February 20, 2024 • 47 mins
Episode 53: Matt and Taylor are joined by Taylor Dedora, AACI. Taylor is the Owner of DS Appraisers from Coldstream, BC, who was born and raised in Vernon. Taylor has been an appraiser since 2008, and bought DS Appraisers in 2018.
Taylor is here to discuss: → The difference between BC assessments and appraisals. → How appraisals play a vital role in the real estate process and ensure fair, unbiased outcomes. → And why not all properties need to cashflow when you're investing in real estate.
DS Appraisers Website: www.dsappraisers.com
DS Appraisers Instagram: @dsappraisers
DS Appraisers Facebook: @DSAppraisers
Matt Glen's Website: www.mattglen.ca
Matt Glen's Email: Matt.glen@century21.ca
Matt Glen's Instagram: @mattglenrealestate
Taylor Atkinson's Website: www.VentureMortgages.com
Taylor Atkinson's Email: Taylor@VentureMortgages.com
Taylor Atkinson's Instagram: @VentureMortgages
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:02):
Estate Podcast with your host,award-winning realtor, Matt Glenn,
and top producing mortgage broker,Taylor Atkinson.
Professionals in the industry,enthusiastic entrepreneurs, and
successful investors.
When it comes to real estate,
we're all in.
back to the show, guys.
(00:24):
Thanks for tuning in.
Matt, how are you doing?
I'm doing well.
How are you doing, dude?
I'm doing great.
Thank you.
A lot of big things happening onthe show lately.
We have been having someprofessionals in the industry,
accountants, a grazer for thisshow.
And without saying too much, us.
Yeah.
Yeah.
Yeah.
We are also having a pretty bigtime lawyer coming on the show in
(00:47):
a couple of weeks.
So we're actually recording that a
couple of days after this episodecomes out.
So if anybody wants to address anylegal questions, concerns
throughout real estatetransactions, fire us a DM.
Yeah.
If you a question for a lawyer, we
can ask them like lawyers charge alot of money to answer these kinds
of So he's coming up.
Yeah.
We're trying to use this as a freeplatform for you guys.
(01:08):
So obviously, we're just askingquestions that we're interested
in, but any topics that you wantcovered, yeah, send us a message
and we'll fire away at that.
But yeah, we want to jump right
into the show.
It's an awesome show.
Taylor DeDora, I've used himpersonally, but he is a wealth of
knowledge.
And yeah, I think you guys will
(01:30):
find a lot of good value out ofthis show.
Yeah, that's a good one.
Once it's two Taylors versus one
Matt, but I Yeah.
The next Matt is yet to come on.
It'll have to be a good one.
I know.
I'm looking forward to the twoMatt's versus one day.
Yeah.
I might just have to bow out on
one.
Okay.
Enjoy the show guys.
Okay.
Welcome to the Taylor.
show, you for and Matt.
I'm as many tailors as I can.
Absolutely.
You've had a Taylor.
Oh yeah.
I saw in your awesome.
(01:54):
I always often thought that I like
Taylor's a female better.
No offense to us.
You know, I was taking it asoffense and then I was like, wait,
your name is Yeah.
Yeah.
Yeah.
I'm allowed to go there.
I just think, I mean, it goessmoothly, but are you Tay?
Do you get Tay from your buds orhow?
No. Do you?I do.
Yeah.
you Matt?
Well, Matt short.
Yeah, true.
That's true.
Yeah.
Matthew.
Okay.
Well, Taylor, we like to just letour guests, you know, connect with
(02:17):
our listener.
What's your perfect Friday look
like in terms of work,productivity, and then leaving
into the weekend?Obviously, starting with a
podcast.
I mean, that's a good way to do
it.
I'm gonna have to do this every
week now.
Friday's easier.
They're more relaxing.
It's kind of like, you know,
during the Christmas season wherepeople expect a little less of
you.
So the pressure's off.
(02:39):
However, I still like to keep thepressure on and finish lots that
day.
I typically professionally have
set deadlines for Fridays.
So it's good to have those done
for the week.
Things that hang over for next day
or for the following Monday,that's a good way to go backwards.
I've often felt for myself andtold my team that finish things.
You can still mull them over andhave fresh eyes on Monday, but get
(03:02):
them 99% complete and move on.
One of the reasons for our success
is getting stuff out.
If you leave it, it can drag for
several more hours the followingday.
But for me, getting up andcertainly being optimistic, I'm
not one of these people that'scrazy early riser and puts on 10K
before six, never have been, but Iget up and throw some pushups and
sit ups, a couple of squats justto get things going and then start
(03:27):
planning the day.
I'm a shower day planner.
You got a whiteboard in theshower.
A whiteboard in the show.
Exactly.
Exactly.
Like my wife's always kind of
like, what are you doing?Like, Like my wife's always kind
of what are you doing?like, well, Like, I'm well,
getting the day worked out herebefore they call it the beautiful
chaos hits have a seven and a nineyear old.
So at some point in the morning,we meet and greet and you never
quite know what mood they're goingto be in.
(03:50):
So just prepping for the day, ahealthy breakfast, get in and go
for it.
We do jeans day at the office.
They're just something a littlemore relaxed about And it.
work yeah, hard and go for We dojeans it.
day at the There's office.
just something a little more
relaxed about it.
And yeah, work hard to get things
out and then celebrate that.
Celebrate the day, celebrate the
week.
At the end of the day, it's really
important to me.
Sometimes my drive home isn't long
enough in a way to make thattransition.
But I mentioned to you prior thatthe work-life blend is a skill and
I'm still working on it.
(04:12):
That's for sure.
But getting better coming downfrom a day.
Someone once told me to physicallydo something, you know, bundle up
your day and work life and throwit into the bush on the way in the
door.
Well, I don't do that, but I have
a breezeway between garage andhouse and just kind of physically
look out into the field and make apoint of going okay i did the
(04:32):
thing today this week awesomeyou've done it now switch gears
because this beautiful chaos thatlies within across the threshold
is about to hit in the face andyour kids don't give a shit how
your day went they just want dadso yeah that's successful friday i
guess continued with maybe glassof wine with my wife, making
dinner.
I've recently found throwing on
some dinner jazz.
Super nice.
Yeah.
A little random for me.
(04:52):
My if they ever listen to they'regoing to probably pepper me on
this one.
friends, this, But throwing on a
little dinner jazz.
If they ever listen to they will
listen to it.
this, Do people listen to this?
Yeah.
Growing by the minute.
Yes.
There you go.
I hope I don't make things gobackwards for you.
(05:13):
And then it's movie night but yeaha perfect friday is the right mix
of relaxation getting stuff out bythe end of the week obviously
satisfying clients deadlines andthen celebrating that and
transition into weekend dad modeyeah i was and as you were talking
about that like the transactionalstate it kind of like i'm not
saying matt has no stress in itlike you are on state, it kind of
like, I'm not saying Matt has nostress in it, like you are on it,
(05:33):
but it kind of like goes down.
And then by the time the appraisal
needs to be ordered, usuallycoming from a broker and it's
usually a deadline and it'susually a, you know, a price that
you're probably like, Oh God, whatare people doing?
And then, Oh, there gets to belike rental income.
And like a lot of pressure juststarts trickling down the
transaction so we find it'stypically the last thing or one of
the last things yeah typicallythat home inspection has happened
everything's kind of aligned andfolks are waiting to order that
appraisal before they knoweverything else is set up so it's
(05:55):
often the caller the text of theemail saying got this condition
removal on tuesday what do youthink?
And we're used to that.
That's fine.
So why?So yeah me, it's usually like, we
want to get the commitment letterfrom a lender first, of course,
because we need to, you know, it'sgot to be directed to the lender.
Yes.
But I guess, is there an
opportunity?Should like the system change
(06:17):
where an appraisal is orderedbefore listing is like, would you
like to be higher up the order?I to appraisal should be ordered
if a transaction is looking likemean, it's me, going to happen.
It gets everyone on the same page.
No more surprises.
We would love it if sellers hadthem sitting there.
Of course, buyers can'tnecessarily use that appraisal
that someone else has done, but itcertainly corrals things and
connects by the process.
When we get orders that say, Hey,
(06:39):
yep, we got some time gettingready for all this subjects are in
two weeks, music to our ears.
I think the more people on the
same page, the better.
You We that Matt subjects, two
weeks.
At least in balanced market.
I mean, it's either that or nosubjects at all.
And then I'm like, I don't care.
Like the pressure is not on me.
This is true.
(06:59):
You're subject free, buddy.
Go for it.
Yeah, rock and roll.
Okay, well, in low hanging fruit,I'm just curious if you can, you
know, give us a definition.
BC assessments have come out
recently.
What's kind of the difference
between BC assessments and actualappraisals?
a very common question.
Not the easiest to answer or not
the easiest, at least to soundgood when I answer.
Assessments, let's be honest here,they can be all over the place.
(07:22):
I think very generally, right nowin the residential world, they're
kind of as close as they've beenfor many years because we had such
exponential growth for a time.
Assessments, people always have to
remember, are effectively a yearbehind.
They're based on the value fromthe previous July and the
condition from the previousOctober.
Why they do that, good question.
But they've now kind of caught up.
This year, for the first in awhile, we're seeing a lot that are
(07:45):
over.
And that's on the rare side
historically, but some that areover.
And our firm also is involved withassessment appeals.
So we see those, but generallythese days, a lot closer
assessment, great in a lot of waysand market value, you know, should
be kind of the fairest andequitable way to tax people.
There's millions of properties andonly so many appraisers.
(08:06):
They don't do what we do and theydon't come into every single home
and analyze the heck out of it.
I don't even even think they drive
by.
Sometimes they do something they
don't often.
It's Google Earth photo you know
and they're relying on data fromsome building permit from 1978 or
what have you but a lot of newhomes they'll show up and check
them out of course.
(08:27):
Generally hey they do kind of as
well as they can with informationwhat they have but it's a
regression formula it's called aregression analysis where there's
just this you know a big longformula with several different
variables attached to that.
And the weight of the variables
are based on the differentcharacteristics, you know,
neighborhood, lot size, home size,quality, out the bottom end spits
an estimate of value.
And, you know, sometimes often
until they have to redo a wholerole or they get checked on
(08:49):
things, they get an assessmentappeal that is laid before them.
They're not having to lookspecifically at an individual
property to kind of recalibrate.
The difference in terms of
refining overall, I don't haveexact numbers for you, but I'd say
it's probably the closest it'sbeen in don't see some that are
hundreds and hundreds off.
it's funny.
So a few clients and we're in thissituation where, you know, maybe
somebody is buying from theirparents or a friend or like not a
(09:11):
true private deal, but they'retrying to come up with the value
without having a real estate agentinvolved.
And obviously like Matt has abunch of information and data that
you pull from for your CMA to kindof say, this is what we're going
to list it at.
But then the market also dictates
what it's going to actually sellat.
So they're in this situation wherethey're like, you know, this is
where BC assessment is like,what's your opinion?
(09:33):
I'm like, I don't know.
It kind of varies.
Like the market would dictate whatit would actually sell at.
You could get a real estate agentinvolved or you could pay for an
appraisal and they're like, yeah,maybe we'll do an appraisal.
I'm like, okay, that's going to bea few hundred bucks.
You know, like at least if it'sjust done like privately, there's
not a huge rush.
