WHY WE INVEST IN APARTMENT BUILDINGS AND NOT SHOPPING CENTRES OR OFFICE BUILDINGS

Many companies have done very well for themselves and their investors by investing in office and retail, but we feel that our unrelenting focus on smaller apartment buildings is less subject to cyclical economic conditions, while offering a still healthy and steady income stream.

Below is a summary of the factors that drive our reasoning:


1 High ratio and inexpensive financing (up to 85% loan-to-value is available).

1 Given strong in-migration, high house prices and rising interest rates there is substantial demand for affordable rental properties.

1 Like many urban areas of Central Canada, Coastal USA, or Europe, renting is the economic choice once ownership costs like utilities, condo fees, and/or mortgage payments are beyond the reach of the average blue collar worker, senior or college student.

1 Major infrastructure projects, new factories and expanding businesses/colleges are luring workers, students and seniors alike in SK, CO, AZ and TX with plenty of job opportunities, decent wages, low taxes and affordable rents.

1 The multi-family rental investment market trades well below replacement cost.

1 Without cash-flow, a real estate investment is more risky (such as development deals, international vacation properties, condo conversions, and land development deals). We like boring, stable, predictable 15-20% annuallized returns for a long, long time. True wealth is created through long term asset ownership, not through speculative flips. Yes, in 2020 or 2030 we still have renters, and guess what: rents will likely be much higher than today!

1 Retail and office real estate is usually tied to longer tenant leases than with apartment renters. As a landlord, it's a lot easier to take advantage of changing market conditions when you're not locked into a 5, 10 or even 20-year lease. This allows one to adjust rents up or down quicker to get maximum rent without undue risk to the stable cash flow that high occupancy levels ensure.


With the above factors working together to lower risk, while driving rents and thus property values higher, we can repeatedly deliver high double-digit and even triple digit returns on the cash invested. See our track record for details.


> Next page in Business Model section: Real Estate Vs. Stocks