In today's session, Leon Goren speaks with Oleg Shiller, Principal Broker/Owner of OZ Capital, and a freshman member of PEO Leadership, about the future of commercial and residential real estate in Ontario and the rest of the country.
If you’re interested in one of our The Way Forward live webcasts, please visit https://peo-leadership.com/.
If you’d like to listen to some of our past webcasts, we have recordings on our COVID-19 resource page (https://peo-leadership.com/covid-19-resource-centre/). Guests have included University of Toronto’s Janice Stein, Harvard’s Rosabeth Kantor. We’ve talked about such topics as mental health, rent negotiations, the stimulus package and a host of others.
If you’d like to find out more about our leadership community, please feel free to reach out directly to lgoren@peo-leadership.com.
If you enjoyed today’s podcast, please subscribe and give us a review on Apple podcasts, or wherever you get your podcasts.
In today's session, Leon Goren speaks with Oleg Shiller, Principal Broker/Owner of OZ Capital, and a freshman member of PEO Leadership, about the future of commercial and residential real estate in Ontario and the rest of the country.
If you’re interested in one of our The Way Forward live webcasts, please visit https://peo-leadership.com/.
If you’d like to listen to some of our past webcasts, we have recordings on our COVID-19 resource page (https://peo-leadership.com/covid-19-resource-centre/). Guests have included University of Toronto’s Janice Stein, Harvard’s Rosabeth Kantor. We’ve talked about such topics as mental health, rent negotiations, the stimulus package and a host of others.
If you’d like to find out more about our leadership community, please feel free to reach out directly to lgoren@peo-leadership.com.
If you enjoyed today’s podcast, please subscribe and give us a review on Apple podcasts, or wherever you get your podcasts.
Hi, I'm Leon Goren, president of PEO leadership, a peer to peer leadership advisory firm. We're an amazing community of CEOs, presidents and senior executives. Ask yourself, are you learning as fast as the world is changing? It's time for Ontario business leaders to band together for counsel and support. It's time for you to tap into the business wisdom of our peer groups and unlock new ways to grow. I want you to come out of this COVID crisis a better leader and your organization ready for what's next, take the first step at peo-leadership.com. Today on our Snippets podcast we have Oleg Schiller, the founder and owner of Oz capital. Oleg is one of our freshmen members. Oleg, I'm glad to have you here with us today. How you doing?
Oleg Shiller :Great to be here. Leon, I'm doing phenomenal. doing absolutely fine. Thank you so much.
Leon Goren :I love speaking with you because you are the most optimistic, positive person out there is nothing that holds you back. So let's let's start this little conversation around your journey. Because you and I, one day sat in it in a little coffee shop when I was first meeting you walking through, and it's really stuck with me, because you were in the banking industry to start. And then you decided to get out on your own. And so maybe just walk us through and share those moments with the members.
