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Investing in High-End Student Rentals with David Choo of Ashcroft Homes

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David Choo came to Canada from Guyana in 1971 to study at Carleton University. He stuck around and now he’s one of Ottawa’s top real estate developers. An engineer by training, David has built over 6000 homes as President and Owner of Ashcroft Homes. Always the visionary, David now has his sights set on the high-end student rental market – starting in Ottawa this year with Capital Hall, but soon taking the brand (Envie) across the country.

Click Here for David Choo Interview Transcript

Welcome to the True Condos Podcast with Andrew La Fleur, the planks to get the truth on the Toronto Condo market and condo investing in Toronto.

Andrew la Fleur: Hi, and welcome back to the show. On today’s show, I had the chance to talk to David Choo. David is the president and owner of Ashcroft Homes. Ashcroft Homes, you might never have heard of it here in the GTA, but it is one of the largest developers in Ottawa. Ashcroft Homes has built over 6,000 homes over 25 years, so a pretty well established builder. I had a chance to go down to Ottawa to check out Ashcroft Homes, its projects, and their head office, and also to meet with David Choo and his team. I was very impressed with the quality of the buildings, and much more than buildings. They build entire communities, entire neighborhoods, master planned areas, high-rise, low-rise, mid-rise. It’s a very comprehensive large developer.

Of course they are now building Capital Hall. Capital Hall is very interesting investment opportunity, which a lot of my clients are excited about and purchasing units at. It’s all about student condos, student rentals in Ottawa right next to Carleton University, and you’re also right on the subway line. The subway line is being expanded in Ottawa as we speak. There’s has a lot of exciting things going on in Ottawa and around this particular investment opportunity. Really the icing on the cake with the whole thing is that you get a 3-year rental guarantee, 3 years free property management by Ashcroft, specifically under their Envie student rental brand, and the units all come fully furnished.

It’s really a turnkey investment for the investor to get into where you really don’t have to think or worry about anything for the next 6 years, until 2021. You’re not even thinking about because you’ve got 3 years of construction before the building is built, and then you’ve got 3 years of guaranteed rental income and managed unit coming in every single month. It’s a very unique and interesting opportunity.

Of course, this is not the first student rental condo that we’ve talked about on The True Condos Podcast and at TrueCondos.com. Last year we were very involved and a lot of our clients were investors in the University Suites project in Kingston, beside Queen’s University. This is a very similar opportunity, except the main difference is you’re in Ottawa which is a much larger city with a lot more to offer the real estate investor, as opposed to some of the smaller university towns where these other projects have been.

Okay. Without further ado, let’s get to the interview with David Choo. If you want to get all the show notes for this episode, just head on over to TrueCondos.com/Ottawa. TrueCondos.com/Ottawa, and you can get links to the show notes on this podcast, transcript of this episode, and you can pick up the investor package for Capital Hall, if you’re interested in that. Okay. Here we go.

Speaker 1: Welcome to the True Condos Podcast with Andrew La Fleur, the planks to get the truth on the Toronto Condo market and condo investing in Toronto.

Andrew la Fleur: Okay. It’s my pleasure to welcome to the show, David Choo. David is the president, and CEO, and owner of Ashcroft Homes. David, welcome to the show.

David Choo: Hi. Thanks Andrew. Good to be here with you.

Andrew la Fleur: David, why don’t we start? Tell us a little bit about yourself, your story. How did you get started in real estate?

David Choo: Well, I came up to Canada at the age of 18 actually, as it turns out, to attend Carleton University, the very University that I’m going to building student housing for. Those small rooms and homes that students get together to rent, I know all about it. I also know that the kind of product that we’re going to be bringing into the market was not there, and that’s going to be an interesting comment as to why student housing is taking off in the way it is now. I came up to Canada to study, and I did engineering at Carleton University. I went there to work for a brief period with Imperial Oil in Calgary in the oil field, came back to Carleton and finished my bachelor’s in mathematics and master’s in system engineering and aeronautical.

Then I left, and I joined a small consulting form and finish my MD at part-time. Then I went out on my own. I’m sort of your quintessential entrepreneur. Apart from the brief stint of working in the oil field, I’ve pretty much been on my own. I’ve started to launch 4 business. We can probably get into that a little later.

Andrew la Fleur: Wow. Tell us about your experience at Carleton, and tell us about why you’re, in a sense, coming full circle back to Carleton with this project.

