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The SiteVisit
Leadership in construction with perspective from the job site. A podcast dedicated to the Construction industry. Construction professionals, General Contractors, Sub trade Contractors, and Specialty Contractors audiences will be engaged by the discussions between the hosts and their guests on topics and stories. Hosted James Faulkner ( CEO/Founder - SiteMax Systems ).
The SiteVisit
How Condo Depreciation Reports and Data Can be a Lead Source for Construction Business Opportunities with Thomas Beattie, Co-Founder & CEO at Eli Reports
Join us as Thomas Beattie introduces the groundbreaking Eli Report, an AI-powered condo document review platform for real estate professionals. This innovative tool enables users to quickly and efficiently review condo documents by extracting relevant building issues from years of documentation in just minutes.
We also delve into the profound impact of natural disasters, such as wildfires, on insurance strategies, highlighting how communities are adapting to maintain reasonable premiums.
Next, we unravel the financial challenges faced by condo owners in British Columbia, contrasting them with Ontario’s more robust approach. We also introduce a benchmark report designed to enhance the financial planning capabilities of condo boards and property managers.
Finally, we explore the future of smart community living, where technology and AI work together to enhance the living experience for everyone involved.
PODCAST INFO:
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So you and I are familiar with the same area like the North Shore. Yeah, you like it over there. Yeah, it's a great spot. You guys have your own police force. That's a good part.
Speaker 2:Wonderful. I haven't had to interact with them, thankfully, yeah.
Speaker 1:Well, maybe a little few speed traps here. It's actually kind of interesting. We went to high school with one of the West Vancouver police guys and some of my friends still live over there, you know they've had the pullover and he's been like, yeah, here's your warning, here's your another warning. But it's cool because it's like a community thing, right, I mean West Vancouver, north Vancouver, you know it's kind of well, west Van has its own police force. I think North Van is still RCMP, correct? I?
Speaker 2:don't know, but all of the North Shore is great. We've got great schools and close proximity to the city, so yeah, that's great Kind of like the Beverly Hills of Metro Vancouver, absolutely.
Speaker 1:Yeah that's cool, all right, so today we're going to talk about your company that you started five years ago and the LE Report. Yeah, okay, which is very, very interesting, and this is going to be eye-opening, I think, for a lot of people in construction, you know, realizing what the opportunities are, what kind of reports you guys make and what kind of a work pipeline. The really cool thing is there's a work pipeline with a pretty good time horizon in order to get contracts together, to get future work together. So, yeah, I think that's pretty cool. So I think we're going to get into that. I think we're in the time of the LA wire fires. It's crazy, I mean, we just seem to everything's kind of. Have you been watching any of that stuff?
Speaker 2:I have. Actually, I visited a friend in Long Beach just a couple of weeks ago Before that, before that, and yeah, just over the holidays, and yeah, it's just tragic what's happened down there. Obviously, we've seen a lot of fires in BC over the past few years as well, and you know significant impacts from these natural disasters.
Speaker 1:Yeah, I mean I think you guys from doing depreciation reports et cetera and then some of it, we also see things where you know insurance claims keep going through, especially in multifamily. Yeah, it plays a lot of part in depreciation reports, like how many times the place has been flooded, what's that done for? You know, floor seals, all that kind of stuff.
Speaker 2:Absolutely. Water claims were a huge issue five years ago. Premiums went crazy. Deductibles went up dramatically. All these communities were affected and it was a twofold impact on owners because they not only had their strata premiums go up here in British Columbia, their condo premiums, but their personal lines policies went up as well because the deductible coverage that they needed as individual owners to cover any loss that originated in their unit went up.
Speaker 2:So or any loss that originated in their unit went up. So it was a significant change in that space and I think that the communities are now doing a lot better with routine maintenance to not use their insurance policy for some of that stuff, and it's resulted in better behaviors and now premiums and deductibles are softening, which is great for those communities. But that's in the face of these sort of large-scale disasters, which are obviously quite difficult to control, although there are measures that you can take to slightly reduce your your fire risk if you are in an area of heightened activity yeah, it seems.
Speaker 1:What I find shocking about this whole scenario is, you know insurance companies like canceling, you know fire protection insurance and like canceling all the stuff prior to um. I'm not getting conspiratorial here. I guess what I'm just saying is is that if you were to look that of akin to a lot of buildings that you know you see a lot of flooding going on and it's going down multiple floors. I have that. You know we live in Coal Harbor. We had that One of our elevators is out because the 28th floor one of the contractors was heating up some drywall to make it cure faster and it didn't catch fire, it just the heat sensor in the sprinkler went and for 45 minutes all sprinklers in the place were going.
Speaker 1:Oh no, and it went into because the way the elevator works is, it goes up because it's on the top floor, goes up and it opens up and it went in and fried the panel and then took out three to four floors underneath that. Unbelievable, unbelievable, right, so I mean. But the question, I guess what I'm saying is that you know, I know we're going to get into your realm shortly here, but you know, when you think of how insurance companies are just getting hammered and hammered and hammered because of these floods, how much damage it creates. At what point are they going to say, like the wildfire thing, sorry, these are becoming too much of a risk. No thanks, thanks, but no thanks, I mean it's going to be interesting.
