S.E.C. Real Estate Observer

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We often ask the following question at our S.E.C. marketing meetings: “Is your client area bound?” It took me a minute to figure out what the moderator meant at my first meeting, though it became apparent very quickly. But what do we really mean?

When Chris Dischinger and I were rolling out the first offering of our Developer course, someone asked me where I would be willing to go to develop. Without hesitation, I answered that I would invest anywhere that the Second Amendment is strongly protected. It has nothing to do with the right to own a firearm; it is all about the way that particular state thinks about business. For instance, Texas is about as business friendly as any state in the union. Ditto for Oklahoma, Indiana, and Colorado (most of the time). I have owned property in all these states and have done development in most of them. I would go to Arizona, Montana, Idaho, and Wyoming immediately, but if offered deals in some of the states on the east and west coasts, I would have to do some serious homework.

This leads me to my reason for this article. I just spent several days in Ontario with my partner and good friend, Darryl McCullough. It has been several years since I have been in Toronto. At 6.1 million people (according to World Atlas), Toronto ranks 51st in population in the world—about the same as Dallas Fort Worth (DFW) at 5.9 million, ranking 54th. Darryl and I spent a lot of time driving around the first day I got there, which was October 10, and Canada’s Thanksgiving Day. Because it was a national holiday, the traffic was manageable. I remember what it was like in DFW during the late 1970s when we were going through a huge expansion, and Toronto’s current boom makes what we were going through then look like a bump. There are cranes all over the province, many of them involved in high-rise condo projects. The area is undergoing a huge boom because of a lack of construction and massive immigration from all over the world.

Darryl has underwritten investments in the United States for wealthy Canadian families for many years. Just as I am willing to invest in other states, his investors are quick to invest in the United States. But what about us—will we go to Canada? I think so. The boundary between Texas and Oklahoma is nothing but an imaginary line on a piece of paper . . . at least until the University of Texas and the University of Oklahoma meet in the Cotton Bowl—then it is serious! But that is another story. If I am willing to cross the line into Oklahoma, why not go into Ontario? It is just another imaginary line. I came to the decision on this trip that I would invest in Ontario just as I will invest in Colorado. I would need a sponsor on the ground, and I trust Darryl without any doubt at all. It is no different from trusting Bill Richert in Oklahoma and Nick Esterline in Kansas.

So, are we area bound? Will we go north of “that” border also? Why not, if the deal is right and the authority will let us keep an acceptable portion of the profits if our deal works out?