Flushing Money Down YOUR Toilets
The Apartment Group
Over the years we have analyzed and valued over 2,000 apartment buildings. We have looked and added up countless utility bills and over a large sample size and generally speaking the costs per suite for various buildings types fall into a certain range. The most can be said about water bills. Owners over time have put in water saving measures like low flush toilets, shower heads etc... But sometimes we come across a building where water is really high. Our first question is - was there a flood? or a busted pipe?? Sometimes that is the answer - sometimes it is not.
Leaking toilets are often the culprit of huge water loss and consumption. This is difficult to see in one building alone. As in one building with constantly leaking toilets consumption will vary but not by much but if compared to other buildings or industry averages then issues can be uncovered.
"One leaky toilet can waste up to 20 cubic meters of water per DAY ($80)"
The most common cause of a leaking toilet tank is when the flapper fails to seat properly and form a tight seal against the valve seat. This lets water leak from the tank into the bowl. It may be caused by the flapper being out of position. This type of leak is hard to detect as there is NO ponding of water on the floor and the issue will almost be invisible to the tenant. As such, unlike a real physical leak this issue can go on undetected for days, months or years.
Studies have shown toilets are responsible for 35% to the total water costs in an apartment suite. The design and operation of conventional toilets means that leaks are often overlooked and go undetected for long periods of time. Leaking toilets are the number one cause of water loss in residential buildings.
New leaks are always occurring at random intervals in any given building at any given time. Leaks are only discovered as a result of regular site wide inspections and this approach is not efficient or cost effective. No one can predict which toilet will or will not leak or which one will leak next or is highly probable to leak. Given the potential causes for toilet leak a new toilet can leak just as much as an older one.
What does this all mean? It means money is constantly flowing down your toilets. Studies have shown that a medium toilet leak could waste up to 20 m3 of a water per day or 600 m3 per month. In Toronto the current cost of water is about $4 per m3 as such the cost on one medium leaky toilet is around $2,400 per month or about $80 per day - FOR ONE TOILET. These costs form part of your water bill and if the problem is chronic and your building is large enough it will not be that noticeable from year to year.
Studies in the US has shown that in any given building generally about 25% of toilets are leaking is some fashion all the time. Translating the above to say an 100 suite building that may have say 130 toilets that could mean a substantial hit to the bottom line. Being conservative and assuming 20% of the toilets leak only 50% of the time could cost that building owner a substantial sum.
What is the solution?
Contact me now at email@example.com or wait until the next Apartment Digest.... but that could cost you...
GTA Apartment Sales are ON FIRE
The Apartment Group
According to our in house data, the first half of 2019 was one of the most active for apartments in over 15 years in the GTA. The first half of 2019 saw over 49 deals trading over 4,100 suites. The total dollar volume of sale reached $1.1BB. To put this in perspective, in all of 2018 dollar volume sales totaled $1.8BB for the entire year!
In the first half of 2018 there were only 30 deals trading just over 2,000 suites. The dollar volume for that same period totaled around $470MM. In the first half of 2017 for comparison, there were only 19 deals trading just over 1,700 suites. The dollar volume for that same period totaled around $335MM.
There were two larger multi building sales in the first half of 2019. Q Residential purchased a number of buildings from Kassinger which totaled around $200MM and Starlight purchased some buildings from Trivest for around $75MM. However, even accounting for these deals the volume in 2019 is unprecedented. There were a number of medium to larger buildings being sold many from long term owners.
In terms of values, pricing keeps moving up. In the first half of 2019 average prices were around $265,000 per suite which is up from $235,000 in 2018 and $190,000 in 2017. Cap Rates in the first half of 2019 averaged around 3.5% and this has been stable over the past 18 months.
We have noticed this uptick in activity as personally 2019 is shaping up to be one for the record books for our team. Hopefully we will be working with you and for you soon.
Check the Elevators Before you BUY
A building inspection should be done before a buyer goes through with buying a building so they have a trained professional properly evaluate the asset they are purchasing. During these building inspections one of the most important parts of the building usually get over looked by building inspectors, this would be the elevators. Majority of building inspectors overlook elevators because they do not know enough about them to properly evaluate them. The elevator is one of the most used tool in a building besides utilities so it should be inspected by someone who can tell the quality of the equipment and let buyers understand what they should do to improve their elevators. Having a poor working elevator can cause issues with disgruntled tenants and building staff, it can decrease the value of the overall building, and it can even lead to law suits with leveling issues and other unsafe factors.
