C A N A D A ’ S O N LY N A T I O N A L P U B L I C A T I O N F O R A P A R T M E N T O W N E R S A N D M A N A G E R S
VOLUME 4 / NUMBER 2 / JUNE 2007
Multi-Unit Residential Mortgages
Buy, Renovate and Profit: Simple Business Model Drives Mainstreet
IT’S CLOSER THAN YOU THINK...
Tight Schedule for Province-Wide Asbestos Inventory Marketing to the Global Community: Beware of Email Scams Is Your Website Static or Dynamic? Going Green Generates Cost Savings
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june 2007 3
30 Cover Story
Buy, Renovate and Profit: Simple business model drives Mainstreet Buying apartment buildings in need of renovation has been a profitable business for Mainstreet Equity Corporation. Starting with 272 units in Alberta, the company now owns over 5,000 units across Canada.
contents... 8 Building By-Laws and Codes Impact Rebuilding Costs Changes to regulations and building codes can stop you from rebuilding or significantly increase the cost to rebuild. Your insurance policy should address this issue.
12 Tight Schedule for Province-Wide Asbestos Inventory Ontario’s new Asbestos Regulation requires owners of multi-residential buildings with four or more units to complete a compulsory survey and management plan for all building materials that contain asbestos.
18 Marketing to the Global Community The Internet gives landlords an opportunity to market on global scale. It also leave them open to email scams. Know how to identify scams and protect yourself against scammers.
22 Who’s Who CAM offers up this year’s results of top tens in three categories of manage only, own & manage and own only.
26 Going Green Generates Cost Savings Multi-unit building owners are facing the need to incorporate recycling into their waste disposal systems. It will cost money, but savings can be achieved through lower haulage fees.
42 High-Pressure Water Jetting Thoroughly Cleans Pipes High-pressure water-jetting is an effective and environmentally safe way to clean blocked drain lines. The jets provide 360-degree coverage and clean all the way to the pipe wall.
44 Is Your Website Static or Dynamic? In today’s rental environment, it’s important that your website attract qualified prospects. Make sure your site is up-to-date and presents your property in the best possible light.
24 Multi-facts 46 Regulations 4 Canadian Apartment Magazine
june 2007 5
editor’s note Regulations are Inevitable In early May the Alberta government announced changes to the province’s Residential Tenancies Act that will limit rent increases to one per year and require landlords to provide one year’s notice if they wish to convert a rental unit into a condominium. In Ontario, both the province and the city of Toronto are contemplating legislation that could eventually require landlords to implement some form of recycling program. A pilot project is now underway to study multi-unit recycling. Added to that, Howard Moscoe, chairman of Toronto’s licensing and standards committee wants to implement a plan that would see the city’s landlords pay a licensing fee. As you can see from this brief summary, regulatory changes are inevitable and can’t be ignored. Speaking to our readers, we’ve found that keeping abreast of new legislation and regulations is one of their main concerns. In order to keep our readers better informed, we’ve added a new regulatory update feature. You’ll find it just inside the back cover of this issue. As space on that page is limited, some regulatory changes will continue to be printed in our usual multi-facts news pages. Elsewhere in this issue, Barbara Carss takes a look at Ontario’s new Asbestos Regulation. It requires owners of multiresidential buildings with four or more units to complete a compulsory survey and management plan for all building materials that contain asbestos. The survey must be completed by November 1, 2007. Our regular marketing contributor, Jason Leonard says, while the Internet gives landlords an opportunity to market their products to the global community, it also opens the door to email scams. This month’s cover story centres on Mainstreet Equity Corp., a company that has grown from 272 units to over 5,000 units in less than 10 years. The company’s founder, Bob Dhillon, gives us a look at his business model and his plans for the future.
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Barbara Carss Stanley J Collini Michael Gailius Robert Helyar Jason Leonard David G Truscott For sales information call 416.966.HUSH
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Quoteworthy “ Demand is being driven by the echo generation, immigration, in-migration, and the retirees.” – page 31
6 Canadian Apartment Magazine
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risk management
Building By-Laws and Codes Impact Rebuilding Costs by David G. Truscott
Property Insurance Should Include By-Laws Clause In the event of a loss, changes to regulations and building codes can stop you from rebuilding or significantly increase the cost to rebuild. Your insurance policy should address this issue. In our last column, we looked at how the “same site clause” in your building insurance program can impact a claim settlement with your building insurance, and how its deletion is in your best interest as an income property owner. This month, we’ll review another often overlooked gem, known as “by-laws” coverage. During the process of arranging for “appropriate” property insurance for our apartment building, we are already aware that we should insure our buildings for their replacement cost. However, there’s a little more to it than that. The replacement cost of our building (and the related amount of building insurance) should be based upon the amount that it would cost to replace our building with a building of like kind and quality to that of the original, with no deduction for depreciation, and to have that replacement carried out immediately, on the same site. That amount of building coverage is to include all costs of debris removal and site cleanup necessitated by the loss, and the subsequent rebuilding. Surely this would suffice, right? Not quite. 8 Canadian Apartment Magazine
Since our hypothetical apartment building was built, (let’s say in 1961) a lot has changed. There may now be laws, by-laws, ordinances, or changes to the building code that regulate the construction, repair, or location of buildings, and those newly imposed rules can pose significant roadblocks to the repair or replacement of your apartment building. In other words, even if you and your insurance company want to rebuild following a loss, sometimes you can’t, simply because a relevant governing body won’t allow you to do so. What’s in the way? Possibly changes to the fire code, the building code, insufficient setback, insufficient parking, or a host of other concerns that might render our building non-compliant. It’s possible that only a partial loss to our building (it could include fire, or even a falling object) has rendered it to be a total loss in the opinion of our municipality. This may require the complete demolition of our building despite the fact that only a portion of the building was directly damaged. Get ready for a surprise here – your insurance policy will only pay for
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your insurer’s main concern is to help put their claimant back into the same position that they were in immediately before their loss occurred the portion of your building that was damaged by the insured loss, and, as a further surprise, they will only pay for the debris removal of that portion. As for the part of your building that was undamaged, your municipality tells you that it has to be removed, and this has to be done at your expense. What’s the solution? A simple endorsement to your property insurance policy, described as “Contingent Liability from Enforcement of Building By-laws”. Often this coverage is available at no additional cost, but if it’s not already included in your insurance policy, don’t expect your insurer to settle a claim on that basis. Make sure it’s there, and, also, that it’s written on a “blanket” basis. There are three instances where this coverage can help you, and they are:
• The loss of value for the undamaged portion of your building;
• Costs of demolition of the undamaged portion of the building, and associated debris removal costs;
• Increase in the cost of construction.