David Choo: When I finished my master’s, I got involved in a little bit of consultancy, and then I joined up with a classmate of mine to start a high tech company. We started a company called Computational Methods, which morphed into CML Technologies. We were the generation just behind Nortel and Mitel in developing stored program control switches. It’s like PBXs for the specialized communication like air traffic control, police communication, and 911. In fact, I believe the 911 system that used in the national capital area is a former CML switch.

I was in hardware and software development for a number of years. We developed some product. Did a joint venture with General Electric, and they used to sell our Canadian manufactured switches in the US market on the GE brand name. I followed my interest probably at the start of ’90s. Actually, believe it or not, I decided to retire at a tender age, and then I got involved in some land development as a passive investor. We sold some land to a housing company that didn’t do well in completing, and so I was faced with the dilemma at the time that I actually tried to find somebody as the builder or I build it myself. I took the latter approach and since around 1991, from starting building a small subdivision, Ashcroft has been around now for about 25 years, and we’ve built several thousand homes in the Ottawa area. That’s really my start in real estate.

Andrew la Fleur: In real estate. Interesting. You got started in the early the ’90s in real estate.

David Choo: In the recession.

Andrew la Fleur: Yeah. I find it interesting. A lot of people I’ve talked to who are very successful in real estate and developers who got their start, a lot of people seemed to have gotten their start in the worst times, in the early ’90s. It’s like if you can make then, then you can make it anywhere. Is that your experience, like you figured out a way to make money in a bad time in real estate?

David Choo: I’ve got a level of inquisitiveness, Andrew, that I think I’m probably … if I have an addiction, it’s the business and entrepreneurship. I didn’t really choose real estate as a career. In fact, none of the businesses that I’ve started really that went out to settle any … This is the plan to get into real estate. It happened by accident. As you get into things, you get insights and then you find opportunities. If you have an inquisitive mind, you’ll seek of those opportunities and pursue them. It’s been a good [inaudible 00:09:26] for me in real estate. Although I thought when I sold my business in high tech that I would be back into high tech in a way.

Actually, people have always kept, “How does a high tech guy come into construction?” My answer is that one business is similar to another business. The business principles are the same. I must tell you that I find the development business in designing and creating enormously creative. I think, Andrew, if you look … If I were to show you some results in a personality testing, you’ll find that learning is a large part of my personality.

Andrew la Fleur: Okay. Yeah.

David Choo: It’s something that I do. I do through looking to find solutions. Sometimes I say in the office here, I’m probably quintessentially a problem solver. When you look at what we’ve done and what Ashcroft has done, we tend to do things that call for a fair amount of vision. Those are the things we get a lot of kick out of doing. It’s not to say we don’t just build condo on the street or a subdivision, because we’ve done those too. If you look at some of the stuff we’ve done, we’ve built projects that probably others found tough to do. If you take for example our large Legacy Community at Central Park that we built, that’s Ottawa’s largest mixed-use neighborhood that is at the modern time.

That community, we are now in the final phases of building about a thousand condos with a [inaudible 00:11:54] private road width, but a hundred thousand square feet of retail. If you look at that project when it’s finished, you’ll have over 8,000 people living in it. Not a lot of guys have done that. A lot of us would like to do things and claim that we are on that path, but it’s good to know when you’ve got something you’ve done that really stand out, and so I take that when you are up here and took a tour, that subdivision or that neighborhood build every single home in this, and every single condo.

That is a unique project at the time when we did it in the early ’90s when we bought the land. Everybody thought that we are crazy to pay what we did. If you have a vision, it’s like risk. Risk is a question of insight. Sometimes when people say, “Gosh, How do you take that much risk?” The question is, what did you see? Risk is relative. If the other project you saw I think is what we call the Monastery Project. That’s a project, Andrew, with 2 adjacent pieces on the street. We’re building a thousand condos, so that’s not just one little project. That’s 7 or 8 buildings, all surrounding the monastery that believe it or not, we bought that chunk of land for 15 and a half million. Again, everybody thought, “David Choo must be a bit wonky because we didn’t have zoning.”

Even though all that was an arduous process to go through to get the zoning, we got in the end. Today, we’ve built out about 600 condos houses. That’s neat, Andrew, because it’s city building.

Andrew la Fleur: Absolutely. Yeah. You’re really building an urban neighborhood there.

David Choo: That’s exactly right. This city is growing too rapidly now with the building of the subway system, rapid urbanization.

