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PM#40063056 CANADA’S ONLY NATIONAL PUBLICATION FOR APARTMENT OWNERS AND MANAGERS CANADA’S ONLY NATIONAL PUBLICATION FOR APARTMENT OWNERS AND MANAGERS Mainstreet Equity Corp. Taming the Wild, Wild West Annual Green Issue WWW.CANADIANAPARTMENTMAGAZINE.CA VOLUME 9 / NUMBER 2 / MARCH 2012

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CAM March 2012

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Page 1: CAM March  2012

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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 SC 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

Mainstreet Equity Corp.Taming the Wild, Wild West

Annual Green Issue

www.canadianapartmentmagazine .ca

VOLUme 9 / nUmBer 2 / march 2012

Page 2: CAM March  2012

Whether it’s a seal, shaft or tiny spring, it’s working to keep your residents’ everyday laundry dependably clean.

Daily dependability depends on, well, everything. That’s why every single component of our MHN30 high-effi ciency front-load washer is engineered to deliver the lasting quality that’s made Maytag a household name. Your residents get a machine that stays up and running. And with programmable options to increase revenue, plus signifi cant energy savings built right in, you’ll fi nd plenty in the picture to be happy about, too. Visit mclaundry.com.

® Registered Trademark/ TM Trademark of Maytag Properties, LLC or its related companies. © 2012. All rights reserved.

MG12026_CanadianAptMag0312.indd 1 2/1/12 1:14 PM

What’s in a name?When the name is Stratacon, a lot!

A reputation as a leading sub-metering solutions provider since 1997, with a dedication to technology, innovation and customer service.

Now the Stratacon name has changed – to EnerCare Connections*.

And what’s in that name? A lot more!

EnerCare brings together a variety of “intelligent energy solutions” including:

•Electricity,WaterandBTUSub-metering •WaterConservation •RentalHVAC

Our energy products and services combine the best practices in the industry with comprehensive programs that are flawlessly delivered.

Withourrobustmenu,weworktogetherwithpropertymanagers,multi-residential building owners, developers, condominium boards and residents to save energy, save money and help save the environment.

For more information about EnerCare Connections’ intelligent energy solutions, please visit EnerCare.ca or contact us at 416-649-1900.

*StrataconInc.andEnerCareConnectionsInc.,bothwholly-ownedsubsidiariesofEnerCareInc.,haveamalgamatedandcontinueunderthenameEnerCareConnectionsInc.

EnerCare_Can_Apt_Feb.indd 1 12-01-13 11:23 AM

Page 3: CAM March  2012

What’s in a name?When the name is Stratacon, a lot!

A reputation as a leading sub-metering solutions provider since 1997, with a dedication to technology, innovation and customer service.

Now the Stratacon name has changed – to EnerCare Connections*.

And what’s in that name? A lot more!

EnerCare brings together a variety of “intelligent energy solutions” including:

•Electricity,WaterandBTUSub-metering •WaterConservation •RentalHVAC

Our energy products and services combine the best practices in the industry with comprehensive programs that are flawlessly delivered.

Withourrobustmenu,weworktogetherwithpropertymanagers,multi-residential building owners, developers, condominium boards and residents to save energy, save money and help save the environment.

For more information about EnerCare Connections’ intelligent energy solutions, please visit EnerCare.ca or contact us at 416-649-1900.

*StrataconInc.andEnerCareConnectionsInc.,bothwholly-ownedsubsidiariesofEnerCareInc.,haveamalgamatedandcontinueunderthenameEnerCareConnectionsInc.

EnerCare_Can_Apt_Feb.indd 1 12-01-13 11:23 AM

Page 4: CAM March  2012

Publisher �Ian�Lederer� [email protected]� (416)�512-8186�ext.�262

ActingEditor Scott�Anderson

SeniorDesigner Annette�Carlucci

Designer Jennifer�Carter

ProductionManager Rachel�Selbie

ContributingWriters� �Peter�Cook,�Derek�Lobo,�Robert�Fleet,�Paula�Gasparro,�Carissa�Drohan-Jennings,�Andy�Schwartze

Circulation Lina�Trunina

Forsalesinformation call(416)512-8186ext.262

Canadian Apartment Magazine is published six times a year by:

5255�Yonge�St.,�Suite�1000,�Toronto,�Ontario�M2N�6P4E-mail:�[email protected]

Tel:�(416)�512-8186�Fax:�(416)�512-8344

PresidentKevin�BrownCopyright�2012

Canada�Post�Canadian�Publications��

Mail�Sales�Product�Agreement�No.�40063056

ISSN�1712-140X

Circulation�ext.�232Subscription�Rates:Canada:�1�year,�$50*�

2�years,�$90*�US�$75�

International�$100�Single�Copy�Sales:�Canada:�$12*

*�Plus�applicable�taxesReprints:

Requests�for�permission�to�reprint�any�portion��of�this�magazine�should�be�sent�to�Ian�Lederer

Authors:Canadian�Apartment�Magazine�accepts�unsolicited��

query�letters�and�article�suggestions.Manufacturers:

Those�wishing�to�have�their�products�reviewed�should�contact�the�publisher�or�send�information�to�the�attention�of�the�editor.

The�opinions�expressed�are�those�of�the�authors�of�articles�and�do�not�necessarily�reflect�the�views�of�Canadian�Apartment�Magazine.�This�

information�is�general�and�is�not�a�substitute�for�legal�advice.Sworn�Statement�of�Circulation:

Available�from�the�publisher�upon�written�request.��Although�Canadian�Apartment�Magazine

makes�every�effort�to�ensure�the�accuracy�of�the�information�published,�we�cannot�be�held�liable�for�any�errors�or�omissions,�however�caused.

Printed�in�Canada

It’s�not�that�easy�being�green�…�or�is�it?

Quoteworthy

– page 16

“We�are�betting�on�commodities,�we�are�betting�on�in-migration,�we� are� betting� on� growth.� You� don’t� have� to� be� the� sharpest�pencil�in�the�box�to�make�money�in�apartments”�

–�Bob�Dhillon,�founder�Mainstreet�Equity

4 www.canadianapartmentmagazine.ca

Editor’s Note

I�never�thought�that�one�day�I�would�be�quoting�a�member�of�the�Muppets�to�get�my�message�across.

But�after�reading�this�issue’s�Marketing�column�by�Carissa�Drohan-Jennings�and�seeing�how�she�playfully�mingled�Kermit�the�Frog’s�famous�“It’s�not�that�easy�being�green”�into�her�column,�I�realized�that�perhaps�Kermit�-�and�Carissa�-�had�a�point.

Indeed,� it� is�not� that�easy�being�green.�Any�company�can�claim�to�be�green�and�many�do�give�sustainability�lip�service�to�appear�that�they�have�the� environment� in� mind,� but� often� it� amounts� to� nothing� more� than�“greenwashing.”

Being�green�takes�time.�It�takes�a�plan.�It�takes�a�commitment�from�the�entire�organization.

This�issue�of�Canadian�Apartment�Magazine�takes�on�the�issue�of�being�green�and�addresses� the�various�ways� in�which�a�company�can�become�more�sustainable.

Finance�columnists�Peter�Cook�and�Robert�Fleet�encourage�the�use�of�an�energy�consultant�and�outline�the�incentive�programs�which�are�offered�by�the�CMHC�and�designed�to�aid�a�building�owner�when�embarking�on�the�green�path.�They�conclude�that� “by�greening�your�building�and�making� it�energy�efficient,�you�will�save�money�in�the�long�term.�In�a�competitive�market,�the�word�‘green’�may�also�be�the�deciding�factor�for�eco�savvy�tenants.”��

Many� multi-residential� firms� have� taken� great� steps� to� make� their� units�more�energy-efficient.�From�retrofitting�their�buildings�with�energy�efficient�windows,� lighting� and� plumbing� to� introducing� green� measures� such� as�recycling�programs,�these�companies�have�embraced�the�environment.

The� feature� article� profiles� Western� Canada’s� Mainstreet� Equity� Corp.�whose�colourful�founder�Bob�Dhillion�claims�was�“green�before�green�was�popular”�and�documents�the�meteoric�rise�of�the�company.���

Meanwhile,�the�aforementioned�Marketing�column�provides�the�dos�and�don’ts�of�a�green�marketing�plan�to�help�landlords�promote�their�eco-friendly�initiatives�to�skeptical� renters.�And�she�offers�up�a�warning�that�should�be�heeded�when�touting�your�program.

“It’s�often�tempting�for�a�company�to�adopt�the�‘green’�label�for�their�units,�but�there�should�be�some�form�of�restraint�taken�prior�to�making�such�a�claim,�for�it�is�important�to�ensure�that�the�claim�adheres�to�the�laws�set�forth�by�the�competition�bureau.”�

With�all�due�respect�to�Kermit,�it�may�not�be�easy�to�be�green,�but�it�is�possible.

Scott Anderson

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Page 5: CAM March  2012

The Right Product. The Right Price. The Right People. The Right Choice.Over 14,000 Products – In Stock, Everyday!

APPLIANCEBATHROOMBUILDINGCLEANINGECO-FRIENDLYELECTRICALFIRESAFETYFLOORHARDWAREHVACKITCHSINKSLIGHTBULBSLIGHTFIXTURESPAINTPLUMBINGSEASUPERSPECIALSWALLWHMISANDMOREAPPLIANCEBABUILDINGCLEANINGECO-FRIENDLYELECTRICALFIRESAFETYFLOORHARDWAREHVACKITCHENSINKSLIGHTBULBSLIGPAINTPLUMBINGSEASONALSUPERSPECIALSWALLWHMANDMOREAPPLIANCEBATHROOMBUILDINGCLEANINGEELECTRICALFIRESAFETYFLOORHARDWAREHVACKITCHSINKSLIGHTBULBSLIGHTFIXTURESPAINTPLUMBINGSEASUPERSPECIALSWALLWHMISANDMOREAPPLIANCEBABUILDINGCLEANINGECO-FRIENDLYELECTRICALFIRESAFLOORHARDWAREHVACKITCHENSINKSLIGHTBULBSLIGPAINTPLUMBINGSEASONALSUPERSPECIALSWALLWHMANDMOREAPPLIANCEBATHROOMBUILDINGCLEANINGELECTRICALFIRESAFETYFLOORHARDWAREHVACKITCHSINKSLIGHTBULBSLIGHTFIXTURESPAINTPLUMBINGSEA

The one source for it all.

www.hsbuild.com 1 800-207-8325 or 905 738-6003

PROUD MEMBER OF:

Eco-Friendly | Cleaning | Fire Safety | WHMIS | Paint | Building | Bathroom & Kitchen | Appliance | Wall & Floor

Plumbing | Light Fixtures | Light Bulbs | Electrical | HVAC | Hardware | Seasonal | and More

Choosing H&S as your maintenance materialsupplier means you are putting your confidencein a supplier willing to go the extra mile toprovide you with the best one-on-one service.A knowledgeable sales staff and over 35 yearsof industry experience – no one else offers thatcombination and it’s why people all acrossOntario choose H&S Building Supplies Ltd. astheir One Stop Maintenance Supply Superstore!

Congratulations to Vertica Residence Services and Thank You for Your Business.

COMMERCIAL | MULTI-UNIT | RESIDENTIAL | INDUSTRIAL | INSTITUTIONAL

Congratulations to Vertica Residence Services and Thank You for Your Business.

