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Frequently asked questions
The simplest way to describe private real estate investments is to first explain an example between traditional equity vs. private equity. In traditional equities, a person would be purchasing shares to own an interest in a public company like Apple (AAPL). In private equity, a high net worth individual or institutional firm would be purchasing shares of private companies that are not accessible to the public.
So when we think of private real estate investments, this would involve high net worth investors purchasing shares or debt in things like:
- Income producing real estate properties
- Value-Add / Development & Construction projects
- Mortgage Investment Corporations (MICs)
Generally, if you’re an accredited investor in Canada you can invest in all private real estate deals. You can also invest in private real estate deals if you are listed as an eligible investor. However, there are several limitations in what and how much you can invest per year and project.
You can find out more info by looking at OSC regulations of what classifies you as an accredited vs. eligible investor here.
The minimum investments for most private real estate dealers depend on a project-basis, but typically range between $10,000 and $50,000 per project.
The hold periods for private real estate dealers investments vary based on the type of investment and asset class.
Generally, most investment dealers try to seek deals that can exit anywhere from 6 months to 10 years. Exit strategies are typically defined before any private dealer raises capital for an issuer and can occur by way of project completion, refinance, share buyback or sale.
Most private real estate dealers offer the following types of investments:
- Private Placements for shares/ownership OR debt in Income producing real estate properties
- Private Placements for shares/ownership OR debt in Value-Add / Development & Construction projects
- Access to invest in Mortgage Investment Corporations (MICs)
Every private real estate dealers that we partner with have their own strict corporate governance policies, which dictate what happens during good times and bad times.
There are many levels of underwriting and due diligence that go into each project which aim to protect investor capital by way of security in the deals and resolutions in the event of a default.
Traditionally, if a default ever occurs, most private real estate dealers are obligated to hold general meetings for all their investors to clearly communicate the plan of action and strategy moving forward.