Alex Rascanu held senior marketing and senior policy advisory roles before entering the real estate industry, where he provides buy and sell-side real estate advisory services: suitable acquisitions analysis with portfolio and development strategy, and direct sales and digital marketing strategy development and execution to help you achieve the highest sale price in the current market. Alex completed a bachelor of business administration from the University of Toronto and a masters of public administration (management) from Dalhousie University, and is a registered real estate sales representative with Right at Home Realty.
In my interview with Alex, we discuss why Alex became a real estate agent, what is the process of owning a home and what are some creative ways to get your foot into the door of the real estate market.
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Full Transcript
Sean Cooper:
Welcome to the Burn Your Mortgage Podcast. I’m Sean Cooper and it’s great to be back for another episode. On today’s show, I’ll be talking to Alex Rascanu.
Alex Rascanu held senior marketing and senior policy advisory roles before entering the real estate industry, where he provides buy and sell-side real estate advisory services: suitable acquisitions analysis with portfolio and development strategy, and direct sales and digital marketing strategy development and execution to help you achieve the highest sale price in the current market. Alex completed a bachelor of business administration from the University of Toronto and a masters of public administration (management) from Dalhousie University, and is a registered real estate sales representative with Right at Home Realty.
In my interview with Alex, we discussed why Alex became a real estate agent, what is the process of owning a home and what are some creative ways to get your foot into the door of the real estate market. Without further ado, here’s my interview with Alex Rascanu.
Sean Cooper:
Hi, Alex, how are you doing today?
Alex Rascanu:
I'm doing well. Sean, how are you?
Sean Cooper:
Pretty good. Thank you. It's wonderful to finally have you on the podcast. When I heard that you had gotten into the real estate industry. I knew that I definitely wanted to interview you. So super excited to chat about all the exciting initiatives you've been up to and for you to share your story of why you got into the real estate industry because I think it's quite an interesting one.
Alex Rascanu:
Thank you. I appreciate the opportunity.
Sean Cooper:
Great. So first of all, can you tell the audience about what inspired you to become a real estate agent? Why did you become one?
Alex Rascanu:
Sure. Well, growing up, becoming a real estate agent is not a career that I was planning to pursue. My father was a Civil Engineer and he would go on construction sites and manage projects and he would do architectural drawings at home and this was back in Romania where I was born and initially grew up. But once we moved to Canada, Toronto, specifically, I had the opportunity to pursue a business undergrad. I was able to work in various marketing roles in Nagoya, Japan, London, England, Zurich, Switzerland. And here in Toronto, I pursued a Master's in Public Administration and worked with a federal government and two provincial governments. And while I was working with a national nonprofit, my wife and I, and our three little ones went through a really terrible real estate selling and real estate buying experience.
What happened was that we had purchased a condo. And we thought that this was going to be the place that we're going to be for quite a while, there were a whole bunch of challenges that happened in the building itself. And we ended up deciding to move and the realtor whom we chose was the realtor who was actually the listing agent for the condo. And we had used the services of this realtor to purchase the condo.
She said, "Oh, yeah, it's going to be so straightforward for me to sell this condo for you, you have nothing to worry about on the sell side. Let's go find a place to purchase that you would really enjoy living in." And so off we went to find a place to buy and don't behold, we found this poem that within our budget was a townhouse in the upper beaches neighborhood in Toronto. And we took a look at it, it seemed like it could be a good option for us. And the realtor came to our place and she brought the offer documentation and she said, "you know, here's for you to sign" and we said, "oh, but there's no inspection clause or we're not doing an inspection." And she said, "trust me. It's got good bones. This house has good bones. It's almost 100 years old, but it has good bones. You just trust me. We're going to be able to lock it in and you're going to enjoy living there and there'll be no issue selling the condo".
Because we needed the money from the condo to purchase the house and we signed not very wisely. And once the deal was firm we started having second thoughts about whether we made a good decision. Long story short, after we moved into the home and we opened up the drywall in the basement. The previous owners had put up a drywall and carpeted the floor. We found black mold everywhere in the basement.
