Renovation project update

The reno had some schedule setbacks largely related to a sales arrangement/change requests so now the push is back on.  Once momentum falters on these projects it can be hard to get moving again. A concrete contractor, hired against my better judgement,  bungled the prep work big time and got sent away to hopefully experience some shame at their ineptitude. Somehow that wasted a couple weeks. The replacement crew (who we knew is good) came in and is doing a fantastic and fast job (at 2x the price of course).  

Drywall taping, sanding and ceiling texture is done. The basement looks like a new build, at this point it basically is with new plumbing, framing, electrical, windows, insulation and drywall. next up is the cabinetry and finishing work.  That will be quick too and we can get to paint, and framing the garage. 

 

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Drywall and taping is done  

 

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Massive progress on the garage with Footings and a wall being poured.  

 

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Totally new basement  

Concrete work now complete at the Richmond semi

The front yard of the attached garage project required a couple days of prep and two separate pours. Fortunately we once again had the skilled crew of Alberta boys from Quebec on site to do what they do best.  

 

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lots of bracing and measuring goes into the stair and sidewalks. 

 

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and another big pour today for both driveways.  

More construction idiots

encounters with construction idiots is a common occurrence at the jobsite. It seems the idiots have a sixth sense when it comes to idiot opportunism.  The Richmond project was relatively idiot free compared to past projects, but we still have had multiple moments of their brilliance.  The idiot from today  arrived shortly after the concrete crew left and added some ugly initials of marking into the new driveway. Those with this irresistible urge to add their graffiti into fresh concrete seem to be everywhere.  Will we need to hire security to watch over fresh paving work in the future ?  

 

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Relatively minor graffiti in the fresh pour but still enough to annoy the builder, easily earning the idiot moniker for today’s winner.  

Brick veneers for the next Killarney project

using old brick in new ways is definitely a trend at the moment.  It just so happens I’ve got a project that’s been kicking around city hall for months trying to get passed, and failing repeatedly.  It features some brick wall  faces and I’ll likely be using the product shown below.  The corners are really costly so beware how you specify your brick detailing.  

 

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this rustic brick look adds a lot of rich colour and texture to the home.  Will be featured on my upcoming build. 

Distasteful realtor games

How long has it been since I've been bothered enough to draft a post bad-mouthing the realtor profession?  Perhaps I'm just desensitized. Anyway today we learned a little about a well priced Killarney development site.  It appears the price was a bait and switch campaign to attract multiple bids and drive the price up. I'm sort of of the view that if something is listed for sale in a public market at a given price and a full asking offer is received, the offer, if written in good faith without conditions should be accepted.  This obviously isn't the case.  Hopefully the strategy backfires and multiple bids are not received.  

 

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This is on the lowest end of the land value spectrum, making it a good deal if acquired here.  Sources tell me otherwise. 

Council knows best...the bizarre case of the anti-rcg Ogden land use re-designation petition

First of all, I am on record indicating my personal view that the row house district is essential to help us as a community to navigate the challenge of sensitive redevelopment of older grid communities and is highly appropriate as a means of ‘gently’ adding modest density to these neighbourhoods.  Many others feel differently. They suggest their community is somehow ‘perfect’ as is, that density will ‘destroy’ the wonderful community, and that existing residents somehow have a veto over redevelopment and it must be ‘locked in time’, even adjacent to a planned multi billion dollar train extension, even in a community that has significantly declined in population over three decades.  The row house zone is seen as the ‘Trojan horse’ district design to unwind community character, will bring in riffraff, renters, landlords, even satan may find a new home in a row house.  The current building on the property, usually a decrepit shack that isn’t suitable for human habitation has little bearing on the mindset of the self appointed community advocates that lead the angry mob to Council to righteously defeat any rcg proposal.   

