Garret (00:01.208)

All right. I'm just going to go ahead here. Darcy. Welcome to the podcast.

Darcy Marler (00:07.771)

Hello Garrett, thank you so much for inviting me. This is gonna be awesome.

Garret (00:11.252)

Yeah, thanks for reaching out. I, in pre-show, didn't even realize we're both in Canada. So this is actually even more relevant to my audience up here in Canada. But why don't we start with who you are and how you came to be here?

Darcy Marler (00:25.587)

So I've been a real estate investor guy for 23 years. Before that, I actually was a computer guy and I lived and worked in South America for five years. Came back, got burnt out, didn't wanna see a computer again. So I moved back, I'm in Calgary now and I started getting into real estate. I started with flips and then a couple of flips, couldn't sell, so now all of a sudden I'm a landlord and then I got into building new and development and I've done all the strategies, condo conversions and the bird strategy, everything. I've got into development. I was actually...

instrumental in getting the Calgary horse track and casino built a century down as I'm still on the board my own part of a racetrack. How awesome is that? I've just you know I get bored easy so I kind of just flip around and do different things.

Garret (01:03.553)

Wow.

Garret (01:09.864)

Okay, well tell me a little bit about like the early days. You said you started out in just flipping and then it kind of transitioned to birds. Did I hear that right?

Darcy Marler (01:19.131)

Yeah, so basically I got my first book on real estate given to me when I was 15, which is over 40 years ago. So I always wanted to get into it. Took another path into kind of IT in South America as I said, I built up a bit of a war chest, had some money, got burnt out, didn't want to see a computer again, so I said, well, I'm going to move back to Canada, I'm actually going to do this. So I started with flips and, you know, just fixing up old stuff. And what happened was I had a house to flip, it was like a 1950s.

the person next to me passed away. So I ended up buying his, as well, off the estate. And I said, you know what, this is an opportunity to build because I'd never done that before. So I actually moved off both houses. I didn't even have to demolish them. I actually sold them to a house mover who took them off. I split those two lots into four, made sure utilities were in all four lots. And then I built four new houses. So I just loved it, you know? And so I've done other things since then too. You know, it was, I wouldn't say shiny trinket syndrome, but

If the next thing looked like it made good money, I did it. So it could be development, could be new construction, but it could also be flips or rentals or condo conversions. Over the years, I've had 240 rentals, 1,000 tenants. So I've done a bunch of stuff at a fairly high level. So yeah, again, I get bored.

Garret (02:36.024)

Okay, wow. Maybe back up a second and maybe if we could start with just, you know, we're throwing around the term real estate development, but maybe if you could formally define it for the audience as you see it.

Darcy Marler (02:49.879)

So we're taught, and again, I've been watching this real estate education world for 40 years, we're always taught the values in the building. We've got to make money by increasing value to the building. We don't really talk about land or some of the other strategies there. So real estate development for me is either working with a vacant lot or tearing down that old house instead of trying to fix it up and then coming back with something new, like a new four-plex. You know, we've got this housing crisis, so can we come back with more?

density and inventory. So for me, real estate development is, you know, built to rent. You're hearing this where we specifically build a new house and with the intention of renting it, lot assembly, land severance, building subdivisions. Could just be what we call up zoning or entitlement where we're just changing zoning and density to increase the value of the land, to allow more things to be built on it. And then we can sell that. You know, we don't necessarily have to go all the way.

and build the final structure ourselves. We can just do bits and pieces of this, which I find is one of the greatest assets or greatest things about development.

Garret (03:54.273)

How many projects had you done before you dipped your toe into the real estate development pool?

Darcy Marler (03:59.599)

I've done probably half dozen flips and a couple of those didn't sell for what I wanted. So all of a sudden you become a landlord, as I said. So probably not much more than what a lot of your listeners have done. So it wasn't like I'd done it for 20 years and then started. You can definitely do this.

Garret (04:15.233)

Okay.

Garret (04:18.932)

Okay, well, you kind of hinted at that first one that you did. And I was just really, I was actually going to ask you that because I was researching you as well. And I saw on your YouTube channel, you really outlined what that first experiment was. Let's unpack that a little bit. So I know you went over it really quickly, but walk us through in great detail.

Darcy Marler (04:41.363)

So I was a flipper, so you end up buying 1950s, you know that bungalow that's all across the prairies, thousand square feet square, there's a bazillion of them. So I got one of those, fine, I'm gonna renovate it. And the person next to me passed away. So I'm leaning over the fence, talking to the sun, and he says, hey, you wanna buy mine? I said, sure. So that was actually my first foray into lot assembly, which doesn't have to be 40 acres on the outskirts of town with 40 acres, it can be.

You know, one city lot next to one city lot. So now all of a sudden I've got like 50 foot of frontage. You know what, instead of just flipping these, let's see what we can do. So funny story, you know, a guy came up to me and said, you know, I had a quote to actually knock down, it was like eight grand to knock down both buildings at that time. Guy comes up to me, he says, you know what I'm gonna buy, I'll pay you 4,000 each, so I'll give you 8,000 if you give me the houses. I'll take care of moving them, I'll get the moving company, you don't have to worry about a thing.

Really? You can do that? Yeah, yeah, yeah. So instead of spending eight grand, I'm gonna make eight grand. Yeah, okay. Let's go for that. So they came, the house movers came, and that's a really interesting day to watch them move. That's amazing, the stuff they do. Anyway, so they move these two houses off. The house mover, the owner of the house mover comes up to me at the end of the day and he says, you know, I'd have paid 15 grand for each of those houses. What? See, now what this guy does is he goes to City Hall once a week, he pulls all the demolition permits,

Garret (05:45.356)

Good deal.

Darcy Marler (06:09.235)

gonna move stuff like you, he goes and offers you four grand, he turns around and sells it to me for 15. Next time, skip the middle man. So could have made 30 grand instead of spending eight, but whatever, so lesson learned. So anyway, so now I have two empty lots. The utilities were there running to the old houses. So as I subdivided the two lots into four, two of the new, two of the lots already had services. I had to put services into the other two. So that just means hiring a qualified,

company to come in and they dig a trench into the middle of the street. They hook up into the city mains. So that's all done with approved builders or approved plumbers. So now all four lots have services, electricity, plumbing, you know, portable water coming in, sewer coming out. And then I went through and I did design with an architect to design the four new homes and I built the four new homes. So I didn't have any experience. And all I had was, like I said, a few flips. So

I'd never done anything. Like, you know, this is like 20 years ago. So no YouTube videos, no courses, no Darcy telling me how to do this stuff. I just had to figure it out yourself. But yeah, I really liked it. I love working with new, right? Like I've, like I said, you know, a few hundred units and I specialized in nasty, right? So I would take a D level building and increase it to a C. And I just hated it. Some of this, you know, I called myself the king of nasty because some of the before pictures were

Garret (07:31.441)

I know where that is.

