Rising cost of building materials?

Question

So I’ve noticed lately that costs of building materials have severely increased over the last year. Between the deficit of plastics coming out of Texas, a decrease in supply from the lumber industry as ppl got laid of during the pandemic, rise in shipping cost, and on top of that.... an increase in remodels from those putting their stimulus checks to work for them. All of which has lead to doubling in price of lumber, drywall, and many other supplies.

So flippers, or investors using BRRRR..... basically anyone who does rehab to their properties after purchase. How have you adjusted your business strategy to compensate for increased prices on certain material costs?

Michael K Gallagher · Answer

@Neil Adams I am not a flipper, but was just talking to one who operates here in central OH in the Dayton area.  She was telling me that her and her husband both spend a ton of their time looking for auctions and other alternative places to get flipping products.  They have not been able to do it with lumber, but she said that they have purchased a shipping container, and literally are stock piling things because of this reason.  They apparently have all kinds of electrical things, lights, fixtures, plumbing connections, fasteners...like anything they can get their hands on cheap and in bulk through like amazon returns, or auction sites/locations locally they are doing it.

She even mentioned they are approaching sellers on AliBaba to buy like bulk orders of things directly from the manufacturer.  Obviously this comes with a higher price tag up front...but right now the extra time they are spending on acquiring things is having a huge impact on their margins.

Mike Reynolds · Answer

There are commercial jobs that are tight bid that have shut down because of this. Lays off are beginning to happen in the construction field. Not many as most are trying to hold on but some. How has your's been doing @Jay Hinrichs? Are you feeling the effects a lot lately?

I know I bought 3/4 CD ply late March and it was 55 dollars a sheet. I remember cussing. Then 4 weeks later the same except it was 95 dollars a sheet. I should have been grateful at 55 I guess.  A handyman I know priced 20' 2x12's at 115 dollars a board. He needed 3 for stair stringers. The homeowner paid for them so I dont know how long this will hold out. As long as people pay (like me and others) it may get worse.