• An elevator may now be required for this style of apartment building, when previously it was not. Remember, your insurer’s main concern is to help put their claimant back into the same position that they were in immediately before their loss occurred. Sometimes local bylaws and building codes won’t allow this. For purposes of discussion regarding the scenario described in this article, if you have the “blanket by-laws” endorsement, you should be OK. That being said, don’t forget to insure your building for what it would actually cost to replace it to comply with today’s standards. The “Building By-laws” endorsement is not automatically included in your property insurance policy, so be sure to ask your insurance provider for its inclusion. Is it a necessity? Most lenders of real estate secured loans require its inclusion as a part of their insurance conditions for granting a loan or mortgage. However, this endorsement is sometimes overlooked and its absence can be severely detrimental to your claim settlement for large losses to your income property. CA M
While the first two points have already been explained, the third point can be illustrated in these examples:
• You now need to include a more expensive fire suppression system than what was required when your building was originally constructed. 10 Canadian Apartment Magazine
David G. Truscott, CAIB, CRM is the President of Risk Review Inc., a risk management consulting practice. Their website and contact information for David can be found at www.riskreview.ca
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regulatory update
Tight Schedule for Province-Wide Asbestos Inventory Intensified Scrutiny of Non-Friable Materials Brings New Costs by Barbara Carss
Ontario’s new Asbestos Regulation requires owners of multi-residential buildings with four or more units to complete a compulsory survey and management plan for all building materials that contain asbestos. The survey must be completed by November 1, 2007. Industry specialists report that compliance levels are still low – in part because of a limited pool of professionals to carry out the work, and in part due to ignorance
Workers in full HAZMAT gear turned a recent energy retrofit into a delicate communications exercise for property managers with Peel Region’s non-profit housing corporation, Peel Living. The $1.2-million project to convert an electrically heated, 140-unit seniors’ housing complex to central natural gas heating began just after Ontario’s new Asbestos Regulation under the Occupational Health & Safety Act came into effect in November 2005. This compelled more stringent than anticipated controls for the work, which involved drilling through flooring and ceilings that contain asbestos. “It stalled our project and it created all kinds of confusion. It increased costs. There were delays. There was a lot of communication required to address the residents’ concerns and concerns from their family members,” recounts Glen O’Brecht, Director of Property Management for Peel Region. “Asbestos is a loaded word. No matter how well you explain it, not everyone gets it. It’s a very emotional term.” The new Regulation will drive up costs for diligence, maintenance, retrofits/renovations and demolition in many situations. Landlords in the multi-residential sector also predict that a new requirement to provide occupiers of a building with written notification of the presence of asbestos could cause undue alarm among tenants. The previous version of the Regulation, which dated back to the 1980s, focused primarily on what are known as friable forms of asbestos that can become airborne and inhaled, whereas the new Regulation mandates greater scrutiny and precautions for so-called non-friable products in which 12 Canadian Apartment Magazine
“Asbestos is a loaded word.” asbestos fibres are embedded and immobile. This encompasses items and materials that can be found in almost any building constructed before 1990, including vinyl asbestos floor tiles, flooring glue, ceiling stipple, drywall joint filling compound, roofing membranes and transite cement. Indeed, transite cement products such as piping used as rainwater leaders have never been banned and are still being installed today. Most conditions of O. Reg 278/05 came into effect in November 2005, but it gave owners of commercial, industrial, institutional and multi-residential buildings with four or more units a two-year window to complete a compulsory survey and management plan for all building materials that contain asbestos. As the November 1, 2007 deadline for completing these surveys and plans draws nearer, industry specialists report that compliance levels are still low – in part because of a limited pool of professionals to carry out the work, and in part due to ignorance. “In practice, you can imagine the impossibility of surveying every single building in Ontario in a two-year period,” says Don Pinchin, President of Pinchin Environmental Inc., one of the most active consulting firms in the field. “There’s also the fact that many building owners are totally unaware of this.”
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Practical Challenges The experts emphasize that the previous asbestos Regulation did need to be updated. It was out of sync with Ontario’s occupational exposure limit (OEL) for asbestos, which, in 2000, had been reduced below the level stated in the Regulation. Nor did it recognize new technologies and procedures for asbestos abatement and management that had been developed in the 20-year interim since the Regulation was introduced. Yet, many of the same experts maintain that some of the new stipulations are overzealous. In particular, they question why certain non-friable products have now been designated for “Type 2” removal procedures that are more complex and costly than the handling practices that were formerly allowed. Pinchin argues, for example, that vinyl asbestos floor tiles break cleanly and abatement can be carried out effectively with the less onerous “Type 1” precautions, while drywall joint filling compound contains such trace amounts of asbestos as to pose negligible risk. “Drywall joint filling compound is going to be a nightmare,” observes Corrado Maltese, Senior Manager, Occupational Health & Safety, with the Toronto Catholic District School Board (TCDSB). “The joint filling compound is something that wasn’t really a concern previously. Now, if we need to nail something in the wall – even something as simple as that – we need to know if we’re going to be disturbing asbestos.” Since sections of drywall are often replaced during building renovations, walls can become a patchwork of drywall vintages that make it difficult to gauge where joint filling compound containing asbestos – which was formally banned in 1986 – might be. This is one of the reasons the cost of asbestos management surveys is rising. “The level of effort to distinguish what is and isn’t asbestos drywall has significantly increased,” says Jason McGonigle, Health and Safety Group Manager with the environmental consulting firm, Golder Associates. Previously, even if building owners voluntarily opted to identify the non-friable sources of asbestos on the premises, they typically relied on an environmental consultant’s professional judgement to deduce its location. Although the former Regulation did require scientific sampling for friable asbestos, the new Regulation is more comprehensive. “It really has tripled the number of samples we’re taking,” Pinchin says. “Two years ago, a survey completed in Ontario was primarily only looking at friable asbestos and the Regulation wasn’t prescriptive as to how many samples you needed to take,” McGonigle concurs. “For building owners, the surveys that they completed previously might be useful on some level, but they likely will not be complete.”
Notification Responsibility November 1, 2007 is also the deadline for notifying occupiers of a building of the presence of asbestos on the premises. Building owners must notify residents and/or commercial tenants in writing, and, in turn, these occupiers must inform employees, contractors and/or visitors who could potentially encounter and disturb asbestos. “There is multi-level responsibility,” McGonigle says. “You 14 Canadian Apartment Magazine
have to notify people who work with or around it. We’re recommending that people talk to their own legal counsel and get their own legal opinions about who should be informed.” In the commercial and institutional sectors, information about asbestos is now typically made available through joint health and safety councils and other associated policies. At the TCDSB, for example, everyone who works on one of the board’s properties is required to read the posted notifications of where asbestos exists, then sign a form to confirm that he or she is aware of the asbestos and will handle it only in accordance with regulated procedures. “Every time a contractor comes into one of our buildings this is required,” Maltese explains. The same rules apply to teachers. “Teachers often like to hang artwork from the ceiling. For years, we’ve told them: Don’t,” he adds. Since 1990, the asbestos survey for each school property is made available to the public in the school’s main office, but board officials still haven’t determined if they will have to send written notification to students and their parents/ guardians in order to comply with the new Regulation. “We feel that the students are not going to be disturbing it [asbestos]. They’re not authorized to hang art and they don’t have access to boiler rooms or other spaces where asbestos can be found,” Maltese says. Multi-residential landlords and property managers are similarly grappling with how to deliver the news and how to help tenants and condominium owners better understand the distinction between and risks posed by non-friable versus friable forms of asbestos. “That’s a significant concern for us,” says Mike Chopowick, Manager of Policy with the Federation of Rental-housing Providers of Ontario (FRPO). “It’s fair to say it’s going to cause unnecessary concern to apartment occupiers.”
