset’s value of what it was. I thought, “I’ll probably take it over and sell it as it is. In Columbus, it was in a 55 and over the community and it was a condo. It was a 3/2. It was 1900 square feet so I thought, “This might cut out a lot of the buyers for this thing,” but I thought, “I’ve got such a good deal, but I can’t go wrong in this.”

Once I got the collateral files, which was February, I believe it was already in the foreclosure pipeline. I can’t remember exactly what happened. I didn’t get my second mortgage recorded in time. This thing had been dragged up to the courts for years and the judge was not going to extend another deadline for the foreclosure in the courts. We had to cancel the foreclosure, which was a little bit frustrating, but it was also a bit of a blessing in disguise. The attorney on the file said, “If you can go and get a consent of judgment, we can file this in 60 to 90 days.”

I reached out and I actually found her on my own. It was an elderly lady that lived there. I made a phone call, she was in a retirement facility up in Chicago. I got a phone call back a few days later from her daughter. She was wondering who I was and why I was calling her and bothering her. I said, “I’m not the big bad banks. I’m just here to offer some money to your mother to sign the deed to the property over.” She said, “You mean the cash for keys or a deed in lieu,” so she obviously knew what I was already talking about. Anyway, this dragged on about four months and finally, I was dealing with the daughter and she was very non-responsive, so I ended up calling the mother directly. I found her phone number and she called me back a day later.

She was tickled pink. She was like, “You’re going to offer me some money?” I said, “Yes, all you have to do is sign this paperwork. My attorney will send it out to you and you get it notarized at the back and send it back.” She actually sent me a letter. She missed signing some of the documents so we had to resend them to her again. Within that package she sent back to the attorney’s office, it was a very nice handwritten letter saying how wonderful it was that I had done this for her and I got that warm fuzzy feeling. That was a win-win because she got some money out of the deal where she wasn’t expecting it and I got a pretty nice property for not too much money out of the pocket. The majority was already paid for by the previous seller.

When we looked at this condo, I have a good route to contact there who was also a pretty savvy investor himself. I hold a seller-financed note with him. When we went through it, we thought, “We could probably sell it for X amount of as it is,” and I said, “What if we fix it up?” That’s my background. It was fixing, flipping. He already has a crew and he said, “If you could put $20,000 into this, we could probably get an additional $20,000 at the sale.” If you do the math on that, you put it in $20,000 and get an additional $20,000 on top, it will be 100% return on some pretty quick money. I thought, “Let’s do it.” We had to turn it around in about a month and they have looked at the furnace for the HVAC or the AC unit but that ended up having to be replaced, which was a bit of a setback of another week. I thought, “If we’re going to list this out, we’re going to list it for that, but I’m not too concerned about that.”

NCS 377 | Note Investing In Canada

Note Investing In Canada: Some money is in the bank, but at least the deals are in or so.

 

Anyway, I paid $21,500 for it and expense-wise, it wasn’t a lot. I haven’t got the legal bill for doing the deed in lieu yet, but I think it’s only $500 for that and some holding costs like utility and some taxes. All in on the actual purchase, it would probably be around mid-twenties. I don’t have all the math but I know I should have had it. Then on the rehab, it started out at around $18,000 and with the HVAC equipment, it was about $22,000. I’m going to be all in around mid-‘40s like $47,000, $48,000, somewhere around there. When we’re going to list this, we thought probably low 80s was a good number to use. Columbus is the top second or third market right now with all of this, throw it at $89,900 and see what happens and we’ll drop the price up for a week if we don’t get any action on it.

When I was down in Dallas, we finally got to list it on a Saturday afternoon. By Monday night, he had three showings and an offer in hand by Monday night. It was a woman who lived in the same complex who was renting who has been dying to get a unit in there. We were the first one that’s rehabbed any of those units in there. She was absolutely astonished that someone came in and had done a rehab because it was built in the mid-‘80s and it was all still original. We got the offer in hand so it doesn’t close for a couple more weeks. It’s not over until the money is in the bank, but at least the deals are in or so. That will be for inspection, as long as it pops up an inspection of probably 70% ROI.

It’s not bad for over ten months roughly.

