How they work
What is a Real Estate Limited Partnership
The Real Estate Limited Partnerships that we market provide a way to
… collectively participate in commercial, income producing, real estate ownership,
… without the large amounts of capital normally required,
… while limiting the amount of risk you assume when you “go it alone” and,
… limiting the potential for problems encountered due to lack of experience in the industry.
It is simply a way to share the benefits and risks of owning real estate with a group of like-minded individuals with an eye to producing a profit.
Mortgage and Cash Flow
Each Real Estate Limited Partnership project that we represent is slightly different, but are typically projected to be mortgage free in 12-14 years.
During the mortgage pay-down period, there is normally very little cash flow to the investors as it is primarily used to pay off the mortgage as quickly as possible.
Once the mortgage is retired, the cash flow surplus from operation of the property increases significantly and is distributed to the investors in the property as a long-term stream of income.
A tax deduction of approximately 50% of the investment amount of these Partnership Units is generated in the calendar year that the unit is purchased.
This tax deduction is like an RRSP tax deduction in how it is used. Your personal benefit is calculated by multiplying the tax deduction by your personal marginal tax rate.
Return on Investment ( ROI )
Projected ROI for each Real Estate Limited Partnership is specific to that Partnership.
The average ROI projections for the offerings that we represent typically range between 15-21% and are based on the first 15 years of operation of the partnership.
The ROI is calculated on the after-tax value of the investment and is comprised of the initial tax advantages, mortgage principal reduction, cash flow surpluses and projected capital appreciation in the property.
The reason these projects are called “Limited Partnerships” is because the investors have limited risk in owning the investment.
In the case of the projects we represent, the maximum financial risk to the investor is the value of their initial investment.
There is no legal liability or mortgage recourse to the investors as this is entirely borne by the general partner in the project.
Why do people invest in Limited Partnerships instead of owning the real estate outright?
Owning investment real estate, especially commercial real estate, usually requires significant amounts of money, knowlege and skill.
Many people simply do not have the needed funds or skill set to go it alone. Others that do possess these characteristics may not have the time or desire to run a commercial property in addition to their primary occupation.
Who may subscribe for a unit in a Limited Partnership ?
Eligible resident Canadian investors as defined by the offering memorandum for the property and as governed by the securities and regulatory authorities of the provinces and territories of Canada.