Andrew la Fleur: Yes. Talk to us about that, especially the GTA investor. We want to talk about, obviously, Capital Hall and the student housing market. We’ll get to that, but talk to us more of a general sense for the GTA investor who’s not as familiar with Ottawa, and both the urbanization that’s happening, particularly with the subject.

David Choo: Andrew, real estate is something I know a little bit about. We are 10 to 15 years behind you. It’s very early days still in Ottawa for urbanization, but we have a brand new subway system which is scheduled to be open in 2018 of which the O-Train is part of this project. Actually, these 2 buildings we are building … I was just meeting the councilor the other day for something else, and it just dawned on me. I said, “Do you realize that these 2 buildings which is over 250,000 gross square feet is your first high-density construction on an O-Train station?” He said, “Actually, you’re right.”

Andrew la Fleur: First of the many obviously. Yeah.

David Choo: First of many, right. We are going to go through, Andrew, the same thing you’re still going through in Toronto that makes Toronto so vibrant, because you put density where the subway pack is, and that makes a lot of sense. When you think today that some folks are contemplating buildings without parking in Toronto, that says a lot about urbanization and where you’re going. It’s early days in Ottawa now.

If you assume that we will go through and build a more high-rise product in Ottawa, then investing particularly in the income producing properties of the high-rise nature in the city is at the growing level. When you look why is real estate a good investment, there’s 2 parts, at least 2 parts. There may be more. One is that cost isn’t going down. Cost never goes down. Line gets very expensive.

Andrew la Fleur: Hard cost. Yeah.

David Choo: They city imposes more divestment charges, and the labor costs more. Then the other thing with income producing real estate is that provided you could keep the income flowing and you don’t have vacancy, then it’s a great investment because every year you pay out a little bit of your mortgage, and offer the term of the mortgage, you end up with an asset-free investment. Particularly if you can invest in a worry-free investment because you’re paying somebody else to manage it and it’s being manage properly, then you’ll get that year after year amortization paid off. Even although sometimes as investors, we talk about cash and cash, but sometimes when we do that cash and cash return, we forget or ignore that is after you’ve paid off a chunk of your principal every year.

Andrew la Fleur: Of course.

David Choo: Our principle is like a savings plan, because it’s.

Andrew la Fleur: Absolutely. It’s going straight to your net worth.

David Choo: That’s exactly right. That is something that we should all remember as real estate investors. I think that for a lot of us who have been through recessions and the stock market gyration that the one good thing about real estate is it never goes to zero. It goes through some tough times, but if you invest in bricks in mortar, it’s there. Maybe you give up this spectacular Google kinds of returns, but where? You get 8 to 10% compound of returns over the medium to long-term. I think that’s good. Right.

Andrew la Fleur: Yeah. Slow and steady. It’s not a get-rich scheme, but it’s proven over many centuries that real estate investing is definitely a great way to go. Why don’t we shift gears and talk about student housing in Canada. You talked about your vision a lot. Tell us a little bit about your vision for … I know your vision is much bigger than just this one building Capital Hall. What do you see going on with student housing in Canada, and why Capital Hall now?

David Choo: Okay fine. Andrew, if you look at it, we have about a million students in the country, and you couple that with the trend. I say it’s a trend because the trend first started probably in North America in the states, and now we are lagging. Students and their parents are increasingly wanting a better sense of accommodation for the kids going to university. Whether or not that’s a combination of people being wealthier, that’s the trend that is there. You can say, “Well, why now, David? Why now? Why not 50 years ago?” That’s a good question.

I’m business as well. 10, 12 years ago when we started to build these more upscale accommodation. When you look at what was on the market at the time, Andrew, people used to call them all folks home. You’re not dealing anymore of that.

Andrew la Fleur: No.

David Choo: That is gone.

Andrew la Fleur: Nobody wants to live in that.

David Choo: Nobody wants to live in that. When you talk about the $600 a month in-

Andrew la Fleur: The basement somewhere in some black hole in Ottawa. Yeah

David Choo: That’s not what … Until today, Andrew, you didn’t have an option.

Andrew la Fleur: There was no option, right.

David Choo: The product that we are bringing to the market what is not there is not there.

Andrew la Fleur: Exactly. Yeah.

