Welcome to the Wisdom Lifestyle Money Show. I'm your host, Scott Dillingham. Today I have Andrew Kim with us from SHARE, and I'm really looking forward to chatting with you today, Andrew.
Andrew Kim:Likewise. Thanks for having me.
Scott Dillingham:Yeah, it's gonna be awesome. We're both kind of in this new world and of investing in The States and I mean, it's not a new world. It's just a lot of Canadians don't do this, right? So I'm excited to talk about this. But I guess before we do, if you could share with us a bit about yourself, maybe some trials and tribulations that you've went through to get to where you are now, right?
Scott Dillingham:Like why The U. S. That type of thing and we'll go from there. I'd love to hear your story.
Andrew Kim:Yeah, so, you know, I've always had this entrepreneurial spirit, but also very cautious at the same time and I think knowing that I was a bit of a risk taker, I had to have my sort of downside protection and that's what always got me into real estate at an early age. So I was a really bad investor in Ontario back in 2010. But then was introduced to The US single family rental markets in 2011 when I moved there for my first technology company. So as an entrepreneur, I focus tech. And then yeah, got into The US markets, fast forward ten years, I didn't really invest much, sold my company, grew my family, was super busy and then moved back to Canada and 2020 comes and I'm wanting to do another startup and the pandemic hits and realized that my portfolio really hasn't grown ever since I started having kids and having the first startup and realizing, my gosh, the only person really responsible for growing my real estate portfolio is me, but if I'm super busy, who's gonna do it?
Andrew Kim:And that's kind of what brought me to building my current company, which is how do we actually grow your portfolio? And so it's an intersection of technology and real estate and happy to unpack that further.
Scott Dillingham:That's awesome, and so when you first got started though, what was it that made you think The States instead of Canada?
Andrew Kim:Yeah, you know, I actually didn't even think about The States, because I was in, you know, doing burs in and around the Greater Toronto Area, well outside the Greater Toronto Area, we're talking Ajax Barrie, 70 plus kilometers from Toronto. And at the time in 2010, it was like 300 ks a whole, which was still a lot. And then when I went to The States, my current business partner was also sort of advising my startup in terms of how to do cross border taxes, because we're a team of Canadians building a company in The US, so she was doing us a favor. And by doing so, we somehow segued into the conversation of real estate and she was like, Well, what do you buy? And kind of shared her my details and she was kind of chuckling and kind of embarrassed for me and was like, Look, you can buy homes for a third of the price for double the returns.
Andrew Kim:And I was like, that's nuts. But like, look, I don't have time. I'm living in California to show me these homes. Like, well, they're in Florida. I'm like, well, I can't do that.
Andrew Kim:And then she showed me the numbers and, you know, we were they used cap rates, which is a measure of returns after your operating expenses, and what I realized is that they all had this weird line that I've never seen before, which was property management and it was still cash flowing after property management. So that was a game changer. Price, toy, returns and the fact that I can hire a property manager to oversee it was a game changer and a no brainer for us. So that was sort of my foray into The US market. Sold my Canadian stuff and then started deploying across The US.
Scott Dillingham:Nice. Nice. Yeah, know it's awesome. I have a lot here too. I mean, but my story, it's not the same as yours, but it's kind of similar, like from the overarching theme of things are better in The States.
Scott Dillingham:So like I was born in Maine and actually Lewiston, Maine specifically. And I still have family there and I would go and visit. And what I noticed over the years was they dedicated Lewiston and I'm sure you've heard of this for different areas. Lewiston is one of those section eight hubs, like government funded hubs. So they have them all over The States.
Scott Dillingham:Obviously section eight is kind of everywhere, but they have these hubs where they'll literally blast people to and get them to set up there. So that was happening there. So I was sitting back and I'm just looking at the numbers and I'm looking at the purchase prices and in Lewiston it's, there is a lot of single family, but there's a lot of like big houses that are like three or four stories tall that just they've made each floor kind of be its own unit kind of thing. And so really cool setup. I'm looking at these numbers and you can get something for dirt cheap and the section eight rents is like so high and I'm like, wow, they don't have this thing cheap.