You're not directing it to a
lender and they're like a fewhundred bucks i'm not gonna spend
(09:55):
that but we're talking like amillion dollar transaction you
know it's a really small part ofthe puzzle there that doesn't
really cost that much and you knowfor you guys like it's a four-year
degree like to be a mortgagebroker you could do it in a few
months it's not that difficultyeah but like an appraiser you
guys are worth your weight whereyou're actually like sifting
through daily right so well wecertainly think we are i mean hey
there's nothing rocket scienceabout we do yes you have to have a
(10:18):
four-year degree and then a couplemore years through solder but to
come back to your point about thefew hundred dollars in cost
relative to what's happening it'scertainly always been our pitch
and it's more than a pitch it'sjust a reality that that appraisal
can be utilized as a tool you knowfor various reasons just like to
get people on the same pageespecially family members you know
and just have this unbiased lookat it that's based on you know the
science and art of the market ithink there's a misconception
(10:40):
often we do is that it's just ahey add up the sticks and the
stones add them together here'sthe numbers like well no there's
so much more qualitative analysisinvolved in the background about
what's happening with the marketsupply and demand and where market
participants apply differentvalues and the variables that go
on along with it.
But yeah, for you to suggest
something like that to anyone inyour family, I think is fantastic.
(11:02):
And we say, hey, well, here's a$400 report.
This is a $1.5 million propertythat one party thinks is 1.7 and
the other thinks is 1.2.
There's a lot of money at There's
play.
a lot of emotion at There's play.
a lot of emotion at play.
Let us help you, you know, get it
corralled.
if I guess you're switching from
(11:22):
like your primary residence to arental, it's not a bad idea to get
that value.
You know, if you're talking
capital gains in the future, likethat could save you thousands and
thousands in capital gains.
gains in the So, and we do that.
That's one of the many functionsof our work, working for
individuals, investors, andaccountants to do just that.
And often we're workingretrospectively.
(11:44):
So meaning, hey, you know,accountant says I have to get an
appraisal because at such and sucha time, I either, you know,
converted it one way or the other.
And we have to look at capital
gains starting from that point orending at that point or what have
you.
And then we're going back in time.
And we have the data.
(12:04):
Again, it's not rocket science.
However, it can take us more timeand the cost can be a little
higher for that report to have togo back several years and find the
right comps and put our minds inthe headspace of what that actual
market was doing at that timeversus just doing it back then
when you knew it was probablycoming and saving yourself a few
bucks.
But yeah, we do work for that type
of function regularly.
Well, there's one other thing I'd
(12:24):
like highlight for customers is,you know, if we're into like a
tight subject removal period andthey're like, oh, we're just
waiting on the appraisal.
We know it's going to come in.
This is a great deal.
It's not just the value.
It's not like you're looking atfoundation, but if something pops
up in a report or you guys seesomething and it gets disclosed to
a lender and then the lender's notwilling to lend on that.
(12:47):
Basement suites that arenon-conforming that you're using
rental income, but maybe the doorisn't like a lockable door.
Like those little- Stove outlet.
Yeah, like those little things.
Absolutely.
Good call for the suite for the
market rent estimate.
Like if that kills a deal and we
can't use that lender, it reallyputs the pressure on everyone else
that made that transaction happen.
So just, I guess the point would
be, it's a very necessary toolthat needs to be done.
And you said like unbiased, whichis pretty powerful as well.
(13:09):
So most lenders, like I'm notallowed to even choose who the
appraiser is.
it has to go through a blind order
some lenders don't let you pay forthem and like it has to just be
everyone's very independent Likeso appraisal management companies
that wedge their way into thesystem 10 or 20 years ago and so
you're having to order throughthem and unfortunately don't often
get to choose who does it or theright appraiser for the job.
But yeah, to come back to yourpoints about the more than just
(13:31):
value, we do thousands andthousands and thousands of
appraisal reports for purchases.
I would say that in my career, the
number of times that the value hascome in less or significantly less
than the purchase price, I couldcount on a hand or two.
Generally, our market is very goodat figuring itself out in terms of
value.
Yes, there's definitely the odd
time where we look at things andgo, no, there's something funny
(13:52):
happening here.
Or if we haven't thought of this,
there's funny business, but that'svery rare.
So you haven't seen seen thathappening lately Not yet.
We're in a transitioned andtransitioning market, Matt, for
sure.
There's all these other factors
now, and great, we can use rentalincome to help qualify.
But the asset and other factor ofour appraisal work that, hey, we
have to work that out.
(14:14):
And like you said, that can squash
a deal if there's not enoughincome potential out of that home
or that suite to help applicantsqualify, so too can remaining
economic life.
Remaining economic life is
probably one of the biggestfactors that comes into play.
And that is the estimate of howlong this real property that we're
looking at here as it is, is goingto last.
(14:35):
And so typically if this is ateardown, but folks have applied
as if it's going to last foranother 50 years and loan to
values and all the things.
Yeah, sometimes it's portrayed as
the bad person for sure, but thatneeds to be considered as well.
Typically, lenders want to seeremaining economic life estimate
of at least five years more thanthe AM that's being applied for.
(14:58):
Yeah, that's a great point becausethere was a property that we're
working on and that was a bigissue for it.
So you're protecting the lender,you're protecting the client, like
you're just kind of the mediatorto make sure that no one's gonna
essentially lose their shirt onThat's it, a transaction,
specifically that function, wecome in as extra insurance,
really.
We are heavily insured.
Lenders know that.
(15:18):
They like that.
But we're just coming in withnothing to gain or lose here.
We do our job and say what ouropinion of value is.
But along with that comes so muchqualitative information and
analysis that the lenders and wethink that particularly the buyer,
obviously seller just wants tomove on and get done with the
deal.
But we think everyone involved
should appreciate it.
(15:38):
We're talking to realtors.
A good appraiser is talking to therealtor involved.
Hey, how did this go?Do you have any other offers?
What do you know?Were showings like?
What was the feedback?Do you have any other, you know,
listings that you think?What's the market been like?
How much competitive supplyexists?
market been like how muchcompetitive supply exists you know
so when you look at back in timeyou know that kind of the depth
(16:01):
and breadth of our qualitativeanalysis is a lot more than meets
the because it's the market we'retrying to figure out what you know
humans they've decided to pay andsell for based on all these
factors involved beyond just thesticks and stones of that
particular home you kind ofbrought up there.
So for insured properties likeCMHC insured, they don't usually
get appraisals.
And if they do, it's like an AVM.
(16:22):
Yes.
It's less equity.
I know there's insurance on it,like default mortgage insurance,
but why would lenders not care somuch about that just because it's
insured and they have no risk?Yeah.
Crazy.
It's backed up by a big old policy
and a lot more than ours was.
And ours is big.
And exactly right.
I mean, it's in a way
(16:43):
counterintuitive, isn't it?I mean, there's greater risk in a
lot of ways.
the listener, if you're less than
20% down, less than a milliondollar owner occupied, you'll get
default insurance.
But generally those don't
require...
Which you pay you pay for.
you definitely Yeah, pay It getsfor.
added to your mortgage butbalance.
generally those don't require...
Which you pay you for.
definitely Yeah, pay for.
It gets added to your mortgage
(17:05):
balance, but generally they don'trequire an appraisal because the
lender is comfortable because theyhave that insurance.
But there's so much less equity.
equity.
They never do or they rarely do?Very rarely.
We do work for your Genworths andyour CMHC from time to time
without a doubt, but it's rare.
Yeah.
Like at that Like they'll do anavm sometimes which is just yeah
plugs it into the computer andspits it out yes or no kind of of
(17:25):
times we're doing work for thosewhat are their tailor their four
entities that back high loan tovalue we'll do work for them on
the back end if things haven'tgone well or if the market's
changed then we'll have to come inyeah just like like you said, it's
counterintuitive.
Yeah.
I didn't know that.
Where's the market going?
Like you're seeing data, you'vebeen doing this for 15 years.
(17:45):
Do you feel there's still a runwayin the residential, commercial,
multifamily?Like what excites you, I guess,
moving forward?I'll start with saying, you know,
kind of my slant and my investmentperspective has always been and
always will be long term.
I don't pretend to be the person
or the professional out therethat's pushing short term.
Look for this specific opportunityand you'll make millions next
year.
Real estate is long term.
I think it would be naive tosuggest, number one, for anyone to
get into real estate, to look forthe short-term wins, and also
(18:08):
naive for me to suggest that Ihave any flipping clue as to what
the market's going to do with thistiny world that we now kind of
live in.
It's such a small world.
There's so many factors that candramatically and quickly impact
the market.
However, we live here and it's the
cliches thing to say that we're inthe Okanagan, what better place,
but it's absolutely true.
You know, in the world, what
better place, you know, there areequal places in my opinion to
(18:28):
invest, but here is, I don't findthat there's anything better in
terms of where the market's going.
My prediction is that we need to
putter away a little bit for a fewmonths or a year here in D.C.
We're finding there's a lot ofwait and see mentality.
Matt, you're probably dealing withthat daily.
Yes.
And obviously, well, both of you,
of course, Taylor and Will, right?Do I wait?
(18:50):
Do I wait?Yeah.
On that note, to buy real estate,get it.
If it's related to your primaryresidence or a vacation home or
something, then you might feel theneed to be a little more selective
but if it's for investment you buywhenever you can buy save up
enough money do not listen to thenoise if you have the down payment
(19:10):
and you qualify you buy so i thinkyeah we're not going to see the
big gains that we've we kind ofgot used to for the last three or
four years, obviously in the shortterm here, but that doesn't mean
that there's not some fantasticopportunities for the long-term.
Multifamily, of course, it's thereand it's going to be there for our
(19:31):
lifetimes.
And this affordability factor is
huge.
Industrials exploded.
So that's good.
They work hand in hand, jobs, you
know, they kind of cycle back andforth.
i think in the short term there'sa lot of you know meat left there
and that industrial industrialsdouble tripled you know in terms
of land in the last few yearsobviously you know we can't expect
(19:51):
to see that again for a while yeahbut man so many pockets places
like in vernon and you probablyhear me you know say the word ver
Vernon and talk about NorthOkanagan works.
That's where we're based and wherewe spend a lot of our time.
But the opportunity there's justin the Swan Lake corridor with the
new sewer to come.
Obviously, it's behind Shocker,
like any big project behind by afew years.
(20:11):
But that corridor, getting sewerand being our next big service
commercial industrial corridor,look for very solid upticks there.
Another good, and this is myopinion, downtown Vernon.
It's been sitting there a littledormant and we've had land value
rates, land rates sitting at 75,80, 75 to a hundred bucks,
depending on the size of the sitefor years.
Cologne has just been exploding.
Cologne is obviously our forecast
in Vernon, but it's probably oneof the things if I had a big
(20:32):
pocket full at the moment, I'd beprobably trying to buy as much
commercial land, ideally with someold building on it or what have
you that produces income, ofcourse, but to get my hands on as
much commercial downtown Vernonland as possible.
talking like 30th and 34th.
Oh, phew.
You have me stressed out whenyou're like, well, so downtown
Vernon.
It's going to be a good one.
(20:53):
That's funny.
That's where we mentioned that.
That's where we met.
Yeah, yeah, it is.
Quite a few years ago.
Yeah, it's funny to me.
I mean, maybe I'm just completelywrong.
I just thought appraisers weremore conservative and like
pessimistic but like what you saidthere which matt and i have said a
lot in the past too is if you cansave up and you can qualify buy
(21:14):
because you don't know whatgovernment regulations are going
to come out that are going torestrict your borrowing power
inflation is going to like erodeyour savings like there's just so
many factors if you can buy yeahand you can afford to hold long
term yeah You got to yeah, it is.
able to float the property though.
Yeah.
Pay for it.
But yeah, I agree.
(21:36):
If the numbers work, they're going
to work for you.
I think it's a good time to Yeah.
Pay buy.
My take is I'm an investor as much
as I'm an appraiser.
My and our, by that, I mean my
wife and then we actually arepartners on most of our staff with
(21:57):
my sister and her hobby.
