Team RentsyncNovember 2, 2022 at 12:00 AM28 min read

E60: The Key to Recession Proofing Your Real Estate Investments

“You take the risks, you jump in, you learn and you get stronger. You get more confident, and I think that resiliency is really helpful.” — Harish Consul

Having bought his first house at the age of 15, Harish Consul has undeniably seen the property market through all of its changes. He is the Founder and CEO of Ocgrow Group of Companies, a privately held investment group involved in venture capital and real estate development. In this episode, Harish joins us to share his secret to recession-proofing real estate investments. He explains the importance of patience, taking risks, and having a diversified portfolio. As a seasoned investor, he fills us in on how interest rates impact investment decisions, and what qualifies a good investment market. Tune in to find out the benefits of PropTech, commercial investments, and so much more!

Key Points From This Episode:

Harish Consul’s education, real estate, and entrepreneurship background.
The major lessons he’s learned as a real estate and tech investor.
The importance of having a diversified portfolio.
Why Harish focuses on later-stage tech investments.
The benefits of investing in commercial properties.
How COVID affected Harish’s commercial investments.
What led Harish to found the Ocgrow Group at age 23.
Why he believes it’s important to take risks.
Harish explains Vertos, Ocgrow’s luxury development underway in Cochrane.
Why Cochrane is such a fast-growing municipality.
The change in demand in the greater Calgary area.
The greatest risk for developers, given the supply issue in Alberta.
How interest rates impact investment decisions.
The importance of being prepared and patient in the realm of real estate.
Ocgrow Group’s marketing strategy for lease-ups and their early adoption of PropTech.
Ocgrow Group’s future plans.

Links Mentioned in Today’s Episode:

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Episode Transcript

HC: “I think I was 23 in Vancouver and at zero income, and it's always hard, right? So, it was very difficult at the beginning but it's like anything, you got to stay focused and execute. And just slowly, slowly, we started from there and then just diversifying and launched a tech company and one thing led to another.”

[00:00:17] NS: Hello, and welcome to Sync or Swim, a weekly podcast, brought to you by Rentsync. Where we take a deep dive into the PropTech, multi-family and rental housing industry. In each episode, we uncover the technologies and strategies used to help overcome operational challenges and increase the value of your multi-family investments. Let’s get into our conversation today.

[00:00:42] NS: Welcome back to sink or swim. I'm your host, Nicolina Savelli. And on this podcast, I chat with multifamily and PropTech experts to learn how you can reach more renters, sign more leases and maximize the value of your assets. And today, we have Harish Consul, Founder and CEO of Ocgrow Group, a privately held investment group involved in venture capital and real estate development. Harish, thank you so much for joining me today.

[00:01:07] HC: Oh, my pleasure, Nicolina. Thanks for having me.

[00:01:08] NS: No problem. Well, I'd love to dive in, because I know that you're an entrepreneur and that's your background, and I know that it goes well beyond just real estate and development. So, I like to understand how you've built and operated and invested a successful growth-oriented business across North America, namely, in real estate and technology. How did that all happen for you? And what are kind of the biggest lessons you've learned on the way?

[00:01:38] HC: Sure, sure. Yeah. That's a big question.

[00:01:41] NS: Yeah, it's a bit of a twofold, maybe, fourfold question.

[00:01:44] HC: So, my background, I'm an engineer, I went to MBA school. I’m a native Calgarian, grew up here. And then I moved to Vancouver, about 20 years, lived out there and moved back. So, I've always been an entrepreneur ever since I was a kid. Honestly, I was really young and started learning about investments and reading Warren Buffett, and as a teenager, I bought my first house at 15. So, it just really started investing –

[00:02:06] NS: Wow, 15.

[00:02:07] HC: It was fun. And I tell my kids, they can't believe it.

[00:02:12] NS: Well, I mean, they're probably in a different environment of buying at this time.

[00:02:17] HC: Yeah, for sure. And I just grew from there. I mean, I started out as an engineer in real estate development and project management. So, started building a lot of residential commercial properties, and then move more investment side. And I started buying and renovating. And then when I was in Vancouver, I started a couple of tech companies in my 20s, had a successful IPO, sold that and then just went there and slowly grew our fund. And so, I spent half of my time on real estate, about half on the venture capital tech side.

