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Cost of Renovation Projects has Increased!

By Paul J. Carroll, CFP®August 17, 2023February 6th, 2024Videos

 

Like many people, I have been involved in a number of renovation projects in the last three or four years. And I have paid tuition like never before. So the purpose of this video is to maybe help you pay a little less tuition than I did.

I read a fascinating article in the Financial Times that really talked about how renovation projects are becoming a disaster for people. It would’ve been nice to read this article three or four years ago. But what we’re seeing both with our clients, ad hoc conversation with others, and even personal experiences within our office is the world has changed. It used to be if you couldn’t afford it the way it is, buy what you can afford, fix it up. That could be a house, a plane, a classic car, a boat. But the rules of the game are changing.

Labor is More Expensive

As you probably already know, there’s a chronic labor shortage, and even more so a chronic skill shortage. Never in history have we seen anything like it. It’s leading to two things. Not only is labor more expensive, but that bell curve of labor, that bell curve has slid over. A lot of those best qualified people have found alternative employment that pays even more, and so not only has labor gotten more expensive, but the labor available to you, more so than say a large contractor or a large shop, is the bottom of the barrel as a general rule. You’re getting worse work, you’re getting more re-dos, and you’re paying more for the experience. And that’s just one side of the coin.

Supply Chain Issues

The second side of the coin is the parts, the supplies. Lumber, steel, specific parts. One example, and it’s extreme, if you want to overhaul a piston aircraft engine, there was a period in the last two years where it took one year to wait for the engine. Now it’s down to more like six months. But it’s not just airplanes. If you’re trying to fix things in your home, if you’re trying to fix a classic car or any of the above, the supply chain is significantly broken. The parts are significantly more expensive and getting the job done is next to impossible in some cases, unless you are the one with the skills and the time to do it yourself.

So it’s a little bit of a blanket recommendation, but what I recommend is if you don’t have the skills and the time to do it yourself, in addition, the time and the budget to wait for the parts, buy it as you want it. Don’t buy a fixer upper. We wish you the best of investing success.

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Founder & CEO at Avion Wealth

Paul is the founder and CEO of Avion Wealth, LLC. He leads a team of wealth managers in building and executing financial plans for high net worth individuals and families. Contact Avion Wealth to speak with a financial advisor.