Ontario Home Builders https://buildersontario.com Your Ontario Custom Home Builder! Fri, 15 Nov 2019 19:46:42 +0000 en-US hourly 1 61304474 Why do construction companies charge more per hour than some people earn in a day? https://buildersontario.com/why-do-construction-companies-charge-more-per-hour-than-some-people-earn-in-a-day https://buildersontario.com/why-do-construction-companies-charge-more-per-hour-than-some-people-earn-in-a-day#respond Fri, 15 Nov 2019 19:46:42 +0000 https://buildersontario.com/?p=5394 I get asked this question so often that I decided to write the whole article on that subject. So, we charge $60.00 per hour for every man on the construction site, be it a foreman, knowledgeable framer, or just a labourer. With 10% overhead, 15% profit, and […]

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I get asked this question so often that I decided to write the whole article on that subject.

So, we charge $60.00 per hour for every man on the construction site, be it a foreman, knowledgeable framer, or just a labourer. With 10% overhead, 15% profit, and 13% HST, the total comes to $85.00.

Is that labourer worth $85.00 per hour?

If you asked that question, you are thinking more like a slave driver, rather than a business owner.

Imagine that you want to start siding, soffit, and fascia business. You’re just getting started, so you need a truck, a trailer, an eavestrough machine, and a bunch of tools, totaling $100.000.00, most of it used.

In the beginning, you get a job or two per month, hardly making ends meet, borrowing funds from whoever wants to give it to you. At times, you hire part-time help, that you pay in cash. As time goes by, you get better and acquire more and more business. At about 3 year mark, you start making money and paying yourself, providing you are an excellent businessman and an even better craftsman. 

However, you are working 18 hours per day, including weekends. After 8 hours per day of hard physical labour, 2-4 hours of driving to and from work, at least 2 hours of talking, visiting, and making phone calls to prospective clients, an hour of maintaining equipment, an hour of paperwork, etc., etc. Out of all those, only 8 hours are chargeable if you are lucky. 

Do we still think we are paying too much?

Let’s take it a little further. Since you are working too hard and can not keep up, you decide to hire a couple of guys. 

You have to hire them as full-time workers with a base pay of $25.00 per hour.  Of course, they want to be paid for those 2 hours spent driving in a truck with you. 

Already, to pay them, you’re having to charge customers a little more than their salary, about 14% more. 

In the meantime, you need another truck and a bunch of tools, so you buy them on credit.

Your guys take the old truck to go to work, and you get the new one. Of course, you have to pay for their insurance, gas, maintenance, and expenses. 

And there’s still more to consider. Since your guys are full-time employees, you need to have workman’s compensation insurance, in case they get injured on the job. It comes to 12% on their gross pay. You have to pay the employer’s contributions to social security, unemployment, and pension plan. Some of them, especially if they have children, ask for private health insurance. 

In October of 2018, Carpenter construction union wage rates, including selected pay supplements, ranged from $45.07 in Halifax, Nova Scotia to $59.43 in Toronto, Ontario.

It doesn’t stop there, though. You have to pay for a 1/2 sick day and one paid holiday per month to each worker. You have to pay a phone bill. You have to buy more and more tools. If you want to have a web site, you have to pay for that. You need a computer to track your inventory, do billing, and communicate with parts suppliers, so you get it. The software is another expense. You have business fees to pay, such as licensing. You have to pay taxes and do payroll, so you will spend a lot of money getting an accountant’s help.

You’re not directly selling any of these things, but they have to be paid for, so you have to factor them into the hourly wage you charge.

Do we still think we are paying too much?

A general rule of thumb used in human resources is that hiring someone actually costs about three times their take-home pay. 

… and that’s the answer to your question. The reason why construction companies charge more per hour than most people make in a day is that there are a lot of other costs that go into the running of a viable construction business. 

