Own Real Estate Without A Mortgage With A Limited Partnership | Investment Revenue Realty Blog

With the new OSFI mortgage qualification stress test and other government measures put in place recently, many Canadians are looking for creative solutions to allow them to enter into the real estate market or expand their real estate investment portfolio. The Limited Partnership investment structure leverages the power of multiple investors, allowing independent investors to finance large-scale projects, starting at just $25,000.

So, what exactly is a Limited Partnership?

A limited partnership (LP) is a form of partnership that must have at least one General Partner and at least one limited partner. For the purposes of real estate development think of it as a very sophisticated joint-venture. The Limited Partnership structure is a legal structure that allows two or more partners to invest in a business but limits their individual legal liability (or risk) to the total of their respective investments – and no more. For example, if a partner invests $25,000 (which is the minimum US or CAD contribution for our LPs), they are only responsible for that amount.

The General Partner (GP) has management control, share the right to use partnership property, share the profits in predefined proportions, and has joint and several liability for the debts of the partnership. The GP has the actual authority, as agents of the firm, to bind the partnership in contracts with third parties that are in the ordinary course of the partnership’s business.

Like shareholders in a corporation, limited partners have limited liability. This means that the limited partners have no management authority and are not liable for the debts of the partnership. The limited partnership provides the limited partners a return on their investment (similar to a dividend), the nature and extent of which is usually defined in the limited partnership agreement. General Partners thus bear more economic risk than do limited partners, and in cases of financial loss, the General Partner will be the one that is personally liable.

What does an LP look like in action?

We represent two North Vancouver firms (Western Wealth Capital and Western Canadian Properties Group) that leverage LPs to fund land development, and multifamily value add deals in emerging markets across Canada and the United States. These companies have a combined 30 years of experience and have completed a total of $2.5 billion in real estate transactions.

Our real estate investors contribute private equity funding for the projects and the LP’s are registered owners on the property title, but they don’t have to worry about the headache of acquiring financing, managing the property or delivering operating efficiency.

Investors can sit back and relax, while the LP’s General Partner carries out the business plan. Over the years, our partners have perfected a turn-key business plan that has delivered proven results time and time again.

Western Wealth Capital acquires underperforming US multi-family rental properties and increase net operating income and valuation through an approach that has been successfully applied across our portfolio. The GP manages these assets, distributes resulting cash flow to investors annually and, when appropriate, divests.

Western Canadian Properties Group acquires land, rezones to higher density and develops properties for sale to institutions, owner occupiers or investors. Buy by the acre, sell by the foot.

Read our blog on multi-family real estate for more details on the approach.

What are the benefits of investing in an LP?

The LP structure is better suited for a passive real estate investor looking to leverage equity by investing alongside an experienced developer. Typically, the deal size is larger, earning multiples greater and investment horizon shorter.  Many of our real estate deals generate double-digit annualized return within the three-to-five year investment term.

There is also peace of mind knowing you investing with the best in the real estate business. Financial models are available pre- and post- purchase to provide a transparent look at how each step impacts overall profits.  Ongoing progress reports, online portal access and annual statements are readily available and easily accessible.

Want to learn more about current opportunities to invest in a Limited Partnership? Contact us for details!


How To Invest In Multi-Family Real Estate | Investment Revenue Realty Blog

From dinner table chit-chat to media coverage, British Columbia’s exploding real estate market has been on the tip of everyone’s tongue for some time.  But, what about the booming real investment opportunities south of the border?

With a burgeoning tech sector, Phoenix, Arizona, is on the verge of massive growth. The local government has committed to investing millions into office space and amenities for its growing population. People go where the jobs grow, and with every booming job market, comes an increased demand for housing.

In Phoenix, our partners at Western Wealth Capital are the community’s second largest multi-family owner. Investing in multi-family properties (apartment buildings) is often a very lucrative real estate investment strategy as this sector of the real estate market tends to be in highest demand.  

