How our 'Collaboration' all got started

Our Special Assessment...our collaboration

February 2010 - The reality of the Calgary Condo Market hit me last month as I was notified of a $48,000 special assessment on a rental unit I own.    I purchased this unit in 2001 for $129,000, a one bedroom plus home office at a little less 800 sq.ft.   In 2008, at the height of the market, it was assessed at a value of $298,000.   My 2010 assessment came in at $230,000.  Situated in Bankview, it had a tremendous downtown view and was an easy rental.  Unlike my other rental properties, this was basically turn-key.   Rarely did I have to do any repairs.  Tenants seemed to stay usually 2-3 years.   The only time I actually had to go there was to show it to prospective tenants.  

In the last decade Calgary had become a condo town; it was no longer just a retirement option for grandma.   As we grew and became more like Vancouver and Toronto, our demographic changed.   Urban professionals wanted the downtown lifestyle.   Downtown developments such as Stella and Chocolate seemed to sell out in weeks.  The surplus of buyers flocked down the block to the next hole in the ground, signing up for a unit, hoping to take possession in 2009 or 2010.  They had walked though a mock up unit in an old store front down the street.   The 3 foot high architects model looked great.   Buy now or you would regret it months down the road. 

Why not do that?  You need to get a toe hold in the hot Calgary Real Estate market.   How could you go wrong?  I had clients who put $20,000 down in 2004 on a ‘hole’ to be called “Chocolate”.  When they took possession of these units in 2006 for which they had paid $180,000, they now had condos worth  $340,000.   Some sold them immediately, pocketing the cash while others turned them into rentals at $1,500 a month.   When Battisitella dug the next hole for the sister tower Colours, people flocked and put deposits down.   They wanted to duplicate the success of Chocolate, unfortunately when they took possession in the spring of 2009 the market had started its slide.  The finished units were now appraising at $40,000 to $60,000 less than the purchase price.   Several buyers simply walked away, leaving deposits behind.

If I could turn back the clock, I would be listing my condo at the peak in 2008.   Unfortunately that can’t be done, but lets face it, I have made at least $100,000 on my investment.  Properties will rise again and it has faired much better today than a stock portfolio.  Again the condo market is ripe for the young owner/investor.  Today you can buy an entry level condo and have your mortgage, condo fees and taxes equal to rent.   This down turn is again the opportunity for first time buyers to enter Calgary’s property ladder.

As for my special assessment, turn the page and see how Jacqui Williamson, Century 21 REALTOR® and owner turner the situation around.

Greg Gullekson, Mortgage Broker
Dominion Lending Centres Westcor
403.244.9133  
www.greggullekson.ca

Don't be afraid to buy a condo, be aware of what you're buying

February 2010 - I’m a Certified Condominium Specialist which means that I understand the ‘ins and outs’ of condo living.  I also have a very good understanding and knowledge of the Condo Property Act.  However, 5 years ago when I purchased my unit I had none of that.  I was working for a staffing company at that time as a Director of Sales and Marketing.    I don’t recall my REALTOR® providing me with any information about what owning a condo was all about.  In fact within 6 months of my ownership my condo was levied with a  special assessment (additional cost above condo fees). I was so upset.  What I remember liking about the building though was the exterior of the building (which is now a problem) and I liked the skylights (also problematic) and I liked the location.  I too own in the same building as Greg Gullekson.

In November 2009 I was served with a $45,000 special assessment that was due in one month (or in an easy monthly payment plan of $5000 or until I died whichever came first).  This happened just 2 days before I left for a vacation to Mexico.  I truly thought that my time in Mexico would be spent dealing with a major depression.  There weren’t enough banana dacquiri’s in Mexico to help me forget the pain I would eventually return to.  I’m a phobic flyer and this flight reminded me that a seatbelt, life jacket, young or old pilot  wouldn’t matter when my plane would inevitably plummet into the ocean/small village/mountain putting me out of my misery.  My beneficiary, my sister would be able to pay off the assessment and have a few bucks left to enjoy her life without me.  Isn’t it amazing how people think when they are in a state of stress?  Real quantifiable stress.

