- What is a Limited Partnership, or LP?
A: REGF Capital Limited Partnership (LP) is a more tax efficient vehicle for acquiring and holding or selling real estate that also offers passive investors liability protection. A corporation would get taxed on its income and then when investors receive their distribution or share of the proceeds, they would get taxed as well. A Limited Partnership is not taxed. All profits and expenses pass through the LP to the LP unitholders based on their proportionate ownership of the LP units. The unitholder is taxed directly.
- What is a unitholder or Limited Partnership (LP) unit?
A: Corporations issue shares and Limited Partnerships issue LP units. Corporations and Limited Partnerships are considered different entities under Canadian Law and the Revenue Canada Tax Act so ownership entitlement for corporations are called “shares” and ownership entitlement for a Limited Partnership are called “LP units”. A unitholder is the owner of the LP units.
- I do not want to lose my house or retirement savings. Are they safe?
A: Yes, your personal assets are safe. REGF Capital Limited Partnership (LP) is designed to allow investors to invest money in real estate and the only capital at risk is what the investor puts into the Limited Partnership. If you have committed to invest more money into the Limited Partnership then it is possible that you may also be liable for the amount of money you committed to invest in the LP as well.
- Can I become liable for more money then I invested in the LP?
A: A Limited Partnership (LP) limits investors from any liabilities beyond their invested capital. You will not be risking any more money then you invest. You can control how much you want to invest and unlike buying your own investment property, your at risk capital is limited to what you have invested. In rare circumstances where an investor has committed to give the LP more money, that committed capital could also be at risk. If you as an investor decide to take an active role in the daily management of the Limited Partnership, then your liability protection could be compromised and could possibly make you responsible for more than your personal investment in the LP.
- Who manages a Limited Partnership?
A: Since a Limited Partnership (LP) is a flow-through company, it needs to be managed by a third party (an incorporated managing partner). The managing partner is the entity that looks after the management of the day to day activities, being responsible and liable for all the actions and finances of the LP. The managing partner of REGF Capital Limited Partnership is REGF Property Development Ltd.
- Can I be required to invest more money in the REGF Capital Limited Partnership?
A: No, you will not be required to invest more money into the REGF Capital Limited Partnership beyond your initial investment, or the amount you have committed to invest.
- Who owns the actual real estate?
A: A Limited Partnership (LP) doesn’t own any real property. Each property is purchased by a corporation and the LP holds these corporations in trust for the LP unitholder, the beneficial owner(s) of the property. As it is holding the assets in trust for the unitholders, all tax consequences (see Question 1) flow through the LP proportionately to the unitholders who will pay their own respective taxes.
- Why set up all these different companies? What was the reason for all these extra expenses?
A: The main reason wasfor liability protection of our investors’ personal assets and tax efficiencies in the short and long term for maximized investment growth with minimal taxation consequences. We consulted with successful corporate lawyers and tax professionals that represent and have set up large, successful real estate investment entities.
We told them that our plans are to buy and hold properties while collecting a revenue stream and to possibly sell off properties in the future. After careful analysis of their advice, we decided that their recommended Limited Partnership (LP) entity was the best option for our investors and the company. This setup will work well as we grow and when we become much larger, we will not need to change the corporate structure we set it as the LP option is the perfect design for growing real estate investment companies.
- Do I buy the LP units in my name, or through a company?
A: We can give generic information. But we do not give personal tax or legal advice. LP units can be held personally or through a corporation. The best option depends on your personal situation We would encourage you to consult with your accountant and/or lawyer if you want personalized advice for your situation.
- Can I buy Limited Partnership (LP) units with my RRSP, TFSA or an RESP?
A: Unfortunately you cannot buy LP units with registered accounts as the Limited Partnership is already a tax advantaged vehicle. If you want to invest in REGF Limited Partnership and the only available money you have is in a registered account, contact us at info@regf.ca to discuss your personal situation.
- How do I stay informed about what REGF Capital Limited partnership is doing?
