LITTLE DOSE OF TIME REALITY

Clearly it’s time for an honest conversation.  This is for anyone planning construction projects, renovation projects, or even real estate investments that might require some improvements.

I can hear many of you already, “don’t you understand that time is money?!”  Yes, we certainly do.  But it appears that many people need to be a little more realistic about their expectations.

One example is the recent plethora of investors, builders and developers now facing receivership or insolvency in Canada.  Most of the media articles have focused more on rising interest rates, than any other cause.  https://www.heddlerealestate.ca/blog/real-estate-insolvencies-in-canada-set-to-surpass-levels-of-global-financial-crisis  However, the extra time required for permits, inspections, etc… is a significant cause of rising holding costs.  Some of these bigger players needed to budget MUCH more time into their planning process.

What about for us humble souls, doing a renovation, or building a home (or 8), or simply adding an Accessory Dwelling Unit?  We thought we’d share a few real stories of delays we’ve seen, just within the past few years.

• A load of siding was ordered months in advance, arrived by ship, then was transferred from the port of Vancouver onto a transport truck. It was late January, 2022.  You guessed it: the truck was parked, somewhere in the Fraser Valley, while that trucker went to the Ottawa Convoy protest.  Result:  an extra 2-month delay in getting our siding to the jobsite.
• Special tile ordered for a client, travelling by transport truck, in November 2021. All 3 highways from BC were washed out with record rains.  We’ve experienced minor delays with one Highway blocked, but we’ve never seen all 3 closed.  FYI, tile is really heavy, and too expensive to put on a plane.  Result:  about a 2-month delay.  We’re still impressed with that incredible engineering feat!
• 2023 Vancouver Port Strike was “only” a couple of weeks, but the logistical nightmare that followed delayed a variety of products (plumbing fixtures, flooring, deck railing). Result:  2 weeks caused roughly 2 months of delays to get all the materials to their correct locations, and processed to us.
• Business closed its doors about midway into a project. This has happened twice to us now.  Result:  need to find another business to pick up where someone else left off—FYI, tradespeople hate being half-way responsible.
• Key team member in one of our subtrades died. This one is very difficult.  We usually want to show compassion, but our clients only want completion.
• Business partners fought, compromising their businesses (materials or subtrades). One of our suppliers was able to pivot and survive.  One of our subtrades entered a stretch of extreme difficulty, where a one-week tile job took an entire month to complete!
• Permit processes can go along relatively smoothly, then suddenly double the time it takes (for example in Calgary, with new zoning bylaws).
• Inspectors and quantity surveyors sometimes have quick turnaround times, and other times, it can be triple the wait. In one instance, a permit was delayed weeks because it was left on the desk of an employee who went to Europe on a planned vacation!!  True story, but I think his colleague wasn’t supposed to tell us the truth.
• Sometimes we run into a specific material shortage. Lumber and steel are probably the most obvious in the media.  But an emerging issue is global transformer shortages.  Everyone wants to go electric and phase out coal, oil and gas.  The ripple effect of this choice, and the concurrent effect of natural disasters is explained well in this article.  https://energynow.ca/2023/11/utilities-when-they-cant-buy-transformers-energyminute/.  Basically, everyone needs more access to electricity, preferably yesterday!  The result that we started to see in 2022 and 2023, was a rationing and prioritizing of which projects receive new transformers or transformer upgrades (for example, when converting a single family residence into a small multi-family dwelling).  At this point, Enmax has been able to move forward, https://www.enmax.com/services/electricity-services/the-current/enmax-power-ends-transformer-allocation-strategy-in-mid-november.  Our client’s result was well over a 6 month delay before they were able to upgrade their service, and upgrade their electrical panel, and finally get their electrical inspection passed.
• In a country that needs millions of new homes, many people are trying to move forward. Recent stats show Canada-wide that building permits were up 22.1%, month over month, in July 2024 (residential and non-residential)  https://www150.statcan.gc.ca/n1/daily-quotidien/240912/dq240912b-eng.htm.  Alberta saw a 33% increase in residential permits, year-to-date, when compared to last year, https://www.atb.com/company/insights/the-twenty-four/building-permits-july-2024/.  ATB has further broken down these stats into a 27% increase in single-dwelling units, and a shocking 48% increase for multi-family units!  The result?  Competition for materials and labour is fierce in this province!!
• Finally, it is worth remembering that weather delays are real. We are an employer committed to workplace safety.  No, it is not safe to put tradespeople on a roof, at minus whatever, in a snowstorm.  Typically, cold snaps only last a couple of weeks.  On the flip side, forest fires and smoke/air quality are another rising concern.  Those issues too will pass, and the project will again move forward.  Most builders and contractors will use a little patience, rather than risk safety, for a minor project delay.  Of note right now in Calgary is another dramatic slowdown in roofing, because of the hailstorm on August 5, 2024.  We are already around a 4-week delay—and that was the shortest wait we could find!

So what’s our point here for people who are building and renovating?  As carefully as you plan your financial contingency budget, please plan a time contingency budget.  There will be a delay, somewhere, in almost every project.  It is not a project management failure. Nor is there any need to panic.  It’s just a temporary stumbling block if all parties are committed to finding solutions, then moving forward as efficiently as possible.

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THE CASE FOR GARAGE SUITES?

            For a long time in Calgary, Garage Suites or Backyards Suites have been rare unicorns.  The financial expense didn’t justify the rental income – only in a few cases did the business plan make sense.  But, like everything else, that is changing.

Let’s just clarify the definitions.  Garage suite, Laneway house, Carriage house, Backyard suite and Garden suite are all expressions that are used in Calgary and other Canadian cities.  Step outside the city limits, and now they’re referred to as Accessory Dwelling Units.  Generally, a carriage house is at ground level, and a garage suite is above a garage.

