Is it harder to find contractors? Skilled trade shortage?
Contractor · Kansas City, MO · Member since 2016 · 55 posts · 21 votes
As an owner of a general contracting business, I get to experience the growing shortage of trained workers on the front lines. Things have been changing. So many retiring and so little learning these trades. As a student of organizational development with an interest of economics and investing as a whole-Are you experiencing this yet? What type of investors are affected most? If you manage a rental-how do you intend to address this shortage if applicants or rising pay? I’d appreciate any feedback.
My opinion doing Plumbing & HVAC it's very had to find workers who know what they are doing. When you do find a worker who knows what they're doing you better be ready to pay them top dollar and offer benefits. If you can't offer a tech great pay and benefits, there's literally tons of companies that will. Then we have constantly rising costs; I looked at a utility body truck the other day that was 75k. Liability, workman's comp insurance and taxes soak up money like there's no tomorrow.
The reason contractors in general don't want to work for investors is because they want things done for as cheap as possible and feel entitled to special treatment because they're an investor. A smart investor makes money on the purchase of the property, not on the repair work. I couldn't even tell you how many posts I see on here about people who are under contract or closing on a property and are asking how much to gut & remodel the whole house.
@James Carollo this is an interesting issue. I have not noticed an issue getting contractors to do work for me, but what I have noticed is a rise in the price of the work in general. This seems especially true in the trades that used to be considered "cheap". I have noticed dry walling, painting, flooring and general carpentry to be much more expensive than it was a few years ago.
With all that being said, as a rental property investor I have several contractors that are my "go to" guys. I have not had any issues with these guys, and their pricing hasn't seemed to have gone up that much. I did have one of my regulars get a really cushy long term job working for a retail client, and he disappeared for a while. I think that is part of the game though in this business.
My opinion doing Plumbing & HVAC it's very had to find workers who know what they are doing. When you do find a worker who knows what they're doing you better be ready to pay them top dollar and offer benefits. If you can't offer a tech great pay and benefits, there's literally tons of companies that will. Then we have constantly rising costs; I looked at a utility body truck the other day that was 75k. Liability, workman's comp insurance and taxes soak up money like there's no tomorrow.
The reason contractors in general don't want to work for investors is because they want things done for as cheap as possible and feel entitled to special treatment because they're an investor. A smart investor makes money on the purchase of the property, not on the repair work. I couldn't even tell you how many posts I see on here about people who are under contract or closing on a property and are asking how much to gut & remodel the whole house.
Shortages for everyone I talk to. I really feel this is going to be a major issue in the next decade. The youngest plumber in my area, is in their 50s. 20 years ago, I was one of the youngest guys in my area, at 26. 20 years later, there are only a couple that are younger. I like to assume governments track the demographics, and encourage kids into fields where there are needed, but that isn't what I am seeing.
Contractor availability and pricing always go up and down with the market cycle. In this market, many investors need scale; otherwise, rehab and repairs can be challenging and costly.
@James Carollo There is for sure a shortage of skilled tradesmen out there. I teamed up with a master plumber to start a drain cleaning and repair company, he is the field manager and I do the admin work, scheduling and handle the money, I can have my guys booked out for a month solid if I want. I knew we would be busy but it's crazy how much work is out there.
I have all kinds of suspicions about this, and I'm not sure of most of them. But one I'm pretty solid on is that the skills gap and shortages are worse in some places in the USA than in others, as are general skills levels on the part of subcontractors and expectations of acceptable work.
I also think it's hard to argue that the school systems and general educational policies of this country are very wrongly focused on convincing young people that working in the trades is vaguely disgraceful and beneath the dignity of young men and women of intelligence and ability. Thanks to these influences, children are also growing up believing that tradespeople are always poor and opportunities to make significant money are nonexistent.
I've come to these opinions after years of transitioning from an ESL teacher to a DIY real estate investor-handyman with a surprisingly solid portfolio in SFR. I have made more money in this than I ever dreamed I would make in my life when I was a perennially broke teacher scraping to make ends meet. In doing this, I have not stolen from anyone, cheated anyone, played cheap little mind games on anyone.
It's a disgusting state of affairs, and I hope we're reaching the end of it. I see a lot of young people now sharply questioning why they should expect to worship at the holy temple of the great and might god MOPM (Making Other People Money) their whole life in order to be "professionally fulfilled," when they're surrounded by broke, unhappy people desperately trying to pretend they're affluent.
