Hey everyone, it’s Mark Ferguson with InvestFourMore. Welcome to another episode of the InvestFourMore Real Estate Podcast. I have a really interesting guest on today. I’m really excited to talk to Anil Walia. He is from India originally, moved to Canada, has invested in real estate in India, in Canada and the US.
So I’m really interested to talk to him about how he’s invested in real estate especially how he’s been able to invest in the US real estate while living in Canada because I get many questions from my listeners and readers of the blog about how to do that.
So Anil, welcome to the show, how are you?
Thank you Mark. I’m fine and thanks for getting me on your podcast.
No, thank you. I appreciate it. I love to have a wide range of guest and I find your story really interesting. So I’d love to start from the beginning. You’re from India and you start investing in real estate in India, how did you first start investing in real estate and what are the first properties like that you bought?
I’m an engineer and I’m a retired commander from Indian Navy. In India, primarily I was in the military but on the side I used to buy homes for my own use. I did buy a property in Punjab which is a state in India and I lost money on that property. It is that loss which put me onto the track for more investing because it is that deal which taught me how the real estate markets work and how you make money and so that was the start. So that happened in 1991 and thereafter, I bought a few properties in India, maybe two or three and I shifted here to Canada in 2004.
Okay, very cool. I’m curious, how does it differ buying property in India versus Canada or in the United States? Is it a similar process or is it completely different?
You see the real estate market in India and Canada or the US is entirely different. There are positives for each of them. In India, the properties that I use regard in some other factors. In North America, the whole real estate sector is organized and everything is legal and everything is through checks. In India, there are deals which are half done in cash and half done in checks. The markets also there, they do not move the same day it moves in North America. More predominantly, the rents in India from the houses are much less. So you get about 2 to 3% per year, the rental yield.
Okay and do you still own properties in India or did you sell everything you have there?
No, I sold everything in India.
Okay, after seeing the different markets you can invest in?
Very good, so what drew you to Canada? Why did you decided to make that move?
You see, in 2001, my children, I have two sons, they wanted to study in Canada so I put them in the undergrad courses for computer science in Toronto and in 2004, they passed that and at that time my wife said that it was time to join the children otherwise, some ladies will hook them and we will not be able to find them. So that was a force for us to shift to Canada and stay with our children.
Okay, very nice and then once you got to Canada, you saw the real estate opportunities and different ways to invest. Were you surprised at how different it was in Canada real estate wise?
Yeah, you see it was so different in 2004, I read an ad by Robert Allan for some courses in Toronto. I went and joined that course, I paid $5,000 for the two day workshop and I realized in that workshop that the houses made in Canada are all of wood, whereas in India, they’re concrete homes. So I was that raw in that time but not withstanding since I’m an engineer and I have an MBA in finance so I understand the business part of it. And I quickly realized that there are a lot of money lying in real estate if you can pick up the threads and if you can understand the market.
Right, very cool. So what were the first types of properties that you invested in, in Canada? How did you get started in a new country?
Yeah, you see what happened is since I was an engineer, I wanted to apply for jobs. So I applied for jobs for three months in 2004 and I didn’t get any job. Then in January of 2005, I applied for a real estate license because I realized in my mind that I had a passion for real estate. So I took six months to get the license. By August of 2005, I got my license and since there were a lot like 70 or 80 Naval officers in this area, so they started buying homes from me and in first six months, I sold six homes.
Yeah but in August 2006, some aerospace company they offered me a job as an assistant engineer and so since I had worked 30 years as an engineer, so I quickly took over that job and left this profession half way. But to my back luck or good luck, in December 2008 I got laid off. It is that time that I decided that no more service and I have to be self-employed and I should look after myself.
By then, I had understood the market and I have understood how the real estate works in Canada so in January 2009, I took a vow to get into investment and real estate. Once I started this, then I looked around for tax sales in Canada and I maybe went to about 100 tax sales and gave a lot of it. I did buy a few properties and I did make money but I didn’t find it very attractive.