Speaker 2:they're all about pricing, risk and, um. You know, we saw deductibles for water in these buildings. Some of them rise from five or ten thousand dollars in 2018, 2019, up to I think the highest we saw in Vancouver was a million dollars, and that means that you've got to have a million dollar loss before you can make a claim on your insurance policy and if you do, your premiums will kind of keep going up. Those premiums, thankfully, are softening now and many of them that were between sort of 50 and 250,000 over the past three to five years are starting to come down and get to the lower end of that.
Speaker 1:Welcome to the Site, visit Podcast. Leadership and perspective from construction with your host, james Falkner.
Speaker 2:Business as usual as it has been for so long now that it goes back to what we were talking about before and hitting the reset button. You know you read all the books, you read the emails, you read Scaling Up, you read Good to Great you know I could go on.
Speaker 1:We've got to a place where we found the secret serum. We found the secret potion. We can get the workers in, we know where to get them.
Speaker 2:One time I was on a job trip for a while and actually we had a semester hungry.
Speaker 1:You know, I was down at Dallas and a guy just hit me up on LinkedIn out of the blue and said he was driving from Oklahoma to Dallas to meet with me because he heard the favorite connect platform on your guys podcast. And we celebrate these values every single day. Let's get into your business here.
Speaker 2:Great yeah, eli Report. We came together, our founding team, in 2018, and we talked about how, when you bought a unit in a condo, you really didn't know much more than what you saw within those walls. You were handed 700, 1,000 pages of documents sometimes and kind of wished good luck. So typically these are like the strata minutes.
Speaker 1:Yeah, strata minutes, and that's what you're. So I went through this about a year and a half ago, right? So your realtor has to actually sift through all this stuff and they, if you have a good realtor, they're going to show you things, yes, and they're going to look at all the depreciation reports, et cetera, that you need, but you don't know how detailed they are.
Speaker 2:You don't know how detailed they are. They're doing their best. They are industry professionals. They've got a better understanding of these issues than a normal buyer.
Speaker 2:But yeah, of course they're better informed, they have more time. If they've got the luxury to be able to go through everything in detail. That's the best case scenario and we launched as a tool to help them. We wanted to help them summarize the issues that are affecting a community, from the meeting minutes, from the engineering studies, from the depreciation report and the bylaws and rules for lifestyle restrictions, and that's what we've been doing.
Speaker 2:They've been our main users in British Columbia a lot of lawyers and notaries in other jurisdictions who are more involved in that review process than the realtor, but in British Columbia it's been mostly realtors and they've used it to get up to speed quickly to help identify where they need to focus their time and their clients' attention. And the ELI report's been used for that purpose and shared by realtors with buyers for years and it's just a really nice informative tool that we don't give any advice or opinions. It's all about extracting the information and organizing it so that you have a better understanding. Okay, this is pretty cool the information and organizing it so that you have a better understanding.
Speaker 1:Okay, this is pretty cool. Yeah, so the Eli report. You were saying that the Eli part, sort of the name, came from every little item. Yeah, which is pretty cool, because I think it is devils in the details on this stuff. It is for sure, and you have your octopus kind of icon there. It's just multiple tentacles. He's a friendly Eli, that octopus.
Speaker 2:Okay, and you have your octopus kind of icon there. It's just multiple tentacles. He's a friendly Eli, that octopus. And the idea is, of course, that octopus they're an intelligent creature. They've got eight limbs. Lots of things going on at the same time.
Speaker 1:There's a lot to pay attention to cuttlefish, which is similar genus, I think, can change their color, like to me that's so weird, mind-blowing, like the fact that it can emulate the terrain around it and and just blend in just by. The question is how does it know? How does it know? How does it know that that is like rock over there and that, like, how does it sense it's almost as like it's it's got some other like are we missing something?
Speaker 2:they are highly intelligent creatures. You know, they'll put themselves in a container and screw the lid on for safety and then unscrew it when they can get out. It's just yeah. I think that they're magical creatures. So we have a friendly octopus as our mascot.
Speaker 1:I like it.
Speaker 2:And you know we've been working with a lot of people over a lot of time. This five years that we've offered Eli Report, we've done over 25,000 reports across North America. That helps a lot of people understand their communities better and it helps us understand what's happening in predominantly the residential multifamily world.
Speaker 1:There are commercial stratas and other kind of corporations that are industrial but the vast majority are residential. So let's just get into some detail there. Obviously, we're a construction podcast, so we're going to be looking at what the opportunities are for the different sub-trades that get involved in this stuff from these reports and what kind of pipeline for work this can provide them with you guys. So who typically pays you guys to do the report?
Speaker 2:it's a buyer, an owner uh strata council or condo board member or a realtor um lawyers in ontario um are frequent users and are these expensive?
Speaker 1:like how much?
Speaker 2:no, zero to sixty dollars, depending on how many features you want in it.