I think it's become impossible to go to a college fair anywhere, see how much money a traditional four-year teritary education costs, and not wonder if it's a scam, not question the whole mess.
I hope to be part of the change I believe is coming.
I'm going against the grain here.
4 year degrees (and higher education) offer more in life, and will always have their place. There's exceptions, certainly - and we can list them.
However, most trades take all of a 40 credit hour class to learn, at least to enter the field. I'm wiring our 950 sq ft addition and it really, really pisses me off that I'm not allowed to do that on our investments, as I'm a licensed electrical engineer.
I'm not a big proponent of trying to increase substantially trades education. I think something needs to change but most owners of service/contracting companies are just body shops, that offer very little in terms of career advancement, growth, etc. This can be solved by more open minded owners that diversify their businesses and offer more. The simple business model where an owner lives in a big house, extracts value from their employees/1099s, practices multi generational nepotism, and encourages unethical business practices by bidding 30x projects at 400% margin to get that one project from poor ol Betty Sue - this is what needs to change to get more ethical and capable entrants into the trades.
Anecdotally I haven't really noticed reduced supply in my market, but we've developed some helpful relationships over time with our go-to plumber, among others.
I also think it's hard to argue that the school systems and general educational policies of this country are very wrongly focused on convincing young people that working in the trades is vaguely disgraceful and beneath the dignity of young men and women of intelligence and ability...
and I hope we're reaching the end of it.....I hope to be part of the change I believe is coming.
Thankfully, I think we are reaching the end of it. And yes, you can make a difference in the mindset shift of high schoolers. Attend the career days they have every spring.
My senior last spring came home excited (for once) after career day. He's wanted to be a woodworker/carpenter for a while but was embarrassed really when asked what he wants to do with his life. Dad, did you know construction managers around here make aroumd $80-90k a year? He had no idea it was possible to earn a good income working with his hands. Attend these career days and spread the word!
I see the transition happening slowly with my generation, too. The parents ask me what my senior is doing. What university is he at? Freshman, Sophomore? I say he's a freshman at workforce university. He's working with a builder of a small house learning all phases of construction right now. After a second they are excited for him even though the first assumption was which college. Good they say. We need more of that. Other people his age are happy for him as are his grandparents. There is hope but it will take a while.
My best tradesmen are all old. They are missing prostates and their eyes are going bad. I'm glad I rarely need them as landlording is 90% punch lists of smalls at turnovers. I am hopeful the gap will be more filled as the fear of massive student loans push youngsters into tradeschools amd the workforce more and the stigma subsides as you contractors spread the word at career days👍
I bought a house to renovate and i am having issues finding folks that have the time, are reasonably priced and have the experience.
I have heard from several of these folks that they are charging double what they did a few years back. It makes sense that if there is a lot of building going on, and house flipping is popular, that the trades will be stretched thin.
Luckily i think I have everyone all lined up now, but it took longer than anticipated !
ETA it took a while to find a skilled handyperson for my rentals. I finally did so see if affecting that market too.
@George W. I think you are 100% correct as far as contractors and skilled tradesmen moving away from the investor “yeah but I have a lot of work for you” pricing and expectation. The average age of a plumber in the US is in the high 50s and electrical right behind it. There is no doubt it will hit crisis levels. I’m looking to see if any wise investors have looked at the gigantic elephant in the room. Or if waiting to find out someday their equity no longer what was thought and solely because of how much it will cost to make repairs for market.
@Matt Groth yes. Yes. Yes. MAJOR ISSUE. One that seems to be ignored like that tire that seems to be wearing on one side.
@Mike Dymski I believe many brush off whats going on as part of the cycle. But we are talking over half, way over half of skilled tradesmen retiring and dieing all at one time. My studies are way outside contracting into change implementation with robotics and human staff merger. Study of what people now want out of a job. It’s being called the great blue collar/White collar shift. Supply and demand. The market does its thing but this will likely be the greatest cause of the crash out. Change who owns property. “Companies” with government money to attempt to keep us from the bottom. This is not a market issue. In my opinion it’s a branding issue.
