Price of Materials?!?

Question

What strategies are you investors using to rehab/remodel these homes with prices skyrocketing?  Some numbers I've heard:

PVC up 400% in last eight months

Electrical wire up nearly 200% in same period

Lumber up around 180%

How are you handling this?

Shafi Noss · Answer

I am a financing partner for some flippers. I've seen some projects do well simply because the spread is large enough that they can take the materials pricing hit.

I spoke with an expert in the supply chain industry about the lumber shortage too. His take is that there was a simultaneous spike in demand and drop in supply. The increased demand is likely to stick around, but the drop in supply came primarily from sawmill workers stopping work, since it is a close quarters job and they were considered non-essential. The lumber-mills are up again, but it takes time for that wood to finally reach retail stores, so we will see the supply increase again in a few months.

Account Closed · Answer

Prices will come down, these fluctuations happen (though these prices are ridiculous).  So do now what must be done, then as prices fall do what you'd like to see done.

Two things are essential:

One) determine the exact scope of work that MUST be done and buy only that material.

Two) Shop around!!  HD and Lowe's are not the cheapest by any means.  Nowadays, on larger projects I get three quotes from a couple lumber stores locally and one from HD/Lowe's cause I know they will be the highest.  A few weeks ago, I saved nearly $850 on lumber and fasteners by purchasing from 84 Lumber on a deck/roof project as opposed to HD.

A few other ideas I use:  IF you can buy in bulk for a few projects, do so -- if you have a place to store material.

Can you substitute?  Example: can you substitute OSB for plywood?  Both are crazy expensive but plywood is crazier!

If you can get a military discount (around 10%) go for it.  Sometimes if you have a credit card with one of the big box stores you can get a discount (5% or more) on all purchases.

As a remodeling contractor these price increases have to be passed onto the customer. I explain to them that prices have gone through the roof and tell them to check out HD or Lowe's web site to verify that I am not sticking it to them!

Best,

Mike

Account Closed · Answer

I honestly don't know if/when material will come down.  As a commodity usually there can be huge swings but I noticed today that the price on 2x4x8 whitewood lumber went up another $.40 (ugghh) so who knows!!

I have been reading that it might have been better to invest in lumber than gold!!  ;-)

Billy Daniel · Answer

Account Closed 100% agree!!

Billy Daniel · Answer

@Shafi Noss

My plumber/electrician told me that they forced a lot of the companies who make his materials to shutdown and make ventilators.  I never really thought about that.

Account Closed

Do you think prices will come down very far?  Seems like the big players don't have much incentive to bring them down too far.

Price of Materials?!?

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