[00:02:45] NS: Awesome. And any major lessons that you learned as an investor, whether that be a real estate investor, or tech investor?

[00:02:53] HC: Yeah, tons of lessons and still learning, right? So, a lot of that, I mean, I think one of the biggest things on the real estate side is really you got to be patient. A lot of people really look at the quick flip or trying to make a buck overnight, and it's just, real estate is a very long-term, patient approach. And I think if you do that, you'll always do well over time, if you have the right deals and add value. So, that's probably one of the biggest ones. What else? I think you've got to be diversified. It's really important. So, not only are we in different markets and different deals, but we've got an income portfolio, which provides the cash flows, and then a development side, which is obviously longer term. So yeah, that's really important to have both.

[00:03:36] NS: I think that was very important through COVID, as well to have both of those, a diversified portfolio, yeah.

[00:03:41] HC: Totally, for sure.

[00:03:43] NS: And tech start-ups, I mean, is it start-ups that you've invested in? Or can you tell me a little bit about that?

[00:03:48] HC: Yeah, happy to. So, we don't do peer start-ups at seed stage. So, we do what's called pre-series A, series A. Later stage, tech companies that are private and the reason we do that is we like companies that are in revenues, starting revenues. People have a thousand ideas, right? But you got to execute. And unless you can execute throughout the model, it's gaining traction and is growing, that's when we'd like to get involved. So, yeah, absolutely. We've been an early investor in a lot of different sort of tech companies in Canada and globally, so it's exciting. And we sort of have three buckets. Obviously, the tech is a huge bucket with all the verticals and then we invest in health care and longevity, and then clean tech. That's a green hydrogen sort of place.

[00:04:29] NS: Interesting. Interesting. Now, kind of in the same vein of lessons, but do you think you made any – I mean, you bought a house at 15, so I think that was a strong probably business decision, but have there been any decisions that you've made at the time that you really didn't realize are going to set you up for success or as much success?

[00:04:47] HC: I think for sure, and made lots of mistakes, for sure. But I think one of the ones that really helped us, I moved more into the commercial side. I was building multifamily, residential for years. That's how most people start. But we moved in the commercial side and built a shopping centre and then other retail assets. And I think that really helped because one of the big lessons there is, you've got long-term tenants with 5, 10, 20-year leases, where at residential, they’re turning around six months a year. So, there's so much turnover. And with stable long-term tenants, you can monetize that asset base over the long term, you can finance it. So, it's just frankly, a lot less work. It's harder, more capital intensive initially, but once the asset and you've leased it, you sort of sit and forget about it long term.

[00:05:32] NS: It’s a little bit of smooth sailing from there. It's on cruise control.

[00:05:36] HC: Yeah, it's a little longer-term asset and is far less management day to day and you're not changing somebody's plumbing or leaky faucet or –

[00:05:43] NS: Totally. As someone who owns an Airbnb, I know about that.

[00:05:47] HC: Right. You know what that’s like.

[00:05:47] NS: I've got someone there for two weeks. And I'm like, “Woo, I can relax.”

[00:05:51] HC: Exactly. For 10 years, I got it, right?

[00:05:54] NS: Yeah, that's amazing. Now, speaking of that, and I don't have that in my questions. But for that type of investment, how did you guys deal with kind of slowdown in retail and things over COVID. Was that still a stable asset for you guys or what happened?

[00:06:11] HC: It was fairly stable. I mean, I can think of one of our centres that, for example, lost a gym. The gym was shut down during COVID. Gym went bankrupt. We tried to help the tenant and they sort of did a midnight move. So, that was very negative for us. And of course, a lot of people suffered, but it's come back quite strong. We're in Western Canada. It's pretty strong market here. And yeah, we more than rebounded after that, for sure.

[00:06:34] NS: And like you said, you have a diversified portfolio, so you're able to kind of overcome that. Yeah, that's great. So, I mean, you kind of already talked about investing in new technology. So, I'm going to just quickly pivot and ask what led you to begin Ocgrow Group?