As well, costs to cure items not uncovered in an inspection could be astronomical. Replacing these items are very costly and add not benefit to the building generally. If the boilers are old and about to die - yes there is a cost to replace them but you will save money as the new boilers will be much more efficient and energy saving. Not so with elevators. As such it is very important to look at them before you buy.
Quality Allied Elevator believes in educating potential buyers on the state of their elevators so they fully understand what they are purchasing along with their building. We would be more then happy to provide a full on inspection report of how the elevator operate, the state of the equipment, and any potential upgrades the elevator is needing. To this end we have seminars on an ongoing basis to educate clients on elevators. The cost of this seminar is $145 per person. However if you mention Commercial Focus Realty, we will waive this fee.
Please contact us at 647-477-9456 - Jamie Sokoloff - firstname.lastname@example.org
RECENT APARTMENT SALES
3 Grove Crescent – Sault Saint Marie – SOLD $6,975,000 / $102,575 per suite / 6.75% Cap Rate
This property was sold by The Apartment Group and comprises 68 large townhouse units all three bedroom in Norther Ontario. The asset was poorly maintained with low rents and deferred maintenance. The units were located on a very large site in a B location in the city. The property was sold by a private owner and was not marketed. The Apartment Group represented the Buyer who is a private investor.
2B Arlington Avenue - St. Catharines – SOLD $5,275,000 / $131,875 per suite / 4.75% Cap Rate
This property was also sold by The Apartment Group and comprises a 40 suite rental apartment building east of the downtown core of the city. The asset was well maintained with low rents and surplus development land on site. This walk up rental building dated from the 1950's and had surface parking only. The property was sold by a private owner who also was the Listing Agent. The Apartment Group represented the Buyer who is a private investor.
1050 Highland Street - Burlington – SOLD $4,400,000 / $244,445 per suite / 4.25% Cap Rate
This property was sold by The Apartment Group and comprises an 18 suite rental apartment in a well established location in central Burlington. The investment had low rents formed an entire block backing onto a park. This walk up rental building was listed for sale by the Apartment Group and fully exposed and sold for full asking price. There were multiple offers. The Buyer was Equiton Acquisitions Corp.
560 Arlington Boulevard – Burlington – SOLD $18,600,000 / $338,180 per suite / 3.55% Cap Rate
This is a property located in south central Burlington within close proximity to the Lake. The 3.5 acre site is improved with 55 rental townhouses in various blocks dating from the 1970's. The property has been under the same ownership for many years. Rents are considered to be far below market at the time of sale. This asset was fully marketed and was purchased by Starlight Investments Ltd.
Portfolio Purchase – Toronto – SOLD $26,400,000 / $231,580 per suite / 3.0% Cap Rate
This portfolio of three building was under the same ownership for many years. It consisted of 1475 King Street West (44 suites), 15 Bater Avenue (33 suites) and 185 Cosburn Avenue (37 suites). These are all low to mid rise rental apartment buildings and were fully marketed as a package sale. Rents are considered far below market. The buyer was Golden Equity Properties.
1 - Etobicoke – SOLD $6,700,000 / $279,170 per suite / 3.87% Cap Rate
This is a 3.5 storey rental apartment building is located in a great rental area in south Etobicoke. It is a large ravine site with a total of 24 rental apartments. Rents are considered far below market. Tenants pay their own hydro and there is surface and underground parking. There an even number of one and two bedrooms. This asset was fully marketed and was being sold by a private owner. The buyer was also a private investor.
THE APARTMENT GROUP
Together the team has completed over 1,000 transaction and has sold over $5 billion in apartments and development land. Put us to work for you and see the results. NO ONE has sold more buildings then your group. Experience, knowledge and professionalism will insure you get the right deal or the highest price if you are selling.
The Apartment Group is a dedicated team of professionals specializing in the sale of multi-residential investment properties. With over 40 years of combined experience, the team brings together their strengths including strong negotiation and sales skills along with highly technical market analysis and appraisal methods.
We are a boutique Brokerage but have the capabilities of the larger houses without the overhead. We have: an internal database of over 10,500 active apartment and land Buyers; a list of all apartment building owners in the Greater Toronto Area; our web site gets over 50,000 hits a month; we highlight properties for sale through our newsletter which reaches 10,000 investors monthly.
President & Owner,
LORENZO DIGIANFELICE, AACI
Broker of Record, Owner