�������������������������������������������������������������

Untitled-3 1 11-09-01 11:43 AM

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CovEr Story

14 Taming�the�Wild,�West�WestMainstreet�Equity�Corp.�By:�Scott�Anderson

contentsColumNS

8� Finance�Financing�your�green�initiatives� By�Peter�Cook�and�Robert�Fleet

12� CMHC��Maximize�your�investment�with�CMHC-Multiple�insurance� By�Paula�Gasparro

22� Insurance�Costa�Concordia�–�What�a�mess!� By�Andy�Schwartze

25� �Maintenance�Are�electricity�suite�meters�worth�the�investment?�By�Christopher�Seepe

28� �Portfolio�strategy�Co-brokering�is�about�scaling�your�business�for�the�future

� By�Derek�Lobo

32� �Marketing�Green�marketing�–�It’s�not�that�easy�being�green� By�Carissa�Drohan-Jennings

DEpartmENtS

4� Editor’s�Note

36� �Newsline

37� �New�Products

38� �Smart�Ideas�

columnists

Petercook,RobertFleet,carissaDrohan-Jennings,PaulaGasparro,Dereklobo,Andyschwartze

Page 7: CAM March  2012

www.williamshvac.com

Through the wall heating and cooling and solutions!

Spot cooling solutions ideal for temperature sensitive technology and elevator rooms.

Gordon R. Williams Corporation provides quality products with a turnkey solution for condominiums and apartments• Quality Products• After Sales Technical Support• Service Contracts• Preventative Maintenance

GE Zoneline Packaged Terminal Air Conditioners• Energy Effi cient• Quite Operation• Reliable• Innovative Design

Built In Series• Many of the features of the Zoneline units• More Compact Design

Applied Comfort Products• Full Range of replacement Heating and Cooling units in various sizes

and capacities• Ideal for new construction or replacement of vintage units

ASK US HOW WE CAN HELP YOU!

Email: [email protected] Phone: 905-820-1400

11278_GordonWilliams_2012.indd 1 12-01-12 10:57 AM

Page 8: CAM March  2012

8 www.canadianapartmentmagazine.ca

Over� the� last�decade,� the� real-estate�market�has�been�adapting�to�a�progressively� “green”�global�attitude.�Some�of�the�biggest�players�in�the�industry�are�opting�for�energy�efficiency,�sustainability,�and�eco-friendly�alternatives.�Unfortunately,�many�apartment�owners�are�still�associating�these�words�with�complexity,�confusion�and�extra�costs.�They’re�not�sure�how�to�get�started,�what�retrofits�would�best�benefit�their�buildings�and�how�quickly�will�they�see�a�return�on�their�investment?�With�assistance�of�a�qualified�energy�consultant�and�the�recent�improvements�to�Canada�Mortgage�and�Housing�Corp.’s�(CMHC)�energy�efficiency�program,�going�“green”�might�actually�be�easier�than�it�seems.�So,�you�ask,�is�it�really�worth�the�effort�and�investment?�Absolutely!�

Program detailsCMHC�has�had�an�energy�efficiency�program�in�place�for�a�number�of�years.�Recently�CMHC�decided�to�expand�the�program�features�further.�The�premise�of�the�program�has�remained�the� same.� Landlords� will� receive� higher� loan� amounts� and� premium� rebates� subject� to�completing�energy�efficient�upgrades� relating�to�hydro,�water,�and�gas�consumption.�The�new�program�has�been� improved� increasing� the�maximum�amount�of�CMHC’s�premium�rebate�from�10�per�cent�to�15�per�cent.�The�new�program�also�allows�for�greater�flexibility�in�the�underwriting�providing�higher�property�valuations�and�loan�amounts.

Table 1 Program features Old program New programPremium�rebate� 10%�(maximum)� 1-15%�Required�reduction�amount� 10%�(minimum)� 1-15%Utilities� Hydro,�Gas� Hydro,�Gas,�WaterMax.�valuation�consideration� 10%�reduction�of� 15%�reduction�of�all�utilities� hydro�and�gasWhen�can�I�make� 12�months�prior�to�advance� 12�months�prior�to�advance�&��improvements?� &�12�months�after�advance� 12�months�after�advance

CMHC insurance premium savingsThe�previous�program�required�a�minimum�energy�savings�of�10�per�cent�to�obtain�a�10�per�cent�reduction�in�the�CMHC�premium.�The�revised�program�will�allow�borrowers�to�obtain�a�

Follow us on Twitter @Robert_Fleet and on LinkedIn. Peter Cook and Robert Fleet are committed to helping borrowers strategize the best loan structure possible. They are available for one-on-one consultation for any CAM reader requiring multi-residential financing. As “Apartment Financing Specialists” with First National Financial LP they have originated over $4 Billion of mortgages. Their combined 35 years experience in the financial industry has lead to frequent speaking engagements across the country. They freely share their knowledge and techniques with audiences, clients and prospective clients. If you have questions, Peter and Robert may be reached by phone or email.Peter Cook — (416) 593-2913 [email protected] Fleet — (905) 301-3449 [email protected]

Financing your greening initiatives

Finance

Page 9: CAM March  2012

Finance

premium�rebate�ranging�from�1�per�cent�to�15�per�cent�depending�on�the�energy�savings�projected�for�their�building.�CMHC�will�require�a�report�from�a�qualified�consultant�detailing�the�necessary�energy�efficient� improvements� as� well� as� the� estimated�percentage�of�savings�once�the�retrofits�have�been�implemented.�If�the�improvements�are�completed�12�months�prior�to�the�loan�advance�the�borrower�will�receive�the�premium�reduction�at�the�time�of�funding.�If�the�improvements�are�completed�within�12�months�after�the�funding�date,�the�premium�will�be� rebated�once�CMHC�receives�a� second� report�from�the�consultant�confirming�the�recommended�retrofits�have�been�completed.

Maximize loan amount: Improved underwriting flexibility on CMHC insured loansFurther�incentive�to�go�green�is�CMHC’s�recognition�of�up�to�15�per�cent�in�future�utility�savings�during�the� valuation� process.� CMHC� will� reduce� the�historical� utility� expenses� by� the� percentage� of�overall�savings�confirmed�in�the�energy�consultant’s�report.�With�the�report,�CMHC�will�accept�a�higher�value�and�approve�a�larger�loan�amount�up�to�85�per� cent� of� the� new� lending� value.� If� the� retrofit�work� is� completed� post� funding,� the� additional�loan� amount� recognized� by� the� reduction� in�utility�savings�will�be�held�back�from�the�initial�loan�advance.� The� funds� will� be� released� upon� CMHC�receiving� the� post� report� from� the� consultant�confirming�the�retrofit�items�have�been�completed.��

How does the program work?To� estimate� the� increased� lending� value� and�determine� the� amount� of� the� premium� rebate,�lenders�must�provide�the�consultant’s�energy�report�at� the� time� of� submitting� the� loan� application� to�CMHC.��The�process�involves�a�three-�to�four-hour�site�visit�and�the�consultant’s�review�of�12�months�to� 24� months� of� utility� bills.� With� this� information�the� consultant� can� determine� the� expected�utility� savings� for� the� project.� The� report� takes�approximately�two�weeks�to�complete.

The�cost�of� the�audit� report�will� vary�amongst�consulting� firms.� The� estimated� costs� should� fall�into�the�ranges�identified�in�Table�2�below.

Table 2: Estimated audit report costUnits� Cost�(approx.)0-25�units� $1,100-$1,80025-50�units� $1,500�–�$2,50050-75�units� $2,000�–�$3,000100+�units� $2,500�+

march 2012 9

By�greening�your�building�and�making�it�energy�efficient,�you�will�save�money�in�the�long�term.�In�a�competitive�market,�the�word�green�may�also�be�the�deciding�factor�for�eco-savvy�tenants”�“

Are you contemplating the sale of your apartment property?

Vancouver Calgary Edmonton Winnipeg London Kitchener Toronto Ottawa Montreal Saint John Halifax

Consider the following: • Whowillrepresentyourbestinterests? • Whowillgiveyourpropertymaximumexposure? • Whowilldeliverthehighestvalueforyourproperty?

With over 20 years experience, tens of thousands of units sold, and hundreds of clients represented, we have consistently delivered superior results. Through our local and national coverage, we create maximum exposure, ensuring maximum value for your property.

Pleasevisitourwebsiteatwww.cbre.ca/nag-torontoorcontactusat416.815.2332tolearnmoreabouthowwecanhelpyou.

www.cbre.ca/nag-toronto

CBRELimited-NationalApartmentGroup: : David Montressor*, Executive Vice President

416.815.2332 [email protected]

* Sales Representative CBRE Limited Brokerage

SOLD226Suites-Oakville$182,655 per suite

SOLD849Suites-Toronto$129,564 per suite

SOLD76Suites-Toronto$139,474 per suite

AD Redesign Half Page Island 2011 Jan 012.indd 1 1/6/2012 4:35:37 PM

Page 10: CAM March  2012

10 www.canadianapartmentmagazine.ca

According� to� energy� consultant� Steve� Herzog�of� Greener� Solutions� Inc.,� (www.greensolutions.ca)�by� completing� the� recommended� improvements�owners� can� realize� a� decrease� in� utility� costs�anywhere� from� 10� per� cent� to� 30� per� cent.� Some�older� buildings� can� realize� a� savings� as� high� as� 50�per� cent.� Herzog� explains,� “Owners� will� receive� a�detailed�report�providing�an�understanding�of�how�electricity,�natural�gas,�and�water�are�currently�being�used�in�their�buildings.�The�report�may�also�identify�waste�management�savings,�as�well�as�insights�into�future�maintenance�suggestions.�Energy�reports�are�extremely� important� for� running� your� building� at�optimal� efficiency� levels.”� Greener� Solutions� is� also�aware�of�a�variety�of�provincial�and�municipal�rebate�programs�and�will�take�care�of�the�application�process�for�their�clients.�����

Here�is�a�list�of�some�possible�improvements�and�their� estimated� return� on� investment.� See� Table� 3�below.

Table 3Estimated return on investmentWindows� 3-8�yearsVariable�speed�fans� 1-2�yearsToilets/shower�heads� 1-2�yearsReplace�lighting�� 1-2�yearsReplace�boilers�� 3-7�yearsThermostatic�controls� 2�yearsDefective�taps� 1-4�yearsSeal�cracks�in�exterior�walls� 6-10�years

So, is it all worth it?Absolutely!� Greening� your� building� is� truly� a� win-win�investment.�With�the�professional�guidance�of�an�energy�consultant,�owners�not�only�reduce�their�energy�consumption,�they�will�receive�higher�loan�proceeds�and�a�CMHC�premium�rebate�to�offset�a�portion�of�their�implementation�costs.�By�greening�your� building� and� making� it� energy� efficient,� you�will�save�money�in�the�long�term.�In�a�competitive�market,�the�word�green�may�also�be�the�deciding�factor�for�eco-savvy�tenants.��

With�CMHC� interest� rates�at�all-time� lows�more�and�more�clients�are�taking�advantage�of�the�CMHC�energy� audit� program� to� finance� their� greening�initiatives.��

Finance

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Page 11: CAM March  2012

Smarter Solutions for Places that Matter

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YARDI Energy Solutions™

Increase your NOI by creating new revenue opportunity and reducing utility costs.

Yardi Energy Solutions™ is a service provided by YES Energy Management, Inc.To learn more, call 1-888-569-2734 or go to www.yardi.com/cam21

Page 12: CAM March  2012

12 www.canadianapartmentmagazine.ca

CMHC Mortgage Loan Insurance for multi-unit properties (five-plus units):If� you’re� looking� to� maximize� your� return� on� an� investment� property,� Canada� Mortgage� and�Housing�Corp.�can�help�you�achieve�that�goal.

CMHC�is�Canada’s�provider�of�mortgage� loan� insurance�for� the�construction,�purchase�and�refinancing�of�multi-unit�residential�properties,� including�rental�buildings,� licensed�care�facilities�and�retirement�homes.�It�provides�borrowers�with�greater�choice�and�financing�options.