I’m pretty excited about that one. The other deal, I can’t divulge too much on this one because I’m right in the middle of negotiating things. This is a deal that I picked up in April. It was a CFD. It turns out that it was on a nonperforming CFD tape. I put the bid in and it got a counter back and I was like, “Why the heck is this so high?” The seller said, “This is a performing note, a performing CFD,” and he sent me the pay history. He was like, “This was on the nonperforming side that’s why I put a nonperforming pricing.” It came up with the tape again. It was a nonperforming tape and I remember seeing it. During the initial due diligence, I remembered that this thing was for sale. I went back and checked the address, sure enough, it was for sale. I was looking at the sale price and it was three times of what the note seller wanted for the note itself. They wanted two-thirds of the UPB, which is not bad for a performing, the yield was 15% or 20% on it.

I was thinking, “This is a no-brainer. If I buy this for $20,000 and the payoff is 30, if this thing sells off within next month or even in six months, that’s a 50% return for not doing anything. It’d be no expenses whatsoever.” I went back to the seller and I said, “If this is still available, I’ll take it.” The seller had numerous judgments against him and he wasn’t able to sell it because once it was sold, it would go into his name. The name is going to be attached to it and then they would go on the title. To make the long story short, he called up and he said, “Can you do Cash for Keys deal?” I was like, “Let me think about that one for about five seconds. Yes.” We signed the agreement and I’ve already got a buyer lined up. I reached out to the buyer who was going to buy it previously and asked if she was still interested and she was. I said, “You’ll be able to get a deal on this because I’ll be able to sell those too and add a little bit of a discount compared to what you’re going to pay for it before.” If this all works out, it would be about 80% ROI within four or five months.

Are you flying down and looking at every one of these assets or are you basically working with teams all across those five states?

I have never seen any of my assets once. No. I just have teams everywhere.

How difficult is it for you to find team members, whether it’s realtors or rehab crews?

It’s not the easiest now. Obviously, all the vendors that you’ve put in place for the program have been fantastic. I can’t say enough for Madison and the Singer Group. Everybody’s worth their weight in gold. I get a lot of referrals through them, especially on the attorney side. Singer’s got a whole array of attorneys across every state. I’m just going with the ones that they typically use. As far as realtors go, it’s being part of the FWCN, part of your group. A lot of people go out there and say, “I’m looking for a recommendation here and here,” and you usually get punched responses on realtors. They’ve already been vetted obviously. You just pick up the phone, call them and say, “So and so recommended,” and you’re off to the races. In that respect, it has been pretty fantastic. I’m in a couple of areas where no one’s been yet. It gets a little bit tough for finding a good realtor. Contractors, as everybody knows, is definitely a sore point. I have a rehab going in the East St. Louis, which is on the east side of the river in Illinois.

I took this deal as part of a package. It was five and under at that time. Writ foreclosing, I was doing more and more due diligence. I thought, “This thing’s a total dog. It is going to be a money loser,” so I went back to the seller. I said, “Can we drop this one?” He said, “It’s too close to the closing date. You have to take it if you want to.” I did get some significantly good pricing on some of the other deal. We were talking four digits on a couple of them and they were worth 40/50. I thought, “This is going to be the one that I’ll take for the team.”

When I took it over it was vacant, so it was pretty easy to get a cancellation of the contract. It took two weeks. Singer’s office got them on the right way. I went to do the deal on the comps on this and that was the reason I wanted to drop it. This thing was worth what I have paid for it as it is. The properties around it, there were no rehabs in there, let’s put it that way. No one goes to rehabs and I thought, “I’ll be the one that cracks the market.” I had contractors go through it. I was getting prices that were astronomical and I thought, “It doesn’t matter what I do with this, it’s not going to go well for me.”

NCS 377 | Note Investing In Canada

Note Investing In Canada: In the note business, you should never lose money on a property.

 

I’ve been doing the rehab work myself. I’m still getting ahold of the contractors, handyman, you name it. I’ve had over a dozen guys go through there and it hasn’t been easy. It’s the first time I’ve ever done a remote flip with the general contractor. I’m saving $10,000, $15,000 on it at least. Wiley Griggs, I found out she’s from the area. There was networking again. It turns out that her cousin is a realtor in the area. I was like, “Where was she four months ago?” I made contact with her and she’s going to go through it to give me some advice.

