EIPP
THE ESSENTIAL INVESTOR PROTECTION PROGRAM
FAQ’s
What is the Essential Investor Protection Plan (EIPP)?
The EIPP functions like an insurance policy for the monthly profit of your suite during the first two years following completion. If your suites carrying costs (explained below) exceed the rent in any given month, you simply report the shortfall to Seafor Financial and you’ll be reimbursed within 5 business days.
How is the carrying cost calculated?
It’s the total of the monthly out-of-pocket expenses a landlord would expect to be paying in conjunction with the ownership/rental of their suite. Just remember the acronym, STIMP:
Strata Fees = The strata fee, or maintenance fee, charged by the strata each month for things like common area cleaning, garbage removal, etc.
Taxes = We use something called the Mill Rate* (explained below) of the municipality the building is in and compare that up against the suite’s assessed value to estimate the property taxes. If there’s no assessed value for the suite yet, we use the Purchase Price from when you bought the suite.
Insurance = We estimate a $60.00 stipend each month to keep things simple.
Mortgage Payment = The lesser of:
- A mortgage payment you would have if you obtained a mortgage based on a 30 year amortization, 20% down, and an interest rate of 5.44% per annum, and;
- Your actual mortgage payment
Property Management = The fees a professional property manager charges for tenant placement and/or monthly management.
How do I report a shortfall in rent vs carrying costs?
You report the shortfall by answering a few easy questions through Seafor Financial’s webpage.
How often can I report a shortfall?
You can report once a month, quarterly, or you can even self-finance any shortfall for the whole two years, and simply submit the claim at the end of the policy period for a lump sum, it’s totally up to you.
How does the reimbursement for a shortfall get transferred to me?
Direct deposit – a representative of Seafor Financial will contact you for your direct deposit information closer to completion of the purchase of your suite.
Do I have to pay to have my suite enrolled in the EIPP?
No. The EIPP is paid for in full by the Developer on your behalf.
What if we assign the suite before completion?
Your EIPP can be assigned as well, as a value add for your potential assignees.
What happens if we sell the suite before the 2 years is up?
If you sell the suite within 2 years of completion, your agreement with Seafor is fully assignable to the new owner, offering an enticing level of security to any potential purchaser.
Is there a limit to the amount we can be reimbursed for?
Like all insurance policies, the EIPP has a policy limit – the limit is $20,000 or two years, whichever comes first.
What if we cannot find a tenant?
If the Property Manager cannot find a tenant then the rent is $0.00 and the amount Seafor Financial would reimburse you would go up proportionately, in order to ensure the suite generates monthly profit.
What if we don’t want to rent the suite out? Can we still buy a suite under which the EIPP applies?
Yes, you would just not be able to submit a claim for a reimbursement under the EIPP. A condition of being able to make a claim for any shortfall of rent vs carrying costs is a good faith attempt to rent the suite out. However, nothing would stop you from taking advantage of the program if you decided to move out after a year or so.
Do we need to be approved by a specific bank/get a mortgage with a specific bank?
Absolutely not. You’re free to use whichever financial institution you choose, or no financial institution at all.
Can we use our own property manager?
Seafor Financial assigns the Property Manager.
What if a member of my family wants to rent the suite?
Your suite will always be rented at arm’s length and full market value. If you intend to rent the suite to a family member, we would base the calculation of your carrying costs and reimbursement on the market rent, not what the family member is actually paying.