“As someone from Saskatchewan, I was disappointed to hear the news,” Willow CEO Logan Yergens told Wealth Professional. Based in Ontario, Willow is a digital real estate investment platform that allows Canadians to make partial investments in real properties across Canada, including affordable housing.
“I think at the end of the day, it was a Ponzi scheme,” Yergens says. “The returns they were offering were in line with Bernie Madoff.”
Based on promotional materials from Epic, CBC News reported that the company promised investors returns of 10% to 20% in its various businesses. According to CBC’s coverage, its so-called “hassle-free homeowner program” included a 15% guaranteed rate of return for investors, which also applied when properties were vacant.
“You can get those types of returns in real estate, no doubt,” Yergens says. “But it is extremely difficult to do consistently, especially in markets like Saskatoon. You have good income potential, but you really have no asset appreciation because there is no paucity of land.
Because developers can always expand outward, he says, land in Saskatoon is inherently not as valuable. This means that returns properties in the area can be expected to largely stem from the income thrown away by those properties. But according to insiders interviewed by CBC News, Epic’s rental estimates and actual occupancy rates were too far off to justify the type of returns they were promising.