Jas Takhar grew up in Rexdale, Toronto, where he sold everything from newspapers to shoes to cars. The next step in the evolution of his sales career, he realized, was commercial real estate. He became a real estate broker 17 years ago, and still maintains that role today while making his own investments. In this episode, Jas details his long-term hold investing strategy, his philosophy when it comes to timing the market, and what’s next for investors in the landlocked city of Toronto.
At age 40, Jas says he prefers to focus on equity in his investments. Because he works as a broker, he doesn’t need monthly cash flow — he’s looking for long-term wealth and stable growth. He targets high-growth locations where he knows infrastructure is going to be either redeveloped or created.
Jas thinks of his tenants as customers and works hard to keep them happy to prevent turnover. “If tenants are paying me on time and not trashing my property, I don’t mind keeping them on and only being able to increase the rent by the maximum allowable amount,” Jas says.
“I think people try to time the market all the time, and I’m more about just putting the time into the market,” Jas says. He believes history is the best teacher, and based on the past, he knows values are going to continue to increase, then inevitably face some dips.
At the time of recording in April 2022, interest rates had been increased to combat inflation, which Jas predicts will cause dips in marketplace values. “But that’s normal,” he says. “Right now might not be the best time, per se, to refinance and pull out the equity … but as long as you wait it out, this is all going to start going back up again.”
Jas says that Toronto is quickly becoming a renter’s city like Manhattan. Population growth is skyrocketing, with 175,000 new residents projected to arrive annually. Because the area is landlocked, developers are being forced to go vertical. He predicts more growth and appreciation in the city as demand increases supply.
Once the city can no longer continue to build vertically, Jas predicts that the population growth will spread to nearby cities in southern Ontario, where transit to Toronto is still accessible. For investors seeking nearby B- areas with the potential for development, Jas is looking toward Niagara Falls.
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TRANSCRIPT
Slocomb Reed: Best Ever listeners, welcome to The Best Real Estate Investing Advice Ever Show. I'm Slocomb Reed and I'm here with Jas Takhar. Jas is joining us from Toronto, Canada. He's the co-founder of REC Canada and From The Ground Up Media. GP of 11 properties, including condos, apartments, duplexes, and a land deal. Jas, can you tell us a little bit more about your background and what you're currently focused on?
Jas Takhar: I appreciate that, Slocomb, for having me on first and foremost.
Slocomb Reed: Totally.
Jas Takhar: In terms of a background - born and raised here in Toronto on the Northern part, in an area called Rexdale. Saw my parents pinch pennies, my father being a taxi driver his whole life and my mother being a factory worker, three sons... Not that we didn't have anything, but we also didn't have everything right. I saw my mother rent out the basement apartment, and that really helped with the expenses of having three sons. While I was growing up, I noticed a couple of people shoveling the snow of multiple homes on my street, and just chit-chatting with them and finding out what they do and why they were doing the lawn maintenance on more than a couple of homes, and I found out that they invested in real estate. So as a teenager, I always thought that was kind of neat, that you get to buy homes and rent them out.
Being a sales guy selling everything from newspapers, shoes, banking, cars, the next evolution in my sales career was really the biggest ticket item that the average person is going to make, which is a home. I thought why not mix and match and have a hybrid of two passions that I wanted to pursue, which is the highest ticket item in sales, as well as in creating wealth and having a vehicle where I can create wealth, and that being real estate. That's how my journey all began in real estate about 17-20 years ago.
Slocomb Reed: You got into real estate through sales?
Jas Takhar: Yeah, that's how I started, as a real estate broker. I'm still a real estate broker here in Toronto. I have a team of about 54 agents. We help buyer-sellers, but my role is helping my investors. I've been cultivating a list of investors of a little over 11,000 for the last 17 years, and helping those investors create wealth in new-build condo investing, duplexes, triplexes, multiplexes, anything up to about 35 doors, like an apartment building. That kind of goes out of our scope, and then we bring in some other experts right across the country.
Slocomb Reed: Gotcha. Are you now, 17-18 years later, primarily a broker or an investor yourself?