Sean Cooper:
Wow. That's not a fun experience.
Alex Rascanu:
Yeah. And I had asked him when I was young, and I had it from mold. So for us, this was a major health and safety issue for myself. And we have three kids, so you know, something to be quite concerned about. And we hired someone, they did the cleaning up with the mold, which is not inexpensive. And then when we tried to use the washing machine in the basement, we realized that anytime we used the washing machine there was a flood that was occurring, there was water bubbling up from under the floor.
Sean Cooper:
Wow.
Alex Rascanu:
And so we had a plumber come in and investigate and little did we know that all the pipes had been completely shattered. Over the years, it was just a complete mess, we got the plumbers to open up the floor. And there were routes through all the different pieces that were constituting the plumbing structure that would allow the water to flow out of the home into the city, sewer pipes and water pipes.
And so we ended up incurring quite a bit of an expense to redo the plumbing for the basement. And shortly thereafter, we realized that there were structural issues with the home as well, where there was a significant foundation issue. Once we opened up the drywall in a particular area, we had to do a whole bunch of reinforcement stonemasonry. It was a mess, we ended up spending over $50,000 out of pocket unexpected expenses like that related to latent defects that were not disclosed to us by the sellers.
And unfortunately, we were not well protected by the realtor who served us who advised us you have nothing to worry about. Just trust me, you don't need an inspection. And then we turned around on the seller's side of the condo. There were also major issues because it was a month and a half and she was not able to sell it. We needed the money from the condo to be able to purchase the house, which we already had a buying agreement regarding. And it was a very, very stressful time. And we ended up using the services of one particular realtor who my wife found online who had a really good presence.
And she did an amazing job. She ended up coming in on a Saturday evening, we reached out to her that Saturday afternoon. She said okay, no problem. I already lined up the staging. For the next day, I already lined up the photographer for the following day, we're gonna be going live the following day, which is going to be a Tuesday. And that's exactly what she did. She had everything lined up, so we signed with her. And Tuesday it went live on the MLS. Wednesday, we had a strong offer. And it all got firmed up when the deposit came in the day after. So in about five days, this person managed to send the seller condo, whereas the previous person in a month and a half, there was nothing really meaningful happened. And that was a really interesting time because it made me realize, hey, we had this really terrible experience with this one particular realtor. But this other realtor was amazing. She was so professional.
And it gave me the opportunity to reflect on whether this is the kind of career that I would like to pursue, to be able to help others make wise informed decisions about the acquisition of their next place to live. And I ended up switching careers and I became a realtor. And as I got in, I also ended up having the opportunity to help men intrapreneurs as well on the commercial side of real estate. So now work across commercial and residential real estate in the Toronto area. There's been quite a journey. But I feel like it's important for people to be very careful to always do an inspection when they're purchasing the property, even if it's a condo, always wanting to freehold property. And just be careful, be wise and trust your gut and instinct. You know you're sensing that you might be taken advantage of by someone who's supposed to work in your best interest.
Sean Cooper:
Now, thanks so much for sharing your story, Alex, and sorry to hear about what had happened to you there. But it's great that you could take a negative and turn it into a positive for yourself there. So yes, in terms of the second question here, could you talk a bit about the process of owning a home in Toronto or any other place throughout Canada and also a follow up question to your last answer there.
If you could do it all over again, what about the process before you can just purchase property you want to purchase from a realtor that is actually going to be professional and look out for your best interest? If you could do it all over again. What tips would you have for the listeners so that they're not taken advantage of and they have a professional Realtor? Like I'm sure there's questions you would ask asking things that you would do so yes, how can you enlighten the listeners to avoid a situation like that?
Alex Rascanu:
Yeah, I would say that when it comes to the second part of your question around finding a competent realtor, if it was me doing it all over again, and I wasn't a realtor, I would say, ask friends family purchased in the recent past and find out who had a great experience with the realtor was look them up. Also, you can generally trust Google reviews. So you can also do some search on the web for your particular geographic area and find realtors who are well rated, and whom you can see based on the reviews are providing competent service, and then reach out and have a conversation with a few of them.