[00:06:49] HC: Thanks for the great question. So, like I was saying, I'm always been an entrepreneur ever since I was young. So, I worked for a large developer in Vancouver and I was the president of that company. I was doing all the development and financing and deals and being an entrepreneur. I mean, you recognize quickly that you know what, you do this on your own, you're far better off on your own capital. I had all the relationships. So yeah, made the big jump finally, and I think I was 23 in Vancouver and had zero income, and it's always hard, right? It's always very difficult at the beginning, but it's like anything, you got to stay focused and execute. And just slowly, slowly, we started from there, and then just diversifying and launched a tech company and one thing led to another. Yeah. So, never looked back. Thank God.

[00:07:33] NS: I feel like what you're saying is that you were willing to take a lot of risks early on in your career. Is there anything that afforded you that ability to take risks? Or was that just something that you knew you had to do to be successful?

[00:07:46] HC: I think that's a great point to climb. I think it's really important to take risks, actually. So, no, I couldn't – I wasn't totally stable at the time and Vancouver is an expensive city, for somebody in their early 20s. So, no, I took some risks. I did whatever I could. And I think, if it doesn't work, you learn, right? You get a great experience and I think the worst thing is not taking the risk, frankly, because you always think back, 20 years ago. “I wish I could have done this, or I should have done that.” But you take the risks, you jump in and you learn and you get stronger. You get more confident, and I think that resiliency is really helpful for everybody when they're young, any age.

[00:08:21] NS: Yeah, I think it's so true. You do get more confident the more risks and investments you take because you're able to kind of overcome – you know you've learned, you know you've learned from the past one, and you can overcome anything that kind of comes in your way. I bought my first house and I was like, “Okay, that wasn't that bad.” Then the second one was like, “This is a little bit more complicated when it gets around to the second one.” But now it's like, “Okay, now I did that. Now, I've gone” –

[00:08:48] HC: Because now you’re prepared, you get stronger, right?

[00:08:50] NS: Exactly.

[00:08:52] HC: And if you ever did that, you’ll always thinking everything. And so, we've had lots of adversity, and you learn through those, right? In the market downturn in the late ‘90s, I mean, the tech market, the huge crash. So, huge losses. But again, you learn, you're more careful, and I think if you don't do that, you don't have those rich experiences in life, right?

[00:09:08] NS: And then you don't make better decisions later on without the knowledge, right? So, it almost sets you up for an upwards trajectory when you sometimes fail, right?

[00:09:16] HC: Absolutely.

[00:09:17] NS: So yeah, that's great insight. Now, I understand you have a new development underway. Vertos in Cochrane located in the greater Calgary area. Can you tell me a little bit about this project? I know that it's a luxury project, and you've kind of branded it in a certain way. So, I just wanted to learn a little bit more about that.

[00:09:36] HC: Sure. That's great. So, Cochrane is an area in greater Calgary just literally 10 minutes west of the city limits. So, it's about a nine-minute drive from Northwest Calgary and it's an amazing area west of Calgary, closer to the mountains. Now, [inaudible 00:09:51] is 45 minutes from Cochrane, really are lifestyle city, young, sort of hip vibe, and it's really changing. It's going from this small-town vibe to this trendy outdoor lifestyle city, and yeah, we've got an amazing project called Vertos. It's one of many coming up for Ocgrow and it's very tech-focused projects.

So, we've got, for example, one of our partners is Shaw. We've formed a major partnership. So, it's the fastest Gigabit Ethernet speeds in Western Canada at Vertos, and it's all Wi-Fi. And I think the younger crowd that's really, really important not only for investors or rentals, but for occupiers, obviously, very high-end finishes. It's a waterfront community. So, we've got a manmade lake, and it's a gorgeous site right along the Bow River. There's a family leisure centre right there, grocery-anchored, we're doing all the commercial and retail around it. So yeah, pretty excited about it. It's a townhouse project there with garden-level condos.

[00:10:46] NS: Awesome. Now, was there a reason for the location that you chose for this project? Did it just kind of fall in your lap? Or was it something that you sourced?

[00:10:53] HC: Yeah, we’re always sourcing the best deals, of course. And so, we did a lot of due diligence. So, basically, the location is, I don't know how much your audience is familiar with Cochrane. So, Cochrane is now the fastest-growing municipality in Alberta.