Jas Takhar: I'm going to say, first and foremost, I'm an investor, man. I'm always looking for something that I can invest my money in for the long term. I'm 40 years old, so I know the game that I like to play within real estate is the equity play. Let me buy something, rent it out, I'm not looking for something where I need a couple of thousand bucks a month cash flow, because I'm a broker, I have a day job, and that keeps my lights on and pays the bills. I'm looking for that long-term wealth. Not to say that buying and renovating homes and flipping them is not lucrative. It's just that that's not my expertise. In fact, if you put a hammer in my hands, I'm going to have a problem with it. I can't really do the work myself.
Slocomb Reed: Me too.
Jas Takhar: Yeah, you get it, man. You get it. I need something that I can just buy, keep it, and rent it out. I know there are some issues that come up with tenants, but being in the customer service business - it's an easy transition for me to help tenants. I know that I've got to think of my tenants as customers, meaning let me treat them right, let me make sure that I can keep my customers for as long as possible, and in hopes of them staying there as long as possible or maybe introducing me to someone else, so my turnover rate is not that high, even though in my province it does make sense to have a turnover because then you can increase the rents; for me, I just like less headaches. If tenants are paying me on time and not trashing my property, I don't mind keeping them and only being able to increase the rent by the maximum allowable amount.
Slocomb Reed: I totally get where you're coming from. I've been there myself as well with some of my properties. I'm not technically a broker, but I am a residential real estate sales agent and I do some commercial but through a residential brokerage. Very familiar there. And I totally get where you're coming from with buying for the long-term hold, buying for long-term stable growth, and the decision to get and keep a quality tenant by treating them right and not forcing rent to the top dollar every time. I totally get that.
Jas Takhar: Yeah. I was going to say... Not to cut you off, sorry. I think people try to time the market all the time, and I'm more about just putting the time into the market because I don't need to be Nostradamus. I can look back and see that history being really our only teacher. Values are going to continue to go up, we're going to go through some dips. At the time of this recording right now, rates are starting to increase as they need to because inflation right across North America is crazy. The amount of money that was printed in both parts of North America, we've never seen this before. To halt some of that inflation, you've got to increase the rates. There's going to be some dips in the marketplace in terms of values, but that's normal, that's actually okay. If you don't sell, you're not going to actually have to feel that dip.
Right now, might not be the best time per se to refinance and pull out the equity as compared to two months ago or three months ago. Because the values were a lot higher, you were able to refinance for a higher amount. But as long as you wait, just wait it out, this is all going to start going back up again.
Slocomb Reed: You and I, Jas, we have very similar career paths and investing strategies. I have not been in it as long as you have, but I know where you're coming from.
Jas Takhar: Some might even think that we look alike too, Slocomb. Some might even say we look alike, because sometimes I keep the beard as well.
Slocomb Reed: I think anyone who is watching this... No, I'm going to leave that alone, I'm not going to make any more jokes.
Jas Takhar: I'm your Indian brother, hey. [laughs]
Slocomb Reed: I'll take it, for sure. Brothers in a lot of ways, and especially in real estate investing from what it sounds like. So let me make some assumptions about how you choose the deals that you invest in, and then correct me where I'm wrong. It has less to do for you with the size of the deal, it's not about the door count or the value as much as it is the location, and the stability and the opportunity for growth. You have a preference for focusing on high-growth locations, class A locations for what you're buying, because you're not as concerned with the immediate cash flow of the moment, as you are with the possibility for growth. You're investing in what it's going to be 10, 20, 30 years from now as opposed to what it is today. Correct?
Jas Takhar: Bang on, other than the only thing that I would add. When you mentioned the class A location, which I do look for and I'm very comfortable investing into class A, I also look for maybe a B- location that I know is going to transition into an A location based on, for me in my province and in my country, where the three levels of government are going to start pumping in money. I generally know that's where the infrastructure is going to be either redeveloped or created, and where the big money flows. I like to invest my money there as well. But everything else - you read it like a book, man.
