Selling REZEN By The Pound II

Pat-Pat-Pat went my hand on my own back as I prepared to take occupancy of my new condo at Rezen Condominiums in August of 2008.

But before I could move forward, there was a ton of work to be done and very little time to do it!

If you think “picking up the keys” is all that is required, think again…

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Pictured above is a photo of Rezen Condominium around the time when I bought into the project.  It’s pictured here about half completed, and if the developers in Ontario had their way, they’d give us the keys when the building looks like that!

Developers in Ontario adhere to a completely different set of rules when compared to that of say, British Columbia.  As renowned Toronto condominium lawyer Audrey Loeb put it, “Toronto is the wild wild west!”

Developers in Ontario get to do whatever they want because the rules and regulations are so lax!  There is no watch-dog at the government level, probably because they wouldn’t know where to begin!

And should we actually expect any level of consumer protectionism from the government?  Whatever happened to all that talk about “monitoring gas prices and possible cartels among oil producers” from our elected government officials?  Or did they just make noise in the media around election time?

Condominium developers in Toronto have free reign to screw eager buyers, and they do exactly that.

I won’t get into specifics, but rather I’ll detail my own experiences.

Oh – and I must play devil’s advocate here and say that I can’t blame developers, nor do I really hold any ill will towards the developers at Rezen.  If it were me, I’d do the same thing.  They use the rules and regulations put into place.  It’s not their fault the rules are so lax…

I was scheduled to do my “pre-delivery inspection” on August 14th, 2008, with occupancy slated for August 28th, but a sales rep working for the developer informed me that my PDI would now take place on August 27th – the very day before my occupancy!

For those unfamiliar with a PDI, it’s basically a chance to preview and inspect your unit and look for deficiencies.  The developer has thirty days to remedy the deficiencies, which begs the question, “How can they possibly expect me to conduct a pre-delivery inspection only ONE day before occupancy?”

It’s simple: they don’t care about you.  You already paid them, remember?

For more information about the pre-delivery inspection, see my blog post here.

I showed up for the PDI last August with the one person I knew wouldn’t take any crap, and who had all the time in the world to kill – my mother.  My mom’s favorite saying is “I’m retired” since she has no reason to ever turn down an invite.  Ask my mom if she wants to hit up a two-for-one potato sale, and she’ll say, “Of course I do!  I’m retired!”  This came in very handy during the PDI…

I felt bad for the girl conducting the PDI that day, as I’m sure she had no idea what was in store for her.  My mom was ready to commit a a whole afternoon to inspecting the tiny 549 square foot condo, because as she puts it, “I’m retired!”

I retired to Tim Horton’s for a coffee and when I came back, I saw the poor sales girl leaning against the wall, completely defeated, as my mother had taken her clipboard and roll of green masking tape which she used to mark all the deficiencies.  There had to be about a hundred pieces of green masking tape all over the walls, floors, counters, and ceilings!  If there was so much as a single paint brush stroke out of line – my mother put this down as a “deficiency.”

My main concern was the absence of a refrigerator, which I really would have liked to get in place before I handed over the keys to my tenant and expected her to keep her fruits and vegetables cool by leaving them under her bed…

Before the PDI was ever conducted, I was allowed access to my unit “just to see what it looked like,” but in actual fact I wanted to get some photos to use in my advertisements on Craigslist and Kijiji in attempts to attract a tenant.

I listed the property on these two websites and within a week I was swamped with over a hundred emails.

I wrote about my experiences in trying to find a suitable tenant here.

At $1,450 per month, I wondered how difficult it would be to lure some unsuspecting prey into my over-priced unit, but it was actually rather easy.  I guess I take it for granted – knowing exactly what a condo should rent for, seeing as I’m in the business.

I’ve made my feelings about rental discrimination known in the past, but let’s just say that I was only willing to rent to a woman, and only one in her 30’s.  You can read my thoughts on rental discrimination here.

On August 28th, I took the keys to my new condo at Rezen Condominium, and entered the “occupancy phase.”

All condominiums must be registered as a Condominium Corporation before you can put a mortgage on the property.

However, when you buy in pre-construction, the developer reserves the right to give you “occupancy” before the building is ever registered as such.

You then pay an “occupancy fee” to the developer (effectively like paying rent on a property you own) until the building is registered, at which point you will obtain a mortgage on the property, pay the developer the outstanding balance, and then make monthly mortgage payments to the lending institution that provided the mortgage.

This can take anywhere from a couple of months to well over a year.  Just consider that the longer it takes, the more money you waste.

The occupancy fee is made up of three parts:
1) Financing the outstanding balance
2) Estimated property taxes
3) Maintenance fees

My “occupancy fee” broke down as follows:
1) $1130.59 – the remaining $195,210 at 6.9% interest
2) $158.14 in taxes
3) $242.11 in maintenance fees.