Speaker 2:Uh, the free one will will use the existing text layers in the documents and give you the natural language right. And then you know, for twenty dollars we do text layers in the documents and give you the natural language, and then for $20, we do text layers on everything. For $40, we give you benchmarks that compare your buildings to others of the same type and the highest price point, at $60, is the one that includes the special levy or special assessment forecast that will tell you when you're going to be on the hook for about how much money, based on math, and that's using the latest engineering study, the depreciation report or reserve study, and the existing information about how much money you have in your reserve fund and how much you're contributing every year. So we use basic math to project when you're going to be short, how much, and we tell you what for. So you might find out that you're expecting a $6,000 special levy in 2029 for the windows and another one in 2033 for the elevator. So those sorts of things.
Speaker 2:And as a result of looking at all of these depreciation reports, we've got the projections for thousands of buildings upcoming capital projects. So we know when there's roofing projects, when there's siding, window, plumbing, elevator, fire, safety, parking, anything you can think of balcony and I think that's where there's a lovely time because this intelligence that we garner through Eli Report, we're putting together data portals as OctoAI that's our company name to allow these people that serve those communities to have better insights on where those buildings are, what those projects are, who's managing them, and the idea is that it's a win-win for the partners that we work with and for the communities themselves, who obviously get access to more quotes from experienced service providers themselves, who obviously get access to more quotes from experienced service providers making sure that they're not going to end up paying too much by horizon where, for instance, they'll say, three years from now we're going to need new windows, let's say, or seals, et cetera between floors.
Speaker 1:So let's just say that's the deal, okay, no-transcript, whether or not there's going to be enough there or not. So I think there's some headwinds there coming for a lot of condo projects like multifamily projects here, undoubtedly so and then on the other side it's like those and I'm getting into some nuances here, but I can only sort of go from the experience that I've had. We live in a place that has the concierge and all that kind of stuff and you have all your fees and it goes up every year. But I look at all of the expenses for the building and I think how is this sustainable over time, like with maintenance fees going up when it comes in order to have personnel, for instance, even a concierge where they get paid. So we're seeing that the world is getting way more expensive faster than the strata fees are going up. So what you end up with you end up with these levies are everywhere and they're hidden everywhere and I don't think people realize.
Speaker 2:Well, last year there were about 100,000 owners in British Columbia that got hit with a levy, and this year we projected the number is going to be closer to 140,000. Okay, now, the average amount of that is going to be roughly $7,500. So these are huge sums of money for people that are already putting out significant amounts on a monthly basis for those maintenance fees. And British Columbia is still taking a well, we'll put 10% of our operating budget into reserves approach and that's not reflective of the work that will need to be done in each of these communities. And Ontario requires full funding and you have to every year say, yeah, we're on track to have funding for our capital projects, and sometimes they're still short, but they do their best. British Columbia has taken a we'll pay for it as we go attitude, and I think that's just something that more owners need to be aware of. There's a lot of different opportunities that exist to try and make life a bit easier for people living in these communities, and so, beyond the Eli report, which is a nice go from zero to one get an understanding of a community, we've developed an annual benchmark report designed for condo boards and property managers to take a really deep dive on that budget. You've seen it, but what are you paying versus the buildings that look most like yours in the lower mainland? What are the other condos that are dealing with concierge that have the same sort of feel as your building doing, and how can we get that right? So, from an operating budget perspective, the annual benchmark report is an interesting tool. It also highlights the capital planning and when you're going to need to fund these more significant projects. It tells you what your ideal reserve fund contributions should be, so that you don't have any net levies over the next 30 years, and tying it back to the construction industry. It's all about knowing when those projects are going to happen, and some depreciation reports we see now, james, are still from 2013.
Speaker 2:Now the government changed the rules in 2024, and everyone's got to have a report on a five-year cycle starting in the next couple of years. And that's great because you're going to have a report on a five-year cycle starting in the next couple of years, and that's great because you're going to have a much clearer picture of both the costs, which have changed dramatically since those estimates were made, as you say, in 2013. And the timing. The engineers are professionals. They have a good sense of the expected life of an asset, but when you're taking a report from 2013, their assessment of you potentially needing a new roof here in 2025, maybe you needed to do it three years ago. Maybe it'll be good for another five years.
Speaker 2:The fact that you are supposed to do these on a three-year cycle and now have to do them on a five-year cycle will give everyone owners, property managers and the construction companies that serve them when they need to do these works much clearer insights on the timing and cost and scope of those projects, because when you're within five years, you've kind of got a tactical horizon. You know what you need to do in the near term and that's, I think, one of the things that our partners are focusing on that our partners are focusing on.
Speaker 1:You know, when I think of the particular, it's an interesting business because you know doing this work, because there is no general contractor, typically, right, you have a person that it's usually a sub trade of some sort that is doing this work. If it's envelope, they're kind of managing the project themselves and it's a significant amount of work for them. And I think what would be annoying from their point of view when it comes to strata work is that everyone gets gamed on this. We need three quotes, and I do get that Like when you know, when a GC puts workout for tender, it's kind of a little bit different than it is this work. That is like they have to manage it all and that they know they're going to spend X amount of time looking through this and obviously two of them are not going to get the business.
