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206. Finding the Perfect Storm in Real Estate Investing · Wealth On Main Street

• 0:00
  Speaker A: You are listening to the wealth without Bay street podcast, a canadian guide to building dependable wealth. Join your hosts, Richard Canfield and Jason Lowe, as they unlock the secrets to creating financial peace of mind in an uncertain world. Discover the strategies and mindsets to a financial future that you can bank on. Get our simple seven step guide to becoming your own banker. It's easy. Head over to Sevensteps CA and learn exactly the learning process required for you to implement this amazing strategy into your financial life. That's Sevensteps ca. How do real estate investors scale and grow their real estate portfolio? And how do you do it with other people's money? And how do you look out for? What are the red flags you need to be watching out for, especially as markets shift? We are joined today by bestselling author Russell Westcott. He's been all over the real estate scene as long as I can remember and know. We met Russell many, many years ago. We're so excited to have him here. He's got a massive breadth of knowledge to share with our community around some of the pitfalls that you can experience in the real estate game. He's lived through many. He was telling us about some of the skeletons in the closet before we hit the go button. And also, how can you really be positioned for maximized success? Being mindful of some of those pitfalls and red flags that you might see coming along the way, as long as you're aware and looking for it. So, Russell, thanks for being on the program today. We're excited about this conversation. Let's jump right in. You've raised a boatload of money to do joint venture deals. Walk us through how you got started in real estate investing at the beginning. And how has that progressed for you so far?
• 1:43
  Speaker B: Well, first of all, I'm sitting here and I can't wait to hear from your guest here today. I'm not sure who that person is that you're talking about or did the introduction about. I'm sitting there and going, I was about to get my pen and paper out and I'm going, man, I can hardly wait to take some whole bunch of notes from this person here. Obviously, I always like to start off with a little bit of canadian humility, right? So one of the hardest things we always have as Canadians is to talk about ourselves a little bit. First and foremost, whenever I do any kind of an episode or podcast, I always get into my heart space. And how do you get into your heart space? You get in your heart space with some gratitude, and most gratitude I can just say is just thank you guys. Thank you for reaching out. It's been many months in the making and a couple things like that. It warmed my heart when I saw Jason on stage in Toronto this spring. I think it was like eight months ago now. And I'm just honored to share and I'm just grateful for the opportunity to be part and share with your community here as well.
• 2:47
  Speaker C: Thank you for being here.
• 2:49
  Speaker B: Yeah, I know. I think I forgot the question. I think it usually, how did you get, you know, it's usually a simple answer, like, I'll keep it know, just like to bring. I had one of those six pack holders, Jay, and I was going to just bring it out and I was going to put it on here and draw little circles for your abs there. Right? So we'll just keep the intro a little tight, just like your abs. Right? But first of all, both of you guys, it warmed my heart to see you. And, Jason, you look fantastic. What you've done, health wise, and I've been watching from afar, and that's as inspiring as all heck.
• 3:26
  Speaker C: Thank you. Thank you.
• 3:28
  Speaker B: And Sue, I see on the side of your head you're getting to be maybe a little higher and tighter. You'll get the same haircut as I have, but we'll get that closer. Well, the real short answer to how I got started was really, it was one of those pivotal moments in my life. It happened at age 31 of those birthdays that had a zero at the end. And at the 30th, I turned 30, and I was just lost. Don't get me wrong, I had a good job, and I was doing well, and I was climbing the corporate ladder and had a hot, fast car and the world by the tail, and I was doing really well, but I was lost. I had a fast car. The ironic thing is I had a fast car, but I was going nowhere. Right. And where does any young 30 year old, and this was the turn of the century, year 2000, where does any young 30 year old male go to turn for some spiritual guidance? I turn to Oprah, and I remember very clearly on Oprah, one episode I saw was Robert Kiyosaki, and he talked about rich dad, poor dad, the little purple book, and not the little purple pill. That's a completely different topic. But the little purple book changed many people's lives. It also changed mine. I know how cliche that sounds, but it really, truly just changed the trajectory of my life. And from there, I decided that I wanted to learn all this stuff. And I picked up a book through the series and picked it up by Dolph de Rouge called Real Estate riches. Read that. Which then led me to be introduced to a guy named Darren Weeks, who was the canadian rich dad. I went to one of his events, and that was the first time I'd seen Don Campbell speak, one of the founders of the real estate investment network, the person who really took it and grew it. And I just kind of jumped in, hook, line and sinker into real estate. And here's the thing, quick time out here. I had no rights to be in real estate. I had never bought a property. I'd lived in a mobile home in Saskatchewan. Growing up, I'd only been in one house. I'd never qualified for a mortgage. I had never bought a property ever in my life. But here I am, jumping hook, line and sinker into real estate. And as the old story says, that was. How long ago was that? That was 2000. That's almost 25 years ago now. And I had one of those experiences a little while ago when I turned 50, another one of those milestone moments of what am I going to do next? Like, I've been doing this for 20 years. What's the next mountain I'm about to climb? And that's kind of what I consider. I'm on version 3.0 of myself right now, where I'm reinventing a lot of things. I've divesting of a whole bunch of others. We're developing and we're building and we're doing things new. All those mistakes I made in all the past, I'm going to keep making mistakes. But all those mistakes I've learned from and I'm going to learn from them. I'm going to clean it up and I'm going to keep moving forward with some velocity. And then I'm going to pay it forward and keep inspiring the next generations of Richards and Jason's and Russell's and Melanie's and Rebecca's and all the people that want to come behind and want to learn from all our mistakes and all our journeys, that's my next evolution.
