How Long Do Buildings Really Last?

[00:00:00] Welcome to The Canadian Real Estate Investor, where hosts Daniel Foch and Nick Hill navigate the market and provide the tools and insights to build your real estate portfolio.

[00:00:12] In the ever-evolving landscape of urban development, one question looms large, especially after a building fell down in Miami. How long do buildings actually last?

[00:00:25] From the ancient wonders like the great pyramids of the Egyptians or the Aztecs, or the Roman Colosseum, the Acropolis in Athens.

[00:00:36] The castles and the manors built centuries ago that still are lived in all over the United Kingdom, or the countless churches that are scattered all over Europe that has stood for millennia maintaining not only their beauty, but their original purpose.

[00:00:54] From historical century homes like the one I live in, to simple cookie cutter subdivisions across America, all the way to the modern skyscrapers that are basically giant rocks made out of concrete that now surpass the clouds.

[00:01:08] Think about it. Some buildings are as temporary as the latest tick tock trend, while others stand for centuries like immovable monuments.

[00:01:18] The reality of how long buildings last lies somewhere in between depending on various factors.

[00:01:25] These include economic considerations, architectural styles, construction methods, and our ability to breathe new life into aging structures.

[00:01:33] The longevity of buildings is influenced by financial resources, design trends, building techniques, and the potential for repurposing old structures.

[00:01:43] So from the economic implications of a building's lifespan to the artful repurposing of historical landmarks, we dive into the intricate dance between preservation and progress that defines our built environment.

[00:01:57] Welcome back to the Canadian real estate investor podcast and join us as we explore building longevity and its impact on our future.

[00:02:06] For anyone interested in urban development or real estate, understanding how long buildings last is crucial for creating sustainable cities that will serve future generations.

[00:02:20] We're going to look at what the lifespan of a building is and its different parts.

[00:02:27] The economic life, the design life, and what it means for both owners and investors.

[00:02:32] We're going to look at building style and construction materials.

[00:02:36] Appreciation versus depreciation.

[00:02:38] And of course, the capex and opex are capital and operational expenditures it takes to keep those structures working and in some cases be profitable.

[00:02:47] Oh, and we're also going to look at a couple of pretty well-known Canadian buildings.

[00:02:53] So Nick, start us off with a building's lifespan and its parts because I'd assume what the building is made of probably has a lot to do with how long said building should last.

[00:03:06] That is quite the assumption and you would be correct in assuming that Dan, a building made of wood, let's say, is a lot less likely to last

[00:03:14] and a lot more likely to deteriorate faster than those built out of, let's say, brick, stone, or reinforced concrete.

[00:03:22] So according to the construction community, the constructor.org, the design life of a building is approximately as follows.

[00:03:32] We've got 500 to 1,000 years plus for historical structures.

[00:03:38] 100 to 150 years for steel structures.

[00:03:42] And they even going to say about 120 years for steel bridges.

[00:03:46] Now, you know, I know that there's a lot of bridges, older bridges in the US designed of out of steel and other metals.

[00:03:54] So you want to be careful about those kind of things.

[00:03:57] 100 years for concrete structures and buildings in about 60 to 80 years for other commercial or private buildings.

[00:04:04] And that's probably where you and I would have most of our assets and be most interested is that 60 to 80 year for commercial or private buildings, Dan.

[00:04:13] Kind of crazy, like when you think about it, you know, like, especially, I don't know if it matters so much for like a, you know, a house that you could like really like hit with a, like take down with an excavator in like a day.

[00:04:25] But I feel like this, this probably is something we should be thinking about in, in the context of like giant, like thousands of giant concrete phallic objects.

[00:04:40] I suppose you could call them just lining. You know what I mean though? Like, we should be talking about this maybe.

[00:04:47] Well, Hey, that's what this episode is all about. So, so, you know, just a quick anecdote here, you know, I was in Italy this past summer and actually recorded an episode there.

[00:04:56] So if you've been listening to the show, you know, I was there and my, and I've been multiple times, but you know, I really took in a lot of the architecture that, that it surrounds Rome and you've got stuff that goes all the way back a thousand plus years, but you've also got,

[00:05:10] stuff and buildings, I should say that the people still live in that are designed hundreds of years ago, you know, the four, six, eight story kind of what we would call mid rise stuff here.

[00:05:22] And that stuff has been standing for centuries and isn't going anywhere.

[00:05:28] Then you've got a place and I'm going to throw this one particular development under the bus city place here in Toronto, otherwise known as cover your kids shitty place.

[00:05:40] And, you know, within years, and that was the biggest development, biggest master plan development in Canada at the time, believe that was going on almost 20 years ago.

[00:05:48] And within years of it being completed, there were already like windows falling out of pains, glass falling out.

[00:05:55] There was like major HVAC and plumbing issues.

[00:05:58] So I mean, like, what are we supposed to do with these?

[00:06:01] As you said, Dan, you know, 50, 40, a hundred, a hundred story phallic objects that might be falling apart.

[00:06:10] Yeah.

[00:06:10] I don't know.

[00:06:11] Like, it's a really good question.

[00:06:12] I feel like we're going to find out probably in the next few years.

[00:06:15] I plan to live long enough to see probably nothing.

[00:06:18] That's my guess.

[00:06:19] You know, that's my prediction.

[00:06:20] Yeah.

[00:06:21] Many buildings and structures outlive their expected design life, both with and without maintenance, repairs, and structural reinforcement.

[00:06:30] The design life of buildings can also be broken down into life expectancy of materials and products used.

[00:06:35] But of course, these individual assets can be rehabilitated or replaced when necessary.

[00:06:40] Right.

[00:06:40] So like you could renovate this and then re-extend the life of said component that I'm going to mention.

[00:06:46] So you have a hundred years for the substructure, a hundred years for masonry, a hundred years for concrete slabs and reinforcements, 50 years for glass, 40 years for plaster, and 15 years for paint, depending on what type.

[00:06:58] And it's probably worth noting that, you know, it terminating its economic life doesn't necessarily mean that it is toast.

[00:07:06] Like, you know, the house just doesn't like implode after like 40 years.

[00:07:10] The windows don't just disappear.