So my brother-in-law, we make a
fantastic team.
I manage it all, but it's all
long-term.
And our mentality has always been
either buy because we have thepurchasing power or LOC or
something to dip into.
And then work your butt off to pay
that off and get the next one.
For me, you know, my wife, very
fortunate to interior health andwe'll have a nice, comfortable
(22:18):
pension.
But for me, nothing.
And our real estate is ourretirement and the cash flow that
it will produce once all the knockon wood mortgages are paid off.
And maybe some of them aren'tever, but there's certainly enough
cash flow at that time.
The time to buy is always now,
guys, in my opinion, on theinvestment side and just be in it
(22:39):
long term you mentioned kind ofthe pessimistic thing i mean yeah
it's again another unfortunatemisconception it's our fault as
appraisers we've done a bad job ofmarketing ourselves yeah sorry i'm
not stereotyping no not no this isit's a good point i came into the
profession and kind of was youknow back then it was you know
you're just the people in thebackground just kind of quietly do
your work and move along.
And, you know, don't be out there.
(23:01):
Don't have stickers and swag withnames on and advertise it.
And I get it.
Confidentiality is key.
So it's not like we're showing upto homes and their vehicles are
peppered with appraisal names.
But promoting the profession and
what we have to offer andpromoting, you know, reality and
optimism where it's warranted.
That misconception, I guess, that
appraisers just come in and we'reall just bank appraisers.
And how many times in my careerI'd be wealthy if they were each
worth a buck that I've heard, oh,you know, it's a bank appraisal.
(23:22):
That'll be low.
What do you mean low?
It is what it is.
I don't give a shit what it's for.
Like doing my job, the market'sthe market.
We're here to analyze it.
We're not here to make it up we're
not here to influence it we'rejust analysts of it and obviously
you know aside from thatespecially as investors we're
advocates and of it you know solately i know taylor and i have
both had appraisals on our dealscome in low so we have to scramble
(23:46):
to figure out the financing onthat if this happens a lot like
what point is it the buyer setsthe market you know like you look
at comparables a buyer is willingto pay that price why is it
pricing low i'll shut a bit oflight so one of mine just came in
low it was just a standard youknow one bedroom apartment the
other one was pre-constructionyeah so maybe there's a reason why
(24:08):
on that but yeah like you had itwas just a pre-built single family
like it was existing right i'veexisting right i've just been
hearing more and more about thisand i'm like it's almost like if
there's enough that are coming inlow at what point is it just right
that the prices are right rightwell well hey it's a very standard
thing or a common thing to havehappen once you know on the other
side of a cooling yeah you knowwe've had a cooling we've had a
(24:32):
transition obviously we don't needto beat the mortgage rate thing to
death, but so inevitably going tohappen.
However, probably the tough thingfor you two is you often don't get
to see the appraisals, understandpotentially why that is, obviously
is, you know, the comparables andmaybe the right ones were used.
Maybe they weren't.
We certainly hope they were.
Whether there was a adjustmentdownward for time and changes in
marketing conditions.
(24:53):
If it's a certain property type,
that's an apartment, sounds likethere should be lots of data and
relative number of comps around.
But if it's a property type where
there just hasn't been many salesof it recently, and we got to use
a sale from six or eight monthsago, and there's an adjustment
downwards there, whereas you,Matt, say to your buyers or your
sellers, well, here's the compboom and then so okay that's sold
for eight so ours should be eightcars very similar and doesn't take
(25:17):
into account our softening andwhat's happened in buyer sentiment
into it but that's always a reallytough one because often there just
isn't evidence yet to supportupward or downward as a listing
agent i get a low appraisal yeahthe buyer so they come to me and
say we need to lower your price orwalking away or whatever that
happens what do i do do i go tomortgage broker like taylor and
say listen the appraisal isn'tright like because my case i had i
think three other offers that wereall higher that just didn't come
(25:39):
together sure for whatever reasonbut they were like i could i guess
present those to the mortgagebroker and hope that they go to
bat for this or like i havenoticed too that it's been one
company that has been lowerappraising everything in my
experience anyway like can i tellthe lender that listen i don't
want that appraising company to dothe praise or you have any say on
this at all or is it just the bankthat this sure you do and to me if
that's going to happen you shouldbe able to see the report and or
(26:00):
just better understand thereasoning for that.
It shouldn't just be like, nope,came along, didn't get approved.
Like, well, let's educateeveryone.
everyone.
Also, I'm not entirely trusting
the buyer agent.
Well, because the appraisal report
is property of the lender.
Yeah.
So even though the client pays forit, and this is a tough one to
communicate, the client pays forit.
(26:20):
The appraisal goes to the lender.
Technically, we can't share that
with anyone.
It's the lenders.
Yeah.
So it's not like they can come
back to you, the listing agent,and say, hey, here's the report.
Yeah.
So course.
And we deal with that on thedaily.
Why is it Why is it like that?Like Taylor said, it really just
has to do with who owns thatreport.
It's such a funny kind of bit of aconundrum to be in because you
(26:43):
could have three different partiesinvolved.
One person that's ordered it, oneperson that's paying, and one
person whose name's at the top andis relying on it.
And only the name on the top, thatlender, gets the copy and gets to
own that copy.
They can choose to obviously give
it to folks if they want.
But we get that all the time.
Hey, I paid for it.
Why can't I get this?
(27:04):
it. Why can't I get this?Don't think most, you know,
lenders and conventionals sittingat the top really care.
For us, Taylor Atkinson phoned upand orders a report.
We're loyal to him.
That's his, at some point, it's
not necessarily fair for a buyeror an applicant to just get their
hands on that and just go shop itaround after Taylor's done hours
and hours and hours of work.
Yeah.
And I don't know either.
It is kind of a weird one, but
potentially it is, it gets sent tothe lender because the lender
(27:25):
knows that there's skin in thegame from the purchaser and
they're not going to then go tothe next lender and the next
lender and the next lender, right?You don't want to waste the
lender's time.
So if it gets sent to them, it's
like, all right, we are committingto fund this file.
Yes.
But if you just have a report and
you're like, I'm just going totake it from bank to bank and see
if I can manipulate somebody.
Yeah.
So I think once you get to thatstage, there's a commitment and
(27:47):
the next As a buyer's agent, sayI'm going to write an offer on a
property and the listing agentsays, just so you know, there's
three offers on this property.
As a buyer agent, I'm like, you're
just lying to me.
Don't believe you.
I can't expect that listing agentto send me the offers.
But if I really am curious, I cancall their brokerage.
I can figure out if there areother offers.
I can't figure out theinformation, but I can prove it.
I was in a situation where I justhad to take this person's word for
(28:11):
it.
The appraiser came in low because
they were asking us for money off.
And I just, it was frustrating
because I was like, what's therecourse here?
How do I explain this to my sellerthat the appraisal is low?
Even though we've had three otheroffers that are higher, it just
doesn't make any sense.
And I was like, well, why don't
you just get another appraisal?I'm like, the bank won't allow it.
There was no real recourse besidestake I can't as a broker, it
(28:31):
depends on the lender, but you cansee the appraisal before it's
sent.
So you could stop it and reorder
it somewhere else or appeal it.
Like most of the time, again, it's
arm's length.
Like they don't want it to be
biased.
It just goes directly to the
lender.
You don't see it until after.
So if that was the case, there'snot really much you can do it.
It does vary from lender tolender, whether they allow a
(28:53):
second opinion.
We do that all the time.
I'm sure there's been the oddsecond opinion of after hours in
the past, but you're right.
Often once a lender sees that and
goes, oh, that's it.
We do reliance letters all the
time to Taylor's point about themnot letting the reports bounce
around.
They can only be addressed and
relied upon, utilized by onelender at a time.
So we'll often get that, hey, canyou release this to another
lender?Yes, we can, if we get permission
from the first lender to releaseit.
But in your circumstance, Matt, Imean, if someone is going to come
(29:15):
along and say, hey, president,come in, we want money off in the
middle of a transaction, thatshould be better backed up, in my
opinion.
You should be able to see some
reasoning for I feel like weshould at least get some
information from somebody.
I can that like, because otherwise
we just started taking the wordfor You know what's funny with the
appraisal?It's like as a buyer, you're
buying something.
You're like, man, I hope the
appraisal comes in.
And if it's low, you're almost
upset.
You're like, you no, need to have
an appraisal.
Like in this, I'll come up with
(29:37):
the extra money or whatever.
It's like you should almost take
that.
What it is, is like the insurance
and be like, oh, this may not be agood purchase.
Like maybe I should walk away fromthis.
walk away from this.
It comes right back to our wish
that they were done sooner, youknow, because then you know how
the both of you, how the emotionalattachment is.
And that is a peak point.
We come in at a peak point.
And if we say anything other thanwhat they're thought, it can be an
emotional reaction.
(29:57):
However, if appraisals, you know,
were done earlier in the processor more upfront, everyone figures
out their stuff a little sooner.
That's a dreamland for me.
I know.
You guys live a tough market.
Hey, like if it doesn't reach towhat it should be, people are
upset.
It appraises for where it should
be.
And then the market comes down.
People are upset.
Like there's not really a lot of
win-wins unless.
best and most effective folks to
work with are the seasoned onesthat have been through that and
(30:17):
just keep emotions capped and iget it that's impossible for you
know primary residents homebuyerssellers i understand that i that's
why you're more on the commercialside as well right like it's a
little bit more mathematic lessemotion it's like hey oh it's it's
hey oh it's it's dramaticallydifferent and we do both our firm
does both personally spend most ofmy hours in the commercial world
and that means you know anythingfrom industrial ag or multi-family
or you know some new low-incomehousing project or what have you
(30:39):
but then the other side of my firmdoes the residential it is it's
dramatically different but wereally enjoy both because the
different paces balance each otherout well.
In my opinion, you have to have apulse on both sides to be
well-rounded.
Some folks only do residential and
they're kind of buried in that andsome only do commercial.
But I think there's a dramaticbenefit to considering a grader in
any marketplace.
And you guys are fantastic.
(31:00):
I've used you a few timespersonally and for clients.
Thank you.
There's a specific niche, like you
have to be approved by a certainamount of lenders.
But when I'm purchasing like avery unique property, maybe it has
a certain type of income it's onlease land or whatever.
Like there's only a few peoplethat can go and actually approach
it correctly.
So I think it is important for
buyers to know, like, you're notall the same.
You're not just going to tick theboxes.
Like you have to find the rightperson for the right property.
(31:21):
For sure.
Yeah.
And For sure.
Yeah.
And expertise and experience andcertain things.
And I think I might know, youknow, one of the ones you're
talking about and the incomeapproach becomes a very important
approach to the lender.
Really, you know, potentially the
only one they really care about.
They're just flipping right to
that page where it's okay.
What does this unbiased
professional think that thisproperty will produce in a year?
What are we talking for occupancyrates?
What are they seeing for expensesand produce a net income that's
(31:44):
not just a spreadsheet or a pieceof paper from a property manager
or what have Yeah.
And one other thing that you said
a little while back that resonatedwith me, I'm thinking like I still
have my tax hat on because we justhad Nicole Watson, my accountant
on.
Sure.
You said, you know, like you guyswill qualify, you'll buy
properties as your partnership.
You have, you'll take a loan,
you'll leverage, maybe you losesome money to begin with or
(32:07):
whatever for the CapEx.
And then you just work your butt
off and try and pay it off.
And, you know, it's always kind of
been the motto of real estateinvestors.
Like don't buy property thatdoesn't cashflow.
Like it's just this, you know,myth that basically you buy and
you're wealthy right after, but itonly resonated with me because
like we were talking about thecost of CPP and expenses for being
(32:27):
full-time.