Why Now?  On Sept 16, 2023, Calgary City Council approved a new housing strategy.  Hundreds, if not thousands, of requests and complaints about the lack of affordable housing had been heard.  And then … the federal government added a twist:  figure out a policy to allow densification, or else miss out on the federal “Housing Accelerators Fund.”  And for the icing on the cake, the Calgary Housing Needs Assessment was released on Sept 6, 2023, with some pretty shocking statistics, https://www.calgary.ca/communities/housing-in-calgary/housing-needs-assessment.html.  Now there is both proof and motivation:  we finally have a City Council ready to allow densification.

When do the changes come into play?  Clearly a big policy shift like this requires time to implement.  The expectation is that details will be coming clearer “soon,” and that the new bylaws should come into effect in the spring/summer of 2024.  Increased density, and relaxed parking rules for new builds are at the heart of the changes coming to Calgary.

What this means is that much of Calgary is likely to be able to have BOTH a secondary suite and a garage suite.  The changes mean a lot of other things too, but for the purpose of this blog, homeowners and investors can have 3 legal suites on a property:  main floor, basement and garage suite.  No more begging city council and/or the neighbours.

What’s in it for the investor or homeowner?  Tenants love garage suites!  And investors love a great tenant who stays for a long time.  Garage suites can be easily customized to attract specific tenants; for example, a 1 bedroom with an office will attract professionals who commute to an office part-time, and work at home part-time.  Another example is a 2-bedroom design that attracts single parents and young couples in communities close to schools; this model would also work well close to universities and SAIT, for student roommates.

A little fringe benefit for those of us with an altruistic nature is the ability to contribute to the affordable housing inventory in Calgary.

And the financing?  As investors, we LOVE an extra source of income!  We also love forced appreciation to our properties (higher net worth).  Many investors will compare building a garage to suite to buying a condo.  We would suggest a discussion with a mortgage broker regarding financing options for the build, as there might be some lower cost alternatives (compared to going out to buy another investment property).  The clear added bonuses here are no condo fees, and complete control of the property.

What’s the catch?  First, the ink isn’t dry on the city’s new zoning regulations YET.  Second, the utility connections (tie-ins) can present a challenge.  We’ve all seen pipes burst across the city.  If the existing property has older water and sewer, the city will likely require an upgrade for the entire property—this is in addition to connecting the new garage suite to the existing utilities.  Third, Enmax makes the rules about power poles.  An electrical pole may require relocation, or replacement—it’s not open for discussion.  And fourth, trees still matter in this city—there are rules and fees if a tree needs to be removed (and sometimes even if it isn’t going anywhere, probably best if we don’t take a sidebar into that story!).  So, a perfectly reasonable build quote has a few wild cards until these issues all get sorted out by the experts and city administrators.

We’re already in the planning stages for a garage suite on a property that doesn’t yet have a secondary suite.  But we’re incredibly excited about the opportunities for investors and homeowners who are interested in a relatively simple extra income source, on a property they already own.  Hoping to share some good news stories about this build project in 2024!

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Hey there dreamers!

Sometimes we focus on our financial and wealth-building investment properties.  We talk about practical, useful and user-friendly rental housing.  But Financial Freedom needn’t be a forever moving target.  Enjoying a home you are truly in love with IS financial freedom to many, many people.

And by the way, building or renovating a personal home can also be a financial investment:  in the place where you’ll create memories, celebrate milestones, and enjoy life with your loved ones.  After so much work growing a career and your investments, you deserve to have a space that reflects your personality AND meets all your needs.

Whether a homeowner is building from scratch, or renovating an existing space, it can be a daunting task.  And the question of “where to begin” often stops people in their creation process.  But this is where an architect or designer, who really listens to your vision, can guide you toward the initial design.  This is also where a general contractor can provide ideas, recommendations, or even assess the property for current limitations (based on local bylaws, etc…).  What is possible?

Then begins the process of narrowing down choices:  2 bedrooms or 5? Open concept?  Basement man-cave?  1000 sq ft?  9000 sq ft?

And guess what?  The summer is a fabulous time to begin building or renovating the home of your dreams!  Why?  Laying on a beach, or hiking in the woods, many of us will have some time to think, and to dream, about what we really want and why.  Coming back in September, concept drawings can begin!

In our experience, it can easily take about 2 months of back and forth to get a set of drawings to where they need to be before a homeowner is happy, and the permit people will accept those drawings.  Did you know that many municipalities may need 6-8 months to get a renovation or build passed through the permit process?  So, if people truly want to start a new build or a big renovation in 2024, the truly successful people will be starting NOW.

Many people also ask, “what style should I build/renovate?”  Summer is a fabulous time to explore different styles.  On those rainy weekends, go to open houses.  When it’s too hot or too buggy, grab a design magazine.  Yes, old school still works!—but all you techies can also collect a digital file of images too!  Summer can even be a great time to learn about the latest/greatest energy efficiencies and sustainable materials.  Even choosing windows can be mind-boggling until we learn a bit, narrow it down, learn a bit more, then decide what is optimal for our space.  A lot of people find that designing a dream space is a lot of fun!  Don’t be afraid of your unique style!

As the Alberta economy continues to grow, diversify and strengthen its fundamentals, now is a great time to invest in our personal residences.  From modern farmhouse, to Scandinavian minimalist, we’ve turned a lot of homes from “drab to fab!”  Live a little, dream a little, and celebrate the wins so far with a beautiful home renovation or build.  Financial Freedom isn’t just some far-away date in the future.  And even if it is for some people, isn’t it fun to have a dream home vision to keep you motivated?

When you’re ready, head over to https://mountainsedgerenovations.com/ for some ideas to start your journey.  We’re now booking into 2024!

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