[00:11:08] NS: Okay, we have a strong listenership in Alberta. So, we will have people who probably know.

[00:11:13] HC: Yeah, exactly. Cochrane is the fastest and there's a lot of reasons for that. It's more affordable, closer to the mountains, all of those reasons. Calgary in general, as you know, has an incredible influx of people right now, for a lot of reasons we can talk about because it's such an amazing quality life. It's number one in North America, number three in the world now. It's been rated, lowest tax base. We got no rent controls here. No sales tax. No DCC charges. No transfer tax. I mean, I can go on and on. And really, really Cochrane is the best of that, the west of Calgary. And one of the things people are starting to realize more and more is we've had a record influx of venture capital in tech. So, the tech industry is absolutely booming out there.

Garmin just relocated their head office to Cochrane and there's a lot of tech companies going in there. So yeah, it's really exciting. So, we look at sort of the macro industry of what's happening in Calgary as general and then kind of boost that with Cochrane. So yeah, we're super excited about that.

[00:12:09] NS: Like what you hear so far, make sure you never miss an episode by clicking the subscribe button now. This podcast is made possible by listeners like you. Thank you for your support. Now, let's get back to the show.

[00:12:23] NS: So, my next question was really about declining demand, and it sounds like you aren't really experiencing that too much in that area. But have you noticed a change in demand in any of your target markets in the last little while? And if so, has that changed your strategies at all in terms of marketing and around your developments in your project?

[00:12:46] HC: Right, great question. We really haven't, Nicolina, honestly, because greater Calgary. Like it's literally – we've had a record in migration of population in the last quarter ever, in the history of the city and it's not only national. It's all to do with Ontario and BC moving here, right for jobs, but it's also international. And on the tech side, because we're so familiar with the tech market, a software developer, to give you an example, makes more in Calgary today than Toronto or Vancouver today. And the cost of living is almost a third. So, we're extremely affordable. It's a no-brainer. I don't know if you've seen our Alberta's posters all over the country now to move to –

[00:13:22] NS: Oh, yeah.

[00:13:24] HC: It's really easy and a massive influx. There’re so many tech companies that are hiring here. We've got almost zero vacancy, and all of our properties, there are waitlists and there's bidding wars for rental. So, it's really, a lot of the press, as Ontario or the West, and it's really not focused. I mean, we've had a lot of attention lately, but it's really, you hate to say we're insulated, but it's a pretty special place right now and there's a lot of influx and so we're very bullish on greater Calgary.

[00:13:50] NS: Wow, that's great. I mean, I feel like we just did a report and we saw the first decline, and I think the major markets like Toronto, Vancouver, and some of the smaller markets as well, but there was also an influx over the last year of immigration. So, it was like, is there a balance there between those? Okay, there was just really high demand, very low vacancy, and now maybe we're hitting more of a healthy balance in those areas because we were experiencing the same thing, where everyone was competing for a lease. Everyone was on a waitlist, and maybe Alberta – in terms of supply, do you foresee that being a continued issue in Alberta with waitlist and things like that?

[00:14:29] HC: It is a continuous issue because supply is the biggest problem right now. I mean, getting approvals and projects, permits ready to build is a very, very long process, and it's really frustrating for us as a developer. That's the longest challenge. The biggest risk for us, we've got so much demand. And keep in mind Alberta never had the big run-up that Toronto and Vancouver had in the last eight years. It's been pretty slow other than the last couple of years. So, we've got a lot of catch up to be doing and that we're so diversified with tech, and it's so affordable, it's a really investor-friendly market.

So, we're seeing that. We're seeing a lot of investors coming in from Ontario and BC, and we don't see a slowdown at all. We see it accelerating, actually.

[00:15:11] NS: Has interest rates impacted any of your decisions and investments? Because I've been hearing a lot of watercooler talk about developers just pulling projects and not going forward because it's just not worth it. What is your take on that?