Cost Repurcussions More stringent controls for handling non-friable materials are already increasing renovation/retrofit and demolition costs. The new Regulation also introduces training requirements for workers and supervisors on “Type 3” abatement jobs, involving friable materials, which could affect project budgets. As of November 2007, workers will have to prove that they have successfully completed a 16-hour classroom course (or recognized equivalent) and exam, and employers will be responsible for ensuring workers have the necessary training. Consultants foresee employee retention challenges that could create delays and/or work stoppages. “Most owners can’t even conceive of the amount of turnover they are going to have [on their jobsites] because the work is very unpleasant,” Pinchin advises. “I think it is likely going to push up the wage rates that these jobs are paid.” Increased abatement costs could cause particular upheaval in the health care sector as hospitals across Ontario are in the midst of multi-year capital programs for which budgets were allocated prior to the new Regulation coming into effect. Construction workers frequently uncover unexpected
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surprises within sprawling buildings that have typically been added to over the course of several decades and eras of engineering and construction practices. “We have no less than seven different wings here – the original one being built in 1925, and it’s still functional,” notes J.J. Knott, Director of Plant Operations at the Norfolk General Hospital and a member of the board of directors of the Canadian Healthcare Engineering Society (CHES). Many of the hospital expansion projects also involve the demolition of older structures to make way for new facilities. “We set aside large chunks of money to take care of abatement, specifically asbestos, but those pockets are suddenly going to need to be deeper,” Knott says. “I hope that the Ministry [of Public Infrastructure Renewal] is sympathetic when it looks at those numbers.” Budgeters may also start re-crunching the numbers for energy retrofits and other upgrades. In Peel Region, O’Brecht calculates that the long-term savings from energy
management improvements in the aging non-profit housing stock should still significantly outweigh the extra costs for Type 2 asbestos removal, but the new requirements will complicate future projects. In the recent retrofit at the seniors’ apartment tower, workers had to drill through asbestos vinyl floor tiles and asbestos ceiling stipple to make way for the piping and fan coils that were to replace electric baseboard heaters. Residents spent time in the building’s recreation lounge while construction occurred in their units. “We are in the midst of big capital renovation work. We have about 13 buildings that operate on electric baseboards,” O’Brecht notes. “It [the Regulation] will increase the project costs; it will add additional steps to the work; and, certainly, there is a resident impact. If the payback was less, but we triggered the highest level of hazardous material handling requirements, I think we would have to reassess the costs and benefits.”
DEADLINE LOOMS FOR MANAGEMENT SURVEYS Certain sectors appear to be ahead of others in complying with Ontario’s new asbestos Regulation. It requires owners of commercial, industrial, institutional and multi-residential buildings with four or more units to complete a survey and management plan for all building materials that contain asbestos by November 1, 2007. “It is taking some time for the awareness to get fully out there,” observes Jason McGonigle, Health and Safety Group Manager with the environmental consulting firm, Golder Associates. “I am finding the commercial side getting on board and being more proactive than the multi-residential or the institutional sectors – except for the school boards, which tend to be moving forward with this. I’m not seeing a lot of action from the hospitals.” School boards’ sensitivity to the issue goes back to the early 1990s when there were several highly publicized cases in which asbestos was found in school buildings. For those slower off the mark, it may become more difficult to secure a consultant since the professional firms that offer asbestos management services are becoming increasingly busy. Notably, the Toronto Catholic District School Board (TCDSB) received fewer-
16 Canadian Apartment Magazine
than-usual responses to its recent call for tenders for asbestos management surveys. “A lot of consultants are just not bidding,” speculates Corrado Maltese, the TCDSB’s Senior Manager of Occupational Health & Safety. Board officials plan to choose a winning proponent and begin the work by March 1 to provide adequate time to get the reports submitted by the November 1 deadline. The most recent previous survey, conducted in 2003, assessed both friable and non-friable asbestos so there is a base of information for meeting the new Regulation’s more comprehensive requirements. “We are somewhat ahead of the game,” Maltese notes. “What is really problematic this time, is going to be the cost. A lot of that cost is associated with the bulk sampling requirements.” Surveys will be conducted in all properties constructed before 1985, representing 188 of the TCDSB’s 210 facilities. Meanwhile, most multi-residential landlords will have to survey 100% of their portfolios. “The majority of the private rental stock in Toronto, and Ontario as a whole, was built prior to 1975 and prior to 1975 almost every building had a certain amount of asbestos in it,” says John Mallovy, Vice President, Construction
and Engineering, with Greenwin Property Management, which manages about 25,000 rental housing and condominium units, predominantly in Ontario. “Right now, we are waiting for our clients to approve the capital budgets that include expenditures for the surveys. It’s very unlikely we’ll have them all done by November despite our best efforts.” The Norfolk General Hospital, which updated its asbestos management soon after the Ontario government released a draft of the new asbestos Regulation for consultation, is something of an anomaly in the health care sector. “Sometimes you just see the writing on the wall,” muses J.J. Knott, Director of Plant Operations at the hospital. “We have made changes in our asbestos management program and we are already in compliance with the Regulation, but in talking to some of my colleagues, the comments I have heard from others in the health care sector is that they really haven’t got a handle on this yet.” CAM
Barbara Carss is the Editor-in-Chief of Canadian Property Management, MediaEdge Communications Inc.
june 2007 17
marketing
Marketing to the Global Community Beware of Email Scams by Jason Leonard
Marketing rental properties to a global community has become a phenomenal opportunity for landlords. The Internet’s ability to reach rental prospects beyond local communities has helped landlords keep vacancy rates manageable while improving bottom lines. In the past year, landlords in Canada have been migrating to the Internet at a record pace. However, when an industry makes such a drastic shift there are bound to be a few bumps in the road. When dealing with prospects, email will often be the first form of communication, especially with prospects in different time zones. Email is an incredibly efficient form of communication with many benefits when used properly. Unfortunately, it is also where we see most scams originate. Email scams have been around since the beginning of the Web. Therefore, knowing how to identify scams and having a policy to protect yourself is important. A Niagara area landlord recently encountered one of these scams and decided to share his story so that others can learn what to watch for. It should be noted up front that this landlord did not fall for the scam and as a result did not suffer any financial loss. Ross Boncore of Boncore Management reported that he received a well written, professional looking, email from a gentleman with a UK email address. “At first glance it looked legit and I thought I was dealing with a British prospect. It had 18 Canadian Apartment Magazine
several questions listed which I answered and emailed back,” says Mr. Boncore. When the first response to his email arrived, Mr. Boncore didn’t make the immediate connection that the prospect was suddenly using broken English. He later realized that every response sent to him was a fresh email with no previous messages attached. “This became one of the clear signs I was dealing with someone dishonest, says Mr. Boncore. The individual tried to deceive me with the well written first message, and then started a new message the next time so I wouldn’t immediately notice the change in the writing.” Still, Mr. Boncore has worked successfully with several people moving from overseas and knows all too well not to be quick to judge a prospect from another country. At this point, he was still willing to give the person the benefit of the doubt even though he had growing suspicions. Mr. Boncore asked the individual for more details on what he was looking for and when he was moving to Canada. Oddly, the response came three days later, yet it was marked URGENT. Furthermore, the prospect couldn’t or wouldn’t answer most of the questions asked, most notably what city he wanted to live in. “I pretty much decided at that point I wasn’t going to continue with the prospect. You hear about scams all the time and when someone can’t even answer the basic questions such as ‘when are you moving to Canada’, that’s a pretty clear sign to me to end discussions.”