Darcy Marler (07:38.715)

just disgusting, you know, you got hoarders or cat lady, you know, one of my buildings had mushrooms and grass growing on the carpet. I had a fire building, you know, so you still end up with a dated age, C level building when you're done and C level tenants, right? So you just kind of get tired of fixing up old crap after a while and no, I want to deal with new, I want to be creative, I want to see stuff come out of the ground. It's, yeah, it just suits my personality so much.

Garret (08:04.64)

Yeah, so the, you just mentioned like two lots side by side. Okay, so I mean, assuming that you're not just gonna put two more houses on there, because there has to be a trade of value. I mean, is there any kind of consideration that was going through your head for that?

Darcy Marler (08:22.695)

Not as much that, you know, so they say God predicts the naive and the stupid. I'm not sure which one I must, but so what happens is that's what we've done in the past, right? Again, we're taught the values in the building. So typically we take an old building, we fix it up. So there's one unit before and one unit after. We haven't really added to the greater mix of housing. And even in the past when we did knock down a house and build new, it's still one for one.

What we do now is let's knock down that old house and come back with greater density, greater inventory to help the housing crisis, for example, or just for the pure economics of it. What we've been doing basically all across North America for the last whatever is just urban sprawl, right? We just keep growing out and out and out. And as taxpayers, that's very expensive. New roads, new infrastructure, new water treatment plants, hospitals, schools, transportation. Like it just gets expensive, right? So...

All across North America, a lot of communities, a lot of cities are saying, no, let's stop that. Let's come back. All this inner city building, this stuff from the 1940s and 1930s, why are we just renovating that? Let's tear that down. Here's an interesting fact, that the average lifespan of a wooden structure in North America is 70 years, 90 for brick. So it's not like Europe where it lasts forever. So that puts us in 1954 and 1934 respectively.

So again, most of the inventory now is getting older than that. Why are we fixing it up? That's all we know. That's all we've been taught. Well, what if we tear it down and come back with the duplex, a fourplex, an eightplex, whatever kind of number you can get away with in the various municipalities? You know, there's kind of different municipalities are at different levels of how much they want density. Some are anti-development, some are really pro-development. So depending on where you are, you can kind of get higher in density. And that's typically...

where the profit comes in, because the more units I have in general, the lower my costs, right? So 10 units is better than eight, which is better than six, right? Because my land cost, for example, is the same whether I build one house or 10 units, right? The architect, if he is gonna charge me so much to design a fourplex, the bill isn't gonna be twice that to design an eightplex, for example, right? So you get some economies of scale. So...

Darcy Marler (10:45.747)

tear the old house down, and now we've got, instead of one house as a rental, earning us rental revenue, now potentially we've got two, four, six, eight units now, all bringing revenue on the same lot. So again, increase the value of the land instead of the building.

Garret (11:04.016)

Okay, okay. So the one-to-one really doesn't work unless it's truly just a tear down, right? And even then, I guess you'd have to be having somebody who really wants or maybe you're building something bigger. Is that accurate?

Darcy Marler (11:18.951)

So typically, actually last week, you mentioned my YouTube channel, the video I did last week was, what are the best strategies to use in each of the, from all the way from anti-development to pro-development, what's the thing? So if it's anti-development, or maybe even your city is pro-development, but you've got a neighborhood that's really nimby, not in my backyard and really anti-development, what can you do? So typically, if it's an upscale, let's say even on those really pro-development cities.

Garret (11:40.966)

Mm-hmm.

Darcy Marler (11:48.411)

You're not going to go into a rich neighborhood, knock down the old house and build an Apex next to all these mansions, right? So what you can do is knock down old house and build really, really nice house. So million dollars for the old house, million dollars to build and sell it for three kind of things. So we've done that for the last 40 years. But now can we look at that, usually middle-class kind of neighborhoods where they're looking closer to the metros and sea trains and these kinds of things. So can we get higher density?

that most cities and towns are kind of looking for now to increase that or help that housing crisis.

Garret (12:23.576)

Okay, so you've done a lot of stuff. I mean, new construction, land development, lots of reconfigurations. What would you say are a lot of the common challenges that you've encountered?

Darcy Marler (12:36.307)

So the first thing is geography is a big difference, a bigger thing here than it is in the flip or the burrow world. Because again, we were one for one before, right? So here, we're starting with, let's say, a vacant lot or even 20 acres on the outskirts of town. And we're coming back with more units, knock down the one house, come back with 10 or whatever, right? So we're adding units. Is there a need or a want? Is there a business case to bring in more stuff?

you know, is the city or town being mothballed, everybody's moving out? Well, then it doesn't make sense to come back with 10 new units. But in those cities and communities where massive immigration, both domestically, foreign migration coming into the country, but also people moving around the states and the provinces like never before too, right? So is there a need for those 10 new units or those four new units, right? If there is, okay, now there's a business case for it, right? And so now we can start to think in terms of how do I...

get more value out of that land. And then again, in those places where there's a need, those are typically the cities and towns that are more pro-development and they're making the bylaws easier, they're making the zoning codes easier. So that, you know, there's the governments are incentivizing us with grants and rebates and, you know, financial, you know, easing up on the mortgage restrictions in certain cases to allow more stuff to be built. So that's kind of what you're looking for. And that's why this is different than the flip and rental or the burr world.

is because now we have to make sure we're in the right place geographically first, which wasn't necessarily such a big deal. Like, you know, you can fix up a place in anywhere and probably, you know, make it worth your while. Not so much here. It's gotta be, there's gotta be business case work.

Garret (14:21.992)

Interesting you mentioned the flip and bur world, which is my world. And I would probably say the world of the majority of my listeners. Let let's do a comparison here. I know you love to compare that. What are the pros and cons of each strategy?