Another good thing which happened once I got laid off, I was always thinking that I don’t have money to make investments but then I got laid off and I met people. I was attending one seminar and I went and told the lecturer that, “I have about $300,000 in here so if you would find a deal, let me know. I can buy that deal.”
But that guy instead of telling me the deal, in the audience he says, “Gentleman, if anybody wants a hard money lender, if anybody wants money, I have a money lender in this room.” So people said, “Who is that?” and he told me, “Anil, please stand up,” and I was really aghast that I never thought I’m a hard money lender.
But he explained it to me. He says, “Damn it, you have money so it’s either you can buy a deal or lend it to them.” So I found that that was a good exposure to me so I started lending money to those so-called investors who were participating in those seminars. And that way, I could understand how the deals work and how people make money in the deal.
I used to make 12 to 13% on my investment but that really gave me an exposure deep into the investment hopefully your kind of thing and to my good luck in 2008-2009, the US market was melting. So since I had done a Robert Allan course that year, my eyes and ears were towards US and then I picked up a few more courses which were related to the US market.
And I started learning more and more. The more I learned the US market and the more I knew that there is money lying in the streets of US. But the problem was, all these gurus they were not giving us the end product. They will give you a dead fish. They don’t want to teach you how to catch the fish. So I thought that this maybe has gone with money. So I need to understand the market myself.
So in 2009, I went and visited Chicago and then I went to Atlanta and then to Indianapolis and then lastly, Los Angeles, Detroit, Buffalo, Cleveland. So I spent 5 days in all of these towns and moved around with a real estate agent and one thing that came out very clearly, that the houses are being sold for peanuts in the US as compared to Canada.
A house which costs $100,000 in US whether it’s Chicago or Atlanta or Indianapolis, it cost $300,000 in Toronto and that house which is a $100,000 you can easily rent at $1,000 or $1,100 which gives you more than 1% monthly return. Whereas in Canada, if you pick up a house for $300,000, if you cannot rent for $3,000, it rents for 15 or $1,600 dollars.
So it made my whole perception very clear as to which is the market I should go. Though the fundamentals, they say that you must invest in your backyard and you should be able to see your properties, you should be able to visit the tenants and talk to them but the second fundamental says, you should invest in a market which gives you returns. So in this case, I had to go to the market which gives returns. So that is how my initial decision from Canada to US came about.
Wow, that’s a great story and insight into how you moved from India to Canada to the US and I hear it all the time from investors who are in Canada how I can’t make money in Canada because prices are so high and rents are so low and they want to invest into the US and we’ll talk about that soon but before we get too far, what was it like being a hard money lender? Was it a good experience? Was it more educational? Did you ever had some problems or issues come up with people paying you back?
No, it was a very nice experience. I did not lose money. I think the primary reason was because I was a real estate agent so I could analyze a deal properly even if somebody gives me an appraisal report, I did give it much weight. I used to do my own CMA and to followed that. One of the criteria that I had was my money should be safe.
Whichever deal that I went in, I would analyze a deal myself and then lend the money. Fortunately, I did not lose money and all my money and all interest payment — I did that for about two to two and a half years and all that money came back.
Very nice and it’s funny how you became an accidental hard money lender when you had no idea what that meant before but coming to realize.
And you know, that too, I was a naval officer for 30 years I was in the military. We were not allowed to talk finance on the dining table and in the parties so I never had financial sense.
Right, it’s amazing. I mean even in school, they don’t teach us much about money. I don’t know how it is in India but in the US, you’re taught very little about financial investing and wellbeing and mostly it’s about investing in the stock market for 40 years and hoping you save enough money. But did they teach you much in India about financial things?
No, nothing. In the school, they don’t teach you, in the colleges they don’t teach you. One picks up on his own.
Yeah. It’s crazy how one of the most important things in our lives they don’t teach us how to handle it.
Yeah, I think it’s the same everywhere.
Yeah. Did you every buy any properties in Canada for rentals or you couldn’t find any good returns up there?
