IDS Reception – IDS GROUP

Money Better Spent

IDS Reception — Thu, 23 Feb 2023 19:50:32 +0000

Firstly, I support the Premier’s efforts to address the housing crisis. I believe he understands the urgency. However, he has ignored the simple truth that when the government tries to interfere with the Real Estate business, it only makes it worse. Tax deferment programs, the ALR, and other various attempts to undertake major development projects have historically failed to accomplish anything close to what was intended.

Mr. Eby’s current plan to buy old and obsolete apartment buildings in hopes of retaining affordable housing, is in my opinion, another example of the government unwittingly attempt to tamper with the Real Estate business. I am relatively confident that he came to this decision without any ideological agenda, but it seems to me this approach was influenced by those who do.

Spending $500 million of taxpayer money to purchase obsolete apartment buildings is not only a bad idea, but it’s also a road map to disaster. I’m of course referring to first, the windfall for the apartment owner and secondly the unavoidable shortfalls of maintaining old buildings, chock full of asbestos, wet rot, rust, and other deficiencies that come with old age. Forget for a moment that these buildings were built when building codes were, to say the least, unsafe; they will inevitably have to be replaced anyway.

In my opinion, government works best when it supports the private sector by establishing policies that protect the public interests and encourages economic growth.

I believe it is in everyone’s interest to redevelop old apartment buildings into new buildings that are modern and healthy and built to last. Through densification, we can replace existing affordable rental units at existing rates and add much-needed market units as well. The only obstacles standing in the way are Municipal development charges and levies, lengthy approval times, and the uncertainties of interest rate hikes and construction cost increases. All of which come under the heading of viability.

I am suggesting that Mr. Eby spend the $500 million on low-interest loans or grants or guarantees or equity to the apartment building owners in order to make the proposed redevelopment project viable. I am also suggesting that the government determines what is meant by the word “viable.”

I am an advocate for income caps. I believe that reasonable profit is good but huge profit at the expense of the public is bad. I also believe that the private sector should take more responsibility in ensuring that the public is protected from profiteers, and the public should take more responsibility in ensuring that the private sector is encouraged to expand.

Lastly, I believe it is possible to solve the housing crisis through cooperation between both the government and the private sector. A little trust can go a long way, especially when earned through fairness, equality, transparency, and the desire to succeed.

David Adelberg

IDS GROUP is a real estate development management company based out of Vancouver. Their are-as of expertise include project financing, architectural design; project, construction, property, and as-set management; sales and leasing; land assembly, and investment. For more information, visit www.IDSgroup.ca

Redeveloping Purpose-Built Rental Buildings

IDS Reception — Mon, 21 Mar 2022 16:26:59 +0000

David Adelberg, CEO, Investment Development Services Group

If you’re looking to redevelop your purpose-built rental building there several steps to consider, including financing, tenant relocation, zoning, and time investment. This guide provides answers to your most frequent questions.

FINANCING — CAN I, AN INDEPENDENT APARTMENT OWNER, ACTUALLY FINANCE SUCH A MASSIVE PROJECT?
The financing to develop a high-density asset is the same as when you, or previous family member had acquired the asset. It’s still the 25 per cent ratio of a down payment to financing needs; all projects are unique but the similar rule/ratio applies. In fact, the federal government recognizes the desperate NEED for rental purpose assets to be developed and have very favourable lending terms for apartment owners such as yourself to develop. If you have held the asset for many years and have substantial equity, this is recognized towards down payment security towards the financing.

ZONING AND THE CITY, WHAT DO I NEED TO DO TO GET APPROVALS?
Chances are that your multifamily asset is already a valued component of your city’s rental supply. There is also a very good chance that your municipality has already designated your area as higher density within their OCP (Official Community Plan). If not, nearby high density redevelopments can set the precedent allowing you to submit and get approval from your municipality to redevelop high density as well. Approval requires: architectural drawings, landscaping plans, engineering schematics, community amenity contributions. There is a lot of dialogue and back-and-forth with city planners. Remember, if there is a shortage of rental supply in your municipality, they want your project to succeed, they need it.

WHAT ABOUT THE CURRENT TENANTS; HOW CAN YOU HELP THEM?
Tenants are the lifeblood of our success and it can be difficult to make the decision to redevelop and ask your tenants to go through the certainly painful process of moving. Unfortunately to create a modern high-density solution for the overall benefit of the community, as well as your portfolio, you will need to end the tenancies of the existing tenants.

Ending tenancies is never a positive experience but when ending tenancy for redevelopment requires some additional consideration and sensitivity. Regardless of where the rental units are located there will be the need for compensation and some municipalities have tenant relocation programs in place that require the landlord to relocate and further compensate tenants for the significant impact that ending a tenancy can have. Additionally, your municipality may have terms that allow tenants to return to the new building at similar rates from the current tenancy agreement. Construction financing can also provide financial support to compensate for tenant relocation expenses. The new development can also be seen as a long-term benefit to the tenant in which they will have a modern building to return to and enjoy the amenities and quality of life for the long-term.