Like people do not care about
working a full-time job and thenthrowing money away on tax.
But as a real estate investor,people are like, I cannot lose
money initially.
Like it has to cashflow.
It's kind of like, okay, would yourather be a full-time employee and
throw money away on CPP that youhope when you're 65 or 70, you
start making money off of it?Or would you like to kind of
(32:48):
control that asset now?And yeah, maybe like people are
paying 400 bucks a month in CPP.
You okay doing that for the next
five years on real estate to hopethat that's now your retirement
egg?Or do you want to just leave it in
the Canadian pension plan?Isn't it it it funny?
So the relative things, some ofthe justifications don't see your
bang on.
Like I have numerous examples.
I'm looking at a spreadsheet rightnow just in case something like
(33:09):
this, you know, came up.
The cashflow thing, of course,
it's important.
I get it.
Not everyone just has a fewthousand lying around for that
year to put into it.
But it's also my thought,
especially when rates arerelatively high now that you're
not ready to necessarily buy ituntil you have an extra $10,000 in
your account or somewhere whereyou can get that to beyond your
down payment to flow that.
Like, so what that doesn't cash
flow i'm looking at one right nowwhere net cash flow is minus 10
(33:32):
grand based on a bunch ofvariables i'm putting in like
annually yeah annually tenthousand dollars that you have
you'd have to make up to coverthat mortgage you know going into
principle fellas like you knowit's not gone yes you have to have
it you have to get it fromsomewhere it has to go into the
account understand that but that.
But you can also save up a little
(33:55):
longer, increase your downpayment.
I can literally put in a numberand it'll show, okay, that's the
down payment.
They need to have a zero cash flow
or at least $1 positive.
And people lose sight of that in
the greater picture.
Like, yes, you have to look at the
opportunity loss of that 10 000what you could have made on the
theory otherwise but in terms ofwhat real estate can produce long
term sorry it like crushes anylong-term other investment that
(34:16):
i've ever seen those when you gointo leverage you have to leverage
it guys in order to get this roithat is true and makes sense and
get it to be beyond what just acap rate is.
I think it is my daily life totalk about cap rates and
commercial rates, return,multifamily, all that kind of
thing.
And okay, they're 5%.
That's 5% is if you're just buyingthe thing outright and you're not
leveraging, you have to leverage.
(34:36):
If you leverage, we're just
talking about your return on yourinitial down payment and equity,
PTT amount, of amount of courseclosing costs they add in there
but you know if you're leveraging75 in other words you're throwing
25 down or 30 down ish it's kindof a nice magic number we're
talking 15 to 22 returns yeah sogo what you've kind of seen in
your portfolio over the last 10years or so with your but i your
but i have to scale that backbecause i don't believe that every
(35:00):
next 10 years sure yeah we'regoing to be the same growth that
we saw yeah but that's but that'sincluding like appreciation cash
flow principal pay down of courseyou have to include appreciation
north okinawa again appreciationover the last 36 has been 7.2% a
year.
Central, 7.4.
36 36 7.4 over the last 36 years.
That is amazing.
That's just appreciation.
That's averaged out.
Obviously, we had some recentyears here where we saw like 30s,
40%.
(35:20):
But, you know, Matt, you pull up
those stats, sit and run on amatrix, you know, whatever it's
called there now.
And we've got 1987 average home
value and clone of, I looked lastnight, I think it was like 81,000.
Can we expect that kind ofexponential growth?
No, but I mean, even if we tonethat down, so saying we prove in
the last 36 that it's been 7.4 incentral Okanagan, even if we use
(35:42):
4%, I got 4% pinched into my thinghere.
You could use three.
You have a 4% of a $950,000
purchase.
We're just talking about kind of
the most basic residentialinvestment.
It's that single family with thegood suite.
That's the beauty.
It's the most clean.
So we're talking about 5,000 bucksin rent a month.
And we've seen operating expenseratios in the 25% less on some of
our new stuff.
But you have to think about
appliances.
You got to think about roof
(36:03):
long-term.
So you use about a 30% expense
ratio.
Once all the numbers come out and
you allow 4% appreciation, evenat, you tell me, Taylor, I've
punched in here at a five and aquarter mortgage rate.
Am I low?I mean, that's high for what we've
seen historically.
Of course, but I mean, for now.
Yeah, that's comfortable, yeah.
So the point is, even now, I hear
all these things and I listen totidbits of folks on your show you
(36:25):
it's tough and and, I know, get Ilisten to tidbits cashflow.
of folks Yep, on your show and nowit's tough and cash flow yep I get
it you're not putting money inyour bank right now you're just
not however even considering thatnegative cash flow I'm showing a
16.5% return on a purchase that Iknow exists out there that you can
make $5,000 a month on and at afive and a quarter mortgage rate
(36:47):
with 25% down yeah That So proofsthere.
That 7% ish over the last 36 yearsactually aligns really well.
We had the BC chief economist onfor our BCREA.
I think it was 76 or 79% was theappreciation over the next 10
years.
Like, so that aligns really well
with the last 36 years.
It's kind of like, we're just
continuing on.
Until 2030.
Until 2030.
Is it?
just continuing on.
(37:08):
So it's just continuing on that
trend.
It's funny, the cashflow
conversation.
I had this with a client.
They're talking about keeping as arental and buying a primary
residence or selling and how theyshould structure it.
And we're talking about capitalgains, whatever.
And I was like, so I did myanalysis on my own spreadsheet
that I share with clients.
I'm like, you know, if you were to
keep this property and then buyanother one, this would lose you
(37:28):
about 500 bucks a month.
So are you comfortable doing that?
And they were like, yeah,absolutely.
You know, like it's a write off.
It's like, well, not really.
You can't write off the principlethat you're paying into that.
So it's like actually like from atax point of view, like it is
(37:50):
profitable.
And I'm not like trying to
encourage people to go buysomething that cash flows
negatively.
But from CRA, that property is
making money because you're payingdown your principal, which is just
going into your bank account.
just So it's like That's exactly
it.
The CRA, the annual statements are
different than the reality becauseyou can't throw principal in
there.
And you mentioned like $500 a
month.
It's not a loss.'s a savings
you're just parking it into realproperty yeah a savings you're
(38:13):
except us to get like two times areturn that's what i was talking
about with cpp it's like peopleare okay to spend x amount of
dollars well i mean you have tobut you can't do it cash flow wise
for a property which technicallyby taxes it's making money anyways
yeah that could talk yeah couldtalk yeah finally comment on you
know cash flows it just makes itharder to buy more right because
(38:37):
like kind of for sure you're itterms of yeah qualifying and just
being able to you can't take fivehundred dollar loss on this one
and buy another one for anotherfive hundred dollar loss and buy
another one for another five likethere's a limit for sure
understood your term in the shortterm if i punch in what they were
a couple years ago uh to get youknow.7% or 2.5% mortgage rates,
then it's going to literally flipthe other way where it's $10,000.
(38:59):
But it's not like those inputs tomake the mortgage payments are
lost.
Exactly.
I mean, yes, in a way to a lenderto qualify, that's like their
loss.
It's going out.
I get it.
But it all comes back to just
working your butt off betweenpurchases to build up for that
next one.
I'm not a big believer myself, and
this is big debate and I get it.
I obviously understand that you
get further and farther.
I'm not a big believer in
leveraging properties.
Get off the show.
(39:19):
Get out of here.
We've done that a couple of times
and it works out great, but for meand what's worked for us, and I
think a lot of folks is show.
Get out of here.
see the other side of that wherefolks just get too buried in it
and aren't just more like afocused on okay now i gotta get
back to work in my other life andmy other source of income here
(39:42):
just to pound that out to save upfor that next down payment for the
next one yeah so that's individualit's whatever stress level you
know folks can tolerate butthere's a point where it can go
beyond and you can't screw up thequality of your life or cause
yourself additional stress andanxiety just for that either so
finding that blend of what worksfor you what you can tolerate
obviously you go through life ican tolerate a heck of a lot more
(40:05):
now and thought of risk now than icould earlier and that's just
natural but you got to find whatworks for you as long as you're on
the push side of things and doingyour best to never look back and
have that grandfather story oflike shut about that whole
hillside i you know yeah you justhave to know that when you look
back you're like nope i dideverything i could you know so
that's my thought on how i want tolook yeah i agree well to wrap
(40:26):
this up we'll fire a few morequestions at you please if you
could buy one property in theOkanagan in the next 12 would it
be?Downtown Vernon, BC, commercial
real estate that I can somedayeither sell or put on multi-story,
primarily residential.
best thing you've ever spent any
money on?Hands down, anything that draws or
keeps my family in one space for acertain amount of time.
(40:47):
That can be many things.
It can be a boat.
It can be another toy like afour-seater side-by-side that gets
you into the mountains and getsyou some mountain therapy or a
trip or a backyard above-groundpool.
I don't care.
It's something that forces my
family to stay in a confined areaand have a great reason to hang
out.
out.
That is awesome.
So do your kids play sports?
is awesome.
So do your kids play sports?
They do.
Yeah.
So my wife and I are talking aboutthis a lot right now.
(41:09):
This is kind of a topic of ourmind.
Sure.
What do we get our 10-month-old
son to do?Like, do we go skiing so that we
can do it together?Do we get a boat so we can do it
together?Do we play hockey where we all
just watch him?Like, what do you think?
Sounds like you think do Sure.
son together i like together i
mean if you're a big hockey guynow's probably the time to get
that stick in his hands but umyeah it's just breaking stuff in
(41:32):
your house just get it started buti'm a proponent both because they
have to also be away from you andsocialize with their so they're
not a yeah that soccer team thingexactly is super important.
Like to be involved if I can insome coach way or bring in the
oranges or whatever, but beingtogether and doing it together.
I firmly believe in, like Imentioned, the quad up into the
(41:52):
mountains or whatever,experiencing that and getting away
from the hustle and bustle thatwe've created down here.
You just can't put a value on thatand that time i mean we sent we
talk your value value value valuenothing even touches time time is
the most important thing we gotwhen you have kids like yeah with
the kids yeah how you give backwhat's a charity you like well you
call it cnc and that's communityand cancer the community thing my
opinion to any good professionaland or firm or a group of folks is
(42:12):
giving back to the community, youknow, in which they operate or
practice and which has given themso much.
So I spent many years as aRotarian that really benefited all
concerned.
And it's one of their sayings,
myself and family included, ranout of time to do it effectively.
So step back for a while, butgiving to any of their causes that
are local.
We raised a lot of money with
different auctions over the years,physically directly handed it to
(42:33):
some of the very goodnot-for-profits that we have
locally.
I think that international is very
important and a certain percentageof everything that we give that
needs to be thought about.
But community first is big for me.
Cancer is the next one.
We all have connections and
stories with that one.
Brain tumor cancer, big one for
us.
Our firm has given to that.
In the past, it lost a dear uncleto a glioblastoma.
And I think that's a, for me, onethat needs to really be focused on
(42:56):
all of them.
It starts with us giving what and
when we can to some decade orcentury being able to say, that
one's gone.
We can cross that one we community
cancer is big for us.
We certainly set aside a portion
each year of our revenue to Nice.
Awesome.
One last question is how can we,our audience or our listener, how
(43:17):
you?Give us a buzz.
I am the first to always say andspeak to good realtors all the
time, brokers, marketparticipants.
Just give us a call.
Yeah, I may not have hours to
chat, but I always have five andsee what we're all up to and how
we can assist.
But look us up, DS Appraisers.
And we practice throughout theOkanagan, Shuswap, Kamloops area.
(43:38):
And always happy to chat.
Remaining optimistic and wanting
to learn about investment is stepone.