No, I did buy a property in Canada. I have in my principle home plus I have one investment property.
Okay, go ahead.
Well not much because you see, I realized two things. Though I am a real estate agent in Canada, I could not find a good deal in Canada. In Canada, the foreclosures are handled differently than US. US is an entrepreneurial country. In Canada, we respect both privacy so it is very difficult to find out where are the defaulters, who is defaulting on the homes and things like that and banks also don’t make it public.
So if somebody is defaulting on the loan, it only becomes public when they list it through a real estate agent and it comes on the MLS. The moment it comes to the MLS, it’s a public information and it gets discounted as for the market value.
Since I could not find a below market value, below market value property in Canada so I did not buy. I thought of converting some of the homes, some of the basements into additional units but there also the return would also not match. It was more of labor than the returns. I thought if Canada is like finding a fish in the ocean if you’re looking for a good deal whereas in US, in the pond, you can see so many fishes.
Yeah, I would say I was fortunate that what happened in US, I think this will not happen in the next 20 years.
I would agree with you. I think it was a unique circumstance with the banks just having crazy lending standards that could not be sustained. So when you decided to invest in the US, you mentioned a number of places that you went to. How did you chose places to visit? Did you do some analytics or some studying before you came to the US?
Yeah, I did because I told you, I attended a few seminars and things like that so I know the various websites in the US where we can check about the US economy and the labor statistics, how the money moves, the IRS websites. There is a website called Air Class Rent Lines, all the people are moving whether they’re moving to sun shining states, what are the internal moments, how the baby boomers are moving.
So I did some research and I found out that these are the cities, Chicago, Atlanta, Las Vegas, Orlando, Phoenix, California and Los Angeles is there, but they are different markets. So I just wanted to have a feel and so what is the difference between Chicago and Los Angeles or Los Angeles and Las Vegas or Las Vegas and Orlando.
Finally, after I did this touring I took about a year to a year and a half and spent about 40 to $50,000 on all these exercises. I realize there are three profit markets in the US, Las Vegas, Florida and Phoenix. These were the three markets and also, my analysis showed that these are the three places where the markets fell the most.
The property values came down to 50% in this market so I knew that the real estate did not have an issue in the US. The issue was on the finance side, it was a financial meltdown so because the real estate sector was healthy and the prices had fallen because of the financial issue. So these are the places that the prices will rise the game and they will rise again for the same reason they rose for the first time.
So one of the results of my visit was that I came to the conclusion that out if these three places only I have to select either Las Vegas or Florida or Phoenix. My next analysis showed that I should go to Las Vegas because Las Vegas is a more celebrity kind of thing and a lot of investments have already gone and all those big wigs will ensure that these market recovers fast.
But just before investing in Las Vegas, I somehow from inside I got a feeling that I should not invest in Las Vegas because it’s a kind of Sin City, with all the US slot machines online
debates and the all casino and sex related activities, adult entertainment, people like to practice their casino skills with online slots
so that once they go the casino they can get tons of cash and go NJ gambling
as much as they want. Somehow, I felt — and the economy is all entertainment oriented, it’s not a mixed economy and then you only have one town in the desert.
So though I knew that I can get good returns but I did not feel — from my mind there was some hesitation. At the last moment, I decided to go for Florida and Florida was nearer to Toronto. It’s only a three hour flight and in Florida, again there were a lot of issues. People used to scare me. You see in Canada, there is a lot of negativity about the US. When you tell somebody that I’m going to invest in the US, “Oh no, no, don’t go there. There are hurricanes, there are a lot of crimes and rentals are very tough. They break the houses, they take,” — all kinds of stories.
So from the hurricanes point of view, I was also scared that I should not go to Miami or east or west coast of Florida. So I selected Orlando because it is central and it has Disney World. So again, the celebrity status is there and Orlando has a mixed economy as against Las Vegas. So all these factors pull in and then I also checked the population wise. The Florida population has been rising two to three percent for the last seven years and it’s the fourth popular state at this moment. It’s going to become the third popular state. It’s going to take over New York by 2016.
