All Forum Posts by: Warren Marshall

Hey Ian,  like the others have mentioned we don't have a 1031 or like kind exemption.  However in larger commercial sales there are some areas where tax can be deferred, our company has had success with both Section 85 Rollovers, and fractional purchases to help owners defer/minimize their taxes.   These are not applicable to all sales nor are they always advantageous to both parties but for the right transaction they are quite handy.   Here is the readers digest version: 

Section 85 Rollover:  The section 85 rollover is an election in the Canadian Income Tax Act that permits a taxpayer to transfer eligible property on a tax deferred basis to a taxable Canadian corporation.  (fullerLLP.com)

Fractional Ownership:  The Concept of a Fractional Ownership Sale works when you have a seller that wants to stay invested in the property/investment and wants to defer their capital gains/ depreciation recapture. This can be done in a couple ways, 1. simply purchase a percentage of the building or corporation, 2. purchase the building or corporation with a mix of cash + ownership shares or units within your joint venture that is going to be buying the property.    The owner may still have to pay some taxes or recapture but the intention is to reduce it as low as possible. 
** Disclaimer: these strategies are concepts that have been successful in the past, however not without the right guidance from CPA's and Lawyers on both sides of the transactions.  

It is important with these transactions to work directly with the seller or buyer, these transactions can be complicated and communication needs to be very clear.  

Good luck and hopefully one day we will have a 1031. 

- Warren

Hey @Stevo Sun thank for taking the initiative here.  Have you had much feedback on a date that would work best?    I'm thinking it would be nice to give everyone a months notice since summer seems to fill up pretty quick.   Maybe Monday July 25th or another week day around 7pm.  

Let me know what you think. 

Hey guys, 

Glad to see the interest, and thanks @Stevo Sun for taking the initiative to pull something together.  I'm on board with a smaller coffee meetup and see where it goes from there.   I find week nights work the best as weekends are usually pretty tied up through the summer.   What do you think about planning something for the last week of June?    North Calgary would be great as I'm coming from Red Deer. 

Thanks.

Hey Calgary Investors, 

I currently host a meetup in Red Deer that has been awesome to be apart of and I'm looking to be more active in the Calgary and eventually Edmonton real estate communities.   I am looking for 2 things:  

#1 a local co-host to help me set up a consistant Calgary meetup starting this summer 

#2 investors who would be interested in coming.   

Ideally I'm looking for a co-host with local investing experience and connections, someone who is eager to help make this a consistent event and provide a quality meetup. A bit about me - I have experience with Long Term, Short Term, NNN Commercial Rentals and I'm a partner in a local corporation that puts together NNN Commercial JV's with $55M in acquisitions across Alberta.

Let me know your interest and hoping we can plan something for July. 

Thanks, 

Warren Marshall

Hey Will, I was able to get a first time home buyer mortgage when I was in college.  I needed to get a Co-Sign from my parents however I was able to take advantage of the low down payment.  It was a bit of a stretch at the time but 8 years later and I'm glad I did.  Couple things I would do differently is: 

1. Get an experienced investor to double check my numbers. I didn't include Cap Ex, Vacancy allowance, or management fees so I've had a lesser return because of that. 

2. I would seriously look at Airbnb Potential when analyzing properties. I'm not confident in the Portland tourism market but I have both long term rental duplexes and short term rental single family homes and the STR's cashflow 5-6x the LTR's.

3. On your first one don't get to into a fixer upper unless you've got twice the time and twice the money needed and talented free labour.  

Good luck and let me know if you have any questions, 

Warren

Hey Alan, 

Congrats on taking the right first steps. I was in your position not to long ago, what worked for me was I asked everyone and anyone in the industry how they got started and the best way to get in. (so your on the same track I was) I found the most experienced guy local guy in CREI and questioned him on how I could help/get involved. I basically found his criteria and sent him potential properties until we landed a deal.  I did the work for free while gaining knowledge while he gained financially from the deal.  I ended up getting licensed and now I am an investment specialist with our firm getting commissions from the properties we buy as well as the opportunity to invest in the deals I would never see if i was out of the industry.

My favourite part of being in the industry is that I have combined my goals of being financially free through real estate with my day job and now my after work time is freed up to spend with family (this part clicks a bit more once you have kids). 

Let me know if I can help, 

Warren Marshall

Sundance Realty & Management
  

Hey Ellen,  Joel has given you some good points to check into.  I analyze commercial properties for my firm and these are the main factors I consider.  Let me know if you would like a copy of my analysis spread sheet, happy to share it. 

Add: Annual Rent

Less: Vacancy & Collections allowance (Anticipate the building having a vacancy at the end of the lease and work you way backwards to see how much you need to allow for) - 2%-10%

Less: Prop. Management Fees (NNN should cover but always confirm) - 3%-6%

Less: Yearly accounting and Legal fees - ours are around 2-3k

Less: Asset management fees ( we allow for this because we need to make sure the property is looked after for our passive investors- food for thought) - .5%-2%

Less: Structural Reserve (yes sometimes this is in the NNN but I don't expect that the tenants are going to reinvest as much into the building long term as I would expect, as well at the end of their lease you can expect that they won't want to cough out anymore than they need to. Allow for it either way) 1-5%

Less: Debt Service 

Less: any other fees you may incur that NNN doesn't cover.

What you have left per year is what you should compare against your investment to determine Cash on Cash return.  

I don't trust anyones future CAP rate projections, run your numbers based on what you already know.

I hope this helps,

Warren Marshall

Sundance Realty & Management 

Hey Guys, 

I am a Commercial Agent working for a company that specifically buys commercial investment properties for JV (Sundance Capital) and an investment company (Brookstone Investments). I'm looking to see if any commercial guys have good strategies for finding off market investment properties? I haven't found any commercial skip tracers in Canada yet and looking for ideas. We are ramping up with a capital raise in the new year and looking to purchase $50MM+ worth of properties.

Appreciate ideas and feedback, 

Warren Marshall

@Jesse Fragale I'm focusing on Commercial going forward, I've done the residential long term rentals in Central Alberta but the purchase price to rent is not favourable. I've done the short term rental route (which has been great) however looking long term I want something as passive as possible. Which leads me to commercial, in my market I'm able to find properties that produce a 7-8% Cash on Cash return with a vacancy allowance, Cap X, mgmt fees, asset mgmt fee, accounting/legal allowance, non recoverable allowance and debt financing. So in my biased opinion I would do STR if you have a tourist market or commercial if your looking passive long term.

Thanks @Don Konipol for the reply.  About how many investors did you pull from at that point in time?