What’s your long-term goal? Are you looking more for cashflow or you don’t mind the fix and flips obviously? What’s your bread and butter that you like, Chad, with the note business?

I’ve heard you say that a bunch of times. When you first start into it, you just want to take every single property back over and fix them up because it’s what you were doing before background. I started off like that, but then cashflow is king. I’d much rather have them paying cash every month. Not every one of them. I do take them back and getting big chunks of change. There’s nothing more invigorating than getting a $20,000 or $30,000 check if you can do that once every month, that’s a pretty good money. Then, I’d like to get to the point where the cashflow covers all the expenses and everything else on top is gravy.

I like a mixture of both. I’m not afraid of taking vacant properties, especially if it’s in a hot market where I’ve already got a team in place there. I don’t know if I’d ever do it again in East St. Louis. The beauty of this one and I’ve told a few people this is what I’ve learned in the note business is you should never lose money on a property. There are so many different ways that you can exit a property as opposed to just selling it and taking a loss or putting a renter in it and hopefully it is going to appreciate in ten years. What I’m going to do with the East St. Louis, if it doesn’t sell retail is I’ll probably sell it to seller financing. I think I can get it to the value where I’m definitely going to make my money back and then at least a 30%, 40% return. That’s what I’m going to do going forward to on a vacant property. I might transition and put those into a seller finance notes.

How are you funding the transactions? Are you using your own capital or are you using other people’s money?

I started out using my own company. I’ve built up a bit of a war chest from my prior fix and flip business. I used to live down in Florida and sold the property down there, so I’ve been using the funds for that. Like everybody, you get to a certain point where I’m like, “Before Christmas, I was buying them like crazy and then I’m getting low in the capital. I’m looking for investors.” I’m brought up to four, five now but definitely, I’m hoping to bring in more people.

I’ve got one that’s going to sell quickly. I have an investor on that’s got an IRA. He’s pretty ecstatic on keeping them up to date and how this is going. He told me there at the get-go. He has a friend of a friend and he lives in New Jersey. He was at the Distressed Mortgage Expo. I met him there because he lives in New Jersey. I sat down with him at a bar. I’d never met him face-to-face and he said, “My wife was completely against this but if you can prove this, there are lots more of this.” When we got into this deal and this was happening I was like, “This is hopefully going to pay well and then he’ll come back with a bit more of the war trunk.

Are you just using sample deals that you closed on or are there other deals to talk with people about that? Are you doing any marketing, email blast? Are you just raising capital from people that you know?

It started out word of mouth from the local real estate groups that I’ve been in. Then I started doing email blasts. I send it out biweekly. I’m getting some pretty good traction on those and BiggerPockets, I’ve got a lot of tire kickers. There have been a couple that I’m not completely committed, but definitely in some. By the time I’m talking to them three or four times, you usually realize that they’re committed. I’m actually at the point right now where I’ve got a lineup of investors and deals to fill because I don’t know what it’s been, but every counter I’ve had has been astronomical or I’ve got them accepted and I’ve got having to due diligence, I realized that there are major issues with the property.

I’ve struck out on every single offer I made, so it gets a little frustrating. Besides that, I’ve got three this week. I was up until 1 AM pricing on a tape. I’ve got an email from one of the sellers at 8 PM, “We need your bids by 8 AM tomorrow.” Not that I don’t have a million other things to work on at the time, but I got them off. It was a late night before that. That’s what I love about this business. You can work whenever you want, when you want and when it’s convenient. I’m more of a nighthawk. I’m not one of those 5 AM risers or 4:30 AM risers. I get up whenever the alarm clock goes up or I don’t use an alarm clock. I don’t sleep in past 7:30 AM, but whenever I wake up, I wake up. The morning is mine and I don’t jump right into work and do some affirmations, meditating and that kind of stuff or visualization. It helps the day progress a little faster, so I find that it could get a little better in my favor. If I miss doing that in the morning, the day never seems to go as planned.

