Landlord to developer in two easy steps

As constantly changing legislation throws up fresh financing challenges, experienced investors are looking to take the next logical step and move into property development, but the move is not for everyone, warn experts.

“I think everybody has their own appetite for projects and where they can add value,” says Peter Cheung, founding partner, president and CEO of Alture Properties. “There is a lot of money to be made as a real estate investor; there is a lot of money to be made in developing projects.”

Cheung, who was first an investor and then a developer, adds that the transition happened naturally for him. Anton Morgulis, an investor and director at SevenSix Investment and Management in Alberta, also believes it is a natural transition for a real estate investor.

“It would be nice if you live what you preach,” he says. “If you tell a lot of people to buy stuff and you don’t believe in it and don’t do it yourself … it’s absolutely natural. You know what it takes. You know how to make it happen.”

But commenting on the CREW forum, Nathaniel Andersen, a mortgage agent at Verico, warned that being a developer takes a totally different skillset.

“Perhaps pursue an intermediate stage of packaging land to sell to developers to familiarize yourself with the planning and approval processes,” he adds. “Margins can evaporate in a development if the project goes off the rails or if the markets go sideways. It’s best to ease into it and build up a solid amount of capital for contingencies.” 

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