Yet these rcg applications are being passed with a massive voting majority all over the City with the local councillor often leading the way to move the motion of approval forward.  We’ve observed many times that Council recognizes the need to have community transit re-investment linked to approving new housing development that works for the building industry and the community.  But what to do when the community somehow claims to have collected 1100 signatures against a tiny redevelopment site?  In the bizarre case of the Ogden rcg application (oversized corner lot, on a mini Main Street, near the future train station), we saw Council overwhelmingly approve the land use change despite the local opposition.

One of the beneficial features of the row house zone is it appears to translate well from the costlier inner city areas to established communities east of the bow river where prices are much lower, often too low to support new semi-detached construction.  Wherever land cost is low enough and the existing building rough enough that is has no value, the rcg zone has become the go to district to spur on redevelopment.  This combined with a Council that must be afraid of building mass transit at tremendous cost  yet having low ridership by allowing low density, decaying housing stock to remain in place leads to rcg approvals. Is this a case of Council exercising leadership, and actually knowing best despite community pushback?  I think so.

 

Some of the many pages of the the petition delivered to Council and published in the April combined meeting of Council.  Fortunately this had little impact on the outcome, the project can now proceed to the DP stage and eventually construction.  Good job Council!

Some of the many pages of the the petition delivered to Council and published in the April combined meeting of Council. Fortunately this had little impact on the outcome, the project can now proceed to the DP stage and eventually construction. Good job Council!

The census data is valuable in identifying communities that could easily sustain a large influx of population and remain well under-filled based on historic data.  One of the bizarre features of the community by community, lot by lot redevelopment battle is such furor can be created over a project that maybe could house 12-15 people at most being opposed by a community that is short almost 3000 people from its peak of three decades ago.  The mayor highlighted this figure before he voted in favour the the land use change.

The census data is valuable in identifying communities that could easily sustain a large influx of population and remain well under-filled based on historic data. One of the bizarre features of the community by community, lot by lot redevelopment battle is such furor can be created over a project that maybe could house 12-15 people at most being opposed by a community that is short almost 3000 people from its peak of three decades ago. The mayor highlighted this figure before he voted in favour the the land use change.

Renovation progress - full re-pipe

A bathroom addition in the basement required a lot of concrete cutting, and the state of the existing cast iron pipe necessitated a full redo.  This is a lot of work but not a place to cut any corners and is much easier to do with the walls fully exposed, basically at this stage the work is like new construction. 

 

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the iron pipe was all torn out and replaced by abs, much easier to work with and not issue of covering the walls with new drywall only to find the old plumbing was faulty. 

 

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new bathroom is installed and passed inspection. The old slab is cut and smashed out to allow room to get the bathroom drain network graded back to the main stack. A wet bar added required a further 10 ft of trench. Along with the new windows cored into the walls (3x) this is a radical basement transformation.

Further process improvements at City Hall - the demo permit

This is another followup in the multi part series (last update was July 2018) on how to get a demolition permit in Calgary. Without repeating that post, I discussed how much better and easier it was to be able to apply from home, at any time, for a demolition permit. The old process often required multiple trips to city hall and was tremendously time consuming for the applicant. As a frequent applicant, I was frustrated with how much time was spent on incessantly paper intensive document work just to get the utilities cut off and the permit applied for. As confusing as the process was to me, at least I could navigate it, it was easy to see how opaque the task would be for a first time applicant.

With my current demo application underway I was pleased to discover the city has now improved the process again, and changed the security payment rules. This is a $4250 fee to get the water shutoff approval and appointment for the meter removal. Previously the applicant had to go to the bank and get a draft, then travel to city hall and wait in an often long line to hand over the draft. This was easily a two hour ordeal that I found absolutely demoralizing, smacking myself in the head with my hammer compared favourably to dealing with that task. The city has now created a process called the Water EPay, which allows a builder to register and submit payment online. It was very easy to do and along with the full online submission I can finish everything on my computer, after hours, without ever visiting downtown. What a time and frustration saving improvement. Once I get the asbestos testing and gas line shut off in a couple weeks, my permit will issued without my ever needing to travel further than the job site (which is a couple blocks from my home and office). So thanks city you have actually achieved a meaningful red tape regulatory improvement. Any small improvement does contribute to productivity and lowers the cost of rebuilding the inner city.