David Choo: you can’t Google and go on Kijiji and say, “Hey, but there’s a $600 a month room and a house.” If you go to the rental way in mainstream apartments vary quite a bit. You can’t compare the rent of a one bedroom on Finch Avenue in Toronto to one on Bay Street. They’re different, and there’s a reason why they’re different. The sad thing is that for more students, and this is why we’re lagging, that are going to the university, the students and the parents are looking for that accommodation but can’t find it. By and large, you’re also looking for accommodation off campus, because until universities changed their policy, they don’t allow the kind of what I would call the life style experience.

Today in Carleton, if you go into residence by its mandate, the student housing, you’re sleeping on a plastic mattress. That’s the policy, you can’t change that. The universities are not going to put out the boutique hotel accommodation for students.

Andrew la Fleur: It’s never going to happen.

David Choo: Concierge serve is in fact that’s what a subset of students want and could afford, particularly the foreign students who are coming over, whose parents are spending a mere fortune to send them to school, and don’t mind spending, and want and demand that their kids be in a safe and in an environment that’s more conducive to them [inaudible 00:22:58] university. It’s all those things that are happening. Let’s face it. For the same guys that say “Well, how could students afford those things?” If you look at what students have today, you’ve got a laptop computer, you’ve got cellphones that have a good plan, and all those things are expensive.

Social media too I think is changing a lot of things, including this area. If you look … If you talk to the marketeers, they’ll tell you that the kid’s market and the adolescent market is one of the biggest consumer market. If that is true, why do you assume that there will be a gap between-?

Andrew la Fleur: For the most important spending of all, which is housing, right?

David Choo: Right. Why would you assume that? Right?

Andrew la Fleur: Yeah. We want the best phones. We want the best computers. We want the best cars, but we want to live in a crappy house.

David Choo:  that’s a combination. Yes. By definition, Andrew, this building is not targeting the lowest tier in the student housing. Although I think it’s covering a good swat of that demand in the upper percentile rather the lower percentile. This type of student housing I think will not only … Look, the stats show that the universities are struggling finding accommodation, there’s no question, almost every major university. You look [inaudible 00:24:51] you’ll find that.

The universities are saying, “How do these buildings would help us meet the coming demand?” The demand is growing. It’s growing for a number of reason. A couple is that you have the foreign student component, but you also have rapidly, in our modern economy, an undergraduate degree is rapidly becoming a high school diploma. If you want to be in the professional ranks, you better be looking at our graduate program. Right?

Andrew la Fleur: Yeah. Students are going to school for long … More people are going to school, and more people are going to school for longer and longer.

David Choo: Period of time. Right.

Andrew la Fleur: Yeah. The number of people looking for housing just grows every single year.

David Choo: Right. If you look at that, you do some digging, you’ll find that. The student market is what I call needs driven. There’s a segment of a retirement business which is needs driven. Your parent, suddenly something happens, and they’ve got it going to maybe they’d have to start cooking for to themselves and so and so. In the retirement business, we call that needs driven. Same with students. If you go to a university, Andrew, you got to find somewhere to live. Today, if you look at the cost and situation, which is typical of a lot of large universities in Canada, you’ve got plenty of houses, student body, but you’ve only got 3,600 beds on campus. The rest of the guys have got to live off campus.

If you live off campus and if you do the stats, if you drill down in the data, you’ll find that students going … The commute time of kids going to school at Carleton is about 25 minutes average, which means [crosstalk 00:26:55].

Andrew la Fleur: 25, yeah.

David Choo: Some are taking a little bit less. That is probably higher than most other universities in the country. Then you say, “Why is that?” Then you got to look at the geography. The Carleton O-Train stop is the closest location to campus, because it’s one service stop away. You can argue that there maybe not a building that could come, which is a little bit closer than Capital Hall, but you’re talking steps, you’re not talking minutes.

Andrew la Fleur: Right. Yeah.

David Choo: I say couple of that, with the fact that cost is not going down, it’s going up. The fact that this is here and now when we’re constructing it means that they have in this building that is building on the investors that will buy into Capital Hall are coming in at this cost level. Anybody else building student housing in the future has higher cost. We think that in our designs ant the level of efficiencies we’re bringing to this, provides an advantage to us and the investor, in terms of the efficient designs and there for cost effective designs.