Borrowers� can� obtain� mortgage� funding� from� CMHC� at� lower� interest� rates� than� might�otherwise�be�required�for�conventional�mortgage�financing,�and�receive�increased�lending�of�up�to�85�per�cent�of�the�multi-unit�property’s�value.�

CMHC’s� Mortgage� Loan� Insurance� for� multi-unit� buildings� allows� investors� to� purchase� a�property�with�a�lower�down�payment�–�as�little�as�15�per�cent�for�buildings�with�five�or�more�units.

By�offering�the�lower�rate�and�providing�a�lower�down�payment,�a�CMHC-insured�mortgage�loan�allows�borrowers�to�maximize�their�return�on�investment�sooner.

The�CMHC�Mortgage�Loan�Insurance�for�multi-unit�buildings�is�broken�down�into�the�following�areas.�Following�are�a�few�basic�provisions,�guidelines�and�requirements:

Rental, licensed care and retirement facilities:CMHC�mortgage�loan�insurance�is�available�to�approved�lenders�for�loans�to�construct,�purchase�or�refinance,�with�or�without�improvements,�rental,�licensed�care�and�retirement�facilities�in�Canada.�First�and�second�mortgages�are�available.

The�loan�relating�to�residential�property�may�not�exceed�85�per�cent�of�the�lending�value,�as�determined�by�CMHC.�The�loan�relating�to�any�non-residential�components�of�the�building�may�not�exceed�75�per�cent�of� the� lending�value�attributed� to� the�non-residential�component,�as�determined�by�CMHC.

CMHC-insured condominium construction mortgages:First�mortgages�are�available�for�the�construction�of�new�condominium�buildings�in�Canada.�The�maximum�insurable�mortgage�loan�amount�is�the�lesser�of�75�per�cent�of�estimated�market�value�or�85�per�cent�of�the�estimated�total�cost�to�complete.

Requirements�for�any�of�these�loans�are�discretionary�and,�on�a�case-by-case�basis,�CMHC�may�need�additional�documentation�or�may�impose�more�restrictive�underwriting�norms�than�those�listed�in�CMHC�materials�or�the�website.

Flexible�repayment�terms�are�available,�including�extended�amortizations,�and�fixed�or�floating�interest�rates.�There�is�also�an�option�for�rolling�application�fees�and�insurance�premiums�into�the�mortgage�loan.

Paula Gasparro is the Manager, Business Development, Multi-Unit Mortgage Insurance at CMHC. Reach her at 416-250-2731, via e-mail at [email protected] or visit www. cmhc.ca/mult-unit. CMHC provides a wealth of research material and energy-saving tips at www.cmhc.ca > Business /Government Housing Organizations > Building & Design > Highrises and Multiples. You can also call CMHC at 1-800-668-2642.

Maximize your investment with CMHC - Multiple insurance

Go�online�for�more�finance�articles

www.canadianapartmentmagazine.ca

CmHC

Page 13: CAM March  2012

The� fees� and� premiums� pay� for� themselves� –�generally� they�are� substantially�offset�by� the� savings�from�lower�interest�rates.

There�are�even�enhanced�underwriting�flexibilities�available�in�support�of�affordable�housing�and�energy-efficiency�initiatives.

Affordable housing: Among� the� general� conditions� are� enhanced�underwriting� flexibilities� for� new� additions� to�affordable� rental� housing� stock,� including� new�construction,� conversion� from� non-residential� to�residential� and� replacement� of� affordable� units� as� a�result�of�demolition.

Also,� units� must� be� modest� in� size,� design� and�amenities�in�relation�to�other�rental�units�in�the�market.�The�project�must�have�a�minimum�of�five�units.

Energy-efficiency:When� energy� efficiency� improvements� are� being�undertaken,� CMHC� multi-unit� insured� financing� for�new�construction,�refinance�or�purchase�is�available.�

To�qualify�for�the�CMHC�energy-efficient�premium�reduction/refund,�borrowers�are�to�submit�the�required�documentation� to� the� approved� lender� within� one�year�after�the�loan�has�been�finalized.

When�retrofit�improvements�have�been�completed�within�a�12-month�period�prior�to�the�current�mortgage�loan�advance,�the�borrower�will�have�the�opportunity�to� demonstrate� a� reduction� in� energy� consumption�and�qualify�for�the�CMHC�energy-efficient�reduction/refund.

Borrowers� are� to� provide� evidence� that� the�improvements� have� been� made� within� the� last�year� through� capital� investment� reports.� CMHC� will�continue�to�include�the�anticipated�lower�energy�costs�when�calculating�net�operating�income�to�determine�property�lending�value.

To� take� advantage� of� CMHC’s� Mortgage� Loan�Insurance,�contact�Paula�Gasparro,�Manager,�Business�Development,�Multi-Unit�Mortgage�Insurance�at�416-250-2731�or�via�e-mail�at�[email protected].�

For more information, log on to www. cmhc.ca/mult-unit.

march 2012 13

CmHC

By�offering�the�lower�rate�and�providing�a�lower�down�payment,�a�CMHC-insured�mortgage�loan�allows�borrowers�to�maximize�their�return�on�investment�sooner”“

Contac t :Tasha Mor ton

Manager, Legal & Col lec t ionsSuite Col lec t ions Canada I nc.

284 R ichmond St . , E , Suite 300Toronto, Ontar io M5A 1P4

t .416.642.0291 x364f.416.340.0855

w w w.suitecol lec t ions.com

Suite Col lec t ions Canada I nc.i s the only Col lec t ions Agenc y in

Ontar io that specia l izes inResident ia l Bad Debt Col lec t ions.

Our pr imar y focus is to recover unpaidrent for landlords, f rom both

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O n e G o a l … . O n e F o c u s … . G r e a t R e s u l t s

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There’s another Dhillon in town and he’s also making a mark on the Wild, Wild West.

Just like Marshall Matt Dillon from the fictional series “Gunsmoke”, Mainstreet EquityCorp.’s founder and largest shareholder Bob Dhillon is also striving to make a name for himself in the West – that being the real estate market of Western Canada.

Taming The Wild, Wild WesT one building aT a Time

Cover Story

march 2012 15

By Scott Anderson

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Cover Story

“I�will�go�wherever�the�money�is.�I�will�go�to�Timbuktu�if�I�have�to�to�make�a�buck,�but�commonsense�is�if�you�are�an�amateur�economist�like�me�is�that�the�West�has�a�lot�of�things�to�offer,”�he�said.

What�Calgary-based�Dhillon�saw�in�Western�Canada�–�where�his�family�moved�from�Asia�some�30�years�ago�–�was�a�booming�economy,�in-migration,�burgeoning�job�growth,�a�favourable�landlord�tenancy�act,�and�lowest�unit�count�per�capita�based�on�CMHC�data.

Encouraged�by�the�so-called�“petro�dollars”�and�the�benefits�of�resource-based�jobs�in�Saskatchewan�and�Alberta,�Dhillon�sees�endless�potential�in�Western�Canada�unlike�the�limited�opportunities�of�central�Canada�where�influential�families�and�institutional�money�control�the�market.

“Western�Canada�is�the�Wild�West.�It�is�a�closed�shop.�In�Toronto�there�are�a�lot�of�rich�families;�third�generation�and�fourth�generation.�How�is�a�punk�like�me�going�to�break�into�that�market?�Instead,�I�have�created�my�own�niche�and�my�own�opportunities.”

This�niche�is�mid-market�apartment�buildings�with�less�than�100�units�in�areas�of�Western�Canada�where�the�economy�is�booming,�jobs�are�plentiful�and�90�per�cent�of�the�apartment�universe�is�mid-market.

“We�are�betting�on�commodities,�we�are�betting�on�in-migration,�we�are�betting�on�growth,”�he�said.�“You�don’t�have�to�be�the�sharpest�pencil�in�the�box�to�make�money�in�apartments.”

These�bets�have�helped�Dhillon�and�Mainstreet,�which�he�founded�in�1998�and�took�public�on�the�Toronto�Stock�Exchange�eleven�years�ago,�to�become�the�No.�10�top�gaining�stock�on�the�TSX�in�2011.

This�is�an�impressive�feat�indeed�considering�resource�stocks�were�the�only�game�for�many�years�on�Canada’s�dominant�stock�index.

“The�‘Blue�Sky�stocks’�consisting�of�the�mineral�companies�and�oil�companies�are�shooting�out�of�the�park�and�then�you�have�this�crazy�real�estate�company�in�Western�Canada�that�is�competing�with�these�oil�and�mining�companies�with�Blue�Sky�returns�from�all�over,”�Dhillon�said�of�his�company’s�meteoric�run�up�the�equity�charts.

A�look�at�the�financials�from�2011�tells�the�tale�of�the�incredible�growth�for�Mainstreet.�Funds�from�operations�(FFO)�before�financing�were�up�47�per�cent�from�2010.�FFO�including�financing�costs�was�up�44�per�cent�from�2010.

Westview Terrace - Calgary, Alberta Boutique apartments, Montrose Manor – Saskatoon, Saskatchewan

I�will�go�wherever�the�money�is.�I�will�go�to�Timbuktu�if�I�have�to�to�make�a�buck,�but�commonsense�is�if�you�are�an�amateur�economist�like�me�is�that�the�West�has�a�lot�of�things�to�offer”�

-�Bob�Dhillon,�founder�Mainstreet�Equity“16 www.canadianapartmentmagazine.ca

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march 2012 17

Cover Story

Net�operating�income�(NOI)�climbed�23�per�cent�from�2010�to�$41�million,�while�same�asset�NOI�increased�by�11�per�cent.�

Mainstreet’s�assets�also�grew�in�2011�adding�almost�950�residential�apartment�units�–�representing�a�growth�in�portfolio�of�15�per�cent�-�in�its�core�geographic�locations.� Mainstreet’s� total� portfolio� now� includes� almost� 7,800� residential�apartment�units�valued�at�more�than$950�million.�

The�growth�in�2011�–�some�$120�million�of�acquisitions�in�total�–�was�achieved�with�no�equity�dilution.�Instead,�it�funded�this�organic�growth�through�cash�flow,�refinancing�matured�mortgages�and�financing�properties�after�stabilization.

“We�grew�this�company�all�through�internal�cash�flow.�Every�time�we�buy�a�building,�we�don’t�go�back�to�the�market�and�raise�$20�million�or�$50�million�to�buy�real�estate.�We�are�doing�it�all�through�internal�generated�cash�flow,”�Dhillon�said.

“We�built�the�company�from�zero�to�a�billion�dollars�with�limited�equity�dilution.�How�many�guys�have�done�that�ever�in�the�history�of�real�estate?�Zero�to�a�billion�without�going�to�the�market.�That�is�a�testament�to�a�business�model�working.”

“Regardless�of�the�market�conditions�we�keep�going�to�the�market�and�buying�buildings�through�internally�generated�cash�flow.”

Humble beginningsFrom�zero�to�an�almost�billion-dollar�company�is�impressive,�but�even�more�so�when�you�trace�the�path�that�its�founder�who�was�born�in�Japan�with�Sikh�roots�took�to�get�to�where�he�is�today.

“Real�estate�was�part�of�my�DNA�because�I�came�from�a�real�estate�background�although� I’m� an� immigrant� to� Canada.� My� religion� was� capitalism� and� as� an�immigrant�that�was�part�of�my�DNA�to�be�successful�here�at�any�cost,”�he�said.

Real�estate� is� the�only�game�Dhillon�has�known�over� the�years� -�he�started�flipping�houses�when�he�was�about�19�years�old�and�has�never�looked�back.

“I�fixed�up�two�houses,�sold�them�for�a�profit�and�that�was�the�beginning�of�my�career�in�residential�estate,”�he�said�“Right�through�MBA�school�I�paid�by�flipping�real�estate,�adding�value�to�real�estate,�buying�real�estate,�holding�real�estate,�cash�flow�in�real�estate�paid�for�my�schooling�and�right�through�my�MBA.”