Uh-oh another fee

In an August 17, 2017 post, I commented favourably on the generous treatment of building demolitions by Atco, the gas provider.

https://sean-kollee.squarespace.com/blog/2017/8/17/construction-freebies

Basically Atco would come to your site, dig up the alley, and shut off the gas permanently. And amazingly enough they’d do it for free. In this industry, any free service is simply too good to be true, and today, I discovered, while applying for my upcoming demo, that yes, the free service is no more (as of July 2019). The new fee is to be around $1400, slightly more in winter. By my count I’ve taken full advantage of this service seven times, so that does add up to a considerable sum.

While the service was free, there was much whingeing in the past from builders about the pace of the Atco shutoff service. So, while the disconnect was free (re-connect was always billed), it was painful to wait sometimes a month or more while Atco mobilized itself. Often you’d have a condemned house sitting there as the precious summer season sped by and there was no way to tear down the building and pour the basement while the gas remained connected. So along with the new fee, I of course suggested that I’d be expecting prompt service, and Atco should be by my site on Friday to do the disconnect. Well, my dreams of faster service were crushed, Atco is saying 3-5 weeks for booking disconnects, no different than previously. Im sure as the years go by we will reminisce about the good old days of pre summer 2019, when Atco’d shut off the gas for free. Enmax remains the last provider doing truly free meter disconnects. Lets hope they don’t change that too! Seems to me that builders are the one group that does not get to add fees to their product, yet every other business can charge extra at any time.

Here is a typical list of fees you are going to get hit with to build a single house or semi detached project in Calgary

  1. The dreaded off-site levy - this fee is because the city was undercharging long term residents on water/sewer bills, so rather than ask people with a lot of equity in their homes to pay a little more to upgrade the water treatment plants they’d help wear out over the years, the city prefers to stick this bill on the builders and expect them to pass it along to new home buyers often struggling to quality for a mortgage and become home owners. This cost is a great way to make housing less affordable for those least able to afford it while ensuring those with the cheapest cost base on their homes can continue to under contribute.

  2. The asphalt degradation and restoration fee - this fee is to repair asphalt from cutting in new sewer and water lines, and is often double when storm water connections are needed too. This can be a huge fee, and watch out for busier roads as the fee can be astronomical. You will pay this fee even when the patch you make looks way better than the condition of the road you cut into.

  3. The typical city BP/DP fees - these can cost a lot that is for sure. In exchange the city often just requests an engineer sign off on various failure prone elements on the building to make sure it isn’t liable for the inspections it does. I’ve advocated this process be privatized in the past and contracted to smaller operators. Hasn’t happened yet.

  4. Surface improvements - These can be really expensive. Sometimes the city decides you should pay for a streetlight or all the sidewalks to be replaced. Not sure why this is even legal because I don’t know what legislation allows a city to make a private citizen pay for its infrastructure.

  5. Water disconnect - You will pay $4250 for this but eventually you can get it back once the new service is done. Nice of the city to give it back.

  6. Atco disconnect fee - You will pay $1380 to cut off the gas line for your demolition.

  7. Tax re-assessment - Once your building reaches some arbitrary level of completion the city will come by and up your tax bill. This is a great money maker for the city but you will never hear of it come budget time.

Here is the notice of another fee for builders.  I’m going to add some fees to my houses currently for sale and lets see if that will work out for me too.

Here is the notice of another fee for builders. I’m going to add some fees to my houses currently for sale and lets see if that will work out for me too.


Making it work - garage door edition

At our first install the garage door couldn’t make the bend below a poorly placed bulkhead.  We ordered in the tighter radius kit and it was able to slip in nicely a couple inches below the drywall. Lesson learned here is to carefully position your garage bulkheads.  How can you identify an inner city builder in Calgary?  Ask him to build you an attached garage and predict the unpredictable.   