[00:15:25] HC: Yeah, no, there's no question. Interest rates will slow down, and new development for sure. I mean, when you're going from two and a half to five and a half, six and a half rates on prime, for sure, that will slow down. And so, what happened on the development side, sort of those marginal projects will get shelved, or they'll go back because the supply chain issues, costs are skyrocketing. So, until markets stabilize, and will get costs under control. But there's still a lot of demand.

So, I think the affordability is the key in any market. And I think again, people will look at Calgary is just so much more – I mean, we're less than half of Toronto, Vancouver. So, there's a significant upside here for us to catch up. And I'll tell you, the rents here are very strong. In Vertos, for example, our Cochrane project, you're getting 2,200 to 2,300 a month rent, and you're paying 399 brand new for a townhouse or 350 or –

[00:16:18] NS: How many bedrooms? Three bedrooms? Two bedrooms?

[00:16:20] HC: Three-bedroom townhouse for 399,000, 400,000, and that's renting at 2,000, 2,200 and you can't beat those returns. It's a very strong rental market.

[00:16:29] NS: I mean, I would even say debatably, that's similar to what the environment is here at this point. It's not much more than that. Because obviously, you also need to realize what people can afford, and if people can't rent, it'll just stay vacant. And if you're saying that people are being paid more in Alberta, then of course, they can afford a higher rent. So why not?

[00:16:52] HC: And they can afford to live there with much more money in their bank account.

[00:16:56] NS: Exactly.

[00:16:57] HC: We're seeing, for example, we're seeing condos in Brampton or Kitchener at 800,000, 900,000, or BC for 900,000 to a million. These are three-bedroom townhomes. Here's 400,000, 450,000.

[00:17:09] NS: Right, to buy. Yes, exactly.

[00:17:10] HC: You're right. I mean, interest rates will slow down. But we kind of look beyond that cycle. I mean, I think if you look at the 24, I think it'll stabilize and hopefully start to you – and I remember rates when they were 18%, 19%.

[00:17:24] NS: I know.

[00:17:25] HC: I remember that rate. I remember 15 or 16. So, people get spoiled, right? Oh, 3%. I don't think it's the end of the world. I think, real estate will continue to be a great investment.

[00:17:33] NS: Absolutely. I think that for those who have gone through the economic cycles that over the last 30, 40, 50 years, they're like, “This is nothing.” To everyone who's maybe just experiencing this for the first time. They're like, “Oh, my gosh, my investments have dropped half in value, whatever.” But it's like, yes, but in two years, they're going to go back up, but it'll be okay. I mean, it looks like we're slowing. Sorry, go ahead.

[00:17:57] HC: I’m just saying, long-term, right? Patience.

[00:18:00] NS: You have to think about it long-term. Unless you're doing a flip for some investors that might be, but then you have to hold on to it for a little longer and pay a little extra and interest. It's not the end of the world. For anyone who's making that kind of investment, you always have to be prepared for that kind of thing.

[00:18:16] HC: You got to be prepared and be patient long-term and you'll do well.

[00:18:20] NS: Exactly, exactly. Now, I did want to talk to you a bit about branding and marketing, and because it's obvious that you guys have a very strong brand around Vertos. So, oftentimes, we look at a lease up and you start marketing like two, three months before. How do you look at your lease ups? What is your marketing strategy? Do you think about it even before it's hit the ground, like you've broken ground?

[00:18:45] HC: Absolutely. So, branding is huge. We're really, really proactive and I think it's important to – the earlier the better, frankly. So, we always start marketing before we start construction, whether it's pre-sales or rental, lease-up as well. I mean, so we are a big believer in the earlier marketing of a project for leasing, for rentals, for investors, is huge. Because a lot of residents want to know, they want to lock in their unit, they want to select their unit, they wanted to be heard of their leasing well in advance. And so, a big supporter of that, always, and our brand is quite well known now. It's getting more and more established as we keep growing. So, Ocgrow’s brand it will continue to grow. And companies that are in that rental management space are critical for us.

[00:19:31] NS: Right, right. Now, have you seen any marketing strategies? I'm sure you're not the core person who's doing all the marketing, but you probably have a say, in the decision-making behind the marketing. Is there any strategies that you've seen really take off in the last few years that you've really put a lot of your investment into? I know that marketing is an investment. So, can you speak to that at all?