Oleg Shiller :Absolutely. So I've been a banker since 1999. I became a mortgage agent in 2003. And my career spans about 20 years at this particular point in time. There's that my journey is there a lot of funny stories about what I did on how we did things. The one thing that they know I'm not very spontaneous, I do think about what I do before I do things, at least they try. But, you know, I got to share a few funny stories just to kind of raise the enthusiasm so that the listeners can really get to know me from from from the way I am really. So I always wanted to get into the banking industry and I always wanted to get that job as a bank. And being an entrepreneur, I don't take no for an answer. So I remember when I was knocking in the door of the HR office at a young gun King, I really didn't know where to go at ABC and I kept knocking knocking on the door for weeks and weeks until this lady comes out. And she happens to be an HR manager said what do you knock in the door, it's a closed area. I go, I really need to get a job. I really need to get a job for the bank. I can do so many things for you, you got to give me a chance. She's like, well lucky. It's your day, you know, the my view. And sure enough, I come home and you know, there is a message to call her back as soon as possible. So I've given her a call and sure enough, she had a position for me to start as a personal banker. It was so such an exciting moment for me. I was so happy and I zoom through an interview I have two three interviews with branch managers they all love me. I fell in love with it was the industry was the job and off I went I've been with the bank for Three years and then moved to positions fairly quickly, I always wanted to advance. So from a personal banking associate to a personal banker, assistant branch manager, I was a financial wellness consultant for Abacus bank, which was a division of CBC. And there's a great story. I was literally a quarterly achievement in sales the first quarter in that division because that was probably the best job of my life. I was the only person on site large corporations like Nortel networks, Research In Motion GlaxoSmithKline we had a CBC office right on site. I got to meet some phenomenal, phenomenal people and I went through Nortel's crisis in 2000 2001. But they were laying off a lot of people unfortunately, and my job was to kind of help families go through this time, give them the necessary credit that they that they needed, because there was a lot of restructuring and I was able to save many families extending the security lines of credit just before they were laid off. And later I remember specifically a story when about a year into my role was already a financial advisor was Imperial service, high value division of CNBC. I was taking lunch on the plaza and they see this guy he's running towards me was his arms open. And he I don't remember specifically what the guy was. And he was like, You Don't you remember me? And sure enough, I'm like, yeah, this was one of my clients. And he's like, you don't realize what you've done. You saved my life. I go, how did I that line of credit you've given me I was laid off shortly after from Nortel. I went back and got my MBA. And now I'm a senior vice president of such and such company, and I realized and she said, I'm so thankful for you. I'm thankful forever. And this was the the pivoting point for me because I realized that this is my purpose, not only helping people but also making a difference in their lives as a financial planner. Later on, dug up me thinking I'm here, here I am in my kitchen. One night speaking was my girlfriend was my wife at this. She was my girlfriend the time my wife now. And I'm saying, Listen, I can't understand there's a big disconnect between the salary yet that the bank versus the amount of hours I'm putting in and all these targets I have, there's no economic sense what do I do? And sure enough, 23 years old, I'm you know, no kids, I guess I had the privilege of being able to make the decision. And I became a mortgage agent. It's such an exciting journey. I love entrepreneurs. I love the entrepreneurial spirit, especially now. You know, it's fascinating to me, the 21st century having access to technology and social media, but back then in specifically in 2002, while being 23 years old, it's not like I had a lot of friends wanting to buy a refinance, you know, 23 years old, you're not a real estate owner. So there's a great story which really outlines the entrepreneurial spirit, which I think is so fascinating. If you know Leon There's some yellow boxes at bus stations where they used to have the arbitrator and renters magazine. What I did was I didn't know how to market I didn't have anyone to ask. So me and my wife created the flyer, very informative flyer. So at night, while nobody would see how would one say those yellow boxes, I would put fliers inside magazines, just to get myself started, because I really didn't know how to start myself on the marketing side. And sure enough, I got two or three deals out of it, which was phenomenal, which really said, wow, you know, entrepreneur has access to all these things that he or she can do, you know, might as well utilize them, which is really a phenomenal story that they wanted to share. Another So continuing on my journey, I'm a mortgage broker. And now since 2003, I was introduced to my partner speaker, and we're partners up until now and what's important is we have no contract between us. We basically work on the 5050 basis. We've been doing it for the past 14 years because we're big believers in trust and relationship in business it's very very important very integral to us. There's a story behind toss capital. We are franchise owners of the new lending centers franchise called oz capital which is a mortgage brokerage largest mortgage brokerage by volume. And there's a funny story behind the name of aos, capital and there's a point behind that as well. And the point the name, we will try to come up with a name how we're gonna name our company and of course you know, you start looking at the mythologies and Greek mythology and Roman mythology trying to name and what's important is the name was right in front of you only have to do is just don't go far think what's right ahead of you. Keep your eyes open. And sure enough, my name is Oleg and his name is Vika and odds. There you go, and scaffold came about. So one night I had this epiphany. Let's call our Company asked capital. I call him next morning all excited. He's like, I found the mean for a company because like what is it POS capital? He's like, you're not gonna believe this. My wife spoke to me yesterday. She said, You're all like I'm Vika all that capital. So sure enough, it's so happens to be that our company was named Das Kapital and think twice. There's a phenomenal story behind it is also exciting.