During�the�process�when�he�was�flipping�real�estate,�he�accumulated�272�units.�“It�was�like�inventory�for�a�merchant.”

And�with�a�bit�of� swagger� he� jumped�wide-eyed� and� fearless� into� the�deep�end�of�the�real�estate�shark�tank�early�in�the�new�millennium.

“For�all�the�wrong�reasons�I�took�those�272�units�and�went�public�with�it.�

Vintage Squared - Calgary, Alberta (renovation materials direct from manufacturer in China)

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Cover Story

The�day�I�got�listed�on�the�Junior�Capital�Pool,�the�day�I�got�listed�is�the�day�the�real�estate�index�crashed.�The�day!�Literally�the�day!”

But�the�hard�and�cruel�lesson�of�the�business�world�did�not�end�there.Fast�forward�a�few�months�and�the�tech�bubble�blew�up�on�Nasdaq�bringing�in�

the� recession.� This� also� ushered� in� a� new� phenomenon,� in� the� form� of� Real� Estate�Investment�Trusts�(REITS),�largely�a�“unique�phenomenon”�in�Canada.

“These� financial� engineers� came� to� the� scene� with� a� different� matrix,� a� different�formula,�endless�capital,�so�they�weren’t�negotiating�as�hard�as�I�would�or�some�of�the�old�time�real�estate�guys�would.�It�was�more�of�a�game�of�consolidation.�It�was�more�of�a�game�accretive�to�their�financial�model�and�not�as�accretive�to�the�market�place.�It�was�more�accretive�to�their�cost�of�capital.�They�were�buyers�from�Mars.�It�was�a�totally,�totally�different�time,�which�we�never�anticipated.”

“I�was�up�against�the�REITS�on�acquiring�assets�who�had�a�lower�cost�of�capital.�So�everything�possible�that�could�have�gone�wrong�went�wrong.�The�real�estate�index�crash.�The�tech�bubble�blew�up�and�the�REITS�came�on�the�scene�that�were�from�a�different�planet.�They�were�gobbling�up�everything�on�a�different�matrix�than�I�was�used�to.”

But�instead�of�folding�up�his�tent�and�going�home,�Dhillon�dug�in�his�heels�and�decided�to�carve�out�a�niche�for�himself�in�an�area�that�would�be�unaffected�by�the�REITs.

“We�rolled�up�our�sleeves.�I�knew�we�couldn’t�raise�any�capital�in�the�marketplace�because�capital�markets�were�tough�and�I�wasn’t�a�REIT�and�I�was�the�only�non-dividend�paying,�non-REIT�on�the�multi-family�real�estate�index.�I�still�am.”

Instead,�he�saw�a�niche�in�Western�Canada�in�mid-market,��add-value�opportunities�and�developed�the�Mainstreet�Value�Chain.

Mainstreet� scours� the� market� for� smaller� buildings� with� less� than� 100� units� that�generally�need�work.�These�units�are� typically�avoided�by�both�the� institutions�and�REITS�who�do�not�have��the�time,�the�patience,�or�systems�in�place�for�the�mid-market.�

It�acquires�the�underperforming�assets,�renovates�them�to�a�higher�standard�and�retrofits�them�with�energy-efficient�features�to�further�lock-in�savings.�It�then�repositions�them�in�the�market�at�a�higher�rent.

Mainstreet’s� platforms� are� British� Columbia’s� lower� mainland,� Edmonton,� Calgary,�and�Saskatoon.�In�these�geographic�areas�some�80�per�cent�of�the�landscape�is�mid-market,�which�kept�the�REITS�away.

“I�created�this�unique�niche�for�myself�that�I�couldn’t�compete�with�the�low-cost�of�capital�of�the�REITs�which�stayed�away�from�the�geographic�platform�of�Western�Canada,�and�generally�they�didn’t�want�to�buy�buildings�that�needed�a�lot�of�work,”�he�said.

Although�each�of�these�areas�have�slightly�different�appeals�for�Dhillon�and�Mainstreet,�he�said�all�boast�common�and�attractive�similarities.�These�include�a�landlord�tenancy�act�that�enables�landlords�to�dictate�the�rental�price�depending�on�the�market,�strong�in-migration�numbers�as�job�seekers�flock�to�the�West�in�search�of�jobs,�and�low�Canada�Mortgage�and�Housing�Corporation�rates.

The�company’s�success�can�be�attributed�to�its�“Six�pillars”�which�it�has�built�over�the�years�and�has�allowed�it�to�fly�under�the�radar�of�the�institutions�and�is�unseen�or�unattainable�by�competing�‘mom�and�pop’�operations.•� Acquire�underperforming�assets�at�attractive�prices•� Limited�to�no�competition�from�REITs�and�pension�funds�in�the�mid-market�sector•� Internalized�construction�capabilities�•� Renovation�supplies�direct�from�manufacturers�in�China•� Internalized�operations�platform�•� Internalized�marketing�and�effective�branding

“We�have�developed�six�pillars�within�Mainstreet�that�are�not�easy�to�replicate�unless�you�have�lots�of�resources,”�he�said.”

The cluster effectKey�to�Mainstreet’s�success� in�each�of�the�geographic�areas�is� its�concentration.�The�company�looks�to�maximize�efficiencies�and�achieve�economies�of�scale�through�the�clustering�of�assets.

The�beautiful�thing�about�social�media�is�it�is�in�its�infancy�for�business.�It�is�a�wide�open�field�and�there�is�no�real�endgame.�You�have�never�arrived…”�-�Michael�Birklein,�Mainstreet’s�director�

of�marketing�and�communications

Strategic investing (Cluster: 63 properties / 1,614 units) – Edmonton Central and NAIT

18 www.canadianapartmentmagazine.ca

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By� clustering� its� properties� within� a� five-block� radius,� the� company� has� been� able� to�reduce�human�resource�costs�by�retaining�fewer�superintendents,� reduce� property� maintenance�costs,� increase� margins� consistently� and� reduce�advertising�expenses.

And� by� concentrating� on� certain� areas,� the�company� believes� that� the� entire� area� benefits�from�the�attention.

“We�don’t�only�transform�the�building,�we�are�transforming� the� neighbourhood,”� Dhillon� said.�(watch�video�at�www.mainst.biz)

One� needs� to� look� no� further� than�Edmonton�to�see�proof�of� the�success�of� this�“strategic�investing.”

Mindful�that�the�city�was�mulling�development�of� the� inner� core� including� a� new� sports� arena,�significant�expansion�of�Grant�McEwan�University,�a�proposed� light� rail� transit� line,�and�a�new�plan�for� the� city� centre� airport,� the� company� began�gobbling�up�apartment�buildings� in� the�area.� In�the� process� it� accumulated� 63� properties� with�some�1,600�units�in�the�area.�(Please�refer�to�map�on�page�18)

“We�looked�at�all�of�the�plans�and�all�of�the�factors�and�said�if�half�the�things�didn’t�go�ahead,�we�would�be� ahead.� But� you� know� what� all� of� them� went�ahead.�You�can�call�it�luck,�or�you�can�call�it�strategy,”�Dhillon�said.

Cover Story

Key� to� the� company’s� success� is� also� its� effort� to� internalize� many� of� its� services� and� costs.� From�renovations�to�marketing�and�branding,�the�company�has�brought�in�house�the�work�in�a�bid�to�shave�costs.

“We�are�continually�developing�pillars�within�our�organization�that�are�going�to�be�very�hard�for�a�startup�company�to�replicate,”�Dhillon�said.�

“Everything� we� developed� and� internalized.� We� internalized� our� operations.� We�internalized�our�construction,�our�advertising,�our�communications,�nothing�is�outsourced.�We�can�proudly�say�that�we�have�one�of�the�best�margins�in�the�marketplace�because�of�that.”

Dhillon� also� notes� that� mid-market� properties� don’t� have� the�structural� operating� fixed� costs� to� contend� with,� such� as:� building�amenities,�elevators,�and�underground�parking.

A� unique� scheme� sees� the� company� sourcing� a� portion� of� its� building�supplies� direct� from� manufacturers� in� China.� By� purchasing� materials� such�as� cabinets,� wood� laminate� flooring� and� lighting� it� has� cut� its� capital�expenditures�tremendously.�This�has�resulted�in�a�60�per�cent�reduction�in�the�cost�of�cabinets�and�a�200�per�cent�decrease�in�flooring�tiles.

Building the brandClustering�also�allows�the�company�to�develop�its�brand�by�maintaining�a�heightened�presence�in�the�communities.

“We�are�really�pushing�and�we�have�got�a�long�ways�to�go�yet,�but�we�are�trying�to�create�a�brand�for�mid-market�space,�because�this�brand�is�totally�obsolete.�Nobody�has�a�brand�yet�developed�for�the�mid-market�space,”�Dhillon�said.

Social�media�and� the�associated� technologies�will�play�a�huge�part� in�branding� for�Mainstreet.�Through� the� use� of� vehicles� such� as� Twitter,� YouTube� and� various� smartphone� applications,� the�company�is�looking�to�take�advantage�of�society’s�reliance�on�all�things�electronic.

“The�beautiful�thing�about�social�media�is�it�is�in�its�infancy�for�business.�It�is�a�wide�open�field�and�there� is�no�real�endgame.�You�have�never�arrived.�You�can�get� in�there�and�do� interesting�things,�

Phone: 905-693-8666 or 1-866-557-5599

Email: [email protected]

www.phelpslaundry.ca

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PHELPS would like to congratulate Mainstreet Equity Corp. for close to 15 years of outstanding contributions to property management. We are proud to be one of their valued

suppliers and wish them success in all their future endeavours.

Untitled-5 1 12-03-12 2:34 PM

march 2012 19

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Cover Story

but� there�are�always�ways� that� it� is�going� to�change� -�how�you�are�using�and�who�you�are�contacting.� It� is�a� really�exciting�area,”�said�Michael�Birklein,� the�company’s�director�of�marketing�and�communications.

A�recent�push�to�move�its�advertising�online�saw�the�company�slash�its�advertising�budget�by�75�percent,�resulting�in�an�increase�in�inquiries�and�coinciding�with�a�drop�in�vacancy�rates.

By�using�the�popular� Internet�site�YouTube�the�company�has�expanded�tremendously�its�advertising�content.�Under�traditional�print�advertising�methods�it�was�limited�to�a�few�words�and�a�picture,�but�now�you�can�go�online�and�post�multiple�digital�assets�and�actually�engage�the�viewer.

“It�is�a�natural�fit�and�people�expect�it,”�said�Birklein.�“If�you�look�at�our�demographic�it�is�the�younger�set�anyway.”

He�notes�that�the�company’s�YouTube�postings�receive�on�average�180�viewings�per�day.�“To�me�that�is�180�showings�that�aren’t�on�the�book.�The�more�video�we�produce,�the�more�it�is�going�to�explode.”

The�company�is�also�eyeing�the�use�of�quick�response�(QR)�codes�on�its�buildings.�These�barcodes�give�potential�tenants�the�ability�to�scan�them�for�an�instant�link�to�video�and�other�information.

“It�is�giving�them�another�access�point,”�said�Birklein.�“They�can�drop�by�anytime�and�not�have�to�wait�for�somebody�to�show�them�a�suite.�They�can�actually�watch�a�video�of�it�right�there.”

The�company�is�also�eyeing�social�media�to�communicate�with�its�existing�tenants�with�the�use�of�tools�such�as�Twitter�and�Facebook�to�communicate.

“Twitter�is�a�really�good�source�of�tenant�retention.�It�is�a�touch�point�for�them.�They�will�use�Facebook�and�Twitter�if�they�have�an�issue,”�he�said.

