Real estate can be a great way to invest and grow your money, but owning real estate can also come with a lot of unexpected headaches. From issues when purchasing and selling to maintenance needs and working with tenants, there are a lot of things that can get in the way of your investment. For many, the allure of passive real estate investments is hard to beat, offering potentially great returns with none of the hassles.
We spoke to the team at the Scott McGillivray Real Estate Fund about why you may want to consider passive investing in 2022. You may recognize the fund’s namesake, Scott McGillivray, from his work as a presenter on multiple real estate TV shows, but beyond his public persona is a two-decades-long track record of investment success in real estate. Along with his equally experienced management team, they have recognized how hands-on investing isn’t for everyone and created a fund to allow passive investors the opportunity to potentially benefit from the expertise of experienced management.
“I’ve been talking to people about how to invest in real estate for over 15 years and the number one question I get is ‘how can I invest with you?’ And honestly, it’s one of the main catalysts for creating this fund. Until now, I’ve never had a satisfactory answer,” said McGillivray.
“Over the past two decades, I’ve seen the many different ways of investing in Canada’s real estate market,” continued McGillivray. “Some are direct ownership and provide a return at the end of the project and some provide interest along the way. Both have their advantages. With this fund, I believe we’re taking the best of both worlds to put together an investment vehicle that will allow people to invest in the exact same things I am without having to do any of the heavy lifting.”
Despite a common misconception that real estate is an inherently passive investment, McGillivray explains that this is not the case. Even the most low-effort properties will require some level of hands-on work, the bigger your portfolio gets, the bigger the task becomes. One major benefit of passive investing is the peace of mind knowing that your investments will continue to perform if you want to take some time off.
“When people ask me about active and passive real estate investing, I often say that if you have to call in sick you’re probably making active income. If you can take some time off with no one noticing, it’s likely passive income,” said McGillivray.
There are other benefits to passive investing as well. For one, the real estate market has become notoriously tight and competitive. This means many would-be investors are frustrated trying to find an appropriate home to buy. Passive investments like a real estate fund can allow you to start investing nearly right away.
Another consequence of such a hot market is that a lot of people have been enjoying huge returns quite easily. However, this won’t be the case forever. With a passive investment, you can trust in an experienced team to execute the best decisions even in the worst of times.
“A lot of people have been making money over the last few years, but as the market shifts it’s going to separate people and show us who’s been successful because all boats float in a rising tide, versus who really has the know-how and experience to make this work,” said Andrew McGillivray, another founder with the fund. “Investing with those who have the experience and know-how to be successful no matter what the market is doing is one of the major benefits of this type of investment.”
Finally, with passive investing, you can gain exposure to many more income streams than with a single investment and can potentially enjoy the benefits of markets that may have been beyond your reach as an individual. The Scott McGillivray Real Estate Fund, for example, focuses primarily on residential development opportunities in key growth areas of Southern Ontario. Most investors won’t have the expertise to casually start developing real estate. With passive investing, they don’t have to.
“I’ve invested in a lot of different types of real estate and the beauty of development is that you’re working with a clean slate,” said Andrew. “We get to create rather than just rehab and that means there’s more room for growth. We don’t have to worry about fixing other people’s mistakes – instead, we come right out of the gate with our best practices, honed from years of experience. We can bring a new vision to life, but also, new developments may be less commoditized.”
“In addition, we believe strongly in the fundamentals here in Ontario including restrictive land-use policies and population growth,” Added Dan Pero, another partner with the fund. “These factors provide a sustainable foundation (pun intended!) for new housing development in a market we understand and where we can leverage our networks and know-how to create value for investors.”
If the ease and opportunity of passive real estate investing appeals to you, there are numerous different avenues you can explore to start growing your money. The Scott McGillivray Real Estate Fund is open to Eligible Investors across Canada and is now available for investment through Registered Accounts (RRSP-TFSA).
You can sign up now at www.scottmcgillivrayrealestatefund.com to receive offering documents including an Investment Presentation and Offering Memorandum with all the info you need to know, including the next steps for investment. Or, reach out directly at [email protected]
Please note that this offering is only available through a licensed exempt market dealer.