So I thought Orlando is a much better place, so then I decided on Orlando and we went and visited Orlando. The final decision came about when I found the US government is building a medical city there. There is a place known as Lake Nona there the US government is investing $700 million in building a medical city. It is four very big hospitals which are going to need 40,000 jobs so I thought, “This is the place” and it meets all my requirements, all analysis, everything can work.
So then in November 2011, I along with my family went with the aim of buying a property. We thought we should buy one property and I have two sons, so then we thought we could buy three maybe. When we went there, my wife and my younger son, they said we don’t want to see properties and we want to go to Disneyland so I along with my eldest son went with the realtors and I placed 20 offers on the homes and we were so scared because we don’t know like Canada as well, on top of it in the US, we don’t know much.
So we were very skeptical if the property listed at $200,000 will give an offer at $160. Out of 20 offers, we finally managed to get one. We got this property at $182,500 and it was listed at $210 and during the peak it was $410. After buying this property, it got rented in 15 days at $1,800. This really opened my eyes. I said, “This is fantastic! If the property reaches at $410 and I am buying at $182 which is renting at $1,800, where is the risk?” I said, “There is no risk, so there is actually a gold lying in US.” In fact, I subsequently wrote a book also. I wrote a chapter in the book and the name of that chapter is, “There is gold lying on the streets of US”.
Yeah, that’s true compared to Canada.
Yeah, absolutely. If you were to find a deal and you just pick up a deal and you see from the hard money lender point of view, if I am getting 12% return on the purchase price being 1% rent every month, appreciation is bonus and then if I can get a refinance, that is further bonus. Once I bought the first property, I said, “Now, no more hard money lending. Let my money come to the US.”
So I bought three homes. After buying three homes, then I went to the bank and they gave me the money. I got them refinanced and then I bought three more and then continued and until now, I am continuing. I’ve got now my 30 home, two more homes I have signed two days back. So I am at 40 by December 30th
Wow, that’s awesome and are they all in Florida in that same area?
Yeah, they are all in Orlando and Kissimmee.
Are you seeing prices starting to rise in that area now?
Yeah, they are rising and in fact, I think five or six of my homes have doubled up.
Yeah, so prices have risen and in fact, all my homes without exception, have gone up by 50% and the prices are rising but we are still finding good deals because by now, I have learned the art of finding properties below market value and so I have a good team of realtors and contractors and property managers and I can find a good property. So every time I buy a new property, I can make about $20,000 in straight equity.
Right, that’s fantastic! And I am curious too, one of the biggest questions that I have from people who are in Canada trying to invest in the US is one, they are so far away so they have trouble setting up a team and we’ll talk about that soon but then financing. Did you find it difficult to find a bank that would finance you because you’re not a US citizen?
Yes, in fact, this is one of my grudge against US, that they treat us as “stepchildren”.
How are you able to? I mean did you talk to just many, many banks to overcome that or were there certain steps or traits? How did you do that?
Yes, so many banks and this have been the biggest challenge and I think it is because it is financing only. We were able to — it is indeed our biggest challenge. This is a special art that I have developed and there are so many cases which maybe we can discuss on the third area.
Okay, very cool so one last question. Have you found that local banks in Florida were best or was it a National bank that helps you out the most?
Yeah, local banks in Florida. They were the better options.
Okay, very good to know. So investing from Canada and getting financing and refinancing the properties and kind of rinsing and repeating the process over and over again has worked, sounds like very well for you. What challenges did you have in putting the team together living so far away? Were you able to do that because you had flexibility to travel a lot? Was there just a lot of back and forth trips?
No, you see I did travel before I started buying but to tell you very frankly, only the first house I had seen before putting in an offer. But the last 37 homes, I bought without seeing the homes. I developed a team so that whenever I locate a property from various websites because I am a real estate agent so I know how to evaluate a property to see what its real value is.