Scott Dillingham:And then over the years, seeing it expand, I'm like, wow, like I really gotta get into this. And then obviously here we are doing that, but no, that's, it's really exciting. So I know for Canadians, they get sort of this, I wanna call it a mental roadblock. I don't know if that's it, but let's just call it that. And as they start looking towards investing, they get caught up on different things and then they ended up getting cold feet, which I find like, you know, if they had somebody holding their hand, they would move forward just like a kid.
Scott Dillingham:Right. They're scared to make that first step. But when you, as a parent guide them, then they're open to it. And I think that's really cool with Cher is you are like their guide and you help them to get established in The States. So can you talk about that a little bit more and how that helps people who are a little too scared to take that first step?
Andrew Kim:Yeah, so we're trying to really implement the concept of an asset manager for everyday sort of retail investors. Everyone always assumes like an asset Or they think of asset management as like, okay, you put in money in a joint venture or let's call it a private equity firm or a REIT or even like a mutual fund, right? Somebody is taking that money and behind the scenes deploying it across different investments, they're making sure that we're maximizing your returns to get whatever risk return profile you're aiming for. So same concept that we're trying to do, but for your personal portfolio, which is, look, we are acting as you, but with lots of institutional and industry ties. Everything along the way, every single thing you need to think about from entity structure, tax, bookkeeping, all of the actual things to set up and scale your portfolio, We already know and think about all the time, helping our clients can think about these things and help them formulate a perspective and calculate your returns on every single step.
Andrew Kim:So that all they have to do is really focus on their personal and professional career. So literally it starts with understanding sort of their risk reward profile, educating them on the different types of houses, regions, price points, returns, risk reward, all of that before we actually start any work, which is them starting to set up their entities, their bank accounts, and then doing an active search across landlord friendly and tax friendly states. Then once they acquire the home, we're doing the renovations and the leasing activity. Once leased there, we're your single point of contact and every single year we're helping you say, well, what is market rent rate? Is it a good time to refinance, rinse, repeat, etcetera.
Andrew Kim:So really trying to put your growth, your portfolio on autopilot.
Scott Dillingham:I love it. I love it. And it shows too, like I've spoken to your clients and they really like the service. Now a question that I hear all the time whenever there's an event or just even people ask me, what's the difference between an asset manager and a property manager?
Andrew Kim:Yeah. So the way I always put it is like, look, if you had a portfolio of homes and you had a property manager in ten years, just like what happened to me, that portfolio is going be the same size. They may be running away with your budget, but I love property managers, but their core responsibility is to be an on call maintenance provider, right? To collect rents and to assist with the leasing, but they're not responsible for understanding your financing, your tax strategy, your bookkeeping, your actual lending and how are you thinking about lending and your returns, your rates and tracking the growth of your home. Whereas an asset manager is looking over every single thing that contributes to building your portfolio, so that's even down to the pricing you're paying for your accountant or the price you pay to set up your LLC and then helping you maintain all of that.
Andrew Kim:And then giving you insights into, Hey, look, we can tap into like 60% of your equity right now and pull that cash out, and this is how much we think you can get, and we can buy another one for you, and here's a good lender for you. So thinking about everything we need to do to grow your portfolio. So if you want to think about it from a hierarchy, you know, you got your property, you got your property manager, then you have us, the asset manager, where typically would be the investor, but that investor is time starved.
Scott Dillingham:Yep. No, that's, I think that's a good description. I think it becomes clear and you know, I'm curious on your end, right? So what do you think the major, I'll let you know what I think mine is, but what do you think the major roadblock or when Acadian calls you and they want to move forward or American, just anybody who wants to leverage your system, what's the major hurdle that usually stops them that you guys overcome?
Andrew Kim:Yeah, I think it's the uncertainty of where to invest. Like, you know, The US is a huge, huge place. Right? And so they're like, I'm trying to understand what is a good neighborhood, what is a bad neighborhood. But to be honest, when they look at the homes on the site, we have different profile of homes that have sort of different risk reward profiles.
Andrew Kim:I think everyone always gravitates to the highest cash flowing homes. But we're like, look, there's a nuance to all of this. And then they kind of get, they're like, I don't know where to go. I hear this state. I hear that state.
Andrew Kim:So it's mainly like the concept of not being close and remote investing.
Scott Dillingham:Makes sense. That makes sense. That's interesting that you say that. I don't see a lot of that because we're not realtors, right? We do the mortgage financing.