When you get up and get everything set, everything’s rock and rolling, focus on your big rocks, focus on that positive mindset, it definitely helps out. Whereas if I get up, I’m rushed and things like that, you always feel you’re behind the eight ball for the day if you don’t start off the way you want to. What’s been the biggest lesson that you’ve learned in the last two years of doing deals?

It’s the old adage, “You make your money when you buy.” Making sure you do your due diligence up front. All your I’s are dotted and T’s are crossed. I probably spend way more time than a lot of people get into the analysis paralysis on a lot of deals. It’s why it takes me a little bit longer to get through them. I don’t want any surprises when I get into it. I still use as much as due diligence as I do, I still get surprises. I’ve got a tax bill from some borrower in Allegheny County that I didn’t even know existed. I was like, “Where did this come from?”

I checked out the title report and it wasn’t on there. It’s one of those counties where you need to get a tax certificate and it takes about two weeks. It’s things like that. I’m picking up on things as I go. It’s not the end of the world, it’s only $1,000 or something like that on that one. It’s doing the due diligence process and refining with systems every time I learn something new. I use Podio for tracking everything. Every time something’s like, “I didn’t see that coming,” I could put that in my due diligence process. The biggest lesson is learning everything or doing as much due diligence on the frontend and especially knowing down the value of the property. If you don’t have that nailed down, that’s the biggest risk in this game.

NCS 377 | Note Investing In Canada

Note Investing In Canada: Investors never hear the average. They always hear the high-end aspect of things.

 

It’s the best way to protect your investor. Your money off the bat is knowing the value. We all agree we’ll be off a little bit, you’ll be here and there. You know if it’s worth it if it’s in the low 50s, not if it’s 30 to 60. That’s not a price range. That’s an important aspect. You’ve got your feet wet partnering up with somebody to begin with, is that correct?

Yes.

What lessons did you learn from that?

Not as many as I wanted to put it that way. I thought of that as we would tag along and learn as we go. The person who was in control didn’t have a great communication platform set up. It was hard getting information. I learned that you can make a lot of money, but good ROIs in this business and that’s definitely what attracted me to it. The first deal we bought was in Fort Worth. It ended up being seven months from cradle to grave. It was already in the foreclosure pipeline when we bought it and we made a 70% return. I was like, “Hopefully, I’ll carry out for that.”

It’s an easy heroin shot right off the bat. You get addicted to it fast.

The next five or sixteen go quite as well, but they tried a little longer than that one. What I did learn from that was what not to do and implement things that I found that were holes in the way that particular person was doing. Especially when dealing with investors, you need to have a system in place. I wouldn’t say on a daily basis, but you need to have a financial system that you can track everything so if they call you up and say, “Where’s my investment sitting at? How much have you spent?” You should be able to have that at your fingertips and not take three months to pull it. Those were some of the things I’ve learned when I was a passive investor.

What advice can you give to somebody who’s brand new?

Get some education through Scott. When I first started down my path back in 2015, I don’t know why I didn’t stumble upon your program. I saw you on BiggerPockets a few times, but these speeds were out there. It was before you who implemented it, but they had an online program where you could go in. I signed up for that. It was all about how to use the HP calculator. It was ten hours of that and me being an engineer, I was like, “Are you kidding?” I can’t believe I paid whatever it was for that course.

When I stumbled upon your stuff, I signed up for the Bootcamp and I was like, “This is all the information you could ever need to get into this business.” Definitely get your education first. Read a few books as well. For your first deal, if you’ve got your own money just buy a small one. Do it on your own and try to work it out. If you don’t have the courage or if you’re working full-time and you don’t have the time, try to ride along with them as much as you can and learn the ropes. That’s how I got started.

It’s not always a daily update on an asset because you’re letting the attorneys do their magic or the mail outs or stuff like that. It’s a good way to get your feet wet. One of the most important things to have is a good network of people to reach out to.

Being part of the WCN Crew helped and propelled everybody’s game. We’re a family and looking out for each other. Even though we’re bidding against each other a lot of times, it’s nice when you can post something and people want some recommendations and they get it back. Although sometimes it might be a little harsh and some posts that deal with all these 150% ROI numbers. Chris Seveney and I are probably the first ones who’ll attack them.