Speaker 1:Yeah, and I think that it's an annoying kind of, because you're also dealing with different levels of strata. Professionalism, absolutely Right. So working for a GC, yeah, sure, there's a big spectrum of how good GCs are Some pay on time, some don't, et cetera, et cetera, right, but these stratas it's like, oh man, some of them have no idea and then you're going to have to manage that. So there's the spectrum of complexity, of how smooth a job will go is a very rocky terrain, I would say for most work like this.
Speaker 2:Do you get the sense that some of them shy away from quoting on strata work because they know that?
Speaker 1:it's-.
Speaker 2:I think so yeah and that's unfortunate because then you end up having stratas that are served with sometimes padded quotes. They know it's not very competitive, they don't really want the work.
Speaker 1:I think that happens a lot.
Speaker 2:And that's unfortunate, because the goal of getting three quotes is that you are supposed to be getting a good and fair price. But if the good players are busy doing high quality work, getting paid fairly for those projects, and then they declined a quote on a Strata project because they just know that the chances are, say, one in three, that's unfortunate. We really do want to unite the best companies with those that need quality service.
Speaker 1:Yeah.
Speaker 2:And I think transparency will help in this industry a lot and we hope that's something that we can help bring.
Speaker 1:So there was in our building the, the hooks had to be replaced on the roof, yeah, okay, which is, you know, typically for services on the side of the building window washes, et cetera, swing stages and stuff like that and one of the quotes was one third of the other quotes, wow. And it was like, okay, why is this so cheap? And, of course, the natural propensity is to be like, okay, well, obviously, obviously, you know, for the, for everyone and and our budgets. You know, obviously we're going to want something as economical as possible, but to have to go through this fear and risk because very often you know you're talking about a strata council, you are and the strata years volunteers they're not getting paid.
Speaker 1:They're not getting paid. They're not getting paid.
Speaker 2:They're not professionals. They're not professionals. They do the best they can. If you're lucky, you've got someone that's got some relevant workplace experience.
Speaker 1:But the role of that council is a difficult one it is, and they've got to make these decisions. Well, we just go with the cheapest one. You got all these voices and you know. So I mean I wouldn't, we'd just go with the cheapest one. You got all these voices and you know, so I mean it's kind of an interesting business, so you know. So, with your initiatives that you have, obviously you see these complexities that are going on. You see the opportunities. Once you guys do these reports, then you and I kind of just, I think, sort of landed on together as a realization is that, yeah, some of this work may be not being serviced as well as it could be because of these reasons, absolutely. And is there an opportunity with your company, to be able to create an ecosystem around that? To level set that a little bit?
Speaker 2:I hope so. That's one of our priorities. We want to make life better for everyone that's living in these communities and everybody that's serving them. And it's difficult because, as you say and as we've discussed, strata Council members are volunteers. They typically don't have all of the relevant experience to make these decisions. They're, in many cases, assisted by a property manager. Those property managers often serve a dozen, sometimes up to 20 different buildings and they don't actually get paid that much, and some of them do. Okay, you can make six figures as a property manager.
Speaker 2:But, with the companies. But you're right and it's a tough place to be, and I would say that property management is one of the toughest desk jobs that you could have, and I'm a recovering investment banker, so if I'm saying that's a tough job, I think I know it. You just get an inbox filled with people that have issues. You're getting hit with bylaw complaints, maintenance issues, staff issues relating to concierge or to caretakers or any of your landscaping issues, and you're responsible for trying to help them redo their annual insurance policy, manage building projects, line up these capital projects. It's a lot and I think that they're often underappreciated.
Speaker 2:I know that there are great managers and there are mediocre managers, but it's a tough job, and anything we can do to make sure that they're well-informed and conveying the realities to the strata council and the owners, I think is good, because your tendency is to try and make everyone feel comfortable. I want them to feel uncomfortable. I really want people to understand what's coming and be better prepared for that. So the annual benchmark report that we put together, that we're offering through property managers and to strata councils, is designed to be the bearer of the bad news. Let me factually show you how you compare to others and what the reality looks like for you, so that it's not the property manager's fault that there's a levy. You've had 20 years to fund your roof project. If you haven't adequately done that, it's not the fault of the property manager or necessarily whoever happens to be on strata council right now. It's been a long time coming, so we want to put everyone's eyes down the road so that they understand their communities better and can make better decisions.
Speaker 1:Wow you know, as you're talking I always say this on the podcast is my uh wheels are turning because serving the kind of uh market that you're serving and providing that level of information. It's usually the other way around. There's usually like property management services that are on the top and then they're trying to come to you or people like you to get all this kind of messy stuff out of the way yeah, whereas you're coming in the other way, you're going. Here's all the messy stuff. This is the first thing. This is what? Because everybody is contributing on a monthly basis five strata fees by having the X amount of dollars go into reserves.
Speaker 1:Everyone comes in a building every day. It gets used. It's depreciating, whether you like it or not. And the opportunity that I see for you and your company. You guys have probably already thought of all of this, but you know that the preferred vendor of different subtrades that can do different things with their star rating and those you know having the pipeline of all the work, having the pipeline of all the work, and maybe there is a, some kind of a I don't want to say marketplace, but that's a nasty word but there is whether or not when these reports are done, whether or not the strata allows there to be a transfer of information.
