While still the top choice on the planet for real estate investors, Alberta has sadly developed a bit of a reputation as the €˜Wild West' of investing recently. So what's going on, how did this come about, should commercial real estate investors be concerned, and most importantly; what's the secret to investing safely? The media and advisors all shouted "Go West" to invest, and masses did as well. It made sense; all the indicators pointed to Alberta, Calgary and Edmonton as the emerging hot spots to invest. Now it is no secret that 20 something class-action lawsuits against investment companies are in the works and up to $2 billion of investor cash is up in the air as companies face financial challenges. What went wrong? The bottom line is that this has nothing to do with the local market or its status as the globe's most attractive investment destination. It has everything to do with the dangerous combination of a lack of education and intense greed that has been seen on both sides of the equation; individual investor and investment firm. Simply put, many just don't have the experience and the history of investing nor the markets to navigate it successfully when glitches arise. Greed and desperation drove many to chase promises of high returns and big paydays without thoughts on security and the big picture. So, yes, Alberta and Edmonton are still amazing places to invest in commercial real estate and sound choices provided opportunities are approached intelligently. Thankfully the industry has been pulling together to force change, weed out the bad apples, and provide more education and transparency to individual investors. This has perhaps been most pronounced in the creation of NEMA; the National Exempt Market Association. NEMA has been developing practical regulatory frameworks while working on protection for those making investments. Clearly Canadians can't afford not to have their money working for them. It isn't safe stashed at home and a savings account does not deliver financial security. What is needed is above average, but realistic returns and real wealth preservation not burying cash in the ground out of fear. To invest safely and profitably in Alberta with confidence make sure you are asking these questions:
- What is the outlook for the location you intend to invest in?
- What is the best and worst case scenario?
- Does the investment opportunity match your timeline?
- Is the investment firm offering the opportunity a member of NEMA?
- Has real, thorough due diligence been done?
- What are the exit strategies?
- How experienced in the management team and what is their track record?