I say, “You need to take your numbers down. Under promise and over deliver.” That’s what I was talking to someone. I was like, “You can’t throw an estimate 70% ROI. You’ve got to go take the numbers back in.” It would be more believable talking about an estimated 25% yield. It’s not a hard-flat thing. A lot of people get so excited about it that they don’t listen to the little details and those little details are important to keep you out of trouble.

When someone goes into that deal with you and it doesn’t turn out as planned, then there might be some repercussions down the line.

Let’s face it, investors never hear the average. They always hear the high-end aspect of things.

One of my investors, he was my first one, I said, “It’s going to be anywhere between a contract for a deed. I had a Cash for Keys, three exit strategies, foreclosure, forfeiture and a little loan and resell. I had the timeframe anywhere from six to eighteen months. He was already saying, “Are we getting a little close to the timeframe of this?” I was going, “What do you mean?” He said, “Isn’t six months coming up?” and I was like, “No. If you look back at the projections, it’s from six to eighteen months.” People just look at the best-case scenario and hone in on that.

What are some things you want to accomplish by the end of the year?

It was at the beginning of the year you had to lay out your goals for 2018. I hopped on there. One of mine was to get to 50 notes. I’m a bit of aways off that. I don’t know if I’ll be able to hit that or not, but I stuck the goal out there, but I’m definitely a lot closer to that. I would have if I said, “I just want to buy ten this year.” One of the reasons I fell back in the goal was after I bought a whole bunch right up in Christmas and January, I thought, “I have no idea how I’m going to manage all these now. I need to put some systems in place.” I had nothing. I was just going by email and this and that. I sat down for a few months and didn’t buy anything.

I used Podio for fixing, flipping and tracking deals through that. I started from scratch on the note side and built a system around that. Once I felt a little bit comfortable with the systems in place, then I thought, “Now I can bring investors on and have it set up now where they can log into my website and see where the deals are at.” It pulls it all from Podio. It’s pretty amazing. I’m probably not going to quite get that this year but the long-term goal, I’d like to be the next Wayne Snell or Jeff Tannenbaum, 300 notes in the next few years. It’s completely attainable if you’ve got the systems in place. I just need the deal flow. Like everybody else, the deal flow is getting hard to come by. The prices are going up, the counters are getting ridiculous.

Keep marketing for new sources. That’s one of the biggest things that I would throw out there. Fifty in a year is feasible for you, especially, you have to figure in the busiest time of the year.

I bought ten between October and Christmas and it went out so well.

One of the things I would highly recommend is reaching out to everybody you’ve made an offer to this year. Follow-up with people, especially as you get closer here. You’ve got to realize that we’ve had mostly school kids are going back to where people are coming off summer vacations here. Labor Day weekend is the final lap the way I look at the year. What we have bought up to now, that’s great gravy but the months that we’re going to buy is between now and December 27th. They don’t want you to fund by the 28th because they want to be done by the 28th. On a Tuesday, that gives you Wednesday, Thursday and Friday to get money into clothes and stuff and get stuff off their books by the end of the year.

I got money on the 24th of Christmas Eve and it had to be delayed a few times. I wasn’t very happy. I stipend some money from my account.

Are you going to a real estate investment club still in Toronto where you’re at?

I do but not nearly as much when I’m buying stuff up here. I was part of one for ten years. I was at a meeting and it was my farewell. I got up and did a presentation on note investing and they shoot me off the stage. I didn’t fit the group there. I didn’t fit their buy Canada. I was throwing out some projections and some of the returns that you could get and shut me down halfway through it. I stopped the club I’ve been in for ten years. I don’t know how many people I’ve referred to them. I was just astonished. I was like, “I can’t believe these guys are shutting me down in front of 200, 300 people. It’s not easy doing a presentation in front of that many people and they just shut me up.

NCS 377 | Note Investing In Canada

Note Investing In Canada: You have to spend a lot of time to make it work the way you want it to work.

 

I know a few clubs like that where they’re very big on rentals or fix and flips and that’s what they focus on, wholesaling and you bring in something different, they get all bent out of shape. There’s a club in San Antonio like that. The guy was reaching out a while back. He called me up. We were going to have him speak. I was like, “We’re focused on cashflow.” Then he said, “We’re not going to have him,” I was like, “Why not?” I said, “This is the ultimate cashflow. My group’s not smart enough to handle it.” I was like, “You’re calling all your investors dumb.”

