Investment Story #8: Private Equity in Land Development with Rav Toor

Our 8th Investment Story features Rav Toor. Rav is a TV show host for a real estate investing talk show. You can find his shows on his YouTube channel: “The Everyday Investor with Rav Toor”

Thanks to Rav for taking the time to share his story with us!

I have no financial relationship with Rav to disclose. However, I am currently invested in one of Greybrook Realty’s investment deals.

Tell us about your background

I got bored very easily in high school and so I was put in a co-op and I was fortunate enough to spend much of my school days in a very large real estate brokerage at the age
of 16. I bought my first property that year with my mom, and never looked back. I have now been investing in real estate for 31 years. I started out like most investors, with buy & hold properties, and now exclusively invest passively in land development which is taxed actively but my work is passive to nil because I’m Joint Venturing with developers
and my responsibility is only to invest funds.

Describe one of your real estate investments

One land development deal that I recently exited was located downtown Toronto. The plan was to develop 3 condo towers with a projected annualized return of 25%, give or
take. Once we serviced the land in preparation to build, the project was acquired by a foreign developer just over 2 years into the project. Though the plan was to complete the development and then exit, the option to sell to the foreign developer made more sense once the opportunity arose and I ended up making over 40% per year on my investment.

Where is the property?

This particular project is located downtown Toronto on Lakeshore Blvd.

Are you the active or passive investor in this investment? How did your partner find this investment?

I am a passive partner. The developer approached Greybrook Realty Partners (of which not only am I an aggressive investor in but also VP Business Development) and
proposed the project. The developer-partner’s job to look for great opportunities and then they let us, at Greybrook Realty Partners, know of them. Then Greybrook does their own vetting and due diligence before sending the deals out to the Greybrook Investors.

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

The investors, for all intents and purposes, are investing in the land portion with some
marketing costs, the developer builds and then the profits are split. As a passive
investor, my security is the land itself and I, along with the other passive investors in the
deal, am on title.

A couple of potential risks could be:

1) Time: if the value of the land were to drop we would wait for the value to come back up and the project would not be a 4.5 year project (for example) and may be a 5.5 year project. Therefore, the risk would be “time”.

2) Illiquidity: not so much a “risk” but this is not an investment where you can push
a button and get your money out. There is no liquidity as you have to wait for a project to complete before you can get your money back.

How much was the original investment? What is the breakdown of your/partner’s

The investment amount was $200,000 and my return was north of $360,000 including my investment amount just after 2 years.

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

Profit after just over 2 years = $160,000
Return on Investment over 2 years = Profit (160,000) / Investment (200,000)
Return on Investment over 2 years = 80%
Annualized Return = 80%/2 years
Approximately 40% Return on Investment per year

When did get your original investment back?

We got paid out after the project was sold, just over 2 years after the project started.

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

This type of investment is not for everyone. It is for accredited and/or eligible investors that are looking for a way to grow their capital. Furthermore, what I like about this is most of the investments allow for registered funds such as RRSPs, RESPS, LIRAs, TFSAs, etc.

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

Please leave any questions/comments for Rav below.  Thanks!

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Warren VDr. NetworthDonald WiensDr. MB Recent comment authors
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Dr. MB
Dr. MB

The thing about good real estate investors are the recurrence of the words aggressive and smart. I am neither of those and thus we do not do as much deals nowadays.

I am usually in awe of good RE investors. Your portfolio sounds exciting as well DN. You certainly are more careful than we ever were.

Donald Wiens
Donald Wiens

Hi Dr. Networth, it’s interesting to see that you have invested with this company yourself. To me the biggest challenge is figuring out how to do due diligence on a company like this. The model they follow is impressive and makes a lot of sense, and the returns look great. But then so did things at Fortress, another big company in the real estate business that seems to have left many investors in the lurch. Although the two companies follow quite different models for their investors, what they have in common is that it’s not easy to see what is… Read more »

Warren V
Warren V

Hi Dr. Networth, I do some small-scale investing in our company’s land development deals with my holdco but have not considered using RRSPs to do so as well. How would this work with a land development deal? Do you take a private mortgage loan with an interest rate TBD as you don’t know the final return that the development deal will provide? Also, once you have the money out of your RRSP do you put this in your corporation to invest?

Many thanks, W.V.