 

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Door squeaks by.  This is an 8 ft door in a 9 ft ceiling.  7 ft door is a better choice perhaps.  

The latest integer homes build is now for sale

Our realtor just posted the Richmond semi d on the MLS. While a fair bit of exterior work remains, we have the interior set up nicely. Contact me for a personal showing or stop by a weekend open house for a visit.

https://www.realtor.ca/real-estate/20563810/3-0-bedroom-single-family-duplex-2111-20-av-sw-richmond-calgary-richmond

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Bungalow renovation progress

Over at the Reno site, the main floor featured a poorly located brick fireplace and a tiny kitchen.   Removal of the load bearing wall was a significant effort but transformative.  Now removed and restructured, an island can be added to the kitchen and a full open concept is created.  Unfortunately I neglected to take many photos of the before and after, so my HGTV skills must be lacking. Working on a renovation is strangely satisfying vs starting from scratch because the daily progress adds up and the house can be back at the drywall stage quickly. While remaining an affordable house, these changes should give this building a real rejuvenation for many years to come. At almost 70 years old, the building desperately needed some help.

 

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load bearing wall is prepped for removal.  By this stage of the demo a massive dumpster is already full. 

 

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with the beam in the ceiling a large open concept living space is created.  

Basement renovation progress

at the renovation the gut is complete of the basement.  The basement was a truly abominable space and had some of the nastiest finishes ever witnessed.  

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the basement scene was sort of a cross between a hideous dungeon and a hunting lodge. 

 

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and totally gutted.  Looks like a decent space now to start over. 

stucco scratch coat stage

With the mild and stable weather we’ve enjoyed (vs last year), the stucco crew, a very large bunch, was able to get the scratch coat on in 2 big days.   It is amazing the production a crew like this is capable of and how difficult and laborious the work is.  We are definitely lucky in Calgary that people want to come here and work as most of our homegrown ‘talent’, myself included, wouldn’t be able to do this work.   

 

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Huge walls consume a massive pile of sand and two pallets of mix.   

Final details that never end

As we approach the largest milestone of them all, being complete, at the Richmond project we are overcoming the usual finishing details.  But slowly. 

Tempered glass and shower door install is underway and this is one of the final tasks.  We’ve also wrapped up the mechanical install and appliances. With warm weather forecast we will be shifting focus to getting the exterior wrapped up too.  

 

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slow and steady progress at the Richmond semi. 

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Glass shower is installed. Lots of matte black hardware  

Vast supplies of cardboard must be managed

I continue to be surprised how much cardboard is produced as packaging waste at the job site. I may now be approaching a dozen truckloads of the stuff, flattened and ready to be dumped in the recycling bin. One of my many peeves is driving by a jobsite and seeing an abundance of overflowing empty boxes atop the garbage bin. Each time I see that I am comforted that some construction idiot is shipping a costly bin full of air to the dump, yet I am annoyed that the city free recycling service is not being used. The usual complaints are heard, ‘my time is too valuable to take 15 minutes to flatten a few boxes and drop them in a bin’. If this is true, then some underling should be capable of investing his less valuable time in cardboard recycling. Lacking any underlings, and not being particularly valuable beyond a scrap hauling cheque writer, the task is done by me most often. Plus I have an empty half ton which is the ideal tool for the job.

The remains of plumbing and lighting from one house.   The trades cooperated by leaving the flattened empties in the garage, where they could pile up enough to justify a full load to the recycling bin.

The remains of plumbing and lighting from one house. The trades cooperated by leaving the flattened empties in the garage, where they could pile up enough to justify a full load to the recycling bin.