• 6:38
  Speaker C: Oh, I love that.
• 6:40
  Speaker A: I appreciate the shout out to Don as well. Don Campbell, amazing guy. For anyone who doesn't know, he's pretty fantastic. You should follow him on Facebook. Has some of the funniest posts I've ever seen, by the way. And I remember, I think, the first time I met you, Russell. Actually, we were at an event together at the Shaw conference Center in Edmonton, and we went out for, I believe, lunch and maybe a beverage or two, and it was at a Ron Legrand real estate seminar? And do you remember one of the number one takeaways I have from that event with Ron Legrand? Everyone who doesn't know Ron Legrand, you can google him. It was the four sws.
• 7:16
  Speaker B: Some will, some won't. So what? Somebody's waiting. And the other is, don't cry over spilled milk. Just go milk another cow.
• 7:24
  Speaker A: There you go. And basically, that's it. Those are the tips for real estate. Everybody listening in. You now have it all. Those are the answers.
• 7:33
  Speaker B: It was 2003 that that was. I remember very clearly that. And if you ever go to an event like that, put your credit card away because $25,000 will be whacked on it before you leave.
• 7:44
  Speaker C: Yeah. Well, Russ, one of the things that you said that is just really incredible, because you're going to be creating, and always have been, but you're going to be creating in this next chapter so much value for people, because those mistakes and all of the lessons that you learned, that's all the raw material for your next chapter and how you're going to be creating and adding value and serving people and, man, that's incredible. We met through the real estate investors network. I began my journey with real estate investing in 1999. I joined Rain in 2000, was a member till 2007, when I moved to the United States. And I learned a lot of lessons along that way, too. But you have been on the real estate investment scene. You've been consistent. You've been very clear about what works, what doesn't work, the rationale, the reasons why. And you also shared something back in the early 2000s where you said, throughout the seasons of real estate, there are certain seasons where you're going to see all the gurus popping up out of nowhere with all the courses and all of the, here's how you can make a ton of money in real estate, and then when the lever goes the other way, they all disappear and they're nowhere to be found. And so you've stuck with it consistently through every real estate season and then some. And you've seen a lot of things. But does anything surprise you anymore in the real estate investment space?
• 9:22
  Speaker B: Well, great question, first and foremost. And, yeah, it's funny how as you start aging, you start reflecting back on a lot of things. First thing, I want to unpack a little bit. Some of you talked about making the mistakes. I used to fear the mistake. It came from a place of insecurity, meaning that I don't want to be wrong, like I never want to be. I'm going to be that little boy, that little Russell, that people pleasing little Russell, that never was wrong, that always had to make everything right. And through lots of therapy and lots of reflection, sometimes one of the biggest lessons I've learned is through making those mistakes is to forgive yourself. Right. You made the decision, you took the action. You did with what the best information and knowledge that you had and because so what? You made a mistake. I'm not trying to gloss over some mistakes were really catastrophic, like really big mistakes. And I'm not glossing over it. I'm trying to gloss over and give people hope that if you have made a mistake and you have stepped on a landmine, it's not a life sentence. It's only a life sentence if you don't actually give yourself parole. You are the prisoner of your own mind and you are in control of giving yourself a stay of execution and keep moving forward. I'll be brutally honest with this, too. As much as I love real estate, and it's been part of my life for 25 years almost. Now, sometimes I hated it. Many a times I had to fall back in love again with what I was doing. I had to fall back in love again with the grind, with the monotony, with the going and doing over. Even after you've stepped on that landmine, you have to go through and you have to do that work with things. So to succinctly answer your question, I will get to your question. Does anything surprise me? You know what? Every day I get a little bit surprised about some because I have a beginner's mindset when I start. Every day I have an attitude that I just want to just learn something new. And everything surprises me in some respects. But here's the thing is when you've been around the block enough times, you start to see patterns and you start seeing patterns surface and then you start extrapolating and taking actions based upon those patterns. I'll give you a real life example. So both you guys, are you both still in Alberta or.
• 11:49
  Speaker C: Well, rich is in BC now.
• 11:51
  Speaker A: My heart's in Alberta, but physically I'm in Chilliwack, which is breathtakingly beautiful.
