JV structure ideas

[SPeever]

Hello:

I have a rental property in Victoria BC, with a current market value of approximately 575,000. The top floor is rented at 1300.00/month and the bottom is currently my office space. The line of credit balance on the property is 400,000.



I am looking for advice and ideas regarding how to structure a JV deal on this property. If it was rented out fully, it could rent for approximately 2,100.00.



Thank you.

 

[invst4profit]

It would be very difficult to structure a JV deal that would be attractive to a investor as the income based on value of the property is less than half what it should be. As a rental property it is negative cash flow and would probably be better off to sell and find a investment that does cash flow.



You might find someone to purchase the equity at a discounted price but you will still end up with a money pit to feed monthly.

 

[SPeever]

Hello and thank you for this prompt and very helpful reply. I could rent the entire house for 2200.00 maximum, but as you have mentioned, the property still remains unattractive to investors. Victoria BC is not conducive to positive cash flow properties and I see that it would make more sense to invest elsewhere.



I am considering selling, and so, is there an actual formula that investors want when becoming involved? For example, there are properties in Port Alberni, or Courtenay, which are in the Comox Valley, or in Nanaimo which could be purchased for 80-100K, and rented for 800-1000/month. These properties would be something I could start with on my own and build from there, or invite investors. Is is more likely that investors would want to participate if I start first on my own, then attract investors, once several properties are in my portfolio?



Thank you again.

 

[Thomas Beyer]

[quote user=SPeever]Is is more likely that investors would want to participate if I start first on my own, then attract investors, once several properties are in my portfolio?
yes. You should build a track record first with your own cash, then ask others to join you.



[quote user=SPeever] I have a rental property in Victoria BC, with a current market value of
approximately 575,000. The top floor is rented at 1300.00/month .. I could rent the entire house for 2200.00 maximum, ...


At those values it is not an investment. It is a wealth preservation / capital protection.



Victoria real estate is not a great place to invest. It is a great place to retire and live off your pension (RRSP, OAS, CPP, the BC or federal cash) as a retiree. It is very left leaning and anti-development as I have been told. Commercial is weak.



US and UK tourists used to come in droves .. now their economy is weak and Can $ currency is high. Weak tourism. No business except tax payer assisted: BC Government, Navy & retirees.



Do I hear the cash-sucking sound ?



No surprise, the only Green Party MP comes from near Victoria in Saanich.



The only thing that makes sense to do in Victoria is to

a) develop properties to sell to seniors/retirees/semi-retirees (from Alberta) or

b) rent to seniors or students.



You may wish to sell this property, and then rent s.th. cheaper for your office, and invest remaining cash in lower priced locales with decent economics.



Selling might take a year or 3 to get a decent price, so be patient. Ideally find a tenant until sold if cash-flow is an issue.



Nanaimo or Comox or Campbell River at the right price point makes sense, but industrial activity in these towns isn't all that great either.



We own a 65 suiter in Campbell River near the hospital. An OK investment (due to price we paid and proximity to hospital and superb management and oceanview) but still not as good as Alberta or Saskatchewan where the MAIN real estate opportunities lie in Canada these days due to highest in-migration and highest job growth.



Come back to Victoria when you're close to 60 and made your money elsewhere (preferably off Vancouver Island, in AB or SK). Go east young man - off island !

 

[SPeever]

Hello Thomas:



Thank you very much for this excellent feedback and you are absolutely right about the economic conditions here in Victoria. I recall an acquaintance who came from Alberta to do business here and he likened his experience to ploughing head on into a brick wall.



I will continue my search and look at cash flowing properties.



Thank you again,

Shelley

 

[Thomas Beyer]

[quote user=SPeever]look at cash flowing properties.


Your building cash-flows alright .. with no mortgage !



[quote user=SPeever]I recall an acquaintance who came from Alberta to do business here and he likened his experience to ploughing head on into a brick wall.
Maybe I know him too .. but likely not as there are so many Albertans who move to BC and shake their head ...



As stated .. a great place to retire or spend a weekend or a few weeks to relax .. or WORK FROM .. similar to Vancouver although Vancouver does offer far more opportunity and world-wide connections.



Interestingly enough though the leader of the BC "Liberals" is far more conservative than the leader of the AB "Conservatives" .. but I digress ...

 

[SPeever]

Thank you!



Can you speak to the advantages and disadvantages of buying revenue property within a LLC as opposed to an individual with respect to JV deals?



Much appreciated.

 

[Thomas Beyer]

There are some posts here on REIN on this topic.

LLC is a US term.

 

[bizaro86]

[quote user=ThomasBeyer]Interestingly enough though the leader of the BC "Liberals" is far more conservative than the leader of the AB "Conservatives" .. but I digress ...


Liberals figured out the only way they could rule in Alberta would be to call themselves Conservatives.