Scott Dillingham: 0:22

Welcome to the Wisdom Lifestyle Money Show. I'm your host, Scott Dillingham. And today, I have an awesome guest, Derek Wurmspecker. He is a mortgage agent who is actually on our team. But what's so unique and really cool about him that I wanted to bring forward was that he's also he lives in Canada, but he also invests in the States, which I think is super important because a lot of our investor clients are wanting to do this. It's been an awesome topic that we've been talking about time and time again, but Derek's done it. So welcome, Derek.

Derek Wormsbecker: 0:53

Yeah. Thanks for having me. Long time no see.

Scott Dillingham: 0:56

Yeah. You're welcome. Absolutely. So, Derek, how did this all start? Like, what made you decide, you know, this is where I wanna be, and then you invested there?

Derek Wormsbecker: 1:09

Going back to the beginning when my wife and I bought our first house and then our family was growing, we needed to buy the next house. You know just had an idea what if what if we kept it kept our townhouse and we rented it out yeah so that's that's kinda how it all started we we kept our original townhouse Funny story They we're selling our house and then the house across the street was for sale and then the townhouse down the street was for sale So I thought why don't we use their foot traffic and list it privately so back in the day, if if you remember Property Guys, we listed it with Property Guys. And and he told me, like, he then they they would help you with tips on how to deal with realtors. Right? Because realtors want their commission and property guys doesn't typically pay. So he said if they if they lowball your your with an offer, just just tell them every dollar off the the sale price is coming out of your commission. So anyway, that was a good experience like talking to realtors and trying to get bullied around So anyway, we that was it that was tough, right? Trying to deal with deal realtors So that's when we were just like, okay. What if what if we just keep it and rent it? So it just that was the start of it. And 2, 2, 3 years later, we got the next one. Yeah. It it all went from there.

Scott Dillingham: 2:41

That's awesome. But why the states, though? Right? So, like, you're doing this in Canada and you're growing, but what attracted you to change countries?

Derek Wormsbecker: 2:51

Yeah. Last last year? Yeah. Last year, we had a tenant give us notice that they were leaving. So we're like, okay. We can we can increase the rent a little bit, cover our costs because we are in variable at that time. So we're we're eating it a little bit. So it's like, okay. Can we increase the cost? Okay. Sure. What if we sell it? What would that look like? And then my wife and I agreed. Yeah. You know what? Let let's sell it. Pay off some debt. And then and then we'll see what happens next. So we sold it. It sold for over asking. It was a great good sale. Everything worked out fine. But then I was like, okay. What am I doing next? And I've done private lending a little bit. And I was like, okay. Maybe I'll go a little more aggressive into private lending. And then I've been following Erwin for a while, and that's when he started promoting share. So I joined one of share's workshops, and I was like, wow. This is this is perfect. This is perfect timing. These guys will walk you through the process and literally hold your hand and help you through every step. And it was, yeah, it was just perfect timing. Met them at the right time, and that's and I just had a meeting with Andrew, and it all sounded good. And I was like, okay. Let let's do it. Let's pull the trigger.

Scott Dillingham: 4:16

That's awesome. And, what state did you purchase in?

Derek Wormsbecker: 4:20

We were originally looking in Atlanta, Georgia and around that area. Some of the numbers weren't looking as good I was as I was hoping. And because it was my first deal with Share, like, there's a bit of a feeling out process with them too. Right? So Yep. I had a general idea of what Atlanta, Georgia was like, but, obviously, their team and and Dimitri has a wealth of knowledge on, you know, where is best to invest. So we looked at and we put on we put some offers. We didn't get them. And then all of a sudden, Dimitri sent me this listing in Arkansas, and it was it was brand new construction house and the price was amazing. The price it it the house was a 176,000 US for a brand new construction house. Wow. He sent me that, and I was like, well, I don't know anything about Arkansas. And he he sent me a little little bit about it. I did my own little, you know, Google research as much as you can. But, yeah, I just I just put my faith and trust and share in Dimitri and, yeah, we we went ahead with that purchase in Arkansas.

Scott Dillingham: 5:34

That's awesome. No. That's so cool. And where where can you really find a new construction house that cheap? Like, in Canada, I don't even know if that's even possible, to be honest. I I know you can buy houses that cheap in certain markets, but I don't think new construction.

Derek Wormsbecker: 5:50

No. And, yeah, the the the builder even gave us a a 1 year warranty on the house as well. So it's it's really good.