Scott Dillingham:So the investors will either reach out to you guys or maybe they've kind of built their own team and they're kind of going off on their own. So I don't hear that. I find on my end, which you guys solve this problem, which is great is the entity setup. Find a lot of investors get stuck on, I don't know how to set this up and going to different tax professionals. One person's reasonable at a couple grand, the other person wants $10.
Scott Dillingham:Why? Right. Is there a difference? Am I getting something extra for the 10 or is it just, you know, they're charging me more? And you guys like kind of do that as part of your package.
Scott Dillingham:I realize there's costs involved, but like it's all there. Can you talk about that a little bit?
Andrew Kim:Yeah. So it's pretty good. Like we spend on average sixty minutes with a bunch of homework in between. So it's usually two phone calls, two to three phone calls before you get the referral comes to your inbox. And usually the three topics are the different types of homes, regions, the risk reward profile, the financing strategy and options and the returns, so we share a bunch of numbers and sample properties.
Andrew Kim:And then yes, tax and entity structure, what is your annual tax obligation, how does it work between Canada, US and how do I protect my assets? So we go through all of that together, we share a lot of material that has cost us a lot of money to produce, just because I think where a lot of Canadian investors get spun and you mentioned it, they'll go talk to a lawyer, they'll go talk to a tax accountant or an accountant, or they talk to a US accountant or US lawyer, and all four of them will say different things because you do need to find a happy middle ground. And I always tell everybody the happy middle ground is where you can get tax alignment, liability protection and asset protection, and lender friendliness. All three need to come into play. We've given my business partner, she's a CPA on both sides of the border and with over 70 units under her belt at this point, she's quite versed in real estate and tax.
Andrew Kim:So she, along with a lot of consulting dollars, we've come to a conclusion and it works well with our lenders and coincidentally enough, a handful of other four national seasoned investors, kind of landed in a very similar structure. We walk our clients through that and we will set it up for them.
Scott Dillingham:Yep. Which I like. I really like that. That's awesome. So yeah, that's what I find is the biggest challenge.
Scott Dillingham:But I just, again, I really like how you guys kind of do that whole process for the investors. That's really cool. Now for Canadians, right? Because one of the things that you mentioned was the locations And I realize a lot of things need to be considered when you pick a location, but do you mind sharing? You don't have to necessarily go into the cities, but maybe the states, like what do you find is the most popular states for Canadian to invest?
Andrew Kim:Yeah. I'm gonna start off with my pain point. The thing I hate hearing the most and it really drives me nuts is when somebody picks a location and it's like, because it's this many hours of drive time. Look, if you live next to the ideal location, fine, that logic makes sense. But that shouldn't be the primary metric of why you're investing in that area.
Andrew Kim:Drive time should not be the metric for success, should be investing in the best area. Now, when I say best, it depends on the profile of homes. So we have like a profile of A, B, C, D type homes. We will pick different metros to look at for those because you can pick any state and find their equivalent of the A, B and Cs. You want to make sure that the surrounding economics are making sense, meaning like job growth, population growth, economic growth at the various highest level.
Andrew Kim:But in terms of which states, can technically go to any, but we try to stick to sort of the landlord friendly and tax friendly states, which is all the Sunbelt states, which think South, as far West as California, excluding California, going across the Southern parts of The US and up the Southeast, as well as the Midwest or what they call the Rust Belt States. But right now we're not in, we don't push clients to all of them because I think a lot of them still are recovering from some post pandemic bubbles or the numbers are kind of being slightly affected. So we're tiptoeing around a handful, but those are the major regions we're in.
Scott Dillingham:Nice. Now we're recording this early December, twenty twenty four, and we've got a new presidency in January. If you look at the map, right? So I know traditionally the red states, and this is not like the rule, it's more of like a high level guideline, but traditionally the red states are more landlord friendly and the blue are more tenant friendly. Again, you know, there there's some overlap there where that's not the case.
Scott Dillingham:But generally speaking, so if you look at the map at the states, right. And you look at Democrat versus Republican and not to get political, but right now the map is like almost completely red. Right? Like it's almost completely red. So do you think that that's going to have any impact on certain areas?
Scott Dillingham:Do you think areas are going to open up and be more landlord friendly?