“You�can�really�turn�a�situation�around.�When�things�are�going�well�people�don’t�generally�talk�to�you,�but�when�they�have�an�issue�they�will�talk�to�you.�If�you�are�responding�to�them�and�dealing�with�them�then�they�are�happy.�You�can�turn�a�situation�around�pretty�quick.”

A perfect stormDhillon�sees�a�perfect�storm�brewing�for�the�company�in�2012�as�the�ongoing�economic�strength�in�its�core�Western�Canadian�markets�and�favourable�macro-economic�conditions�like�low�interest�rates�-�expected�to�remain�at�60-year�lows�-�and�a�new�accounting�standard�benefit�real�estate�companies�like�Mainstreet.

Mainstreet,�like�other�real�estate�companies,�is�preparing�for�the�adoption�of�International�Financial�Reporting�Standards�(IFRS)�for�the�2012�fiscal�year.�For�the�first�time�the�market�value�of�a�company’s�assets�will�be�reported�on�its�balance�sheet�and�will�more�accurately�reflect�the�shareholder�value.�

“We�are�value�creators�in�the�mid-market�apartment�business,�for�the�first�time�the�value�that� we� have� created� will� be� reflected� in� the� new� accounting� standards,� which� in� turn�validates�our�business�model,”�said�Dhillon.

The�best�strategic�move�was�the�share�buyback�as�reported�in�the�2009�annual�report�when�the�company�repurchased�some�4.1�million�shares�representing�28.5�per�cent�of�the�float�at�an�average�share�price�of�$6.35�–�the�stock�at�the�time�of�this�article�is�in�the�$23�range.

Forecasts�suggest� that�Western�Canada,�where�more� than�90�per�cent�of�Mainstreet’s�portfolio�is�situated,�will�also�continue�to�thrive.�Commodity�prices�show�promise�with�oil�prices�projected�to�average�$95.75�per�barrel�in�2013/14�and�billions�of�dollars�in�private�sector�investment�is�seen�flowing�into�Alberta’s�energy�sector.

Demographic� trends� also� tilt� in� Mainstreet’s� favour� with� in-migration� set� to� continue�to� flourish� in�Alberta�on�the�back�of�another�energy�sector�boom.�Migration�to�B.C.�and�Saskatchewan� is� also� not� expected� to� slow.� Landlord-friendly� tenancy� acts� will� allow�Mainstreet�to�raise�rents�as�market�conditions�allow.

All�these�factors�point�to�a�bright�future�for�Dhillon.“I�learned�early�in�the�game�that�you�have�to�continue�to�swing�every�day�and�occasionally�

you�will�hit�a�home�run.�You�are�going�to�hit�a�lot�of�singles�on�the�way�and�occasionally�you�are�going�to�strike�out,”�he�said.

“The�bases�are�loaded�right�now.�I�am�up�to�bat�and�I�think�the�pitcher�is�sending�me�the�perfect�ball�-�where�am�I�going�to�hit�it?.”

Real�estate�was�part�of�my�DNA…My�religion�was�capitalism�and�as�an�immigrant�that�was�part�of�my�DNA�to�be�successful�here�at�any�cost”�

-�Bob�Dhillon

20 www.canadianapartmentmagazine.ca

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Mortgage Financingfor:

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Peoples trust CAM.indd 1 10-09-20 9:29 AM

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22 www.canadianapartmentmagazine.ca

Who�could�not�have�witnessed�the�unfolding�of�one�of�the�most�bizarre�marine�accidents�in�recent�memory�in�the�media?�

If�it�were�not�such�a�tragic�occurrence�this�event�would�be�comical�and,�without�a�doubt,�fodder�for�every�sharp�witted�comedian�out�there.�For�the�management�of�one�of�the�largest�cruise�ships,�plying�the�blue�waters�of�planet�Earth,�to�have�even�risked�getting�so�close�to�a�land�form�is�unthinkable.�For�the�management�to�then�get�off�the�ship�and�pretend�to�be�handling�the�evacuation�from�the�comforts�of�a�bobbing�lifeboat�is�even�more�unbelievable.�

This�disaster�brings�to�mind�an�event�that� took�place�on�Nov.�23,�2007�and�which�ended� on� a� much� happier� note.� Doing� its� usual� adventure� cruise� to� the� Antarctic�Peninsula,�apparently�under�the�command�of�a�new�captain,�the�MS�Explorer,�a�small�Canadian� owned� and� Norwegian� flagged� cruise� ship,� hit� some� ice� and� went� down�near�the�South�Shetland�Islands.�The�entire�passenger�group�and�crew�(approximately�150�people)�found�their�way�to�the�lifeboats�and�were�rescued�roughly�five�hours�later.�

This�vessel�too�ultimately�wound�up�on�its�side�prior�to�sinking.�The�unfortunate�event�happened�on�the�same�voyage�that�one�of�my�sons�and�I�had�taken,�on�this�ship,�earlier�that�

Andy Schwartze, BSc., MBA, CIP, is an insurance broker specializing in property management and real estate. He is a former President of the Insurance Institute, has taught in the community college system and provides continuing education to other brokers. He can be reached at [email protected]. For any comments, you can go to www.takecover.ca and post them on their new blog.

Insurance

Costa Concordia – What a mess!

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year.�The�manner�in�which�the�ship�was�evacuated�was�lauded�by�experts.�The�Antarctic�waters,�even�in�mid-summer�(being�the�end�of�December)�rarely�rise�above�36�degrees�Fahrenheit.

It�is�very�hard�to�guess�what�will�be�the�final�financial�result�in�the�case�of�the�Costa�Concordia.�This�has�already�put�the�captain�in�danger�of�being�charged�with�a�capital�crime,�one�that�can�result�in�a�stint�as�a�featured�guest�in�one�of�Italy’s�penal�institutions.�That�can�then�trigger�an�avalanche�of�civil�actions�against�the�cruise�line;�clearly�the�estates�of�those�unfortunate�souls�that� died� having� significant� leverage� to� work� with.� Those� who� survived�have�already�been�offered�compensation�and,�as�is�always�to�be�expected,�some�will�take�it�and�others�will�opt�to�go�for�more.

Estimating�the�impact�on�the�insurance�world�is�tricky,�but�insurers�have�to�set�money�aside.�They�are�statutorily�obligated�to�do�so.�Most�of� the�world’s�cruise�ships,�and�their�operations,�are�insured�by�what�are�known�as�“P&I�Clubs”.�These�are�groups�of�pooled�insurers�(no�doubt�with�Lloyd’s�being�a�big�part)�that�have�been�primarily�set�up�in�Belgium�for�this�very�purpose.�Unlike�conventional�insurance�sources,�they�operate�more�as�low�profit�fraternities.�When�they�need�money,�their�“premiums”�are�adjusted;�much�as�the�real�estate�world�deals�with�its�issues�via�the�cash�call.

Early�indications�point�to�settlement�reserves�that�need�to�be�set�aside,�which�range�from�between�$500�million�to�a�not� insignificant�$1�billion.�Interesting�is�the�fact�that�most�cruise�lines�carry�large�deductibles.�Carnival,�the�apparent�owner�of�this�vessel,�allegedly�carries�deductibles�in�the�$25�million� area,� perhaps� as� much� as� $40� million.� At� the� end� of� January,� a�$460-million�class�action�suit�had�already�been�filed�in�a�Florida�court.�The�hit�that�Carnival’s�balance�sheet�will�take�is�far�from�clear;�but�there’s�more�to�the�story.

This�vessel�was�carrying�500,000�tons�of�heavy�fuel�in�its�tanks.�Sitting�on�rocks�that�are�right�by�the�harbour�mouth�of�Giglio�Island,�any�errors�in�retrieving�that�fuel�will�have�an�unimaginable�impact�on�the�local�waters�and�shorelines.�This�fuel�doesn’t�have�to�go�very�far.�Should�foul�weather�shift�the�wreck,�which�as�of�this�writing�could�still�slip�into�deeper�waters,�the�recovery�challenge�would�grow�exponentially.

On�the�financial�side�of�world�insurance�news,�it�looks�like�2011�will�have�turned� out� to� be� the� second� worst� year� on� record� for� economic� losses�resulting�from�natural�catastrophes.�The�year�2005�appears�to�have�been�the� worst.� Of� last� year’s� estimated� $350� billion� in� losses,� most� of� which�stemmed� from� the� Japan� earthquake,� the� insured� portion� amounts� to�

Insurance

march 2012 23

Estimating�the�impact�on�the�insurance�world�is�tricky,�but�insurers�have�to�set�money�aside.�They�are�statutorily�obligated�to�do�so”“

Untitled-1 1 12-01-24 9:59 AM

less�than�one-third.�Earthquake�insurance�is�still�not�universally�offered�and�thus�the�property�loss�portion�was�to�a�large�extent�uninsured.�One�can�only�imagine�the�premium�levels�in�areas�where�the�risk�is�real.�Not�yet�clear,�of�course,� is� the� inevitable� impact� that�will�be� felt�on�North�American� west� coasts� when� the� debris� finally� arrives.� Certainly� the�satellite�images�are�disturbing.�Mother�Nature�never�ceases�to�remind�us�who�is�really�in�charge.�

I�cannot�wrap�this�up�without�a�quick�comment�on�what�insurers�are�thinking�for�the�year�2012.�This�year�is�beginning�to�look�like�it�will�be�a�“swing”�year.�At�such�times,�we�typically�see�a�few�new�insurers�getting�into�unfamiliar�territory.�The�mild�winter�has�certainly�reduced�the�water�and�slip/fall�events�that�apartment�building�owners�are�all�too�familiar�with.�This�will�entice�a�few�novice�underwriters�to�enter�the�rental�realty�insurance�arena.�Experience�shows�us�these�entrants�tend�to�abandon�ship�as�soon�as�their�loss�ratios�go�bad.

After�all,�this�winter�will�be�followed�by�next�and�it�will,�no�doubt,�be�back�to�what�is�normal�for�this�time�of�year.�Insurance�rates�for�revenue�producing�buildings�have�basically�remained�at�stable�levels�for�30�years.�Claims�treatment,�on�the�other�hand,�can�be�all�over� the�map.�So,�be�careful�and�remember�that,�if�it�seems�too�good�to�be�true,�it�probably�is.��

On�the�financial�side�of�world�insurance�news,�it�looks�like�2011�will�have�turned�out�to�be�the�second�worst�year�on�record�for�economic�losses�resulting�from�natural�catastrophes”

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Suite�metering,�sometimes�called�sub-metering,�is�where�the�energy�consumption,�rated�in�kilowatt-hours�(KwHr),�of�each�tenant�is�monitored�by�a�separate�meter.�In�most�cases,�a�sub-metered�tenant�is�responsible�for�paying�their�own�utility�costs,�and�is�empowered�with�energy�use�feedback�so�that�they�can�manage�their�energy�consumption.

How�many�property�owners�have�driven�past�their�investment�property�in�the�mind-numbing�cold�days�of�February�and�seen�tenants�with�their�windows�and/or�a�balcony�door�wide�open�and�the�heat�in�their�apartment�cranked�up�to�the�max?

Energy�costs�continue�to�increase,�sometimes�exponentially,�and�especially�electricity.�Time-of-use�pricing�has�added�to�the�energy�consumption�costs�of�the�building.�The�13�per�cent�HST�levied�on�energy�services,�which�cannot�be�passed�on�to�the�tenant,�had�a�huge�impact�on�landlords,�often�causing�landlords�to�compromise�on�the�quality�of�service�that�was�previously�provided�to�the�tenants�as�well�as�to�the�general�maintenance�of�the�property.�The�coup�de�grace�was�delivered�in�2011�with�the�government’s�0.7�per�cent�maximum�rent�increase.�Landlords�have�been�reeling�from�the�devastating�impact�of�these�green�movement�and�economic/social�policies�and�reforms.