Some of the ones that were referred to you, some of the ones that you're seeing, have good reviews, and then make a decision that feels right for you based on the type of service that you're looking for, whether it's on the buy side or the sell side. But I would say those would be the two main things that I would personally trust, a referral from someone whom I trust, and I know they had a good experience. And then online reviews will be a second layer that I would consider.
Sean Cooper:
Those are great tips. Thank you.
Alex Rascanu:
Yeah. And when it comes to the process of owning a home, in my view, there is an opportunity to pause and reflect as to whether buying a home is the right thing for you right now. I mean, buying a home is one of the biggest decisions you'll ever make. But is this the right time to purchase? Or is this the right time for you to potentially rent, I remember when I was serving as the first head of marketing for a large financial technology firm. One of the key advisors we had, he had just sold his firm recently, he had about $4 billion of assets under management. And he was sharing with me his real estate journey. And he mentioned the way he decided where he wanted to live. And whether he would rent or buy was as follows.
He decided where he wanted to live with his family. It was a higher end neighborhood in Toronto, because he wanted to be around the kind of people that he would want to do business with, or he wants his kids to be around. And he rented and he rented for about 10, 15 years before he purchased, even though he had already reached the point where he was managing over a billion dollars of assets. He was still renting. And it's only when he feels “okay, I'm committed to life, this area, I really enjoy it, we're going to pull the trigger.” Now all of our numbers are lined up. We're being super conservative, because we want to put a significant amount down. We want to have a mortgage timeline that is not 25 years that is much shorter, you know, in your case, Sean, you managed to do it in about three years.
A lot of people think about 25 years, from my point of view, if you're able to have a shorter timeline for your mortgage that is definitely ideally serving a huge amount and interest. So he was very wise in how he approached it. So, you know, I think that is it right for you to buy or to rent right now, if you want to rent you have less maintenance and repairs, you have lower monthly and upfront costs, you are making a short term commitment, which makes it easier for you to move in case you get a job in a different part of Canada, there might be depreciation in the property value, and you don't have to stress over that. So there's benefits to renting. On the flip side, there's benefits to buying because you get the freedom to renovate or modify your home when you're renting, you don't really get the freedom to do that. You're building up equity in a safe, secure investment compared to other asset classes. Real estate is definitely much more secure when looking at the volatility of certain types of stock that people have been investing in lately and have significantly dropped in valuation. That also gives you potential for rental income. Right?
When somebody reads your Burn Your Mortgage book, they see that you know, you lived in the basement and you rent it out the upstairs and you're able to really accumulate a significant amount of revenue from tenants. And you're able to throw that into the mortgage. And so you have that opportunity when you own the property. And you also have stability and peace of mind.
So really, the first thing would be is it wise for you to rent or is it wise for you to buy at this particular juncture? If you decide that owning a home right now is something that you want to pursue you want to think about? Are you financially ready to own a home? Have you had the opportunity to pay down your debts ideally, you've completely paid down your debt. Ideally you have put yourself in a position Shouldn't where you have an emergency fund, ideally three to six months worth of monthly expenses. So if your family's monthly expenses are $5,000 a month, ideally, you have 15 to $30,000 saved up before you're looking to make a purchase, you then save up for the down payment, maybe friends or family are able to help. But ideally, you're able to save for that. And it's not a loan, if you ever get something, it's ideally, just a gift from someone that you may need to purchase a property. And then you want to kind of line up your numbers to make sure that you're going to be in good shape.