Darcy Marler (14:36.715)

So I don't have too much good to say about the rural world. Like I said, I just get tired of nasty, I get tired of classy tenants and all this stuff. So I've sold all my rentals. Like, I used to have a thousand, I've had around a thousand tenants. I don't have any rentals anymore. Again, I don't like old, I don't like nasty. You can get into it right away. So there's not necessarily the city permits and stuff that.

that are existing in the new world. So that would be a plus for flips or burrs. But the thing with flips, you're always looking for the next one. It's like really tiring. You're always on the hunt. Got to keep your trades busy, right? So that's exhausting after a while. You're dealing with old and disgusting a lot of the times. So again, that was a turnoff for me. I think too is you're always scared. Like what's your budget, right? Because if you go into the wall and oh God, there's a, you know.

asbestos in there, whatever. Now all of a sudden I got to deal with that. If you expose it, you got to deal with it, right? So your budget can be really wonky, right? Is there asbestos? Is there aluminum wiring, which is almost impossible to ensure nowadays, right? You've got all this old stuff. But even after you've renovated it, it's still dated, right? Like I can take a 1950s or 1940s building, I can go down to Home Depot and get the latest.

Garret (15:50.598)

Mm-hmm.

Darcy Marler (16:01.671)

cabinets and plumbing fixtures and flooring, it still looks dated even after I fixed it up, right? Cause it still has the curved archways over the doors, seven and a half foot ceilings, the bedrooms are nine by nine, the whole house is only 600 square feet to begin with. Right? So there's limitations. In this new world, you get to knock it down, right? And the biggest thing about that is, you know, you get to deal with new and you get to be creative, which I love, and you get to watch your vision come to life.

Garret (16:17.201)

Mm-hmm

Darcy Marler (16:30.055)

But the other thing too is because now you're dealing with maybe that really old stuff that most investors shy away from, you're eliminating the competition. Now we don't have to shy away from that vacant lot. Because again, we're taught the values in the building, increase the value of the building. Most of us have no idea how to create value out of a vacant lot. And if it's really nasty, they will tear down. We don't know what to do with that either. We need a house, but we don't want it to be too disgusting, most of us, right? So...

If you knock down an old house, well, now it's a vacant lot. And if you learn what to do with a vacant lot, it opens up a lot more doors and shies you away from the competition that most of your fellow investors are in. We're all looking for the same property now, right? Whether you're a landlord, a flipper, wholesale or Airbnb, we're all looking for the same old thing. If you can move away from that, get towards vacant lots and older houses that are obviously tear-downs. Now you're gonna pay less for that. So your cost to buy that property is probably less than.

than the much in demand 1960s bird that you're gonna do. So there's a ton of stuff. And plus, let's say you knock it down, you come back. Let's say you want a new rental in your portfolio, you wanna be a landlord. The benefits of new rental portfolio is, you get a better class of tenant, either a professional single or professional couple, they're willing to pay more for rent, they qualify easier, less repair and maintenance because it's a brand new building, right?

All of that together means it's much easier to manage. Things aren't breaking all the time, you're not dealing with class C tenants, right? So that's easier. You don't have to deal with nasty, you're gonna tear that old building down. Again, and much easier to ensure and finance because everything's new. And then again, too, you're not dealing with nasty, you get to tear it down. So there's a whole bunch of benefits that come with new in my world compared to fixing up old.

Garret (18:26.576)

Okay, no, I was when you said you sold all your rentals and things like that. I actually was going to ask what about buy and hold But you answer that at the end where if you want to choose to be a landlord now You can be a landlord of a very nice a-class building with a-class tenants higher rents Less preventative maintenance costs or basically nothing. I mean you might even be on new home warranty for five years, right? Depending where you are

Darcy Marler (18:48.411)

Right. Or even, you know, like right now, like, you know, let's say I had a 1910 building, fixed it up. Okay, how do you mortgage that? Right, like, what's the useful life in that, right? You know, you have to get a very favorable civil engineer out to kind of pretend there's 15 years of life left, 20 years of life. Well, now I got a new building, right? Well, now it's 80, 90, 100 years of useful life, much easier to ensure, much easier to finance. So just a lot of the old problems go away.

Most of, you know, the biggest one is competition. We're not dealing with the same group of people.

Garret (19:21.768)

You know, Darcy, I'll add one there. Here in Manitoba, I mean, I know you guys out in Alberta are lucky with no rent control right now, but in Manitoba, we do have rent control. However, we don't have rent control for buildings that are 20 years or newer. So from what you're describing now, take an old nasty single family home, put a four or five, sixplex on it, and now we can literally raise the rent to whatever we want year after year for 20 years until it gets locked in.

So there's yet another advantage.

Darcy Marler (19:50.215)

Yeah. That's the same thing in Ontario as well. And Ontario is even worse than Manitoba in terms of rent control of the government. But even if you're in any of the other strategies, Airbnb, well, city Victoria just outlawed Airbnb, right? You know, in the flip and rental world, there's places all over Canada that they're starting to tax the profits on flips, right? So again,

Garret (19:56.37)

No, we know.

Darcy Marler (20:12.247)

None of that exists in the new world because they want, I always talk about don't paddle upstream, which basically means what does the city want and need? Well, work with them. Don't be a square peg in a round hole. They're looking for increased inventory, increased density. So they're incentivizing all this stuff, grants, rebates, they're making it easier to do this. And that's another way, as far as financing, CMHC has a program called MLI Select, which exists for refinancing existing properties too,

Garret (20:36.959)

Yep.

Darcy Marler (20:42.343)

been modified so that it finances new construction. So for example, let's say traditionally, I can get 70 or 75% loan to cost to build something new. MLI select if you're building more than five units, you get points for providing units that a certain percentage you're building is gonna be for the lower income crowd. You get points for having environmentally friendly building, you get points for having...

access for the disabilities disabled and that. And you can potentially go from like a 75% loan to cost up to a 95% loan to cost, which means you only have to come up with a 5% down payment. You build the building and then you can port that into a 50 year mortgage, right? The idea of being is over 50 years, your monthly payments come down, which again, they're trying to incentivize us to lower our rents as well, right? But that's...

That's unheard of in the kind of the existing flip and bird model world. So that's pretty cool. Right, so.

Garret (21:43.802)

Well, plus I believe being insured, usually you get better rates too.

