RRSP`s
- Thread starter Susana
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Hi Susana,
You have a few options re: RRSP investing...
1) You can liquidate the RRSPs, pay the withholding tax and use the remaining funds as a down payment.
2) You can loan the RRSP money while having it secured against real estate as a 2nd mortgage. You have no beneficial ownership in the property per se but have piece of mind that your RRSPs are growing at a fixed rate and secured against hard assets...versus being at the mercy of public markets.
We are currently paying 13.5% growth on RRSPs, secured on title against specific properties in our portfolio.
Please let me know if I can help.
Best regards,
Greg
You have a few options re: RRSP investing...
1) You can liquidate the RRSPs, pay the withholding tax and use the remaining funds as a down payment.
2) You can loan the RRSP money while having it secured against real estate as a 2nd mortgage. You have no beneficial ownership in the property per se but have piece of mind that your RRSPs are growing at a fixed rate and secured against hard assets...versus being at the mercy of public markets.
We are currently paying 13.5% growth on RRSPs, secured on title against specific properties in our portfolio.
Please let me know if I can help.
Best regards,
Greg
- Joined
- Aug 29, 2007
- Messages
- 173
The most important consideration for you is to know that any RRSP investment you make has to be in an arm`s length deal. So you cannot buy properties for yourself using money kept within your RRSP. And arms length also excludes family members (by blood or by marriage).
I have some other basic info on RRSP mortgages at:
http://lease2ownbob.blogspot.com/search/label/RRSP
... but a more complete source of info is from Mister RRSP, Valden Palm www.misterrrsp.com
Good luck!
I have some other basic info on RRSP mortgages at:
http://lease2ownbob.blogspot.com/search/label/RRSP
... but a more complete source of info is from Mister RRSP, Valden Palm www.misterrrsp.com
Good luck!
- Joined
- Sep 18, 2007
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- 1,230
QUOTE (BobHudson @ Feb 3 2008, 11:12 AM) The most important consideration for you is to know that any RRSP investment you make has to be in an arm`s length deal. So you cannot buy properties for yourself using money kept within your RRSP. And arms length also excludes family members (by blood or by marriage).
I have some other basic info on RRSP mortgages at:
http://lease2ownbob.blogspot.com/search/label/RRSP
... but a more complete source of info is from Mister RRSP, Valden Palm www.misterrrsp.com
Good luck!
From my understanding of your post I can take my RSP funds, maintain their status w/in my self directed plan and use that to invest in a lease to own property. If that is correct I may be in a position to set something up, please contact me to confirm.
thanks,
Ed R
I have some other basic info on RRSP mortgages at:
http://lease2ownbob.blogspot.com/search/label/RRSP
... but a more complete source of info is from Mister RRSP, Valden Palm www.misterrrsp.com
Good luck!
From my understanding of your post I can take my RSP funds, maintain their status w/in my self directed plan and use that to invest in a lease to own property. If that is correct I may be in a position to set something up, please contact me to confirm.
thanks,
Ed R
- Joined
- Aug 29, 2007
- Messages
- 173
QUOTE (EdRenkema @ Feb 3 2008, 04:01 PM) From my understanding of your post I can take my RSP funds, maintain their status w/in my self directed plan and use that to invest in a lease to own property. If that is correct I may be in a position to set something up, please contact me to confirm.
thanks,
Ed R
Yes you can certainly invest in a real estate deal without taking the funds out of the RRSP. No tax event will be triggered. I have done three arms length deals so far with my own self directed RRSP and we have been paying up to 14% interest only on our lease to own projects.
thanks,
Ed R
Yes you can certainly invest in a real estate deal without taking the funds out of the RRSP. No tax event will be triggered. I have done three arms length deals so far with my own self directed RRSP and we have been paying up to 14% interest only on our lease to own projects.
- Joined
- Aug 22, 2007
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- 2,005
Hi,
You may wish to check out Canada`s leader on RRSP for Real Estate, Valden Palm. www.misterrrsp.com
Trust that will give you even more info to help you on your way.