Once I am near about finalizing the order, then I tell my real estate agent to go there and send me the pictures and videos of the house. The real estate agent sends me the pictures and videos and then I send my inspector and the inspector sends me 34 pages report and then I send an EMD and then the property closes. Then my contractor and I sign a separate agreement with the contractor and the contractor does the work and he sends me the pictures every night and the final inspection is done either by my property manager or by my inspector.
After that, the houses take over by the property manager. So if the contractor hasn’t done the job properly, the property manager will come and cry. Once the property manager takes over, then the tenant comes. If any defect is left over then the tenant cries. So by the time the tenant is in, I know that because rent starts coming into my bank so I know I am the owner and I don’t have to go to Orlando.
Right. That’s a fantastic system. I wonder because you’re far away and you have to have these systems in place where everyone is sending you pictures and giving you constant updates, if you almost have a better system than some local investors because they feel they don’t have to be as hands on because they’re local and they’re probably not checking the houses as much as you’re getting updates from three hours away.
Yeah. You see for selecting a realtor, I have trained four or five realtors but the current realtor is the one from whom I had bought the majority of the property maybe about 35. Initially, I had trouble in identifying the right realtor but you keep pruning your team. I think I have changed seven to eight contractors and inspectors, I have changed two inspectors. The current inspector is excellent. I found a good roofer then there was challenges on the mortgages side so I had to change so many banks.
So you see, money making is not that easy but at the same time, it is not difficult. The beauty in the whole thing is, there is very less amount of risk because what I find, knowledge is power. SO if you acquires that knowledge and if I know sitting in Canada that this house is worth $100,000, I don’t mind paying $102 but if I get it at $98, I am happy. So once I have that knowledge and once I know that the repair value is only $10,000, if the contractor tells me it’s $11, it’s okay. If I can get it at $10,000, I am happy. So that way, there is no big issues.
I am not saying that there are no challenges. There are at times challenges but they are all very well managed. Then the picture which I had then knitted in my mind in Canada before I started buying, what happens if you don’t do anything, you generate a lot of fear but when you take one, two or three steps, then you find the real clutter keeps getting clear and the things become more brighter and you are able to take control.
That’s very true. The easiest way to learn is to do it and we all make mistakes but by doing it, you figure out what your mistakes are, what you can do better and if you never get out there and do it, you’re never going to accomplish anything. That’s for sure.
Very cool. Now you said you’ve become an expert in finding deals, how are you best finding deals from out of the area? Are you relying on real estate agents to send you listings or are you looking online yourself and trying to do the deal finding yourself from Canada?
It is both ways. Mostly we do it ourselves on various websites but the real estate agent also does. You see, you have to have a real estate agent. Even for the deals that we are finding, we list our agent on the website so that those websites know that we have an agent and anytime an agent is required to visit the home, so they will give the code and etcetera.
The beauty in Canada is, a lot of people especially white people are thinking how this guy coming from India is able to buy. So they wanted to interview me on the TV. So I got an offer from the Roger TV if I could come to the TV. So I said, “I have no problem,” because I haven’t done anything illegal or I have not cheated anybody.
So they interviewed me last May and there were a lot of responses. They re-interviewed me in September, then they re-interviewed me this year in May and on 20th
of November for the fourth time. They want to know how it is so easy to buy a home sitting in Canada without seeing it and making good cash flow and making appreciation as well.
Right, it’s challenging and it’s not easy. Like you said, it’s not easy but it’s not rocket science either.
It’s about systems and staying. You said you changed contractors seven or eight times and changed agents. You can just sit back and think everything is going to be fine without doing any work but again, if you stay on it, if you have systems in place then it’s not terribly difficult once you figure it out.
Very cool, alright so I’m curious, have you had problems with property management companies? Have you had to change them?
Yeah. I have changed two property management companies. So now, I am with the third management company.
Yeah, I imagine it’s an ongoing process.
An ongoing process, yeah.
So you’ll have 40 properties by the end of this year. Do you have goals for the future? Do you have a certain number you want to get to or are you taking them as they come? What are your plans?