By developing a repeatable, scalable and profitable system that has the potential to deliver double-digit investment returns for our clients. Here’s how it works:

Finding Underperforming Assets In High Growth Markets

We apply a proven business model to our real estate investments. Instead of simply relying on real estate prices going up to generate a profit, WWC strategy focuses on acquiring underperforming properties in markets it knows are booming due to job growth. WWC identifies properties that have under market rents, don’t show well and are located in high traffic areas close to emerging business centres. It increases their value by increasing the income through its value-add program and ultimately, generates a positive return on investment. Multi-family properties provide the scale needed to create exponential growth.

How We Transform Properties

Generally, our investment projects have a three- to five-year window. During this time, WWC does cosmetic “Goldstar” updates to the apartment units, raises rents to market rate, and installs washers and dryers. The WWC team oversees the project and tracks progress every step of the way to ensure it is on time and budget.

All the while, investors needn’t worry about managing tenants, vacancy or repairs on the building. This is all handled by WWC team.

In doing so, WWC increases the profits for our investors. It’s called the multiplier effect. For example, for every unit that is upgraded, residents can pay another $150 per month. For every washer/dryer installed, another $50 month. This would achieve approximately $270,000 in rent revenue per year for a 150-unit building. Based on a 6% cap rate using the income approach to appraisal that equals $4,500,000 increase in value.

No Mortgage Necessary

In partnership with WWC, we raise funds for investment properties through a Limited Partnership structure. Our investors contribute to the LP without having to acquire a mortgage or dealing with the headache of pre-approvals and rigid mortgage stress tests. WWC teams manage the financing and execute a proven process.

Maintaining A Human Connection

We love WWC approach to business. Janet Lepage, CEO of Western Wealth Capital, the mantra is, “We do business on human terms”. WWC focus is to create a nice place to work and live, so nurturing caring relationships with property managers and tenants is a major priority. We support those that care.

You get what you give. Every year WWC gives to its communities, “We Got Your Back”, a back to school program that provides 1,500 backpacks with school supplies for children in our buildings. Rent Free Christmas for one family in each community that needs a helping hand.  This year WWC raised its own bar giving 3 families Christmas in a Box – rent free December PLUS gifts for the family.

After all, a healthy and happy community is great for residents, and, in turn, investors.

Interested in learning more about investing in multi-family properties? Call 604-764-5647 or book a webinar!

 


real estate vancouver, real estate development, condos, surrey real estate, real estate investment, investing, investment

Real Estate Development 101

Real Estate Development 101

Did you know that between Downtown Vancouver and Langley there are just over 2,000 total units available for sale – and only about four dozen of those are move-in ready right now?  With so many towers going up throughout Metro Vancouver, it may seem surprising that there is so little supply. But, the truth is that almost everything that’s being built today is nearly sold out before it’s even built.

But, that isn’t stopping those presale lineups. The math is simple: we have a finite amount of land in the region and a growing population that’s leading to increased housing demand.

This is particularly apparent in the City of Surrey, where the population is expected to grow by another 300,000 people by 2030.  There are approximately 150 new towers in the cue for development in Surrey, and exciting new amenities and transportation for the city’s five neighbourhoods make this community an appealing focus for real estate investment. In particular, Surrey City Centre is set for massive growth with a new LRT, expanded amenities and emerging businesses.  

Despite the looming growth, Surrey is still very affordable market to invest in real estate. Earlier this year, condo units were selling for around $750 per square foot. In contrast, the average new concrete condo in Vancouver sells for between $1,200 – $1,500 per sq. ft.

For most investors, the prices don’t make sense unless you get in on the ground floor and partner with other investors to fund the purchase or re-development of a real estate project in a top market like the City of Surrey.  

With mortgage rates creeping up and a more strict stress test for qualifying for a mortgage, many investors are opting for the partnership model. Our team at Investment Revenue Realty has developed the RealSimple investment strategy – a proven approach that often nets our investors’ double digit annual returns from their first year.

So, how does it all work?