Darcy Marler (21:51.199)

Most things in CMHC, you know, it's kind of expensive to come in. They kind of dingy on the upfront, but then again, you can typically spread it over 25 years. It doesn't matter. Well, now you can spread it over 50 years, right? So again, big, big difference. It's a really, really popular program. It's really a lot of builders are getting in on this.

Garret (21:56.097)

Yep.

Garret (22:07.676)

No, for sure. When I think about just developing, I think about, again, what you said, the very simple buy a piece of garbage, knock it down, put something brand new, whether it's gonna be a duplex or a fourplex. But in your course, you're outlining a whole bunch of different strategies for land. Can you kind of go through those?

Darcy Marler (22:29.555)

Sure. So most people, when you hear development, they think land development, right? And they say, oh, okay, that's just the big companies, again, urban sprawl, building a thousand track homes on the outskirts of town. I could never do that. Well, let's bring that down to our size, kind of regular investor size. Again, a vacant lot in the inner city or that old house, sitting on a 50 foot or 40 foot lot in the inner city. Let me, actually, let me do it this way. Let me give you four scenarios that are very actionable and relatable to your audience. So...

Again, we're looking for a house to burr or flip. You're given an address to a new project that you're all excited because we got all this competition. You drive to this new place and it's a vacant lot. Well, most of us, I said, don't know what to do with that. So what can you do with that? If you buy it well enough, you can just flip it. So there's a strategy. If we wanna add value, we can change the zoning density usage of that to say, okay, there's a single family home right there. Now let's change the rules so we can build that four-plex.

You can just sell that too. You've increased the value of the land just by allowing more units to be on it. So sell that to another investor or builder, right? So again, we don't have to do actually work on site. So for those of you that think this is too hard or I need construction experience, there's paperwork only kind of strategies there too, right? The next step is we can actually have our architect design that fourplex, get the building permit approved. And now we've got a shovel ready package to sell to a builder. Again, vacant lot.

Garret (23:33.656)

Oh.

Darcy Marler (23:55.343)

Just paperwork, we don't actually have to do it. If we wanna do some work on site, we can split the lot in two, make sure both utilities are size, or have utilities like I did on my first project. And now we can sell service lots, right? We've taken the work out of a lot of it. So now there's, you know, two young couples potentially could buy those and actually put up their own little dream homes there, right? And then the final thing is you can actually take it all the way through and build that fourplex yourself. Scenario two.

you're given an opportunity to go to a new purchase, you go there and it's a tear down. And this is too hard for me. Most of us will just keep driving. But if you know what to do with that old tear down, that's an opportunity too. So here's the secret. If you tear down an old property, you get a vacant lot. And I just told you what to do with a vacant lot. So now we don't have to be scared of that 1910 piece of crap. We don't have to fix it up or drive by. Option three, we're given an address for a new project.

And there is a house there that we can deal with. Perfect. But the lot next door is vacant or has an old teardown. Most of us will ignore that. I'm just gonna work on this thing that I know what to do with. But now we've got an opportunity for lot assembly, right? So let's see if we can buy that like I did, right? With the two lots, my neighbor that passed away, right? So now I've got two lots instead of 50 feet each, now they're 100. I can potentially get all the paperwork together to build a small apartment.

I can subdivide that into, or I can potentially, yeah, subdivide that into 520 foot or 425 foot lots, or 333s, I can just sell like that, or I can get the paperwork in progress to build duplexes on there. Again, I don't have to do the work, I can sell. Or I can put the pipe in the ground sale service lots, I can potentially take it all the way through and build those things, yeah.

Scenario four is I find the new house and it's on a large lot all in the same deed. Again, most of us would ignore the land, the excess land. How many of your listeners actually have an existing apartment portfolio? Back in the day, we weren't real great with efficiency of land, so they probably have the apartment building and then there's probably some from spare land that they're not using. Well, if you sever it, now what can we do with that, right? So we sever it, we can come, we can sell that excess property, go buy something else with the profits, perfect.

Darcy Marler (26:17.691)

We can sever it, sell it. We can put the profits on the mortgage of the existing rent. So now let's say it was 85% or 80% loan to value. It's not cash flowing. I get it down to 60% now cash flow. Here's the other thing too, as you were talking about the rules in Ontario thing. A lot of places now, like the Ontario government, for example, with Bill 23, they came out. Every lot in the province can have a minimum of three units.

Well if you sever a lot, the newly created child lot

has the...

Darcy Marler (26:55.379)

So, don't lose you.

Darcy Marler (27:16.115)

We're back again.

Garret (27:24.74)

Sorry, my internet went down. Can you hear me?

Darcy Marler (27:26.383)

Oh no. Yeah, I got you again. We're recording again.

Garret (27:32.29)

Okay. I don't know how much when it showed me dropping out, but you were talking about

Darcy Marler (27:37.884)

Let me do scenario four again. So scenario four is we drive up to this potential new purchase old house that we can work with, but there's extra land on the same lot, the same title, the same deal. Deed. Most of us would ignore that. We don't know what to do with that. We'll just fix the house. But now we've got an opportunity for lot severance. We can split the lot in two, sell the excess for profit, and go buy something else.

or we can sever the excess, take the profit, and put it into the mortgage of the remaining house. So maybe it was percent loan to value, it wasn't cash flowing, now it's 60% loan to value, and now it cash flows. The other thing too is when you sever land, the newly created child lot has the same rules as the parent, the original lot. In Ontario, for example, Bill 23, the provincial government just said that all lots in the province can have a minimum of three units. Well, now the original lot would have had

three units. If I've severed it, now the new one does too. So now I can build the three plex or triplex on the new one and I can either renovate the old building, put a suite in the basement, an ADU or a garden suite in the back, or I can tear that down, build a three plex there. So where there was one source of revenue before, I can potentially now have six sources of revenue on the same land, right? So again, how do I increase the value of land? And one of the ways to do that...

Garret (28:35.977)

Okay.

Darcy Marler (28:58.583)

is to get more time. So these are some of the strategies that are available in development that aren't available in the old world. In the old world, you've got three or four tools in your toolbox, long-term rental, short-term rental, fix and flips, wholesaling kind of thing, right? I just gave you another 15 different options, different tools to put in your toolbox. Makes you more powerful and flexible investor. Now you don't have to be scared of old buildings or vacant lots. Maybe...

your next potential purchase, maybe flips and rentals are the best, but maybe they're not. Things change, economies change. Now you're able to kind of deal with the, go with the flow and you're, you're much more powerful in that way.