You may wish to check out Canada`s leader on RRSP for Real Estate, Valden Palm. www.misterrrsp.com
Trust that will give you even more info to help you on your way.
- Joined
- Sep 17, 2007
- Messages
- 25
Susana, here is the reader digest version of RRSP 2nd mortgage investing.
* Whenever you are looking to use your RSP`s for investing you must find an individual who is arms length to put the funds onto a property in Canada. Arms length means they can`t be related to you.
* you find someone that has a property that wants to do an RSP and has enough LTV on the property. You work out the details of the RSP loan with the investor. ( there are many ways for deals so you need to determine what YOU want in the deal)
* Funds must be with an institution that is set up for doing RSP 2nd mortgages such as Olympia Trust, Laurentian, Canadian Western Trust and TD.
* If you aren`t with one of these institutions you will need to transfer the funds within your RSP into an account with one of them.
* Once you have the funds transferred and it must be in cash, not in a mutual or stock ( it doesn`t mean you cash in the RSP at all) you then obtain the necessary paperwork from that institution and pass this on to your lawyer.
* The lawyer will register the mortgage on title and the payments from the lender will go into your account as interest payments. These payments are NOT contribution, just investment returns in your RSP.
If you are in Calgary and you want more information look me up. I am the one that wears the Calgary Flames jersey.
Ken Wilson
*
* Whenever you are looking to use your RSP`s for investing you must find an individual who is arms length to put the funds onto a property in Canada. Arms length means they can`t be related to you.
* you find someone that has a property that wants to do an RSP and has enough LTV on the property. You work out the details of the RSP loan with the investor. ( there are many ways for deals so you need to determine what YOU want in the deal)
* Funds must be with an institution that is set up for doing RSP 2nd mortgages such as Olympia Trust, Laurentian, Canadian Western Trust and TD.
* If you aren`t with one of these institutions you will need to transfer the funds within your RSP into an account with one of them.
* Once you have the funds transferred and it must be in cash, not in a mutual or stock ( it doesn`t mean you cash in the RSP at all) you then obtain the necessary paperwork from that institution and pass this on to your lawyer.
* The lawyer will register the mortgage on title and the payments from the lender will go into your account as interest payments. These payments are NOT contribution, just investment returns in your RSP.
If you are in Calgary and you want more information look me up. I am the one that wears the Calgary Flames jersey.
Ken Wilson
*
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- Aug 30, 2007
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- 13,881
a number of firms, including ours, take funds for commercial properties that are RRSP eligible ! It is usually structured as a (syndicated) mortgage or as a bond plus an equity participating company !
- Joined
- Dec 3, 2007
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- 18
Hi Susana,
If you are considering how to use your RRSP`s I`d like to add another option for you that the other have not suggested. It boils down to how you are going to go about investing in Real Estate. If you are going to do it on your own then you have to have them arms-length from yourself as the others have suggested. If you are going into a partnership situation you can use your own RRSP`s within that partnership if you are structured in the proper way. If your RRSP is sustantial it would make sense to use these partnership structures if it is smaller it might not make sense.
Keenan
www.LibertasHoldings.com
If you are considering how to use your RRSP`s I`d like to add another option for you that the other have not suggested. It boils down to how you are going to go about investing in Real Estate. If you are going to do it on your own then you have to have them arms-length from yourself as the others have suggested. If you are going into a partnership situation you can use your own RRSP`s within that partnership if you are structured in the proper way. If your RRSP is sustantial it would make sense to use these partnership structures if it is smaller it might not make sense.
Keenan
www.LibertasHoldings.com
- Joined
- Oct 24, 2007
- Messages
- 2,289
So Thomas you use a new company to provide RRSP investors with an equity upside as well? I thought RRSP second mortgages had to be fixed rate without ownership interest?