Leon Goren :I love your spirit and the entrepreneurial, some great words of wisdom there, I can pull out of it as well. Before I get back to AWS capital, I want to ask you because in the mortgage business, you know, the real estate business, I mean, yes, you've got that entrepreneurial spirit, but you got some brain power there too. I can tell the way you think. Tell us, you know, February 2019, to where we are today. What's changed in the real estate market today. If you're, you know, I'm thinking of even from our members from a personal perspective in their homes today as the prices move. Is that justified? Between 2019 and today and then I'll ask you the next question between 2019 and what you expect six months from today?
Oleg Shiller :Absolutely, um, without getting too technical about, you know, what we do and how we evaluate our mortgage applications and our risk business to see that something significant change in terms of the price values, I can't really say because he I want to make a note that we're dealing in the residential space primarily, we don't expose ourselves to commercial. I know enough to be dangerous about the commercial industrial market, but our specialties are in the residential sector. So we haven't seen a price decrease we we see changes obviously in that specifically in the commercial sector offices right and and whether people are questioning of course ownership, we need those spaces and if people can work from home and cut costs, but I haven't seen a decrease in values. And I am chatting, I see a lot of appraisals. I'm chatting with a lot of appraisers And they always ask him the same question. Has anything changed in the past six months in the past three months, and for the most part, I mean, cities have in certain cities have had a mere adjustment, but nothing significant. There's a lot of fear right now, especially in something that we'll cover in the second part of the question you've asked me is, you know, especially with social media, they talk about the, you know, the nine to 18% decline that we listed market, I find, I find it very subjective. I mean, we are the 14 million in Ontario populations growing because the population is so large, I believe, there's a lot of movement I see purchases, I see refinances, yes, less transactions, but no significant depreciation and value that I can say specifically based on applications we see every day. And we see probably anywhere between 15 to 20 applications on a daily basis was credit requests and appraises for what's gonna you know, if you look at six months, do you think the market is going to change I read that report to it. With CMHC, premium 19% 18% being the worst case scenario, but we do know there's a huge loss of jobs and income coming. We know we're in a recession, we know the recession may last two to three years.
Leon Goren :What's the what with the residential market? You think? Do you not think it'll be impacted six months from today or there will be some type of price adjustment?
Oleg Shiller :I believe that there's going to be a price adjustment. I think what's important on this to separate the 416 area real estate market and the 905 real early area of real estate markets historically, what we've seen, and we've been through this adjustment several times in 2017, in 2008, the real estate market adjustments that didn't last for a long time, but the hit that was taken was the super expensive properties was an adjustment and price was overall about 25%. We believe that anything that's less than or equal to a million dollars in the 401k area, even going forward is not going to be impacted a lot. Maybe there's going to be a mere adjustment, the five to 7%. That's possible. But the question was five to 7%. For what levels? Because every house is so different. Yes, we have unemployment as more people are getting laid off. Yes, companies are going to be restructuring. But we're running a fairly sizable portfolio of mortgages. And we see based on our repayment history that people have capacity to carry. And another important factor is even if there's going to be a market adjustment, let's say 5%. Overall, it doesn't mean that people will stop being mortgages, because food and shelter are of the most important concern. So going forward, we're pretty optimistic about the market. There's going to be a small adjustment, but overall, I don't think it's going to affect the economy or it's going to drag it down completely to a point where people are just going to start handing keys on the table. Like we had the 1981 1983 recession.
