Mar 30

Why Investors Prefer Commercial Property Investments

Written by: Richard Crenian

Real estate is the one investment that every investor around the globe is agreeing on right now. However, there is a distinct difference between what investors are investing in. Many are trending toward small partnership structures and are looking to popular international cities and secondary markets.

Beginners often launch into real estate investing with residential single family homes or condos. The more accredited investors often choose commercial investments such as retail, multifamily, office and retail.

There are four primary reasons experienced investor chooses commercial property.

1. Liability

Dealing with residential homes and condos comes with additional quirks. This applies no matter where you are investing in the world. Besides homeowner and condo associations and their rules, there are many regulations which pose liability for residential landlords. There are many protections for residential tenants, with some areas often siding with the renter over the landlord. Commercial landlords and lenders avoid these pitfalls and regulations.

2. Scale

It’s normally easier to scale investments in commercial property. Rather than investing alone in one property at a time, commercial investors enjoy more leverage. They can leverage better financing terms and partnerships to get involved in multiple investment opportunities. Also this allows them to participate in larger projects, which can be more profitable and carry less risk.

3. Diversification

Commercial properties can offer more manageable and profitable diversification. Seasoned property investors know that diversification is critical to long-term portfolio performance and consistent cash flow. Trying to stay on top of single family homes or condos spread across the country, internationally, or even your local city can be tough. It can be expensive and time consuming. Multi-tenant commercial real estate also builds in extra diversification to each property invested in.

4. Ease of Management

There are single family property management companies and real estate agents that provide it as a side business. However, residential property management is can poor, with plenty of horror stories and it can be costly.

Commercial real estate is virtually always professionally managed and more efficient to manage, providing freedom and confidence.

Posted in Canadian Economy, Commercial Real Estate, real estate investment, Richard Crenian
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Mar 30

Canadian Commercial Real Estate Warming Up in 2015

Written by: Richard Crenian

A gathering of Canada’s largest retailers at the recent CIBC retail conference concluded current trends are actually benefiting Canadian business. CIBC analyst Perry Caicco even believed “the outlook for 2015 is more positive for retailers than it has been for a couple of years.” If that’s the case, then commercial real estate could be breaking new records when it comes to delivering returns.

The conference highlighted the fact that lower gas prices are “putting more money into the pockets of consumers,” and that “the economy is faring well.” According to The Toronto Star newspaper, Target’s exited from the Canada removes a potentially strong competitor, and is creating a better environment for Canadian businesses.

However, this doesn’t mean that US firms aren’t benefiting from Canadian business and retail either. The entry of US based technology companies is helping the office sector, creating jobs and adding more money to the economy. Facebook and other tech firms are working on improving the backend of The Internet of Things and its security. This provides a strong framework for Canadian firms on the frontline to put to work in homes and businesses. In contrast to previous fears, we continue to see that the more connected we are, the more efficient and profitable businesses will become, especially retailers.

As our homes and devices become more connected, shopping may become more automated and streamlined. This is actually making retailers more profitable, as small storefronts at shopping plazas can do far more business resulting in increasing revenues, which is great news for their landlords and retail investors.

What’s good for Canadian retail is in turn good for Canada’s other commercial real estate sectors. When Canadian business is strong, office buildings are in higher demand. When these sectors are doing well multifamily apartments are fed by more workers and the capacity for renters to pay more for units. In the current environment this could even help prop up Canada’s industrial as a despite oil price softness.

The outlook for Canadian commercial property investment is still bright ahead. Some may even be surprised at how some investments and sectors outperform expectations over the next several quarters.

Posted in Canadian Economy, Commercial Real Estate, real estate investment, Richard Crenian
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Mar 30

Commercial Property Investment Provides Perfect Balance for Canada’s Digital Nomads

Written by: Richard Crenian

Canadians are becoming more mobile and nomadic than they have been in generations. Sound commercial property investments at home are emerging as the best financial tool available to help them maintain balance in their finances and lifestyle goals.

Canada appears to deliver more annual sun seekers to top US destinations than any other country. Each year, thousands venture south in search of warmer weather and often stay for many months. The economic roller coaster Canada has been on for the last few years has driven masses to hop between the nation’s provinces in search of jobs, better pay, superior lifestyles and more affordable housing. On top of this are the millennials, who are passionate about travel, aren’t ready to settle down and are empowered to stay mobile due to new technology. Even generation X is embracing this new digital nomad lifestyle.

So how are commercial real estate investments helping?

Brick and mortar investments provide essential balance, as they can deliver the perfect contrast for retirees that are holding portfolios heavily weighted in the stock market or younger generations that are taking a gamble on tech investments, new careers and startup life.