That is something … It’s not a lot of people get right. If you like our design, it’s because you put a lot of thought into it. As the old story, there’s 2 things at high-rise buildings. Sometimes you design outside in or you design inside out. Even with respect to designing inside out, there are constraints. If you buy a piece of land in down town Toronto, you got to build in that geometry fully. You can’t create an efficient geometry because you’re going to waste the land. In Capital Hall, we were lucky enough that the geometry of our site approval allow us to build some tremendously efficient units. I think that anybody who has reviewed our floor plans will come to that conclusion.  “Gosh, that’s … I don’t see any wasted things here.” Right?

Andrew la Fleur: No. Yeah. Really great great square floor plans. Let’s talk about some questions that … I know a lot or some of the GT investors might be wondering about, who are looking at this investment. I’ll do some rapid fire questions here. First one, how realistic are the rental rates that you’re guaranteeing? You’ve got guaranteed rental rates in this project which is amazing, but the skeptical investor might say, “Well, but what happens after the guaranteed period is up?” How realistic are these rental rates? What would you say to that?

David Choo: First of all, a few things. The rental rates are good. They’re reasonable. Remember now, Andrew, that those rates are 3 years out. Our first building will open up next summer. This building will be 2 years from next year. With respect to these rates, we are building a building that we are owning. As you know, if you build an apartment building, you’ve got to do a lot of studies for the bank to show what the viability is. As part of that, we’ve done feasibility studies which we can’t necessarily share with everybody because it’s proprietary process. The rents we have in Capital Hall is streamline in line with the rents that we are charging or will be charging next year for the building.

Andrew la Fleur: In your own rental building. Right.

David Choo: In our own rental building. That has been vetted by feasibility and so on. There’s a more simple thing. It’s not to look at a $600 a month at Kijiji and say, “Well, but he’s charging a thousand, 11,000.” You could easily, if you’re an investor who want to do some research, look at rental apartment at the same rental rates that we are proposing, and you could find them. I think when the group is up, we gave you one search. Right?

Andrew la Fleur: Yes.

David Choo: They think you can find that. You need not worry about $600 a room rent. What then you should do is to say, “For that apartment building now, they’re getting 1,100. How does that compare in location and quality and offering to what Capital Hall is doing?” That’s a more meaningful insight and comparison. Then you’ll realize. You say, “Well, there’s somewhat a building out there. As I look at it, it seems to be 100% full, and they’re getting 1,100.” They’re $1,100 a month for studios where if you want air conditioning, you got to rent a window based system to put on right with no amenities.

If David Choo and Capital Hall is offering $1,100 a month rent for something better, how effective is that? I think that’s the meaningful comparison. The fact is I think that this is early days still, because by and large, the Canadian University student haven’t seen a lot of what are you going to be bringing to market in Capital Hall. My own personal view is that there is going to be a lot of demand for this type of product. Once kids and their parents starts to feel it and experience it, they are going to, Andrew, they’re going to re-prioritize their budget to say, “I want to be there.” No different to the students who have iPhones. You can buy a lot cheaper phone than an iPhone.

Andrew la Fleur: Yes, and it still does the same thing.

David Choo: Student have iPhones.

Andrew la Fleur: Right. All of them.

David Choo: That’s really what it is. If you look at student housing compared to buying condos … First of all, if you’re buying condo, you got to be a landlord or you pay for property management. Student housing, really where we want to go, it is to be brand. This is why we’re branding it. We think by branding it and by elevating this offering to student, that’s really where students want to be. I think a good portion of it, particularly the foreign students. We think that it’s not just property management, it’s lifestyle. If students want a concierge manager to manage certain things for them and they can afford it, they should have it.

If you’re buying into Capital Hall, first of all, you’re buying to a fairly safe demand. So long as Carleton is there, the demand will be there. If Ottawa people come and build a student residences, then you got to share that demand. Nothing in life is certainly but for me, I feel confident enough that I got enough insights into what we’ve done. We’re going to do that midway.

Andrew la Fleur: You’re putting your money where your mouth is. It’s important for every investor in Capital to Hall to understand that it’s not just talk. You’re building an entire building yourself and owning it. Obviously, like you said, you’ve done your research, you’ve done your homework. You’re spending tens of millions on this building, and the banks have vetted all these numbers and everything lines up. They wouldn’t lend to you otherwise.

David Choo: Exactly right. If through my insight and through my own investment that our purchasers at Capital Hall is getting an opportunity to come and take a ride in an insight with David Choo in this type of investment. Here is something. Even if you were to build on the east side of Carleton, which is the only residential area, it’s [inaudible 00:36:20] family, and a lot of us think that will never happen. Even if it were to happen, Capital Hall and Carling Avenue and is a bad bet. Why? Because it as an urban flavor. It has the shops and the bars and the restaurants.