Yeah.
Love it.
Awesome.
Well, thank you so much for your
time.
Thank you so much.
Awesome.
Thank you, fellas.
Pleasure.
for listening to the Kelowna Real
Estate Podcast.
Be sure to reach out and let us
know how else we can add value toyour Kelowna real estate journey.
Be sure to reach out and let usknow how else we can add value to
your Kelowna real estate journey.
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(43:59):
This is sponsored by Matt GlennReal Estate and Taylor Adventure
Mortgages.
Estate Podcast with your host,award-winning realtor, Matt Glenn,
and top producing mortgage broker,Taylor Atkinson.
Professionals in the industry,enthusiastic entrepreneurs, and
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When it comes to real estate,
we're all in.
back to the show, guys.
(00:24):
Thanks for tuning in.
Matt, how are you doing?
I'm doing well.
How are you doing, dude?
I'm doing great.
Thank you.
A lot of big things happening onthe show lately.
We have been having someprofessionals in the industry,
accountants, a grazer for thisshow.
And without saying too much, us.
Yeah.
Yeah.
Yeah.
We are also having a pretty bigtime lawyer coming on the show in
(00:47):
a couple of weeks.
So we're actually recording that a
couple of days after this episodecomes out.
So if anybody wants to address anylegal questions, concerns
throughout real estatetransactions, fire us a DM.
Yeah.
If you a question for a lawyer, we
can ask them like lawyers charge alot of money to answer these kinds
of So he's coming up.
Yeah.
We're trying to use this as a freeplatform for you guys.
(01:08):
So obviously, we're just askingquestions that we're interested
in, but any topics that you wantcovered, yeah, send us a message
and we'll fire away at that.
But yeah, we want to jump right
into the show.
It's an awesome show.
Taylor DeDora, I've used himpersonally, but he is a wealth of
knowledge.
And yeah, I think you guys will
(01:30):
find a lot of good value out ofthis show.
Yeah, that's a good one.
Once it's two Taylors versus one
Matt, but I Yeah.
The next Matt is yet to come on.
It'll have to be a good one.
I know.
I'm looking forward to the twoMatt's versus one day.
Yeah.
I might just have to bow out on
one.
Okay.
Enjoy the show guys.
Okay.
Welcome to the Taylor.
show, you for and Matt.
I'm as many tailors as I can.
Absolutely.
You've had a Taylor.
Oh yeah.
I saw in your awesome.
(01:54):
I always often thought that I like
Taylor's a female better.
No offense to us.
You know, I was taking it asoffense and then I was like, wait,
your name is Yeah.
Yeah.
Yeah.
I'm allowed to go there.
I just think, I mean, it goessmoothly, but are you Tay?
Do you get Tay from your buds orhow?
No. Do you?I do.
Yeah.
you Matt?
Well, Matt short.
Yeah, true.
That's true.
Yeah.
Matthew.
Okay.
Well, Taylor, we like to just letour guests, you know, connect with
(02:17):
our listener.
What's your perfect Friday look
like in terms of work,productivity, and then leaving
into the weekend?Obviously, starting with a
podcast.
I mean, that's a good way to do
it.
I'm gonna have to do this every
week now.
Friday's easier.
They're more relaxing.
It's kind of like, you know,
during the Christmas season wherepeople expect a little less of
you.
So the pressure's off.
(02:39):
However, I still like to keep thepressure on and finish lots that
day.
I typically professionally have
set deadlines for Fridays.
So it's good to have those done
for the week.
Things that hang over for next day
or for the following Monday,that's a good way to go backwards.
I've often felt for myself andtold my team that finish things.
You can still mull them over andhave fresh eyes on Monday, but get
(03:02):
them 99% complete and move on.
One of the reasons for our success
is getting stuff out.
If you leave it, it can drag for
several more hours the followingday.
But for me, getting up andcertainly being optimistic, I'm
not one of these people that'scrazy early riser and puts on 10K
before six, never have been, but Iget up and throw some pushups and
sit ups, a couple of squats justto get things going and then start
(03:27):
planning the day.
I'm a shower day planner.
You got a whiteboard in theshower.
A whiteboard in the show.
Exactly.
Exactly.
Like my wife's always kind of
like, what are you doing?Like, Like my wife's always kind
of what are you doing?like, well, Like, I'm well,
getting the day worked out herebefore they call it the beautiful
chaos hits have a seven and a nineyear old.
So at some point in the morning,we meet and greet and you never
quite know what mood they're goingto be in.
(03:50):
So just prepping for the day, ahealthy breakfast, get in and go
for it.
We do jeans day at the office.
They're just something a littlemore relaxed about And it.
work yeah, hard and go for We dojeans it.
day at the There's office.
just something a little more
relaxed about it.
And yeah, work hard to get things
out and then celebrate that.
Celebrate the day, celebrate the
week.
At the end of the day, it's really
important to me.
Sometimes my drive home isn't long
enough in a way to make thattransition.
But I mentioned to you prior thatthe work-life blend is a skill and
I'm still working on it.
(04:12):
That's for sure.
But getting better coming downfrom a day.
Someone once told me to physicallydo something, you know, bundle up
your day and work life and throwit into the bush on the way in the
door.
Well, I don't do that, but I have
a breezeway between garage andhouse and just kind of physically
look out into the field and make apoint of going okay i did the
(04:32):
thing today this week awesomeyou've done it now switch gears
because this beautiful chaos thatlies within across the threshold
is about to hit in the face andyour kids don't give a shit how
your day went they just want dadso yeah that's successful friday i
guess continued with maybe glassof wine with my wife, making
dinner.
I've recently found throwing on
some dinner jazz.
Super nice.
Yeah.
A little random for me.
(04:52):
My if they ever listen to they'regoing to probably pepper me on
this one.
friends, this, But throwing on a
little dinner jazz.
If they ever listen to they will
listen to it.
this, Do people listen to this?
Yeah.
Growing by the minute.
Yes.
There you go.
I hope I don't make things gobackwards for you.
(05:13):
And then it's movie night but yeaha perfect friday is the right mix
of relaxation getting stuff out bythe end of the week obviously
satisfying clients deadlines andthen celebrating that and
transition into weekend dad modeyeah i was and as you were talking
about that like the transactionalstate it kind of like i'm not
saying matt has no stress in itlike you are on state, it kind of
like, I'm not saying Matt has nostress in it, like you are on it,
(05:33):
but it kind of like goes down.
And then by the time the appraisal
needs to be ordered, usuallycoming from a broker and it's
usually a deadline and it'susually a, you know, a price that
you're probably like, Oh God, whatare people doing?
And then, Oh, there gets to belike rental income.
And like a lot of pressure juststarts trickling down the
transaction so we find it'stypically the last thing or one of
the last things yeah typicallythat home inspection has happened
everything's kind of aligned andfolks are waiting to order that
appraisal before they knoweverything else is set up so it's
(05:55):
often the caller the text of theemail saying got this condition
removal on tuesday what do youthink?
And we're used to that.
That's fine.
So why?So yeah me, it's usually like, we
want to get the commitment letterfrom a lender first, of course,
because we need to, you know, it'sgot to be directed to the lender.
Yes.
But I guess, is there an
opportunity?Should like the system change
(06:17):
where an appraisal is orderedbefore listing is like, would you
like to be higher up the order?I to appraisal should be ordered
if a transaction is looking likemean, it's me, going to happen.
It gets everyone on the same page.
No more surprises.
We would love it if sellers hadthem sitting there.
Of course, buyers can'tnecessarily use that appraisal
that someone else has done, but itcertainly corrals things and
connects by the process.
When we get orders that say, Hey,
(06:39):
yep, we got some time gettingready for all this subjects are in
two weeks, music to our ears.
I think the more people on the
same page, the better.
You We that Matt subjects, two
weeks.
At least in balanced market.
I mean, it's either that or nosubjects at all.
And then I'm like, I don't care.
Like the pressure is not on me.
This is true.
(06:59):
You're subject free, buddy.
Go for it.
Yeah, rock and roll.
Okay, well, in low hanging fruit,I'm just curious if you can, you
know, give us a definition.
BC assessments have come out
recently.
What's kind of the difference
between BC assessments and actualappraisals?
a very common question.
Not the easiest to answer or not
the easiest, at least to soundgood when I answer.
Assessments, let's be honest here,they can be all over the place.
(07:22):
I think very generally, right nowin the residential world, they're
kind of as close as they've beenfor many years because we had such
exponential growth for a time.
Assessments, people always have to
remember, are effectively a yearbehind.
They're based on the value fromthe previous July and the
condition from the previousOctober.
Why they do that, good question.
But they've now kind of caught up.
This year, for the first in awhile, we're seeing a lot that are
(07:45):
over.
And that's on the rare side
historically, but some that areover.
And our firm also is involved withassessment appeals.
So we see those, but generallythese days, a lot closer
assessment, great in a lot of waysand market value, you know, should
be kind of the fairest andequitable way to tax people.
There's millions of properties andonly so many appraisers.
(08:06):
They don't do what we do and theydon't come into every single home
and analyze the heck out of it.
I don't even even think they drive
by.
Sometimes they do something they
don't often.
It's Google Earth photo you know
and they're relying on data fromsome building permit from 1978 or
what have you but a lot of newhomes they'll show up and check
them out of course.
(08:27):
Generally hey they do kind of as
well as they can with informationwhat they have but it's a
regression formula it's called aregression analysis where there's
just this you know a big longformula with several different
variables attached to that.
And the weight of the variables
are based on the differentcharacteristics, you know,
neighborhood, lot size, home size,quality, out the bottom end spits
an estimate of value.
And, you know, sometimes often
until they have to redo a wholerole or they get checked on
(08:49):
things, they get an assessmentappeal that is laid before them.
They're not having to lookspecifically at an individual
property to kind of recalibrate.
The difference in terms of
refining overall, I don't haveexact numbers for you, but I'd say
it's probably the closest it'sbeen in don't see some that are
hundreds and hundreds off.
it's funny.
So a few clients and we're in thissituation where, you know, maybe
somebody is buying from theirparents or a friend or like not a
(09:11):
true private deal, but they'retrying to come up with the value
without having a real estate agentinvolved.
And obviously like Matt has abunch of information and data that
you pull from for your CMA to kindof say, this is what we're going
to list it at.
But then the market also dictates
what it's going to actually sellat.
So they're in this situation wherethey're like, you know, this is
where BC assessment is like,what's your opinion?
(09:33):
I'm like, I don't know.
It kind of varies.
Like the market would dictate whatit would actually sell at.
You could get a real estate agentinvolved or you could pay for an
appraisal and they're like, yeah,maybe we'll do an appraisal.
I'm like, okay, that's going to bea few hundred bucks.
You know, like at least if it'sjust done like privately, there's
not a huge rush.
You're not directing it to a
lender and they're like a fewhundred bucks i'm not gonna spend
(09:55):
that but we're talking like amillion dollar transaction you
know it's a really small part ofthe puzzle there that doesn't
really cost that much and you knowfor you guys like it's a four-year
degree like to be a mortgagebroker you could do it in a few
months it's not that difficultyeah but like an appraiser you
guys are worth your weight whereyou're actually like sifting
through daily right so well wecertainly think we are i mean hey
there's nothing rocket scienceabout we do yes you have to have a
(10:18):
four-year degree and then a couplemore years through solder but to
come back to your point about thefew hundred dollars in cost
relative to what's happening it'scertainly always been our pitch
and it's more than a pitch it'sjust a reality that that appraisal
can be utilized as a tool you knowfor various reasons just like to
get people on the same pageespecially family members you know
and just have this unbiased lookat it that's based on you know the
science and art of the market ithink there's a misconception
(10:40):
often we do is that it's just ahey add up the sticks and the
stones add them together here'sthe numbers like well no there's
so much more qualitative analysisinvolved in the background about
what's happening with the marketsupply and demand and where market
participants apply differentvalues and the variables that go
on along with it.