More discussion: Home Price Versus Lifetime Cost

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ROI: Can Geothermal Boost a Home’s Value? https://buildersontario.com/roi-can-geothermal-boost-a-homes-value https://buildersontario.com/roi-can-geothermal-boost-a-homes-value#comments Sun, 02 Jun 2019 19:37:05 +0000 https://buildersontario.com/?p=5378 Geothermal heat pumps are gaining some traction with homeowners interested in saving money, the environment, or both. People who are considering installing a heat pump

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Geothermal heat pumps are gaining some traction with homeowners interested in saving money, the environment, or both. People who are considering installing a heat pump in their home often find themselves asking questions about how much money a geothermal heat pump will save them, and how long it would take to break even on their purchase. However, some homeowners may forget to take into consideration that geothermal heat pumps may increase a home’s market value, resulting in more profits when the time comes to sell.

Geothermal Heating

Geothermal Heating

Why Geothermal Heat Pumps Attract Buyers

There are many factors that can influence a home’s value. Location, size, features, aesthetic, and condition of the home are all variables that buyers take into consideration when they’re trying to decide which home to purchase. Some factors are simply economical decisions, while others may be more subjective or even emotional. In that same vein, geothermal appeals to buyers for a number of reasons.

Sustainability & Eco-Friendliness

Relatively recently, green/sustainable features have become another factor that can influence a home’s value. Sustainability can not only act as a tie breaker between two similar properties, but it can also be something buyers actively pursue. More and more home buyers seek “green” homes or homes with “green” features simply out of a sense of duty or obligation — although that is not to say these buyers wouldn’t also enjoy saving money as a result.

Energy Efficiency

Geothermal HVAC systems can cut a home’s energy use by a significant amount. This is one of the easier selling points as it is one of the easiest to explain. Because they save homeowners hundreds or thousands of dollars over a period of many years, the presence of a geothermal heat pump on a property can compel buyers to make higher offers. For example, if a buyer believes there’s a reasonable opportunity save upwards of $10,000 over their decade-long residence in a home, they may be inclined to pay $5,000 more for a home with geothermal compared to an exact copy of that home with a traditional HVAC system.

Durability

Heat pumps are also long-lasting. Whereas an air conditioner lasts about 15 years, and a furnace lasts about 20, a geothermal heat pump lasts for 25 years while the ground loop can last as long as 50 years. Since the heat pump can serve as both an air conditioner and as a furnace, this means that a heat pump can potentially save a homeowner thousands of dollars over many decades on replacement HVAC appliances.

Novelty

There’s something attractive about an element of uniqueness to many buyers. Although geothermal is not really new, it’s not the most common home feature either. Just like a home with an interesting roof, unique architecture, or elegant entryway, some buyers may enjoy the prospect of “standing out” with geothermal. Their home may not be visibly different from the others in their neighborhood, but they’ve certainly obtained a good conversation starter when the topics of utilities or sustainability come up.

It’s also possible that a buyer may specifically look for homes with a geothermal system already installed and – in that case – they may be willing to make a very competitive offer.

Consider Every Variable

Making an informed decision means running all of the numbers. Even within the same neighborhood, some homes may be better suited to certain upgrades than others. It’s quite possible that monthly savings alone will make this upgrade “worth it” to homeowners. Every situation is unique and should be treated as such. Consulting with experienced professionals is a great first step.

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Building or Renovating – What Makes More Sense? https://buildersontario.com/building-or-renovating https://buildersontario.com/building-or-renovating#comments Thu, 07 Mar 2019 15:39:38 +0000 https://buildersontario.com/?p=5375  Building New Or Renovating – What Makes More Sense What makes more sense? Building a new home or renovating an existing one? This is a question that homeowners and prospective homeowners often grapple with whenever they wish to upgrade their living standards. Well, there isn’t a clear […]

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 Building New Or Renovating

 Building New Or Renovating – What Makes More Sense

What makes more sense? Building a new home or renovating an existing one? This is a question that homeowners and prospective homeowners often grapple with whenever they wish to upgrade their living standards.

