Costs of maintenance for a house -
My question is: Canadian-specific
QUESTION: Hi David,
I'm a student at the Sauder School of Business at UBC in the BCom in Real Estate Program. I'm doing some research regarding the difference between renting and owning in cities across Canada, and I'm looking for a simple way to estimate the the cost of maintenance on a given house. The information I have is the number of bedrooms, the monthly rent, and the approximate value of the house/apartment. Using that information, is there a basic way to estimate maintenance cost?
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david ingram replies:
Sorry, I have no idea now but will send this out to my list to see if
anyone else has an idea. If they do and want credit, I will be glad to
pass it on. In the good old days, it was simply: look at the kind of
construction and use $11.66 per square foot as an example. i.e back in
1976, $57.60 a month was $.09 a square foot for a 640 square foot
condo. You might find an almost identical unit for $37.00 a month just
down the street. Then we would add in extras for a pool, tennis
courts, fancy courtyards, locked parking lots, extra elevators, rooftop
gardens, weight rooms, etc
I actually founded property management firms that at one time managed
over 3,000 rental condominiums from Ottawa to Victoria and as far south
as Phoenix.
What always intrigued me was that the monthly maintenance on a 640
standard one bedroom apartment could range from $45 to $150 a month
depending upon construction and maintenance. This would be for what
appeared to be almost identical units to the untrained eye. The
trained eye would see the difference in materials and the way that
drains had been installed, etc. And, one of the biggest items would be
the amount that the strata council was setting aside for a contingency
fund or a new roof account, etc. The amount in the contingency fund
would also affect what someone would pay for a condo.
My eye was not great. I thought I could spot good from bad, but not
always.
One of the buildings I thought was very good at 140 east 4th in North
Vancouver has just received a $75,000 per unit upgrade assessment
because of poor maintenance over the years.
My family's unit was bought in 1986, 22 years ago. Divide $75,000 by
22 and you get $3,409.09 per year of 'extra' maintenance. My ex wife
only paid $48,800 for the unit in 1985. But then I only spent $42,000
for my house. AND
I have just spent over $50,000 on repairing 20 years of neglect on my
own house and it looks worse than before I started.
However, if you want to read a new book that paints a possible horror
story of owning for the future (and why you should rent), read Garth
Turner's Book, the Greater Fool.
see it at www.greaterfool.ca. He is in Vancouver this next
Tuesday and Wednesday and you might be able to see him. I am doing an
Internet television interview with him at 5:00 PM at the Hotel
Vancouver on Tuesday for instance. You will be able to see it later at
www.howestreet.com. His book covers Japan, the United States,
Great Britain and Canada among others. If you look at his website, he
shows a nice little house for sale in Detroit for $625. To contact
him, try [email protected] or phone at (416) 346-0086 contact information
he displays prominently on the inside back cover of his book.
If the following picture does not show up on your email, you can find
it on the front page at www.greaterfool.ca
-----------------------------------------------------------------------------------------------------------------------------------
For sale in Detroit: 3 bedrooms, 1 full bath, 1129 square feet,
lot 40 by 140, ready for immediate occupancy. Price recently reduced,
to $625. (Yes, six hundred and twenty-five US dollars)
---------------------------------------------------------------------------------------------------------------------------------------------------
One of my clients is in the process of walking away form a Detroit
house in which he had $100,000 of equity in 2002, long before the
sub-prime crisis.
check out: http://www.greaterfool.ca/
This book contains a very good analysis of the sub-prime mess and
explains that the same thing is actually happening in Canada.
I first met Garth Turner when
he was the Financial Editor of the Toronto Sun and he wrote a story
about my book on Income Tax. He went on to become a Conservative Member
of Parliament AND the Minister of National Revenue. He now sits as a
liberal in the Federal Government in Ottawa.
His book, the GREATER FOOL is a spectacular piece of
information. You should get him out to speak to the class.
Only one more thing I have to say. I am a graduate of the UBC Urban
Lands Economics class back in 1987.
Back then, there was a question which dealt with rental condominiums.
I just printed out what i had written in my book in 1979. I got a
really nasty letter accusing me of cheating and having a copy of the
student guide. the marker had observed that my answer matched the
student marker's guide almost word for word.
It turned out that the School had lifted that chapter out of 'my' 1979
book and used it for that lesson. I did the four year course without
using the the school textbooks (I just answered the questions, did the
assignments and wrote the exams) so had not spotted that the chapter in
question was my stuff.
Somewhere in my files, I have an apology from Robert Laing,
who was the Executive Director of Professional Programs, Faculty of
Commerce, UBC, at the time.
------------------------------------------------
>From www.garth.ca
Garth Turner is the Member of Parliament for Halton, Ontario.
He was first elected to the House of Commons in 1988
and served until 1993. During that time he chaired many Standing
Committees of Parliament, served on Priorities and Planning, and was a
member of the Treasury Board. He served as Minister
of National Revenue, and ran for the leadership of the Progressive
Conservative Party of Canada.
In January, 2006, after a successful thirteen years in private
business, Garth was re-elected to Parliament. He now serves his
constituents as a Liberal MP, after joining that caucus in February,
2007. In this Parliament Garth is known for his proactive outreach to
Canadians and his belief in the future of digital democracy. His interactive Internet blog has
received international attention as a first for an elected politician,
and receives more than 2,000,000 hits a month.
At the same time, he has founded MPtv,
an Internet television-type broadcast which takes Canadians behind the
scenes with MPs of all parties on Parliament Hill. He balances his
Internet profile with many Town
Hall public meetings in his own constituency and across Canada.
Garth's career expertise lies in business, personal finance, real
estate and taxation. He's authored many best-selling books, lectured
extensively across the country, hosted Canada's most-watched business
television show, and written a syndicated
newspaper column carried in scores of cities.
His volunteer work has included serving as a National Director of
the Sierra Legal
Defence Fund, which fights to uphold environmental legislation, and
as a national spokesperson for the Alzheimer
Society of Canada.
His entrepreneurial spirit has led him to start many businesses,
from the country's largest independent producer of network television
programming, to the restoration of heritage buildings and in the
hospitality industry, creating a host of jobs in our vibrant small
business sector.
Garth Turner is a member of Canada's Privy Council. He was educated
at the University
of Toronto Schools, the University of Toronto, and the University of Western Ontario.
He is married to Dorothy, and shares an emotional attachment with his
motorcycle.
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