But yeah, for you to suggest
something like that to anyone inyour family, I think is fantastic.
(11:02):
And we say, hey, well, here's a$400 report.
This is a $1.5 million propertythat one party thinks is 1.7 and
the other thinks is 1.2.
There's a lot of money at There's
play.
a lot of emotion at There's play.
a lot of emotion at play.
Let us help you, you know, get it
corralled.
if I guess you're switching from
(11:22):
like your primary residence to arental, it's not a bad idea to get
that value.
You know, if you're talking
capital gains in the future, likethat could save you thousands and
thousands in capital gains.
gains in the So, and we do that.
That's one of the many functionsof our work, working for
individuals, investors, andaccountants to do just that.
And often we're workingretrospectively.
(11:44):
So meaning, hey, you know,accountant says I have to get an
appraisal because at such and sucha time, I either, you know,
converted it one way or the other.
And we have to look at capital
gains starting from that point orending at that point or what have
you.
And then we're going back in time.
And we have the data.
(12:04):
Again, it's not rocket science.
However, it can take us more timeand the cost can be a little
higher for that report to have togo back several years and find the
right comps and put our minds inthe headspace of what that actual
market was doing at that timeversus just doing it back then
when you knew it was probablycoming and saving yourself a few
bucks.
But yeah, we do work for that type
of function regularly.
Well, there's one other thing I'd
(12:24):
like highlight for customers is,you know, if we're into like a
tight subject removal period andthey're like, oh, we're just
waiting on the appraisal.
We know it's going to come in.
This is a great deal.
It's not just the value.
It's not like you're looking atfoundation, but if something pops
up in a report or you guys seesomething and it gets disclosed to
a lender and then the lender's notwilling to lend on that.
(12:47):
Basement suites that arenon-conforming that you're using
rental income, but maybe the doorisn't like a lockable door.
Like those little- Stove outlet.
Yeah, like those little things.
Absolutely.
Good call for the suite for the
market rent estimate.
Like if that kills a deal and we
can't use that lender, it reallyputs the pressure on everyone else
that made that transaction happen.
So just, I guess the point would
be, it's a very necessary toolthat needs to be done.
And you said like unbiased, whichis pretty powerful as well.
(13:09):
So most lenders, like I'm notallowed to even choose who the
appraiser is.
it has to go through a blind order
some lenders don't let you pay forthem and like it has to just be
everyone's very independent Likeso appraisal management companies
that wedge their way into thesystem 10 or 20 years ago and so
you're having to order throughthem and unfortunately don't often
get to choose who does it or theright appraiser for the job.
But yeah, to come back to yourpoints about the more than just
(13:31):
value, we do thousands andthousands and thousands of
appraisal reports for purchases.
I would say that in my career, the
number of times that the value hascome in less or significantly less
than the purchase price, I couldcount on a hand or two.
Generally, our market is very goodat figuring itself out in terms of
value.
Yes, there's definitely the odd
time where we look at things andgo, no, there's something funny
(13:52):
happening here.
Or if we haven't thought of this,
there's funny business, but that'svery rare.
So you haven't seen seen thathappening lately Not yet.
We're in a transitioned andtransitioning market, Matt, for
sure.
There's all these other factors
now, and great, we can use rentalincome to help qualify.
But the asset and other factor ofour appraisal work that, hey, we
have to work that out.
(14:14):
And like you said, that can squash
a deal if there's not enoughincome potential out of that home
or that suite to help applicantsqualify, so too can remaining
economic life.
Remaining economic life is
probably one of the biggestfactors that comes into play.
And that is the estimate of howlong this real property that we're
looking at here as it is, is goingto last.
(14:35):
And so typically if this is ateardown, but folks have applied
as if it's going to last foranother 50 years and loan to
values and all the things.
Yeah, sometimes it's portrayed as
the bad person for sure, but thatneeds to be considered as well.
Typically, lenders want to seeremaining economic life estimate
of at least five years more thanthe AM that's being applied for.
(14:58):
Yeah, that's a great point becausethere was a property that we're
working on and that was a bigissue for it.
So you're protecting the lender,you're protecting the client, like
you're just kind of the mediatorto make sure that no one's gonna
essentially lose their shirt onThat's it, a transaction,
specifically that function, wecome in as extra insurance,
really.
We are heavily insured.
Lenders know that.
(15:18):
They like that.
But we're just coming in withnothing to gain or lose here.
We do our job and say what ouropinion of value is.
But along with that comes so muchqualitative information and
analysis that the lenders and wethink that particularly the buyer,
obviously seller just wants tomove on and get done with the
deal.
But we think everyone involved
should appreciate it.
(15:38):
We're talking to realtors.
A good appraiser is talking to therealtor involved.
Hey, how did this go?Do you have any other offers?
What do you know?Were showings like?
What was the feedback?Do you have any other, you know,
listings that you think?What's the market been like?
How much competitive supplyexists?
market been like how muchcompetitive supply exists you know
so when you look at back in timeyou know that kind of the depth
(16:01):
and breadth of our qualitativeanalysis is a lot more than meets
the because it's the market we'retrying to figure out what you know
humans they've decided to pay andsell for based on all these
factors involved beyond just thesticks and stones of that
particular home you kind ofbrought up there.
So for insured properties likeCMHC insured, they don't usually
get appraisals.
And if they do, it's like an AVM.
(16:22):
Yes.
It's less equity.
I know there's insurance on it,like default mortgage insurance,
but why would lenders not care somuch about that just because it's
insured and they have no risk?Yeah.
Crazy.
It's backed up by a big old policy
and a lot more than ours was.
And ours is big.
And exactly right.
I mean, it's in a way
(16:43):
counterintuitive, isn't it?I mean, there's greater risk in a
lot of ways.
the listener, if you're less than
20% down, less than a milliondollar owner occupied, you'll get
default insurance.
But generally those don't
require...
Which you pay you pay for.
you definitely Yeah, pay It getsfor.
added to your mortgage butbalance.
generally those don't require...
Which you pay you for.
definitely Yeah, pay for.
It gets added to your mortgage
(17:05):
balance, but generally they don'trequire an appraisal because the
lender is comfortable because theyhave that insurance.
But there's so much less equity.
equity.
They never do or they rarely do?Very rarely.
We do work for your Genworths andyour CMHC from time to time
without a doubt, but it's rare.
Yeah.
Like at that Like they'll do anavm sometimes which is just yeah
plugs it into the computer andspits it out yes or no kind of of
(17:25):
times we're doing work for thosewhat are their tailor their four
entities that back high loan tovalue we'll do work for them on
the back end if things haven'tgone well or if the market's
changed then we'll have to come inyeah just like like you said, it's
counterintuitive.
Yeah.
I didn't know that.
Where's the market going?
Like you're seeing data, you'vebeen doing this for 15 years.
(17:45):
Do you feel there's still a runwayin the residential, commercial,
multifamily?Like what excites you, I guess,
moving forward?I'll start with saying, you know,
kind of my slant and my investmentperspective has always been and
always will be long term.
I don't pretend to be the person
or the professional out therethat's pushing short term.
Look for this specific opportunityand you'll make millions next
year.
Real estate is long term.
I think it would be naive tosuggest, number one, for anyone to
get into real estate, to look forthe short-term wins, and also
(18:08):
naive for me to suggest that Ihave any flipping clue as to what
the market's going to do with thistiny world that we now kind of
live in.
It's such a small world.
There's so many factors that candramatically and quickly impact
the market.
However, we live here and it's the
cliches thing to say that we're inthe Okanagan, what better place,
but it's absolutely true.
You know, in the world, what
better place, you know, there areequal places in my opinion to
(18:28):
invest, but here is, I don't findthat there's anything better in
terms of where the market's going.
My prediction is that we need to
putter away a little bit for a fewmonths or a year here in D.C.
We're finding there's a lot ofwait and see mentality.
Matt, you're probably dealing withthat daily.
Yes.
And obviously, well, both of you,
of course, Taylor and Will, right?Do I wait?
(18:50):
Do I wait?Yeah.
On that note, to buy real estate,get it.
If it's related to your primaryresidence or a vacation home or
something, then you might feel theneed to be a little more selective
but if it's for investment you buywhenever you can buy save up
enough money do not listen to thenoise if you have the down payment
(19:10):
and you qualify you buy so i thinkyeah we're not going to see the
big gains that we've we kind ofgot used to for the last three or
four years, obviously in the shortterm here, but that doesn't mean
that there's not some fantasticopportunities for the long-term.
Multifamily, of course, it's thereand it's going to be there for our
(19:31):
lifetimes.
And this affordability factor is
huge.
Industrials exploded.
So that's good.
They work hand in hand, jobs, you
know, they kind of cycle back andforth.
i think in the short term there'sa lot of you know meat left there
and that industrial industrialsdouble tripled you know in terms
of land in the last few yearsobviously you know we can't expect
(19:51):
to see that again for a while yeahbut man so many pockets places
like in vernon and you probablyhear me you know say the word ver
Vernon and talk about NorthOkanagan works.
That's where we're based and wherewe spend a lot of our time.
But the opportunity there's justin the Swan Lake corridor with the
new sewer to come.
Obviously, it's behind Shocker,
like any big project behind by afew years.
(20:11):
But that corridor, getting sewerand being our next big service
commercial industrial corridor,look for very solid upticks there.
Another good, and this is myopinion, downtown Vernon.
It's been sitting there a littledormant and we've had land value
rates, land rates sitting at 75,80, 75 to a hundred bucks,
depending on the size of the sitefor years.
Cologne has just been exploding.
Cologne is obviously our forecast
in Vernon, but it's probably oneof the things if I had a big
(20:32):
pocket full at the moment, I'd beprobably trying to buy as much
commercial land, ideally with someold building on it or what have
you that produces income, ofcourse, but to get my hands on as
much commercial downtown Vernonland as possible.
talking like 30th and 34th.
Oh, phew.
You have me stressed out whenyou're like, well, so downtown
Vernon.
It's going to be a good one.
(20:53):
That's funny.
That's where we mentioned that.
That's where we met.
Yeah, yeah, it is.
Quite a few years ago.
Yeah, it's funny to me.
I mean, maybe I'm just completelywrong.
I just thought appraisers weremore conservative and like
pessimistic but like what you saidthere which matt and i have said a
lot in the past too is if you cansave up and you can qualify buy
(21:14):
because you don't know whatgovernment regulations are going
to come out that are going torestrict your borrowing power
inflation is going to like erodeyour savings like there's just so
many factors if you can buy yeahand you can afford to hold long
term yeah You got to yeah, it is.
able to float the property though.
Yeah.
Pay for it.
But yeah, I agree.
(21:36):
If the numbers work, they're going
to work for you.
I think it's a good time to Yeah.
Pay buy.
My take is I'm an investor as much
as I'm an appraiser.
My and our, by that, I mean my
wife and then we actually arepartners on most of our staff with
(21:57):
my sister and her hobby.
So my brother-in-law, we make a
fantastic team.
I manage it all, but it's all
long-term.
And our mentality has always been
either buy because we have thepurchasing power or LOC or
something to dip into.
And then work your butt off to pay
that off and get the next one.
For me, you know, my wife, very
fortunate to interior health andwe'll have a nice, comfortable
(22:18):
pension.
But for me, nothing.
And our real estate is ourretirement and the cash flow that
it will produce once all the knockon wood mortgages are paid off.
And maybe some of them aren'tever, but there's certainly enough
cash flow at that time.