• 11:56
  Speaker B: I can see you on my window. I'm in Burke mountain in Coquitlam, so it's quite gray out here today, but it's really nice. Right? Okay. So Alberta had its run up from 20 05 20 06, 20 07 20 08 and things were just going gangbusters like, honest to goodness, it was like 58% year over year growth and people were walking into the room going, I just bought a place and made $100,000 in a month and egos were going rampant and just things were just getting out of control. The fundamentals, the pace of growth outstripped the fundamentals. I was seeing all that, and I made the mistake of I doubled my portfolio in 2008 at the absolute, as you can go back and look over price, that was the absolute wrong time to do that. I doubled my portfolio at a peak of a marketplace. So I literally saw the pain of nothingness, of flatness, of declines and no growth and evictions and NDP government. Sorry, did I say the quiet part?
• 13:03
  Speaker A: I didn't hear that. But I think what you meant by.
• 13:05
  Speaker C: That, we'll make sure we get the audio file.
• 13:07
  Speaker A: Jobs and some market rents were going down, plus the values were. I think that's what you meant, was what you.
• 13:13
  Speaker B: Yes, 100%. So I saw all those things. And then you can also track the numbers and you can track the affordability, getting to a point where it's getting too high and people can't afford to buy places and stuff like that. So I saw that because I lived through all that. So I was sitting back just kind of after a morning coffee, and this was February of 2021, and I started looking what was happening in British Columbia and Ontario. Okay? And I started seeing what was going on. I saw exactly the same things in DC and Ontario that were happening in Alberta in 2007, 2008. I saw the trajectory that was going on. So I started advising my inner circle investors and my inner circle clients. Now is the time to start looking at divesting out of BC and Ontario. I'm not telling you to sell everything. I'm telling you to sell the bad, the marginal properties, the ones that are the pains in the butts, the ones that have terrible tenant profiles, the ones that are just constantly causing you issues. Divest of 20% or even more of your Ontario and BC properties and start early 2021 and be out by the end of 2021. Now, as I can say, and I look back upon this, I almost nailed the timing because I think the peak of those two marketplaces were March of 2022, give or take, or something like that. Since then, a lot of those markets have come off and I started advising people to pull those chips off of BC and Ontario and start moving it back into Alberta again. And just look what's happened in Calgary since that time of 2021. In Calgary, you could have legitimately doubled your money in that period of time. So all long winded ways of saying that through time and experience and kicks in the I'm going to call the gut or maybe a little further south or the tight abs, those tight abs. You learn those lessons and then you can apply it the next time going forward. And I'm now starting to see four new perfect storms that are starting to brew again. And that's what I'm advising my clients to do, is to take advantage of these four perfect storms that are converging in one place at one time. So anyways, I hope that answered your question.
• 15:35
  Speaker C: It sure did. And if you were able to, with 25 years experience, if you could go back and talk to Russell on day one, what are some of the key things that you would share with him before he embarked on his real estate journey?
• 15:54
  Speaker B: It's funny, I often reflect upon that. The first thing would be is 25 a year ago, Russell would have been too stupid to listen to me. First of all, he would have been too pig headed. He would have been too caught up in his ego. He would have been too arrogant to listen to future Russell. Right? However, that wouldn't have stopped me. And here's the thing. One of the big regrets I have just of late, as I've been reflecting upon this a bit, there's a little bit of a regret, is that I didn't start in 2021 telling the message that I was seeing. Louder, louder meaning, guys, Ontario and BC, be very warful of those markets right now, be very wareful and start shouting it from the market tops and start mountaintops and telling more people. I mainly just advised my inner circle at that time. And now that the time has passed, I have a feeling if I would have been a little bit more forthright and a little more aggressive of that messaging at that time, a few people would have been in less pain than they're feeling right now. So that was a little bit of regret. So back to what I would have told. I would have told exactly what I just shared on the start of this podcast of some of the lessons that I've learned and just learned from some of the people, that there's a reason why there's some gray hairs and some gray beard of things is to listen to those people that have been through the war before, listen to the people that have ridden all the market waves, listen to the person that is still standing, because there's an awful lot of all hat, no cowboy. I think it's all hat, no cattle. People out there of people that have been investing in real estate within the last five to seven years, and this is no disrespect for them. I'm trying to be very, not trying to be disrespectful. They don't know what they're doing. They really don't. They've only seen one market condition. They've only ridden one wave, and it's been up. They've only had low interest rates. And honest to goodness, there's a lot of people that don't know what they're doing. But here's the thing. I don't ever poo poo upon that person for doing, for taking all that action, because they're about to learn the lesson. They're about to learn some lessons. And some of them will go away. Some of them will quit. Some of them will go crypto trade, and some of them may go do something else, which is totally fine. But the ones that survive and get through this downtime will have abundance. And the analogy I use is one of my favorite movies of all time, Forrest Gump. We're all familiar with Forrest Gump. There's a famous scene in there when Lieutenant Dan and Forrest were on the boat and they couldn't find any shrimp. And the shrimp and was terrible, right? They couldn't find anything. And then all of a sudden, the storm hit, and Lieutenant Dan's up in the crow's nest, and he's having it out with the good Lord above, and he's having his coming to Jesus moment. And then all of a sudden, after the storm passed and all the other boats went away and all the other boats quit or all the other boats sink their shrimp and got real good. So those of you that are going to get through, if you're going to be the Jenny, the Jenny boat that gets through the storm, you will have very good shrimp ahead of you. Now, I'm not saying the storm is past, and I'm not saying any of that kind of stuff. And I'm not saying there's not going to be another storm, because there always is. It's just having that ability and having that skill set to be able to navigate the ship through any storm is absolutely paramount.