1. Market Research and Discovery

As an investor, you’ll want to learn as much about the market and the real estate opportunities as possible. Investors can sign up for online webinars, walking tours, discovery trips, and real estate investment events to learn more about the process, the top markets, and the specific properties we have on offer.  Our team is also on hand throughout the process to help answer any questions you might have along the way.

2. Investment

We create a Limited Partnership (LP) for each property. One of the benefits of the LP is that investors don’t need to sign for the financing or qualify for a mortgage. We take care of the paperwork and secure financing from lenders. All you have to do is make the commitment, and let our team take care of the heavy lifting.

We also structure returns so that the investor receives 85% of the profit for returns up to 18%. Once we achieve this milestone, the investor will then receive 15% of the profits going forward. This is the second layer of protection for the investor to ensure they’re receiving sound returns should there be cost overruns.

3. Refreshing The Property

When we acquire an existing apartment unit, one of the benefits is that it is already cash flow positive. This means that the units are already tenanted and their rent is generating income for investors from Day 1.

We’re often able to increase that rental income shortly after acquiring the building by improving the units with small updates, such as a fresh coat of paint, flooring or new appliances. This means profits will increase right out of the gate.

4. Rezoning

When we purchase a property, there may be potential to rezone it for redevelopment.

These days, buildings are designed to be efficient and sustainable, so we can add more units to the existing land. For example: a six-story building with 200 units has the potential to become a 26 story building with 350 units, which will ultimately increase the amount of returns we can yield throughout the process.

Junior one bedroom units are common, offering comfortable living space at reasonable prices. At today’s going rates in Surrey, a 450 sq. ft. would only cost under $350,000, which is a fraction of the cost of a Vancouver condo. New buyers will be lining up to buy in no time!

It’s important to note that the building remains tenanted while we are going through the rezoning and permitting process, ensuring that our investors are protected against unexpected delays and we aren’t sitting on vacant land.

5. Pre-sales

Developers are required to pre-sell a property by between 75-95% before breaking ground. Once we’ve received approval to rezone an acquired property, we can then create a marketing plan to promote the new vision. We partner with British Columbia’s top firms, who specialize in pre-sales to ensure we are selling out as quickly and efficiently as possible.

6. Construction

Once we’ve achieved our pre-sale threshold, we will then go through the process of notifying tenants, demolishing the building and bringing to life the new vision for the tower. Depending on the building design, construction may take between 18-24 months.

7. New Owners Move In

Once the building is completed, the new homeowners move in and the investment term has completed. It’s then time to move on to the next opportunity!
So, there you have it, our RealSimple investment strategy. Want to learn more? Get in touch with one of our experts.


Fort St John, BC Economy Poised For Recovery

 

 

 

Northeast BC Investor Update: January 2018

 

 

B.C.’s NDP premier turns LNG cheerleader in Asia trip

To the surprise of many, British Columbia NDP Premier John Horgan could emerge as the saviour of Western Canada’s troubled liquefied natural gas (LNG) industry.

Horgan is leaving Saturday for a 10-day mission to Asia and will have meetings in China, Korea and Japan with backers of two proposed LNG projects: LNG Canada, sited in Kitimat and led by Royal Dutch Shell PLC with partners PetroChina, Korea Gas Corp. and Mitsubishi Corp. of Japan; and Woodfibre LNG, located north of Vancouver in Squamish, and owned by the RGE group of companies based in Singapore.

Meanwhile, Kitimat LNG, a joint venture between Chevron Corp. and Australia’s Woodside Petroleum Ltd., is re-emerging as a player with Horgan’s support and is working to improve the competitiveness of its proposed plant.

“I think we have a real opportunity of perhaps landing one or two LNG facilities here in British Columbia,” Horgan told Stewart Muir, executive director of Resource Works Society.

[read the full article here]

 

 

Northeast B.C. unemployment drops more than half to 4.6% in 2017

Unemployment in Northeast B.C. plummeted by nearly six percentage points in 2017.