The time to buy is always now,
guys, in my opinion, on theinvestment side and just be in it
(22:39):
long term you mentioned kind ofthe pessimistic thing i mean yeah
it's again another unfortunatemisconception it's our fault as
appraisers we've done a bad job ofmarketing ourselves yeah sorry i'm
not stereotyping no not no this isit's a good point i came into the
profession and kind of was youknow back then it was you know
you're just the people in thebackground just kind of quietly do
your work and move along.
And, you know, don't be out there.
(23:01):
Don't have stickers and swag withnames on and advertise it.
And I get it.
Confidentiality is key.
So it's not like we're showing upto homes and their vehicles are
peppered with appraisal names.
But promoting the profession and
what we have to offer andpromoting, you know, reality and
optimism where it's warranted.
That misconception, I guess, that
appraisers just come in and we'reall just bank appraisers.
And how many times in my careerI'd be wealthy if they were each
worth a buck that I've heard, oh,you know, it's a bank appraisal.
(23:22):
That'll be low.
What do you mean low?
It is what it is.
I don't give a shit what it's for.
Like doing my job, the market'sthe market.
We're here to analyze it.
We're not here to make it up we're
not here to influence it we'rejust analysts of it and obviously
you know aside from thatespecially as investors we're
advocates and of it you know solately i know taylor and i have
both had appraisals on our dealscome in low so we have to scramble
(23:46):
to figure out the financing onthat if this happens a lot like
what point is it the buyer setsthe market you know like you look
at comparables a buyer is willingto pay that price why is it
pricing low i'll shut a bit oflight so one of mine just came in
low it was just a standard youknow one bedroom apartment the
other one was pre-constructionyeah so maybe there's a reason why
(24:08):
on that but yeah like you had itwas just a pre-built single family
like it was existing right i'veexisting right i've just been
hearing more and more about thisand i'm like it's almost like if
there's enough that are coming inlow at what point is it just right
that the prices are right rightwell well hey it's a very standard
thing or a common thing to havehappen once you know on the other
side of a cooling yeah you knowwe've had a cooling we've had a
(24:32):
transition obviously we don't needto beat the mortgage rate thing to
death, but so inevitably going tohappen.
However, probably the tough thingfor you two is you often don't get
to see the appraisals, understandpotentially why that is, obviously
is, you know, the comparables andmaybe the right ones were used.
Maybe they weren't.
We certainly hope they were.
Whether there was a adjustmentdownward for time and changes in
marketing conditions.
(24:53):
If it's a certain property type,
that's an apartment, sounds likethere should be lots of data and
relative number of comps around.
But if it's a property type where
there just hasn't been many salesof it recently, and we got to use
a sale from six or eight monthsago, and there's an adjustment
downwards there, whereas you,Matt, say to your buyers or your
sellers, well, here's the compboom and then so okay that's sold
for eight so ours should be eightcars very similar and doesn't take
(25:17):
into account our softening andwhat's happened in buyer sentiment
into it but that's always a reallytough one because often there just
isn't evidence yet to supportupward or downward as a listing
agent i get a low appraisal yeahthe buyer so they come to me and
say we need to lower your price orwalking away or whatever that
happens what do i do do i go tomortgage broker like taylor and
say listen the appraisal isn'tright like because my case i had i
think three other offers that wereall higher that just didn't come
(25:39):
together sure for whatever reasonbut they were like i could i guess
present those to the mortgagebroker and hope that they go to
bat for this or like i havenoticed too that it's been one
company that has been lowerappraising everything in my
experience anyway like can i tellthe lender that listen i don't
want that appraising company to dothe praise or you have any say on
this at all or is it just the bankthat this sure you do and to me if
that's going to happen you shouldbe able to see the report and or
(26:00):
just better understand thereasoning for that.
It shouldn't just be like, nope,came along, didn't get approved.
Like, well, let's educateeveryone.
everyone.
Also, I'm not entirely trusting
the buyer agent.
Well, because the appraisal report
is property of the lender.
Yeah.
So even though the client pays forit, and this is a tough one to
communicate, the client pays forit.
(26:20):
The appraisal goes to the lender.
Technically, we can't share that
with anyone.
It's the lenders.
Yeah.
So it's not like they can come
back to you, the listing agent,and say, hey, here's the report.
Yeah.
So course.
And we deal with that on thedaily.
Why is it Why is it like that?Like Taylor said, it really just
has to do with who owns thatreport.
It's such a funny kind of bit of aconundrum to be in because you
(26:43):
could have three different partiesinvolved.
One person that's ordered it, oneperson that's paying, and one
person whose name's at the top andis relying on it.
And only the name on the top, thatlender, gets the copy and gets to
own that copy.
They can choose to obviously give
it to folks if they want.
But we get that all the time.
Hey, I paid for it.
Why can't I get this?
(27:04):
it. Why can't I get this?Don't think most, you know,
lenders and conventionals sittingat the top really care.
For us, Taylor Atkinson phoned upand orders a report.
We're loyal to him.
That's his, at some point, it's
not necessarily fair for a buyeror an applicant to just get their
hands on that and just go shop itaround after Taylor's done hours
and hours and hours of work.
Yeah.
And I don't know either.
It is kind of a weird one, but
potentially it is, it gets sent tothe lender because the lender
(27:25):
knows that there's skin in thegame from the purchaser and
they're not going to then go tothe next lender and the next
lender and the next lender, right?You don't want to waste the
lender's time.
So if it gets sent to them, it's
like, all right, we are committingto fund this file.
Yes.
But if you just have a report and
you're like, I'm just going totake it from bank to bank and see
if I can manipulate somebody.
Yeah.
So I think once you get to thatstage, there's a commitment and
(27:47):
the next As a buyer's agent, sayI'm going to write an offer on a
property and the listing agentsays, just so you know, there's
three offers on this property.
As a buyer agent, I'm like, you're
just lying to me.
Don't believe you.
I can't expect that listing agentto send me the offers.
But if I really am curious, I cancall their brokerage.
I can figure out if there areother offers.
I can't figure out theinformation, but I can prove it.
I was in a situation where I justhad to take this person's word for
(28:11):
it.
The appraiser came in low because
they were asking us for money off.
And I just, it was frustrating
because I was like, what's therecourse here?
How do I explain this to my sellerthat the appraisal is low?
Even though we've had three otheroffers that are higher, it just
doesn't make any sense.
And I was like, well, why don't
you just get another appraisal?I'm like, the bank won't allow it.
There was no real recourse besidestake I can't as a broker, it
(28:31):
depends on the lender, but you cansee the appraisal before it's
sent.
So you could stop it and reorder
it somewhere else or appeal it.
Like most of the time, again, it's
arm's length.
Like they don't want it to be
biased.
It just goes directly to the
lender.
You don't see it until after.
So if that was the case, there'snot really much you can do it.
It does vary from lender tolender, whether they allow a
(28:53):
second opinion.
We do that all the time.
I'm sure there's been the oddsecond opinion of after hours in
the past, but you're right.
Often once a lender sees that and
goes, oh, that's it.
We do reliance letters all the
time to Taylor's point about themnot letting the reports bounce
around.
They can only be addressed and
relied upon, utilized by onelender at a time.
So we'll often get that, hey, canyou release this to another
lender?Yes, we can, if we get permission
from the first lender to releaseit.
But in your circumstance, Matt, Imean, if someone is going to come
(29:15):
along and say, hey, president,come in, we want money off in the
middle of a transaction, thatshould be better backed up, in my
opinion.
You should be able to see some
reasoning for I feel like weshould at least get some
information from somebody.
I can that like, because otherwise
we just started taking the wordfor You know what's funny with the
appraisal?It's like as a buyer, you're
buying something.
You're like, man, I hope the
appraisal comes in.
And if it's low, you're almost
upset.
You're like, you no, need to have
an appraisal.
Like in this, I'll come up with
(29:37):
the extra money or whatever.
It's like you should almost take
that.
What it is, is like the insurance
and be like, oh, this may not be agood purchase.
Like maybe I should walk away fromthis.
walk away from this.
It comes right back to our wish
that they were done sooner, youknow, because then you know how
the both of you, how the emotionalattachment is.
And that is a peak point.
We come in at a peak point.
And if we say anything other thanwhat they're thought, it can be an
emotional reaction.
(29:57):
However, if appraisals, you know,
were done earlier in the processor more upfront, everyone figures
out their stuff a little sooner.
That's a dreamland for me.
I know.
You guys live a tough market.
Hey, like if it doesn't reach towhat it should be, people are
upset.
It appraises for where it should
be.
And then the market comes down.
People are upset.
Like there's not really a lot of
win-wins unless.
best and most effective folks to
work with are the seasoned onesthat have been through that and
(30:17):
just keep emotions capped and iget it that's impossible for you
know primary residents homebuyerssellers i understand that i that's
why you're more on the commercialside as well right like it's a
little bit more mathematic lessemotion it's like hey oh it's it's
hey oh it's it's dramaticallydifferent and we do both our firm
does both personally spend most ofmy hours in the commercial world
and that means you know anythingfrom industrial ag or multi-family
or you know some new low-incomehousing project or what have you
(30:39):
but then the other side of my firmdoes the residential it is it's
dramatically different but wereally enjoy both because the
different paces balance each otherout well.
In my opinion, you have to have apulse on both sides to be
well-rounded.
Some folks only do residential and
they're kind of buried in that andsome only do commercial.
But I think there's a dramaticbenefit to considering a grader in
any marketplace.
And you guys are fantastic.
(31:00):
I've used you a few timespersonally and for clients.
Thank you.
There's a specific niche, like you
have to be approved by a certainamount of lenders.
But when I'm purchasing like avery unique property, maybe it has
a certain type of income it's onlease land or whatever.
Like there's only a few peoplethat can go and actually approach
it correctly.
So I think it is important for
buyers to know, like, you're notall the same.
You're not just going to tick theboxes.
Like you have to find the rightperson for the right property.
(31:21):
For sure.
Yeah.
And For sure.
Yeah.
And expertise and experience andcertain things.
And I think I might know, youknow, one of the ones you're
talking about and the incomeapproach becomes a very important
approach to the lender.
Really, you know, potentially the
only one they really care about.
They're just flipping right to
that page where it's okay.
What does this unbiased
professional think that thisproperty will produce in a year?
What are we talking for occupancyrates?
What are they seeing for expensesand produce a net income that's
(31:44):
not just a spreadsheet or a pieceof paper from a property manager
or what have Yeah.
And one other thing that you said
a little while back that resonatedwith me, I'm thinking like I still
have my tax hat on because we justhad Nicole Watson, my accountant
on.
Sure.
You said, you know, like you guyswill qualify, you'll buy
properties as your partnership.
You have, you'll take a loan,
you'll leverage, maybe you losesome money to begin with or
(32:07):
whatever for the CapEx.
And then you just work your butt
off and try and pay it off.
And, you know, it's always kind of
been the motto of real estateinvestors.
Like don't buy property thatdoesn't cashflow.
Like it's just this, you know,myth that basically you buy and
you're wealthy right after, but itonly resonated with me because
like we were talking about thecost of CPP and expenses for being
(32:27):
full-time.
Like people do not care about
working a full-time job and thenthrowing money away on tax.
But as a real estate investor,people are like, I cannot lose
money initially.
Like it has to cashflow.
It's kind of like, okay, would yourather be a full-time employee and
throw money away on CPP that youhope when you're 65 or 70, you
start making money off of it?Or would you like to kind of
(32:48):
control that asset now?And yeah, maybe like people are
paying 400 bucks a month in CPP.
You okay doing that for the next
five years on real estate to hopethat that's now your retirement
egg?Or do you want to just leave it in
the Canadian pension plan?Isn't it it it funny?