Land selection and slow motion debacle

Often it can be illuminating to review the misfortune of other builders as a means of making ones own building tribulation and failure somehow more palatable, relatively speaking. Maybe there is some portion of shadenfreude gained from these case studies, I’d prefer to say this isn’t true, but most likely my wife would dispute me. Despite the presence or absence of that strange phenomenon, I find the land deal debacles of others frighteningly illuminating, and useful as a priceless teaching exercise for those of us exposed to the vagaries of the land speculation marketplace, and of course one of my favourite topics, the hideous behaviour of ‘USED LAND ®’ salespeople in these matters.

Our overview for today is of a very nice Kensington parcel, featured on this website some time ago, at 615 2 Ave NW ( http://tinyurl.com/y2mmdh23 ). Dormant, (or fallow?), for a few years (was listed in 2017 for a few months), while burning through much costly property tax and financing, the land is being marketed again by a wonderfully not-forthcoming USED LAND ® seller. I guess over the past nearly five years it has gained value despite the recession. For those too bored to recall the history of this land, first it was purchased in 2014 for $1.15M, design work was completed, and a five unit building was approved by the City and later overturned on appeal. The USED LAND ® seller then immediately listed the failed development site and chose to mis-represent it as a five unit development prospect, while the ink was still drying on the appeal board decision report refusing the five unit proposal. I felt shame and humiliation on behalf of the USED LAND ® seller, but I got the sense that neither the USED LAND ® seller or the Calgary Real Estate Board considered development misrepresentation a valid concern. A duck’s back, I guess, is absorbent only when compared to the permeability of the USED LAND ® sellers suit jacket. The allure of the juicy commission on this property, priced today at a bargain basement $1.245M ensures a full goretex wardrobe?

The purpose of this post, however, is to illustrate how costly holding onto this failed development site must be for the builder, and to urge caution to those considering a similar purchase. So many risks and pitfalls show up after the purchase, the land must be bought at a price that the gremlins can be affordably bribed to vacate. Yet this one clearly was not, and the bills are piling up as we approach year five. The largest has to be the opportunity cost. Sure this land may have a mortgage on it, necessitating a hefty monthly nut, with little in the way of revenue to offset it. But the cost of capital is a builder-killer, and a five year hold could well be insurmountable to all but the most deep pocketed builder. At a cost of 7%, this property is bleeding around 80 grand a year, in funds that can’t be used to build elsewhere, or in funds that can’t be borrowed productively toward finishing active construction that will lead to sales revenue.

To a small business that prides itself on being fleet footed and capable of switching strategy with the trend of the market, this five year hold has to hurt, and no end to the suffering is within reach. I wonder if they now realize that had they dumped the lot in 2017 by tearing off the bandaid to discover the real value, the bleeding would now be over? The scar tissue remaining would be better than the anguish of slowly bleeding to death?

Prospective land buyers, particularly new builders, often ask me what I think of properties, or inquire about how to get a ‘deal’, as if I have some surplus of amazing opportunities (I don’t, but this year so far has been better than most for identifying deals). Real deals are few and far between, and the duds are absolutely everywhere. So how does a person distinguish between the two? Experience counts, as some land just gives you an excited feel about its potential while others are cringeworthy. The higher quality land will retain value, thus is less risky to hold onto, yet often there isn’t a huge differential between the golden nugget and the junk. They key of course is to not overpay, but you can’t know if you’ve overpaid until you’ve finished selling the completed units. I have observed so many train wrecks in recent years on all kinds of property, it amazes me that anyone wants to start building. Yet they do, so here are some random thoughts.

  • Choose the grade A location - when one parcel must later be marketed as four finished townhomes, favourable leverage is created by the best land. It is easier to find four buyers in a great location than four buyers willing to accept an awful location at a lower price.

  • Consider access and utility needs - too many buyers search out the deal but have little notion of the storm water infrastructure underground that needs to be connected to. This huge factor can make a great deal turn sour. Be friendly with a civil engineer to reduce some risk. Look at what Enmax/Atco/Roads indemnified crew will be needing to do to connect your property and how cars can access the garages.