Garret (29:44.774)

Okay, wow. So much to unpack there. Let me dial it back a few minutes. I had questions, but you were rolling. I didn't want to interrupt you. So when we talk about the various levels, right, you said bear land, and then maybe we're going to subdivide it and sell that, or we're going to get some plans, or actually knock it down and sell that, get some plans and sell that, subdivide it and sell that. I mean, I imagine there's...

Darcy Marler (29:46.887)

I'm sorry.

Garret (30:11.346)

an increased value for the work that you've done, even at the paperwork level here, can you kind of maybe give me some anecdotal anyways? They don't have to be exact numbers or anything, but what are the different values in terms of those different levels?

Darcy Marler (30:25.259)

Yeah, I'll do that in a sec though, just to kind of unpack it a little bit. So again, we're taught the values in the building, not the land. So how do we increase the value of land? In the old world, I have to finish the renovation. I have to finish, you know, I can't have finish a flip and expect to sell it for profit. I can't have finished a renovation and expect the renter to move in. Right. I got to finish. In this world, we don't have to do that. So there's lots of entry points, lots of exit points. So for example, if every building starts with grass, we got to do all this stuff to get a building there.

we can just do the little bit that we want. Whatever, you know, we can match our strategy to our personality so we can actually enjoy working with real estate too, instead of just doing it for the money. So let's say we just wanna do the paperwork part. We can do that. We can look for properties in this state, do this value add and then sell to the next person down the line. Or I can do the land prep where I put the pipe in the ground, raw land development, for example, sell to a builder. Or if I really get a charge out of building that fourplex,

I can look for stuff where the pipe's already in the ground, all the paperwork's done, and then I can build that. So some actual numbers, you know, I had a student that made $135,000 in three months just by doing the paperwork strategy. Had another lady, another student of course here, she just phoned me on Friday and said, Darce, you know that, we're talking to her, you know that property that I got, I also teach 11 different ways to potentially partner with the seller, so you don't have to buy that old house.

She did that, she got like eight months extension. She was gonna go and just do the paperwork only. At Midway, she decided, no, I wanna actually build the new Fourplex Perfect. So she's working on the development permit. And now she's just a couple of weeks away from getting the development permit approved. She phones me up and she said, I was talking to a realtor. He says, I can sell it and get a $400,000 profit once the development permit's done. Should I do that? And I said, well, if you take it all the way through.

and build that four-plex, what's your potential profit? She said about the same. I said, well, it's a pretty easy decision then, right? You take away all the risk and all the potential problems that can come up for the quick fix, right? So there you go, 400,000 in less than a year just by doing the paperwork stuff. Now I'm not saying that. Yeah.

Garret (32:38.922)

Well, I was actually going to just sort of, sorry to stop you there, Darcy. I was just going to ask because when you're at that stage of whatever you're, you've got either you put the pipe in the ground to use your expression or you've got plans made or whatever, like you haven't physically started building yet. And yet, you know, it's going to take a year to a year and a half to put up that four plex or 10 plex. I mean, it has to be worth it for that developer.

Or they do literally want to do a buy and hold project because if at the end of the day, by the time you have your holding costs and interests and project management and everything else, it has to make sense. I guess you, you probably just teach your students to evaluate every deal that way.

Darcy Marler (33:18.255)

Yeah. And so again, you've got all these entry points and all these exit points. So what do you wanna do? What makes sense to you? Being in Alberta, you know, we've got massive booms and unbelievable busts. We just came out of like a six year recession from 2016 to 2021, unbelievably awful. My biggest thing now, one of the main things you'll hear me repeat all the time is in and out quick. Right? Like just, I don't wanna be in. So that's one of the thing about long-term rentals, I didn't like, I don't like being.

potentially owning this apartment building for 10 years, right? I don't want to have to potentially, you know, you and I just met, you're going to be a JV partner in my deal. I barely know you and we're going to be in bed together for 10 years. Right? That, that a lot of time works out well, a lot of time, not so much. Right? So what if, you know, there's an opportunity, um, you know, Curtis, you know, the guy that did the 135,000, uh, he also,

So he works with a builder and the builder specializes in two or three communities here in Calgary. He can find the land really cheap. Curtis comes in with the money and they can do all these different strategies, right? Sometimes they just flip the land. Sometimes they put the pipe in the ground, sell service lots. They've actually gone ahead and actually built. And basically it depends on the project itself. It depends on the economy, depends on what they think they're doing, but they can actually go ahead. It takes about six months.

even lost now to get the permits and about eight months to physically build two houses. So in and out, you know, 25, 30% profit in these cases for 14, 15 months in and out, right? I like that a lot better. So personally, I like that better than a 10 year or 15 year hold. So it's what you want, what fits into your portfolio.

We always talk about legacy at these conventions. I wanna leave a legacy for my kids. Here's a little tip. Your kids don't want your 1950s piece of crap. Sorry to break it to them. Sorry to be the bearer of bad news there. I got kids 25, 26, 27, they don't want anything. But you've got a fighting chance if it's a brand new build and not so old, right? So if you want, so what do you want?

Garret (35:16.583)

Hahaha.

Darcy Marler (35:31.187)

Like that's one of the things I preach kind of all the time too, right? When I first got into this 20 years ago, 23 years ago, again, you could either be a flipper or a landlord. That was it. Right. So pick one. Okay. What are you doing? So what if you didn't like, what if you didn't want to be a landlord? Like I, I had a thousand tenants. I never enjoyed the journey, right? I just did it for the money. My projects, my flips, my new construction. I was onsite supervisor guy all the time. And I literally went to Rona every day.

for like 18 years. And yeah, we all have, right? And so you just get bored after a while. You know, I've had like, I've renovated like a few hundred suites. After the fifth or sixth, they all look the same. You know, in order to make this work on the flip side, you have to use the same paint and the same fixtures and the same flooring so that if you're renting them out after, you know, and something breaks, you can get it quickly.

Garret (36:04.713)

Oh, I've been there.

Darcy Marler (36:28.087)

or it's just your crew gets used to it if you're flipping it, right? Well, you get bored of that. Like I had an off green color and off brown and an off gray, like that was it. Like two or three different colors of a floor. Like I'd say, you get bored of that, right? So maybe you get to be creative, you get to work with new, you get to design stuff. So it's just lots of benefits. But it's what, so I teach, you know, match your strategy to your personality. So what do you wanna do? Do you wanna be in and out quick? Do you wanna just do the paperwork only?