Part way through the presentation they stopped me and they said, “Does anybody understand what he is explaining?” Half the room put their hands up and he was like, “That’s what I thought. No one here has any idea what you’re.” If you’d let me finish, by the time I get done everybody has a pretty good understanding of it. I was just blown away. I’ve been friends with these guys for ten years too.

We have a question, “What CRM or other tools are you using to keep track of all your deals?”

Everything is in Podio, every single thing. I track all my investor leads. I track on the context obviously, all the realtors, vendors and all that stuff. When I get a tape in, I download it into Podio and it will bring up Zillow all of the information. It was a thing that I built and it took a while. I can see the street view so I don’t have to plug it into Google maps. That’s on the bid analysis. Once an account is accepted, I switch it over to a due diligence app, which is called in Podio and that’s where I’ve got all my processes and checklists setup for every single thing that needs to be done on that. If I end up buying the deal, I switch it over to Holdings app and that’s where I track everything that’s going with the deal while it’s happening.

I’ve got numerous apps that work around it. I extensively use Podio. I use Trello, a task list for stuff that’s personal and business. Most of the stuff comes in Podio and I’ve been using Podio more and more because I found out you can do a task and it will remind you through Outlook. I use either Outlook or Podio but I’m mostly in the Outlook. I can drive everything through Podio to show up on my Outlook now. This is a pretty powerful tool. It’s out of the box, it’s a clean slate. You have to spend a lot of time to make it work the way you want it to work but once you get it all out there, it’s incredible. The automation, the workflows that will do for you. For instance, if I’m going to buy a loan, I’ll say, “Check up with my custodian in two weeks to see if they’ve got the file,” so it will remind me. It automatically does that as soon as I buy a loan, I can pull up all those workflows so that I don’t have to go in and remind myself or physically put them in. For any of the deals that I’ve got investors on, I’ll go in there and I’ll put an update. I’ll type it in where I can voice dictate it on my phone. It will go down in the comments box, which then goes into another updated field on my website. Anybody can log in at any time and you see what’s happening.

As oppose when they’re calling me up when we had two or three at that time and they were emailing me all the time. One was happening to call me and one I was having weekly calls with some of them. I was like, “How can I figure this out?” If I bring out ten or twenty investors or more, I’m not going to keep up with this. I spent some time figuring out how to put on my website. Now, they just log in and see what’s going on. I don’t discourage them from calling me. I said, “You can call me whenever you want, but no one ever calls me or emails me or text things.”

We have a question, “Are you going to stay and live at the North of the border or you’re going to end up coming down to the states?”

I was living in Florida during the winter for a few years. I had to experience my first winter up here again and I’m very happy about it. Once the dust settles, I might end up getting a place down in Florida again. I had to get a US visa when I bought the house down there. I was having a hard time getting across the border, I got denied once. They said, “You need to get an investor visa in order to come across.” That was under $5,000. I wasn’t accounting for it, but I was able to come across. I could work there until Trump changes his mind and bars all Canadians from coming to the US.

What part of Florida?

Down in the south end, it’s called Boca Raton, which is an hour North of Miami.

I bought some in the neck of the woods, especially in West Palm Beach and all that neck of the woods as well too.

That stuff is few and far between now. I can’t find any notes at all.

If I could go back and buy everything I saw in West Palm Beach. When you lay or your structuring things like those with a few people, do you have the United States based LLC that you’re funding through? How do you set all that stuff up?

I had this all set up before I got into note business. I’ve got a limited partnership that operates out of Florida and that’s owned by a Canadian corporation and partly by me. It’s a convoluted structure which costs me a fortune in accounting fees and legal fees every year to maintain. It’s set up for ultimate liability protection.

You have your own version of the Rockefeller strategy basically.