Speaker 1:they allow that, obviously, because some of this is you know, a depreciation report is kind of reasonably confidential I would guess it's not like it's someone's medical records, but you don't want the whole world knowing all of this stuff.
Speaker 1:But because I think you know what's interesting is that when I look at you know what's interesting is that when I look at you know property values, especially in a hot market like Vancouver is, toronto is where people are spending a significant amount of their income on their property. Their net worth is tied up a lot in their property, absolutely Like I know lots of people in the properties who've got you know $8 million houses and a lot of their you know their careers kind of do this, they oscillate, they go through hard times, good times, all that stuff. But that property is that solid thing that's always worth something. And down here, you know in the sort of plus million dollar mark, there's a lot of capital tied up in that and you know. You see the property valuations. We've had our assessments coming in through the city for Vancouver anyway and those were the BC assessments and you're seeing the softening. And also from your opinion, how much of that depreciation did the depreciation reports get to the city?
Speaker 2:and they no, to my knowledge, they're not being looked at at scale in the way that we're starting to look at them. Obviously, the engineering firms who write them and there are a dozen firms that do the majority of these reports within any given province or jurisdiction They'd have a view on all the ones that they've done, but to my knowledge they're not being used at scale yet by those that are doing the assessments, and they should be. I mean, obviously the assessment authority has an understanding of you know when they were built, the age of those communities. They may be informed when certain projects are done. Obviously, permits are pulled to do work. You've got a sense of of that community. But to do it at the scale that we're doing, where it's granular, it's building by building and it's updated every three to five years as these reports get updated.
Speaker 1:I'm not aware of anyone else doing it and I think it's important work the reason I ask is, um, before we were in the property where now we're looking at a different one, and once we got into the details with our real estate agent, we found that it had a huge assessment coming up like crazy amount of money, and I think it was almost a hundred grand per unit. Yeah, grand per unit. Now what's interesting is I went and looked at the BC assessment for the place. We did get, versus the other one, similar square footage, and that one with the $100,000 assessment has gone down 100 bucks a square foot.
Speaker 2:Wow.
Speaker 1:So they must know something. That's cool.
Speaker 2:Well, I'm glad to hear that they do, and we've had some conversations with the LTSA and the group that helps provide those assessments and they're doing really great work with title and with the buildings and the valuations. So I think that there's a lot more that will continue to evolve in that space. But it is interesting you mentioned avoiding one because you could see this upcoming levy thanks to your realtor, which is fantastic. We had a similar story. A realtor came to us a few months ago and he said oh, I sent my clients the ELA report and they pulled out. They didn't want to make an offer. They saw a $50,000 levy coming in 2027 and said, no, I'm not going to proceed. It was a competitive situation. And said, no, I'm not going to proceed. It was a competitive situation.
Speaker 2:And my first fear as the CEO of a company that provides these reports is did we make a mistake? Because it's possible. We've got great technology and we've got a great admin team that reviews it. It's a combination of AI and human review, but mistakes could be possible. Anyway, I took a quick look. No errors were made. We stand by our projection. It's all based on math. It's based on the engineer. I don't have any opinions. Ai is not guessing when it's happening, it's just math. But I said, no, that's a thing. I think you've done a good thing for your client here. Talk to them about it and explain what's happening here. And anyway, he found them another place within two weeks and they were very happy that they were not facing that kind of upcoming levy and I'm delighted to hear that your agent went through that for you.
Speaker 1:Yeah, it's my sister. That's the good part. She was awesome. Well, that is so lucky. No pressure, right? Yeah, no pressure. Yeah, dealing with the little brother Damn, yeah. So where do you see this, your industry, going in the next, let's say, five years? I mean, you're using AI tools now for the analysis. Yeah, do you see the subcontractor being more connected via your platform?
Speaker 2:Oh, absolutely yes. So all sorts of vendors to these communities some are already working with in landscaping, exterior cleaning, concierge you look at those sort of operating budget line items. It's helping them qualify quotes so that they know before they go to site approximately what they should be looking at. And it's helping them get in there and provide a competitive quote to try and win. And it's a real mutual win because the owners in that community are going to get better service, better price or both, but they'll stick with their incumbent. So this is saving everyone time. It's helping them grow their business. It's helping them leverage the relationships they may have with property management firms, with individual managers. You can now see the other buildings that those individuals or those companies are managing. So I think that anytime you're able to shed light at scale, with data, onto problems, you can come up with value and solutions for everyone. So that's what we're all about mutual wins.
Speaker 1:So if, let's say, an envelope contractor reaches out to you guys and says this is the kind of work we do typical high-rises, complicated work, swing stage stuff kind of work we do, you know, typical high rises, complicated work, swing stage stuff mostly that to essentially to mitigate having to put the entire green screen or blue screen that they have netting, they have to put on everything. That's a pain in the ass, especially when a lot of places are buying the view right and they don't have it for 18 months. It's terrible. So what can that contractor do you know, reaching out to you guys like, what is it ideally? What kind of email inbound emails do you want? Phone calls, et cetera from sub-trades that are good at what they do?