The region finished the year with 4.6 per cent unemployment in December, down from 10.5 per cent at the end of 2016 and the start of the year, according to Statistic Canada’s Labour Force Survey released Jan. 5.

Unemployment dropped steadily throughout 2017 with an uptick in the oil and gas sector that brought major projects including Pembina Pipeline’s Northeast B.C. expansion project, AltaGas’s Townsend expansion and North Pine liquids facility, and the Tower and Sunrise natural gas plants, among others.

Spending on petroleum and natural gas drilling and exploration rights also hit $173.25 million in 2017 after a dismal record low of $15.1 million in 2016.

[read the full article here]

 

 

BC Hydro poised to sign contract to build generating station, spillway for Site C

BC Hydro is poised to sign a billion-dollar contract to build the generating station and spillway for the Site C dam.

The Crown utility announced Dec. 21 it has selected the AFDE Partnership as its preferred proponent to carry out the work.

The partnership includes Aecon Constructors, Flatiron Constructors Canada, Dragados Canada, and EBC Inc., and will be responsible for building Site C’s powerhouse, penstocks, spillways, and power intakes.

BC Hydro says it’s finalizing contract terms with the partnership, which the utility’s board of directors still needs to approve. The deal is expected to be signed in early 2018, with the partnership mobilizing to the site in the spring, BC Hydro says.

An uncensored report accidentally made public as part of that review showed BC Hydro budgeted the dam’s generating station and main spillway at $1.25 billion.

[read the full article here]

 

Encana to focus 2018 spending in Montney

After coming out of 2017 ahead of its production growth targets, Encana said this week it would focus its 2018 capital spending on its core areas – specifically the Permian Basin in Texas and the Montney play that straddles Alberta and B.C.

Encana said it plans to spend “similar” to its 2017 $1.8-billion capital program this year, with “modest allocation adjustments to optimize delivery.” Approximately 70 percent of spending will be directed to its Permian and Montney assets.

Encana said it more than doubled liquids production in the Montney between 2016 and 2017, “driven by a focus on condensate rich wells and the early start-up of the Tower, Saturn and Sunrise processing plants.”

In 2018, the company said it expects to grow its liquids production as it fills capacity at the new plants and completes two additional liquids hubs in the second half of the year, further reducing its exposure to low regional natural gas pricing.

[read the full article here]

 

Pembina Pipelines approves LPG export terminal in Prince Rupert

The board of directors for the Pembina Pipeline Corporation has approved the development of its proposed liquefied petroleum gas (LPG) export terminal.

The Prince Rupert Terminal will be located on Watson Island, British Columbia on lands leased from a wholly-owned subsidiary of the City of Prince Rupert. Through site assessments and engagement with key stakeholders, the company has confirmed Watson Island as the ideal location for the project to be developed and has executed definitive commercial agreements with the city.

The Prince Rupert Terminal is expected to have a permitted capacity of approximately 25,000 bbls/d of LPG and is expected to be in service mid-2020, subject to Pembina receiving necessary regulatory and environmental approvals.

In announcing its overall budget, Pembina said that its board of directors has approved approximately $400 million of new capital projects, as well as a capital program of approximately $1.3 billion for 2018.

[read the full article here]

 

TransCanada keeps LNG pipeline to northwest B.C. alive

TransCanada continues to keep alive its $6-billion Prince Rupert Gas Transmission Project to transport natural gas from northeast B.C. by pipeline to the coast despite uncertain market and economic conditions.

Just two weeks ago, the mega-project received approval from the B.C. Environmental Assessment Office for an amendment to its project certificate for two additional main construction camps, and a standby compressor unit at each of its eight proposed compressor stations.

The proposed 900-kilometre pipeline was meant to feed the Petronas-led $11.4-billion Pacific NorthWest LNG project on Lelu Island near Prince Rupert that was cancelled five months ago.

