- REITs: Invest in income-generating properties without managing them yourself. Example: Killam Apartment REIT with a 97.6% occupancy rate.
- Crowdfunding: Start small with platforms like Addy Invest ($1 minimum) or Equivesto (from $100).
- Private Lending: Flexible loans for time-sensitive deals, but expect higher rates and shorter terms.
Quick Comparison
| Financing Method | Key Benefit | Accessibility | Drawbacks |
|---|---|---|---|
| REITs | High liquidity, 90% income payout | Publicly traded | Market volatility, limited control |
| Crowdfunding | Low investment minimums | Platform dependent | Regulatory caps, platform fees |
| Private Lending | Flexible terms, fast approvals | Network required | High interest rates, short terms |
These options can be combined for better results, like using private loans short-term while REITs or crowdfunding generate passive income. Ready to dive deeper? Let’s explore how these methods can work for you.
REITs in Nova Scotia Real Estate
REIT Basics
Real Estate Investment Trusts (REITs) allow investors to pool their money to buy and manage income-generating properties [5]. To maintain their tax benefits, REITs are required to distribute at least 90% of their taxable income annually [5].
"REITs pool capital from investors to acquire, manage, and operate income-generating properties, providing dividends without buying or managing properties themselves" [6].
In Nova Scotia, REITs offer investment opportunities that align with the province's specific real estate market needs.
REIT Options for Nova Scotia
Nova Scotia is home to several REITs that stand out for their investment potential:
| REIT Name | Portfolio Size | Key Focus Areas | Key Metrics |
|---|---|---|---|
| Crombie REIT | $4.8 billion | Retail, Mixed-use | 304 properties, 19.1M sq ft [4] |
| Killam Apartment REIT | $5.4 billion | Residential | 97.6% occupancy rate (2024) [8] |
Crombie REIT, headquartered in New Glasgow, Nova Scotia, focuses on grocery-anchored retail and mixed-use properties across Canada's urban and suburban markets [4]. With a history spanning over 60 years, Crombie benefits from deep market knowledge and established local relationships [7].
Killam Apartment REIT, based in Halifax, excels in the residential sector. In 2024, they sold properties worth $59.2 million, with 75% of those located in Atlantic Canada [8]. This move allowed them to diversify geographically while maintaining a strong presence in the region.
REIT Advantages and Drawbacks
Investing in REITs comes with its own set of pros and cons. Here's what investors should consider:
Advantages:
- Professional management eliminates the need for hands-on oversight.
- High dividend payouts provide consistent income.
- Diversification across multiple properties reduces risk.
- Historical average annual returns of 9.09% (1972–2022) [10].
Drawbacks:
- Exposure to market volatility.
- Sensitive to interest rate changes.
- Non-traded REITs often come with higher fees.
- Limited investor control over property decisions.
"REIT investing allows individual retail investors a distinct opportunity to access large, institutional assets that they otherwise may not have been able to acquire on their own", explains Skyline Wealth Management [9].
In Nova Scotia, commercial and retail REITs hold particular appeal, making up over 25% of Canada's REIT market [2]. This focus aligns with the province's expanding commercial real estate development.
Property Crowdfunding vs. REITs: The Ultimate Guide (2024)
Real Estate Crowdfunding in Nova Scotia
With traditional financing becoming more restrictive, real estate crowdfunding is gaining traction as an alternative option in Nova Scotia.
How Crowdfunding Works
Real estate crowdfunding typically operates under two models: equity crowdfunding, where investors gain partial ownership of a property, and debt crowdfunding, where investors earn fixed interest returns [1].
Here’s how the process usually unfolds:
- Choose a Platform: Select a platform that is either a registered dealer or operates under the Start-up Crowdfunding Registration Exemption.
- Review Investments: Browse available properties and conduct your due diligence.
- Commit Capital: Make investments within the regulatory cap of $1,500 per distribution [13].
- Complete Documentation: Fill out the required forms and verify your investor status.
- Manage Your Portfolio: Use the platform’s dashboard to track your investments.
Next, let's dive into the specific rules governing crowdfunding in Nova Scotia.
Nova Scotia Crowdfunding Rules
The Nova Scotia Securities Commission (NSSC) oversees real estate crowdfunding to ensure compliance and protect investors [11]. Platforms generally operate under two frameworks:
| Platform Type | Key Requirements | Investor Protections |
|---|---|---|
| Registered Dealers | Full NSSC registration | Investment suitability checks |
| Start-up Exemption | Limited registration requirements | Basic disclosure obligations |
| Crowdfunding Limits | Maximum raise of $250,000 | 90-day maximum duration [13] |
"The 'Start-up Crowdfunding Exemption' allows small businesses to raise capital through internet portals with the expectation of a financial return", according to NSSC guidance [12].
These rules shape how crowdfunding platforms operate and influence their success in the region.
Local Crowdfunding Platforms and Results
Several platforms are making real estate investments accessible in Nova Scotia. For example, Equivesto, a licensed equity crowdfunding platform, offers opportunities starting at just CAD 100 [3]. It caters to both accredited and non-accredited investors across the province.
Here’s a comparison of notable platforms operating in Nova Scotia:
| Platform | Management Fee | Transaction Fee | Minimum Investment |
|---|---|---|---|
| Willow | 0.5% | $4.99 per sale | Varies |
| Addy Invest | $25 annually | N/A | $1 |
| BuyProperly | 2.5% | N/A | Platform specific |
To make informed choices when selecting a platform, investors should:
- Check platform registration via the CSA's National Registration Search [11].