  • Prepare to be hit with offsite levies and surface improvement - the City makes the rules and you will pay. Is your land deal good enough you can afford to pay for asphalt, sidewalks, streetlights, and storm upgrades? Or is it more likely that once you pay for the true costs of building there is simply no margin left to justify the business case?

  • Know what the ceiling is on unit values - If other similar units have sold for X, you likely cannot sell for X plus Y, despite how wonderful your paint colour coordinates with your cabinetry, and how fabulous your floorplan flows. You must plan your specification according to reality, not fantasy. Your valuation of the land must be corroborated by the proven value of the end product.

  • The market you buy in won’t be the market you sell in - given the lead time for a new build, difficulty in financing, and delays beyond your control, by the time you are ready to sell the finished homes, governments will have changed, rules will be altered to distort the market, and input costs will fluctuate, sometimes by a lot. I’ve found that most changes will be a kick in the nuts rather than wind beneath your wings. The price you’ve paid for the land protects your nuts from being crushed by the markets boot. Politics will not help you, because developers are evil and well connected businesses have relationships you can’t possibly foster in time to save your project.

  • Prepare yourself to detach emotionally from the stresses - You must be able to navigate this minefield of risk by minimizing the personal damage inflicted upon you by the stress. One of my builder friends calls it ‘brain damage’. He's right. Temperamental snowflakes need not apply to this endeavour and expect success.

  • Become a person who can make decisions - this doesn’t mean refusing to change course, inability to take advice, or making quick or rash decisions. You must develop an effective process that leads to a well reasoned decision, and once made go after it.

If you fail on these general principles, you may find yourself in a real bind, with no avenue to relieve the pain. What I’d suggest is not to do what the 615 2 ave owner has done. Learn from these case studies as I try to and you can survive, remain opportunistic and capitalize when the right land deal is identified.

Expecting another investor to bail you out of a bad decision is a tried and true technique of an irrational seller. How is overpricing a property a successful technique? The land is not worth $100k more than it was 5 years ago in this market. Nobody cares that you need to hit a number to make yourself whole.

Expecting another investor to bail you out of a bad decision is a tried and true technique of an irrational seller. How is overpricing a property a successful technique? The land is not worth $100k more than it was 5 years ago in this market. Nobody cares that you need to hit a number to make yourself whole.

As we approach five years, the cost of this investment are really adding up to a shockingly high opportunity cost. Can you allow your business to struggle elsewhere when it could thrive by shedding a burdensome seven figure property that is acting as a ball and chain on business momentum?

As we approach five years, the cost of this investment are really adding up to a shockingly high opportunity cost. Can you allow your business to struggle elsewhere when it could thrive by shedding a burdensome seven figure property that is acting as a ball and chain on business momentum?

Study results on housing affordability shows Calgary is most affordable of 35 major cities

a report from zoocasa https://www.zoocasa.com/blog/canada

suggests calgary has the most affordable real estate among the 35 major markets studied. 

This is interesting as income averages appear to dictate much of the relative measure of affordable housing, not just pricing.  

I think some of these aggregate stats distort the Calgary market because the inner city areas are vastly more expensive than the sprawl communities.  While low cost housing in Calgary is clearly available, one must pay a serious location and convenience tax to purchase the cheaper stuff.  

 

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Built in fridge install

typically fridge install is fairly easy, get it delivered and plug it in.  In this example of doing it the hard way we needed seven different construction dudes to hook up the fridge. 

2 delivery guys  

1 plumber to connect the water line

2 cabinet installers to make the trims  

2 builders to assemble the fridge and haul away the garbage.  

 

The finished install  

The finished install  

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The space required to open these big fridge/freezer combo units is considerable.   

Appliance install

with appliance install well underway at the Richmond project we are advancing nicely to interior completion.  Next up will be mirrors and glass work plus the final plumbing and water heater.  

 

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