Real estate offers concrete security and diversification for when other ventures fall flat and underperform, as it can provide both passive income and passive wealth appreciation. Monthly or quarterly cash flow payouts can provide steady income to live, while growing equity can help build a nest egg for retirement or to pass on as an inheritance.

Commercial property investments are normally designed to be far easier to manage than other types of real estate too. With professional property management in place, Canadians can travel with confidence and never have to worry about checking on tenants or knocking on doors to collect rent.

Aside from the direct monetary benefits of investing in commercial property in Canada, individuals can find these types of investments help them stay anchored and supporting their home country, even if they rarely step foot back here.

Posted in Alberta Vs., Canadian Economy, Commercial Real Estate, Investing Alberta, Richard Crenian
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Mar 11

The Pros & Cons of Emotions in Canadian Real Estate Investing

Written by: Richard Crenian

Warren Buffett often leans on one of his favourite quotes from ‘The Intelligent Investor’ which says that “investing is best when it is most businesslike.” So does this mean emotions are always bad when it comes to making investments in real estate?

Emotional investing can be calamitous. However, once you dig into it, emotions may have some positives when investing too.

Emotionally Charged Investment Decisions

Emotions tend to influence people to act less rationally. This would appear to be at odds with making sound, logical, investment decisions. We see it when home buyers keep on stretching beyond their means to bid on homes as they get caught up in the excitement and competition. We even see it when Canadian real estate investors fall in love with the concept marketing and branding of a pre-construction condo or luxury rental homes, and then vastly over pay, or can’t bring themselves to exit a failing investment when they should.

The reverse is what keeps many investors from making the better, more common sense investment decisions in less fancy property, which may actually be far more profitable.

Fear is one of the strongest emotions. It is also one of the most dangerous for an investor. Fear has been manufactured and managed many times to create substantial sell-offs at discounts when investors should have held. We’ve seen this in the stock market, oil, tech world, and real estate markets, and it looks as though that cycle may soon start again, if people fall for it.

When Emotional Investing Can Be Good

While some would argue that emotional investing can never be good, there are some factors which refute that.

For example, you could say emotional panicked sell-offs of an asset can create an amazing opportunity for those with the bullishness and courage to go against the market or act from a high level of wisdom. If no one invested emotionally then green and eco-friendly building never would have caught on.

Finding Balance

It is wise to be objective when choosing investments and predetermined timeline for selling and holding investments. However, this may follow an investor first emotionally by selecting a country, region or city to invest in, and the type of investment they are most interested in. It is then crucial to put personal bias aside and choose expert third party management that can execute and objectively manage real estate investments daily in order to maximize portfolio performance.

Posted in Canadian Economy, Commercial Real Estate, real estate investment, Richard Crenian
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Mar 11

Investment Insights from Forbes 2015 Billionaires List

Written by: Richard Crenian

Forbes has released its new 2015 list of world billionaires, which details how the world’s wealthiest investors are doing this year and the valuable insights for individual Canadian investors desiring to follow in a similar path.

The Economy is Just Fine

While some enjoy debating the health of the national and global economy, the data from the new 2015 Forbes Billionaires list shows that the economy is operating fine for those that are willing to make it work for them.

Together the members of the list have seen their net worth grow close to one trillion dollars over the last year and nearly 300 new individuals achieved billionaire status this year as well.

Age is Not One of the Numbers to Dwell on

With 46 billionaires on the list under 40 years old, as well as aging veterans like Warren Buffett, age should not be considered a barrier for Canadians looking to increase their personal wealth. Age may be a motivating factor in demanding more from an investment portfolio or an added advantage for those getting started early and benefiting from compounding returns. It is clear from the list that age is not something that any Canadian investor should allow to hold them back.

The Power of Partnerships

It is incredible to see the vast majority of billionaires on the 2015 Forbes list are self-made, along with it are also two key takeaways Canadian investors shouldn’t overlook.

The first is the power of partnerships. Pick any name on the list and it is hard to see how they could have made it without others. Everyone on the list had help in creating, maintaining and growing their fortunes. This applies to Uber, Facebook, Berkshire Hathaway, Amazon, Alibaba and all of the other companies these billionaires have developed into modern day success stories. It also applies to the individual partnerships that investors have formed to invest together.

While it is great to see so many self-made billionaires, it may also be shocking to see that very few billionaires attained their wealth from inheritances. If so few heirs have managed to grow their inherited wealth, Canadian investors should give serious thought to how they will instill good financial principles amongst the next generation, as well as selecting secure investments that can be professionally managed on behalf of heirs.

