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Friday, September 24, 2021

Pattie Lovett-Reid: Rolling up the sleeves for home renovations? Proceed with caution

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HUNTSVILLE, ONT. — Reality TV has a way of idealizing the transformation of your home from depressing to dazzling, with home renovations made to look easy.

The housing market has shown some signs of cooling over the last few months, but it’s far from crashing with prices up approximately 25% year over year, according to the Canadian Real Estate Association.

However, that hasn’t dampened the desire to own a home, and it has forced some potential homebuyers to look to a “fixer upper” in an effort to drive housing costs lower. It’s also spurred some on to consider a small build of their own.

Before you embrace the challenge, a few considerations.

According to Doug Finnson, my brother, who has done home renovations his whole life, “it is a great strategy to buy low, renovate and sell high.” But before diving into a renovation, he warned that cost assumptions can be wildly inconsistent, especially if you are a first time renovator.

“You better know the numbers,” he warned. Those numbers include the purchase price and renovation costs which include design and materials. You should also be crystal clear if you are buying to flip, lease or live in. That can drive the quality of the materials.

Finally, building to code can prove to be costly, labour intensive and is non-negotiable.

And hidden costs are what can destroy your budget.

From my own experience, going through a small build can have pitfalls that can set you back emotionally and financially. The rookie renovator may simply underestimate the costs and not communicate as effectively as they should have from the start.

Changes to the original plan always end up costing you a lot more. It is important to set a budget, but also important to know you will likely exceed it. A little contingency planning can give you peace of mind.

There will be areas to compromise and areas to stand firm. Skimping on materials could escalate costs and result in delays. In other words, order a little more than you think you need.

Also keep in mind the golden rule: Measure twice, cut once.

PRICE FLUCTUATIONS

You may run into costs that are simply out of your control. I reached out to Billdr and asked how potential renovators deal with the price fluctuation in material costs.

According Raphael Sammut, a Toronto based General Manager of Billdr: “What we saw for estimates in the first half of 2021, during which the price for common materials like soft lumber and drywall increased anywhere from 100-200%, was that the overall impact to price for the majority of our renovations was minimal,” he said.

“In construction, material prices typically only account for 30-40% of the overall cost, while labour, administration, overhead and contractor profit account for the remainder. Renovations tend to use far less structural wood, plywood, and drywall than a new home construction, so the impact to home renovations is much less than the increase in material prices alone.”

Sammut provided this example for a recent front porch estimate: Doubling the price of wood only resulted in a 15% increase in overall cost. For a typical kitchen or bathroom remodelling project, doubling the price of wood and drywall only resulted in a 5% increase in the overall cost.

“By providing homeowners with a detailed budget estimate early in the planning process, they will be able to understand the true cost of their renovation and set aside an appropriate contingency for material price fluctuations,” said Sammut.

As we get closer to the completion of our small build, sure there have been challenges, material delays and project design flaws. However, as we near completion, you might wonder, would be do it again? You bet.

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