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 ?
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For 30 years I have been involved with helping building owners lower their property taxes.
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For 5 years I have been involved with helping building owners lower their water bills.
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To me the parallels between the two are a no-brainer and the ensuing rationale on finding someone that can help you accomplish both.
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To the outside world and/or owner of an apartment building maybe not so much.
WHAT DO #PROPERTYTAXES AND #WATER HAVE IN COMMON ?
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They both involve a third party government entity sending you a bill.
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They both involve this government entity measuring your property – either in its market value or in the amount of water its uses.
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The market value as determined by your Net Operating Income (NOI) is in part a by-product of your operating expense (which includes water).
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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 ?
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In the multi-family rental sector these expenses come out of the owner’s pocket.
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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:
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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.
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Managing costs is primary driver to increasing net income.
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Taxes and Water are two of the highest costs in managing a rental building.
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You can only challenge your taxes at certain times throughout the year.
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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:
Conclusions
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The operating expenses and ensuing net income of your apartment building are intertwined
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These two line items can account for more than $3,000 per door in annual expenses
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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
Phone: 416-625-7801
Address
2366 Ventura Drive,
Oakville ON, L6L 2H4