[00:07:11] They're just there.

[00:07:12] They're just doing a really bad job.

[00:07:13] Right.

[00:07:14] Yes.

[00:07:14] Yes.

[00:07:15] Right.

[00:07:15] This isn't like Inspector Gadget.

[00:07:17] You know, this building will self-destruct after you're done with it.

[00:07:21] Now, referencing cartoons.

[00:07:22] Is that Inspector?

[00:07:23] Isn't that Mission Impossible?

[00:07:25] No, it might be, but it's also Inspector Gadget.

[00:07:27] They got it.

[00:07:28] They got it from Inspector Gadget.

[00:07:29] Go watch those old cartoons.

[00:07:30] Now, on the note of old cartoons, just as the three little piggies learned in our childhood stories, building materials are quintessential in the longevity.

[00:07:39] The property of a building.

[00:07:41] And of course, to keep big bad wolves away as well.

[00:07:44] Straws and sticks don't cut it.

[00:07:45] So go be that little piggy that built his house out of bricks.

[00:07:49] I'm going to try to ignore the fact that you just told me to be a little piggy and get back to buildings.

[00:07:55] This is like a little too Lord of the Flies for me.

[00:07:58] Building lifespan can't be determined by materials alone.

[00:08:02] Construction quality and techniques also play key roles.

[00:08:05] So generally, buildings last from 30 to 50 years up to several centuries, like the structures for cathedrals, castles, and government buildings.

[00:08:13] But I would say your modern quality.

[00:08:15] I would maybe not expect a random mass produced new build in a random field in the GTA to be doing the same performance.

[00:08:27] Same as like Notre Dame Cathedral.

[00:08:29] Yeah, fair enough.

[00:08:30] I mean, look, you know, Dan, both you and I love real estate.

[00:08:33] But look, I own more duplexes than I do castles or cathedrals.

[00:08:38] So let's put those aside and maybe let's focus on a more typical house.

[00:08:45] Yeah, I always have this thought, right?

[00:08:46] Like, you know, the house that I live in is like a portfolio of cathedrals and castles.

[00:08:52] Oh, here we go.

[00:08:53] Dan's got a thought.

[00:08:54] No, that the house that I live in is like 1860s, 1870s.

[00:08:59] And I think that that house will be standing longer than the houses that are being built today.

[00:09:06] I really feel that way.

[00:09:09] Like a half kilometer down your street?

[00:09:11] Yeah, probably.

[00:09:12] That's what I think.

[00:09:13] The general life expectancy of a wood frame house with a concrete foundation is 100 years or more.

[00:09:17] Assuming the home has been properly maintained, it's a big assumption, and cared for in that lifespan.

[00:09:22] This is good news since 38% of the homes built in the U.S. are now more than half a century old or built for before 1970.

[00:09:29] In Canada, 30% of homes were built between 1961 and 1980, and another 22.2% were built before 1960.

[00:09:38] So you got a lot of aging supply here.

[00:09:41] A lot of aging supply.

[00:09:43] And the unfortunate thing is, you know, we go off topic a little bit here.

[00:09:47] We've covered this a lot recently with, you know, the lack of housing starts that we've seen and the rush that we've seen a lot of these houses built in.

[00:09:58] And, you know, when you're rushing something, right, you go back to that kind of iron triangle, that project management iron triangle.

[00:10:05] You know, we need them built fast.

[00:10:07] Okay.

[00:10:08] Well, building something fast is likely going to increase the cost, which we avoid.

[00:10:14] But in a more typical trade-off, it's going to decrease the quality, which we've definitely seen in today's household.

[00:10:22] So on that note, Dan, let's look at some common household components and how long they last.

[00:10:30] This is from our friends over at Zolo.

[00:10:34] So Dan, I'm going to do bathroom components.

[00:10:36] You look at kitchen components and then we'll split up the bottom here as well.

[00:10:40] I mean, so for bathrooms, you know, six to 10 years for your sump pump and your hot water heater.

[00:10:46] 10 to 15 years.

[00:10:48] 10 to 15 years for things like your washing machine, your dryer, tankless water heater.

[00:10:53] 15 to 25 years for, you know, a bathtub and showers.

[00:10:58] Your toilets actually last quite a while.

[00:11:01] And then 25 plus years for a septic system and certain other, you know, a bit more like if you got like an old clawfoot tub, those things go forever.

[00:11:10] So, you know, your bathroom stuff lasts anywhere from on the low end, five to 10 years on the higher end, 25 plus.

[00:11:18] So Dan, tell me a bit about the kitchen side of things.

[00:11:21] Yeah. So on the kitchen side, you've got basically your durable goods.

[00:11:26] So this is appliances, which would say like six to 10 years.

[00:11:30] So it's crazy because when they came out originally, like durable goods were designed to last like 25 years.

[00:11:35] Right. But that term durable comes into play.

[00:11:38] Yeah. Dishwasher, microwave, sink, et cetera.

[00:11:41] Then you've got kitchen appliance or sorry, cabinets.

[00:11:44] So your cabinets, stainless steel, sink, et cetera, would be like a 25 year.

[00:11:48] Oh, I guess this is like clockwise. I should be reading these in order of the age.

[00:11:52] 10 to 15 year range would be refrigerator range, hood, exhaust fan.

[00:11:57] So those are your more durable goods.

[00:11:59] Freezer, garbage disposal, faucet, et cetera.

[00:12:02] 15 to 25 years, it says countertops, but I'm assuming that's probably more of a laminate thing.

[00:12:06] Like I would say like a good stone countertop should last longer than that.

[00:12:10] Right. I mean, not most of faux stone today is really just as good as the quality of the epoxy that they coated in.

[00:12:16] So that maybe would be a little bit worse, but then, and then finally you've got your, again, 25 years, you're, you're, you know, you get like wood, you know, wood custom cabinetry, obviously going to last a little bit longer.

[00:12:26] Some of this like MDF, like glorified cardboard or like now they're making them out of foam, I think even.

[00:12:30] Right. Like basically like it's true.

[00:12:33] I think they're making like cabinets out of foam.

[00:12:35] So that probably is not going to last a little bit or not last as long.

