Monday, October 30, 2006

Renovation project

Fabulous fall day , sunny and warm . Just finishing up a reno on an old house down town Windsor. I'm laughing a bit to myself at how home owners get stressed out during a major renovation. On Friday the owner spent the whole day waiting for the mortgage rep. to arrive in order to inspect progress for a draw on the mortgage. He needs money to pay the trades and paced and puttered around all day waiting .The fellow never showed up. I know he's taking a risk because he purchased a large dumpy house in an old neighbourhood , gutted the interior, and started over with new drywall, wiring, and plumbing. The owner is hoping that that the mortgage appraiser will assign enough value to the completed renovation so that he can get his original investment back plus some profit.

I've been burned a few times in this kind of situation .Home owners who contract their own job often run over budget because they are at a disadvantage compared to builders when calling for trades to price their job .Builders are able to get competitive prices because they are contracting multiple homes year round, thus offering steady cash flow for a particular trade. I had a customer who was unable to pay because the stress of the building project caused a marriage break up and the wife took off with a $20,000 mortgage draw.

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