All Forum Posts by: Oren K.

Sorry I didn't get a chance to say hello earlier.

From one Oren to another Oren; Welcome.

@Roy N.  @Jack Martin 

Thanks for the input. Will check out both Pli-deck the tile options. Can you provide an approx. cost (per sq ft) of installation over a clean plywood surface. 

Also, not sure if it would work (or how well) but what about products like Deckover or Restore

http://www.olympic.com/products/olympic-rescue-it-...

http://www.behr.com/consumer_ca/products/wood-stai...

Have you ever used them? If so, what were the results? How long did they stand up to use?

Agree that artificial turf look is bad.

Balcony decking is wood so not sure how the tiles would work on it. Do you have product name or better yet a link?

What do you use as the surface of any balcony that has to be repaired? After fixing any railing issues and putting a new plywood deck, what do you put on top?

Options being considered:

Remove Balcony and Put in a 'Juliet' railing

• Reduced maintenance issue
• Maintain ability to get fresh air
• Lose building feature / amenity (not sure of impact on rent but many buildings in area do NOT have balconies)

Roofing Material

• Not exactly easy on bare feet
• During the summer, any chairs / tables feet will create impressions

Artificial Turf

• Look sucks

Outdoor Carpeting

• Not sure how it will hold up

Any others suggestions / recommendations?

Any experience with any of the above?

@Colleen F.  - I had a chat with the PM and the absorption rate is probably no more then 1-3 per month; Less in during the winter and highest in the spring. Not an abnormal leasing pattern. Keep in mind that I do not 'just' want to fill the place but want 'quality' tenants. I can afford to be patient (up to a point). At ~50% occupancy the property is a bit below breakeven from an operational perspective. I expect breakeven to be ~65-70% occupancy so only need to fill 5-8 units. Once I hit that, it should be self funding to rehab the rest of the units.

With that being said, it will take 6 months to a year to fill empty units and turn occupied units to the new standard which will be higher then currently in place. I am finding that the difference in pricing between "bottom of the line" and "nicer" is within my budget.

@Joel Owens  @Moses Kagan - My thinking, after reading your comments, is to scale back on my original plan and take your suggestion of minor variations as follows:

The building has two types of units: 1 & 2 Bedrooms with identical layout by type. All units have the same kitchens: Pass through / Galley with ~7 ft of wall on each side. On one wall you have the sink and stove with some counter space. On the facing wall you have the fridge and more counter. The wall with the fridge backs onto the living room.

I think an interesting feature / design element would be create a pass-through / breakfast island on the wall backing onto the living space. It would open up the unit and connect the kitchen to the living area / family room which has been the trend for the past decade or so.

If I do 4-6 units, split between 1 & 2 Bedroom, I can 'play' with this design element and other finishs but not get to far ahead of absorption. If there is strong demand (one way or the other), I can then accelerate the rehab on the rest to the preferred design.

@Roy N. - I agree with offering some of the newer units to existing tenants. Getting one or two to move and pay the higher rent not only improves cash flow but also helps set expectations to existing tenants (i.e. You are not going to get a better unit at the old rent).

Any other thoughts / comments?

For Sept 13 - Sept 14 the inflation rate in Toronto was 2.7% (see: 

http://www.statcan.gc.ca/tables-tableaux/sum-som/l...).

You can also find historical rates for many Cdn cities at the same site.

I am starting the process of rehabbing a 39 unit ~50% occupied property. The property is  in a blue color / section 8 neighbourhood. Good bones but due to ownership dis-interested over the past years, many of the unoccupied units need a fair bit of work (Kitchen, Bathrooms, etc.). The occupied units also need work. I am finishing up the exterior / mechanical systems (Roof / Boiler / Tuck Pointing / Lot Patching) and now will start on the interior.