The total occupancy fee was $1,530.84 per month, which meant that I was just shy of the $1,450 I’d be bringing in each month via rent.

To carry this property, I’d have to pay $80.84 out of my pocket each month until the building was registered as a condominium corporation.

The difference was negligible to me, but obviously I hoped the building would be registered as soon as possible!

I found a tenant who seemed to meet all my criteria, and she was scheduled to move in on September 1st, 2008.

But I still had the issue of the non-existent refrigerator to deal with!

I showed up at the sales centre every single morning and hounded the sales staff for my fridge.  Every, single day.

They told me something so stupid, but yet so honest and true: “David, there are thirty-six units scheduled for occupancy on August 28th, but you’re the only one who is actually moving in.  Sooo…..we just assumed that we had another week for the remaining appliances!  Sorry!”

I said, “Apology accepted, now get me a goddam fridge.”

I had them take a fridge out of somebody else’s unit and put it into mine.  The way I saw it – if Mr. Smith in unit #205 was an absentee investor who had no clue what do with his unit (ie. actually find a tenant to pay the expenses? hellooo?), then I could take Mr. Smith’s fridge.

On September 1st, my tenant moved into my condo at Rezen and called to thank me for working so hard for three days to get the fridge into place.  But she was somewhat curious to know why I chose a black fridge and yet I chose to have all the other appliances in white.

I raced over to Rezen in about ten seconds flat and discovered that the geniuses downstairs had given me a black fridge!  In a white kitchen!  White dishwasher, white stove, white microwave, white cabinets, and a big ole black fridge!

I guess the laborer who took the fridge from Mr. Smith’s unit and put it into mine was somewhat color-blind…

As nice as my tenant was, she didn’t come without any complaints.

You wanna be a Landlord, you say?

“David – how come the dryer makes so much noise?”

“David – the hot water isn’t hot enough.  I like to take long, hot showers in the morning and I can’t get the water hot enough!”

“David – my clothes aren’t getting clean enough in the washer.”

“David – I want Bell but they say this is a Rogers building.”

“David – the guy across the hall is having a gay lover’s quarrel every single night!”

“David – the concierge downstairs said he liked the smell of my perfume and it offended me.  Can you please have him fired?”

And that was just Tuesday!

My tenant and I spoke on the phone every single day for the first two weeks as there was always something wrong.  Thankfully, I was only working about 60 hours a week at this point during one of my “slow phases”…

However, my tenant put up with a lot of crap and I thank her for that.

You see, when you take possession of a “new” condo in Ontario, it is NEVER actually finished.

Your unit is finished, but that’s about it.

There are no carpets in the hallways, nor are there any light fixtures, or is there any wall-paper.

The floors are covered in dust, scraps of construction debris, and screws.

The lobby isn’t finished, and there is a dirty concrete floor for you to walk through every night.

The elevator has a wood floor and there is often a man inside who needs to connect a few wires to get you to the floor you want, since there is no control panel.

I’d laugh if you asked, “But is the gym ready?”

Not a chance.  The amenities won’t be finished for months!  And that’s only if the builder decides to actually deliver what was promised when he was selling the units in pre-construction, since a builder can change just about anything, anytime, for any reason.

Construction workers drill, hammer, and yell in various languages all day as they scramble to finish the units on higher floors, for owners who will take occupancy months after you do.

Taking “occupancy” of a new condo is an absolute nightmare, and I truly thank my tenant for putting up with all this crap.  She was a real trooper, and in return, I never evicted her when her rent cheques bounced three months in a row.

She was a real sweetheart, but at the end of the day, daddy gotta get paid!

The scheduled, estimated, approximated, desired, hopeful registration date was set for December of 2008.  That would mean I would only have to pay occupancy fees for four months.

Around the same time, I recall that Toy Factory Lofts was finally being registered after somewhere in the neighborhood of 16-18 months (don’t quote me on it) of initial occupancy, and likely 16-18 months of death threats from the residents directed at Lanterra Developments.  Somehow hearing that story made me feel fortunate…

By January of 2009, the building was about 95% finished as all the common elements had been constructed with the exception of the rooftop patio, which couldn’t be opened until the good weather anyhow.  The gym was fantastic – about ten brand new cardio machines, free weights up to 60-lbs, and two multi-purpose weight machines.  The adjacent yoga studio was an excellent touch!

I was very pleased with my investment, even if the market was in the tank, and I looked forward to finally closing the deal when the building was registered as a condominium corporation!

January became February, and February became March.

Just when was this damn building going to be registered?

(TO BE CONTINUED…..)

2 Comments

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  1. Therese says:

    How did you manage to rent this condo during the occupancy phase?I have been told by the builder this is not allowed!!!!,

    Thanks for your reply

  2. Frank says:

    Interesting. How were the measurements of the unit, anything close to the pre-sale floor plan?

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