• 19:27
  Speaker A: Become your own banker and take back control over your financial life. Hey, is this even possible? You may be asking, can I even do this? Well, you better believe it. In fact, it's easy to get going. So easy that we put together a free report. Seven simple steps to becoming your own banker. Download it right now. Go to sevensteps ca. That's seven steps. Ca. Now, let's get back to the episode. It's funny that you talked through the Alberta rise in that early 2000 period. And then the similar correlation in both BC and Ontario. I've had that conversation, I'm sure no less than 20 times in the last year depicting that same analogy, that same story. And from my own personal perspective, similar to you buying properties at that 2008 kind of level, I signed the contract to build one and took possession of it on 2008. And that property today. I could actually sell it for what it's worth, but not buy a lot. And it needs a new roof now and it's 15 years later. So I'm very familiar with that whole experience, probably just not to the scale that you were.
• 20:40
  Speaker B: Yeah, I think I went from 40 to 80 properties in that one year time frame of at the absolute. Now that I look back at it was the worst timing. Like the absolute worst timing.
• 20:50
  Speaker A: And the recovery from that, I suspect was not only stinging and painful, but what I think is interesting, and I'd love to hear your take on this. Maybe you can expand on this a little bit, Russell, through the process of that acquisition and that doubling effect that required capital, but a lot of that capital to help get that done wasn't yours. It was through like OPM mechanisms. So maybe you can expand on that a little bit. And I'd imagine with the joint venture partners that you had at that time, that created a lot of conversations that needed to be had following the aftermath of that acquisition and then the market shift. And then how did you manage relationships around that afterwards? I think there's probably very critical learning opportunities for our listening audience about how a professional goes about dealing with that circumstance.
• 21:41
  Speaker B: Yeah. Okay. So I'm going to give you. There's two ways of doing it. There's the right way and then the way I did it. Okay. And I'm not going to tell you I was perfect in any way, shape or form. And I'm telling you, after the time in going through this, the biggest learning lessons that I had of going through that process were as false. Number one is I should have been more honest with myself, honest with the. Not that I deceived anybody, but honest with the investors of exactly what was going on. My insecurities surfaced up again. And Pollyanna, everything is great. La la, things will just turn around and things will come back all better and la la la, everything is wonderful, right? And kept and doing that. And maybe at that time, I should have had some more difficult conversations, made some more bold moves and ripped bandaids off a lot quicker. But what I kept doing is I kept a slow bloodletting for years and years, turned into decades and a slow bloodletting over decades of things in a marketplace that was not doing well at the time. Don't get me wrong, it was totally fine. It wasn't Armageddon and that kind of stuff. But when you buy at a peak and you're getting $1,400 rent, and then the next year later, you're only getting $1,000 rent, you took a 40% haircut on your rents, there's no way it's going to cash flow. No way. And I probably should have ripped the band aid off on a few of those there, cut my losses at that time, had real honest conversations with my partners, dusted off, and started again at the bottom. It is not a sign of weakness if you do have to sell. If you didn't do it, if took a misstep, it's not a sign of that prison cell I talked about before. I literally put myself in jail and purgatory for many years along the path of doing this, and not within the last handful of years, probably within the last five years, I've been able to, in many respects, rebuild on a lot of this as well, knowing all the things that I do know. And so, to answer your succinctly answer, your question is I just should have probably had some more real, honest conversations with partners along the way and told the truth about what was going on. And it is okay if it is not going well. It is totally okay. The conversations I had with partners, the ones that I did have with conversations, most of them understood. They really did. And in some cases, some partners lost money, like, they did not get their capital back. And I lost sleep over that. I for years, suffered great anxiety and ulcers and stress and all that kind of stuff over these kind of things. But I had to forgive myself in order to move forward, in order to get to what's next, in order to get to the new opportunity, I had to let go of the mistakes and the missteps I made along the way in order to be able to grow and to build back better and with a lot of people that trusted me with the capital and didn't get their capital back. I've opened the door of a conversation with them. If they are willing to want to be part of the rebuild, get back better, I'm not making any promises, but I'm making a commitment. If they're willing and want to build back again, I would love to be part of that process, and I will help them to build everything back that was lost. That's a commitment I've made to the majority, if not all of the partners at the time. Some are willing, some aren't, and I can't control that.
