Rowhouse spray foam

the monster concrete firewall at the rowhouse continues to be a costly feature as we detail the building pre-drywall. 

Given the enormous heat loss and conductive property of the concrete some extra spray foam appears to be a sensible approach. If poorly insulated there is a likelihood that frost could creep into the building along the wall and later on thaw and create moisture issues.  

lots of foam to keep the cold at bay. The other side of the wall is exposed to the elements and could be a trouble spot if left untreated. 

New project development permit application is advertised

the Richmond project is now in advertising with a sign on the lawn. This is a really nice project stay tuned for more info.  

looking forward to launching the next project 

Stain match

Back at the Killarney semi detached project we are working on the final paint for the first house.  The oak railing is on so we also had a gallon of custom tint stain made to attempt to match the hardwood floor.  Looks good so far.  With a bit more work complete we can start cleaning and readying the house for appliances.  

the wiping stain coat the orangey feel of the oak very nicely to match the white oak hardwood 

Budget basement project

We are tackling a basement project in a new suburban house for some family members.  This will give us some interesting insight into what it actually costs to do a basement from scratch basically.  A lot of trades and logistics are involved in these projects.   I typically don't tackle any job with a construction budget less than $1/2 million. So doing a job and trying to squeeze everything into $20k is fun. I will post the final cost to do the work at the end. 

Basement taping underway. We've done Framing, mechanical, vacuum, electrical, plumbing and a lot of cleanup work and logistics to get to this point.  Plenty if permit fees too, the city made some nice profit on this job. 

Endless winter

2018 has proved that snow management and removal isn't a strength of Calgary.  While the main streets get taken care of the side streets and alleys are left to wait for a Chinook to melt.  What happens in a year without any Chinooks?

well into April and still we need the jackhammer to clear out frozen sidewalks that refuse to melt.  

Freestanding tub and filler

More premium finish components installed at the Killarney project master bath.  

Fine tuning the tub filler  

and they are tucked in and put back to bed 

Custom shower door install

The master bathroom shower is a completely custom hand made piece of work involving many trades and materials.  Cost of these can get fairly extravagant.  Here is the final piece of the shower now installed at the Killarney project.  

Garage slab prep and pour

the detached garage has been a major obstacle at the semi detached project. We couldn’t get the pad done in the fall, and with the cold and snow refusing to melt we had to thaw the ground with a heater, yet still it was too cold to pour.  Today the crew decided to sneak in the pour and had it all troweled and set up by midday.  We will cover it until it is time to frame the walls. 

a recurring question is how much do these garages actually cost.  I may add it all up and  post it here once we are done.  

Fire safety sprinklers at the rowhouse

the powers that be decided to require sprinklers at the rowhouse project (months after approving the building permit).  Given the time constraints and need to proceed with inspections I went ahead with the install rather than pursue an alternate solution.  Certainly over time we expect the city to demand more fire protection but realistically the city now added another $20k in cost to the building that arguably isn’t needed.  

a lot of specialized components go into the sprinklers, all expensive. 

Plumbing final underway

The plumber is back to tackle the finish work. This mostly includes the faucet trims and under cabinet drains. After this is done we can get on with some cleaning as the site is a hideous mess.  Lots of cardboard and dust to deal with during the finish work.  

Taps and toilets going in.  

The rental pro forma - how can this calibre of financial information be distributed by professionals to the public?

An unexpected real estate advertisement appeared in my inbox the other day.  It promised an amazing opportunity and attached some attractive sales brochure type information.  I decided to take a look, because clearly anyone willing to prepare this material surely would have an interesting proposal for me to review.

In order to protect the names of the innocent (and guilty), I wont bother to post the entire document, but I will include a tidbit of some of the most egregiously horrible misinformation.

So to start, the amazing real estate opportunity to own your own rental property, as calculated by the sellers own  (incorrect) figures, loses $944 each month (when it is rented and the tenants pay according to the lease).  So at best, the owner would have to dig deep into her pocket and come up with the $944 each month to pay the mortgage.  This sounds like a negative return doesn't it?  No, after five years, the ROI is indicated at almost 15%!!  That is good.  Time to call your favourite realtor and write up an asking price offer!

Once you dig a little deeper, you will find that the math here is just terribly inaccurate.  In fact it is so full of errors that you have to assume it is purposeful.  Could anyone really be that wrong though?  Could a realtor who is a professional in dealing with property as his full time career be so off on his numbers?   

I will list a few real numbers below to show how I can irrefutably show the rental pro forma presented is just awful.

1.  The downpayment cost is not calculated.  The buyer needs $160k down to buy this deal.  If that money was invested in a conservative 5% yielding investment, it would earn $666 per month.

2. The monthly loss based on rent vs expense, if this is even accurate, is already -$944.  Once you lose the further $666 which is income you give up from the downpayment, that loss broadens now to $1610.

3.  But this deal has a 15% five year return, how can that be when it loses $1610 each month?  The supposed return is based on assumption of future appreciation and mortgage pay down, but this is calculated wrong as well.