[00:19:54] HC: Sure. Yeah. I think, I mean, we're really tech-focused, of course, and all of the PropTech companies are in that space. We do a lot of digital media marketing online and to target different markets. A lot of people moving here. We work with the relocation companies and a lot of the related companies in our industry, as you know, knows well. So, it's really important to have great partnerships and alliance.

[00:20:17] NS: Yes, that makes sense. Yeah, I asked that because I know that print and on-site marketing, over the last few years, have kind of, not died down, people still had them, but they knew that they need to overcompensate with digital marketing to really reach the future renter. I know that a lot of people have pivoted, and I just wanted to kind of get your take on whether or not that was like a huge pivot for you guys as well.

[00:20:43] HC: Yeah, we've always been doing that early because of our tech focus, like we were in it.

[00:20:46] NS: That makes sense.

[00:20:47] HC: Online, hopefully, considered one of the leaders online in terms of digital marketing and media. We do almost, I would say, less than 5% print. So, very little print now. It's almost online. I think that it's so much more interactive as well, right? Walk through the suite, you can pick the finishes, the colors, even furnishings, and it's very exciting. And it'll only continue to improve.

[00:21:10] NS: And I think with the market that you're in, you've always needed to kind of do that, because you're not going to get the foot traffic that the Vancouver or Toronto developments are going to get. So, you need to be reaching out via, it's not necessarily a dense market where you're getting that kind of eyeballs on things. So, you need to put yourself out there digitally in order to reach the right people, especially if you've got immigration coming in. So, people are coming in from abroad. How are they going to know about your building? Obviously, you have to get them somehow.

[00:21:42] HC: You’re absolutely right. 100%, for sure.

[00:21:46] NS: Yeah. Now, can you share any future plans for the Ocgrow Group? And are you able to share them with us?

[00:21:52] HC: Sure. Yeah, we've got – so in our community, in Vertos, and around that community, we've got a lot of other plans coming up, including, a second project, a second multi-project. We've got all the retail commercial buildings that we're building at Ocgrow. So, do both commercial and multifamily. We're launching a new project in North Calgary very soon. So, we're looking at several – we're really at the stage now where we're building communities, entire communities with the multifamily, retail, commercial and really that live work play sort of aspect of and – that's what people want. People want everything on their doorstep and the fitness centres and be able to walk along the river or the waterfront and enjoy everything. That’s what we’re focused on.

[00:22:36] NS: Quick question around that area. How is the transportation? Because I know that transportation has become – during COVID, it wasn't a big deal. But now, it's becoming more of a big deal to get around and go places and actually travel and do those things. Is that a factor that you've considered in that kind of community?

[00:22:53] HC: For sure. That's a great point. I mean, transportation is excellent. I mean, Calgary has a train. So, we've got a ring road called Stoney Trail. So literally, from Cochrane to the airport is 30 minutes. So, you can get anywhere and that’s in Calgary. you can go west [inaudible 00:23:07] or you can go to the airport. The transportation is really good in Calgary. You're not driving an hour and a half, one way. It's literally, you can get anywhere in 30 minutes from one end to the other end. So, it's important.

[00:23:19] NS: Yeah, it's very important. It's becoming I think, much more important than it was the last two years now because people are ready to leave their homes and go places and experience things again, and especially I think in Alberta because it's such a beautiful place.

So, Harish, I just want to thank you so much for joining me today. I know that your time is precious. I can hear all your notifications going off. Everyone's trying to contact you. I just have one last question. If listeners are looking to follow you or interested in learning more about Ocgrow Ventures and Group, where should they go?

[00:23:51] HC: Sure, they can go to our website, ocgrowgroup.com or find me on LinkedIn. Please reach out anytime, happy to help. Thanks for the interview, really appreciate it.

[00:23:59] NS: Thank you so much. And until next time, keep swimming.

[00:24:06] NS: You’ve reached the end of another episode of Sync or Swim. Make sure to visit us at rentsync.com/podcast to access show notes, key takeaways and where you can sign up to our newsletter to receive free bonus content. If you found value in the show, please also remember to rate, review and subscribe. Don’t forget to join us next week for another episode. Thanks for listening.