When I came back from my vacation another meeting was arranged to discuss our design plans and which design we should vote on.  Needless to say the meeting became very hostile, with board members leaving and others looking for their bullet proof vests.  In my mind I thought, I have a $45,000 assessment without notice, quotes or justification and you want me to vote on design?  Where’s my etch-a-sketch, that I can vote on.  Needless to say we had the special assessment rescinded that night.    People were frustrated and it was obvious their needs weren’t being considered and no answers were being given.   We found out that 1/3 of the building if not more would be foreclosed on followed by a very belabored and cold description by the property manager of how this would happen.  After that meeting, Greg and I met and discussed the need for a solution.  I recognize that  not everyone is a leader. People know when there is unjustice, they know when things just don’t add up.  But not everyone speaks up.  It’s not in their personality. They hope for the best.  But ultimately they look to others to help them.  Greg did.  I did.  In doing so we took on a leadership role that we feel will  benefit others and will benefit ourselves too.

Nothing was adding up.  The entire building, minus the inept condo board was distraught, angry and powerless. Greg and I began our own investigation along with two others that became part of the new board.   We brought in as many as 11 contractors to price out siding and windows.  We listened to their opinions, we looked at their written quotes (now there’s an idea) and in doing so came to a very important realization.  We could refurbish our building for a substantially less amount than the going rate of a Boeing 787 Dreamliner.  I engaged in conversations with people that had installed new windows and siding on their detached homes for far less than the price of a new BMW.  The next question that came to my mind was now that I have this knowledge and a glimmer of hope, what do I do with this?  How do I stop this?

I phoned an instructor that I had at the Calgary Real Estate Board and he suggested I contact a specific lawyer, she’s a top condo lawyer in Calgary.  I consulted with her and she advised that we needed to get control of the board.  She told me the way to do this.  So we did.  As a result,  tonight a new condo board was voted in. I’m the Chairman(woman) and Greg is the Treasurer.  We have 2 others on the new board.  All very capable and ready to take on the new project.  We know we need to get our building in order and in doing so, we hope no one loses their home.  Tonight we spent an hour discussing our new action plan.  I can tell you I feel great relief, my jaw has  finally become unclenched.

My comments though transcend this experience.  Whenever I take clients into a condo I’m aware of factors that aren’t about the space itself.  I talk to people coming in and out of the building or in the elevator.  Questions such as, Do you like this building?  Are there any problems in the building you know of? What’s the condo board like? Are you happy here?   Condo documents are very important, I believe the board minutes speak volumes.  Now with new legislation the reserve fund must maintain a prescribed amount.  This is likely the case because many condo boards previously used the reserve fund as a slush fund.  Think about it, owners are investing a huge amount of money  into their home.  The fudiciary duties of the condo board impacts an owners property values.  Most people don’t want to join a board because of the time commitments.  I tell all my clients, join the board.  It may take some extra time out of your life but let me say this.  If you’re given a special assessment out of the blue for $45,000 and you think it should only be $20,000.  What is your time worth then?  Maybe a $1000 an hour?   Your doing better than a lawyer, mine charges $450 an hour.

With a house you have an idea of what your buying.  You control many of the decisions.  With a condo it’s different.  Make sure you trust your condo board, make sure you attend all the meetings, make sure you stay in touch with what’s happening physically within the building.  If you don’t, cancel your trip to Mexico.  Trust me on this not even a hammock, tequila and a mariachi band will block out what awaits your return.

Condo buyer beware.  This is what due diligence is all about.  Don’t be afraid to buy a condo, but make sure you investigate, observe and question.  This will ensure you’ve made the right decision.  Let me tell you the difference between a right decision and a wrong one: 100% of every dollar you invested.     

Jacqui Williamson, REALTOR, Certified Condo Specialist
Century 21 Bamber Realty Ltd.
403.245.0773
www.jacquiwilliamson.com