Well, there isn’t a clear one-size-fits-all answer to this question because there are many factors that come into play when remodeling or building a new home. The best you can do when presented with this question is to consider each option separately and then see which one will work best for you. In this post, we will look at the differences between building a new home and renovating an old one in regards to 7 key factors.

1. Desired quality

How qualitative is your existing home? Is it structurally sound in terms of the electric wiring, plumbing and heating systems? What about the quality of the home’s workmanship: Do you find it unique to the extent that modern contractors cannot replicate? If you answered yes to any of the questions, then remodeling will work best for you. That will allow you to modernize it and still maintain its original uniqueness.

If your current home is in very bad shape and quality, then you may need to build a new one. Maybe the plumbing and heating systems are failing or outdated, the uniqueness it had initially seemed to be structurally off nowadays, or maybe you there is certain design specification that you desire, but the current home cannot be transformed exactly into that design.

2. Neighborhood

How do you like your current neighborhood? Have you developed strong emotional ties with your neighbors? What about your kids: Are they in love with their current school? Are you ready to find another church? The amenities in your current location; are you willing to leave them all behind? If you are skeptical about moving to a new neighborhood, then renovating your current home would be a good idea.

However, then there could be that your current neighborhood isn’t as appealing or maybe you have gotten a chance and the finances to move to a trendier neighborhood. In that case, building a new home would be more fulfilling.

3. Financial Considerations

What is your current home’s worth and how much will it cost to renovate it? After renovations, will it be worth as much as its current worth plus the renovation costs or will it cost lower/higher? If its worth will be higher, then renovating it would be a good Investment decision. If its value depreciates or stagnate, then renovations might end up being a total waste of money.
Can you qualify for a mortgage loan to finance a new home? Can your current home raise enough equity loan amount for renovations? Moreover, if you sell your old home today, how big will the real estate commissions be? All these factors put together will tell you which option will work best for your case.

4. Convenience

Renovating or building a new home will have their unique challenges that you must learn to live with, at least temporarily. In the part of renovations, you will have to spend a month or even five months with debris all over the place, noise, or even weeks of alternative accommodation. That’s all depending on the magnitude of renovations.
If you wish to demolish the current home and build a new one in its place, then you will be looking at six months of alternative accommodation or more. However, if you are planning to build on a different plot of land, then your life will continue undisturbed.

5. Available space

Renovating your house may limit you in terms of space. You can only either build out which means that your yard will shrink or build up which means that you will have local zoning laws to contend with. Also, remember that your house’ foundation may limit you when adding extra stories.

6. Wear and tear

Renovating your existing home means that you will retain most of its old infrastructure. A new home, on the other hand, comes with an entirely new infrastructure. All things being equal, wear and tear will necessitate repairs to your old house sooner than in a new house.

7. Technology

This goes without saying: Renovating your new home will deny you a chance of enjoying modern technology. Its bathroom, showers, kitchen, and even the overall house design may not have the space to accommodate new heating, lighting, and other vital technologies.

If you are thinking of building or renovating your existing home, please review our blog for more information on most of the things you will need along the way

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Should You Consider Bridging Finance For Your Home Construction? https://buildersontario.com/should-you-consider-bridging-finance-for-your-home-construction https://buildersontario.com/should-you-consider-bridging-finance-for-your-home-construction#comments Mon, 18 Jun 2018 10:18:56 +0000 http://buildersontario.com/?p=5345   The average house price in Ontario is $578,000, a figure that has seen a negative 13% change over the last year, according to the Living In Canada website. While home prices across Canada have been steadily rising over the last decade, income levels have not increased at […]

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bridge loan

 

The average house price in Ontario is $578,000, a figure that has seen a negative 13% change over the last year, according to the Living In Canada website. While home prices across Canada have been steadily rising over the last decade, income levels have not increased at the same rate, making it harder for potential homeowners to finance home construction projects. Luckily, choosing to walk the bridging finance path can help to easily utilize opportunities that are time-bound. While it is a common option for homeowners looking to sell or buy a new home, it can also help you construct your dream house. With this option, you can get to build efficient homes while taking advantage of enticing building discounts. Here’s what you need to know about bridging finance and how it relates to the construction industry.