[00:12:39] But I know a lot of, like a lot of people in the investment space, you know, they'll say like they don't want to spend on a lot of this stuff.

[00:12:46] You know, like there's this kind of trade off, right?

[00:12:48] Some people will say, oh, you want the durable material because it'll be, it'll last longer and you won't have to replace it as much.

[00:12:53] But then it's like, what if people are really rough on it, which has been my experience and a lot of other people's experience.

[00:12:59] And, and you do have to replace it anyway.

[00:13:01] And it was just the expensive item, you know?

[00:13:04] Yeah.

[00:13:04] So I don't know if that's good.

[00:13:06] That's one of those, those age old debates, I think in this, in this space.

[00:13:12] Yeah.

[00:13:12] I mean, I think that just goes back to, totally right.

[00:13:15] And I think it goes back to, you know, your investment thesis, who you're renting to.

[00:13:19] And, you know, you usually, it usually takes you one good or one bad experience to kind of start making those decisions moving forward.

[00:13:27] For sure.

[00:13:30] Home decor and interior stuff.

[00:13:32] So like, you know, carpets, man, get rid of those carpets.

[00:13:36] Carpets have like a, you know, six to 10 year lifespan.

[00:13:40] If you're taking on a new project or renovating an existing property, carpet is like the last freaking thing you should keep.

[00:13:48] Get rid of that.

[00:13:49] Patio glass and sliding doors, you know, 15 to 25 years.

[00:13:52] Those can actually have an effect if you, and same thing with windows, you know, 10 to 15 years.

[00:13:57] There's, there's rebates for a lot of this stuff because it does increase energy efficiency.

[00:14:01] Whether you're going like the CMHC, MLI Select Road, or whether you're building a smaller project, or whether you're just renovating your own house.

[00:14:07] That's something where I'd always look to spend money on because that will increase things like your, your energy bill.

[00:14:14] If, if those aren't performing.

[00:14:17] And then of course, you know, doors, hardwood floors, tile floors.

[00:14:21] You can, if you spend the money, you can usually get, you know, 25 plus years out of that kind of stuff.

[00:14:26] Dan, talk to me about some of the HVAC systems and some of the major structural components.

[00:14:31] I think your, your mechanical stuff, you've got like HVAC, electrical.

[00:14:36] So like, or your, your, your HVAC, like a humidifier, like portable window AC would be like, like up to 10 years kind of go with like a built-in central AC, like central air dehumidifier up to 15 years.

[00:14:49] And then some of the other components within that mechanical system, your thermostat, furnace, gas fireplace, et cetera, 15 to 25 years.

[00:14:56] 25 plus years being duct work, which is really just metal.

[00:15:00] So it should lie, you'd hope it would last a long time, but you know, there, there are some kind of like incremental differences, like some of that older, older, like, I think it's like a galvanized or like pounded metal.

[00:15:10] Can't, can't hold cold air as well or not.

[00:15:11] Can't like, it can break from cold air.

[00:15:14] So you'll get like, they, they won't want to hook up a, an AC to it sometimes.

[00:15:21] Structural side, paint, obviously, you know, we're huge investment.

[00:15:25] Sherwin-Williams baby.

[00:15:26] Yeah.

[00:15:27] It's funny.

[00:15:27] Like I actually, I connected Sherwin-Williams with, with strip mall guy, like Trent.

[00:15:32] Cause Trent, Trent's been just on this, on a tear about paint, about paint, man.

[00:15:37] Always on Twitter.

[00:15:38] He's talking about paint just being like the best ROI.

[00:15:40] And he'll, he'll show this image of him, like fully painted this like huge plaza.

[00:15:45] And I'm like, I got to connect this guy with Sherwin-Williams.

[00:15:47] So anyway, I did.

[00:15:49] The next would be attic insulation, 10 to 15 years.

[00:15:52] There's asphalt roof.

[00:15:54] So your roofing systems, gutters, soffits, fascia eavesdrops, attic vents, cedar decks, garage doors, 15 to 25 years.

[00:16:04] Things over 25 years would be wood, metal, copper, slate roofs.

[00:16:09] Wood roof being like, don't just put wood on your roof.

[00:16:13] Like your cedar, cedar shakes.

[00:16:15] Cedar shingles.

[00:16:15] The composite decking, siding, stucco, foundations, external doors, weeping tile systems, chimneys, et cetera.

[00:16:24] Yeah.

[00:16:25] So I think, I think that covers like it decently well.

[00:16:29] Yeah, that's a pretty good, that's a pretty good list.

[00:16:31] Now, I mean, look, as, as real estate investors, we should obviously be focused on what's known as the economic life of a building.

[00:16:41] So what exactly is the economic life other than, than the, you know, like Socrates said, the, the unexamined life is not worth living.

[00:16:49] And I feel the same way about the economic life.

[00:16:52] The economic life is not worth living.

[00:16:54] Spoken like a true capitalist.

[00:16:56] I love it.

[00:16:56] Sounds like, this sounds like a job for the dictionary.

[00:16:59] So an economic life refers to the period during which a property remains economically viable or productive.

[00:17:06] This concept helps determine how long a real estate investment can generate revenue before it depreciates or needs significant repairs.

[00:17:15] That goes back to, okay, we've been doing, Danny, you mentioned CapEx and OpEx, right?

[00:17:19] So OpEx is what we do to keep the building maintained and going.

[00:17:23] Now, at the end of that economic life, we're likely going to need some major CapEx, capital expenditures.

[00:17:29] So the economic life can vary on numerous factors, including things like location, right?

[00:17:34] So for instance, you know, I grew up in BC, a lot of wood houses there.

[00:17:38] You don't really see a lot of brick homes.

[00:17:40] Now living in my adult life in Ontario, a lot more brick, a lot less wood.

[00:17:44] So little things like that.

[00:17:45] I think that's like a function of climate though, too, right?

[00:17:48] Like I think the more-

[00:17:49] Well, that's what I'm saying.

[00:17:49] Yeah.

[00:17:50] Yeah.

[00:17:50] Market conditions, location, the climate.

[00:17:52] Because it's crazy.