Leon Goren :Okay, now that's great. So going to talk about AWS capital. I know you've been very successful at creating mortgages, you know, either through the brokerage house that you know, or your business there, but also, you and your partner, looking at mortgages, people looking at second mortgages. And you're in the midst of really, you've been very good at it, you've been solid at it, and you've been growing that portfolio over time. And you really want to take it to the next level now. So what does that next level look like to you? And how do you get there what what success look like to you?
Oleg Shiller :Success to me is not comprised of one part. This is such a combination. I would say even right now, it's such a delicate combination of things. For entrepreneur, what's important, is the mindset, his ability to cut out the noise and not listen to the outside world and just keep focused on your goals. That's very, very important. mental state To us, the expansion is, as I shared with you, we're we're in the process of opening up a mortgage Investment Corporation, which is basically a mutual fund where investors are going to be investing the money into a diversified pool of funds of mortgage residential mortgages. And when I was listening to one of the speakers about the pivoting point, I think it was wrong tight, right, that was talking about the don't break, accelerate the corners and I was listening and I said, Yes, absolutely, that that is the case. You know, you can't slow it down to us right now is that crazy point in our business, the pivotal point where we must accelerate, pull, triple, quadruple, quintuple effort into it to grow. So the reason why we decided to open the mortgage Investment Corporation is to diversify our offering to investors. At present point we in the we match borers with lenders by presenting mortgage opportunities to investors and don't put them on title. But we're opening up a fund, which will be more of a passive approach and will allow us to expand not just was an imperial, but outside in different provinces. So, to me, the success is being focused, being planned out, be clear in your expectations and communications, know that you're not running a sprint, you're running a marathon unit for a long term and don't lose sight of what's important and just keep hammering at it.
Unknown Speaker :Like historically when you were doing it per deal basis, what what was your return for those investors that invested with you about? what was the range?
Unknown Speaker :So our portfolio is balanced between the first and second mortgages, residential mortgages, and the first mortgages raised investors will typically make anywhere between seven to 9% depending on the level of risk that they take, which is driven by what's called the loan to value which is the total amount of equity of the person have over the total amount of exposure versus mortgages on that portfolio on their second mortgages, were able to generate anywhere between the nine and 11%. Mark. So our on average, the investor mix between both will probably be able to yield closer to the eight and a half to 9% return on their investment. Step one,
Unknown Speaker :On the fund that you're starting today, what are your aspirations of on investor thinking about this? What is your it's not deal to deal anymore? It's a collective it's a basket, what should I be expecting on a net basis?
Oleg Shiller :So net basis, our fund is targeted rate of return of 8%, which is fairly common for a lot of residential mortgage investment corporations out there. Ah, but the best part about us specifically, is when we're not just limiting ourselves to a mortgage Investment Corporation, our investors are going to be very able to choose between the passive and active or combination of both. So our job is to optimize the rate of return two ways of diversifying between the offerings that we have. So we'll be able to offer both and cater and and raise the rate of return as much as possible within the retrospect of the risks were able to substantiate and cover. That's great.
Leon Goren :Well all like I really want to thank you for all that information both on the real estate market but and the information you provided me with regard to us capital and by the way if somebody is interested in contacting you, they just look up boss capital and can reach out directly to you.
Oleg Shiller :Absolutely reach out directly to me. The contact information is everywhere. I believe I'm on LinkedIn on Facebook everywhere, all accessible available.
Leon Goren :The true entrepreneur that guerilla marketing at its best, I love it. Oleg, thank you so much for joining us and sharing your insights today. If you're interested in our live webcast, the way forward live and any other snippets that we've done in the past, please take a moment and visit us at p o dash leadership calm On our site you'll find various recorded webcasts and snippets. Some of these guests include Professor Rosabeth Cantor Professor Michael beer Professor gana Stein, some of the well respected thought leaders from around the world we've talked about topics such as Mental Health Leadership, the world reset government stimulus packages and where we go from here. Again, if you'd like to learn more about our leadership community, please visit us at Bo dash leadership comm that concludes our session today. Thank you very much. Have a great day.