Andrew Kim:I don't think you'll get more landlord friendliness from, let's call it the blue states. I think they're trying to hold strong on their tenant friendliness, and if anything, maybe going the opposite direction, right? Going deeper into being tenant friendly. I do think red states are typically and will continue to be landlord friendly because typically the Republican party is just very capitalistic in nature and that's the investor dollars. And also what you don't see a lot in Canada or at all in single family is institutional dollars.
Andrew Kim:There are large REITs and private equity and hedge funds, big firms that are buying up billions and billions of dollars of single family homes. They couldn't do that without sort of the legislation necessary to be in control of their investments. So, they're deployed across the same states, so yeah, we don't see that changing anytime soon.
Scott Dillingham:Okay, that's good. Yeah, I just didn't know like, you know what I mean? Because change is coming, so we'll have to see.
Andrew Kim:Yeah, I if, I think if the election went the other way then possibly, but I think the election went the right way for real estate investors, but I could always, I could sit here for an hour and argue both sides of the coin. So I'm interested to see, I'm following a few different policies and a few different there's a few different malp policies that upfront don't seem like, hey, look, this is gonna negatively impact real estate, but I could see that having a trickle effect down the road. I would say if I had to split it, I would say probably sixtyforty in favor of real estate investors.
Scott Dillingham:I think so, Donald Trump, he made an announcement at the start of his campaign and I haven't heard it since, but if he does it, I think it will be great. But currently the states like the federal tax rates, 21% for entities. And he talked about lowering that to 15%. And I mean, hopefully he does it. So I think he does, I think that would be awesome.
Scott Dillingham:So you're gonna see, but if he does, I'm looking forward to that. I think great for investors. Yeah, yeah, Just politics, you just never know.
Andrew Kim:Yeah, it's definitely good for investors. I'm curious to see how the immigration policy works out and all of the, him being such a nationalist and bringing manufacturing jobs here, like in theory should work out well. So yeah, no, I'm interested to see which way the economy goes.
Scott Dillingham:Yeah, no, I'm excited to see. Same with Canada too, right? I think Canada needs a refresher and I know we're here talking about The States, but just, we both live here in Canada and it just, yeah, I want to say.
Andrew Kim:But I think it's a timely conversation because if you think about it as a Canadian, that like Trump has won and he's threatening these 25% tariffs, it's like, you hear a lot of Canadians like, well, needs a reset, they're all gung ho. I wouldn't say they're all. There is a sizable portion of the Canadian population that is going for Trump, and I don't think they realize that that has a potentially strong negative impact on the Canadian economy. So it's like a double edged sword here, right? They want him as a front runner, but it could hurt our economy and could put us in a downward, know, spend.
Andrew Kim:Who knows? We'll have to see how we react.
Scott Dillingham:Yeah. Yeah. No, I mean, that can be taken two different ways, right? Depending how you ride the cycle and how your mindset is. Right.
Scott Dillingham:You could take that as this is the perfect time to invest in The States now because of that. Or you can take the other approach for Canada, but again, they don't have the other stuff like the landlord tribunal, all that's not fixed, but I know investors in Canada will look at it like, okay, well now there's a buying opportunity in Canada if the market crashes. So you do see both ends, but still the fact that even if the values reset, the fact that it's very tenant friendly, it does push away some people for sure, depending on the locations and stuff. So, it's really interesting. I don't like to talk politics, but I think this election and just sorta everything that's going on kind of, I think it actually really affects us more than a lot of the previous ones,
Andrew Kim:Yeah, I agree. I remain politically neutral. I just talk either Canadian dollar or US dollar and the other question is always like Forex.
Scott Dillingham:How much is going in my account?
Andrew Kim:I was like, they're like, well, about Forex? I'm like, well, it's so funny because everyone's so concerned before you make your investments into The US, but then the day after they invest in The US, they're like, Canadian dollar sink, US dollar go up, you know, like just all of a sudden switch teams. It's interesting.
Scott Dillingham:Yeah, no, it's crazy. No, that's awesome. So, okay. Well, we're coming to the end here. We're gonna wrap up the show.
Scott Dillingham:Is there any final tips or thoughts that you would share with somebody who is considering investing into The States to help maybe more?