Speaker 2:I want to hear from them. You know which communities they serve, the types of work that they do, the types of buildings that they want, and we use AWS QuickSight, which is an online portal system, to provide them with access to the intelligence that they're looking for. So they'll get only the cities they want, only the building types they want and only the insights on the capital projects that they're interested in doing and that allows us to price it economically. It allows these communities to get these quotes from experienced, qualified professionals.
Speaker 1:That's cool. So are you guys going to be? Are you going to think you're doing marketplace kind of thing or not in marketplace, but more like?
Speaker 2:There are existing companies that are kind of involved in the procurement process, and that's not so much what we're doing. We're condo intelligence, so we're providing insights and intelligence for communities, property managers, strata councils, condo boards, owners and now those that serve them, and that's where we see ourselves within the ecosystem. I think that between the major property management firms, existing tools and the existing players that are in that procurement space, that's well covered and I don't need to kind of tread on their toes.
Speaker 1:Which ones are those procurement ones?
Speaker 2:Like Vendor, pm is a good example, so that's one that's been set up a number of years ago. It's another prop tech startup. They raised several million dollars and have been trying to solve that problem, bringing together trades quotes with these communities and you know, you say, oh, we need the three quotes. Well, they're inserting themselves into that process and serving a lot of property management firms. Others have their own in-house tools, are you?
Speaker 1:guys connected with those guys at all.
Speaker 2:Yeah, I mean we know Emil Brill, who's the founder of Vendor PM, and it's been a while since we spoke. We've got obviously more in common now than we did several years ago, so it'd be worth reconnecting, that's cool.
Speaker 1:So what do you see coming down? The, the, what. What headwinds do you do you think there are for this kind of work for condo owners right now, like what do they need to be wary of?
Speaker 2:What kind of worries you about the market et cetera? There's a lot to be worried about if you're a condo owner. I think being aware of your community's future is really important, and I say that as an owner and as a buyer.
Speaker 1:Can you be more specific when you say community's?
Speaker 2:future. I mean the physical and financial health of your community. I think too many of us are complacent. We see the day-to-day stuff but we're not necessarily aware of those bigger projects. Your sister's saying there's a $100,000 project coming down is something that many owners in that building may not be that familiar with If it hasn't been tabled in their AGM, meaning it's happening in the next year or two and they're starting to talk about that special levy. Many of those owners might not be well informed and when you're talking about anything of that magnitude it's a significant life impact. You know you're either remortgaging, adding on a line of credit. Most of us don't have $100,000 sitting around for a capital project in their community, and so that's what keeps me up at night.
Speaker 2:I talk a lot about the fact that we're not properly funding our reserves in this province. Many jurisdictions in North America find themselves in the same situation. You're seeing a lot of noise out of Florida. Obviously in the wake of the Surfside tragedy a couple of years ago, where a condo building half collapsed, they started requiring more structural assessments of other communities. Some of those communities have identified issues. Some owners are being told that they need to come up with a quarter million dollars for major structural works and they can't afford it. So I think that when you come and look at the condo landscape across North America, that's the thing that keeps me up at night if I'm a condo owner. I think if I'm somebody that's serving these communities, we really need to get better organized and make sure that these communities understand what's coming and manage those projects efficiently, effectively and productively.
Speaker 1:Okay, so what do you think about the inflation versus strategies?
Speaker 2:um, inflation is very real. Um, you know, I I remember hearing the word transitory and shaking my head because, you know, you just knew it wasn't not in the sense that they were trying to describe it. Now it's returned to what appears to be a more normal level, but, conveniently, when it comes to major costs, um, operating these buildings, I think that the true inflation rate for condo owners is higher than the stated inflation rates. Exactly, yeah, and that's something that we've all got to be aware of and plan for. I see some stratas triumphantly declare that they're you know, they haven't raised condo fees in three years and I'm going.
Speaker 2:Well, you're just robbing yourself here, because if you're not, if you're not setting aside more money for everything else, you're cutting something along the way and maybe it's something you can live without. Maybe you've managed to reduce your landscaping budget, maybe you've managed to make it with one less shift on your concierge, but if it hasn't been a conscious choice, then the costs and the deferred maintenance that you're putting onto your community by trying to falsely cap your fees is just putting that burden on the future. So that's one of the realities that we are all seeing them face with.
Speaker 1:Yeah, and also in the aging population in some of these buildings that cannot afford an increase. So there's a community side of things where, um, you know, I can think of some people if I were to suggest, hey, let's put our strategy up, even by something small like 50 bucks, yeah, okay, it'll make a huge difference. You know, together it's a small boutique building so you're like, okay, well, what's this really, what's this really going to do? Is what they would say Say well, it's every month, it's all year and it'll make a big difference. So, but the reality is, is that the amount, of like, when minimum wage goes up significantly and then trade costs go up everything, as you nailed it there a couple of minutes ago, is the actual stated inflation rate you hear in the news, is not the actual increase of costs that you see on the ground level. It's like a crazy amount. Sometimes it's an inflation rate of X and then you've got an inflation rate of 25% on the reality of life, yeah.