Once you make a purchase. Imagine that you want to purchase a property that's $500,000 in Halifax or you want to purchase a $500,000 condo in Toronto, or you want to purchase a $500,000 property in Calgary, at the end of the day, you're going to have a different cash flow situation and each one of those situations because in the condo, maybe it's just you who is going to be living there in Freehold detached property, you will be able to rent a portion of it. So what are going to be your monthly expenses once you are in that property? What are your monthly revenues going to be? And what is the difference between the revenues and expenses to land on? Okay, is this going to be a cash flow, positive opportunity for you. And even if it's not cash flow positive, because you're not treating it as an investment, you're literally buying it as a lifestyle decision. Because you want to live there yourself, you want to live there with your family, you still want to line up your numbers to make sure that you're able to cover all the expenses on a monthly basis based on your salary and that you're dedicating as little as possible of your monthly income toward your housing costs. And ideally, the be no more than 25 to 30%.
And people think it's wild to even think about your housing being only 25 to 30% of your gross monthly income in a place like Toronto or Vancouver or Montreal or other major cities in Canada. But it is feasible if you are wise and how you're approaching it. You definitely can. I don't know, you know, we're co hosting this tour of the Yorkville neighborhood in Toronto, which is a really high end neighborhood coming up. And there are condos in Yorkville that are not far away from that $500,000 price point that I mentioned, which people will be surprised to learn that but yeah, there are options available. And you can make wise calculated conservative decisions as to how you're approaching your home purchase. Beyond that, I would say that you want to meet with Ideally an independent mortgage broker by someone I'm speaking with right now, Sean Cooper.
Sean Cooper:
Thanks for the shout out.
Alex Rascanu:
Yeah, or you know, someone else that maybe is in your network right now, when you trust, no, whatever makes sense for you. Generally independent mortgage brokers would be able to access options for you from a lot of different lenders. And whereas if you go to your bank, they will only be able to see the products that the bank makes available, not their competitors. And there are certainly a significant number of financing options in Canada, and someone who's an independent mortgage broker is able to see through all of that and has a more significant number of options for you.
So you know, really speaking with capable professionals around your financing options is wise. And then you want to then engage a competent realtor, pursue options that are available for you in the market. Lock in the right opportunity, making sure that you are doing an inspection that you have a starter certificate clause in your offer. If it is a condo in Toronto, if it is a Strata in Vancouver, you want to make sure that you are giving yourself time for financing. So in my experience, there's really five business days that you take to be able to ensure that your financing is going to be in order and your mortgage advisor will likely say something similar to that. And then you know on closing day, which is super exciting, you get to have the keys and either take possession and move into the property yourself or take possession and then lease it out and have tenants be able to cover a significant portion of your mortgage if not all of it and potentially even driving you a level of profitability through positive cash flow from that.
Those are some of the steps that I would say one would want to consider and if they are just quick adjacent thought if someone is looking to invest they would likely want to look across residential and commercial as well not purely as residential because commercial does present quite a few options and has more flexibility in terms of being able to remove the tenant out of the property if non payment of rent was to occur, whereas that is tends to be a lot more complicated. on the residential side.
Sean Cooper:
Well, thanks so much for all those tips. They're very helpful. And you really covered a lot in your answer there. And, yes, I mean, there's not much more for me to add, you really covered a lot of great points there, I would just basically summarize and say the whole rent versus buy decision, like, really, some people automatically buy all the time, like, you really need to be ready to commit yourself to a certain career and location before it makes sense to buy there.
So yeah, try to get your life figured out there. And then it can make sense to put down roots. But yeah, I mean, some people have just always rented their lives and all their life. And there are definitely some pain points there. Like I would say, the biggest pain point is having to ask the landlord permission for everything, and even being asked to move quite a few times and maybe being priced out of your community, because you may have rent control for many years, and then the property is being sold. So you have to leave and then you can't afford to live in that neighborhood anymore.
So yeah, I would say once you're ready to put down roots and you're established in your life, it definitely makes a lot of sense to buy there. So yeah, thanks for all those great tips there. Okay, perfect. And the last question that I had for you is, as everybody knows, the real estate prices, home prices have gone up quite a bit in the past few years and decades, to say the least there. So what are some creative ways to get your foot into the door of real estate markets, especially expensive markets, like the GTA and GVA as an example?