It’s not quite as good until I saw a presentation on there and putting the trust over top of it. That will be the next step. Once you get a bunch of assets in your entities, they might not be able to touch you personally, but if you’ve got all of your wealth tied up in your businesses, somebody will go to come and clean you out until he did that presentation and saw that trust structure. I’m like, “That’s what I get to do next.” Although he tipped me off, “How much is it going to cost?” I’m like, “Maybe not this year.”

It’s a layered aspect of things. Any final words of advice for those out there, Chad?

NCS 377 | Note Investing In Canada

Note Investing In Canada: Everybody has hiccups. There’s a surprise in every deal, but there are multiple ways to get around that and still create win-wins.

 

I was texting back and forth of Blake Allan because he was commenting, he made a post on the crew there about this one deal that got to buy run. He said he got his first cash for his deal and he’s still looking for more. I said, “It’s all about persistence and patience in this game.” It’s not easy. Scott, you do a fantastic job and you make it look easy because you do so well at educating. Once you get into it, there are a lot of moving parts. Without your education, I don’t know where people will be because it’s a lot to know. You have to be patient and you’ve got to learn like what you’re telling me all the time. There’s probably going to be a surprise thrown to you in every single deal, so you have to expect that.

I was getting the preservation company go to this one property where they’re moving out of, then there was an urgent email from the CEO of the preservation company. I was like, “I can’t wait to see what this is all about. I’m not sure whether I want to call them back or not yet. Usually, when you get a star, urgent and an email, call me, that’s never a good thing. Anyway, I won’t find out until I get the call.

Chad, I want to say thank you for coming on. I know you’ve been busy. I’m very proud of what you’re doing. Keep it up. You’re doing a great job. I love the fact that you’re sharing everything too. I know I may not always be sharing a lot of stuff on BiggerPockets and communicate with people and that’s the biggest thing. I had a conversation with somebody at the expo. He talked about that there’s the old school way of doing things from the old dogs of the ordinary thing, but it’s different with this evolution of people that are doing stuff now. A lot of people are sharing with resources and vendors. The whole term of coopetition, of people working and competing against each other, but still working together to make things happen and help us all avoid potholes. It’s refreshing. It’s great to see everybody doing a great job with things. Everybody has hiccups. There’s a surprise in every deal, but there are multiple ways to get around that and still create win-wins.

Then there are also the deals you get where they drag on. You have to take the good with the bad. I talked to a couple of good deals but you also get some like, “When is this ever going to end?” You and I were discussing that during the Mastermind that you take the good with the bad and we average out to be pretty good still.

How’s the best way for people to get ahold of you if they want to reach out to you?

Call me. I’ll give my Florida number so my Canadian number doesn’t cost a fortune with long distance fees. It’s at (561) 240-4255. It’s best to email me at Info@EquiGrowth.com. You can find me on Facebook. I never used Facebook until I got into notes. Maybe once a month. It was definitely a learning curve. My girlfriend said, “When I met you, you only had 50 friends, now you’re up to 500. Who are all these people?”

Thanks again for taking the time in your busy day. Let me know if we can help with anything.

Thanks a lot for having me.

It was a special show with Mr. Chad Urbshott, our North of the Border note investor. You’re doing a great job out there plugging away one day at a time and making things happen. I encourage you out there to reach out to Chad. He’s a great guy. You can tell from the webinar here. He’s a straight shooter and he will tell you exactly like it is. Otherwise, go out and make something happen. We’ll see you all at the top.

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About Chad Urbshott

NCS 377 | Note Investing In CanadaMy acquisition of real estate investments started in 2007 with single-family homes. Capitalizing on my background in structural engineering and construction, my interests evolved into larger properties ranging from commercial land to multi-unit student apartments.

Over the past five years, I’ve focused on the lucrative opportunity of investing in US properties, when I discovered many distressed and foreclosed properties could be purchased for significant discounts, repaired and re-positioned for sale at a significant profit. In 2012, Equigrowth Capital was formed to acquire properties throughout the US, for the purpose of yielding above-average returns for the company and our partners.

I’ve recently transitioned my company’s direction into purchasing distressed mortgages in the US, where they can be picked up at significant discounts to their face value to create stellar returns. We do this by either getting them re-performing again and collect the cashflow or assume the property at a fraction of their value and either resell, rent or owner finance to qualified borrowers.

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