Speaker 1:So that's pretty crazy, right? So, yeah, can I ask you a question Is there any AI systems that you have seen that replace these expensive property management firms?
Speaker 2:You know, I think it's all about incremental gains and efficiencies. I'm an advisory board member of a firm called Strata Press, which allows communities to manage and organize their documents, whether they're self-managed or whether they have a property management firm, and the work that Sean Jordan is doing there, I think, is quite impressive. It's not going to replace a manager, it's going to help them be better at their jobs. If you can streamline the process for issuing a bylaw notice, if you can make it easier for an owner to understand what their bylaws are and what type of pet they're allowed to have without having to email the property manager, then they can be more efficient. And there are AI tools.
Speaker 2:There are great system tools being built by the plethora of companies that are like Strata Press across North America that are making life easier and better. To afford them purely because your, your strata council or your condo board is comprised of volunteers, and having someone that has the experience, that has that professionalism, that has a network and a system around them that can help them navigate the complex issues that affect every community, that's a good thing. So I'm hoping that technology and AI makes everyone more efficient, it makes them better, it allows as the number of condo buildings continues to expand and the number of property managers is treading water at best. We read about shortages of property managers every year and I think, as the number of condo buildings continue to increase, they've got to be able to serve more communities, or more communities are going to end up self-managed.
Speaker 2:And I know that that's something that gets, you know, a bit of coverage as well.
Speaker 1:Well, I think the big delta of any building is the old building manager. Not property manager, but building manager, the person that's if the gate's stuck or if, like you know, something's going on that a third-party property management company you know, is an email or a phone away and miles away to be able to deal with something immediate.
Speaker 1:And then you know so that to me there's that huge Delta problem that I think a lot of buildings are going to be in where you know, on the paperwork side of things, this is planning, this is you know, all that kind of that stuff Big picture but yeah, big picture stuff, that's great, but like the nuances of daily, there's something every day, every day, absolutely Every day. That's going on.
Speaker 2:And as you say that Now, concierges are having to do it, that building manager, that superintendent, that person that's been there for 20 plus years, who knows exactly why this door gets stuck or why there's water seeping into this particular place. That intelligence is something that does get lost if not transferred, and I know someone who's had that exact situation. The guy's been there for nearly 30 years. He's retiring. They're in a panic. They need all of that knowledge passed on before his retirement and I think that, yeah, that on-site expertise is important. Obviously, fresh eyes can be good too, instead of ignoring or knowing how to just avoid a problem for a long time. Fresh ice can solve a problem rather than just tend to it, but, yeah, I agree.
Speaker 1:I mean this is a luxury problem, but I've noticed in my building that all the replacement light bulbs are not the same Kelvin.
Speaker 2:And I'm like it pisses me off because I'm like what the hell it's not a dentist's office. They're different whites, yeah.
Speaker 1:So one's 2,700, the other one's 4,000. I'm like, whose job is it? Yeah, somebody has to get that right.
Speaker 2:But the thing is, I don't think it's anyone's job.
Speaker 1:Well, you've got to make the noise about it, because I agree, this is a highly irritating luxury problem?
Speaker 2:Yes, but it is highly irritating and we talk a lot about different things. You know we have insights to all these different budget line items and one of them is the gas, the electricity, the water and sewer bills and whether you've got high gas consumption and you could look at shifting towards a heat pump solution, whether you are using a lot of electricity relative to other buildings and you might consider an LED lighting project or some other efficiency upgrades. Consider an LED lighting project or some other efficiency upgrades. Those are the times when you get to make those conscious decisions and somebody's deciding which bulbs to replace and obviously you've got lighting of different styles and different ballasts and different fixtures and, yeah, that decision has to be made. I don't know what to tell you in your personal situation. I can tell you I'd go down to the hardware store and change that bulb myself because that would just drive me nuts and it's just not going to rank on a property manager or strata council's list of priorities.
Speaker 1:It won't because it has to be at the next AGM or something and it's like a year later they're going to be dealing with light bulbs, absolutely.
Speaker 2:And let me just say for the record that I'm only suggesting a light bulb. You are not allowed to do any electrical work in your strata building. You need to be a licensed professional to do that. So when I talk about, you know the Kelvin issue. It's merely changing a bulb.
Speaker 1:Yeah, yeah, interesting, okay, all right, so what?
Speaker 2:else is happening. You know we're looking at the future of smart buildings and smart communities. How can people get more efficient? What can they do that will make their communities better for the longer term and more comfortable for them? You know a lot of the buildings in Vancouver were kind of a unique situation in North America. Is that when they were built, there's no air conditioning. Is that when they were built there's no air conditioning and, depending on the year, your community and depending on your aspect if you're south-facing, your unit might get uncomfortably warm for a protracted period during the summer.
Speaker 2:So finding ways to accommodate heat pumps and other energy-efficient ways to make your living space more comfortable, I think, is an important issue. There's been more discussion about that and lightening of the rules to make it easier for people to make their living space more comfortable. We've obviously seen a big push by the government with the electrical planning reports. They want more electric vehicle support, more ev charging. I think that that's a great innovation, and I think we talked about insurance premiums and deductibles earlier.