QUOTE (thomasbeyer2000 @ Feb 4 2008, 08:37 PM) a number of firms, including ours, take funds for commercial properties that are RRSP eligible ! It is usually structured as a (syndicated) mortgage or as a bond plus an equity participating company !
QUOTE (thomasbeyer2000 @ Feb 4 2008, 08:37 PM) a number of firms, including ours, take funds for commercial properties that are RRSP eligible ! It is usually structured as a (syndicated) mortgage or as a bond plus an equity participating company !
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QUOTE (RedlineBrett @ Feb 5 2008, 09:27 AM) So Thomas you use a new company to provide RRSP investors with an equity upside as well? I thought RRSP second mortgages had to be fixed rate without ownership interest?
Another question - when you are pitching an investor on doing the RRSP thing with you what do you tell them about liquidity? If the property is to be a long term hold what do the seasoned RRSP REIN members do? Do you tell them they can access their cash in 3 years? five? what, if any, seems to be the industry standard? While we may want our investors to keep their capital with us indefinitely how do you spin this when pitching them?
Another question - when you are pitching an investor on doing the RRSP thing with you what do you tell them about liquidity? If the property is to be a long term hold what do the seasoned RRSP REIN members do? Do you tell them they can access their cash in 3 years? five? what, if any, seems to be the industry standard? While we may want our investors to keep their capital with us indefinitely how do you spin this when pitching them?
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We use OlympiaTrust .. and we use 2 offering memorandums !
One is for the RRSP @ 5% .. a subsidiary of a public company issues a bond (let`s call this company A) .. company A then lends this money at 5% to company B, and arms-legth transaction / loan, where you the investor (not the RRSP) invest 10 cents for every $100 in bonds .. so for a $50,000 RRSP investment or 500 bonds you would invest $50 into company B as shares. Company B invests / buys LP units in our apartment building LP. The shares in company B will provide the equity upside, if any, paid as dividends (not capital gains).
Since these are then both officially securities (i.e. a non-guaranteed return), it has to be registered with the various security regulators, and they are all NOT GUARANTEED with various risk disclosures and risk disclaimers.
Timeline is usually 5 years minimum.
Cost to the LP is about $30,000 to set this up .. so a sizable amount has to be raised to make this worthwhile. We`re raising $15M right now, probably about 20-25% will be in the RRSP pipeline.
So, it is "fractional apartment building ownership"
2nd option, for a fixed return, would be a (syndicated) mortgage, a liability and not a security. We chose the former option, but the latter is also used by some firms. A syndicated mortgage assumes an existing buidling and a willing 1st mortgage lender .. often not the case as we often don`t have a building yet when we raise funds. A mortgage woudl work AFTER the fact, once you own an asset, and THEN add a 2nd syndicated mortgage !
One is for the RRSP @ 5% .. a subsidiary of a public company issues a bond (let`s call this company A) .. company A then lends this money at 5% to company B, and arms-legth transaction / loan, where you the investor (not the RRSP) invest 10 cents for every $100 in bonds .. so for a $50,000 RRSP investment or 500 bonds you would invest $50 into company B as shares. Company B invests / buys LP units in our apartment building LP. The shares in company B will provide the equity upside, if any, paid as dividends (not capital gains).
Since these are then both officially securities (i.e. a non-guaranteed return), it has to be registered with the various security regulators, and they are all NOT GUARANTEED with various risk disclosures and risk disclaimers.
Timeline is usually 5 years minimum.
Cost to the LP is about $30,000 to set this up .. so a sizable amount has to be raised to make this worthwhile. We`re raising $15M right now, probably about 20-25% will be in the RRSP pipeline.
So, it is "fractional apartment building ownership"
2nd option, for a fixed return, would be a (syndicated) mortgage, a liability and not a security. We chose the former option, but the latter is also used by some firms. A syndicated mortgage assumes an existing buidling and a willing 1st mortgage lender .. often not the case as we often don`t have a building yet when we raise funds. A mortgage woudl work AFTER the fact, once you own an asset, and THEN add a 2nd syndicated mortgage !