Slocomb Reed: Totally. I do the same thing. When you're in it for the long-term hold and when you look at what's happening in metro areas like Toronto... I'm in Cincinnati, Ohio. When you look at what's happening in metros like ours, that are frankly of similar ages, I believe, you're seeing a re-urbanization of white-collar professionals, which means that neighborhoods are shifting and redeveloping; you can use the "g" word, gentrifying if you want... Which leads for real estate professionals in the space, the people who are doing this day in and day out who are seeing all the transactions and handling these transactions - we know which B, B- locations are in the path of progress. That's a great point that you make. Thinking more as an investor, Jas, what are you doing to find deals right now?
Jas Takhar: Being a broker for 17 years, I'm very blessed to be in contact with some of the biggest developers in our city. We have, right now, half of the world's cranes are actually in the Greater Toronto area, which is, call it a 50-mile radius. We're actually number two in the world with the amount of cranes that are in the sky. That's how much development is happening, and it's all based on immigration numbers. Immigration, like outside of our country, coming into our city, but also the net migration that's happening within our country. We're not as big as the states, we've got 33 million people right now in our country, but every single year, we're going to have a little over 350,000 people coming into the country, half of which come to our city. That's the demand side. We can't, unfortunately, keep up with the demand, because we're on this island.
I wanted to give your viewers and listeners a sense of Toronto... We're on a little island, a real estate island, because in the South of us we have a lake, we can't build there. In the northern part, we have restricted land. The government came up with legislation, 17 years ago to be exact, that doesn't allow developers to build on that land. Wherever there is any land, like empty parking lots, what developers are doing is building up.
Slocomb Reed: Vertical. Goung vertical, yeah.
Jas Takhar: They're going vertical, exactly. Where I've been really lucky is having those connections with the developers so they'll come to me first and my team to let us know and give us first access. The reason the word first access is so important is that if there's a 300-unit building being built within the first, say, 10 days of a project being launched, the builder is going to, out of those 300 units, release about 50 units. They're going to hand me about 10 to 15 of those. The first 10 to 15 are the best pricing out of the 300. Because every time the builder allocates units in batches of, say, 50 or 75, they have a massive price increase anywhere from $20,000 to $25,000 every single time that they're allocating units. That's probably the number one way.
Number two is when I mentioned that I have a little over 11,000 investors list that I was cultivating. Those investors are finding deals by knocking on doors and maybe doing wholesaling, and they're coming up to me as well, saying "Hey Jas, I just came across a 15-unit building. It's too big for me. Do you want to maybe JV with me, or do you know some other investors that might want to actually JV where we can put a deal together?" Number three is that I also have the ability to raise capital now, because of my client list. So those are really the three ways that I'm finding deals.
I also want people to know, for somebody who's listening, and maybe they're in an area where there are no deals to find. For somebody in the car, I'm doing air quotes because there are always deals to find. Sometimes you need to create the deals, and you do that by knocking on doors. You knock on doors and send flyers, make phone calls, and ask landlords that might have a 15-unit building if they're thinking of selling, especially if they've owned the building for 20-40 years, they might want to get out of the market and cash out. That's an opportunity for you as well.
Break: [00:13:01.11] - [00:14:52.20]
Slocomb Reed: Jas, we're talking about Toronto being landlocked and having this explosive growth of 350,000 people a year. Investors are going vertical, because that's how you can increase the unit count when you're landlocked. There will eventually come a point, I would imagine, when Toronto just can't go vertical anymore, and all of the land is developed. Where is next? Where does all of that population growth go after Toronto?
Jas Takhar: Well, I think it's in other parts of our province, specifically Southern Ontario, because most people are going to need to find ways to get into Toronto... Toronto being really the financial heartbeat of the country. This is not because I'm biased, which I am, but these are just true facts, where we have all of our major banks headquarters in the downtown core. Some of the country's best universities and colleges are in the downtown core. Some of the best hospitals in the country are in the downtown core; we have our own little... I was about to say little Silicon Valley. But actually, the job growth in downtown Toronto for tech jobs is actually outpacing Silicon Valley right now. All of that is happening in the downtown core of Toronto, so that's where all the jobs are.