Garret (36:33.333)

Mm-hmm.

Darcy Marler (36:57.263)

Like I'm doing stuff personally, you know, I've done stuff in nine different jurisdictions in Alberta. I don't know that Canada has too much left to teach me. So I'm actually, I've done a money raise and I'm actually looking to do a raw land development, building a subdivision in Houston, Texas. So I'm not going to build the houses. I'm just going to buy the land permitting, put the pipe in the ground, build the internal road, sever them off into smaller units and sell that to a builder. Right? In a note.

theoretically in 18 months to two years. I like that much better.

Garret (37:31.762)

Interesting. So I was going to actually ask you about that. I saw you on that on your channel as well But just to back up for one small second when we talk about I mean, I'm a I've always been a burghai, right? I've done some flips, but they haven't they've been okay, but I very much liked the buy and hold strategy What would you say to somebody who's who would maybe challenge you to say that the buy and hold or you've got the tenant paying Down your mortgage and you've got that massive ROI each year versus your in and out

I mean, are you just literally saying it depends on what you want?

Darcy Marler (38:05.339)

How did your BRRR work out when interest rates went up three times? You got it at a 1.9, life's good. When you went to refinance it, your payment is literally three times higher than it was. How's that working out for you?

Garret (38:17.59)

Touche. Yeah, well, I mean, I have a management company with 400 clients and yeah, they're feeling pain right now. Last two, three years, it's been awful.

Darcy Marler (38:26.179)

And these gurus that goes, the value of your property always goes up. Bullshit, you come to Alberta from 2015 to 2021. You talk to me about that? Yeah. In and out quick, in and out quick. I'm not saying, I have this, I got a cheat sheet. What's the best thing to do with this property cheat sheet? And I'm not saying that you're never gonna burr or flip again. So like I gave you those numbers 70 years for wood, 90 years for whatever.

Garret (38:37.086)

Yeah? Yeah. No, I hear you.

Darcy Marler (38:55.451)

So in my world, 1970 and newer, keep doing the flips and the burrs and the fix up because they're not end of useful life. 1950 and older, tear it down. Now I'm not talking about things that are historically or, you know, architecturally valuable, but that's a very small percentage of the old crop. Most old crop is just old crop. So 1950s and older tear it down. The 1950s themselves and 60s are kind of a gray area. Does it have one more renovation left in it or is it better as a tear down?

Garret (39:09.49)

No, of course.

Darcy Marler (39:24.667)

But I can tell you most of those old 1950s, you're not getting highest and best use, you're not getting best tenants, you're not getting highest rent. So can you renovate it enough to bring that up significantly? That's a you call, that's a project by project kind of thing. So, you know, and in certain places, you know.

It's different, you know, the cost of building and the cost of this and that is different. So it makes more sense to build new in other places than some places and others. Sure, I'll give you that. But it's all, what's the best thing to do here? What made sense last year may not make sense this year or vice versa. What strategies weren't working last year and now may be working again. By having all these tools in your tool belts or your tool belt, now you've got options. Now I can, okay, here's what's happening now in my town.

What's the best thing to happen? This, okay. So I ride that way for a couple of years. Well, that's not working anymore. Let's flip it around. That also gives you the opportunity to go somewhere else, right? Like, okay, I'm listed in Houston. So, you know, I have to learn a little bit about what's different in Houston, but not a lot. You know, there's not a ton of education. So now I've got the confidence to actually go do this anywhere. So again, that helps me become recession proof, or, you know, more so, so I'm not tied to any one thing.

Garret (40:28.296)

Mm-hmm.

Garret (40:44.682)

Okay, so I mean, I've kind of structured my entire portfolio and I guess my life per se as an entrepreneur, because I don't have a pension, to kind of buy those, I'll give you just a classical plan that everybody I'm sure is aware of, buy those 10 houses, get them paid off, and now you don't have mortgages, now you're making 15K a month by the time you're, whatever, 55, 60 years old. That's a very simple, traditional BRRR strategy. If you're going into development,

obviously very similar to like I used to be a realtor. I mean, the money was great, but as soon as I stopped selling, the residual income comes in. What do you advocate even for yourself if you're not into long-term buying holds?

Darcy Marler (41:31.591)

So again, I like projects. I like a beginning and middle and an end. I like to be in and out quick. And it took me a long time to figure that out, right? So it's different for all of us. But on your properties, what's your average monthly cashflow?

Garret (41:51.598)

Well, a single family, I think a couple hundred bucks, right?

Darcy Marler (41:54.735)

So now, just real quick math, for most of your listeners, okay, for you to retire, Twitch your nine to five at 200 bucks a month per unit, how many units do you have to have in order to do that? A lot.

Garret (42:08.382)

Right, well, I think to my point, if you've got your 10 houses and those $1,300 mortgages are gone, then your 200 should turn into 1,500, right? 10 houses, that's where I got my 15K, but of course you have to pay those off somehow, right?

Darcy Marler (42:17.107)

But the

Darcy Marler (42:22.386)

But the key word there is if you've got those 10 houses.

If your listeners are just starting out, how many units do you need at 200 bucks? A lot. Do you have the money to buy all those houses? No. So now I got a JV partner. Okay, well now the number of units I have just doubled. Right? So it's not as easy as, you know, and like I was into it, like I did a shit ton of flips and burrs and, you know, so I got it. I was, you know, I bought the Kool-Aid for a long time too.

Garret (42:28.258)

Correct.

Garret (42:36.775)

a lot.

Garret (42:41.035)

Yep.

Darcy Marler (42:55.099)

The difference is a lot of the gurus are coming out of Ontario where from 2016 to 2021, it just went up 20% a year. You know, something you bought for $600,000 in 2016 was worth a million too in 2021. Well, you know, a monkey can throw a dart at a dartboard and make money in that economy. Contrast that to Alberta where your, you know, your values went down and you know, I had about 150 units from 2015 to 2021.

I lost, my rents went down $300 per month per unit. So I was losing, that's 45 grand in revenue loss. I went from making like 10 or $15,000 a month to losing 25. I lost 25 grand a month for three years. Do the quick math in your head there. So this long-term buy and hold works until it doesn't. Interest rates are, being highly leveraged works until.