Andrew la Fleur: It’s an established neighborhood already.

David Choo: Neighborhood, right. That makes it better than being on campus. Nothing in life is 100%, but this comes pretty close to being-

Andrew la Fleur: A guarantee. Yeah. Talk to us about appreciation rates. A lot of investors, they like the rental income. Obviously, that’s the main reason why you buy a student rental property like this. You’re enjoying this great rental income every single month, and a nice return, a nice ROI. Eventually, every investor has got to sell. What would you say about appreciation on the asset, moving forward in the future, when eventually they do have to sell?

David Choo: 2 things with that. One is that inflation keeps costs going up. When you look at depreciation, it’s going from 2 perspectives. One is that replacement cost is more. What you bought 3 years ago is provide that one bed room you unit. Hey, it’s so much. The second is in location. You know what they say in real estate, location, location, location. It’s a very important part of it. You’re investing in student housing and you’ve got a stable proven now demand and you got historical data now. 5 years from now, the investors and myself that have bought into Capital Hall, we got 5 years of full occupancy. What do you think that the next investor wants? He pays a premium for that, because it’s got the demand is proven, is stable, and people pay a higher cap rate for that.

Also, because generally, real estate prices keeps increasing. I haven’t done the math, but I think that if you do the math in terms of the escalation rates, you would probably find that Ottawa, on a market like Ottawa, probably increases faster than a more mature market like Vancouver or Toronto. That’s what you say at investors to say, “Well, is there any appreciation?”

Andrew la Fleur: Yeah. I like to think of it as like with the subway development going on, you’re buying right on the subway line that is expanding. Imagine buying into Toronto, somewhere along Yong Street before the subway line went into Young Street. The expansion that Ottawa is going to experience over the next 10 years because of the subway and along the subway corridor is going to be huge. People are going to pay big premiums for that, like you said, once it’s already there. You’re getting a discount now because it’s not there yet, and you have to have some vision to see passed it.

David Choo: Right. That’s the history. Plus, if you do drill down and look at the stats, you’ll find that whenever a city introduces a subway, they get a huge spike. That’s also because there is in either subway, and then the subway adds an additional growth spurt. You view Ottawa at the adolescent years that know we’re going to put on this year. If you believe in real estate and then Ottawa is a great place to invest. I think almost everybody I’ve talked to will tell you that, because look at the Ottawa market rate, it’s a federally driven economy that has 2 parts to that.

One is we don’t grow as fast as probably you’re doing in Toronto. The highs and the lows. We are sort of smooth occurrence we still have the little valleys and hills, but they are not as extreme.

Andrew la Fleur: Yes. Much more stable.

David Choo: Right. I know recessions are not as deep and as painful, because you’ve got the stables at our government. Now there’s anomaly to that as well. We sometimes go counter cycle. What do I mean by that? We are one of those cycles now, because Steven Hopper, in the last couple of years, have been tightening the civil service. Why? Because he made a promise to balance the budget. We as the biggest expenditure for the federal government is employees at the federal level, and a lot of those live in Ottawa.

After the election in October, no matter who gets into power, you’ll find that Ottawa will begin to pick up more in growth because it’s a start to the next 4 years of the government.

Andrew la Fleur: Right. The next cycle.

David Choo: We go through those things that you don’t see in Toronto.

Andrew la Fleur: Right. By long-term, it’s a very stable growth curve compared to other cities. Again, student housing in a government town like Ottawa is the ultimate in stability.

David Choo: Not only that. We have to highest median family income in the country.

Andrew la Fleur: The highest median family income in the country, great stat. Yeah.

David Choo: That is something people … It’s an upper middle class town. You don’t have the very high wealth, but for this type of investment, it’s the median that is providing the drive for the investment, not the Bill Gates of the world.

Andrew la Fleur: What happens after the 3-year guarantee period? What happens with investors? Obviously, GT investors, they’d like to keep renting it out. How is that going to work in the …

David Choo: Okay. At the minimum, there’d be a management driven your asset for you for a fee. More importantly what we see in moving forward with the brand is to have a rolling hopefully 5-year type of offering to the investor where this will always be a worry free investment, because Envie in Ashcroft Home would run or manage the asset, that’s the view of the long-term. I think that’s the opportunity for investors in this type asset class. Particularly for a brand that is committed to the segment.

