How to Invest in Real Estate Development Using Registered Funds
For many Canadian investors, registered accounts like RRSPs, LIRAs, and RRIFs make up a significant portion of long-term wealth. These accounts are typically allocated to public market assets—ETFs, mutual funds, and dividend stocks. But there’s a lesser-known option that offers both higher return potential and real asset backing: private real estate development.
When structured properly, real estate development projects can be held inside registered accounts—giving investors access to project-based returns that are not tied to equity market swings.
Why Consider Real Estate Development?
Over the past decade, Victoria’s housing market has become a maze of challenges for first-time buyers:
Real estate development projects offer a few things that traditional market investments don’t:
- Higher return potential — Many projects target 15–25% annualized returns.
- Tangible assets — Your investment is backed by land and physical improvements.
- Shorter timelines —With changes to regulations, projects are completing in under 3 years not the 7 to 10 that they used to take.
- Structured downside protection — Preferred returns, conservative pro formas, and clear exit strategies help manage risk.
These aren’t risk-free investments. Timelines, permitting, and cost overruns are all real possibilities. But compared to the volatility of equities or the low returns of fixed income, they offer a different type of risk—one that’s often more predictable and rooted in execution.Bottom line: you don’t need to put all your eggs in one basket, but adding exposure to development can balance out a public-heavy portfolio.
How It Works: Structuring the Investment Properly
You can’t just buy into any development with your RRSP. The project needs to be structured in a way that meets CRA and trust company requirements. There are two common paths:
1. Mutual Fund Trusts (MFTs)
MFTs are often used for larger or longer-term projects, such as multi-phase developments or rental-based strategies. Think of them as similar to REITs in legal structure, but focused on private assets.
- Used for projects over ~$5 million
- Suitable for income-generating or multi-asset strategies
- Higher admin costs and regulatory complexity
- May suit patient capital or institutional-style investors
For smaller, more focused build-and-sell projects, CCPCs are the preferred vehicle. These are private corporations that raise capital through preferred shares, typically with a defined investment horizon (e.g., 18–24 months).
2. Canadian-Controlled Private Corporations (CCPCs)
- Used for smaller, single-project investments
- Investors purchase preferred shares with defined returns
- Returns paid at the end of the project (post-construction sale)
- Simpler structure, lower admin burden
Getting Set Up: Trust Companies and Your Role
To invest your registered funds in a CCPC, you’ll need to open an account with a trust company like Olympia Trust, Western Pacific, or others approved by the CRA.
It works like this:
- Open a Self-Directed RRSP, LIRA, or RRIF
Similar to how you’d open a brokerage account. - Transfer in the funds you want to allocate.
You don’t need to move everything—just what you plan to invest. - Direct the trust company to purchase preferred shares
of the specific CCPC tied to the development project.
From there, the trust company holds your investment and reports everything through your registered account like any other qualified asset.
The Bottom Line
Most people’s registered accounts are tied to public markets. Real estate development offers a chance to diversify—without giving up growth.
You’re participating in a real project, with a real timeline, and a clear plan for value creation. When it’s structured properly, it fits neatly inside your existing registered strategy—and keeps your long-term plan moving forward.
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