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Mr. Boncore did just that, choosing not to reply to the last email. Then the strangest thing happened. Three days later another message arrived, again marked URGENT. In this particular email though, the prospect outlined an apparent agreement and some additional details, in essence exposing the scam. Here is the actual email as received by Mr. Boncore:
Thanks for your email. i am very sorry for the delay, his just because of the nature of my job. if you can see a nice place that his closer to you i will apreciate it ,before i will look for a better. Kindly confirm our agreed price of $3400 (being payment for a month rent, plus Damage deposit of $1700). After discussing with my financier he has made me to understand that the furniture cost will be included in your initial $30600 rental deposit he is sending to you for six months payment including damage deposit. So all that is required of you when you receive the total money, is to kindly deduct your part of $30600 for the initial payment and have the balance of the total funds received, sent to the furniture company for my orders as this will allow them pay all necessary and required charges and make delivery of my ordered list of furniture to the apartment. Also I will need you to kindly be around to accept delivery or alternatively have someone be around as I want these furniture delivered to the apartment once the delivery date and time is fixed. Please, I know you must be a very busy person with your work and things to take care of. I want to plead with you to kindly assist us on this note because I am anxious to have things settled so I can be rest assured my family and I will be moving into a home soon with little or no inconveniences. I apologize for any inconveniences on this. Note. I will contact you immediately the payment has been sent so you can watch out for it. And we look forward to meeting you especially my wife. Kindly get back to me to know if you can handle the above mentioned concerns for me before my arrival Thank you so much Ross Boncore.
Regards, Henry Smith “After reading this email, I knew beyond a shadow of a doubt the prospect wasn’t legit. I replied that I had reported him to the Canadian police and never heard from him again,” say Mr. Boncore. “The advice I have for other landlords is to use common sense. If it doesn’t feel right to you, it probably isn’t. I love using the Internet and this won’t stop me in the future, but I will be careful when dealing with people by email only.” 20 Canadian Apartment Magazine
How to Protect Yourself 1. Pay close attention to the email communications you have with a prospect. Review previous messages to ensure you and the prospect are on the same page.
2. When renting site unseen, verify as much of the information you have about the prospect as possible. Do a credit check, contact their employer (if they have a job waiting for them) and call all references.
3. Try to have the prospect send a representative, such as a relative or friend, to view the property on their behalf.
4. Do not accept international cheques as they can take a long time to clear. Ask the prospect to use Western Union and send you cash.
5. Do not accept any funds until after the prospect has been sufficiently checked out.
6. Do not get involved in any deals that require you to forward funds to another party such as a furniture company or an agent acting on behalf of the prospect.
7. If you find yourself stuck in a bad situation, contact the police immediately and advise the prospect that you have done so. This usually makes them go away quickly.
Above all else, use common sense. Your gut is almost always right. CA M
Jason Leonard is our marketing feature writer. You can get a free copy of his “Landlords Guide to Using the Internet” by sending your name and address to jason@gottarent.com
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Apartment Own & Manage millions of sq. ft. Boardwalk REIT 29.960 RealStar Management 26.000 Cap REIT 23.708 TransGlobe Property Management Services 20.700 Minto Developments Inc. 7.799 Greenwin Property Management Inc. 7.000 Morguard Residential 6.035 Morguard 6.035 Berkley Property Management Inc. 5.400 Globe General Agencies 4.700 CLV Group 4.500
22 Canadian Apartment Magazine
Apartment Own Only millions of sq. ft. Homestead Land Holdings Limited 18.634 El-AD 15.200 Rancho Management Services Corporation 3.168 Sun Life Assurance Company of Canada 2.544 Lanesborough Real Estate Investment Trust 1.737 The Brown Group of Companies Inc. 1.103 Dorset Realty Group Canada Ltd. 0.625 Glen Corporation 0.510 Hospitals of Ontario Pension Plan Realty Inc. (HOOPP) 0.500 Canadian Urban Limited 0.184 CA M
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GTA Apartments Trades Total $800 million 2006 proved to be another active year for multi-residential investors, according to a report published by CB Richard Ellis Limited. It states that over $800 million of apartment properties traded in the Greater Toronto Area, compared to just over $600 million in 2005. Demand for multi-family properties remained strong, with solid activity in the GTA, south western Ontario and Ottawa. For many property owners, vacancies began to wane and for the first time in recent years rents began to increase. Cap rates ranged from lows below 5 per cent to highs above 8 per cent with per suite pricing ranging from lows of $45,000 per suite to highs of $180,000 per suite. Over the course of the year, a clear dichotomy formed between properties that were highly sought after due to location and potential rental upside, and properties in challenged locations with little, if any, potential for rent increases. Another trend worth noting was that low cap rate transactions were not limited to the GTA. A number of trades in smaller markets sold at similar cap rates to “A” class properties across Toronto, proving that quality in any market is in strong demand. 2006 also saw a number of properties trade to investors new to the multi-residential property market. There continues to be an abundant amount of cash earmarked for investment in real estate, with a growing proportion allocat-
ed to multi-residential properties. We expect this trend to continue into 2007. In 2007 CB Richard Ellis expects: • The rental market will remain competitive and challenging. Strong and professional management will be the key to coping with these market conditions. • Rents should stay relatively flat for southwestern Ontario and rise in the GTA. • Vacancies should remain flat but could decline for certain areas. • Increasing amounts of capital will continue to be allocated to multi-residential properties.
Rental Vacancy Rates Lowest in the West The average rental apartment vacancy rate in Canada’s 35 major centres was 2.8 per cent in April 2007, according to the spring Rental Market Survey released by Canada Mortgage and Housing Corporation (CMHC). In October 2006, the vacancy rate was 2.6 per cent nationally. “Thanks to strong employment growth, solid income gains, and high immigration levels, the Canadian economy remains very supportive of strong demand for both ownership and rental housing,” said Bob Dugan, Chief Economist at CMHC’s Market Analysis Centre. Vacancy rates were lowest in Alberta (0.9 per cent) and British Columbia (1.2 per cent).
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Moscoe recently took a tour of some of the city’s worst apartment buildings to reiterate his plan. The proposed fee system would be somewhat similar to the city’s restaurant-inspection system. Well-maintained buildings would be visited by inspectors relatively infrequently, whereas bad buildings would be the subject of monthly or weekly inspections. Any licensing system is at least a year away from becoming law.
dent and CEO of the Federation of RentalHousing Providers of Ontario. “But why do good landlords have to pay?” If the city takes more money from landlords, it will likely come out of maintenance budgets, he said. Moscoe estimates there are about 200 to 300 bad buildings in the city.