Scott Dillingham: 5:58

That's incredible. So so now you've been investing in the states for some time. Right? Because you closed on the house and you're collecting rent and stuff. So how's it going? Was there any hiccups or challenges or things that you didn't know that you came across that you got past? Or

Derek Wormsbecker: 6:15

That's the thing. Right? Like, I have no idea. Like, when I was starting, I have no idea what I'm doing. And and here comes share, and they're just like, here, give me your hand and I'll take you along. And that's literally what happened, you know. Everything from entity creation to my bank account to, you know, submitting the offers and booking the home inspection, you know, they they took care of everything. I I it was, you know, to do that amount of research on my own, you know, to research the state and then, okay, once I find the state, okay, now I need to find a realtor I can trust and a property manager I can trust and then, okay, who's gonna do the the home inspection? Are they are they at arms length? You know, can I trust this person? You know, how much time would that take me, you know, to really feel comfortable? And, you know, I I feel like I'm promoting share here, but, like, they they are I I I don't know how long it would have taken me to do it without share. Yeah. Like, it was it was a good experience.

Scott Dillingham: 7:24

That's awesome. So then so as an investor and a mortgage agent right now in in in both countries for well, in the states, obviously, and investment properties focused. But would you okay. Let's oh, let's say you're buying your next property. Where would you wanna buy it? In US or Canada?

Derek Wormsbecker: 7:44

The answer is obvious for me. I'm definitely buying in the US a 100%. Like, my my other rental, the tenants let me know they're they're moving out this year. And, you know, I've already made up my mind. We're we're selling, and we're gonna redeploy that capital into the US. We're gonna buy another one. It's it's gonna happen this year and and probably refinance Arkansas as well this year. So, you know, we're gonna be we're gonna be building a portfolio in the US a 100%.

Scott Dillingham: 8:15

That's awesome. No. That's so cool. And and, I mean, for those listening that that love Canada, you know, I do wanna make it clear. There's tons of of different markets, and there's still so much business that can be done in Canada. I don't wanna get, you know, political on here, but we we have new potential candidates that are gonna run the country that are saying that they're potentially gonna get rid of the capital gains tax and things like that that was introduced. And, you know, I think that will make Canada more competitive and and right? So we have to see with the change of leadership how that really opens up the doors for investors because there's absolutely still opportunities here. But I just think that for Canadian to know that there's more options. Right? Yes. Canada is an option, and we're not saying get rid of Canada, but I think to make it clear that US does bring some added benefits. And I'd like to talk with you, Derek, about some of those benefits. I know we talk, you know, internally on the team and and we all know these things. But for somebody listening right now that's on the fence and right there hearing the excitement about the US, but what are some of the main advantages that you found from investing in the states beyond, like, the price? Because obviously that's important and and that's massive what you just discussed. But what are some of the other benefits, that you see or that you found compared to investing in Ontario, let's let's say?

Derek Wormsbecker: 9:38

Yeah. The first and obvious one is here in Ontario, we have the LTV, and you see a lot of stories about tenants not paying or destroying the property and you know there's no repercussions for them and they just get away with it It's it's totally different in the US where the laws are are more in the landlord's favor. That's that's that's the first one. And the second one for me is just the capital it would take to purchase. You know, I think right now, duplexes and triplexes and garden suites are popular, but, you know, to do a conversion and to add a garden suite, you know, how much capital do you need? And, you know, is that cash or are you borrowing those funds? So, you know, just if the house is financed and then the construction is financed, like, how are you how are you cash flowing? And with the states because, you know, the cost of entry is so much smaller. Obviously, there's a conversion, but it still works out. And to to talk about the conversion, like, would you rather make Canadian currency or US currency? And, you know, I I wanna generate US income, and I'm doing that now. And the and I I'm about to reap the rewards because I'm going on vacation in the US, and I have an American bank account with American cash, and I don't have to worry about the conversion now. Like, I just get straight US cash. No conversion. So, yeah, landlord capital, you know, US currency, it it it's all it's all positive in the states.

Scott Dillingham: 11:27

No. Absolutely. That's that's awesome. Yeah. You you touched on all the major points. I I think there's there's one one more that I hear as well, and that is rent control. Right? You have to be competitive. You can't just raise your rent to any amount that you want in the states, and and your tenant is just gonna pay it. Right? They're gonna move out if if you're doing it stupidly. But, like, for an example, right right after COVID, when all the rates skyrocketed, I have a property that had good cash flow before that I'm losing. I mean, the loss is smaller because the rates are coming down now, but now it's like $700 a month that I'm losing. And I can't increase the rent because of rent control. Right? We're in the states. If the expenses increase, which they don't because you get a 1 30 year mortgage, I mean, your property taxes, maintenance, you know, property management, that stuff's gonna increase, but your mortgage amount actually stays the same unless you refinance. So that that's another benefit. But the fact that if the expenses did go up, you don't have that control in Canada to to to raise it. And so I

Derek Wormsbecker: 12:31

don't think their their property taxes are going up like they are in Hamilton and the GTA, you know, 9, 10 percent around here. So