So the relative things, some ofthe justifications don't see your
bang on.
Like I have numerous examples.
I'm looking at a spreadsheet rightnow just in case something like
(33:09):
this, you know, came up.
The cashflow thing, of course,
it's important.
I get it.
Not everyone just has a fewthousand lying around for that
year to put into it.
But it's also my thought,
especially when rates arerelatively high now that you're
not ready to necessarily buy ituntil you have an extra $10,000 in
your account or somewhere whereyou can get that to beyond your
down payment to flow that.
Like, so what that doesn't cash
flow i'm looking at one right nowwhere net cash flow is minus 10
(33:32):
grand based on a bunch ofvariables i'm putting in like
annually yeah annually tenthousand dollars that you have
you'd have to make up to coverthat mortgage you know going into
principle fellas like you knowit's not gone yes you have to have
it you have to get it fromsomewhere it has to go into the
account understand that but that.
But you can also save up a little
(33:55):
longer, increase your downpayment.
I can literally put in a numberand it'll show, okay, that's the
down payment.
They need to have a zero cash flow
or at least $1 positive.
And people lose sight of that in
the greater picture.
Like, yes, you have to look at the
opportunity loss of that 10 000what you could have made on the
theory otherwise but in terms ofwhat real estate can produce long
term sorry it like crushes anylong-term other investment that
(34:16):
i've ever seen those when you gointo leverage you have to leverage
it guys in order to get this roithat is true and makes sense and
get it to be beyond what just acap rate is.
I think it is my daily life totalk about cap rates and
commercial rates, return,multifamily, all that kind of
thing.
And okay, they're 5%.
That's 5% is if you're just buyingthe thing outright and you're not
leveraging, you have to leverage.
(34:36):
If you leverage, we're just
talking about your return on yourinitial down payment and equity,
PTT amount, of amount of courseclosing costs they add in there
but you know if you're leveraging75 in other words you're throwing
25 down or 30 down ish it's kindof a nice magic number we're
talking 15 to 22 returns yeah sogo what you've kind of seen in
your portfolio over the last 10years or so with your but i your
but i have to scale that backbecause i don't believe that every
(35:00):
next 10 years sure yeah we'regoing to be the same growth that
we saw yeah but that's but that'sincluding like appreciation cash
flow principal pay down of courseyou have to include appreciation
north okinawa again appreciationover the last 36 has been 7.2% a
year.
Central, 7.4.
36 36 7.4 over the last 36 years.
That is amazing.
That's just appreciation.
That's averaged out.
Obviously, we had some recentyears here where we saw like 30s,
40%.
(35:20):
But, you know, Matt, you pull up
those stats, sit and run on amatrix, you know, whatever it's
called there now.
And we've got 1987 average home
value and clone of, I looked lastnight, I think it was like 81,000.
Can we expect that kind ofexponential growth?
No, but I mean, even if we tonethat down, so saying we prove in
the last 36 that it's been 7.4 incentral Okanagan, even if we use
(35:42):
4%, I got 4% pinched into my thinghere.
You could use three.
You have a 4% of a $950,000
purchase.
We're just talking about kind of
the most basic residentialinvestment.
It's that single family with thegood suite.
That's the beauty.
It's the most clean.
So we're talking about 5,000 bucksin rent a month.
And we've seen operating expenseratios in the 25% less on some of
our new stuff.
But you have to think about
appliances.
You got to think about roof
(36:03):
long-term.
So you use about a 30% expense
ratio.
Once all the numbers come out and
you allow 4% appreciation, evenat, you tell me, Taylor, I've
punched in here at a five and aquarter mortgage rate.
Am I low?I mean, that's high for what we've
seen historically.
Of course, but I mean, for now.
Yeah, that's comfortable, yeah.
So the point is, even now, I hear
all these things and I listen totidbits of folks on your show you
(36:25):
it's tough and and, I know, get Ilisten to tidbits cashflow.
of folks Yep, on your show and nowit's tough and cash flow yep I get
it you're not putting money inyour bank right now you're just
not however even considering thatnegative cash flow I'm showing a
16.5% return on a purchase that Iknow exists out there that you can
make $5,000 a month on and at afive and a quarter mortgage rate
(36:47):
with 25% down yeah That So proofsthere.
That 7% ish over the last 36 yearsactually aligns really well.
We had the BC chief economist onfor our BCREA.
I think it was 76 or 79% was theappreciation over the next 10
years.
Like, so that aligns really well
with the last 36 years.
It's kind of like, we're just
continuing on.
Until 2030.
Until 2030.
Is it?
just continuing on.
(37:08):
So it's just continuing on that
trend.
It's funny, the cashflow
conversation.
I had this with a client.
They're talking about keeping as arental and buying a primary
residence or selling and how theyshould structure it.
And we're talking about capitalgains, whatever.
And I was like, so I did myanalysis on my own spreadsheet
that I share with clients.
I'm like, you know, if you were to
keep this property and then buyanother one, this would lose you
(37:28):
about 500 bucks a month.
So are you comfortable doing that?
And they were like, yeah,absolutely.
You know, like it's a write off.
It's like, well, not really.
You can't write off the principlethat you're paying into that.
So it's like actually like from atax point of view, like it is
(37:50):
profitable.
And I'm not like trying to
encourage people to go buysomething that cash flows
negatively.
But from CRA, that property is
making money because you're payingdown your principal, which is just
going into your bank account.
just So it's like That's exactly
it.
The CRA, the annual statements are
different than the reality becauseyou can't throw principal in
there.
And you mentioned like $500 a
month.
It's not a loss.'s a savings
you're just parking it into realproperty yeah a savings you're
(38:13):
except us to get like two times areturn that's what i was talking
about with cpp it's like peopleare okay to spend x amount of
dollars well i mean you have tobut you can't do it cash flow wise
for a property which technicallyby taxes it's making money anyways
yeah that could talk yeah couldtalk yeah finally comment on you
know cash flows it just makes itharder to buy more right because
(38:37):
like kind of for sure you're itterms of yeah qualifying and just
being able to you can't take fivehundred dollar loss on this one
and buy another one for anotherfive hundred dollar loss and buy
another one for another five likethere's a limit for sure
understood your term in the shortterm if i punch in what they were
a couple years ago uh to get youknow.7% or 2.5% mortgage rates,
then it's going to literally flipthe other way where it's $10,000.
(38:59):
But it's not like those inputs tomake the mortgage payments are
lost.
Exactly.
I mean, yes, in a way to a lenderto qualify, that's like their
loss.
It's going out.
I get it.
But it all comes back to just
working your butt off betweenpurchases to build up for that
next one.
I'm not a big believer myself, and
this is big debate and I get it.
I obviously understand that you
get further and farther.
I'm not a big believer in
leveraging properties.
Get off the show.
(39:19):
Get out of here.
We've done that a couple of times
and it works out great, but for meand what's worked for us, and I
think a lot of folks is show.
Get out of here.
see the other side of that wherefolks just get too buried in it
and aren't just more like afocused on okay now i gotta get
back to work in my other life andmy other source of income here
(39:42):
just to pound that out to save upfor that next down payment for the
next one yeah so that's individualit's whatever stress level you
know folks can tolerate butthere's a point where it can go
beyond and you can't screw up thequality of your life or cause
yourself additional stress andanxiety just for that either so
finding that blend of what worksfor you what you can tolerate
obviously you go through life ican tolerate a heck of a lot more
(40:05):
now and thought of risk now than icould earlier and that's just
natural but you got to find whatworks for you as long as you're on
the push side of things and doingyour best to never look back and
have that grandfather story oflike shut about that whole
hillside i you know yeah you justhave to know that when you look
back you're like nope i dideverything i could you know so
that's my thought on how i want tolook yeah i agree well to wrap
(40:26):
this up we'll fire a few morequestions at you please if you
could buy one property in theOkanagan in the next 12 would it
be?Downtown Vernon, BC, commercial
real estate that I can somedayeither sell or put on multi-story,
primarily residential.
best thing you've ever spent any
money on?Hands down, anything that draws or
keeps my family in one space for acertain amount of time.
(40:47):
That can be many things.
It can be a boat.
It can be another toy like afour-seater side-by-side that gets
you into the mountains and getsyou some mountain therapy or a
trip or a backyard above-groundpool.
I don't care.
It's something that forces my
family to stay in a confined areaand have a great reason to hang
out.
out.
That is awesome.
So do your kids play sports?
is awesome.
So do your kids play sports?
They do.
Yeah.
So my wife and I are talking aboutthis a lot right now.
(41:09):
This is kind of a topic of ourmind.
Sure.
What do we get our 10-month-old
son to do?Like, do we go skiing so that we
can do it together?Do we get a boat so we can do it
together?Do we play hockey where we all
just watch him?Like, what do you think?
Sounds like you think do Sure.
son together i like together i
mean if you're a big hockey guynow's probably the time to get
that stick in his hands but umyeah it's just breaking stuff in
(41:32):
your house just get it started buti'm a proponent both because they
have to also be away from you andsocialize with their so they're
not a yeah that soccer team thingexactly is super important.
Like to be involved if I can insome coach way or bring in the
oranges or whatever, but beingtogether and doing it together.
I firmly believe in, like Imentioned, the quad up into the
(41:52):
mountains or whatever,experiencing that and getting away
from the hustle and bustle thatwe've created down here.
You just can't put a value on thatand that time i mean we sent we
talk your value value value valuenothing even touches time time is
the most important thing we gotwhen you have kids like yeah with
the kids yeah how you give backwhat's a charity you like well you
call it cnc and that's communityand cancer the community thing my
opinion to any good professionaland or firm or a group of folks is
(42:12):
giving back to the community, youknow, in which they operate or
practice and which has given themso much.
So I spent many years as aRotarian that really benefited all
concerned.
And it's one of their sayings,
myself and family included, ranout of time to do it effectively.
So step back for a while, butgiving to any of their causes that
are local.
We raised a lot of money with
different auctions over the years,physically directly handed it to
(42:33):
some of the very goodnot-for-profits that we have
locally.
I think that international is very
important and a certain percentageof everything that we give that
needs to be thought about.
But community first is big for me.
Cancer is the next one.
We all have connections and
stories with that one.
Brain tumor cancer, big one for
us.
Our firm has given to that.
In the past, it lost a dear uncleto a glioblastoma.
And I think that's a, for me, onethat needs to really be focused on
(42:56):
all of them.
It starts with us giving what and
when we can to some decade orcentury being able to say, that
one's gone.
We can cross that one we community
cancer is big for us.
We certainly set aside a portion
each year of our revenue to Nice.
Awesome.
One last question is how can we,our audience or our listener, how
(43:17):
you?Give us a buzz.
I am the first to always say andspeak to good realtors all the
time, brokers, marketparticipants.
Just give us a call.
Yeah, I may not have hours to
chat, but I always have five andsee what we're all up to and how
we can assist.
But look us up, DS Appraisers.
And we practice throughout theOkanagan, Shuswap, Kamloops area.
(43:38):
And always happy to chat.
Remaining optimistic and wanting
to learn about investment is stepone.
Yeah.
Love it.
Awesome.
Well, thank you so much for your
time.
Thank you so much.
Awesome.
Thank you, fellas.
Pleasure.
for listening to the Kelowna Real
Estate Podcast.
Be sure to reach out and let us
know how else we can add value toyour Kelowna real estate journey.
Be sure to reach out and let usknow how else we can add value to
your Kelowna real estate journey.
Please show some support by
hitting the like, share, andsubscribe button.
(43:59):
This is sponsored by Matt GlennReal Estate and Taylor Adventure
Mortgages.
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