The licensing fee is bitterly opposed by the people who own Toronto’s rental units. “We don’t have a problem if they want to go after bad landlords,” says Vince Brescia, Presi-
The highest average monthly rents for twobedroom apartments in Canada’s major centres were in Toronto ($1,073), Vancouver ($1,051), and Calgary ($1,037). In Ontario, vacancy rates are at historically high levels and exceed the provincial average in Windsor, Thunder Bay, Hamilton and St. Catharines-Niagara. Vacancy rates are below the provincial average in Sudbury, Ottawa, London and Barrie, while Toronto and Kitchener vacancy rates remain at provincial averages. When adjusted for inflation, rent levels remain low and are near levels of the late 1990s.
Student Population Surge Causes Sudbury Apartment Shortage Sudbury’s booming economy, driven by high copper and nickel prices, has lead to a shortage of apartments in that city. In October, the city’s rental apartment vacancy rate was only 1.2 per cent. Canada Mortgage and Housing Corporation is forecasting the rate will fall to 1.0 per cent in 2007 and 0.8 per cent next year. The apartment shortage comes despite a population decrease. The 2006 federal census pegged the city’s population at 157,000, down from its peak of 169,000 in the early 1970s, when an apartment shortage did not exist. Demand for apartments is being driven by students from Laurentian University, College Boreal and Cambrian College. The schools are all experiencing surging enrolments, bringing thousands of additional students to the city. Student housing is such an important issue at Laurentian that the university has hired an off-campus housing co-ordinator. The upsurge in student numbers is not the only factor affecting the local rental market. There have been no new sizeable, multi-unit residential housing developments built in the city over the last decade and those that have been built are seniors’ residences. A 157-unit complex to be created out of the vacant Ecole secondaire catholique L’Heritage was approved by the city’s planning committee in February. The $10-million complex is expected to appeal to high-end market.
Toronto Councillor Wants to Crack Down on Bad Landlords Howard Moscoe, chairman of the Toronto’s licensing and standards committee, wants to implement a licensing fee that would charge higher fees to landlords of substandard rental housing.
june 2007 25
going green
Multi-Unit Recycling Programs Create Cost Savings by Michael Gailius
Multi-unit building owners are facing the need to incorporate recycling into their waste disposal systems. Installing recycling equipment will cost you money, but savings can be achieved through lower haulage costs. Throughout North America, multi-unit complexes typically house up to one-third of the population of most urban centers. In years past these buildings were constructed without the option of recycling and, as a result, all waste from this demographic went straight to landfill. While most municipalities require new developments to incorporate recycling disposal as part of the building’s infrastructure, the challenge of retrofitting an older complex can be daunting. Building owners and managers are facing a combination of pressures, including diminishing landfill opportunities and the mainstreaming of environmental responsibilities. They are also confronting a host of new legislative requirements as provincial and municipal governments compete for leadership in the arena of environmental responsibility. Add to this the high population density of multi-use residential areas and apartment recycling is the best opportunity to affect waste diversion. Although regulatory requirements vary from city to city and province to province, the writing is on the wall: Multi-unit recycling is here to stay! Admittedly, apartment recycling has its challenges. Small spaces make in-unit separation of recyclable materials inconvenient; garbage chutes were not designed for waste diversion and a high turnover of tenants can translate into little investment in building management policies. Despite these challenges, many building managers have realized that implementing a site-specific recycling program not only satisfies compliance issues, it also increases tenant goodwill and can result in significantly reduced waste hauling fees. There are many sophisticated source separation options available. They include systems like chilled underground tanks from Finland for storage of organic material to modifying the existing garbage chute to accept a tri-sorter in the basement. Simpler solutions are also available. For any recycling system to be successful, it needs to take advantage of two key elements: the existing partnership between management, tenants and hauler; and acquiring the right tools for the job. The old model of collecting refuse via garbage chutes 26 Canadian Apartment Magazine
and trash compactors is out of step with the new requirements to separate recyclables out of the waste stream. One of the simplest solutions is for tenants to sort recyclable materials in the apartment and carry them to central bins where waste haulers can pick it up. Typically this requires the purchase of some type of apartment blue box and central containers to store the material. The advantage is that each unit now has its own two-stream waste management system. “Because trash is taken to a landfill, but recyclables are taken to be separated, broken-down and reconstituted into fresh material a clean sort has to start at the source,” says Craig Busch, President of Busch Systems. “Nobody’s going to separate this stuff once it has become intermixed. It’s much easier to start at the beginning – the person who is throwing something away.” While blue box style recycling is not an overly sophisticated solution, it can be effective as it works in any building, regardless of size or layout and represents a relatively small capital investment. Common areas such as laundry rooms, parking lots, entrances and patios also need containers to capture recyclable materials. Landlords have found that by giving new tenants recycling information with their lease, tenant investment in the program is often enthusiastic. Cleanly-sorted material is a valuable resource to your serviceprovider and your hauling fees will reflect the quality of your building’s recycling program. When done well, you will reduce what you pay to haul to a landfill and increase the raw materials your hauler will purchase from your site. With the right partnership of tenants, suppliers, management and hauler, a waste-diversion program for any type of multiunit property is not only achievable and affordable, but will continue to reduce environmental and financial impacts well into the future. CA M
Michael Gailius is an Account Manager with Busch Systems International and can be contacted at michael@buschsystems.com
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Buy. Renovate. ProďŹ t. Simple business model drives Mainstreet. Undervalued assets key to growth. by Randy Threndyle
Buy. Renovate. Profit.
Buying apartment buildings in need of renovation has been a profitable business for Mainstreet Equity Corporation. Starting with 272 units in Alberta, the company now owns over 5,000 units across Canada.
Bob Dhillon got the real estate bug at the age of 19 when he bought two houses which he renovated and later sold for a small profit. Since then buying distressed or rundown properties and fixing them up has become a much larger business. Today, the CEO and founder of Mainstreet Equity Corporation runs a business with over $650 million in assets. While the company has grown, the basic business model remains much the same as his original real estate purchase. Find undervalued, mid-market apartment buildings in need of repair, renovate them and set rental rates that provide a profitable return on investment for the company’s shareholders.
Given the fact that few new buildings have been added to the rental market in the last 20 years, Dhillon expects that buying older buildings and renovating them will continue to be a profitable business. With no new supply and a projected urban population increase over the next 10 years, rents have nowhere to go but up. “Rents will continue to go up every year moving forward for many years to come because the demand cycle is coming in,” says Dhillon. “Demand is being driven by the echo generation, immigration, in-migration, and the retirees.” Large portions of these population groups, says Dhillon, typically look to rent an
“Demand is being driven by the echo generation, immigration, in-migration, and the retirees.” The publicly traded company now has over 5,000 apartments, mostly in Western Canada, and is looking to expand its portfolio. Dhillon has based his business model on the fact that multi-residential buildings trade at well below replacement cost, often less than half of what it would cost to construct a new building. The low value, when compared to replacement cost, is “The number one driver of our business,” he says, adding, “Who knows what replacement costs are today due to escalating costs, bottle necks for approvals, cost of land, soft costs and cost of debt.”
