Welcome back to the Wisdom Lifestyle Money Show. I'm your host, Scott Dillingham. I'm really excited today. I've known Sean Quigg for a long, long time. He's a real estate investing focused lawyer.
Scott Dillingham:He's part of the Cardinal Law, like, law firm, doing tons of great stuff with investors. And I actually reached out to you, Sean. I know we've known each other for some time, but I saw some of your your videos that you're posting. I'm like, you know what? I actually love that he's posting this content.
Scott Dillingham:It's it's so useful. And most lawyers, they wouldn't present, you know, this information online, and I'm like, this is so great. I I wanna chat. So here we are. So welcome.
Shawn Quigg:Scott, thanks so much for having me. It's good to chat with you again and and share that conversation.
Scott Dillingham:Yeah. Yeah. So let's let's start with your story. I always like to start when I have someone on for the first time with their story. So, you know, growing up and how you got into the real estate investing world and then obviously law and kind of some tips that the listener will be able to to take away today.
Shawn Quigg:Well, I got started in investing in real estate almost by accident. You know, I I had a career with the federal government. I was in immigration enforcement. And so I was working in Toronto, you know, fighting the good fight, and and I lost a case. And when, you know, in that role, we had a right to to a what's called the judicial review, and so I ended up working with the lawyers of the Department of Justice on the appeal.
Shawn Quigg:And I was doing a lot of their work because I, you know, I knew the case inside and out, and they were they had to represent the government at federal court. And so this is when the bug of, hey. Maybe I should do that sort of hit me. So I applied to law school. I got in.
Shawn Quigg:But before I got in, I I was I had three applications out. And a buddy of mine said, well, if you get into the University of Windsor, you should just buy a house because they're so cheap. And so this was back in 2014, 2015. And so as you probably remember, they were very inexpensive at that time. And so I got into Windsor, and I I was like, well, I guess I'm gonna buy a house then.
Shawn Quigg:So I ended up I bought a house. It was five bedrooms. And I thought, well, why don't I rent the other rooms out to other law students? You know, I was coming from job with a salary and a pension, and, you know, I was going to nothing. So I thought, well, I gotta find a way to at least live for free.
Shawn Quigg:So that's what I did. So I read to the the the other students. And before long, within a couple of months, I was cash flowing, which is really great because one of the most important ingredients to getting through law school is beer money.
Scott Dillingham:Mhmm.
Shawn Quigg:And so that's what it gave me, a little bit of beer money. And and so, you know, I love school so much, I decided I'd add a business degree to my law degree. And, you know, we're learning about the essence of a corporation one day in finance. And I learned something so antithetical to everything I'd ever been taught, that cash is the least valuable asset of a corporation because it loses its value every day to inflation. And this was mind blowing to me.
Shawn Quigg:You know, I've been taught to save. Not that I took that lesson, but I'd been taught to save. And, you know, I had access to all of this cash. It was mine. It was the banks.
Shawn Quigg:But I had access to it because I was in law school. So I thought, well, why don't I use that and buy another student rental? And I'll learn you know, I'll take the lessons I've learned, which are buy closer to the school, buy a bigger house. That's what I did. So, you know, for some numbers, my first house, I got for 133,000.
Shawn Quigg:Crazy. The second one, I got for 236,000. It had five bedrooms and two living rooms. The second living room became a bedroom within a month. So I also had it full on, like, five bedrooms.
Shawn Quigg:Four of the five bedrooms were rented before I even took possession. The the seller was a real estate agent in in Windsor that you would probably know, and he allowed me to show the house before I owned it. So I there I was. I had two two cash flowing assets while two, you know, in my second year of a four year sort of joint program. And it sort of just blossomed from there.
Shawn Quigg:You know? I'd never heard of the BRRRR strategy. Here, I was thinking I was pretty smart. Right? Happened with the with all the cash flows.
Shawn Quigg:So so I thought, well, let's get into student rentals. But I'd sort of missed the boat by the time I really came around to it. You know? You remember that period of time, 2012 to 2016 in Windsor was prime time for student rentals. Right?
Shawn Quigg:And if you knew how to do it really well, which a few of the people did, you know, you were you were you were cash flowing very well. Yep. Anyway That's when I started. When I
Scott Dillingham:started lending. And just for the listeners who don't remember, we did a training at the bank, and you kinda confirmed it, but they said the the average sales price in Windsor, right, so this is owner occupied everything, was 189,000. That was the average. It's crazy.
Shawn Quigg:What's it now? $4.50?