Speaker 2:There are some great solutions out there that will help you manage and mitigate losses and to manage some of your utility bills. So one solution is putting in a pressure gauge right where your meter is to prevent you from paying for air bubbles in your water supply. It's actually a big deal and some companies out there will save 10 to 15% of your annual water and sewer bill, which can be a significant line item. And then you've got the insurance side where with, for example, bfl's FlowGuard program, if you put in and have sprinkler systems and if you've got smart water shutoffs, you save money on your premiums every year. So these investments in smarter home solutions are allowing owners to make savings on a recurring basis. So those are all things that I think are being discussed and are important and are reflective of the future of community living.
Speaker 1:So, whether you're an HVAC company that's looking to serve these communities, or whether you're looking at some of their bigger capital projects new, more energy efficient window installation and new siding and insulation all of those things I think are are big, um big priorities for these communities so in the uh, in the pacific north coast here, or pacific north northwest, um, specifically, um, we see a huge issue with the west, south, southwest sides of the buildings, absolutely, and the other, so the other side has like a algae not algae, but on the dark side yeah, you've got algae moss.
Speaker 1:On the moss, exactly Moss and mold on the northeast sides and then totally baked on the southwest sides. Yeah, yeah. So that's got to be like how much, like from the envelope point of view of like window seals and all that kind of stuff that get heated to the like?
Speaker 2:are we seeing this seasonal, like summers are?
Speaker 1:getting really hot? Yes, like is this a climate change thing, do you think?
Speaker 2:I think weather is a thing Without you being political, without getting too political about it, I think weather is just a thing.
Speaker 2:Weather is and there are fluctuations over time, but we're in a period now where summers can get better. Are we having an impact? Yeah, I mean there are impacts, but I think that the challenges that these communities face are obviously how do you adequately maintain buildings where the weather seals are getting cooked on one side and they're covered in moss on the other? I think that's an issue that I think is widespread across the Northwest and I'm sure that many of your customers and clients would know how to handle that. I see it as you do. I lived in Coal Harbor myself and I faced west, and that little unit got hot even 20 years ago. So that building had central AC but none in the units. So you know that was an issue even 20 years ago.
Speaker 1:What was the reason most air con was not put in?
Speaker 2:I mean, it was just something that we didn't think we needed.
Speaker 1:You know, we kind of thought that we were temperate.
Speaker 2:I certainly think it wasn't as hot and we were not living in the same concentration within condo buildings. You know, you look back 40 years. The number of people living in condos were less than 10%. Well, now, across North America, nearly one in three people lives in some sort of multifamily community, whether it be a gated community in HOA or in a condo of some description, townhouse, duplex, et cetera. And the more concentrated you are in your living environment, the less you have airflow to help you regulate temperatures.
Speaker 2:And I think, at any case, where you find yourself in an environment where you are constrained, having some sort of air con or improved HVAC solution is more essential. So I think we've got a lot more people dealing with the problem now than we had a generation ago, and I think that that is definitely a part of it. And certainly some hot spells might be getting more common than they were a generation ago as well. But making your living environment more comfortable, given the cost of real estate, I think is entirely reasonable.
Speaker 2:Out of all the work I had to spend on my non-strata row house when we moved in, the best $15,000 was on a heat pump system that makes it more comfortable all year round a heat pump system that makes it more comfortable all year round, especially that top floor which only had electric baseboards, like so much of the detached homes in the Pacific Northwest. You might have had forced air on your lower floors, but your top was only electric heat, and for us, having the ability for the heat pump to provide heat in the winter and cool in the summer makes that home immeasurably more livable, and I love mine. So I'm not an HVAC salesperson, but I appreciate the value of a good heat pump.
Speaker 1:Nice, all right. Well, this has been pretty awesome to listen about your company. So just so people can listen to it, the value there there can be getting. So someone can come to you guys either a strata can or somebody looking at a property or somebody trying to figure out what to do with their property or whatever it is, you can get a a report from you guys, yeah.
Speaker 2:Eli report gets you up to speed, annual benchmark report helps you make budget capital planning decisions. And then OctoAI is providing greater condo intelligence for everyone that serves and supports those industries and all of those condo owners. So, whether you're a property management company, whether you're a construction company, you're involved with any aspect of multifamily residential and serving them, then I think that there's an opportunity for us to do some things together that will bring those mutual wins to everyone in the ecosystem. All right, well, this has been awesome. Thank you so much for having me.
Speaker 1:Good luck with everything. Thanks, awesome, thanks, man. Well, that does it for another episode of the Site Visit. Thank you for listening. Be sure to stay connected with us by following our social accounts on Instagram and YouTube. You can also sign up for our monthly newsletter at sitemaxsystemscom slash, the site visit, where you'll get industry insights, pro tips and everything you need to know about the Site Visit podcast and SiteMax, the job site and construction management tool of choice for thousands of contractors in North America and beyond. Sitemax is also the engine that powers this podcast. All right, let's get back to building.