Who is your ‘guy’? Meet the WHO. Your WHO.
Bobs Idea Corner Entry 2.0 March 28th, 2021
Everybody has a “guy” or a WHO for certain jobs, tasks or problems that they need solved. I am a “WHO” that just happens to thrive on ideas and that has spent 30+ years helping building owners save money.
My latest idea focuses on a simple question….
What if tax and water were in the same sentence ?
For 30 years I have been involved with helping building owners lower their property taxes.
For 5 years I have been involved with helping building owners lower their water bills.
To me the parallels between the two are a no-brainer and the ensuing rationale on finding someone that can help you accomplish both.
To the outside world and/or owner of an apartment building maybe not so much.
What do #propertytaxes and #water have in common ?
They both involve a third party government entity sending you a bill.
They both involve this government entity measuring your property - either in its market value or in the amount of water its uses.
The market value as determined by your Net Operating Income (NOI) is in part a by-product of your operating expense (which includes water).
The property tax and utility expense goes up year over year. When was the last time you budgeted for a decrease in taxes or water expense ?
In the multi-family rental sector these expenses come out of the owner’s pocket.
The majority of owners do not have a good handle on what either cost “should” be relative to what is fair, what is possible and/or what its peers pay.
The common ground questions are relevant to me and ideally to owners / managers of multifamily for a number of reasons:
Growth in rental rates in GTA is easing off as COVID and population growth impact vacancy rates making it tougher to drive gains in net income.
Managing costs is primary driver to increasing net income.
Taxes and Water are two of the highest costs in managing a rental building.
You can only challenge your taxes at certain times throughout the year.
Water as a variable non-recoverable operating expenses can be reviewed and addressed anytime.
In order to successfully challenge your property taxes you need to take a hard look at your expenses and specifically how they compare to similar properties.
Having high utility / water expenses helps in the short term to lower your property taxes by giving you ammunition to challenge the Assessors’ valuation variables.
Having high utility / water expenses over the long term hurts your net income and is not a particularly sound strategy.
Taxes per Door: In Toronto current values for property tax purposes range from $120,000 to $150,000 per door where this # is reflective of MPAC’s current value assessment as at January 1st 2016. With an effective tax rate of 1.09% (2020) the property taxes per door range from $1300 to $1600 / door.
Water Per Door: In Toronto, current water usage per door ranges from 0.8 m3 to 1.1 m3 / unit / day. This translates into annual water costs of $1270 to $1747 per year based upon 2021 rate of $4.35 m3 (price includes sewer and water expense)
Water ($) Sample Four Hi-rise Apartment Buildings in Toronto:
Water Usage (L) Sample Four Hi-rise Apartment Buildings in Toronto:
(*) 24,500 L / mo = 816 L or 0.82 m3 / unit / day or 216 G / Unit / Day
Taxes & Water Toronto Multi Res Sample
Conclusion(s)
The operating expenses and ensuing net income of your apartment building are intertwined
These two line items can account for more than $3,000 per door in annual expenses
You might want to know what your tax # and water # are and what they might be
If you are looking for a #WHO to #help the teams at www.water-controls.com and www.argil.ca have a unique perspective and great experience in marrying these two items to boost your bottom line
Bob Langlois Founder: Water Control Management
Advisor / Value Creator: ArGil Property Tax Services
Phone: 416-625-7801