• 25:40
  Speaker C: That's right.
• 25:41
  Speaker A: It's interesting to hear that story, and I really appreciate you being so forthright with it, because watching many other individuals who are in a similar circumstance as yourself and folks that I know that had a large portfolio in the 50 plus range of doors and experiencing similar challenges because they've been in a growth phase, growth phase. Growth phase. And to some degree, then you factor in things like, okay, doing RSP lending and second mortgages, and the goal is acquisition. So some degree, some people weren't leaving much equity left in properties, and it created an over leverage type situation. And so I saw lots of individuals or groups that had real challenges, and to some degree, many just didn't survive because of the methodology by which they were acquiring the real estate. And so I think about those lessons and recognize, okay, for someone who is newer to this, or they're just getting started in the last three or four or five years, they were in a positive growing cycle. They might not even be familiar with what the experiences was when that cycle shifted. And so it's through having those conversations, going through that learning journey with someone else's real life experience, where you can develop the context to be able to think through how you might do things differently. Because you can't do anything differently. If you don't know, you don't know what you don't know. And it's through leveraging the power of real life experience like yourself, that allows us to say, oh, I can see a picture now of what happened. What might I do differently? How might I go through that experience differently? What specifically would I do to ensure that I have more peace of mind protection, whether it's on the asset or whatever, so that I'm not in a similar situation when the market does eventually shift.
• 27:28
  Speaker B: Yeah, now you want to add one more, and I'm not trying to be overly dramatic here, but you want to add one more layer of heaviness on top of all that that you just said of what I went through. And I'm not just, woe is me. This is just a person who is aware and reflecting upon 25 years of doing this. I was the guy on stage telling people to do this. I was in this, and I had my identity attached to this. I had my identity too attached to being, and I'm using air quotes for those that are listening to being successful and making these things work and that stuff I lost a lot of sleep over many of those years because some of the market calls that I was part of, now, don't get me wrong, those market calls that I was part of, not that I just advocated and told people, market calls and all this kind of stuff, I was in it. I was 100% in it, and I made some of those calls. And in hindsight, they were the wrong call at that time. Okay? Now, that's one of the reasons why I probably have learned a few lessons. I'm a little bit more aggressively conservative on what I'm doing. But at the same time, the point I was trying to get to is sometimes it's that heaviness of that you put on yourself. Now, here's the thing. Whenever I have conversations with rain members from years and years and years ago, and I will sit there and I will say that I felt really bad about some of the things I was advising people to do in 2008, and look at me, I bought more property.
• 29:09
  Speaker A: Look at me.
• 29:10
  Speaker B: Worship me. I bought 40 more places, and some people bought more properties. I felt heaviness about that. And when I talked to rain members that did maybe the same thing at that time, every one of them goes, yeah, we made our own choices, Russ. Thank you. You inspired us, and it sucked. Some of them really sucked. But some of them, if we got through it and we still own it, they're pretty close to free and clear now. So why are you so beating yourself up over it? We're not beating you up over it.
• 29:37
  Speaker C: Yeah. All progress begins with telling the truth. And so for you to be vulnerable enough and humble enough to share your journey like that, that's authentic. People aren't expecting.
• 29:51
  Speaker B: Yeah, sometimes. The crazy thing is it's the story you tell yourself, which is usually worse than actually the real story with things, too. Don't get me wrong. Knowing what I know now, I would make some 100% different conversations and different calls and stuff. And that's what I am doing. I am doing that exact same thing now with what we're moving our portfolio into and doing things differently. But at the time, I did the best with what I knew I could do at the time.
• 30:20
  Speaker C: And so when you think about building a future now that's bigger than your past, I'm not talking about bigger in terms of a larger real estate portfolio. I'm talking about a future that is fascinating and energizing for you, and you feel like you're really creating value for people. So talk to us a little bit about that. What's really energizing you right now about the real estate space and your inner circle and the clients that you're serving, what is fascinating you and bringing you energy around that.