Before�the�scares�of�energy�shortages�in�the�early�1980s,�many�apartment�buildings�were�designed�with�a�single�meter,�generally�called�a�bulk�meter.�The�landlord�either�factored�the�utility�costs�into�the�rent,�or�prorated�the�single�bill�among�all�the�tenants.�

In�the�former�case,�landlords�wound�up�absorbing�rising�energy�costs�since�rent�controls�and�the�Residential�Tenancies�Act�(RTA)�in�Ontario�prevented,�and�still�prevents,�landlord/owners� from� passing� on� increased� utility� expenses� to� tenants,� except� in� an� extreme�situation.�In�the�latter�case,�a�single�retiree�could�be�paying�the�same�utility�as�a�five-member�family.�In�all�cases,�there�was�inequity.

However,�the�escalating�costs�of�utilities,�especially�electricity,�combined�with�the�rapid�growth� in� energy� conservation� awareness,� have� fueled� all� kinds� of� incentive� programs�and� cost-cutting� measures.� Unfortunately,� like� many� new� initiatives� from� government�

Christopher Seepe is a commercial realtor at The Behar Group Realty and maintains www.multiresidentialexpert.com, a website dedicated to providing expert advice and sharing his personal investment and ownership experiences to those investing, or looking to invest, in multi-unit residential properties in southern Ontario, Canada. You can contact him at [email protected]

Are electricity suite meters worth the investment?

maintenance

march 2012 25

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maintenance

authorities,� there� are� some� implementation� challenges� and� pains� that�have�arisen�between�government�agencies�like�the�Ontario�Energy�Board�and� conservation� authorities,� who� are� driven� by� certain� mandates� and�ideologies�that�do�not�always�take�into�consideration�the�practical�business�costs� of� implementing� such� programs,� versus� the� utility� companies� that�manage� the� end-user� relationships,� provide� the� actual� service� of� energy�delivering,�and�carry�the�mandate�of�finding�practical�business�approaches�to�implementing�a�government’s�mandates�and�policies.

Consider�an�average�11-plex�that� is�converted�from�one�bulk�meter�to�12�individual�meters�(11�suites�+�1�house�meter).�Instead�of�one�bill�to�the�landlord,�who�is�a�very�low-risk�client�that�always�pays�their�bill,�and�most�likely�on�time.�Individual�metering�now�requires�the�utility�company�to�install�12�new�meters�(but�not�the�infrastructure,�to�be�discussed�further�below),�create�12�separate�business�accounts,�check�credit�references,�sometimes�collect�and�be�accountable�for�deposits,�bill�each�person�separately�every�month�or�two,�collect�and�process�12�separate�payments,�provide�individual�support�and�maintenance� for�each�new�account,�and� take�on�a�notable�relative�increase�in�the�risk�of�payment�delays�and�defaults.

Until� utility� companies� are� legislated� to� take� on� this� extra�administrative� and� operational� burden,� there� is� little� incentive� for�them�to�incur�these�additional�costs�for�virtually�no�directly-correlated�profit.�Nevertheless,�in�Ontario,�these�issues�are�being�worked�out�and�progress�is�being�made.�It�took�me�about�six�months�to�have�the�issues�addressed� with� my� utility� provider,� but� once� the� challenges� were�resolved,�the�utility�company�was�ready�to�do�the�conversion�within�a�couple�of�days’�notice�and�a�small�application�form�that�was�completed�by�the�meter�installer/electrician.�Not�all�utility�companies�and�certainly�not�all�situations�would�have�the�same�types�of�challenges.�You�may�be�pleasantly�surprised�by�the�quick�response�and�painless�process�of�suite�meter�conversion.

Now,�having�provided�caveats�regarding�cooperation�of�the�utility�companies,�there�remains�the�issue�of�“converting”�tenants.�If�a�landlord�installs�a�suite�meter,�a�tenant�does�not�have�to�start�paying�their�own�utility�costs.�An�existing�tenant�must�be�empowered�by�the�landlord�to�make�an�informed�decision�about�how�they�are�charged�for�electricity.�The�process�is�arduous�-�no�surprise�there�-�and,�if�the�tenant�consents,�the�landlord�must�lower�the�rent�according�to�a�prescribed�formula.�

Currently,� my� tenants� do� not� enjoy� the� creature� comfort� of� an� air�conditioner�or�freezer.�I�tried�to�entice�them�to�add�these�amenities.�None�of�my�11�tenants�took�the�offer�and�frankly,�if�I�was�a�tenant,�I�probably�wouldn’t�either.� There’s� little� upside� for� the� tenant.� If� they’re� already� frugal� energy�users,�the�rent�decrease�is�hardly�compelling.

Also,�make�certain�you�notify�tenants�in�writing�of�the�conversion.�Prepare�them�for�a�full�day’s�power�outage.�Keep�refrigerator/freezer�doors�closed�and�don’t�buy�food�on�that�day.�Let�them�know�that�the�landlord�will�not�be�responsible�for�food�spoilage.

After�installation,�likely,�the�best�time�for�you�to�make�the�billing�conversion�is�when�an�existing�tenant�moves�out.�The�Residential�Tenancies�Act�(RTA)�is�structured�such�that�you�can�negotiate�any�new�terms�you�like�in�your�new�rental�agreement,�provided�it�does�not�“contract�out”�existing�legislation,�for�example,�no�pets�allowed.�

This� is�one�of�those�rare�conflict-of-interest�situations�where�you�hope�that� your� tenants� will� move� out� so� that� you� can� start� billing� electricity�separately�and�recover�some�of�the�lost�profit�from�the�financial�hammering�the�government�has�been�doling�out�to�landlords.

While� I� was� waiting� to� sort� out� the� municipal� issues� regarding� the�installation� of� suite� meters,� I� changed� my� monthly� (I� never� do� one-year)�

rental� agreement� to� indicate� that� the� unit� would� eventually� have� a�separate�utility�meter,�and�that�when�the� installation�took�place,� the�tenant�agrees�to�immediately�contact�the�utility�company�to�pay�their�own�utility�bill.�Between�the�time�I�made�that�contract�change�and�the�time� the�meters� first�became�operational,� I�had� three� tenants�move�out,� and� were� replaced� by� three� tenants� who� now� pay� their� own�electricity�bill.

So,� despite� the� potential� long� tenant-turnover� timeframe,� here’s�why�you�should�still�do�it.�From�a�return�on�investment�and�return�of�investment�perspective,�it�could�possibly�be�the�best�investment�you’ll�ever�make�in�your�property.

In�my�case,�when�I�purchased�the�building,�all�11�tenants�had�their�electricity�costs�included�in�their�rent.�

The electricity bill was about $14,000 per year. Once�I�had�the�go�ahead�from�the�utility�company,�I�obtained�six�quotes�for�installation.�Prices�ranged�from�$10,000�to�$28,000.�I�learned�from�several�independent�sources�that�I�should�be�looking�at�about�$1,000�to� $1,100� per� meter� installed.� This� cost� does� not� include� the� actual�meter;�only� the�wiring,�back�plates,�wall�mounts�and�other�assorted�infrastructure�requirements.�

The� utility� company� will� install� the� actual� meters.� Every� utility�company� has� a� different� cost� recovery� policy.� In� my� case,� my� utility�company�provided�all�the�meters�themselves�for�free�(which�it�should)�and� charged� me� a� one-time� $50� fee� for� each� installed� meter� above�the�first�four�(three�apartments�+�the�house�meter).�They�also�charge�a�one-time�fee�of�$30�for�each�tenant�that�is�transferred�from�your�bill�to�the�tenant’s�own�bill.�The�tenant�would�pay�this�service�fee.

The business case (roughly speaking):•� Total� invoice,� including� HST� =� $11,550� to� install� 11� suite� meters� plus� a�

house�meter�(about�$960/meter�installed)•� Average�annual�electricity�bill�=�$14,000•� Cost�reduction�strategic�objective:�convert�eight�of�11�units�(73�per�cent)�

within�three�years�to�having�tenants�pay�their�own�electricity�bills•� Cost�reduction�financial�objective:�=�$14,000�x�73�per�cent�=�$10,220•� Multi-residential�investment�properties�are�currently�selling�at�between�a�

five�per�cent�and�six�per�cent�capitalization�rate�•� $10,220�/�five�per�cent�(cap�rate)�=�$204,400�or�$10,220�/�six�per�cent�(cap�

rate)�=�$170,330

I�didn’t� factor� in/out�the�common�area�costs,� just�to�keep�the�premise�of�the�business�case�simple.�The�financial�result�is�substantial�any�way�you�slice�it.

Business case summaryThere’s�more�to�determining�the�total�return�on�the�value�of�the�investment�but,�in�the�simple�math�above,�adding�between�$170,000�and�$204,000�to�the�value�of�your�property�for�an�investment�of�$14,000�should�be�a�pretty�obvious�inducement�if�you�have�the�upfront�$14,000�to�do�it.

Energy managementI�now�also�have�a�very�useful�record�of�the�energy�consumption�of�every�unit.� I� created� a� meter� record� sheet� to� record� all� the� individual� kilowatt-hours,�and�created�a�spreadsheet�that�not�only�tracks�usage�on�a�per�unit�basis�but�also�automatically�colour-codes�every�unit�to�instantly�identify�the�heavy�users�relative�to�total�consumption�of�the�building.

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portfolio Strategy

Derek Lobo is the founder of DALA Group of Companies and Rock Advisors. Derek has been the Canadian rental apartment industry’s leading consultant for almost 30 years and is now one of the industry’s most active brokers. Derek recently brokered the sale of the ESAM portfolio to Minto Management in one of the largest multi-unit residential sales in Canadian history.

Co-brokering is about scaling your business for the future

Page 29: CAM March  2012

march 2012 29

A� lot� of� the� green� revolution� that’s� sweeping� our� industry� lately� has� been� about�efficiency.� How� do� we� heat� and� power� our� buildings� using� less� energy?� How� do�we�build�using�more�recycled�materials?�How�do�we�design�to�use�the�most�floor�space�in�the�smallest�footprint?�While�efficient�thinking�takes�a�lot�of�effort,�it�pays�off�directly�on�our�bottom�line.

Realtors�looking�to�grow�their�business�face�similar�concerns�about�growing�efficiently.�They�entered�this�business�because�they�wanted�to�sell�real�estate,�but�it�seems�that�if�they�want�to�sell�more�real�estate,�other�things�get�in�the�way.�There’s�the�paperwork.�There’s�the�need�to�be�up-to-date�on�the�governmental�regulations�and�legislation.�Very�quickly,�realtors�need�to�hire�support�staff�to�help,�but�that�also�is�a�drain�on�their�time,�having�to�market�for,�interview,�hire�and�train�new�people�to�work�for�them.

This� is�a�problem�for�many�brokers�seeking�to�grow.�When�our�companies�are�small,�they�don’t�scale�up�well.�If�only�there�was�a�way�that�one�could�purchase�the�services�and�personnel�one�needed�quickly�to�give�just�the�assistance�that�was�needed,�without�the�cost�and�trouble�of�hiring�one’s�own�support�staff.