apartment. While immigration is often cited as a market driver, Dhillon says the echo generation, which he estimates at 6.5 million people will also create huge demand for mid-market rental units. With demand escalating and no new supply, rents will have to increase considerably to justify new construction, says Dhillon. “Based on third-party surveys, replacement costs are over $250,000 per unit on a stick built scenario,” he says. Dhillon estimates that the majority of apartment buildings in Canada are mid-market. These buildings share several factors in common. They typically have high vacancy rates, and june 2007 31
“We are sometimes described as the Holiday Inn Express of mid-market apartment buildings.” issues related to neglected or deferred maintenance. Often, says Dhillon, the owners of these buildings are smaller landlords who don’t have access to the capital needed to carry out major renovations. “My business model is to create a better quality of life for middle class Canadians, immigrants, echo generation, all these people who are willing to pay a little bit more rent. I’m going to give them renovated suites, better service and increased security.” The renovations, says Dhillon, help to create a brand name for Mainstreet. “We are sometimes described as the Holiday Inn Express of mid-market apartment buildings.” Typically suites are vacant for several months while the renovations are underway. In addition to in-suite improvements like new bathrooms and kitchens, Mainstreet also adds new technology to the buildings such as energy-efficient furnaces, lighting and appliances. Other cost-saving initiatives include clustering buildings to reduce operating costs, training people internally and an auto debit system which covers 70 per cent of the company’s tenants. State-of-the art software to monitor expenses, allows Dhillon 32 Canadian Apartment Magazine
instant access to building expenses, income or renovation costs. These improvements reduce operating costs and help to reposition the buildings as ones where tenants will be willing to pay higher rents. The company’s goal is to create a quality apartment and offer tenants a higher level of service than is generally available in the mid-market segment. “How do I do that? I buy buildings that need repositioning. That’s all I’ve ever done in 20 years. I have a network of vendors, realtors, receivers, lawyers and property managers. I look at the
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“We grew our company from 272 units which was $17 million in assets to a quarter billion dollars in assets...” building and I say what is the rent today, and what can it be in 18 months. And what do I have to do to increase the top-line revenue, on a fixed-cost building. “Sometimes market conditions can help. Like Alberta, where we have increased our top-line revenue by 50 per cent in the last 18 months in a fixed-cost business,” he says.
Company Launched Dhillon launched Mainstreet Equity in 1998 using $17 million of his own assets. The company’s portfolio consisted of 272 apartments in Alberta. While the Alberta boom has certainly helped the company in recent years, that wasn’t always the case. “We grew our company from 272 units which was $17 million in assets to a quarter billion dollars in assets without any equity dilution. This was before the Alberta boom when the price of oil was less than $20.” Recalling those early days Dhillon says the day the company went public, the real estate index crashed. A few months later he found that his corporate business model was now in stiff 34 Canadian Apartment Magazine
competition with real estate investment trusts for the purchase of additional rental buildings. With access to large pools of lowcost capital, many REITs were moving into the multi-residential business. In 1998, Mainstreet was one of about 25 publicly traded micro cap real estate companies. Over the years, says Dhillon, every one of those companies, other than Mainstreet, has privatized, sold out or liquidated. He has remained in business thanks to a unique business model.
revenue. But, once the renovations are complete and the building has been repositioned, the rents more than cover the loan carrying costs. Dhillon says his business model has worked so well that he has never had to go to the equity markets to raise capital. Rather, he repositioned the buildings and generated sufficient cash flow to carry the loans. Dhillon’s business model also impressed one of his old professors at the Ivey School of Business where he earned an MBA.
“I also got lucky in Surrey, I also got lucky in Saskatoon. I’ve been lucky everywhere it looks like” Frank Renou, President and CEO of Peoples Trust, a longtime lender to Mainstreet says, “What Bob does is he finds distressed undervalued properties. He is willing to go in and do an extensive renovation program. Most other apartment owners, and we deal with a lot of them across the country, I think they are more interested in finding well-maintained properties that they can fix up a little bit and maintain.” Renou says Dhillon first approached him about 15 years ago. “I was an immediate believer. I knew this thing would work,” he says. Since then Peoples Trust has been providing acquisition loans, renovation loans and long-term CMHC financing for Mainstreet. The lender does, however, have to accept that after a building is purchased, renovations may take anywhere from 12 to 18 months. During that time the units are vacant and generate no 36 Canadian Apartment Magazine
Larry Tapp, the former Dean of the Ivey School of Business is currently the Chairman of Mainstreet’s board of directors. Tapp, who also sits on the boards of several large Canadian corporations, describes Dhillon as a real estate executive “with a great understanding of the marketplace and an ability to identify value.” “When I look at Bob, I think he’s a very astute real estate entrepreneur. He’s built the company through a lot of hard work. He’s incredibly dedicated and I think he’s serving the shareholders well.” Jeff Roberts, Real Estate Analyst at Desjardins Securities, has covered the company for about one year. He currently has a $27.50 target price for the company’s stock. As recently as one year ago the company’s stock traded at less than $8. At the end of May it was trading at just below $18.
“Congratulations to Bob Dhillon and Mainstreet Equities Corp. in recognition of your many accomplishments.” — Joseph B. Amantea Barrister and Solicitor
“We’re very bullish on the stock. We like the model and we like management. We think this is a great place to be and a great market.” Roberts says he began coverage of the company due to strength in the Alberta market where Mainstreet has about two-thirds of it portfolio. “Bob Dhillon is a self-made millionaire, with a fairly unique formula; buying rundown apartment buildings, fixing them up, re-renting them at market prices and refinancing them and getting out equity. The equity then refinances the cycle to start it all over again.” “That was a very interesting way of doing business. We did our research and found it (the company) was undervalued, so we initiated coverage,” says Roberts. Going forward, Roberts believes that Dhillon can continue to grow the company’s portfolio, but it will be difficult to buy new units in Alberta as the market has simply gotten too expensive.
buildings, when compared to replacement cost, has attracted a number of condo converters to the Alberta market. Condo converters, says Dhillon, are the only competition in the mid-market segment adding, “They really rocked the prices in Alberta.” “The condo converter has a different matrix. They look at the price per door and they look at what they can sell it for,” he says. Typically they buy buildings at $170,000 per unit, spend $20,000 or $30,000 in renovations and then sell the units for $270,000 to $300,000. Dennis Aitken, Peoples Trust Vice President, Mortgages & Regional Manager for the Prairies, says the influence of condo converters has pushed prices up to the point where on a cash flow or rental basis it doesn’t make sense to pay the per unit cost of buildings in Alberta. Most mid-market buildings of 20 to 50 units, says Aitken, are selling in the range of $150,000 to $185,000 per unit. “You might be able to rationalize $125,000 to $150,000 per unit on a rental basis, but it’s rare to get it at that price.”