Scott Dillingham: 12:39

No. I've seen but I have seen big jumps. Like, I've seen, like, if they assessed and I think this is important for every investor to know. But if they assess the home say they assessed it at, like, $50 and the investor's paying 1200 in taxes, but you just purchased that property for 200, there will be a reassessment. Right? And it will go up. And so that's the thing because certain states, it's been 7 to 10 years since the taxes have been reassessed. So, I mean, good news is, right, if you owned a property 7 or 10 years ago, that means your taxes really haven't changed. Right? But the bad news is when you buy, right, they they see that. So I I have seen it where it's it's one up because it caught up to what the actual value of the property is. But beyond that, you are right in the sense that they don't raise like they do so much over here. So it's it's just altogether different. And you mentioned Arkansas. I'm very positive, and correct me if I'm wrong, but I'm very positive that Arkansas is one of the states that if the tenant does not pay the rent, it's actually a felony, and they can go to jail, like jail.

Derek Wormsbecker: 13:49

Yeah. So I didn't know that when I did my initial research about Arkansas. And then Erwin and I were doing a a webinar, and we're and we're promoting my my property with with Cher. And then someone in the chat mentioned mentioned that in the chat. Is it true you can go to jail? And I I laughed it off, but then then I did a little bit of googling and I and checked GPT search and it turns out it it it is true. It it seems like it's the only state in the US where you can be criminally charged and convicted for for not paying your rent.

Scott Dillingham: 14:26

Yeah. Which is crazy. It's it's awesome too. No. That's that's crazy. So Yeah. Awesome. So your tenants are gonna move out this year. They're gonna sell the property, redeploy capital to the states. Are there any other states that you're looking for, or would you still consider just arc Arkansas?

Derek Wormsbecker: 14:46

Yeah. From what I'm seeing from our clients, you know, Michigan and Ohio is is really popular right now with the with the prices there. They're they're really they're really competitive. So, you know, I'm gonna I'm gonna look at Ohio, but, you know, I I'm open to anything. You know, I'll I'll have another chat with Cher and see see what asking what they're seeing. I haven't done much research yet, but, you know, even even Chris on our team, you know, I wanna chat with him because he he's been doing it for a while. So, you know, I got a little bit of research to do and some people to talk to, but I know I'm gonna be investing in the states. I just you know, it just needs to take some time to look at where.

Scott Dillingham: 15:31

Absolutely. And I think and I do wanna make this, you know, bring this point up too because we are talking to investors every day. Like, if if if I were to share a screenshot on my calendar on this podcast, you'll see that there's actually more US investors that are booking on my calendar to talk than there is Canadians. So there's just a lot more excitement. I mean, they are Canadians, but they wanna invest in the states versus Canada. So they're they're booking US strategy calls, not so much to Canadian. And the Canadian are still there. It's just there's more US. So, anyways, it's it's a topic that we're talking about every day. And one of the things that I think that I wanna call out for some of the some of the smaller priced properties like in Ohio, like you mentioned, There's there's other states as well. But when you do go after the the really, really small properties, just know that the rates are gonna be higher. They're not gonna be super competitive for two reasons. 1 is the loan amount is so small. So over there, they reward you with better pricing based on a larger size loan. Okay. So keep that in mind. And then secondly, there are certain parts of Ohio and other states where the law is, and I think Ohio specifically is the loan amount under 110,000. I was looking this up for a client yesterday. And so if the loan amount is under 110, you're supposed to get an open loan over there, where if it's over that, you can get just a normal loan. So if you get an open loan, that also raises your interest rate just like it does in Canada. So investors love Ohio, and then they see the pricing, and it's like, woah. So I just wanna caution. So so those things, you know, I wanna bring present, but then also the fact that I wouldn't recommend that an investor just buy some place because it's cheap that you wanna look at the market fundamentals. Right? You wanna see what's going on there. Is there development? Is there new employment opportunities? Is there, you know, facilities opening? So for an example, right, everybody's talking about Ohio and, you know, I'm looking in the area and I discover that Google is opening a massive plant that's already started construction or sorry, starting construction in Indiana. So I'm like, oh, that's cool. And then I start looking at the town in Indiana that it's going to, and it's like, there's there's lots of stuff happening there. So, like, that's a key metric for me that I was attracted to. So it makes me wanna invest, you know, in this this area of of Indiana. So, like, look for those things is is what I wanna say to the investor. Right? Look for that because there's there's challenges. Right? And I know Intel talked about opening up in Ohio, but I believe currently, like, that's kind of on the back burner, and it might not actually happen. So you do wanna be careful too. Right? And you wanna look for more than one investment opportunity or or growth in that area. But I wanna turn this back to you. I I I wanted to educate, but also I wanna turn this back to you. So you're doing mortgage financing for the investors in the states. What are some caveats or things that, you know, an investor should be aware of or cautious of or be aware of as they get the the mortgage financing?