[00:17:53] Like in Switzerland, everybody has these like family heirloom, like it's almost like a wardrobe and they're wood, right?

[00:18:00] And there's a date carved in the top of it.

[00:18:04] And some of them, like I've seen, like I've been in people's houses where they have these wardrobes that are like 600 years old.

[00:18:11] And I'm like, how is that wood in that good of shape?

[00:18:13] Like in Ontario, if that was in my house, it would have like rotted already.

[00:18:18] You know what I mean?

[00:18:18] So anyway, I thought that was pretty remarkable.

[00:18:20] Could probably have something to do with the mountain air, like same thing that BC, how they can just clad all these houses and that-

[00:18:26] There you go.

[00:18:26] Yeah.

[00:18:27] We need that fresh mountain air.

[00:18:28] Yeah.

[00:18:28] So anyway, we're going to talk about this obviously in the key factors influencing economic life, but properties in desirable areas with good infrastructure, schools, amenities tend to have longer economic life.

[00:18:38] A lot of this is because more people want them, which means more people are going to put money into them.

[00:18:42] And if people are taking care of these buildings, then they survive a little bit longer.

[00:18:46] Real estate in urban centers often remains valuable longer than in rural locations, simply because there are people who want to consume it and put that money back into keeping it alive.

[00:18:55] Property type matters.

[00:18:57] Residential, commercial, and industrial properties all have different economic lifespans.

[00:19:00] Generally, commercial properties have longer economic lives due to higher demand and potential returns, but also because in most commercial tenancies, you have tenants who are doing interior fit outs.

[00:19:10] And so they end up spending, again, because it's being used for business purposes, the amount of money that gets spent on resurrecting that structure every time there's a tenant turnover can often improve the long-term economic life.

[00:19:23] Also, they're just different types of structures.

[00:19:26] They're signing longer leases too, right?

[00:19:28] Yeah.

[00:19:28] They have to, like, I mean, you could have, you could build a commercial space and it could last for a hundred years and you might only have four tenants, three tenants, even one tenant at that point, right?

[00:19:39] Yeah.

[00:19:39] So a lot different than a duplex or a student rental, which, you know, can change every year or every few years.

[00:19:45] For sure.

[00:19:46] Market conditions matter.

[00:19:47] Obviously, economic downturns or booms can drastically impact property values.

[00:19:51] You would know this from, like, looking at, you know, the U.S., like, GFC when there was just, like, vacant houses everywhere because people were walking away from them, right?

[00:20:00] And a lot of those houses ended up having to get torn down.

[00:20:03] Consequently, this would impact their economic life.

[00:20:05] If you leave a house vacant too long and, you know, you allow the elements to get it, right, where nobody's checking to make sure there's no water getting in or, you know, the heat or you're not heating or cooling.

[00:20:19] Like, you'll see this a lot, actually, just as, like, a point of if you're out shopping, when you're doing, like, a PDI on a new build, you'll see, like, the builders will often leave the – they won't heat the interior.

[00:20:31] And then the house will, like, maybe get moisture or it'll expand and contract.

[00:20:37] And you'll see, like, gaps in a lot of the finished carpentry.

[00:20:40] That happens because builders didn't keep the temperature proper in the house.

[00:20:46] And you get these huge – it's not so much, like, if it gets too hot or if it gets too cold.

[00:20:49] But if you get these huge, like, ebbs and flows in temperature, that can damage a structure, right?

[00:20:54] Property management, and this is kind of, like, the whole – some of the thing.

[00:20:58] Like, good property management, good – or just having somebody living in something can extend the economic life of a property.

[00:21:04] Regular maintenance and upgrades not only retain property value but can also increase it.

[00:21:09] Yeah, exactly.

[00:21:10] So that goes back to that OPEX, right, and how important that is.

[00:21:13] Okay, so the next question is how do we go about actually analyzing economic life in real estate?

[00:21:19] Well, to assess the economic life of a property, several valuation methods can be used.

[00:21:26] One of the most common is the cost approach.

[00:21:28] So this is involved in an appraisal which estimates the value based on the replacement cost minus depreciation.

[00:21:35] So you'll – I feel like we talk about this all the time on the show.

[00:21:38] Replacement cost new, RCN, just replacement cost, buy below replacement cost.

[00:21:42] That's the – that's one of the primary ways that appraisers look at the value of a property.

[00:21:49] And now that CMHC is requiring all three different – we just mentioned this in an episode that we recorded recently with Josh from Build Capital.

[00:21:57] You're going to be a lot more familiar with this because before they were just using income approach to valuation.

[00:22:01] Now you have to use three different approaches typically to valuation.

[00:22:04] So the next approach, first one is cost approach.

[00:22:07] The next approach is called the sales comparison approach which evaluates similar properties to gauge market trends.

[00:22:12] Yeah, okay.

[00:22:13] So here's an example.

[00:22:14] Consider a residential property bought in a suburban area for let's say $300,000.

[00:22:21] We're in the prairies here, okay?

[00:22:22] If the average economic life of such a property is estimated at about 50 years and you, the owner, the investor,

[00:22:30] expects a consistent rental income of let's say $20,000 annually,

[00:22:37] calculations are pretty simple and they would look like this.

[00:22:39] The total potential income over the economic life would be 50 years times $20,000.

[00:22:44] That gives you a million dollars.

[00:22:46] Right now, of course, we're not taking into account mortgage and expenses and all that kind of stuff.

[00:22:51] This is keeping it high level and simple.

[00:22:53] Now, the total investment including maintenance and taxes, let's say we add that in and it comes out to about $450,000.

[00:22:59] So what we do is we take that profit, 50 years times $20,000 of a million dollars.

[00:23:04] We minus that cap and OPEX over that lifetime of that building which we're going to call it $450,000.

[00:23:11] Well, that still leaves us with $550,000 of potential profit and that is the economic life.

[00:23:18] So if you can get even a high level understanding of an economic life of a property, that can help you make as an investor,

[00:23:25] help you make informed decisions, especially regarding things like property management and potential upgrades to increase that longevity

[00:23:35] and ideally increase those returns and overall lower that maintenance expense.

[00:23:42] Yeah, exactly.