Scott Dillingham:It's yeah. I think it's like $6,600 to $6.50 is the average sales price now.
Shawn Quigg:So as I'm, you know, as I'm getting into the real estate investing space, I start joining the Facebook programs or sorry, the Facebook groups, and I start to see that no one's all that happy with their lawyer. So most people are working with your average residential real estate lawyer, and there's a time and a place for for that expertise. But as you get into investing and buying small multifamily and getting into private financing, buying wholesale deals, You know, the private mortgage is probably the biggest piece. The residential the average residential real estate lawyer does not do that work and isn't necessarily proficient in it. And so I had this idea.
Shawn Quigg:Why not pair my interest in investing in real estate with my profession? So it took a little while. Right? I started on Bay Street. I was doing the big law, you know, corporate commercial work for a bit, and then I eventually said, you know what?
Shawn Quigg:I'm gonna I'm gonna take this on. So I went to a smaller firm. I was there for two and a half years. Really sort of cut my teeth in the industry, learned a ton about how to be an investor for real estate investors. Sorry.
Shawn Quigg:How to be a lawyer for real estate investors. And then launched my own firm about a year and a half ago, and then had the opportunity to merge it with this one, with Cardinal Law. And so now my partner, Melena, and I have this sort of super firm for real estate investors by real estate investors. I'm still an investor. My partner, Melena, is
Scott Dillingham:as well. That's incredible. And I've actually had Melena on the podcast previously. So for anyone who may have heard that, yeah, that's ties it all together. That's incredible.
Scott Dillingham:So what do you find? Because I know, again, the video that struck me as inspiring was it was you had a deal. It was difficult to close it. I'm sure there, you know, there's things that you can't talk about here as to why it was difficult to close it, but you came up with some solutions, and I and I love that. And what what do you find the biggest challenges in real estate for an investor are?
Scott Dillingham:Because I agree with you. Most people, they don't understand it. And if you go to the wrong lawyer, yeah, I just I've seen a lot of issues. So what would you say would be those issues, and and how do we get past them?
Shawn Quigg:Right now, you know, we're recording in late twenty twenty five, and the biggest issue that is facing investors right now is that they borrowed all sorts of money cheap a couple years ago. And that money is time it's, you know, it's time to collect on that if you're the lender, and equity is down. Values are down. And so the refinance ability is just not there. Right?
Shawn Quigg:You remember the boom when you you could be the worst investor in the world and still be making a ton of dough because the values were just going up ten ten, 12% a month. That's normally the case. As you and I both know, values are going down or are have stagnated. And as a result, everyone's having trouble paying out their lenders. So I am seeing a ton of power of sale.
Shawn Quigg:And a power of sale on a house is bad enough, but I'm seeing a lot of power of sale on big projects, on development projects, on large multifamily. And that's where things get really sticky. So the so the transaction you're talking about, the post that I made, was about a a power of sale proceeding where our client was the owner and borrower and and ran out of money to pay the interest and his joint venture partners. Well, he didn't actually finish with the joint venture agreement. You know, started on it, never got it signed, never got it finalized.
Shawn Quigg:And as a result, we had no leverage to go sue his partners to start keep chipping in more money. And as a result, he stopped he had he was out of cash, stopped paying the mortgage. So the lender started the power of sale proceeding. So our job was to do two things, really. Hold off the power of sale as long as we could until he could sell the building, which he did.
Shawn Quigg:He was able to sell the building, but inexplicably, he delayed the closing by three months. And over those three months, the amount owing to the lender became so much that it exceeded the purchase price, which added a third problem, or a third thing to solve, which was getting the lender to accept less, in exchange for not only a discharge of the mortgage, but also a release of the guarantor. Basically, a full on final settlement. That was the key piece. That was the hard part here because paying out the lender is one thing.
Shawn Quigg:And, yeah, sure, they'll take a $5,060,000 dollar haircut now, but they're just gonna turn around and personally soothe the the proponent personally, which sort of defeats the purpose. So we were able to limit his exposure to about $12,000 from 1,800,000.0, which I count as a win. I don't think 12,000 is enough for anyone to really go after, and it would be small claims in any event. So so we got a win. It was it was a challenge.
Shawn Quigg:It it you know, there there was a very difficult lender. You know, the lender themselves, they were fine. Their lawyer is a well known private lending lawyer in the industry and notorious, you might say. And the seller also, you know, is where Isaac was sort of playing in a league that maybe he ought not to have been in, so that that created some challenges as well. But in the end, everyone got what they wanted.