“TransCanada continues to evaluate alternatives for the PRGT project and are completing matter-of-course permitting work that was underway prior to the Pacific Northwest project being cancelled in mid-2017,” TransCanada spokeswoman Doris Kaufman Woodcock said in a written statement Thursday.

[read the full article here]

 

“The past as it becomes a present”

– Trevor Bolin #1 Realtor in Fort St. John with RE/MAX

“I have been known over the past almost two decades in Real Estate to give my opinions more than the amount of years I have been a Realtor. Some people I am sure have used them to buy or sell depepding on the position they were in, some have not. All these years later I can recall the stories of people waiting to buy or waiting to sell based on main stream media.

Attached to this blog is an interesting graph, now I could tell you this is Fort St John’s housing graph since 1950 based on sales and activity and you would google it to find out it is very close. I could tell you this is Fort St John’s construction graph, or new housing and ultimately it would be very close. The fact of the matter, this is world oil prices since the early 1950’s. The four red dots you see above are all the really matters for today’s topic.

 

The red dots in the graph play an important role in looking at this whether it was the housing sales graph, construction graph, sales graph or what it is, the oil graph. The dot farthest to the right is the price of oil today, hovering at the mid 60’s and up about 22% over last year. The dot to the left of that was the end of 2009 when prices started to climb back from the depths of 2008. Continuing left was 2004 again recovering and heading to its ultimate highest peak near 160 a barrel. The farthest dot to the left was 1978 when of course things started to boom and for Fort St John became one of the busiest markets in the west.

So okay, thats great .. dots on graph, what could it mean if anything. The dots aren’t part of the graph, truth be known, the graph without the dots aren’t that important either. What matters for us in looking into our market, is the graph and the dots together. Each of those dots that I mentioned above, and that are shown above represent the signs of changing times.

Each of the dots on the upward climb, have a corresponding downward cross path. the first one 1977, crosses paths with 1985. The second from the left with a climb of 2004, crosses paths with 2008. The third one 2009, again levels out with 2015. Each of these represents a stable climb combined with the downward slide for an additional year, or years like this last case.

So where do these years leave us with right now? As you can the see the dot to the farthest right giving us where we stand today with a healthy recovery of world wide oil prices, translated into the climb of both our market as well as our neighbors to the east. This is great news, we not only have an idea of where we are sitting, but we can see from each of the graphs changes, where we are heading. Using the same theory we have used to plot the past, lets plot the future together. Collectively these average out to 2018 being a great build year with a limited amount of inventory lasting until 2023/2024 when this graph could at the time take another swing into a downward position for both the industry, our market and and the economy.

So again as I said in January of 2016 (now two years ago) when I made the following graph below, I am not a fortune teller or a medium … just simply someone who loves seeing Fort St John flourish and being the guy you can rely on for accurate, factual information.”


Colorado Springs, Phoenix, and Tampa, will see strong rent growth in 2017 because increased demand outpaces supply, allowing landlords to raise rents at a quick pace. As these areas have emerged from the Great Recession, they have added jobs and experienced population growth but have not had as much of an increase in multifamily construction as many other areas have had. READ MORE

Fort St. John Market Report - February 2017

Woodfibre-LNG-offers-few-jobs-vs.-big-impacts-Retired-KPMG-partnerApplication for a 40-Year Export Licence For Woodfibre LNG Project

The licence would allow the export of approximately 2.1 million tonnes of LNG per year for 40 years from the Woodfibre LNG Project READ MORE

 

 

townsend-gas-plant.jpg__0x500_q95_autocrop_crop-smart_subsampling-2_upscale

2017 could be pivotal year for energy sector

Hundreds of millions of dollars are expected to start flowing into B.C. in 2017 in the form of energy infrastructure investments, from the Trans Mountain pipeline expansion to the Woodfibre LNG plant in Squamish to natural gas wells, pipelines and processing plants in northeastern B.C. READ MORE

oilgas_montney-rig-worker_source_encana.png__960x536_q85_autocrop_crop-scale_subsampling-2_upscaleB.C. oil & gas land sale raises more in one day than last two years combined.