• 30:52
  Speaker B: Yeah, a great question. So the simple answer was, we're going to do a little cardinal sin here as we're going to date. This, this is, we're recording in January of 2024. So it would have been later, probably fall of 2022. Okay. Interest rates were starting to go up. Lots of people had all variables and things were just starting to gravitate. Things were really slowing down. Some markets were actually going down, all that kind of stuff. So I sat back and I go, what is this market good for? Like what is this market truly good for? And I sat back and I go, okay, what are the opportunities? Lots of problems. You can spend 5 minutes on the Internet and you could just crawl up in a little ball and be sucking your thumb begging for mama. Right? But what are the opportunities? So I really leaned into it and that's where I came know to tie to the Forrest gump Jenny story, I came up with the analogy of the four perfect storms that are converging at one place at one time. Okay? And some people look at a storm as really devastating, but a storm can actually be very powerful. And if you actually harness the energy of the storms, you can actually create power and electricity and wind and you can harness all that. So really the four perfect storms that were aligning at one place at one time. Canada is still in a significant housing shortage. Like I've seen from the last numbers I've seen, I think we're 4 million homes short of just doing what we just currently need, plus a normal immigration and birth patterns and stuff. We're 4 million homes short across the country. Okay. So that's a huge opportunity. As for number one, so that's number one. Number two is in Alberta, which is my target market. The economic fundamentals were finally coming under the deep freeze. The GDP growth was starting to come. Wages were going up, all the population. Alberta added just shy of 200,000 people to the province in the last twelve months.
• 32:58
  Speaker A: More than most countries.
• 33:00
  Speaker B: Exactly. I think Saskatoon has 200,000 and change or something like that. So all of Saskatoon moved to Alberta in the past twelve months. So all the wages and the job growth and pardon the political comment here, good. Some good policy and good governance and good stewardship started coming into play again, making the right calls and making the right moves and the right investments. So all those economic fundamentals were starting to come and start to drive again. Then if you go really drill it down deeper into, for example, my target market of Edmonton. Edmonton was being extremely progressive and extremely forward thinking in their plan. They are planning to add a million people to Edmonton and area in the next 15 to 20 years. Now most cities will sit there and go, oh, well, okay, there's a million people coming, what are we going to do? Well, let's just keep doing what we've been doing. But Edmonton decided to make a change. They decided to open up densification. They decided to open up a lot more leeway for development. They started taking all those inner city lots on large lots, tiny little wartime houses, and they now will give you access to building four, six, eight units on those same places. So you now can add density on it. So that's the third perfect storm. First one was housing shortage. Second was economic fundamentals. The third one was densification and housing rules in my target market. The fourth one was a Financing product has just come out in just recent course order to incentivize people to build rental housing. To give you, we're qualifying on some of our new builds, construction projects right now for 95% loan to cost mortgages, 50 year amortizations, and we're getting interest rates in the low to mid fours. Okay. What? Yes.
• 35:02
  Speaker A: It sounds like incredible flow opportunity.
• 35:04
  Speaker C: That is incredible.
• 35:06
  Speaker B: Huge. And then let me just really blow your mind away now, if they incentivize us, I don't know if you heard recently that the canadian government included in the cost of the properties that I'm building and purchasing and stuff includes GST. The government just gave us an announcement that you potentially, if you're building housing for the purpose of rental, you can apply to get your GST rebate back. So if we're buying.
• 35:33
  Speaker A: Sounds like down payment capital on more builds.
• 35:35
  Speaker B: Well, if we're buying houses for 95% loan to cost, obviously there's lots of expense and there's lots of nuances and there's lots of things that I glossed over a lot of the nuances there. But if we're buying it for that kind of loan to value and we have a potential opportunity of getting 5% back at the end. Sign me up. Right. So right now, in the process, right now, personally, between myself and my inner circle, just within my own personal inner circle, we have four projects, 25 units that will be completed between March and July of this year. And within our build team, within our realtor team, in that we have 550 projects in the ground in Edmonton, anywhere from six to 28 units in construction right now.
• 36:18
  Speaker C: That's outstanding.
• 36:19
  Speaker B: So those four pillars, all are perfect storms. All are coming together in one place at one time. And if you understand this word, you'll get it is I'm going ham for the next half for five to ten years here. When I heard that from the other day from my kids and stuff, I go, what does that mean? They go, oh, that's what it means. I like it. That is so good.
• 36:52
  Speaker C: Yeah, I love it.
• 36:54
  Speaker B: There's some cool opportunities out there right now. And this is what next version of myself is. Honestly, today, all morning leading up to this call, I was on the call with the team, the construction team about finalizing, closing. We were on the team with the financing team about when we're going to get the lawyers and then also the property manager. We're talking about lease up strategies. When you're going to add, we're adding 25 units to the portfolio in a matter of three, four months. We got to have our ducks in a row in order to do that. But the cool thing is the fundamentals in Edmonton are really turning in our favor as well.
• 37:30
  Speaker A: That's a pretty new big announcement with some large investment capital coming in on the upgrader row right there.
• 37:37
  Speaker B: Yeah. If you just want to just go see something like, sorry, I don't mean to jump over it. I get excited when we start talking about that. The industrial heartland. Just go check out the industrial heartland. I think it's something like 40,000 direct jobs and we're talking multiple billions. Like we're talking Alberta is now throwing around the b words again, meaning billions of dollars in capital projects. And it's been a while since that happened. Now if we just get one more gatekeeper out of the way at a federal level, we may have a real nice shrimping ahead of us, if you will.
• 38:10
  Speaker A: That might be a fifth pillar in your.