[00:23:43] And when you're thinking about real estate in this way, it really goes to show that you need to be thinking of the real estate asset in a long-term way.

[00:23:52] Now, we always like to look at appreciation in real estate.

[00:23:56] Yeah, which in the most simple terms is the value of your real estate asset going up over time.

[00:24:03] But what about depreciation?

[00:24:06] The term depreciation implies loss.

[00:24:09] In real estate investing, it is actually a positive as far as income is concerned.

[00:24:12] Real estate depreciates.

[00:24:13] It's classified within that capital category in accounting.

[00:24:19] So toilet sinks and bigger items like your roof or furnace are essentially all items that comprise a real estate investment are depreciable with the exception of land itself.

[00:24:29] Yeah, exactly.

[00:24:30] Now, we aren't going to get too much into detail here because we are working on a full episode kind of on appreciation versus depreciation.

[00:24:38] We'll be joined by a tax expert to shed some light on what Dan is going to mention.

[00:24:43] But high level, Dan, give me how this works in the next minute.

[00:24:48] Yeah.

[00:24:48] So rental property depreciation is an accounting process where you deduct the value of your property and any improvements you made to it from your taxes.

[00:24:57] Instead of claiming the total cost of your rentals purchase price, as well as many improvements in a single year, you spread it over many years.

[00:25:04] CCA is the tax deduction based on rental property depreciation.

[00:25:09] The CRA has strict rules about how much you're limited to be able to do.

[00:25:15] CCA stands for capital cost allowance, by the way.

[00:25:17] And CCA, you can claim each year within this limited category on your tax return.

[00:25:22] Yeah, exactly.

[00:25:23] Okay.

[00:25:23] So this is something that all real estate investors should be aware of.

[00:25:27] And again, it really reinforced the idea for me that having the right power team members is crucial.

[00:25:31] You want to rely on your accountant to help you determine your capital cost allowance, especially when you have a larger or a growing portfolio,

[00:25:41] something that you're spending a lot of money on over the course of a few years.

[00:25:46] Now, we spoke about construction materials, Dan.

[00:25:49] We've spoken about the lifespan of common household items.

[00:25:52] We've talked economic life.

[00:25:54] Let's turn the page here and talk about design life.

[00:25:58] And then we can talk about some of Canada's oldest buildings and a specific Canadian landmark.

[00:26:07] So if you're in the midst of having worked on your existing commercial building, or if you're planning a new build,

[00:26:12] you will notice all kinds of lingo in your contracts and paperwork.

[00:26:15] Some of it is more explanatory than others.

[00:26:17] One of the buzz phrases you may come across is the design life of buildings.

[00:26:22] Buildings require varying levels of maintenance based on their construction quality, design, environmental exposure, and how well owners maintain them.

[00:26:31] Notwithstanding the differences between individual buildings, it has been determined that many buildings follow a similar pattern as they pass through different stages in their respective life cycles.

[00:26:39] In this regard, five general life cycles stages have been identified and using the analogy of the human body.

[00:26:45] This is where it gets funny.

[00:26:48] I love the analogy of the human body compared to the buildings here.

[00:26:51] So let me explain this chart here.

[00:26:54] We've got five stages.

[00:26:55] Okay.

[00:26:56] Stage one is prenatal, and that is original construction.

[00:27:00] Okay.

[00:27:00] So no building yet.

[00:27:01] That's where you're going and pouring the foundation.

[00:27:04] You're building that building, whatever it may be.

[00:27:07] Stage two, we enter into childhood.

[00:27:10] Okay.

[00:27:11] So now that is from one to 16 years old, right?

[00:27:15] You've got your grumpy teenage years in there, your rebellious phase.

[00:27:19] So you might have to do some routine maintenance and maybe a little bit of those capital renewals kind of edging into that 10 year to 16 year area right there.

[00:27:29] Now we've grown up a little bit.

[00:27:30] We're adolescents.

[00:27:31] We're 17 to 29 years old.

[00:27:34] Okay.

[00:27:34] We're becoming the people or the buildings that we are for the rest of our lives.

[00:27:39] And you'll see here that routine maintenance continues.

[00:27:43] Routine maintenance continues all the way from conception to old age.

[00:27:47] But you know what else increases is capital renewal.

[00:27:50] So that's that capital expenditure.

[00:27:52] So 17 to 29 years, Dan, it might be time for a new furnace, new roof, some other major capital expenditures.

[00:27:59] After adolescence, we graduate and we grow into stage four, which is adulthood.

[00:28:04] Remember, I'm using the human body analogy for buildings here.

[00:28:10] So stage four, we are at 30 to 49 years here.

[00:28:13] So Dan, this is you and I.

[00:28:14] And by the looks of it, we've got a lot of capital renewals coming up in our human body and in our lives.

[00:28:20] So that could be, you know, a knee replacement or a boiler replacement.

[00:28:24] Or if you have a regular stretching routine, like you take care of your asset, then maybe you don't have to do either.

[00:28:30] Right?

[00:28:30] There we go.

[00:28:31] Okay.

[00:28:31] So that's that routine maintenance.

[00:28:33] That's that operational expenditures that we see throughout.

[00:28:36] And then, of course, stage five, old age.

[00:28:39] Now, this is where the human body and buildings tend to differ because as humans grow older, we likely need more and more care.

[00:28:45] But after stage four, after that building has reached, quote unquote, adulthood and been around for between 30 and 50 years, there's likely been a decent amount of work done to it.

[00:28:55] So if that building was built with integrity using the proper construction methods when it was actually conceived, that building should have new life breathed into it.

[00:29:06] And it should potentially go on for another 50 years and just relive this stage all over again.

[00:29:13] Love to see it.

[00:29:14] I do like to see that building on the chart, just living out its old age happily with no more knee replacements.

[00:29:25] It is kind of funny, though.

[00:29:26] Like, I mean, my house is like that.

[00:29:27] It's like at a certain point, you're just like, what am I?

[00:29:29] Like, I can't fix this anymore.

[00:29:30] Like, yeah, maybe get some of the, you know, like 50 generations of mice have lived in like the roof system.

[00:29:37] It's like maybe get rid of those.