Alex Rascanu:
Yeah, my suggestion would be to make sure that we're in a good financial position before we look at purchasing. So as I was mentioning earlier, paying off debts, building a three to six month emergency fund saving for a down payment. And assuming that we've been able to do those things which are safe, conservative, wise things to do, I would say that, we could look at properties that are priced at the lowest possible price point in our market as possible.
So that may be a condo or a Strada, as one would refer to it and VC, one could potentially look at co ownership as a solution. So it may be that you have a family member, or you have a friend, or a couple of family members or a couple of friends who would be willing to co purchase with you a property and for you to live in different parts of them parts of the property, maybe it's a duplex, maybe it's a triplex. And if you wanted to pursue co ownership, one suggestion that I would have would be to make sure that you speak with a lawyer upfront that you have an exit strategy that's built in, because the last thing you want is for you to co purchase with someone and then that person gets a great well paying job in Seattle a year from now, and they want to move and they're asking for their half of the investment back.
And you may not have those funds lined up. And then it puts you in a really difficult situation as to whether you need to sell or how exactly, you're going to come up with the funds to buy out the co-owner. And so to prevent those kinds of situations from happening, you ideally would want to have a legally binding agreement that's in writing that says this is how the exit strategy would work out in this scenario. And a lawyer would be able to help you with that. Another idea would be to approach your search process by thinking about what are some ways in which I can generate some revenues from this particular property that we're thinking of buying. And it may be that you identify a semi detached home that has a separate entrance in the basement, and which you would be able to rent out.
And depending on the financial institution that you will be using to actually support you in the purchase of the property. It may be that that financial institution would actually be able to consider somewhere between 50 and 100% of the rent revenue that you're projecting to generate from the basement unit as part of what total amount of mortgage you're able to qualify for. So you might be able to actually achieve homeownership and have somebody rent a portion of the home that's a separate unit from the one that you're living in as part of that solution, which can work really well for you.
And so those are a few ideas. Another one would be to look at what we call in the Toronto area Co Op buildings where these are generally older, legal structures. There are some really beautiful Coop buildings and neighbors like Forest Hill and Rosedale and the beach where you're able to purchase a property for a much more affordable price. Then you would have a condo down the street or typical condo as the way you normally think about them. And the reason for that is because you would normally need 25 or 30% down as part of the purchase, as opposed to maybe 5% ,10%, 15% down in the case of a condo.
And so it tends to be harder for people to sell the coops. But if that's a neighborhood, and that's a building where you would love to see yourself living, or in the long run, it could make sense if you're able to put together the cash as part of that purchase. So I personally, am currently living in a quad building actually, it's a beautiful 1940s building in a good neighborhood. And it can be a really interesting option for other people as well. But you want to do your research and make sure that you're buying in the kind of neighborhood that you want to live where you want your kids to go to school and take all those dummies into consideration.
Sean Cooper:
Well, that's great advice. Alex, thanks so much for being a guest on the podcast. It was wonderful to have you and I'm looking forward to being a guest on your podcast in the coming weeks as well.
Alex Rascanu:
Yeah, I really appreciate the opportunity to be on your podcast and your mortgage Sean. So if anyone has any questions, feel free to reach out. My email address is Alex@rascanu.com That's Alex @rascanu.com, where you can go to my website rascanu.com. Thank you so much.
Sean Cooper:
My pleasure. And I'll have that all in the show notes. Great. Thank you.
Alex Rascanu:
Appreciate it.
Sean Cooper:
Thanks for listening to another episode of the Burn Your Mortgage podcast. Besides being a podcast host, I'm also an independent mortgage broker. If you or anyone you know, family, friends, co-workers or neighbours could ever use any unbiased mortgage advice or a second opinion, feel free to reach out. Email me at Sean that's sean@burnyourmortgage.ca or call or text me at 647-867-3711 for a free mortgage consultation. Also, be sure to head on over to www.burnyourmortgage.ca and sign up for my free weekly newsletter. As a small token of my appreciation, you'll be able to download my ultimate mortgage checklist on choosing the perfect mortgage. I look forward to hearing from you and helping you with all your mortgage needs. Once again, thanks for listening.
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