- Joined
- Oct 24, 2007
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- 2,289
QUOTE (thomasbeyer2000 @ Feb 5 2008, 01:20 PM) We use OlympiaTrust .. and we use 2 offering memorandums !
One is for the RRSP @ 5% .. a subsidiary of a public company issues a bond (let`s call this company A) .. company A then lends this money at 5% to company B, and arms-legth transaction / loan, where you the investor (not the RRSP) invest 10 cents for every $100 in bonds .. so for a $50,000 RRSP investment or 500 bonds you would invest $50 into company B as shares. Company B invests / buys LP units in our apartment building LP. The shares in company B will provide the equity upside, if any, paid as dividends (not capital gains).
Since these are then both officially securities (i.e. a non-guaranteed return), it has to be registered with the various security regulators, and they are all NOT GUARANTEED with various risk disclosures and risk disclaimers.
Timeline is usually 5 years minimum.
Cost to the LP is about $30,000 to set this up .. so a sizable amount has to be raised to make this worthwhile. We`re raising $15M right now, probably about 20-25% will be in the RRSP pipeline.
So, it is "fractional apartment building ownership"
2nd option, for a fixed return, would be a (syndicated) mortgage, a liability and not a security. We chose the former option, but the latter is also used by some firms. A syndicated mortgage assumes an existing buidling and a willing 1st mortgage lender .. often not the case as we often don`t have a building yet when we raise funds. A mortgage woudl work AFTER the fact, once you own an asset, and THEN add a 2nd syndicated mortgage !
Wow... LOTS of great info in there... I`ll file that away until we`re a bit bigger I think
We`re trying to do our first RRSP 2nd and I`m loading up on info to field questions I`ll undoubtedly be asked.
That does sound like a brilliant way to provide your investors with the best of both worlds (unless I`ve misread it) fixed rate of 5% plus an equity upside (although not guaranteed (so it`s a security)) OR a guaranteed fixed rate syndicated mortgage (liability).
Has the first option made it past the CCRA, with the RRSP funds untaxed by the investor if they choose to go elsewhere after the term has expired?
One is for the RRSP @ 5% .. a subsidiary of a public company issues a bond (let`s call this company A) .. company A then lends this money at 5% to company B, and arms-legth transaction / loan, where you the investor (not the RRSP) invest 10 cents for every $100 in bonds .. so for a $50,000 RRSP investment or 500 bonds you would invest $50 into company B as shares. Company B invests / buys LP units in our apartment building LP. The shares in company B will provide the equity upside, if any, paid as dividends (not capital gains).
Since these are then both officially securities (i.e. a non-guaranteed return), it has to be registered with the various security regulators, and they are all NOT GUARANTEED with various risk disclosures and risk disclaimers.
Timeline is usually 5 years minimum.
Cost to the LP is about $30,000 to set this up .. so a sizable amount has to be raised to make this worthwhile. We`re raising $15M right now, probably about 20-25% will be in the RRSP pipeline.
So, it is "fractional apartment building ownership"
2nd option, for a fixed return, would be a (syndicated) mortgage, a liability and not a security. We chose the former option, but the latter is also used by some firms. A syndicated mortgage assumes an existing buidling and a willing 1st mortgage lender .. often not the case as we often don`t have a building yet when we raise funds. A mortgage woudl work AFTER the fact, once you own an asset, and THEN add a 2nd syndicated mortgage !
Wow... LOTS of great info in there... I`ll file that away until we`re a bit bigger I think
That does sound like a brilliant way to provide your investors with the best of both worlds (unless I`ve misread it) fixed rate of 5% plus an equity upside (although not guaranteed (so it`s a security)) OR a guaranteed fixed rate syndicated mortgage (liability).
Has the first option made it past the CCRA, with the RRSP funds untaxed by the investor if they choose to go elsewhere after the term has expired?