Differences between N. American and Chinese investing in commercial real estate
1) Mentality differences between North American and Chinese investors investing in commercial real estate.
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It has been my experience, that many Asian investors have a long term "generational" investment perspective whereas North American society/culture is based on a 5 to 10 year investment horizon based on achieving a specific return and then reinvesting in new projects or opportunities with more "upside"
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2) Needs differences between North American and Chinese
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North Americans want to what to know "all" their investment options for a specific type of real estate property asset (apartments, office, industrial, retail, hotel/motel, manufactured home park, care facility, etc) in a specific geographic area as well as the recent past operating history of the property. Chinese investors want to ensure that they are investing in a "safe and secure" environment where they will realize a gain in the value of their real estate and can easily sell their real estate asset if needed. There are also immigration strategies based on Canadian legal requirements.
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3)How easy or difficult for an investors to get financing?
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Financing the purchase of an investment property depends on the property type (apartment, retail, hotel, industrial, shopping centre, land, etc), purchaser's equity (should be at least 25% of purchase price), financial statements of the property being acquired (if a cashflow property) and the financial strength of the purchaser in terms of credit worthiness.
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4) what is the realistic cap rate range when investing in BC?
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Capitalization rates have a wide range from a low of 2% for a Westside/West End concrete rental apartment building in Vancouver to 10% for a motel/hotel property that requires significant management oversight and ongoing operational expenses (staffing, marketing, linens, beds, TVs, maintenance, etc) in changing business cycles. Cap rates are dependent on the risk and return of the investment which must be carefully analyzed to ensure that they are "market" based taking into consideration the location of the property and current business environment.
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