Eight drilling licences brought in $39.6 million, including a record-setting $35 million parcel east of Dawson Creek. READ MORE

DSite Cecember saw a decent sized jump in the number of people working at the 1,100 megawatt Site C Dam

BC Hydro’s Site C Dam is Canada’s largest infrastructure project. In December, there were a total of 1,916 workers on the 1,100 megawatt dam. The number of Construction and Non-Construction Contractors jumped by 149 to a total of 1,531, 1,250 or 82 percent of whom were B.C. residents. BC Hydro has created a very cool 2-minute drone video capturing the progress of the project to date, to watch the video click here

AltaGasAltaGas will build its $500-million Propane Export Facility

AltaGas will proceed with building its Ridley Island Propane Export Terminal, a $500 million facility that would export 1.2 million tonnes of propane a year to Japan and other Asian markets.“Together with our northeast B.C. infrastructure, once the Ridley Export Terminal is built and operating, we will give producers new access to premium Asian markets for their propane.” [read full article here]

AlMontneytaGas to build new Montney facilities for $180-million

AltaGas Ltd. to build a 120 million cubic feet per day deep-cut natural gas processing facility, a natural gas liquids separation train, and rail terminal this year.The deep-cut processing facility is expected to cost approximately $100 – $110 million while the separation train and rail terminal are expected to cost an additional $60 – $70 million. They expect the facilities to be online in early 2019. [read full article here]


BC working with feds on Pacific NorthWest LNG delay

Provincial officials are in Ottawa today to work with their federal counterparts on overcoming the latest delay for Pacific NorthWest LNG (PNW), B.C.’s natural gas minister says.

In a statement, Rich Coleman said senior officials from the province are in the capital to “reach a positive final outcome that helps our economy, protects the environment, and respects First Nations.”

“I’m confident that any remaining questions can be answered completely and quickly. They have to be. Jobs for British Columbians should not be held by unnecessary delays,” Coleman said.

“After all, this just isn’t any project. At $36-billion and 18,600 jobs, PNW LNG would be the largest private sector investment ever in Canadian history.”

“The positive impacts of PNW would be felt across almost every community in BC and across [full article here] 


Jordan Cove LNG lands sales agreement for gas

Jordan Cove LNG, a natural gas export facility proposed on the Oregon coast, has signed a 20-year sales agreement with world’s largest liquefied natural gas buyer.

The deal appears to put the project, which could take gas from the B.C. Montney formation, back on track after running into a roadblock with U.S. regulators.

JERA Co. Inc, a joint venture of the Tokyo Electric Power Company and Chubu Electric Power Co., Inc., signed on to buy 25 per cent of the project’s proposed 6 million tonnes per year output in a deal announced Tuesday.

The company is owned by Veresen Inc., a major midstream natural gas player with assets in the Dawson Creek area. [read full article]


Site C Dam civil construction begins in May

Site C Dam is 8 months into the 10-year Site C Dam project. While the physical construction of the Dam doesn’t begin until May, there has been lots of progress made to date.

This is the largest infrastructure project happening across Canada, located 7 km from Fort St. John.

Over the course of the project 33,000 jobs are expected to be created.


Billion-dollar gas plant approved for Dawson Creek area

A partnership involving Veresen Inc. and Encana Corp. that has already committed $1.5 billion to two new gas processing plants in the Dawson Creek area has announced plans to spend nearly $1 billion more on a third gas processing plant.

Veresen is already building two new gas plants in the Dawson Creek area – the Sunrise and Tower plants – with a combined capital cost of $1.5 billion.

Last year, Veresen acquired natural gas gathering and compression assets from Encana and the Cutbank Ridge Partnership.

As part of that deal, Veresen committed to $5 billion worth of investments to build out additional assets for Encana and the Cutbank Ridge Partnership. Under the agreement, Veresen is funding 55% to 60% of the three new gas plants.

The investments underscore the attraction of the Montney formation in Northeastern B.C. [full article here]