Passive Income

From the multi-billion dollar valuations of tech companies to the personal investments of these billionaires, the one consistent theme is passive income. These titans of industry create passive income streams and invest heavily in assets that can produce them.

Real Estate

Whether its providing the initial capital to invest, serving as a main investment vehicle, or providing a safe haven for excess capital; real estate is perhaps the one consistent investment and asset that all of these successful individuals have in common.

Summary

It doesn’t matter your age or how you start your financial journey. As can be seen by the members of the Forbes Billionaire list, leveraging partnerships and acquiring passive income investments can build great wealth over the long term. By seeking out the investments and embodying these principles, more Canadians can experience greater progress toward their financial goals.

Posted in Canadian Economy, Commercial Real Estate, real estate investment, Richard Crenian
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Mar 2

The Best Place To Invest In Canadian Real Estate In 2015

Written by: Richard Crenian

The numbers show that Canadians continue to be bullish on buying property despite recent news of a slowdown. In fact, the statistics show incoming commercial investment capital and demand for Canadian homes is growing.

Bidding wars and growth seem to be inevitable throughout 2015, so the only real uncertainty is determining the best real estate investment destinations in Canada over the coming months.

Toronto

Canada is home to many notable real estate markets and thriving cities. While each has its own set of advantages, there are several major Canadian cities that remain popular with both domestic and international real estate investors. Toronto has appeared to have side stepped what was anticipated to be a big crash, with competition for housing escalating to even fiercer levels.

The Most Important Factor

While real estate investing is said to be all about “location, location, location,” the truth is that the most important factor in making a great investment is evaluating the individual investment opportunity on its own merit. There may be benefits of investing in old stronghold urban cores or new hip, upcoming neighborhoods. Yet, location alone, even when accompanied by all the data and media buzz has little value if the individual opportunity isn’t solid.

Equally important is making investments that match your financial and lifestyle goals, while adhering to your investment horizon. Fantastic opportunities and even potentially highly profitable ones sometimes should be passed on if they don’t fit your personal plans, just as it may make sense to choose modest returns in exchange for safety and consistency of passive income.

Posted in Canadian Economy, Commercial Real Estate, Richard Crenian
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Mar 2

How Far Should Canadians Stretch To Buy Homes in 2015?

Written by: Richard Crenian

According to The Globe and Mail, the Canadian home market has evolved into outrageous bidding wars. The recent Bank of Canada rate cut is emboldening homebuyers and enticing them to capitalize on the current market rates. Toronto homes are regularly going through two, three or even four rounds of escalating bidding, while properties selling for six figures over asking price has become commonplace.

The Canadian Press has fueled the market by debating whether individuals should even go as far as tapping RRSPs and retirement savings to take advantage of the deals available on the market. According to some financial advisers through the Edmonton Journal, this is believed to be an acceptable move, of course depending on age and the amount of savings one has. While this may make sense given the market’s proven long term performance, security and returns versus other investment options, there may be other options available.

In February 2015 Bloomberg News reported that some Canadian property stocks jumped up as much as 20 percent, while the nation’s largest banks including RBC and National Bank of Canada have been outperforming expectations.

While stocks may not be the safest bet for investors, it can certainly be smart for Canadians to invest first before stretching with loans they can’t afford or draining retirement savings.

Diversifying investments and savings into Canadian commercial real estate first and letting the passive income and cash flow pay for homes can be another good option.

It eliminates overstretching on emotions and eliminating pressure to keep up with earned income or relying on residential home prices to provide for retirement, building a nest egg, or leaving an inheritance.

Ultimately, this is a fantastic time to buy homes in Canada; especially considering low interest rates. However, instead of taking on more debt and depleting assets, another option might be to leverage current trends for investing in commercial real estate first, then using those proceeds to purchase homes.

Posted in Canadian Economy, Commercial Real Estate, real estate investment, Richard Crenian
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Mar 2

A Look at Canadian Property Drivers Ahead

Written by: Richard Crenian

Bad ‘news’ and scary hype might drive more views and shares for media websites, but the truth is that there are many positive factors bolstering the Canadian real estate market.

The truth is that not only are major Canadian property markets still firing on all cylinders, hard data and core fundamental information are showing the nation’s position and future as one of the strongest, safest and best performing .

Beyond improving bank performance and a veracious appetite for buying homes and commercial real estate, here are some of the factors propelling the nation forward.

Low Mortgage Interest Rates

Lower interest rates in 2015 are propelling more home and investment property acquisitions. The fresh rate cut suggests this trend will continue for a while before reversed.