Mortgages are good debt until they're not kind of thing, right? So I'm just saying, I'm not advocating one or the other. I kind of am, but anyway, I'll pretend I'm not. Um, but anyway, uh, options are better. Right? You know, here's a strategy too, right? Okay. So let's say we build a new fourplex, whatever we keep it in our portfolio. We build a second one and we flip, right? Keep one, sell one, keep one, sell one. You get the best of both worlds. You get the long-term. Um,

growth for your retirement. And then it's almost like flipping, right? You get the quick short-term cash that the flip gives you. So that again, makes you more recession-proof too, because now we've got cashflow, if things get bad to kind of feed stuff. So again, I'm all about options and tools in the toolbox and being flexible. Yeah.

Garret (44:40.39)

Okay, now you've convinced me. Thank you for that lively debate. No, honestly, because I know people are gonna be saying, yeah, but what about my cashflow? What about my long-term? And you can argue if you're making a ton of money doing development, you could put it wherever you want, right? Back into passive real estate if you really want to. Let's change gears. I wanna hear about Houston. Are you doing this just because you're bored? Because you just wanna learn, like did you just throw a dart at the board? Like why Houston?

Darcy Marler (45:07.315)

So 1996 to 2001, I was an IT guy and I lived and worked full time in South America, Venezuela, Mexico, Colombia, and Brazil. My wife is from Venezuela and my kids were born there. I always joke that I went to South America and I made my own souvenirs. My client was a US-based oil and gas multinational out of Houston. So I made a ton of trips back and forth.

I was actually gonna live there for a while. So out of all the places in the US, I know what the best, right? So go with what you know. So the other thing too is when I was there, let's say before the last time I was there was in 2001, they'd had the middle ring road completed and they were like 75% done the second ring road.

I rip Van Winkle, I come back in 20 years, they've done the second and they're 90% done the third ring road. So again, that just speaks to consistency and growth, right? And from a guy in Alberta that's used to this, just give me consistent growth, right?

Texas is supposed to double in population by 2050. Can you just give me that? I don't need this anymore. I'm too old for this, right? I don't need Ontario like this. And then all of a sudden a steep drop off the last year, right? Like just, I'm too old, too much gray hair already. I don't need more. So just give me, give me consistency.

Garret (46:29.954)

Okay, so the part of the project that you're talking about then is just the land deal. I know that you're just working on it, but can you maybe give us a few details and strategies of what's going through your head?

Darcy Marler (46:42.331)

So I don't actually have the land yet. So basically a couple of things you can do, right? So most of us are used to finding the opportunity first and then we scramble like mad to find the money. Whether it's burr, whether it's flip, whether it's development, right? I kind of went the other way. I went for the land. I was sorry, I went for the money raise first, right? It's called the blind pool, blind raise. And so there you're...

Garret (46:58.37)

Correct, yep.

Darcy Marler (47:06.395)

based more of it on your reputation and what people, you know, if they trust you or not. So I raised a good chunk of dough and now I've got two or three realtors and land brokers out looking for stuff, right? So I can potentially, it's getting harder and harder to let me back up a bit. So another reason for that is it's getting harder and harder to buy larger buildings, larger pieces of land without the money in the bank.

Because the seller or the seller's realtor is saying, okay, you're going to tie up my property, my client's property for four or five months, and you don't have the money. Even if you're buying larger multi-families, that's a thing too. It's getting more and more common. Now, you got to have proof of funds. I got to know you're real. That's another reason why raising money is becoming more important on the front end. Now that I've got it, now I'm a lot more flexible too. I can buy, just an example,

You know, in Northwest of Houston, you know, land's gone crazy. It's like $250,000 an acre. South, Southwest is, you know, 30 or 40, for example. Out in the East it's cheaper. So I can buy more land depending on where I'm going, right? And now the finished, I'm not gonna build the houses, but the houses will be of a different kind of quality as well. Maybe I can only afford a very small chunk of dirt, but maybe that's more suited for a multifamily apartment, right?

I don't really care. I'm not married to anything in particular. What I'm doing is basically the plan is to buy land, get the permitting and zoning done, do the stripping and grading, you know, put the pipe in the ground, ready for whatever builder is going to build, whatever they're going to build. So that's the exciting part to me too, is I get to be creative. Here's the other thing about building new too, right, is let's say I'm just going to do the

Darcy Marler (48:59.091)

planner, lawyer, that's what I have two or three people that I need to put pipe in the ground to do a raw land subdivision 10 to 15 to build a new house or to do a burr or anything there's 50 material suppliers and contractors so the more you go a the more people with their hands out asking for money hopefully there's some left for you at the end of the day and there's also a risk of time right because it's taking longer to do all that

So I've done larger developments in the past and I did the whole thing. And yeah, what I've learned is a, to phase it, or at least just pick one, you know, of the three strategies, kind of the paperwork only, piping the ground. Building on large projects, just pick a lane and go with it. Don't try to do the whole thing in and out quick. Right. So you can minimize your chance of risk of time and the economy is changing and government's changing. So, uh, it's all about flexibility and time for me.

Garret (49:29.482)

Yes. Yep.

Darcy Marler (49:55.771)

That's kind of some of the things I learned over the years.

Garret (50:00.994)

Okay, one of the questions I was gonna ask you is, how does a newbie who is like myself, a flipper guy, transition? And I know you have this course. Why don't you give yourself a plug here and tell the audience a little bit about why you're doing the course, because I've never heard of anything like it. I think it is quite unique.

Darcy Marler (50:14.587)

No, it is, yeah. Like I said, I've got my first book given to me when I was 15, 40 years ago. I've been watching education for years. All we talk about is flips and rents. 10 years ago, rent to own was a big deal. Then it kind of went away. Now, Airbnb arbitrage is big the last four or five years, but that's getting harder to do. So, but we're always taught again, values in the building. So nobody's really teaching how do we deal with land? How do we increase land? How do we get highest and best use? And now that most of our inventory is older.

How do we, and the values in the land and not the building. How do we profit from that? So that's what I'm trying to do, give people options, give them more tools in the toolbox. So now you're not just stuck on the old stuff. Cause again, we're all just looking for the same property. And there's massive competition. All across most of North America, now you can't cash flow. A single family home, Saskatchewan, New Brunswick.