A: We have a quarterly newsletter that updates our investors and followers. Newsletter subscribers will also be signed up for email alerts which may be sent out when there is new information or opportunities that we want to get out to our subscriber base but do not want to wait until the next newsletter. We will be setting up a blog shortly that will comment on different news articles and relevant changes to REGF Capital Limited Partnership.
- Now that I have bought LP units, what do I have to do?
A: You only have to deal with relevant personal or corporate (if your investment is held in a corporation) tax documentation related to your personal situation.
We are designed to be a passive investment option so that you can focus on your career and your life. We look after all of the day to day management activities. You will get the upside on your investments of equity appreciation through mortgage pay down and property appreciation without the 3 AM calls to fix the toilet or the bounced rental check notice.
- Do I need to be stay aware of what REGF is doing?
A: It is your money we are investing. While you are not required to stay informed of what is going on, we want you to stay informed and engaged with us. We will send out quarterly newsletters and other emails periodically. You can email any questions or comments to info@regf.ca or to ken@regf.ca as we want to keep our investors engaged with us.
- What kind of properties is REGF Capital Limited Partnership going to buy?
A: We intend to initially focus on revenue properties at the start. These may be properties that are good to hold as is or properties that require investments for minor upgrades and cosmetics. We want good solid investment properties for our investors. The solid overall value of the property is more important than the specific type of property.
- What area or region are you looking to purchase properties?
A: We prefer the lower Southwest region of BC but depending on return and property upside potential, we are open to all areas in BC and will potentially consider properties in Alberta and even Saskatchewan. As we go further from our Surrey location, we will be expecting better returns and future appreciation.
- Why would I invest in REGF Capital Limited Partnership?
A: We are a ground floor company that is small and nimble. Being smaller means we can pivot easier and do not have large minimum dollar amounts or minimum unit sizes that larger funds and investors may have. Therefore, the smaller and mid-sized properties will have less competition and better cap rates.
- How do investors get paid?
A: Distributions are paid proportionately based on LP unit ownership. Amounts and timing of distributions will be determined by management based on profits, cash flow, current and projected expenses and business needs.
- Can I sell a property to REGF Capital Limited Partnership?
A: Yes, we are always looking for properties that fit our parameters. Email the property information to us at info@regf.ca and with any questions you may have. See our “Property Owners” page (https://regf.ca/property-owners/) for more information. Your property, your timeline.
- Who can buy LP units in REGF Capital Limited Partnership?
A: REGF Capital Limited Partnership is not a publicly traded company and the company has to approve the purchaser. As we are in the Province of British Columbia, we are governed by the British Columbia Securities Commission (BCSC) and must abide by the BC Securities Act as well.
There are two exemptions that REGF Capital Limited Partnership is currently using to sell its LP units under the BC securities act:
• “Family, Friends & Business Associates Exemption”
• “Accredited Investor Exemption”
If you think you do not fit in either of these two options, contact Ken directly at ken@regf.ca and we will assess the situation. Sing up for our emailing list to stay apprised of any changes as well.
- Can I sell my investment early?
A: No, there are restrictions that may affect your ability to sell your LP units early. Please review the REGF Capital Limited Partnership agreement for full details.
- Are there restrictions on selling my Limited Partnership (LP) Units?
A: Yes, there are restrictions on reselling your LP Units as stated in the REGF Capital Limited Partnership agreement and under BC Securities Law. The purchaser must be approved by REGF Capital Limited Partnership.
- What is your privacy policy?
A: Your privacy is important, so we do not share any of your personal information outside of our company.
- How do I get on the emailing list?
A: Email us at info@regf.ca and we will add you to our growing mailing list. You will receive a welcome email, regular email updates and our quarterly newsletter.
- How do I update my contact information?
A: Email us at info@regf.ca and we will confirm your requested changes.
The previous Questions and Answers are for answering general questions and inquiries offering insight into REGF Capital Limited Partnership. Any discrepancies between these answers and legal documentation the legal documentation will take precedence.