At this moment, I buy five homes in cash and then go to the bank and they give me a refinance and then I buy five more. So I think this can continue up to a point because if the interest rates rise or the values rise, this equation may not work. Until such time it works and because in my opinion, single family homes, three bedroom, two washrooms, between 1,000 square feet to 2,000 square feet is the best product.
Especially, we are able to buy a foreclosed home so we get the discounted property and then we are able to rent it so that is why I don’t want to shift from this segment to multi-family units or some condos or something. Until such time this formula or this product works, I’ll keep going. Maybe if the foreclosures just stop — you see Florida is number three space in US even today where there are foreclosures available.
So if the foreclosures in two or three years died on and become very less and good deals are not available, we might have to change our product or chain but at this moment, I do not contemplate.
Very good and yeah, I have heard from multiple people that Florida still has a very good market for rentals and finding distressed properties. I’m in Colorado and we have the highest appreciating market in the country and our deals have dried up significantly. It’s very hard to find anything but yeah, I always keep my eyes open for other places to invest as well and Florida has been on my radar too.
Good. Yeah, we can work together there.
Nice. So tell me, if someone is from Canada and they want to invest in the US, what advise can you give them as far as starting out and maybe the first steps they should take?
As I mentioned to you, I have written a chapter in a book, it’s called Achieve
. This is the expert from the successful entrepreneurs. I wish I could show you the picture. It is listed on Amazon.com also but my chapter is, its title is “There is gold lying on the streets of US” and I have a website. My website address is thewaliagroup.com.
So if somebody can go onto this website, then I can send them that chapter and the chapter explains whatever I have spoken in the radio with you and then I’m also running a mentorship program. This I had to start because there are a lot of people that have shown interest that they want to buy properties in the US. So depending on what the person wants, I do give mentorship as well.
Great, that’s awesome and I will include a link. I always write an article, a brief write up on this podcast. I’ll include a link on your website and to the book so people can have access to that if they want more information. It is the best way to contact you going to that website?
Yeah, they can go to the website and they can ask for the copy of the chapter and I have even made an audio book for the chapter. I can send them an audio book as well.
Okay, great and again, that’s thewaliagroup.com. It’s W-a-l-i-a-group.com.
Alright, so we got your goals, we figured out what you do in Canada, are you still an active agent in Canada or are you just focused on investing right now?
I am a licensed agent not an active agent in Canada but I am more active in the US now.
Nope, that makes sense. Great, well any parting advice for our listeners here? I think I have asked all the questions I have to ask, is there anything else that you want to let them know before we sign off?
I feel that the best advice to the listeners is, knowledge is power. They must try to generate the knowledge in whichever field they want to go and then the second is, they must have an investor mindset. That means that even if somebody is working and doing their job, they must save money and they must invest. They should develop that attitude.
The third is, once they know where they want to go, they should look for a mentor who has chartered that route. So just follow him. On the investor’s mindset, I will tell you that when I started investing, when I found that it’s a great vehicle, I found a lot of credit cards giving me money for one year at 0.99% and so many offers them today. I have over a $100,000 on credit cards at 0.99%.
One has to be financially savvy to utilize that money but if you develop the investor mindset, you can make a lot of hard way. What I’m saying is, if the percent is working and using the service, he has good credit, he can have the credit card, he can utilize these free offers for one year or two years then he should know how to retain that money and he can invest in the real estates. Real estate is an only way who generate well. All the millennials in the world all over, they became billionaires primarily because of real estate.
Yeah. That’s great advice and yeah, I completely agree with you. Obviously, I have chosen real estate and it’s been fantastic for me. I really appreciate you being on the show, great information, I learned a lot myself, thank you a bunch and yeah, I may be in touch with you if I decide to invest in Florida, we’ll see.
Okay, thank you and I’ll also have to try to explore the Colorado market.
Oh yep, it sounds good. Alright, thank you Anil and yeah, we’ll talk soon.
Yeah, thank you Mark.