Ohio, but other than that, not so much. So we're all going to multifamily courses. We're all trying to find that apartment. Dirty secret there is once you're done with the course, there's nothing to buy, right? Because if you've got a multifamily that cash flows, you're not selling it. So these things don't come on the market very often, right? Until dad dies and the kids don't want it, right? And so now it's a 1950s thing that needs a lot of love.

Garret (51:23.53)

Yeah.

Darcy Marler (51:31.835)

We're all going after the same property. So if we can differentiate ourselves, learn what to do with vacant land, learn what to do with that tear down, like we talked about the four scenarios. Now, now we're talking, now we can do some stuff. Like I said, 70 and newer. Perfect. That's probably still the old world. But now we can separate ourselves in the competition by learning what to do with the really old nasty stuff instead of trying to fix them. I, you know, I was a guest on a podcast a couple of weeks ago. And after we got off the air, the guy was telling me he was in Philadelphia.

and he's working on an 1880 burr, just kicking his ass. And I'm saying, well, in my world, that's a teardown. My world, that's a teardown. He goes, yeah, no, like, yeah. So, you know, tell me about your course again. Kind of that's where he was too, right? So like, why are we fixing this whole crap up? So that's what the course does. It's 15 hours of video, three to four hours will get you up to speed and going. There's a great, it takes you all the way through all the steps to, from grass to.

Garret (52:08.031)

Wow.

Garret (52:18.365)

Yeah, yeah.

Darcy Marler (52:29.415)

to building, doing subdivision. You know, if you're a wholesaler, for example, wouldn't you want to add an extra zero to your payday? You're looking for something, you flip it to your foreground check. What if you did just do the zoning and density changes, shovel ready and sell it for 40 grand, right? So lots of value, lots of options. There's a library of 50 spreadsheets and case studies.

Garret (52:49.627)

Mm-hmm.

Darcy Marler (52:56.811)

and contracts, sample contracts. There's an amazing Facebook community of all the other students so we can learn together and invest together. So it's really come together, really, really great. I'm really proud of it. It's a great course.

Garret (53:09.11)

Wow, yeah, no, well, we'll talk offline. Like I said, part of the reason I do this podcast rather than the passion project is to meet interesting people, but to learn, right? This has been a side, I don't know, I don't wanna say bucket list thing because I'm not ready to go yet, but I've always wanted to learn about real estate development. So that's great, we'll put some information about the course in the show notes and give a link to your YouTube channel. Before we end, I want to...

Darcy Marler (53:31.484)

for the

Garret (53:37.578)

pick your brain a little bit about what you see coming into the near future in terms of opportunities, emerging trends, obviously the budget just dropped you know, a week and a half ago, but in terms of real estate development, what do you see, what's in your crystal ball?

Darcy Marler (53:53.003)

Well, I've been saying this from the beginning of the year because it's an election year in the US and maybe in Canada, we never know with the thing it has to. But anyway, you know that they're going to lower interest rates just because they have to make the existing government kind of look better, right? So you know interest rates are coming down. Those people that are sitting on the fence waiting to buy a house, they've been sitting there but now that interest rates are maybe a little favorable, so maybe they come in so I can see kind of a short-term lift.

In-house prices, again. I think we're all set though for kind of longer term, more people are gonna be renters than ever before. So again, if we can create the density, knock down the old house, come back. I think it's a mistake to assume that everybody that wants a new house wants to live in the suburbs. Lots of people wanna come into the inner city.

higher walkability scores, existing trees, existing shopping and all that. So if we can kind of revitalize some of these older neighborhoods, again, higher density, you're looking, I think, at a really good opportunity there to make some good money as well. Give the people what they want, what does the community want and need, and go from there.

Garret (54:50.498)

Sure.

Garret (55:10.218)

Yeah, okay, well said. All right, final question. I ask every guest this, so I hope, I'd love to hear what you have to say. So this is the Investing to Win podcast. How do you define success and what does winning look like for you?

Darcy Marler (55:12.929)

guess this.

Darcy Marler (55:23.759)

So success is being able to do what you want, when you want, with who you want. And that works kind of across the board. If you're a real money guy and you wanna be a titan of industry, well, what you want, when you want, with who you want, perfect. If you're a lawyer and you're tired of that and you wanna just work for a nonprofit, perfect. What you want, when you want, with who you want, right? So again, it kind of fits in all areas. So I like that it gives you options. We don't all have to be all about the money or all about...

We kind of got to divide, we're either pro money or we're kind of not about money, right? It can be a mix. So what makes you happy? I kind of like, again, we all kind of come into real estate investing to talk about investing specifically and we're, well, either are you gonna buy a rental course? You're gonna do a flip course. Cause you know, I got to sell courses, hurry up and make a decision. We're kind of forced to make a decision too quick, I think. So I always say,

Take some time, learn all the different options, flips, rentals, burs, development, whatever, see what you think would match best with your personality and then learn more about that, right? And so that way, I think we picked the how before we picked the why, and we should be doing that the other way around. So if you pick your why, like, you know, for example, I shouldn't have been a Nylor, I hated it, right? And I should have delegated the on-site stuff. My strength is I love to hunt.

I love finding the opportunities. I love putting the deals together. I love being creative. When I was flipping, what am I gonna do with that really ugly 1960s fireplace over there? I love that creative part of it. If I knock down the wall, building a new house, sitting down with the architect, doing lands subdivision, sitting down with the engineer and where's the water gonna run when it rains? I like that kind of stuff. I should have delegated the whole building part.

Garret (57:14.576)

Mm-hmm.

Darcy Marler (57:17.563)

Should have found a partner. I'm big on partners too, right? Like find someone who's strong where you're weak. It was always kind of a down day when I got the keys to the new place, cause the fun part for me was over. Now I had to go to Rome every day, right? So it was, I didn't like that. So, so kind of make sure you're happy when you're, you're doing this investing thing, not just all about.

Garret (57:42.35)

Awesome. Well said. Well, thanks again for joining me this afternoon on the pod. I really appreciate it. I learned an absolute ton and I know you've brought great value to my listeners.

Darcy Marler (57:51.027)

Good, thank you. Bless you, you know, I'm very passionate about this, as you can tell, so it's almost like I'm the prophet. I'm spreading the gospel of development. Let's see what we can do about it. I want to know, let's build some new communities and not just fix up old stuff.

Garret (58:02.651)

Awesome.

No, for sure. Yeah, win-win. All right, thanks again.

Darcy Marler (58:08.924)

Thank you.