HOW LONG IS THIS GOING TO TAKE?
The timing wildcard in any development currently is the approvals and processes through your municipality’s city hall. This could take 6-18 months depending on: current zoning, OCP, capacity of the city planners to meet the demand for their time and approvals. Construction time, depending on the size and scale of the project could be 18-24 months. Preliminary financing approvals could take 6-12 weeks; in which triggering construction financing would be dependent on civic approvals for development. Five-years in total is the conservative outside time limit that we work backwards from depending on optimal timelines at each step.

Once the building is nearing completion and occupancy, marketing of the suites for rent should commence. Develop your database for viewings as soon as possible after occupancy. Rendered drawings of units and virtual reality (VR) presentations are great tools to showcase your new, modern suites offering lifestyle not just a roof over one’s head. Lease-up is key if the goal is to sell the final complete asset. Maximum sale price is achieved with full lease-up and stabilized revenue achieved.

The final, cherry-on-top benefit of your new development is the naming rights. This is an opportunity of the legacy of the family trust or flagship property of your portfolio. Recognize a loved-one, founding family member, champion of your community, or branding opportunity of your hard earned portfolio.

As daunting and intimidating the idea of developing a high rise, concrete, purpose-built rental building is, it’s the natural next step as a real estate investor.

4 Benefits Of Property Redevelopment You May Never Think Of

IDS Reception — Wed, 16 Mar 2022 23:09:41 +0000

The maintenance costs for an aging and deteriorating apartment building may grow exponentially over years. Hence, this factor contributes to the need to redevelop these aging properties. In fact, many property owners may not be aware of the values that their existing property may create for them, in contrast, they are more concerned about the expenses involved to upgrade or redevelop their properties. This article will discuss the advantages of property redevelopment and how property owners may take advantage of the services provided by real estate development management companies to maximize their economic well-being.

Increase of supply benefits the tense housing market

While the economy is recovering from the pandemic and people’s lives are going back to normal, the population in the Vancouver area has increased significantly. According to McElroy’s (2022) posting in CBC News, “the shortage of housing supplies drives the cost of housing to a crazily high rate in comparison to the other metro areas in Canada”. As such, transforming the aging properties into modern high-density properties will increase the market supply and put downward pressure on housing prices.

Enhance the community’s living quality

As reported by Beattie (2022) in the CBC News, aging buildings cost millions of dollars to preserve, also, other apartments collapse like the Champlain Towers in Surfside can happen. Undeniably, the old-fashioned properties can be liabilities from the inside out. The unforeseeable potential safety issues threatened the health and safety of the tenants in the building. Therefore, it’s time for the property owners to decide between:

(a) protecting the well-being of the tenants at the same time maximizing the property value or;

(b) leaving the buildings to deteriorate, putting the tenants in a potentially dangerous situation, and doing nothing with the shrinking property values.

Create job opportunity

Another amazing thing, property owners may not be aware that their decision to develop can feed the stomachs of many families. The construction phase in property redevelopment to build a high-density property requires huge efforts from the professionals like engineers, plumbers, designers, etc. Not only that, upon finishing, an office, restaurant, shop, or any business operating in the new property are going to create more opportunities in the job market. Hence, as property owners and real estate developers are constantly taking up property redevelopment projects and each of these projects lasts years, the contribution to the job market will be sustained.

Save the forests

Regardless of an individual or a corporation, we always owe the responsibility to take care of the environment. Since the supply in the housing market is scarce and the Government of BC encouraged more property development, especially in the Greater Vancouver area, it is obvious that new property development requires more and more land clearing for the properties. According to Somma (2021), land clearing is likely to contribute destructive consequences to the environment such as erosion, pollution, or flooding. In fact, sacrificing environmental health to cure the housing crisis must not be something that everyone expects. Thus, property redevelopment seems to be the most suitable solution to deal with this situation, in which the necessity for land clearing is minimized, and housing supplies can be boosted. If people can build a better community with minimal harm to the environment, how could they say no to that?

Conclusion

The future of Greater Vancouver’s housing market is in the hands of property owners. By joining part of the property redevelopment movement, property owners could make a symbolic contribution to social, cultural, and environmental issues. Additionally, to reduce the negative consequences of the housing crisis, the Government of BC is even easing the requirements for rezoning, so that property developers can work on their best abilities to solve the housing crisis (Fletcher, 2021).

While some owners might hesitate to take the next move due to the concerns of losing property ownership, financial constraints, or technical limitations, IDS Group could be the best option for these property owners to proceed with. This is mainly because IDS Group provides exceptional support and solutions to inexperienced property owners in the redevelopment process, including but not limited to financing, design, construction, and asset management. IDS is committed to helping clients to create developments that are attractive, economically viable, socially responsible, and environmentally sensitive. Apart from that, previous clients of IDS Group also left an excellent review to the company for the services they received.