• 38:12
  Speaker B: That would be a perfect storm. Yeah, definitely fifth one.
• 38:17
  Speaker C: What do you think I'm getting the tight abs for?
• 38:24
  Speaker B: I'm just kidding.
• 38:25
  Speaker C: Well, I'm not kidding. You lit up like a Christmas tree when you started talking about what is fascinating you and bringing you energy. It's amazing to see that.
• 38:36
  Speaker B: And don't get me wrong, about three, four years ago, I was not that way. Honest to goodness, it was. How's it going? Oh, kind of sucks. And then my honest answer is, if anybody ever asks, how's it going? My cheeky answer is it's like a Charles Dickens tale. It's the best of times and it's the worst of times all at the same time. Like there's some really bad things going on, but there's some amazing positive things going on. And the goal every day is to try to eliminate, mitigate all the bad things and shrink all the bad things so I can get to all the good stuff that's ahead.
• 39:09
  Speaker C: Wow, that's amazing.
• 39:11
  Speaker A: Rich. Well, I'm pumped to hear your excitement. And again, you're talking about, it's interesting me, because we have a wide listening audience. We have people who probably listening and they don't even know where Edmonton is. And we have a lot of folks, of course, in the States and. But you're talking about my backyard or at least where I spent my entire life existence prior to the last three years since I moved to the BC area. So my heart is there. And quick story, Russell. When we decided to make the shift during COVID to move from Sherwood park to BC, we sold an acreage and we had just shy of four acres, beautiful area just outside of Sherwood park. And I told a lot of people like, oh, they're going to have to pry my cold, dead hands off the sign at the end of the yard. I'm never leaving this. Like I was locked in. I'm like, this is it. They're going to bear me in the back sort of a deal. And some things changed for my wife and I with our kids and we realized that there was going to be a change where we wanted a different lifestyle. We want to be close to the mountains and those kind of things. And living where you are, you understand the draw of that. And so we actually solar acreage at a pretty good loss. Not that we didn't walk away with capital, but relative to what we put into it over a six year period of time, let's just say there was about $100,000 that didn't show up with us when we walked away. And so going through that experience, that's a personal experience, but we made a lifestyle choice to do that. When I bought the acreage, it wasn't an investment, it was a place for us to live and we needed a place to do that anyway. So I don't begrudge that opportunity. However, what I do recognize is how many opportunities were created for us because of making that change in the lifestyle decision. But here we are talking about an area that I would go buy my groceries, the industrial heartland not far up the way. And it's just so fascinating and interesting to hear your, take your look on it. And as someone who doesn't live there, although you're familiar, you have investments in that area, that's your zone and you know the market fundamentals. I think it's important for people to recognize that you can be in a different area, live in a different area and understand a specific zone, a target place, property area, zone of a city, whatever it is, so that you can narrow your energy and your financial focus onto something. Warren Buffett doesn't just throw a dart to the dartboard when he's buying companies. He has a specific strategy. He knows what works. He doesn't diversify, he focuses. And what I think the takeaway I have is that you're trying to help people understand that you can focus your knowledge base and your energy into that category to be more successful. Is that a fair assessment?
• 41:46
  Speaker B: 100%. The other is really go all in, go ham. Sorry for that as well, but go all in on one path and figure it out. Just to just throw around a couple of numbers. I'll keep them really high level just for sake of conversation. One of the projects we're doing, we bought a property, inner city Edmonton, a 50 x 150 lot, 7500 square foot lot, and it had a house on it, too. Inner city Edmonton in a nice neighborhood, mature, beautiful neighborhood. We paid, let's call it $300,000 included a house, okay. For 7500 sqft lot, a same piece of half that size of a lot, just the dirt alone to build out in the area I'm at is a million dollars just to start. So we take that $300,000. Our build costs are 1.3 million. So we're into it for one six and change. And when we're done, we take one tiny little two bedroom house. And when we're done, we have a six unit multiplex on that thing. We have a side by side duplex, two suites, two garage suites. Okay.
• 42:58
  Speaker A: Wow.
• 42:59
  Speaker B: We've now taken it from one little two bedroom house to a six unit property. Rents on that are now just shy of $12,000 a month on that. The yields are now almost eight and a half, 9% on the yield on that as well. Especially when you couple that with the really nice financing that we're getting. And here's the thing is we're building it for 16165. Appraisals are coming in a couple of hundred thousand dollars higher than that because we have an arrangement with our builder and we're doing it on cost plus model and all that kind of stuff just for perspective to really blow your mind. And I'm not trying to do this in any kind of a way of as a flex or any of this kind of stuff. The assessments, BC assessments just came out. There are houses in the neighborhood that I live in and we always check other houses in the neighborhood. The average assessed value of one house in this area is 2.2 million. So for $600,000 and we're talking nice houses, like maybe 3000, 4000 lot and stuff like that, but we're talking $600,000 less. And I get six units as opposed.