Scott Dillingham:So for and that that's an awesome story. Now for the investors, right, and and hearing what you're saying and reading between the lines, I think, right, especially if you have those expensive money loans, right, and it's it's coming due. Lots of renewals are coming due. Right? And they are worried about power of sales from that, from the loans being unaffordable.
Scott Dillingham:I think to reduce that, and I'm sure you'd agree, is is speak to a lender now. Even though your loan might not be up for six months to a year, and you know your rate's going up, speak to someone now, get a game plan going. Now your client, you know, it was an unfortunate situation that they couldn't pay. It was slightly different, right, deal, but still, those with existing properties. Right?
Scott Dillingham:If they don't get in and and chat with their lender, it's it could cause, you know, trouble. So would you agree, like, get in early and come up with a game plan before it's it's too late?
Shawn Quigg:Yeah. No doubt. Getting ahead of it is is gonna work out so much better. Now there's a fine line here. You can't you you don't wanna go so far as to say you're going to default.
Shawn Quigg:That's going to result in possibly a legal issue called anticipatory breach. And anticipatory breach is is problematic because it basically accelerates the deal. It basically says, well, you are telling me that you can't complete our transaction now even though it's not due for four months. Well, then I'm declaring it default now, and that is permitted. So you want to work with them on a without prejudice basis.
Shawn Quigg:You definitely want to talk to your mortgage broker. You probably wanna talk to your lawyer. And if you have joint venture partners, they need to be on board. You know, one of the things that sort of shocks me, and it happens so often, are joint venture or shareholder agreements that show up unsigned. If you're out there and you have partners and you don't have an agreement or you have an agreement but it's not assigned, that should be priority number one today.
Shawn Quigg:Get assigned because without it, you got no leverage.
Scott Dillingham:And with multifamily too, like, there's ways around it. We saved a deal, not quite to the extent of of yours, but we had a client that they they bought the property with, you know, not good financing because they're they're trying to, you know, turn it over. And they did turn it over, but not to their full capacity. They're younger investors, and they just didn't know all the ins and outs and everything. So ultimately, they they got done the project and they wanted to refinance it, but it didn't have the appraisal value they're looking for because they didn't increase the rents and do just the things that are fully needed to, you know, get better terms.
Scott Dillingham:So kinda like you, the project was becoming unaffordable. So we we kinda coached them on some solutions to get those rents up, which for those that are listening and that don't know this, right, with with commercial, the higher the rents, the higher your property's value. So we were able to force the value up by turning it over properly, and then we could do the refinance, get them out, get them into better terms, making it affordable now, and now they have positive cash flow. So little things like that that people don't realize. People are busy too.
Scott Dillingham:Like, I see so many investors that forget to raise the rents, and that could even be a solution here. Right? You could have your mortgage renewals coming up, where the payment is gonna be high that you don't cash flow, but maybe you've been too busy that you haven't actually raised your rents. In Ontario, right, with rent control, there's there's limits, but other provinces, there's not. Right?
Scott Dillingham:So these are things that you should look at to maximize, you know, the success of your of your project and deal. So
Shawn Quigg:Yeah. It's amazing what having the right people on your team can do for you. Great. You know, completing a project, takeout financing should be where you start, and then work backwards to purchase. Right?
Shawn Quigg:Because the purchase is really just the start. Right? The value add piece is the hard part, but the hardest part is that takeout financing. And if you don't have everything lined up, you know, more or less perfectly, your takeout financing is gonna be impacted, which could mean your perfect BRRRR turns into a not so perfect BRRRR. Maybe you're leaving 6 figures, Darid, and that could have been avoided if if you just figured it out in advance.
Scott Dillingham:And working with the key people is super important. Like, we're doing this deal. Large developer. He bought the property, and he developed it all on his own. And then he met me, and he's like, I wanna do the MLI select program.
Scott Dillingham:Right? Well, actually, to be honest, he didn't really know about it, but I told him about it and then he wanted to do it. So the thing is with MLI Select, as you know, you need to reach a 100 points if you want max leverage, right, with the longest amortizations. So we came up shy on the energy audit. It was gonna be a forty five year amortize amortization, but then we sat down with them and we went through the plans and everything, and his renderings showed what they were adding to this existing property.
Scott Dillingham:It used to be a school. They converted it to residential. But they built on top of existing insulation. So with that, we're able to get the points needed so we had the the full drawing. So just back to your point about meeting with the right team first before you start a project because had we not noticed that, right, he wouldn't have had the full points, and he would have had to potentially lower loan to values and, like I said, shorter amortizations eating into his cash flow.