@Matt P. I think investing in skilled trade and labor will be the next “invest in Realestate.” The supply and demand will get way more disproportionate. I’ve been asked with all the consulting i do for international real estate investors-why DONT you invest in real estate yourself? I say “I invest in skilled trades-higher risks but much higher rewards.”
@Jim K. The construction job needs to change.
@Jim Goebel It’s the most obvious crisis we have had (even more than subprime craziness) but it’s a crisis people can hardly see if not infused in it. Its so strange. The largest elephant in room in years. I think the answer is to change the jobs. I have a son pursuing aerospace engineering with a great interest in electro magnetic pulse defense. He needed college. They need him too and paid for it. Takes all types. We need people under 55 to work in the trades. Sure we may be implementing use of sensors and all kinds of technology but the job needs to change. And money will end up luring in smart young people. Most of my employees are working on investing in real estate. There will be no need for an investor if you are few that can rehab it.
@Steve Vaughan I believe the construction industry attempting to show what they offer to more kids or more people but the last few generations are explaining with their actions they do not like the construction job product. Loud and clear. Have to change the job.
@Mary Mitchell Many think that it’s because the market is up but simultaneously we are losing tradesmen. Glad you found your handyman. That’s very important.
@Scott Mac All. In fact with the new airport contract my own dad said they will be having travelers from all over. Right now my brother in Phoenix because how much pay is. See what’s happening is there are not enough skilled journeyman carpenters so the larger companies lower their standards for entry. So Everyone moves up. Every single construction field in Kansas City is having trouble hiring the talent from just a year ago and we are paying the not as talented more than we once paid the most talented. Happening in every single trade and down to landscaping and cleaners.
@James Carollo A topic close to my heart as a tradesman myself, not in the building trades though but as a Diesel mechanic for the last 15 years and an automotive technician for 8 before that.
I don’t necessarily believe it’s about younger people thinking these jobs are “below” them. The amount of people that apply for NYC garbage man tells me young people will take a not so prestigious job if it has something to offer in the long run.
It’s about quality of life.
If one aspires to live an impoverished lifestyle they need not learn a skill to do so.
From what I’ve seen the majority of employers in these trades, with the exception of civil service and some unionized jobs, do not have anything to offer except low pay,unsteady work,lack of benefits,advancement or vacation etc. In addition to that many places have a lack of basic respect for
their employees. One really can’t blame a young person for opting for a different career path.
You’re not alone, I’ve talked to many people that share your concerns- Investors, contractors, business people etc.
Thats just my 2cents
I wish you all the best in your endeavors
I've been a small time contractor for about 18 years. I was also a union guy for about 5 years right before the recession in 08.
Its definitely cyclical but right now I believe the Northwest is having a real shortage of skilled workers. Prices are up in the north east but most of these companies are still trying to make up for 5-7 years of bad- bad times.
I know a lot of people who have large student loans and can't get employment in their fields. They often turn to the trades to help make ends meet and pay off these loans.
@Jim K. I think you kinda hit the nail on the head, looking back when I graduated high school I did automotive but wished i would have done electrical and HVAC. I still managed to be lucky by being military and getting that career in aviation. I watch my wife struggle because her masters degree isn’t getting her anywhere so she does real Estate as a full time thing and she loves it. These lessons learned are definitely being passed on to my daughters. We need more skilled trades around because when those older individuals retire then who picks up the slack and how are process going to be when everyone thinks they should be paid more than what they are worth.
Definitely shortage of skilled tradesmen in our area. Most electricians around here, like myself, are in their 50’s or older. For years, budgets have been cut at schools for trade programs and kids were encouraged to pursue four year college degrees. I believe this has contributed to the shortages we’re seeing today. Fortunately, our local high school recognized the growing demand and just opened a wing with state of the art auto labs, culinary department and life science department for future nursing students. Nice to see these kids getting some recognition and modern facilities for a change.
It is getting harder. I let my guy go in March after 4 years, great employee just couldn’t stand his temper tantrums anymore (50 years old). I have yet to find a decent replacement.
I am a big proponent of the trades. HVaC, electrical, etc are all great and in demand jobs and they don’t require $100k in student debt. Honestly, I think there should be classes in High School like “home basics” or something like that. There’s no reason why a grown man or woman has to pay $50 for someone to change the $4 flapper in their toilet.
I just wish schools would teach more “life skills” than some of the stuff they do teach that 99% of kids will never use.