[00:29:38] Now you're displacing them.

[00:29:39] Yeah.

[00:29:41] Okay, let's pivot to the final segment here and let's have some fun with this one.

[00:29:45] Nick, start us off with, you have it listed here in the script here as one of the most iconic buildings in Canada.

[00:29:52] I would say it's the second most iconic building after its sister tall tower, the Sudbury Superstack.

[00:30:00] Yes.

[00:30:00] Which is the second tallest freestanding structure in Canada.

[00:30:04] But tell me about this, this building.

[00:30:07] Not a lot of people have heard of it.

[00:30:09] Yeah, look, you may hate it.

[00:30:10] You may love it.

[00:30:12] But regardless of how you feel about it, you likely know about it.

[00:30:16] When they built the CN Tower in Toronto, one of the most critical components of the structure were the anchors that hold steel cables that compress the concrete and give it its strength.

[00:30:27] And those can never be replaced.

[00:30:29] Those anchors were designed to last 300 years.

[00:30:34] It will no doubt one day turn into a very expensive demolition project.

[00:30:39] But Dan, not in our lifetimes, unless you know something I don't and you're taking some vitamins that I need to get on.

[00:30:44] So this was from a great article from the Toronto Star called the CN Tower was built to last.

[00:30:52] Dan, read me a little piece of this article and then let's talk about some of the key points.

[00:30:55] Yeah, so the completed in 1976 structure of the CN Tower was engineered with long-lasting components that ensured the structural integrity for centuries.

[00:31:08] Central to its strength are the irreplaceable anchors that you mentioned that hold the steel cables in place, which are designed to last at least 300 years.

[00:31:16] At least 300 years, not 300 on the dot.

[00:31:18] There we go.

[00:31:19] Okay, good, good, good.

[00:31:20] Architect Ned Baldwin, involved in its design, highlights the tower's innovative engineering feats, including its unique shape and robust, great word, robust construction materials.

[00:31:30] Now, I'll just say this.

[00:31:31] Like when you're talking about concrete, right?

[00:31:33] Like this is exposed concrete.

[00:31:35] To my understanding with the way concrete works is like each time it gets wet and then dries again, doesn't it get stronger?

[00:31:41] Isn't that like how it works?

[00:31:43] That's what I thought as well.

[00:31:47] And I didn't think-

[00:31:47] This is not the Canadian engineering podcast, by the way.

[00:31:50] So-

[00:31:51] Far from it, unfortunately.

[00:31:53] Not engineering advice.

[00:31:55] Wherever the financial advice disclaimer is, do that with engineering.

[00:32:01] Yeah, I mean, hey, look, we've already talked about the large phallic shapes that cover the Toronto streets and they make up the skyline here.

[00:32:11] This is the biggest, most robust phallic shape of them all.

[00:32:17] Structural resilience.

[00:32:18] It's the tower's shape compared to an overturned golf tee, they described.

[00:32:24] Allows it to withstand winds of up to 1,600 kilometers per hour, which are deemed unlikely to ever occur here in Toronto.

[00:32:32] I certainly hope not.

[00:32:34] Because we would be in a, the Cedar Tower would be the only thing left standing if that was the case.

[00:32:39] Man, have you been up to the top, like since they opened up-

[00:32:43] Not for a while, no.

[00:32:44] No, like the very, there's like, you can go to the second thing now.

[00:32:47] And there's this, what do they call that?

[00:32:49] A dumb, dumbwaiter or something?

[00:32:51] I don't know what it's called.

[00:32:52] Yeah, yeah, the thing that like, it's a little elevator for food or whatever.

[00:32:55] No, no, no, no, not that.

[00:32:57] It's like a, no, I gotta look up what it's called now.

[00:32:59] I'm having a, I'm blanking.

[00:33:00] But it's like, it's this, it's this weight that's hanging from the ceiling.

[00:33:04] And wherever it's swayed, like you can see the sway of the tower when you look at this.

[00:33:10] I was there on a windy day with the kids recently and stuff.

[00:33:13] And you could see this thing like moving back and forth.

[00:33:16] And instantly when you're, when you look up at it, you kind of get a little nauseous.

[00:33:20] I bet.

[00:33:21] But I thought that was pretty fascinating.

[00:33:24] If you look at like the Burge or something like that, right?

[00:33:26] Like those buildings actually have like wind tunnels and like suspension systems.

[00:33:30] Yeah.

[00:33:30] Yeah.

[00:33:31] Isn't like, I think certain buildings of certain heights have like this big water thing in it too,

[00:33:36] to balance it back and forth.

[00:33:37] Yeah.

[00:33:38] Counterbalance essentially.

[00:33:39] Yeah.

[00:33:39] So, I mean, it's like nothing, nothing much more to say about the CN tower engineering,

[00:33:44] Marvel, you know.

[00:33:45] Iconic.

[00:33:46] The reason that we don't have super tall buildings in the GTA, because nobody wants to

[00:33:52] have a building taller than the CN tower.

[00:33:54] Cause you could build a skyscraper taller than the CN tower now, right?

[00:33:57] They've done it all over the world.

[00:33:58] But nobody's gonna, because it would just be rude.

[00:34:01] Yeah.

[00:34:02] It would be rude.

[00:34:02] And yeah, it's, it's kind of like the church, the church steeples of, of old European cities,

[00:34:06] right?

[00:34:06] You could never build a skyscraper or, or building taller than a church steeple.

[00:34:10] Well, I guess here in Canada, that's our church steeple.

[00:34:14] All right, Dan, let's finish off here.

[00:34:16] The church of 70s concrete structures.

[00:34:18] Yeah.

[00:34:18] Let's go province by province and look at what the internet has told us is the oldest standing

[00:34:23] structure in each one.

[00:34:24] And it's important to remember that there were indigenous tribes that had constructed amazing

[00:34:29] structures across this country that date back further than that.

[00:34:32] And that, that are older than these more modern buildings that we're about to go over.

[00:34:36] But sadly, most, if not all were destroyed.

[00:34:38] We started our journey off in Quebec where this is actually the highest concentration of

[00:34:43] old buildings in Canada, which makes sense.