To your point, it's going to become, and some will say it's already become, a renter city very similar to Manhattan, where the average person is not buying a property anymore, especially somebody who's just coming into the city; they're renting. What you have to do if you wanted to own - you have to drive till you qualify. You start to move a little bit further out of the downtown core into other parts of our province. Those are areas known as Hamilton, Ontario, London, Ontario, and Chatham, Ontario. They're just smaller little areas right outside downtown Toronto and Toronto in itself; that 50-mile radius where you can come in by transit. I think we need to do a much better job... For the world-class city we are, I think we're probably one of the worst cities when it comes to transit. Our subway system, our underground subway system is, by far, out of the major cities in North America, the worst. I would say it's probably worse than most cities in the world. They're just starting to put in the infrastructure, but that's going to take another 15-20 years.
Me doing this for 17 years, Slocomb, I've always told my clients and anybody else who would listen, I yelled it from rooftops that you're going to need to drive until you qualify. That's just the norm in major metropolitan cities.
Slocomb Reed: Drive until you qualify. So if I'm looking for a B- area in your metro that is going to... Let's call it gentrify, or maybe not even gentrify, but just develop into an A area. I'm driving out of downtown Toronto...
Jas Takhar: I would say about an hour and a half away; like, the actual drive is going to be about an hour and a half away. Right to the border of Buffalo, actually, into Niagara Falls.
Slocomb Reed: Is that where you're investing? Is that where you're buying?
Jas Takhar: Well, I'm starting to look there now, because now you can find - and these are Canadian dollars - you're looking at probably finding a duplex just on the Canadian border side of Niagara Falls. You're finding a duplex or a unit upstairs, a unit downstairs, Canadian dollars, probably a little over $575,000 to $600,000. American dollars as of right now - what are we at? End of April 2022, at the time of this recording, so you're probably at about, I'm going to say 475 grand, 450 grand.
Slocomb Reed: Let's keep it in Canadian, because we're looking at property value by comparison to rent rates anyways, and not by comparison to the United States. So for what you have to pay to buy a building closer to downtown or in Niagara Falls, how do the purchase prices change in proportion to the rent rates?
Jas Takhar: Niagara Falls, I said call it that $600,000 price point for a duplex - in downtown Toronto, it's double, all day long.
Slocomb Reed: 1.2. What about the rents? Are the rents double?
Jas Takhar: The rents are not double. No, the rents are not going to be double. You're probably looking at about, I'm going to say 1.5 times more in Toronto. You're not going to double exactly.
Slocomb Reed: So you're going to get better cash flow in Niagara Falls. Although I will say, if you're buying a duplex for 600, you're in a fairly white-collar area anyways...
Jas Takhar: Niagara Falls are probably more blue-collar than you are white-collar. In Toronto, you're definitely white-collar. And to your point, you're going to for sure get better cash flow in Niagara Falls, you're just not going to get that passive appreciation as high as you are in Toronto.
Slocomb Reed: So you're seeing that in Toronto you're still going to have more growth, you're going to have more appreciation, and the rent growth I would imagine has to be higher closer to downtown Toronto anyways, because the supply is so capped. Demand is increasing supply, the supply is increasing for now, while developers can go vertical for as long as that lasts... But soon supply will be capped and demand will not.
Jas Takhar: This is no shot at anybody in Niagara Falls or anything by any means. I have amazing clients there. But the type of tenant, the household income of somebody in Niagara Falls is going to be lower than somebody in Toronto. Now, what you're also banking on is the fact that there are a lot of people who still though work in Toronto and they're going to live in Niagara Falls. Not necessarily because of the hour and a half drive is not normal - or the average drive is probably closer to 45 minutes within that 50-mile radius, but now in Niagara Falls, you're further; you're probably now 75 miles out. However, the transit is going [unintelligible 00:20:29.04] We have what's called a gold transit line that's going to be heading out there in the next four years. That's why that B- location I think will start to transition for sure to an A-. Not sure if it's going to go to A location - I left the crystal ball at home today - but I can see it definitely going to an A-, because people are just going to have to go out there now.