Expansion Outside Alberta To counteract the more expensive units in Alberta, Dhillon has been expanding the company’s portfolio in British Columbia, Saskatchewan and Ontario. He says while the company has benefited from the Alberta boom, its business model was successful before the rise in oil prices. “Everyone is riding the Alberta horse, but we were in Alberta before anyone knew the name Alberta,” he says. Using the extra cash flow the Alberta boom generated, Mainstreet has grown its portfolio by approximately 40 per cent over the past year. In recent years the company has expanded into British Columbia. In Surrey, Mainstreet owns about 20 per cent of the market and in Abbotsford the company has about 10 per cent of the market. Earlier this year the company bought an additional 400 units in Saskatoon, Saskatchewan, an area where it is looking to expand. It also owns another 664 units in Ontario. Surrey, says Dhillon, has the lowest unit count in Canada, with only 5,800 units for a population of 500,000. Saskatoon had the second biggest housing gain in Canada, and the second lowest unemployment rate in Canada, next to Calgary. “We were in these markets before anyone discovered them. I may have got lucky on the Alberta boom, but I also got lucky before the Alberta boom. I also got lucky in Surrey, I also got lucky in Saskatoon, I’ve been lucky everywhere it looks like. “It goes back to the number one driver. Product trades at below replacement cost. It’s very easy to get lucky on undervalued assets.” The one cloud on the horizon is that the low price of apartment
38 Canadian Apartment Magazine
Another area of concern is new rent control legislation in Alberta that restricts landlords to one rent increase per year. Previously they were allowed to raise rents twice a year. Commenting on rent controls, Dhillon said, “95 per cent of all economists say rent controls don’t work. It’s a knee-jerk reaction by the Alberta government.” He says the new legislation just means that landlords will increase rents more a year down the road. “Where the real issue is,” he says, “Is that we have to create housing for poor people. That is where the real issue is. Rent controls are going to create ghettos and no supply.” In the future, Dhillon plans to continue his business strategy of increasing Mainstreet’s holdings across Canada. In fact, over the next three years he expects that Mainstreet could grow to 15,000 units, almost three times its current size. While that sounds like a tall order Dhillon says, “I’m a Ferrari and my life’s an autobahn. Every morning I tune up and go on in overdrive.” CAM
june 2007 39
feature ENTREPRENEUR THRIVES IN CANADIAN REAL ESTATE MARKET Family Were Economic Refugees Bob Dhillon wants to be the first Sikh billionaire and as the CEO of Mainstreet Equity Corporation, a company with over $650 million in assets, he’s well on his way. But it wasn’t always easy for Dhillon, whose business acumen has created a rags to riches story. Born in Japan, Dhillon and his family came to Canada as economic refugees after his father lost everything as the result of a civil war in Liberia. Recalling those days Dhillon says his mother worked in a post office and his father took on whatever work he could find. Despite the family’s economic setback, Dhillon, determined to succeed in the business world, began buying and selling real estate while still a student at the University of Western Ontario in London. He eventually graduated from Western’s Ivey School of Business. Armed with an MBA and an entrepreneurial business plan, Dhillon went fulltime into the real estate business. “I’ve never had a job. All I’ve ever done is buying and developing real estate,” says Dhillon.
But why the real estate business? “I was born in Japan and have been travelling since I was a kid, so I have seen the global perspective. Canadian real estate,
in my mind, was always undervalued from a global perspective. That’s why I have always stayed in real estate. “Compared to Asia, India and Japan, all the developing world, we have the best real estate laws, we have the best mortgage laws, the best landlord rights and the best ownership rights. Coming from Liberia, where we lost everything, coming to Canada as paupers, I just couldn’t fathom the real estate ownership rights and relatively easy financing compared to the rest of the world.” That fascination with real estate has made Dhillon, while not quite a billionaire, at least a self-made millionaire. And with millions at his disposal, Dhillon has made a decision to give something back to both the Sikh community of his birth and his adopted community in the Central American country of Belize. To that end he has set up a charitable foundation to help both communities. As the Honourary Consul General of Belize for Canada, Dhillon helped to raise $60,000 BZ to be used for the benefit of underprivileged children in Belize City. He has also donated money to help build the first hospital in the village of San Pedro Lions and raised money to bring a team of Canadian dentists to Belize. The most recent donation will be used for a food program being administered by St Mary’s parish in Belize. “What makes Belize a special place in my heart is its people,” says Dhillon. “Nothing gives me more joy in life than to help people, especially underprivileged children.” Dhillon also owns a 2,300-acre island in Belize, which is not part of Mainstreet Equity Corp. The island is part of the largest live reef in the world and is being developed using green development principles. The first phase of the development consists of 119 waterfront lots, totalling about 100 acres. Dhillon describes the homes as 100 per cent green and ecologically designed. In addition to enforcing green regulations, Dhillon has also made certain that a large percentage of the profits from development of the island go toward charitable contributions. CA M
“Canadian real estate, in my mind, was always undervalued from a global perspective.”
40 Canadian Apartment Magazine
maintenance
High-Pressure Water Jetting Thoroughly Cleans Pipes Removes Grease, Sludge and Debris by Stanley J. Collini Water jetting is probably one of the best and most efficient advances in the plumbing and drain cleaning industry since the invention of the original Roto-Rooter drain cleaning machine back in 1933. The name, water jet, pretty much sums up its purpose: High-pressure water jets scour and clean the inside walls of sewer and drain pipes, clearing blockages, and restoring water flow to maximum levels. To explain how high-pressure water jetters work, you must first think about how a plumbing system functions. Sanitary drainpipes from the restrooms, called branch lines, feed into one large drainpipe, called the main line. It leads to a municipal sewer line. Grease, sludge, sand and debris are the main culprits when it comes to commercial drain line problems. Blockages can occur in any of the branch lines or the main sewer line. Youâ&#x20AC;&#x2122;ll sometimes notice water taking longer and longer to drain from sinks and floor drains as buildup clinging to the inside walls of pipes slowly chokes the line. High-pressure water jetting is an efficient, economical and environmentally safe way to clean your drain lines. Using state-of-the-art pumps and flexible hoses, ordinary water is propelled under varying amounts of pressure into your sewer line. A special nozzle mounted on the end of a heavy-duty hose has an array of forward and reverse jets, which direct cleansing streams of water. The jets provide 360-degree coverage, shooting high-pressure water all the way to the pipe walls, cutting through even the toughest blockages. The jet nozzle and hose are pushed through the entire length of pipe ensuring that it is scoured as clean as the day it was put in place. With 1,500 to 4,000 pounds of pressure per square inch (psi), high-pressure water jetting can completely clean lines ranging from one-and-a-half inches to eight inches in diameter. The chance of blockage in the future is minimized because the jets penetrate and emulsify grease, break up sludge and debris, pulverize tree and shrub roots, blast away hardened scale and flush out the system, leaving your pipes clean and free of obstructions. Many property managers wonder why they need highpressure water jetting when their plumber has successfully used a conventional electric cable snake to open clogged lines in the past. Electric powered cable machines rely on rotating cutting blades to bore through a clog. They are highly effective against tree roots and work well in a number of residential and commercial applications. 42 Canadian Apartment Magazine
However, cable machines are best suited for opening drains and clearing them of roots. Cable machines cannot match highpressure water jetters when it comes to cleaning lines all the way to the pipe walls. Their revolving blades do little to rid a pipe of grease and muck. They can bore holes through sludge but they canâ&#x20AC;&#x2122;t clean and push it out of pipes the way jetting can, so they really offer a much more temporary solution to some kinds of clogs. Cleaner pipes mean fewer service calls and less down time. Most high-pressure water jet machines are mobile and can be backed up to an outside doorway at your building. From there, the service technician pulls hose from a spool to your sewer clean out access point or floor drain. He inserts the head and hose into the line then slowly advances it through the pipe, varying water pressure as needed. After your pipes have been jetted clean, itâ&#x20AC;&#x2122;s a good idea to set up a scheduled maintenance program to ensure that your lines remain clean and trouble-free. Each property has unique needs so a qualified technician will evaluate yours and recommend an appropriate schedule specific to your location. Some properties may require just one annual treatment while others would benefit from a much more frequent regimen. If you feel your properties could benefit from high-pressure water jetting services, contact a qualified plumbing and drain cleaning company to schedule an appointment or a demonstration. CA M
Stanley J. Collini is the owner and operator of Roto-Rooter Plumbing and Drain Service in Toronto. To contact Stanley, visit www.rotorooter.com or call him at 416-503-4444.
june 2007 43
what’s hot what’s not
by Robert Helyar
Is Your Website Static or Dynamic? In today’s rental environment, it’s important that your website attract qualified prospects. Make sure your site is up-to-date and presents your property in the best possible light. Does your website attract or deter prospective tenants? Does it work for you? In today’s technology driven environment, everyone has a website. It doesn’t matter whether you are a small five-person company or a large corporation, having a website is important to your business. If you are the owner or manager of more than one building, you probably have more than one website. Most companies have a website about their company as well as one for each individual building.