Andrew Kim:Yeah. I actually want to touch on this is because this seems to be another common barrier, but I always tell Canadians that US single family is actually indeed the most Canadian investment you could possibly do. Because I think what a lot of people don't realize is that US single family rental SFR is like a bonafide asset class, right? It's not just any single detached unit. There is this price point, price range, regions, these economic policies, these legal policies that kind of all wrap it, which the reason why these large institutions are tons of money is because it's super resilient with least amount of sort of fluctuation.
Andrew Kim:So if you look at major price point fluctuations and everyone's like, Oh, well, if I invest in GTA, I'm going to have this crazy appreciation. I'm like, but you're gonna be funding this thing out of pocket month over month, so you're losing money. And it actually is quite price volatile. Tell me your house is the same price it was a year and a half to two years ago when we were in the bubble. Right?
Andrew Kim:Whereas the USSFR, like the price point we're in, they stay pretty stable, so rents tick up modestly and appreciation ticks up modestly, so it's not like it does this, right? Whereas Canadian real estate often does that and it's highly driven by Ontario and BC. So if you want steady state, safe and secure, high demand, that's The US single family and it's the most Canadian asset class in the world, think.
Scott Dillingham:No, I agree. And just a note of caution for Canadians, I find, and it hasn't like affected the deal or anything, but like I find Canadians maybe because they're used to like properties in GTA, right. That you could buy for X price and in a year it's worth a couple $100,000 more. So they have these same expectations in The States. And it's not like that.
Scott Dillingham:I think you just nailed it right. It's a steady, but it's a slow increase. It's not like a crazy massive one. Obviously markets, some markets are hotter than others, but I'd like to share that with the Canadians that, cause I hear people say, okay, I'll buy it. I'm gonna hold it for one year.
Scott Dillingham:I'll do a prepay one. So then after one year I can refinance it and we're gonna have all this equity because it's gonna be worth so much more. And I'm like, woah, woah, hold on.
Andrew Kim:Yeah.
Scott Dillingham:Yes, it's gonna be more. Yes, you're gonna have mortgage pay down from your tenant. No, it's not gonna be as much as you think. Cause some Canadians get really like, so I just think like the mindset, right? Just getting over, like, they've got appreciation, right?
Scott Dillingham:They've got all those good things, but it's not like a craze. We're over here. It's a craze, right? We get into bidding war frenzies and people are overpaying like crazy. That's not, that doesn't really happen there.
Scott Dillingham:At least to my knowledge in the markets that I've lent in. Do you see that at all?
Andrew Kim:Yeah. It's steady state. You're going to get growth. It's gradual, but you're going to continue to tick up into the right. Even The US trash, everyone knows of the price volatility.
Andrew Kim:That is driven by the Toronto and Vancouver equivalents of The US. New York, San Francisco, LA, those are where the price points are north of a million. You don't see that price volatility in the rural areas of Canada. It's same principle, but there's more of that steady state piece in The US than there is in Canada.
Scott Dillingham:Yeah, which I like. Would rather have, and I think a lot of Canadians would especially investing so far away, I'd rather have something that's tried true and tested that you know, and it's predictable than something that you just hop into and then lose money. Right? So you just wanna be careful.
Andrew Kim:Predictable. That's the word.
Scott Dillingham:Just to caution Canadians. Cause again, everybody gets hopeful that they're going to make so much money and whatever. And I just want to put that message out there that you can, it's a little more than a year. So no, that's awesome. So then for anybody listening that wants to follow-up with you or touch base with you or your company, what's the best ways for them to reach out to you?
Andrew Kim:Yeah. Create a free account, sign up, and then you can book a call with a team and we'll help you strategize, put a plan in place and help you execute it. Run numbers, walk you through all of that. Sharesfr.com. Sharesfrasinsinglefamilyrental.com.
Scott Dillingham:Yep. And I'll put the link in the description as well so everybody can click Awesome. So if you're in the car or whatever, can't take notes, we'll we'll put it in there. But awesome, it was great to have you on. I'm glad we could connect and chat.
Scott Dillingham:Yeah. There's so much going Yeah. It's exciting. So I guess I'll see you in probably a week, right? Because we've got an investing event coming up.
Andrew Kim:Yes, that's right. Yep.
Scott Dillingham:Alright. Well until then.
Andrew Kim:Awesome. Alright. Take care. Take care.