Slocomb Reed: Yeah, it's not going to become as hot as downtown Toronto, but it will be hotter than it is now in the future. It's time to transition to the last segment of our episode, Jas. Are you ready for the Best Ever lightning round?
Jas Takhar: I love it.
Slocomb Reed: What is the Best Ever book you've recently read?
Jas Takhar: The 7 Habits of Highly Effective People by the late great Dr. Stephen Covey.
Slocomb Reed: Awesome. What is your Best Ever way to give back?
Jas Takhar: Right now, I'm going to say I'm giving back to the industry that gave to me so much, which is the sales industry. I'm an uneducated person from a formal education like a university or a college. I can't spell half the words I say, but sales gave me a way to connect with people, make a very good living, and now I'm able to give back to other salespeople, to teach them how I did it, which is not being sleazy... Not to say that all salespeople are sleazy, I don't believe that at all, but there are people that might be construed as sleazy, and I've come across some of them. But now I get to give back to this industry that gave me so much.
Slocomb Reed: In your investing, Jas, what is the biggest mistake you've made and the Best Ever lesson you've learned from it?
Jas Takhar: Not tying up properties. I think I delayed and got into paralysis by analysis, and just never tied up the property. Then by the time I made the decision that I should move forward, it was snatched up by somebody else who was a lot more savvy, or just had a bigger stomach at that time to take on the risk. At least I'm tying it up, so now I live by the mantra which is "Ready, fire, aim." Pull that trigger, and then you can readjust along the way. In real estate you do that by tying up a property. Make it conditional on financing on a home inspection, on Slocomb's brother's sister's husband looking at the place. You can make a conditional on anything you want, as long as the seller of the property agrees. I didn't do that at the start, and now some of those properties that I could have tied up for $200,000, they're worth $800,000-$900,000, if not $1 million from when I saw them. That just came down to not taking that leap of faith and tying up property.
Slocomb Reed: Powerful. Jas, what is your Best Ever advice?
Jas Takhar: I'm going to say stop comparing yourself to others. In real estate, especially with social media, it's quite easy to take a picture of a building and say that you own that building. I do like what's happening with the crypto world, because we're going to really be able to see if people own things or not. But as you see someone may be on social media, or even your cousin that you hear that just bought a property that they're renting out and building wealth, you start to compare yourself, and I just think that's poison.
You can only control what's in your control. And every single second that you spend comparing yourself to what someone has more of than you or less of than you takes away the actual execution time of you getting what you are supposed to get, or you focusing on you building a team, or you trying to raise capital, or you knocking on a door, because you're sitting back and worried about the fact that Jas has 52 properties and you haven't even gotten started yet. But he puts his pants on one leg at a time, he breathes the same air as you; you can do it yourself as well. But most people are just comparing themselves to others. So by far, the best advice I have for someone is to stop comparing yourself to others and just focus on what you can control, and that's your daily habits.
Slocomb Reed: Jas, where can people get in touch with you?
Jas Takhar: I'm very easy to find, man. I do 10 to 15 pieces of content a day on all the platforms. I think the best thing to do is just Google my first name and last name. Slocomb, I hope that I brought some value to the people that are listening and watching. You've definitely given me a platform and I appreciate that. But if someone wanted to get to know a little bit more about me, the best thing to do is just Google my name and you can figure out if you want to watch a video, you want to hear a podcast... But if you don't like to see me or hear my voice, you can see a bunch of images and blogs I've done. There are lots of ways to consume me.
Slocomb Reed: There are links to some of your social media in the show notes as well. Jas, thank you. Best Ever listeners, thank you as well. If you've gained value from this conversation with Jas, please do subscribe to our show. Leave us a five-star review and share this with a friend who you know we can add value to through this episode. Thank you and have a Best Ever day.
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