Remember now, Andrew, this is not a condo that we see as a building to sell and it happens to have a student twist. It’s different. We committed to this. It’s a lifestyle brand that we want to build and we think there’s a big opportunity. We see opportunities to partner with developers who may have a piece of land, who may want to get into it, but don’t have the plans to really manage this as an asset. We hope that we would expand the brand across the country by partnering with people that may have land that may look at this segment that want to do it, but don’t know how to. We have got a cradle-to-grave kind of capability in what we’re developing for this product.

We think that we can bring to the table efficiencies which would benefit the investors in these projects. I say that because if you look at the designs we brought to the table, they’re probably the most efficient, anybody has seen in Canada. That’s important. That’s an important part of the long-term.

Andrew la Fleur: Yeah. It’s important for the investor at Capital hall to understand that it’s … Like you said, to summarize what you’re saying, it’s not just a one-off condo building that you’re trying to sell and get out of there. You’re trying to build a brand. This is the first stage of it, but you want to build a national brand around student housing for the long-term.

David Choo: We hope that someday when somebody says, “My kids is going to a university”, the second thing that comes to mind is that they have to stay in an Envie building.

Andrew la Fleur: Wow. I want to go to a university that’s an Envie university, a town with an Envie building. Yeah.

David Choo: Right. That’s the vision. I think there’s a big demand, there’s a big need out there. After all, there is … I don’t think this includes some of the larger technical colleges, like the George Brown, but there’s over a million students in the country. This is just-

Andrew la Fleur: Growing every year.

David Choo: That’s the opportunity in this still early days in this asset class as an investment.

Andrew la Fleur: David, listen, it’s been great talking to you. I just want more questions before we go. Is there anything that … Is there question that no one has asked you about student investing or about this project Capital Hall that no one has asked you yet but that you wished someone would ask you about, and what would that question be?

David Choo: I can’t think of a lot of questions at the micro level. In terms of real estate, we’re so tied up with zoning regulations and planning. A question really need to be asked really is that, are we building at the right level of density in the country? I think the answer is no. If you look particularly in our city, we have so much apprehension towards height and density, and still if you look at Toronto in terms of the vibrancy that you’re beginning now to create because you’re having entire neighborhood to where people don’t need a vehicle to actually leave and work.

I think that it’s an issue that really needs addressing, but the NIMBY, not in my backyard kind of mentality that forbids the local [inaudible 00:48:28] is something that I wish that we all were more aware of to make our politicians see that in this wide country that we have that really density is an important competitive advantage that we should understand and embrace, and that we don’t do enough of.

Andrew la Fleur: That’s great. David, if people want to learn more about Ashcroft Homes or more about you, what’s the best way for people to find you online?

David Choo: We have the Ashcroft Homes website and Alavida Lifestyle, and more and more people just Google David Choo Ottawa, and they’ll find a lot of stuff and what’s we’ve done. We’re developing a David Choo umbrella that covers the 3 brands that we have and so more and more we’ll have a comprehensive web presence that would have people to be as navigate to see just what I’m up to, what I’m doing.

Andrew la Fleur: Great. Okay. Well, I definitely encourage you Google David Choo. How do you spell that again? I know there’s different ways to spell it.

David Choo: D-A-V-I-D C-H-O-O.

Andrew la Fleur: C-H-O-O, David Choo.  David, thank you very much for your time today, and I look forward to speak with you again.

David Choo: Perfect, thanks Andrew. Take care.

Andrew la Fleur: Thanks.

David Choo: Bye-bye now.

Andrew la Fleur: Bye. Okay. There you have it. That was my interview with David Choo, from Ashcroft Homes. I hope you enjoyed that. Very interesting guy. Like he said, he’s got a big vision. He’s got a lot of interesting insights into the student rental market in Canada and the future of the student rental market in Canada, the student housing market I should say. He really wants to be at the forefront of it with Envie, the brand Envie which is new and who knows, maybe 5 years from now we’ll be talking about the Envie project number 10 or something of Envie student housing somewhere in Canada.

For all the show notes on this episode, again, just head on over to TrueCondos.com/Ottawa, and you can get links to what we’re be talking about here, Ashcroft homes website and more. Also of course, you can pick up the investor package for Capital Hall where you can learn all the details about this opportunity and see if it’s right for you. Thank you very much for listening, and until next week I hope you have a great week. Talk to you soon.

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