[00:34:45] And when I was in the U or when I was in Quebec city last, I spoke with a lot of American

[00:34:48] people and like, they love it.

[00:34:50] Like there's nowhere in, in North America that you can go to consume that history.

[00:34:54] Right.

[00:34:55] Quebec is Maison des Jesuits de Sillerie, 1637.

[00:35:01] Cool looking building.

[00:35:03] Classic kind of, I don't know, like just looks like a, looks like a Maison des Jesuits, to

[00:35:08] be honest, from my perspective.

[00:35:10] Quebec is home to dozens of the oldest buildings in Canada, but the Maison des Jesuits is the

[00:35:15] oldest in the entire country.

[00:35:16] It was part of the first establishment built in New France by the Jesuits who were on a mission

[00:35:22] to evangelize the indigenous population.

[00:35:24] Look at that, 1637.

[00:35:26] And that thing, I'll tell you right now, there has been some very good, I'm assuming both

[00:35:31] OPEX and CAPEX because that thing looks like it's in pristine condition.

[00:35:35] Next one.

[00:35:36] The Scousia one looks so sick.

[00:35:37] It looks like something Dave Bordeaux would try and buy.

[00:35:42] Fort Anne from 1702, originally built to protect the harbor of Annapolis during King George's

[00:35:51] war.

[00:35:51] The fort is now home to a museum where you can learn about the history of the area.

[00:35:56] And yeah, I mean, that also looks like a couple of the garages that you would see in

[00:36:01] like the bridal path here in Toronto.

[00:36:03] Similar style.

[00:36:04] Yeah.

[00:36:05] Yeah.

[00:36:05] The garage.

[00:36:06] Yeah.

[00:36:06] But it's kind of like, it's like Cape Cod style, but also like a barn.

[00:36:09] It's kind of cool.

[00:36:10] I'm into that.

[00:36:11] Yeah.

[00:36:11] I might build my next, my next Cape Cod barn like that.

[00:36:15] I like the cannons out front too.

[00:36:18] Ontario.

[00:36:18] We got the Peter Secord house.

[00:36:20] Yeah.

[00:36:20] You might recognize that last name.

[00:36:22] American loyalist, Peter Secord, whose nephew married the iconic Laura Secord, built this

[00:36:30] little stone home for his family in the late 1700s.

[00:36:33] American troops set fire to the neighborhood in 1814, but this house somehow survived probably

[00:36:38] because it was made of stone.

[00:36:40] More recently, it was converted into a two room bed and breakfast, but has since closed.

[00:36:44] Hopefully it's still being taken care of because it's a very nice structure as well.

[00:36:50] Yeah.

[00:36:51] There's an opportunity.

[00:36:51] And Dan, you and I both Guelph graduates.

[00:36:53] There's a couple of houses in Guelph that kind of look like this with that, that, you know,

[00:36:57] that stone, that natural stone facade and structure.

[00:37:00] I love the look of this thing.

[00:37:01] And like a lot of those like old towns look like that, but it's like, it's a half story

[00:37:05] with the, with the dormers, the nice three chimneys, like fire.

[00:37:09] He was heated by fireplace back in the day.

[00:37:13] Okay.

[00:37:14] Let's move over to the prairies.

[00:37:16] We've got Manitoba with the Prince of Wales fort from 1731.

[00:37:22] Cool.

[00:37:23] This was built right on Hudson Bay.

[00:37:24] It's like a throwing star.

[00:37:26] Yeah.

[00:37:26] Yeah.

[00:37:26] It does look, it does look pretty cool.

[00:37:28] Obviously no one lives in this probably ever.

[00:37:31] No one lives in it currently.

[00:37:33] You never know.

[00:37:33] Like there's a lot of, a lot of people living out in the wilderness these days in Canada,

[00:37:38] the housing crisis and stuff.

[00:37:40] Yeah.

[00:37:41] I mean, Hey, it would be a good place to do that.

[00:37:42] This would be a good place.

[00:37:44] It'd be a lot better than a tent in, in one of the parks.

[00:37:46] Um, originally built as a log fort, uh, in 1717 that was later replaced with stone.

[00:37:52] And that stone still stands there today.

[00:37:54] The walls are six meters tall and nine meters thick.

[00:37:58] Wow.

[00:37:59] With 42 cannons mounted on nine meters thick.

[00:38:01] That is crazy.

[00:38:01] That makes me think, uh, another quick anecdote, Dan.

[00:38:04] So, you know, my, my parents, uh, used to live in a century home.

[00:38:08] And one of the things about that century home is it, and this, what this fascinated me is,

[00:38:12] you know, in, in modern construction, you got one layer of brick, right?

[00:38:16] Why would you ever use more than one layer of brick?

[00:38:18] It doesn't make sense.

[00:38:18] Well, the century home that my parent used, parents used to live in triple brick, three

[00:38:23] layers of brick as well.

[00:38:25] Yeah.

[00:38:26] Yeah.

[00:38:26] Awesome.

[00:38:27] I mean, not nine meters thick.

[00:38:29] Back when bricks didn't cost $30 a piece, I guess.

[00:38:31] Yeah, I guess so.

[00:38:33] Yeah.

[00:38:33] Should we go over to Newfoundland and Labrador here?

[00:38:35] Let's do it.

[00:38:36] The Anderson house of 1805.

[00:38:38] It's a wooden two and a half story building that was constructed for military Sergeant

[00:38:46] James Anderson.

[00:38:47] Then just 10 years later, it became a military barracks for local officers.

[00:38:52] It's changed hands many times since then before becoming private commercial space that it is

[00:38:56] today.

[00:38:57] And it's now been painted a nice, uh, nice light blue to reflect the, uh, kind of modern

[00:39:04] jelly bean vibe that's going on in the Newfoundland architecture scene.

[00:39:08] Yeah.

[00:39:09] I love it.

[00:39:09] It looks like there's a little bakery and a bookshop in there.

[00:39:11] I could go get a class on Canadian.

[00:39:13] A nice book from that place.

[00:39:15] Yeah.

[00:39:15] Some, okay.

[00:39:16] Get some, uh, get some gifts, some travel gifts, coffee on the road on your RV tour.