4.  The realtor suggest the property will be worth about $927k in five years, plus the mortgage will be $88k lower, so the return, after losing $59k over those same years still pencils out as positive $157k. I will show how wrong this is below:

• There actually is no mortgage pay down.  The mortgage is just dropping because the owner is paying it herself from the negative cashflow of -$1610 x 60 payments = $96k.  So the mortgage is $88k lower, but that cost $96k.  That means the owner paid $96k to payoff $88k in debt, that sounds pretty bad to me (the difference is interest to the lender).  Paying down your own debt is not profit.  That would be like moving a dollar from your left pocket to your right pocket, and claiming it as profit.
• The appreciation is not assured - the property is already so over priced based on its rent to income ratio that is seems unlikely that further $127k of appreciation could occur. To realize this, the 2018 buyer would have to find a new buyer in five years that would view the property as even more valuable, despite the economics being even worse at that highly appreciated valuation.  To even get to that five year resale horizon, the buyer would need to come up with $96k to feed the loan.  
• Sales costs are not factored into the return - in five years, the sale commission would be significant and would wipe out a lot of the appreciation (which may not have even happened).

This property is a hideous black hole of an investment that could really hurt the buyer.  I would urge no fledgling real estate investor to even consider the deal at the numbers shown. The realtor involved seems to know a little about real estate, but just enough to make him dangerous. If you are going to work with a realtor, take their advice, or accept their numbers as factual, you need to be extra careful and assume each number provided to be incorrect.

It is really troubling that this real estate profession is so often plagued by these borderline deceitful quasi professional looking information sheets. If this was a different type of investment brokerage, these documents would not be acceptable.  Yet somehow, for what could be an individuals largest purchase of his or her life, the realtor somehow can become a trusted advisor, yet offer advice that is simply garbage.

There are ways for a person to educate themselves on rental property.  I'd recommend the www.biggerpockets.com website.  While it is US based, it has some great calculators to take a lot of the mistakes out of rent/buy decisions.  

Take a look at the numbers here, this awful deal is presented as a winner. It is as far from a winner as I have witnessed.  

Rowhouse stucco prep

The stucco prep can begin despite conditions unfavourable for applying the sand and cement mix.  The tyvek and black paper layers also provide a significant amount of waterproofing for the building so we can eventually start interior insulation.  

Railing install

The railing material is being installed at the Killarney project.  We’ve got a continuous rail style with clips to fasten the glass to it.  The carpentry involved in this is always a painstaking affair.   

Measure more than twice to cut once on these installed.   

Hardwood stair detail and final finishing material is next

At the Killarney project the hardwood stair nosing detail is complete.  With the hardwood and tile done, that is the end of the flooring project. Next up is paint followed by finishing the baseboard and plumbing hardware.   After that is all done and the dust is gone we can do the lighting.  We’ve got some fun lights selected for the hanging fixtures as shown below  

this will sit over the bathtub. 

many final touches to the stairs are needed. 

Congratulations to me - I have a builder licence

The province instituted a mandatory system to take money from builders in exchange for nothing. It is a pretty good deal for the government.  They get to take a lot of money and offer zero value in return.  Over time I am sure the government will ratchet up the cost and headache associated with retaining the licence.  That is what a bureaucracy does over time, it scope creeps and and causes more grief for those under its influence.

Now that I have a licence to do what I was doing before, without a licence, and for free, I wonder if I am a 'better' builder.  I could argue that I am the identical builder before and after the licence was issued but there is one key difference, I have $600 less each year to actually fix stuff that breaks.  The next time I have to fix something, I will just dig deeper into my pocket to find more money rather than invest it in some productive activity such as building more or better houses.

I'd like to see at the end of the year how much money the government has confiscated during this process, and to what benefit, if any, the money has been used for.  I am convinced the money will mainly go to some lucky bureaucrats in Edmonton who will graciously pocket the money while on vacation enjoying their paid time off.  I'd wager after a year the licence has had zero benefit to anyone outside of those recipients of the fees.

I guess if you work 300 days per year you give the government an extra tooney each day.  That is the Canadian way.

Unveiling the natural stone exterior work

The mason finished on the weekend and after a few days of heating and hoarding we unveiled the almost complete exterior of the Killarney project.  What is interesting about this project is the combination of new products.  We’ve got the metallic silver metal siding combined with large slabs of natural stone.  Just a little warm weather is needed and we can stucco and landscape.  

the stone is complete. 

Hardwood install

We’ve got the hardwood crew on-site now that the tile work is complete.  they make remarkable progress over the course of a single long day.  

The wide plank oak floors seems to be a trend that will never go out of style.  The cost to redo an entire 2000 sq ft house in hardwood would be very large so use of timeless natural products makes a lot of sense.  

Grout - the final component of the tile job

The crew was back this afternoon to begin the process of grouting the finished tiled areas.  There is always some discussion on using matching vs contrasting grout.  I prefer matching grout generally, but in a few instances a white grout is best to make smaller tile patterns stand out. I do avoid the lighter grouts on floors or in wet areas, it just isn't worth the effort to try and clean white grout later on.

The white grout was a good choice on our brick tex walls.  

Natural stone sealant - before and after

The mason advised the application of a sealant on the natural stone product.  We did a side by side comparison of the stone with and without the sealer.  The verdict was definitely to go ahead and seal the stone.  This is a very quick and easy maintenance step that can be done for less than $20 in supplies.  Re-application is suggested, but we can wait a year or two and see how it looks.  Zero skill is required, you just apply with a rag and let dry.

The sealant highlights the natural grain of the stone. We will unveil the finished stone wall in a few days once it is all cured.

live33st.com signage

With a lot of inside work progressing at the rowhouse project, I felt it was time to get some advertising signage posted on the street facing fencing.  The purpose here is to start identifying possible residents of the live33st.com townhouses to move in this summer.  

large black and white signage carries a simple message and the website address.