Oil

While a rapid plummet in oil prices provided the media a lot of fuel in the last few months, we’ve already seen them beginning to bounce back from their low in January.

Oil is far from becoming redundant. Even though Obama has vetoed the Keystone XL pipeline bill, Michael Bloomberg recently told the Financial Post that there is a solution here, in Canada and that victory is still possible. Even if the pipeline doesn’t happen, Canadian innovation is sure to come through to create something even better.

Affordability

Expert analysts continually agree that the most important factor in real estate performance is affordability. While some might not think Canadian real estate is ‘cheap’, put in proper perspective, it is still very affordable for the most part given strong Canadian employment, wages and low rates.

Shopping

Overall national and personal financial health remains strong in Canada. We are proving to be a nation that loves shopping. Our retail sales per square foot are among the highest in the world. This not only applies to investing in retail properties, but crosses over to support the housing markets in close proximity to fashionable shopping.

Foreign Investment Capital

Recent studies and surveys forecast incoming investment capital will be stronger than ever in 2015. This won’t just maintain strength, but spur growth in construction and prices too.

Together these factors can ensure Canadian real estate performance will be more than just okay throughout the year.

Posted in Canadian Economy, Commercial Real Estate, real estate investment, Richard Crenian
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Feb 24

What New Canadian Mortgage Moves Will Mean

Written by: Richard Crenian

The recent 2015 Bank of Canada rate cut stole headlines and was expected to fuel a new low interest rate as banks and mortgage lenders vied to make more home loans. However, as we approach March, a new trend appears to be emerging – which can take things in the opposite direction.

Bloomberg News recently picked up on Canadian mortgage insurers and lenders pulling back and making new plans in some pockets of the market. Entities including Home Capital Group and Gentworth MI Canada are reportedly preparing to defend against more defaults and losses on loans, as well as tightening underwriting criteria as they fear the fallout of low oil prices.

Between investors withdrawing capital and cash flow interruption, many are expecting high capital rates to fall out of the oil industry as well. These entities want to protect themselves from further losses – possibly making it harder to borrow for regular home buyers and homeowners in regards of qualifying for mortgages and their borrow amount.

 

Together, current trends can make residential condos and single family homes, as well as industrial property slightly less attractive to investors in the short term. Expect more activity in commercial property sectors such as multifamily and retail, as Canadian investors seek more safety, growth and yield.

Industrial developments like Edmonton airport’s new distribution center may offer exceptions to this, but those that have stalled on buying homes could add to the pool of renters nationwide; increasing performance for apartment building owners.

Domestic and global capital will likely seek out other commercial property investments. Retail in particular may provide some shelter to investors looking for properties that can better ride out any potential dip and bounce back easily when things pick up.

 

Posted in Canadian Economy, Commercial Real Estate, Richard Crenian
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Feb 24

Investment Trends according to Heavy hitting Investors

Written by: Richard Crenian

Legendary investor Warren Buffet made big waves with Canadian and energy sector investments over the past few years. However, financial reporting from his flagship firm Berkshire Hathaway shows the ‘Sage of Omaha’ dumped its entire Exxon Mobil investing (around $3.7 billion) in the beginning of 2015.

According to coverage by The Globe and Mail, this was Buffett’s single biggest bet since IBM five years ago. This dramatic portfolio shift is probably in part due to crumbling oil prices, but also potentially a side effect of his frustration over the Keystone XL pipeline which he said was a “good idea”.

How to Invest Like Warren

Everyone wants to know how to invest like Warren Buffett. Most do it too late. So while the news is fresh, how can more Canadian investors emulate Buffett’s latest bold investment moves and enjoy more Warren style rewards?

The big question is where the legend is investing now.

According to financial filings by Berkshire Hathaway, some of the most notable moves and holdings over the last year have been in services that support retailers like Wal-Mart – which we know has become a major player in Canada. Retail property investments are definitely complimented by current trends picked up by the Toronto Star in February 2015.

A declining Canadian dollar, new stores with better deals and the prioritization of experience and saving hassle has kept more Canadian consumers shopping at home. That bodes extremely well for retail real estate investors and the performance boost applies equally to smaller local plazas as major outlets.

However, more than anything else Buffett and Berkshire Hathaway’s real estate investments continue to stand out as the ones to watch. Buffett continues to be bullish on real estate which he still names as his best investments. His forays into this arena are widely diversified from personal residences to farms to commercial retail property and mortgage debt, as well as real estate sales.

 

Posted in Canadian Economy, Commercial Real Estate, real estate investment, Richard Crenian
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