Well,�such�an�option�does�exist.�It’s�called�co-brokerage.A�company�offering�co-brokerage�services�has�gone�through�that�growth�period,�has�

hired�support�staff�and�provided�the�training.�It�now�seeks�to�monetize�its�back�rooms�by�offering�its�research�and�analysis�skills�to�other�brokers�willing�to�work�with�them.�

By�partnering�with�a�co-broker,�an�up-and-coming�realtor�benefits�from�the�co-broker’s�experience�in�the�industry,�as�well�as�the�skills�and�infrastructure�in�its�back�room.�The�co-broker�shares�in�the�realtor’s�successes�as�the�realtor�focuses�on�selling�his� or� her� properties.� This� arrangement� allows� mid-market� realtors� to� compete�directly� with� much� larger� companies� for� bigger� deals,� building� their� reputations�within�the�wider�brokerage�community.�

Some�realtors�may�be�wary�of�taking�up�the�services�of�a�co-broker�and�sharing�their�deals�with�such�a�company.�That’s�understandable.�There’s�always�a�certain�amount�of�uncertainty�when�it�comes�to�sharing�such�business�arrangements,�but�the�rewards�are�tremendous.�If�you�have�an�active�co-brokerage�arrangement,�you’re�not�only�paying�for�backroom�services�but�you’re�likely�to�obtain�similar�deals�in�your�area�from�your�partner,�which�would�not�have�come�your�way�and�earned�you�commissions.�

Moreover,�the�realtor�can�limit�his�or�her�risk�in�this�arrangement�by�keeping�a�few�rules�in�mind�when�establishing�a�relationship�with�a�co-broker.�Remember�that�a�co-broker’s�role�is�to�support�the�realtor�in�selling�his�or�her�buildings.�They�are�obliged�to�stay�out�of�the�personal�client/broker�relationships�that�the�realtor�has�established�in�his�or�her�sales�process.�A�co-broker�will�not�contact�your�client�without�first�clearing�the�interaction�with�you.�The�contract�should�state�this�clearly.

portfolio Strategy

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30 www.canadianapartmentmagazine.ca

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Specialists in….

Co-brokerage�helps�realtors�enter�into�asset�classes�they�may�not�be�100�per�cent�familiar�with.�By�signing�with�a�co-broker,�a�realtor�takes�advantage�of�the�co-broker’s� skills� and� experience� in� the� industry,� and� this� is� an� excellent� way�to� broaden� one’s� portfolio.� A� good� co-broker� should� also� have� an� advanced�and�robust�database�of�active�buyers,�sellers�and�sales�information,�which�their�back-room�staff�updates�daily.�This� information�is�critical�to�help�realtors�make�informed�decisions�about�potential�deals.�

So,�be�sure�to�ask�what�the�co-broker�logs�in�its�database,�and�don’t�be�afraid�to�ask�for�a�tour�of�the�co-broker’s�facilities�before�you�commit�to�a�deal.�If�you�are�not�going�to�be�spending�the�money�for�an�equipment�room�of�your�own,�you�should�get�the�best�from�your�co-broker.

With� a� co-broker,� a� realtor� will� receive� assistance� with� the� preparation� of�comprehensive�sales�packages,�an�online�marketing�plan,�print�flyers,�and�more.�Direct�target�marketing�services�are�also�available,�getting�the�realtor’s�properties�in�front�of�qualified�buyers�through�e-mail�blasts,�fax-outs�and�telemarketing.

The�key�to�managing�a�successful�real�estate�brokerage�is�effective�delegation.�Without� back� room� support,� realtors� work� too� hard� growing� their� business.� A�co-broker�can�take�that�task�off�a�realtor’s�hands,�allowing�them�to�concentrate�on�the�joy�of�selling.

Co-brokering benefits:

By partnering with a co-broker, an up-and-coming realtor benefits from the co-broker’s experience in the industry

With an active co-brokerage arrangement, you’re not only paying for backroom services but you’re likely to obtain similar deals in your area from your partner

A co-broker’s role is to support the realtor in selling his or her buildings. They are obliged to stay out of the personal client/broker relationships

By signing with a co-broker, a realtor takes advantage of the co-broker’s skills and experience in the industry, and this is an excellent way to broaden one’s portfolio

A good co-broker should also have an advanced and robust database of active buyers, sellers and sales information, which their back-room staff updates daily

portfolio Strategy

TAKE A fresh LOOK AT WHAT’S

POSSIBLE

FlexibilityObtain mortgage � nancing on up to 85% of the multi-unit property’s value when you are buying, building or re� nancing.

Reduced Renewal RiskEnjoy mortgage renewal with no need to re-qualify. CMHC insures the entire amortization period of the loan and coverage is transferable between CMHC-approved lenders.

Lower Interest RatesBene� t from interest rate savings available throughout the entire life of CMHC-insured loans, including construction periods and renewals.

Learn how CMHC mortgage loan insurance gives you more choices for your multi-unit property investment. Call 1-877 Multi GO or visit www.cmhc.ca/multi-unit.

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TAKE A fresh LOOK AT WHAT’S

POSSIBLE

FlexibilityObtain mortgage � nancing on up to 85% of the multi-unit property’s value when you are buying, building or re� nancing.

Reduced Renewal RiskEnjoy mortgage renewal with no need to re-qualify. CMHC insures the entire amortization period of the loan and coverage is transferable between CMHC-approved lenders.

Lower Interest RatesBene� t from interest rate savings available throughout the entire life of CMHC-insured loans, including construction periods and renewals.

Learn how CMHC mortgage loan insurance gives you more choices for your multi-unit property investment. Call 1-877 Multi GO or visit www.cmhc.ca/multi-unit.

Untitled-1 1 11-09-29 10:55 AM

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32 www.canadianapartmentmagazine.ca

Carissa Drohan-Jennings is the Director of Marketing and Communications at Landlord Web Solutions (www.landlordwebsolutions.com). If you would like to learn more about any of the topics mentioned above, please email Carissa at [email protected] for more information.

Green marketing - It’s not that easy being green

marketing

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march 2012 33

marketing

Kermit� the� Frog� put� it� best� in� his� song�when� he� lamented� “It ’s� not� that� easy�being� green.”� Being� green� in� a� world� of�marketing,� where� advertisers� are� able�to� create� an� image� of� their� brand� and�create� messaging� with� virtual� freedom,�has� led� to� problems� for� anyone� claiming�to� be� green.� Consumers� are� becoming�increasingly� skeptical� of� green� or� eco-friendly� claims� made� by� companies,�and� legislation� has� still� not� caught� up� in�Canada.� One� thing� remains� certain:� it ’s�not�that�easy�being�green.

Landlords�are�faced�with�an�abundance�of� energy� saving� incentives� in� today’s�market.� � Whether� it’s� a� light� bulb� that�saves�electricity�or�a�smart�lighting�system�that� reduces� lighting� usage� during� low�demand,� there� is� no� shortage� of� ways� to�save�on�operational�expenditures.

So� once� these� efficiencies� are�introduced,� it’s� often� tempting� for� a�company� to� adopt� the� “green”� label� for�their�units,�but�there�should�be�some�form�of� restraint� taken� prior� to� making� such� a�claim,�for�it�is�important�to�ensure�that�the�claim�adheres�to�the� laws�set� forth�by�the�competition�bureau.��

“Environmental� claims:� A� guide� for�industry� and� advertisers”� is� produced�by� the� Canadian� Standards� Association�to� provide� advertisers� and� consumers�with� a� best� practice� guide� to� the�application� of� environmental� claims� in�the� Canadian� marketplace.� Landlords� can�find� the� full� document� at:� http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/02701.html#pdfreader.��

Within� this� document� landlords� will�find� guidelines� that� govern� the� usage� of�green� labeling� to� ensure� that� all� labels�and� declarations� are� accurate,� verifiable,�relevant,�and�not�misleading.

Once�it�is�determined�that�claiming�eco-friendliness�is�acceptable,�it�is�now�time�to�market� that� status� to� the� public.� Here� are�a�few�strategies�that�will�help�landlords�to�promote� their� eco-friendly� initiatives� to�skeptical�renters.�

Four green marketing strategies to overcome skepticism1. Enlist the support of third parties� Align�with�suppliers�or�third�party�organizations�that�can�lend�credence�to�the�claims.��

Perhaps�they�perform�independent�life-cycle�inventories,�certify�claims�or�award�eco-seals.�Any�way�that�the�product�can�be�certified�will�lend�credibility�to�the�environmental�messages.�When�choosing�eco-labels,�choose�wisely�based�on�how�relevant�the�label�is�to�the�brand’s�image.�

Mind, body and soul.

You’ve been thinking about leaving it all behind, for some time now. You worked hard to get to this stage in your life, yet the challenge of keeping pace with the demands of today’s business is getting to the point of overwhelming. There’s nothing wrong withleaving while you’re on top of your game. In reality, it may be thevery thing to bring your life back into focus. Whether a new business challenge, a more balanced lifestyle, or simply a leisurely ride along a sunny beach—you decide.

At MetCap Living, we’re always looking to add to our capital assets; so, if you feel you’re ready to exercise some options on your current property portfolio, give us a call—we’d like to talk to you. After all, change is good... but, change with a solid return on your investment is even better.

Enjoy it. You’ve earned it.

For more information, please contact Stacey Kurck, Director of Business Development, MetCap Living 416.894.2377 or [email protected]

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2. Avoid the logical approach� Purchasing� is� an� emotional� decision,� rarely� a� logical� one.�

Consumer�decisions�are�made�because�a�product�is�perceived�to�have�a�higher�value�to�them.�Consider�the�question,�“What’s�in�it�for�me?”

� It’s� better� to� sell� deep� emotional� benefits.� Just� think� about�marketing�for�beer;�they�promote�improving�sex�appeal�rather�than�how�great�the�beer�tastes.�When�selling�a�unit�try�to�focus�the�image�around�status�or�improving�family�life.

3. Promote responsible consumption� The� first� step� is� to� make� the� product� greener,� but� the� next�

is� to�continue� to�promote�eco-friendly�practices� throughout�the� product’s� life� cycle.� If� you� are� replacing� incandescent�bulbs� for� energy� efficient� ones� for� example,� make� sure�that� residents� can� dispose� of� them� in� an� efficient� manner.�Supporting� responsible� consumption� is� a� sure-fire� way� to�build�credibility�and�reduce�risk.�

4. Be transparent� A� skeptic� is� always� looking� for� any� hint� of� deviation� from� the�

claim.�Be�transparent�and�offer� links�to�the�supplier’s�website,�or�additional�information�about�the�eco-friendly�practices�that�have� been� implemented.� Educate� them� on� environmental�issues� and� the� specifics� of� their� company’s� processes� so� they�can� fuel� authentic� communications� about� your� company’s�green�initiatives.

A�recent�episode�of�the�popular�show�Marketplace�took�a�look�at�a�product� that�claimed� to�be�eco-friendly.�A�particular�brand�of� toilet� paper� had� a� label� claiming� it� came� from� sustainable�logging.�Once�Marketplace�dived�into�the�details�of�that�label,� it�was�quickly�discovered�that�the� logging�practices�were�far� from�sustainable.

These�types�of�shows�only�help�to�fuel�consumer’s�skepticism�when� it� comes� to� green� marketing,� but� one� way� marketers�can� circumvent� this� skepticism� and� arrive� ahead� is� to� provide�information.

In�short,�there�are�many�motivations�for�purchasing�eco-friendly�products,� and� not� all� of� them� involve� saving� the� planet.� Some�people� buy� energy� efficient� appliances� to� save� money,� while�others� may� pay� a� premium� for� natural� cosmetics� because� they�are�perceived�as�safer�than�conventional�products.�Although�only�some�seven�per�cent�of�consumers�are�motivated�by�altruism,�the�majority�are�motivated�because�they�see�the�product�as�better�in�some� way� for� themselves� (such� as� health,� lower� energy� cost,� or�safety).�In�many�cases,�the�green�product�is�the�tiebreaker�or�the�cherry�on�top,�thus�green�consumers�must�see�the�product�as�the�same,�or�better,�than�the�competition.