What information does your website provide? When a prospective renter visits your site it is with one question in mind: do I want to live here? If your website does not answer “yes” to that question, they will not visit your building. If this happens it no longer matters how good your leasing agent is on the phone or the closing ratios of your staff as you have lost the prospect before they even get there. 44 Canadian Apartment Magazine
What information are prospects looking for? Tell them why they want to live there! Show them what you have to offer. Having photos of the actual property is much more appealing than abstract art. If there is a lake view, show that view on your site. If you have a unit that will allow you to see the beautiful sunset, show that. The renters are now seeing what they will really be getting. If you have a property with features that you know will be attractive to the prospects, include photos of those as well. Whether it is the lobby, elevators, landscaping or amenities, all of these features play an important part when a prospect is trying to find a new place to call home. Offer floor plans that show accurate sizes and layouts of units available in the building. If you have various styles, show them all. Be interactive; allow prospects to take a virtual tour of the units or even your building! The more information you provide, the more enticing you make your building. Provide up-front pricing for each of the various sized suites.
This will assist the prospects in determining whether your building fits their budget and avoid wasting both their time and your staffs’ time if they know it is not within their range. If there is flexibility in your pricing, quote a range. This will reduce the number of unqualified applicants and/or visitors you receive. It is also important to keep your site information current. The information provided on your site should match what the prospect will be told when they call to make an appointment. Although this is not always possible, it is important to ensure your pricing is current.
text descriptions to be displayed in place of photos for those systems that cannot download the images. Remember, everyone is trying to save time. If you can help them to do this you have already made a positive impression!
with development and real estate holding companies. He holds a number of professional credentials including Registered Property Manager and Senior Certified Valuer. CA M
Robert Helyar is the President of DALA Group of Companies and has held a number of executive positions
How do you get the prospect from your website to your building? Allow the use of an online application. If they like what they see, this will save time by permitting them to apply immediately. It also reduces your competition. If they have found what they are looking for and can apply immediately, there is a 90% chance that the prospect will wait for a response from you before continuing to look at other properties. Be available! Ensure accurate and sufficient contact information is readily available on your site for general inquiries. This should include phone and fax numbers, an email address and possibly even an on-line form that can be filled out and submitted immediately. These forms provide a quick and convenient method of contact when the prospect is already on your website.
Fabrication
Renovation
Accessories
What page layout works best? Keep it simple. If you have a flash introduction, have the option to skip it as someone using a dial-up connection will most likely leave your site without ever actually entering if it takes a long time to load. A typical page generally provides a menu on the left and the main body in the centre. Photos work well on the right hand side. People generally read left to right so it is important to have your information flow in a manner that will be easy to follow. Use colours and fonts that are easy to read and will be visible on all screen settings. It’s also a good idea to provide
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june 2007 45
regulation
Toronto to Test Recycling in Apartments
Changes to Alberta Landlord-Tenant Legislation
The Ontario provincial government will provide $305,000 to six municipalities – Toronto, Windsor, Hamilton, Peel Region, London and Quinte – for apartment recycling pilot projects. Ten buildings in Toronto have signed on for the project. The first phase of the pilot will involve assessing the content of multi-unit garbage, while the second phase will help to determine the best methods to increase recycling. Toronto’s $52,000 pilot project will look at practices in 10 buildings (of different heights and age) to identify the barriers (such as space and convenience) to recycling. Residents will be offered several choices: a mini blue box, a recyclable throwaway plastic bag and a reusable blue plastic bag for newspapers and bottles. The test will look at what works best, with no single solution likely across the board, given the range of buildings. The city’s goal is to divert 70 per cent of waste from landfill by 2010. Single-family homes, which have blue box and green bin recycling, divert 58 per cent of waste from landfill. Among multi-residential buildings, only 13 per cent of waste is diverted from landfill. At present, the city does not offer the green bin program to highrise residents. They must take newspapers and bottles to dumpsters outside their buildings. New highrises have tri-sorters, with chutes for garbage, recycling and organics, but older buildings have only one chute for garbage. With space at a premium in some units, the temptation is to throw garbage and recyclables down the same chute. The province’s goal is to divert 60 per cent of waste from landfill by 2010. “The Ontario government’s goal is to help municipalities deal with waste effectively using the three Rs – reduce, reuse and recycle,” Environment Minister Laurel Broten said.
Proposed legislative amendments in Alberta will limit rent increases to one per year and require landlords to provide a full year’s notice to convert a rental unit to a condominium. The amendments will be retroactive to April 24, 2007. “Many Albertans across the province are facing serious challenges with rent increases and finding affordable housing. These changes are one action of many our government is taking to help tenants,” said Lloyd Snelgrove, Minister of Service Alberta which is responsible for landlord and tenant legislation. “The changes will help stabilize the province’s rental markets. Rent will go up less often and it will take more time to convert a rental unit to a condo. That’s good news for tenants.” The amendments to the Residential Tenancies Act and Mobile Home Sites Tenancies Act were introduced in the Legislature on May 2 as Bill 34. The following is a summary of the proposed changes: Rent can only increase once per year. This will apply to both periodic (month-to-month) and fixed-term tenancies. Three month’s notice will still be required before increasing rent on periodic tenancies (six month’s notice for mobile home site tenants). Landlords will need to provide one year’s notice before ending a periodic tenancy for the purpose of converting a rental unit to a condominium or to undertake major renovations to a rental unit. No rent increases will be allowed during that one-year period. One year’s notice continues to be required for converting a mobile home site to a condominium unit or for other uses. Any notice to increase rent or end a tenancy that doesn’t comply with the legislation would be declared void and could result in a landlord facing fines of up to $5,000 per tenant. CAM
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C A N A D A ’ S O N LY N A T I O N A L P U B L I C A T I O N F O R A P A R T M E N T O W N E R S A N D M A N A G E R S
VOLUME 4 / NUMBER 2 / JUNE 2007
Multi-Unit Residential Mortgages
Buy, Renovate and Profit: Simple Business Model Drives Mainstreet
IT’S CLOSER THAN YOU THINK...
Tight Schedule for Province-Wide Asbestos Inventory Marketing to the Global Community: Beware of Email Scams Is Your Website Static or Dynamic? Going Green Generates Cost Savings