When asked what he does for a living, Chip Wilson says he is an idea creator, constantly gathering and sharing information with those he works with.
Wilson is best known for the yoga pants that revolutionized athletic wear. He is, after all, the billionaire founder of Lululemon and while no longer CEO, he remains the apparel company’s single largest shareholder. The outspoken mogul aims to replicate his success in the athletic wear industry in real estate.
The burgeoning value of his sprawling Vancouver estate makes local news headlines annually, but apart from that, little is known about his billion-dollar real estate portfolio.
He sat down for his first-ever interview on real estate with Daniel Foch and Nick Hill, hosts of the Canadian Real Estate Investor podcast.
Wilson was joined by David Ferguson, CEO and co-founder of he and Wilson’s real estate investment, development and management company, Low Tide Properties.
Ten years ago, Wilson says he and his family, alongside Ferguson, decided to invest 65 per cent of their wealth into real estate in three cities by 2030
“Our other businesses have done so well that, you know, we haven’t reached that percentage… We’ll probably be lucky to get to 20 (per cent). And that’s buying almost as fast as we can.”
A decades-old friendship
Wilson and Ferguson were introduced through a mutual connection at a party in Calgary 38 years ago, and after both spent time in Toronto, the pair eventually reunited in Vancouver.
Wilson chuckles, “He’s very measured in what he says; I’m very unmeasured in what I say. So we were kind of a perfect combination.”
Ferguson refers to himself as a “career real estate guy,” adding, “That’s all I’ve ever done. That’s all I’ve ever wanted to do. I love it.”
After cultivating a friendship, the duo found their way into business together. Wilson adds, “I recognized that he was probably the smartest guy in the world. And I’m maybe not as smart as Dave, but I had lots of money. So it was a perfect combination.”
Low Tide Properties
Low Tide Properties was founded in 2011; the pair’s love for Vancouver and desire to reinvest in the local economy drives the company’s success.
Ferguson explains that the region’s proximity to the mountains and Pacific Ocean and limited land supply has made it a popular destination for international immigrants and a favourable location for investment.
The company purchases property in emerging neighbourhoods, not downtown, but near the city’s core, aiming to influence or be the catalyst for change in the area.
He adds, “We know the city unbelievably well in the areas we invest. I know every single block; I’ve probably gone through half the buildings, maybe more. We’ve made offers on lots. So we really, really understand, we understand what block we want to be in. We understand what side of the street we want to be on.”
The company offers “creative office spaces,” catering mainly to smaller and local businesses. The company’s website boasts 30 properties in Vancouver alone, ranging from office space to laboratories and retail to multi-family. Wilson emphasizes the importance of understanding the target audience, focusing on what kind of lifestyle the future employees of the tenants want and appealing to them. The pair staunchly believe treating tenants well is crucial to their success.
“Your tenant is your customer. It’s your only customer, so you need to treat them really well…it’s a fantastic business. You have a customer that’s going to pay a fixed amount of money every single month for your product,” Ferguson notes.
In 2017, the founders diversified their portfolio by investing in Seattle’s multi-family rental market, aiming to avoid putting all their eggs in one basket.
Wilson says they’re looking to add a third city to their portfolio, “We love places where land is constrained, and we really understand it. So we’ll probably look for somewhere like that.”
The company’s long-term investment strategy emphasizes holding onto properties for at least 25 years, with Wilson advocating for a 100-year strategy. He puts it simply, “We’re a long-term real estate investor.”
When asked about the real estate market’s tumultuous year, Wilson says, “Inside of downturns, there are opportunities, and you have to have enough cash on the sideline in order to take advantage of that.
Wilson and Ferguson have built an expansive real estate portfolio with Low Tide Properties; they shared their top three investment strategies that have proven to be effective.
Location, location, location
Location is the most important factor to consider when investing in real estate. According to Ferguson, “You can change almost anything, everything about a property other than its location.” Therefore, one should look for a location where the economy is growing, jobs are being added, and there is limited real estate development.
Boots on the ground
Conducting on-the-ground research by talking to people can provide useful insights to identify potential investment opportunities.
Wilson suggests asking people about the top restaurants, coffee shops, and stores in the area and where they would like to see a second location of their favourite shops. This can help investors understand the demand for real estate in that area.
For investors with limited capital, partnerships can be an effective way to lower risks and increase knowledge. Wilson suggests finding partners who can bring different skill sets to the table, such as finance, property management and tenant relations.
Through partnerships, investors can learn from each other and make more substantial investments with reduced risk.
Investing in real estate requires building a team of experts with different skill sets. As Wilson notes, “There’s very little that you know, and your capital is limited” when you start out, but partnering with others who can complement your skills can help you achieve success.
“A leader is someone who creates a future that would otherwise not have occurred.”
– Chip Wilson
While Wilson and Ferguson are fiercely passionate about real estate, they recognize the importance of leaving the world a better place than they found it.
“A leader is someone who creates a future that would otherwise not have occurred,” Wilson says. “We both believe that if we complain, we can complain a couple of times, but then we’re in action to do something about it.”
Ferguson adds that he is very conscious about what he does and focuses on enjoying his life to the fullest. “Who we do business with, who our employees are, everything is a very conscious choice to maximize the enjoyment of our lives.”
He finishes, “I think when you’re really enjoying your life and you’re happy, you will do much better than when you’re miserable.”
Listen to Foch and Hill’s full interview with Chip Wilson and David Ferguson:
Jordana is the editor for Real Estate Magazine. You can reach her by email.