[00:39:23] You know, that place, you know, that place has a good coffee shop in it for sure.

[00:39:26] Okay.

[00:39:26] Let's, let's start to round this out.

[00:39:28] We've got Saskatchewan, the Holy Trinity Anglican church from 1854.

[00:39:34] Beautiful, uh, wooden structure.

[00:39:36] The church was constructed over several years by local Cree workers who built it out of locally

[00:39:42] cut lumber.

[00:39:44] Not only is the church itself the oldest building in Saskatchewan, but it even has some of its

[00:39:48] original locks, hinges, and stained glass.

[00:39:52] That is awesome.

[00:39:52] You love to see it.

[00:39:54] Man.

[00:39:54] That's one of the things I'm dealing with right now is like, uh, we're, you know, you were

[00:39:57] doing this renovation on the older house and it's like, do you, you know, the old, old

[00:40:02] locks and stuff are incredibly annoying.

[00:40:05] I'm not going to lie.

[00:40:05] And my house would be like only, my house will be only a little bit older or new, uh,

[00:40:09] newer than that building.

[00:40:11] And, um, it's like, do you get rid of them or do you keep them?

[00:40:14] Cause you know, it's like, do I want to be able to close my doors properly or do I want

[00:40:18] a badass old house anyway?

[00:40:20] Yeah.

[00:40:21] Yeah.

[00:40:22] Go heading over, uh, slightly North to, uh, to Yukon where we've got the, um,

[00:40:27] Fort Selkirk schoolhouse.

[00:40:31] It's a former trading post, uh, that was, that sat on the Yukon river and it's schoolhouse

[00:40:37] is the oldest building in the province or, or territory.

[00:40:40] Uh, it's a bit tricky to access it today apparently cause there aren't any roads, but

[00:40:44] you can get there by, by a navigable waters, uh, using a boat or plane.

[00:40:49] There you go.

[00:40:50] Right next door, the Northwest territories, we have the church of our lady of good hope

[00:40:56] in 1865, cozy little church kind of in, in that Gothic style of architecture.

[00:41:02] And then I think over to new Brunswick.

[00:41:04] Yeah.

[00:41:05] I'm not, how do you say that?

[00:41:06] It's like Nietzsche, but treat she treats treats treats.

[00:41:10] Treats house treats.

[00:41:12] Yeah.

[00:41:12] That's where they sell the treats.

[00:41:15] So the treats house was a 1769, uh, building.

[00:41:20] The Eastern portion of it at least was built in 1769 with an addition constructed in the

[00:41:24] 1820s.

[00:41:25] It is assumed that the settler Jacob treats built and occupied the structure.

[00:41:33] Very cool.

[00:41:34] Now, uh, this next one here in BC, we got the Fort Langley storehouse from the 1840s.

[00:41:40] Now I grew up in, uh, BC as a kid and there was a lot of cool, you know, they had the gold

[00:41:44] rush and the Hudson's Bay was big there as well.

[00:41:47] So, and, and a lot of fur trading.

[00:41:49] So this was one of the fur trading posts, uh, posts from the, uh, Hudson's Bay company.

[00:41:54] Unfortunately, this is the only one surviving from the original fort.

[00:41:57] Um, and it's now been converted into a museum.

[00:42:00] Heading over to Alberta's oldest surviving building is this little chapel built by the

[00:42:04] Métis community for the St. Albert Roman Catholic mission and became a center of a French

[00:42:09] speaking Métis settlement in St. Albert.

[00:42:13] And to round off the list all the way over to Prince Edward Island, where we have the

[00:42:19] Doucette house built in 1768.

[00:42:23] Not only is this the oldest building in the smallest province, but it's also a great

[00:42:27] example of Acadian construction built by local Acadians and initially served as the

[00:42:32] local center for religious life.

[00:42:35] So there you have it.

[00:42:36] We do have a few old buildings here in Canada.

[00:42:39] Most of them in Quebec, of course, nowhere near as old as some of the monumental places

[00:42:45] that we opened the show with Dan, like the Acropolis and the Coliseum, but a not bad for

[00:42:50] a young country.

[00:42:52] So hope everyone, uh, learned a thing or two about the CN tower, how long buildings last

[00:42:58] economic and design life.

[00:43:00] And, uh, and, and the fact that, you know, in each province, there's at least a building

[00:43:04] that's a few hundred years old.

[00:43:06] Yeah.

[00:43:06] I guess we'll wrap it up here with a quick review.

[00:43:09] Please leave us a review.

[00:43:10] That's why we read these and, uh, we'll, we'll be happy to read yours as well.

[00:43:14] It says grateful for the show.

[00:43:15] Five stars, the knowledge and insight shared by Dan and Nick are always appreciated.

[00:43:19] Thank you.

[00:43:20] Bye.

[00:43:21] Bye.

[00:43:22] Oh, that's just a button mash there by Apple podcasts.

[00:43:27] The also, I guess, uh, check out realist.ca join our community.

[00:43:30] We have a free community and a paid community.

[00:43:32] We were kind of testing out a monthly option.

[00:43:35] So I'd love to discuss if you'd be a good fit for that.

[00:43:37] Give us a shout and head over to a meetup second Tuesday of every month.

[00:43:42] Love it.

[00:43:43] Thanks so much for listening, everybody.

[00:43:44] We'll see you soon.

[00:43:45] The content of this podcast is for educational and informational purposes only.

[00:43:50] It is not intended as financial legal or investment advice.

[00:43:52] Always consult a qualified professional for advice tailored to your unique circumstances.

[00:43:57] The views expressed are those of the hosts and guests and do not necessarily reflect

[00:44:02] the opinions of affiliated organizations.

[00:44:05] Daniel Foch is a real estate broker licensed with Valerie Real Estate Inc.

[00:44:09] Website is Valerie.ca, V-A-L-E-R-Y.ca.

[00:44:13] And a member of the Canadian Real Estate Association, the Ontario Real Estate Association, and the

[00:44:20] Toronto Real Estate Board.

[00:44:21] Nick Hill is a mortgage agent and partner at OWL.

[00:44:25] Mortgage license number 10317.

[00:44:28] Agent license M21004037.