Being�green�may�simply�provide�an�advantage�when�deciding�between� similar� apartments;� however,� promoting� the� green�angle�is�still�worth�the�effort.

marketing

ambient.indd 1 12-03-07 11:01 AM

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36 www.canadianapartmentmagazine.ca

Newsline

CREA sees flat 2012 home sales across countryThe� Canadian� Real� Estate� Association� (CREA)� has� updated� its�quarterly� forecast� for� home� sales� activity� via� the� Multiple� Listing�Service� (MLS)� Systems� of� Canadian� real� estate� Boards� and�Associations�in�2012,�and�extended�it�to�2013.

National�home�sales�activity� for�2012�and�2013� is�projected�to�remain�roughly�on�par�with�the�10-year�average�for�annual�activity,�as�interest�rates�remain�low�and�further�economic�and�job�growth�continue�to�support�Canada’s�housing�market.

National�resale�housing�activity�is�forecast�to�reach�458,800�units�in�2012,�representing�an�annual�increase�of�0.3�per�cent�compared�with�457,305�sales�in�2011.�Rising�demand�in�Alberta,�Saskatchewan,�and� Nova� Scotia,� is� expected� to� offset� softer� activity� in� British�Columbia,�Ontario,�and�New�Brunswick.

“The�continuation�of�low�interest�rates�is�good�news�for�housing�and� for� the� economy,”� said� Gary� Morse,� CREA’s� president.� “Local�housing� market� outlooks� differ� according� to� their� respective�economic�prospects,�so�buyers�and�sellers�should�talk�to�their�local�realtor�to�better�understand�housing�market�prospects�in�their�area.”

In� 2013,� national� sales� are� forecast� to� ebb� by� 0.3� per� cent�to� 457,200� units,� with� modest� gains� in� all� provinces� except�Ontario�as�economic�and� job�growth�picks�up� later� this�year�and�builds�into�2013.

Multimillion-dollar�sales�activity�in�Vancouver�caused�the�national�average�price�to�temporarily�spike�in�early�2011.�This�phenomenon�is� not� expected� to� recur� in� 2012.� As� a� result,� while� prices� are�projected�to�hold�steady�near�current�levels,�the�national�average�price� is� forecast� to�dip�by�1.1�per�cent� in�2012�to�$359,100.�Prices�are�expected�to�rise�modestly� in�2013,�with�the�national�average�inching�upward�0.9�per�cent�to�$362,300�at�the�national�level.

“CREA’s� updated� housing� market� forecast� reflects� recent� and�prospective�trends�for�provincial�home�sales�activity�coupled�with�prevailing� provincial� economic� outlooks,”� said� Gregory� Klump,�CREA’s�chief�economist.�

“Risks�to�the�Canadian�economic�outlook�remain�elevated�owing�to�the�European�sovereign�debt�quagmire,�but�the�continuation�of�low�interest�rates�is�the�silver�lining.�As�long�as�the�European�debt�crisis� is�contained�and�a�global�economic�recession�avoided,� low�interest�rates�will�support�Canadian�home�sales�and�prices.�Recent�trends�are�reassuring,�but�interest�rates�remaining�low�for�longer�will�no� doubt� keep� the� Canadian� housing� market� under� scrutiny� for�signs�of�overheating.”

Please send your company’s news tips, acquisitions and new products to [email protected]. As well, check out our website, www.canadianapartmentmagazine.ca for timely news, features and V-Reports.

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march 2012 37

New products

Homazooma helps users take charge of real estate decisionsCreated�to�give�consumers�unprecedented�privacy�and�control�over�their�real�estate�

needs,�financial�planning�and�mortgage�decisions,�Homazooma.com�empowers�Canadians�to�make�the�most�of�their�biggest�and�proudest�investment:�their�home.�A�free�public�resource�with�no�industry�biases�or�affiliations,�Homazooma.com�provides�its�members�with�all�the�calculation�tools�and�professional�expertise�required�to�make�confident,�informed�choices�–�anonymously�and�hassle-free.

In�addition�to�browsing�(or�posting)�real�estate�on�Homazooma’s�search�engine�or�crunching�numbers�with�superior�mortgage�calculation�and�credit�management�tools,�members�can�solicit�the�advice�and�opinions�of�as�many�real�estate�and�financial�professionals�as�they�wish�without�having�to�reveal�their�own�identity.�

For�licensed�real�estate�agents,�financial�planners�and�mortgage�professionals,�Homazooma�represents�the�opportunity�to�connect�with�–�and�impress�-�potential�clients�in�a�neutral,�permission-based�context.

“The�whole�idea�behind�Homazooma�is�that�you�can�go�about�your�business�and�get�the�information�you�need,�when�you�need�it,�anonymously�and�with�no�strings�attached.�Your�identity�remains�confidential�until�you�decide�to�reveal�it�to�the�professionals�of�your�choice,”�said�co-founder�Tracy�Thomas.

Donat�Plenter,�also�co-founder,�adds�that�Homazooma’s�level�of�privacy�has�advantages�most�consumers�don’t�even�realize.�For�example:�every�time�homeowners�shop�a�mortgage�in�the�hopes�of�finding�a�better�rate,�they�lose�points�on�their�credit�rating�and�must�spend�time�completing�forms�and�dealing�with�multiple�agents�or�lenders.�At�Homazooma,�applicants�are�provided�the�opportunity�to�pull�their�own�credit�without�penalty�and�encouraged�to�submit�their�score,�anonymously.

Following�almost�two�years�of�research�and�development�by�parent�company,�DataAbacus�Inc,�Homazooma�offers�tools�and�features�not�available�anywhere�else�including:�•�The�most�advanced�mortgage�calculation�tools�on�the�internet�today�•�A�robust�and�detailed�alternative�to�MLS�•�Anonymous�home�market�evaluation�•�Home�match�system•�Anonymous�applications�•�Client�reviews�•�

Anonymous�24/7�live�chat.“The�real�estate�and�mortgage�industry�

has�lagged�behind�how�consumers�get�their�information.�Homazooma�was�created�to�help�Canadians�get�their�business�done,�on�their�own�terms,�and�in�the�medium�they�are�accustomed�to�using,”�Thomas�said.

Real Estate Investment: Here’s an app for thatIf�you�have�an�iPad�or�an�IPhone,�you�know�that�there�is�an�ever�increasing�number�of�fun,�interesting,�entertaining�and�inexpensive�apps�you�can�download.

The�Real�Estate�Investor�Formulator�app�created�by�veteran�Apple�developer�Marc�Schulman�at�Multieducator,�Inc.�New�Rochelle,�N.Y.�allows�you�to�make�an�incredible�number�of�important�real�estate,�financial,�and�property�management�calculations.�It’s�a�powerhouse�in�your�pocket.�

This�handy�little�program�can�calculate�the�market�value�property,�vacancy�loss,�rent�multiple,�total�net�operating�income�and�much�more.�Real�Estate�Investor�includes�45�important�formulas.�Sections�include�capitalization,�debt�ratios,�depreciation,�interest,�investment�returns,�mortgages,�rent�multipliers,�valuation�and�a�variety�of�formulas�for�calculating�rental�income�on�various�types�of�properties.�

You�just�finger�touch�an�item�on�a�menu�screen,�enter�the�data�required�to�do�the�calculation,�and�click�to�calculate�the�results.�All�the�formulas�are�programmed�and�each�key�formula�element�is�defined.�

All�formulas�can�be�saved�and�printed.�You�can�also�quickly�access�recent�formulas�and�tag�formulas�as�favorites.�Results�can�also�be�e-mailed.

j

j

Congratulations! Berkley Property Management on all of your success. We feel fortunate and privileged to be working and associated with

the professionals of the Berkley Property Management team. All the staff of C.H.A.M.P. Engineering Limited wish Berkley

Property Management many years of continued success.

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Smart Ideas

What’s green on the inside?Eco-savvy building owners are realizing the benefits of a living wall in their buildings. Here are five benefits of choosing one for your building:

Property value Energy savings

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Living walls are also great marketing tools that can be used to promote a company’s green image. A living wall can increase property values of homes and businesses. By simply having plants in and around a building or home can increase real estate values by up to 20 per cent. A living wall is a unique way to add more greenery to the interiorscape design or exterior landscaping plan and attract more people interested in purchasing your property. A green wall is a great way to provide the greenery that people want. If they feel less stress, become more relaxed, they will end up staying longer.

Studies have shown that the surface of an exterior green wall is up to 10°C cooler than an exposed wall, therefore, considerably less heat is radiated inward. Not only do green walls reduce cooling requirements but they also help to mitigate the urban heat island effect. Interior green walls also help to save energy during the summer. During the winter a living wall system acts as extra insulation.

Indoor air quality LEED creditsA green wall can contain more than 1,000 plants, all of which filter air and create energy-rich oxygen. Research undertaken by the National Aeronautics and Space Administration (NASA) proves that plants are capable of cleaning indoor air of the toxic chemical soup that is common in modern buildings.

Installing a living wall can be used to earn LEED credits. A living wall qualifies directly for two LEED credits and helps gain an additional 30 points. The categories include sustainability, energy savings, indoor air quality, health and wellness, and acoustics.

Quick closings with competitive LTV.That’s our commitment to you.First National is committed to working together to provide the ideal customized mortgage solution to meet your needs. We offer a wide variety of mortgage products, competitive loan to value, and one of the quickest closings in the industry. You can often receive your commitment documents in as little as seven days. Trust us to fi nd the best fi nancing solution for your property.

First National is licensed under the Mortgage Brokers, Lenders and Administrators Act 2006 (Ontario) Licence No. 10514

www.fi rstnational.ca

Make First National your fi rst call. Contact us today.

VANCOUVER

604.681.5300 800.567.8711

CALGARY

403.509.0900 888.923.9194

TORONTO

416.593.1100 800.465.0039

MONTREAL

514.499.8900 888.499.1733

HALIFAX 902.452.0776

Untitled-1 1 12-01-05 5:30 PM

Living walls protect buildings by reducing temperature fluctuations of the envelope. A constant flux in temperature leads to the expansion and contraction of building materials resulting in cracks, fractures and general deterioration. Covering an exposed vertical surface with a green wall shields it from precipitation and wind as well as from harmful UV radiation and corrosive acid rain. This in turn increases the integrity and longevity of a building’s exterior.

Building protection

Page 39: CAM March  2012

Quick closings with competitive LTV.That’s our commitment to you.First National is committed to working together to provide the ideal customized mortgage solution to meet your needs. We offer a wide variety of mortgage products, competitive loan to value, and one of the quickest closings in the industry. You can often receive your commitment documents in as little as seven days. Trust us to fi nd the best fi nancing solution for your property.

First National is licensed under the Mortgage Brokers, Lenders and Administrators Act 2006 (Ontario) Licence No. 10514

www.fi rstnational.ca

Make First National your fi rst call. Contact us today.

VANCOUVER

604.681.5300 800.567.8711

CALGARY

403.509.0900 888.923.9194

TORONTO

416.593.1100 800.465.0039

MONTREAL

514.499.8900 888.499.1733

HALIFAX 902.452.0776

Untitled-1 1 12-01-05 5:30 PM

Page 40: CAM March  2012

Financial Sustainability. Customer Sustainability. Environmental Sustainability.

Providing sustainable solutions for multi-dwelling and commercial properties

Receive a FREE survey of your laundry services,

call: 1.877.755.5302 email: [email protected] visit www.coinamatic.com

■ Reduce utility costs and maximize revenues with our robust leading edge equipment

■ Enhance resident loyalty and experience with our guaranteed nation-wide service – priority response

■ Enjoy a hassle-free experience with our multilingual Customer Care Centre for management and resident support 24/7

■ Improve the value of your building with well designed laundry rooms that residents want to use

Coinamatic continues to evolve the laundry business with earth friendly products and services that both our Clients and their residents value.

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