Derek Wormsbecker: 18:57

Yeah. The the main difference for the lenders in the US for Canadian investors is we don't look at the Canadians' credit score or their bank statements or their their income. It's all based on does the property cash flow cover the expenses, the mortgage, the taxes, the insurance. So that's that's the first thing. We we don't need a, you know, to submit your application with all your t fours and all your bank statements. Obviously, we do require, you know, your ID and stuff like that, and they they will check some like, you are a real person, right, obviously. So Mhmm. Other than that, you know, it's just organizing your your documents. Do you have all your LLC documents in hand? Do you have all your LP documents? Whatever your corp structure is, you know, do you have all your documents ready to go? The the quicker we we have your documents in line and set up and ready to submit to the lender, you know, the quicker we have financing click quicker to close.

Scott Dillingham: 20:05

Yeah. Absolutely. And for those, I know I mentioned this in a previous episode, but we have the instant entity program set up. We already have entities set up and they can be assigned to you and as quick as 2 hours, and I'm gonna say business hours. So that's there too. If you if you find something that's like a quick rush, rush, rush. But now, Derek, I know we talk we we talk about it sometimes, but how how many lenders I mean, not how we use, but in the states, how many lenders do we have access to?

Derek Wormsbecker: 20:35

I haven't seen them all, but I know you've mentioned 100 and even 1,000 sometimes. So there's there's too many to choose from.

Scott Dillingham: 20:44

That's right. There's over 45100. So one of the things that I know that we do is we'll price out the loan for the investor. Right? I I know you do that all day long, but when an investor as soon as an investor finds the property, then we do shop more deeply, right, to help them to save. Now, Derek, what what would be some of because another question I get is what's the benefit of going with you guys over a local US mortgage broker? So what would you say to that? That's a question I hear all the time.

Derek Wormsbecker: 21:16

There's a few things. Like, for 1 like, for me personally, I invest in the States, so I know I know what it's like. I know the process. And and some of so if you if you were to call a broker in the US and say, hey. I'm Canadian. I need to get a loan. And he, you know, he might say, you're from Canada? I've never done this before. I don't I don't think we can do this. Right? But for us, this is our specialty. We we know who the lenders are that will work with Canadians. So that's that's one of the main differences. And they those lenders, you know, send us promotions and send us emails and about all the offerings they have to offer for what they call foreign nationals. So we were in constant contact with these lenders who have specific programs for non US citizens for for Canadians and for anybody abroad, really.

Scott Dillingham: 22:18

Yep. You nailed it. That that's exactly it. That's honestly the exact same answer I give to clients too because it's it's very true. And even if they they have a lender, right, even if they do, they're not gonna have that many because their clientele is Americans. That's who they're used to working with, right, where all of ours support the Canadian foreign nationals. And then on the flip side, right, we might not have the same benefits to a US citizen that they would. And and maybe not. Right? Because we have so many lenders that maybe maybe we do have, you know, an aggressive stance, but I would think that they would know a lot more, especially the homeowner deals and stuff like that because that's not what we're doing. Right? We're doing the investment property. So, yeah, it just makes a huge, huge difference. So no. That that's awesome. So I I know for a fact for everyone here listening that that Derek, you know, this is why we wanted to work with Derek and hire him because not only is he an investor in Canada, he's one in the states, and he provides the financing. And that's super important for our team is that we have these experts. So I encourage anybody that's listening to this. If you wanna move forward to reach out to Derek, I am available to speak to, but I'm just gonna refer you to Derek in the end anyways because he's the one that processes the loans. So, you know, it's easier sometimes just to go straight to the source. So, Derek, how do people reach out to you? We will put your calendar link in the show notes, but do you have any specific ways or methods that you want them to reach out to you?

Derek Wormsbecker: 23:51

Yeah. Put my contact info in in the show notes. And then if you, you know, if you're at the gym right now or you're driving in your car and you need to remember, just remember my name, Derek Wurmsbecker. Google it, and you'll you'll find a bunch of my information there. And also check out my website, derekworm.com, and you can book a call with me there too.

Scott Dillingham: 24:14

Awesome. Well, thanks so much, Derek. I'm glad to, have you on here, and I I think it's such a value add to have you as part of the team because, again, you're you're doing it, which is which is what I love. So thanks for for joining.

Derek Wormsbecker: 24:27

Yeah. Pleasure to be here. Thanks, Scott.

Scott Dillingham: 24:29

No worries. Take care.

Derek Wormsbecker: 24:30

K. See you.