Investment Story #5: Saskatchewan 144 unit Joint Venture Deal with Edna Keep

Our 5th Investment Story is provided by our featured guest, Edna Keep, who is a real estate investor in Saskatchewan.  I have no financial relationship to disclose.

If you are interested in learning about real estate investing and/or investment opportunities with Edna, then she can be reached at: edna@ednakeep.com

I heard Edna’s interview on “Millionaires Unveiled Podcast Episode #25″, and I was amazed with how much she has achieved in a relatively short period of time as a real estate investor.   In the podcast, Edna stated that she has achieved a net worth of $6.5 million with 473 doors (update 521 doors), which is very impressive.  She has an interesting background in that she worked at minimum wages jobs and as a certified financial planner until the age of 36 before switching to real estate investing.

If you have some time, I recommend for you to listen to her podcast interview, as well as the other podcast interviews.  The (multi)millionaire interviewees describe how they achieved their wealth and what investment strategies they employ.  Some of the interviewees are well-known personal finance bloggers, such as White Coat Investor, DiverseFI and Root of Good.  If you enjoyed reading “Millionaire Next Door”, then you will definitely enjoy “Millionaires Unveiled Podcasts”

Thank you to Edna for taking the time to share her investment story with us!

1) Please tell us a bit about your background.

Edna Keep, Real Estate Investor, Entrepreneur and Coach

I am 58 years old and began in Real Estate 11 years ago after being a Certified Financial Planner for 15 years.  We ( as in my husband Warren and I) are active Investors primarily multi-family and primarily in Joint Ventures.  We invest in primarily in Saskatchewan.  We are owners of 521 doors valued around $60M.

2) Please describe one of your real estate investments (past or present)

One of my favorite deals is 144 units we bought in November 2012 – we paid about $43,000 per door.  We raised $1.2M of Investor capital to close on the deal.  The managing partners and I each got a $75,000 acquisition fee.  In July of 2015 we refinanced after forcing appreciation through renovations, active management and increasing the rents.  The Investor capital was returned in full and the managing partner and I each got a $400K payday.  The property cash flows over $200K per year.  The mortgage pay down per year is $242K per year.

3) Where is the property located (city/province/state)?

A small town in northern Saskatchewan called LaRonge – the community is considered the gateway to the north.

4) Are you the active or passive investor in this investment?   How did you/partner find this investment?

Active in that I raised the capital for the deal and I liaison between the Investors and the active partner of the deal.  Our managing partner brought us the deal and they actively manage it.  We have caretakers on site.

5) What was the risk of this investment?   What was the security?

We calculated the risk of it being a small town investment – the inflationary rate won’t be as high as the cities.  We felt the cash flow, the price we paid and the fact we were able to get all the Investor capital back in 30 months reduced the risk.  The security is the buildings.  We have very low vacancy in the area.

6) How much was the original investment?  What is the breakdown of the investment?

The original price was $6.2M – My husband and I own 30%, the managing partners own 30% and the Investors own 40%.  The down payment, closing costs and acquisition fees were part of the original capital raise of $1.2M from our Investment partners.

7) What was the annualized ROI?   What is the breakdown of the ROI?

Our original projections were 21.8% cash on cash return 262,000/$1.2M.  We figured out of cash flow alone – we’d have the Investors paid out in less than 5 years.  Once everyone is paid out the return is infinite.  With the refinance our cash flow did reduce to $200K per year.

For properties, please fill in:

  • Cash Flow/yr = $200,735/year
  • Mortgage Paydown/yr =  $241,803/yr
  • Appreciation/yr  =     1.5%
  • If applicable, Forced Appreciation/yr = The primary forced appreciation came in the first 30 months.  We refinanced and pulled out $2M as the refinance appraisal gave us an $8.8M value.

8) When did your investors get their original investment back?

In this particular case – the Investors got their capital back in 30 months.

9) What did you like or didn’t like about this particular investment?    Would you recommend this investment to your friends/family members?   Any advice to give to the readers?

We loved this particular investment.  We calculated the risk – returned the principal back to our Investors quickly and maintain a high level of cash flow.  I would recommend this type of investment.  The advice would ensure the price point makes sense for the area.  Look for forced appreciation plays and note that small town will likely not appreciate inflationary wise like a city so make sure the whole deal makes sense.

10) If any reader wants to contact you, what is the best way to contact you?

Email: edna@ednakeep.com

Website: ednakeep.com

Any comments/questions for Edna?  Please submit below and I will notify her.  Thanks!

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Bell

what would be the minimum level of investment with Edna?

Edna Keep
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Edna Keep

The minimum investment with us is $100,000.