I am struggling with the question of how many units to to how fast. The PM company, who I do trust, is recommending just doing 2-4 units and seeing what the market uptake is. My inclination is to do more (10-12) for a couple of reasons;

• Better pricing on materials and labor
• I can be on site and so do more oversight
• If there is uptake, the PM has 'inventory' options

Looking for input / thoughts / experiences.

I defer to Roy regarding the Tenancies Act. There clearly are ways to get tenants out but I stand by the fact that it is a difficult and long process as in the case I linked. 

Not for the faint of heart or business case / plan that does not have a lot of contingency built in.

Best of luck

Filipe,

All I can say is good luck with that. In Toronto, even if all the leases are expired (assumption), the tenants become MTM renters and under the Landlord Tenant Act (LTA) have a right to stay in the unit. You are required to maintain the unit and are can make limited rent increases based on rent controls (basically inflation). Note: this does not apply to condos in the same way and that is why probably 1/2 the condo inventory is leased out.

Other then them leaving voluntarily, the only way to evict a tenant is if they stop paying rent and you take them through the eviction process which will take at least 6 months and I have seen cases where it has taken YEARS (I kid you not!).

There is one case in the news currently about a single family in city owned assisted housing building that simply refuses to move. The city has been trying to evict them, for various reasons since February 2013 (almost 2 years). The city wants to 'condemn' the building (tells you something about the state of the property) and redevelop the site. The city is willing to move them but wants to keep the eviction process going so they don't have to start from scratch. The work on the building can not start with them in place and the cost to the city is estimated @ ~ $10K per day that things are being held up. (see: http://www.torontosun.com/2014/10/03/tenants-refusal-to-leave-delaying-tchc-building-demolition)

So short of giving your tenants an 'inducement' to vacate (and that may not work), you need to think about this (if you move forward) as a long term process. If they have 'low rents' currently, it will probably be challenging for them to find a new place with similar rent which is 'as nice' (whatever that mean in this context). Don't forget that you will need to continue to support / maintain the property as it vacates (e.g. taxes, utilities, snow clearing, etc.). If you don't, they can call in and get violation notices forcing you to do the repairs / maintenance. It will also allow them to deposit the rents in a trust account until the work is done (depriving you of the cash flow).

Read / know the LTA. Get familiar with the Landlord Tenant Board (LTB) processes. Get a lawyer who specializes in LTA / LTB work. Even with a 'smaller' property, I think you really need to have deep pockets, deep knowledge and lots of patience for something like this.

As I said, good luck with that.

Oren

Marquelon,

If you are not familiar with Offering Memorandums (OM's) and the information they contain, I would start with getting several in hand. Given the size of property you are looking at there are many real estate web sites (e.g. Loopnet, Sperry Van Ness, CBRE, etc.) where if you register (free) you can search, find and download OM's. Some may require you to sign a confidentiality agreement to get the OM but assuming you are not going to turn around and post it on facebook, that is not much of a barrier.

In general, the OM should contain all the income / expense information (hopefully more then one years worth), demographic and market information and finally comparables for the property (e.g. Class, Size, Condition, Amenities, etc.).

Do remember that OM's are marketing / selling documents so most if not all the information has to be vetted / confirmed independently. If you are getting them from a reputable real estate company (e.g. CBRE), they are not going to lie but it is 'buyer beware'. For example, they will correctly state the current real estate taxes but in your analysis, you need to determine what the real estate taxes WILL be after the purchase and take that into account when preparing your financial projections. I find the comparables to be the most entertaining; they include properties that are not nearby and clearly not similar as bench marks data points or they include deals from more then 2 years back and you know the market is not the same as it was.

As an academic exercise it may be interesting to compare and contrast the information they contain, how accurate the information is and how realistic the projections are from the different companies.

As well, if you troll around the internet a bit, you will come across many investment / development partnership opportunities where they provide fairly detailed information regarding financing, expenses, income, expected net income, profit sharing, etc. etc. Some may have them freely available for download, others may require a call to the agent / sponsor of the deal to get them to send it to you.

Have fun.

Oren