MAGICAL CONTRACTOR!?!
How many times have you heard the story about the Big Bad Contractor? Well, if you’re involved in real estate investing, you’ve heard a few! The dramatic, evil, and sometimes illegal stories go round and round.
So we thought we’d flip that story a bit today.
Newsflash: Contractors are not Magicians. Nope!
So you need/want to do renovations in 2021, in a quasi-pandemic world? Well, here’s a bit of truth-telling from the other side of the stage.
- Lumber is still expensive (at least double last year’s costs (if not more) for dimensional lumber). But at least you can get your lumber without too much delay (as of summer 2021).
- Any product made with steel is more expensive, and may be delayed.
- Yup, you guessed it, concrete is more expensive. There’s a reason somewhere, I’m sure. Electrical materials have spiked as a result of the increase in copper prices.
- Windows around the Calgary area are ridiculously delayed. It goes back to the hail storm AND a problem with a glass manufacturer in the USA.
- Random products are still delayed and sold out. For example, some ABS products are becoming more difficult to obtain. Contractors are trying substitutions in some cases, and shipping products when possible—from Eastern or Western Canada, and even from the USA when necessary.
- A new delay showed up last week, where a major fiber cement siding company has decided to simply not sell or ship ANY product “out west” until they catch up on their supply and labour issues. Not kidding.
- Plumbers are in short supply in and around Calgary. Exterminators too. Expect up to a 2 week wait as of August 18—or pay for emergency service. And roofers have a significant waiting list too.
- Many renovation and construction companies are short staffed. Even suppliers are struggling to find staff (for example, plumbing fixture and even Big Box stores). The shortage of skilled trades’ people has already begun, but it is especially acute in Calgary right now. We hear many stories of staff that have already moved west for better opportunities.
- Everyone is buying stand-alone tubs these days—guess what? 4 weeks minimum for that one. Appliances? Well, we’re still waiting on a dishwasher from a March order! Pack your patience, or choose something different and in stock.
- Do you like to comparison shop? Currently, most suppliers and trades people are only holding quoted prices for 10-14 days. Prices are in flux that much. You may even be required to pay a deposit to hold that price.
So when your “big bad contractor” tells you there is a delay—he’s probably already made a dozen phone calls to try to find a different solution to your problem. And if you did a reno last year, or 2 years ago, those price comparisons are virtually useless. Despite this, renovations are continuing all over the city and surrounding communities—nothing is impossible! But renovators and investors need to adjust our expectations.
None of this is unique to renovations. Bike stores are having trouble getting replacement parts—and they’re telling customers that bike tires are projected to cost more all through 2022. Toyota just announced it is cutting vehicle production by as much as 40% due to chip shortage. Talk about ripple effects of one key part!
As real estate investors, this means you may encounter extra holding costs, AND extra renovation costs. If your budget allows for this—no problem! Just know that inflation, staff shortages and supply chain issues are all REAL in 2021. No one is making this stuff up, no one is “cooking the books,” and no one, I mean no one, is enjoying the perpetual Covid excuse. Unfortunately, your contractor can’t always provide a magical solution in 24 hours or less!
What’s our best advice? Plan your reno; and plan to be adaptable. Order your products and store them somewhere, then start your demo once you have as much product as is feasible to buy and store. Let your subtrades know that you’ll be ready for them in a week or 2, and check if they’re still available. But most of all, don’t panic when you have to wait for something—it’s probably going to keep happening for months. If you have choices, choose something different when necessary—especially if it’s a rental and you’re not going to live there. Today’s post is a bit of a harsh reality check, but isn’t it better to know and prepare for the challenges you will encounter?
Bonus points if you remember: your contractor didn’t cause Covid, and he/she is just as frustrated as you. We’re all working hard to make your investment properties profitable! If contractors ever do find the magic wand, … well that would be HGTV magic on steroids!