• 44:10
  Speaker A: To one house and $12,000 a month.
• 44:15
  Speaker B: There is no way you'd be able to rent one house out this area for twelve grand a month. You maybe get four. Maybe four. Maybe four and change. Right.
• 44:22
  Speaker A: And to buy that one, you got to pay roughly 25 or so $1,000 as a buying tax just for the privilege of purchasing it in the province of British Columbia.
• 44:31
  Speaker B: Yeah.
• 44:31
  Speaker A: And you'll also have to deal with some rent controls when you go to rent it.
• 44:34
  Speaker B: Yes. The privilege of owning in BC. You do know as you live here now, Richard, you do know what BC stands for, right? Bring cash, bring cash. And bring complications too.
• 44:48
  Speaker C: Russell, this was awesome.
• 44:50
  Speaker B: This was awesome.
• 44:51
  Speaker C: Thank you. We are doing this again because we'd love to follow your journey and this whole inner circle sounds really interesting. And you're obviously progressing by telling the truth.
• 45:07
  Speaker B: Well, what I'm doing is on a smaller scale. Like, don't get me wrong, it's nothing like what rain used to do in the day. I'm having fun sitting in my office with my dog snoring behind me and from the occasional dropping a bomb or fart, if you will. And I'm just having fun putting out my podcast at the moment. I joke I have a face for podcasting. I think we're 190 episodes deep into the podcast as well. I don't know why, but I'm grateful and honored whoever listens. But I'm also extremely, I go, really? How many hundred thousand people have listened over the past? Well, that's pretty kind of cool. I don't know why, but at the same time I'm grateful and honored with that. So that's just kind of where I've been really spending my time is helping out people that want help and at the same time sharing my 25 plus years of wisdom and doing a little legacy project of putting something down to pay it forward to generations of people. And the last thing I'll probably say is, I've stood on the shoulders of so many giants on my path along the way. I know I'm not a very tall guy. I stand five foot seven at best. With wearing my kiss boots. But I like to believe I have very strong, broad shoulders and I would like to be that giant that people can stand on my shoulders and they can see very far ahead because they've stood on the shoulders of giants.
• 46:40
  Speaker A: Really nice. Love it. Thanks for being with us, Russell. On that note, you've shared so much gold with us today. A journey and the ups and downs of it, which you can't take away from any journey in life. I don't think so. It'll be highly valuable for all of our listeners. I think the last thing we'd like to know that you can share with us is as you consider the next best decade of your life and as you move forward, being a giant for others, you've kind of shared a little bit about that. But who would you say specifically would you most like to be a hero to?
• 47:13
  Speaker B: Wow. Who I'd like to be here? Well, first and foremost, to my kids and my wife. Right? Every day that's what I get up and I run that race to try to be a hero to my wife. And thank goodness she's still my biggest fan. Even though we've had some ups and downs and some challenges and tribulations, by and large, she still is my biggest fan and biggest cheerleader. Now, to succinctly answer that a little bit deeper is another one of my written goals that I have on my whiteboard over here is to impact 1 million real estate investors with the tools and resources to help you buy one more property. Because I know what the power of one more property is. If you just buy one more property held to the course of, let's say, held to 15 to 20 years, that you have a tenant that pays it off even if it goes up. Nothing in value, right. That is life changing wealth. It truly is like if you bought a half a million dollar house and you held it for 15 to 20 years and you rented it out and the tenant paid it off and it never went up a dollar, you just created a half a million dollar pension plan for you going forward. So my mission is to help everybody help a million people with tools and resources to buy one more property.
• 48:36
  Speaker C: Well, let's see how many people we can help you help in that mission. And we just want to say express sincere gratitude as well, Russ, for having you on the show, and people can connect with you@russellwescott.com. Again, that's russellwescott.com. We will include that in the show notes, but take a moment to head on over, get connected with Russell. Tune into his podcast. This is a fellow that you want to follow, and both rich and I have had the pleasure of being acquainted with Russ, knowing him, for a few decades now. And this is a guy that you definitely want to follow. And for all of our viewers on the youtubes, you've just seen another video show up that's courtesy of our editing team. That's a video that we recommend to you because we want you to continue your journey of learning. There's always something new to learn. There's no such thing as having arrived in knowledge. And so, gentlemen, this was just a real pleasure. Have an outstanding rest of your week. Russell, thank you. Thank you again for joining us. We really appreciate, we will do this again.
• 49:41
  Speaker B: Honored to serve. Honored to serve.
• 49:44
  Speaker A: Thanks for listening to the wealth without Bay street podcast where your wealth matters. Be sure to check out our social media channels for more great content. Hit subscribe on your favorite podcast player and be sure to rate the show. We definitely appreciate it. And don't forget to share this episode with someone you care about. Join us on next episode where we continue to uncover the financial tools, strategies, and the mindset that maximize your wealth.