- Assess the platform’s property vetting process.
- Review fee structures and minimum investment requirements.
- Look into the platform’s track record in Nova Scotia.
- Understand exit strategies available for investments.
As regulations evolve and investor demands shift, careful platform selection and thorough research remain critical.
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Private Lending for Nova Scotia Properties
Private lending provides an alternative for investors who face challenges with traditional bank loans. While it offers more flexible lending criteria and faster approvals, it typically comes with higher interest rates, additional fees, and shorter terms. Careful planning is essential when considering this option.
Private Mortgage Basics
Private mortgages are offered by individuals or private companies instead of traditional banks. Unlike bank loans, which focus heavily on credit scores and income, private lenders prioritize the property's equity and the borrower’s exit strategy. These loans usually carry interest rates 3–5% higher than conventional mortgages, can be approved in days rather than weeks, and require a clear plan for repayment or refinancing.
Understanding these basics helps borrowers weigh the advantages and challenges of private lending.
Benefits and Risks of Private Lending
Benefits
- Faster approvals, ideal for time-sensitive deals
- Flexible criteria that accommodate unique properties or financial situations
- Customized structuring for borrowers like self-employed individuals or those with limited credit history
Risks
- Higher interest rates, along with possible additional fees for lenders, brokers, or legal services
- Shorter loan terms, demanding a solid exit strategy
- Less regulatory oversight compared to traditional lenders
"Private mortgages provide a short-term solution for clients to improve their circumstances to transition to a traditional mortgage or to assist with a financing objective that can be satisfied during the term of a private mortgage."
– DV Capital [14]
How to Find Private Lenders
Nova Scotia investors have access to various private lending options. For instance, Graysbrook Capital, based in Halifax, has issued hundreds of short-term mortgages across Atlantic Canada.
When evaluating private lenders, consider the following:
- Ensure the lender is licensed
- Check their track record and client reviews
- Compare terms, rates, and fees across providers
- Verify the presence of a compliance officer, as required by law
"Graysbrook Capital Ltd bring a common sense lending approach to all submissions, provide adequate security, a realistic exit strategy and an ability to service the mortgage and the deal gets done."
– Nicholas Hamblin, Broker/Owner, Ideal Mortgage [15]
For multi-unit property investments, private lenders often assess factors such as the borrower’s equity in the property, the clarity of the exit strategy (whether through a sale or refinancing), the property’s cash flow potential, and its location. Consulting a licensed mortgage broker can help ensure your project meets these criteria and adheres to Nova Scotia's Mortgage Regulation Act [16].
Mixed Financing Methods
Building a Mixed Finance Plan
Combining multiple financing methods is a strategy often used by Nova Scotia real estate investors to balance returns and reduce risk. For example, a commercial mortgage might cover about 75% of a property's value, while private loans, REITs, and crowdfunding can help bridge the remaining gap. Helio Urban Development applies this approach for its duplex projects, aiming to maximize returns while managing risk effectively.
Tax Effects and Planning
Each financing method comes with its own tax implications, so careful planning is crucial. The tax treatment varies depending on the type of income generated. To stay on top of this, keep income streams separate and consult a tax expert to take advantage of provincial incentives and handle liabilities efficiently.
Investment Timeline Planning
Aligning your funding schedules is key to making the most of a mixed financing strategy. Here's how you can approach different phases:
- Initial Phase: Use long-term commercial mortgages as the foundation, backed by short-term private loans to address immediate expenses.
- Growth Phase: Incorporate crowdfunding and REIT income to fund property expansions and new opportunities.
- Exit Strategy: Develop distinct exit plans for each financing source to ensure a smooth transition when the time comes.
"Private mortgages provide a short-term solution for clients to improve their circumstances to transition to a traditional mortgage or to assist with a financing objective that can be satisfied during the term of a private mortgage."
– DV Capital [14]
Stay adaptable and adjust your financing mix based on changing market conditions. Flexibility is key to long-term success.
Conclusion
Advanced financing methods have transformed real estate investing in Nova Scotia. This guide explored how tools like REITs, crowdfunding, and private lending address regional challenges while offering opportunities for portfolio expansion.
Key Insights
The Nova Scotia real estate market is evolving, presenting investors with diverse financing options:
-
REITs for Consistent Returns
REITs distribute at least 90% of taxable income, providing consistent dividends without the need for hands-on property management [17]. -
Crowdfunding for Broader Access
Crowdfunding platforms enable smaller investments in large-scale projects. Successful ventures often maintain a debt coverage ratio of 1.25 [19]. -
Private Lending for Flexible Solutions
Private lending offers quicker approvals and tailored terms, making it a practical choice when traditional financing falls short. -
Balancing Risk and Strategy
Smart investing requires thorough market research, sufficient cash reserves, careful due diligence, and combining different financing strategies effectively.
For multi-family properties, investors can secure up to 85% financing through CMHC-insured programs. Commercial properties, on the other hand, generally qualify for up to 75% of their appraised value [18]. These guidelines help investors strike the right balance between leveraging opportunities and managing risks.
Related posts
- How to Finance Your First Investment Property in Nova Scotia
- 8 Government Incentives for Property Investors in Nova Scotia
- Bridging Finance in Halifax, Nova Scotia: How to Secure Interim Funding for Your New Build Project
- Demographic Tides: Analyzing Youth Migration & Retirement Inflow in Nova Scotia’s Housing Market