Scott Dillingham:So in this guy's case, it worked great. You know, we we made it work, but I agree. I find we're always getting, you know, clients where it's like, we're kinda picking up the mess, so we don't mind. It's like, it makes it, you know, interesting and entertaining. Not entertaining, but do you know what I mean?
Scott Dillingham:Like, it's it's like a new challenge. So it's like, alright. Let's let's fix this. But but, yeah, coming to the right people, I think that's a great takeaway here. Coming to the right people the first time will help.
Scott Dillingham:And that's why I wanted to have you on this call because I really like what you and Milana are doing. I love how you're built for investors. I see how you guys solve problems, and I just think for any investor who's out there purchasing, refinancing, whatever the case may be, I feel like, you know, they should give you guys a call. Right? And if they wanna speak to a couple to get a couple opinions, right, they should make you guys one of them.
Scott Dillingham:Absolutely.
Shawn Quigg:Appreciate that, Scott. One of our we have five core values at our firm, and one of them is bringing new solutions to age old problems. There is no you know, we don't really take no. One thing I've learned, you know, in my years of practice is that it is a lot easier to say this is too risky or old than to figure it out. It's so much easier to say, don't bother.
Shawn Quigg:But that doesn't move the needle for the people that need needles moved. And so that's why it's one of our core values. It's so important just to to actually figure out something. Right? It might not be the best, but something is definitely better than nothing.
Shawn Quigg:So so thanks for that.
Scott Dillingham:No worries. So and for those listening, because we do have an audience across Canada here. But for those listening, where where do you service? Where where could they use your your services?
Shawn Quigg:Yeah. Good question. For primarily Ontario, all over Ontario, but primarily Ontario, You know, if you have corporate structures that need to look outside of Ontario, there may be a scenario where we can sort of assist there. We can also help with estate planning out of province, although I generally recommend people do find a lawyer in the province in which they live because the estate planning the the law of estate planning is governed federally, which means it works across, but the application is provincial. And so it is it's pretty important to to make sure that you're you know, those proverbial t's are crossed and i's dotted within your province.
Scott Dillingham:That makes sense. So okay. So then how does that work? Right? Let's because your GTA based, say the property is in Sudbury.
Scott Dillingham:I'm just making this up. How do they get the keys? Like, how does that work?
Shawn Quigg:Well, great question. We're a virtual firm, so our physical existence is doesn't really exist anymore. With with real estate transactions, largely, the keys are left at the property, usually in a lockbox of some kind. That's you know, whether we were physic you know, a traditional firm with a physical location or not, the the active courier in keys to the lawyer's offices has largely gone away, especially since COVID. You know, our realtor partners have really stepped in to help with that, and and, you know, for acting for a seller, we'll give us the lockbox code that we can then give to the buyer's lawyer once we have the money and vice versa.
Shawn Quigg:Most law firms are pretty good about getting that information and giving it to us once they have the money if we're on for the buyer. Okay.
Scott Dillingham:So that's that's nice and easy. So cool. So okay. So someone's listening to this and they wanna reach out to you. What's the best way that they can contact you to get this going?
Shawn Quigg:Good question. You'll find me all over social media, on Instagram, on Facebook. You can message me there. You can send me an email. We got a form on our website, cardinallaw.c, that you can fill out, and I'll I'll get that form right to my inbox, and I'll I'll reach out.
Shawn Quigg:What we do typically, especially when new investors come in, if they're looking to to make a change at the on the legal side of their power team, we'll get on a call, you know, talk about what their goals are, where they where they've been, where they're going, sort of understand what gaps they're seeing that cause them to reach out, and to and then sort of devise a plan to get them set up and ready to take on new projects once they come on board. Right? So that means taking a look at that corporate structure. Make sure it's tidy. Make sure it's the right size.
Shawn Quigg:Right? Sometimes we have corporate structures that are too big or too small. So we wanna make sure that you're making good use of your money there. And and then once that's cleaned up and ready to go, you know, tackling transactions is actually so much easier. Your when your books are in order, man, things are so much easier.
Scott Dillingham:No. That makes sense. I agree. I agree fully. Yeah.
Scott Dillingham:So awesome, Sean. Well, listen, I really appreciate you coming on and and adding value and sharing your story. So thank you. And then I'll make sure in the show notes as well that it lists your details there. So if you're listening and you're in the car and, you know, you can't take note, it'll be in the show notes, so save them for later.
Scott Dillingham:And thanks so much.
Shawn Quigg:Thanks, Scott.
Scott Dillingham:Thanks for having me on. Take care.