What Is A Bridge Loan?

A bridge loan is a short-term financing option that provides borrowers with funds to fulfill their construction or home buying goals before they can get a permanent solution. It tends to be fast, secure and flexible for times when you need a quick fund injection. By doing some quick calculations, you can get to decide which bridging loan works best for you. Once you find a permanent financing option, you can then pay up your loan and proceed to repay the permanent version.

Why Should You Consider It?

The average cost of building a home in Canada from the ground is $200 per square foot. This cost can be quite a daunting target for most homeowners. While there are instances where the construction can wait for a long time to get underway, other cases might demand that the construction work starts as soon as possible. For instance, if there is a time-limited discount on building material, then you might need to get a loan fast to utilize this opportunity. Unfortunately, the conventional mortgage system often takes too long to provide you with the needed finances. Bridging finance can provide you with an easily ready finance option within a short period. Additionally, most bridge loans lack repayment penalties. However, you will still need to maintain a good financial profile for both options.

What’s The Catch?

Generally speaking, traditional loans are less expensive than the bridge loans. In exchange for the convenience and short approval periods, the loans tend to come bundled with a high-interest rate. Since you will easily repay the loan with a permanent financing solution that has a lower interest rate, dealing with this disadvantage can be quite easy. Furthermore, the fact that most loans come without a contingency to sell as you buy or construct your new home can make you feel comfortable with using this financing option.

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Putting The “Con” In Construction Projects https://buildersontario.com/putting-the-con-in-construction-projects https://buildersontario.com/putting-the-con-in-construction-projects#comments Fri, 01 Jun 2018 15:29:42 +0000 http://buildersontario.com/?p=5340 Industry Scams Home Builders Should Be Aware Of Canadian construction fraud alone creates annual costs of over $628,000,000 according to a report by Grant Thornton, a leading network of accounting and consulting firms. Construction fraud is on the rise – and not just when it comes to shady […]

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construction scams

Industry Scams Home Builders Should Be Aware Of

Canadian construction fraud alone creates annual costs of over $628,000,000 according to a report by Grant Thornton, a leading network of accounting and consulting firms. Construction fraud is on the rise – and not just when it comes to shady contractors trying to con customers out of money. The industry is ripe for fraud, largely because of how multiple suppliers and subcontractors tend to work on building projects simultaneously. Although it’s not always easy to know what all of them are doing and if any of them are fraudulent, there are ways your builder can protect you.

The same report by Grant Thornton highlights how construction fraud tends to be committed by employees, subcontractors, and suppliers.  Here are some popular ones doing the rounds.

The manipulation of orders

The relationship between a contractor and subcontractor is important – it should be based on trust. However, sometimes fraud enters the relationship, causing problems. This can affect both parties. Your builder might notice change orders that are missing scope descriptions or have a higher charge. It’s important for him to scrutinize all changes that have been requested by you as the homeowner and request documentation so that fraud can be nipped in the bud. To prevent misunderstandings and problems, you and the contractor should always be wary of any costs from change orders as well as how they should be determined, as outlined by the Construction Law Canada website.

The fake request for payment 

Sixteen percent of people who participated in a poll by Angus Reid Public Opinion said they’ve dealt with contractors who requested more money than what was originally quoted. But sometimes when this occurs, it’s a scam that not only cons you as a homeowner but also your builder. Here’s how it works: your builder has started on a project for you, then you receive an email containing an invoice that’s allegedly from your builder. It requests more money for materials or extra building costs. But your builder never sent it! Even though the email appears to have come from your builder’s email address, it’s got different bank details in it. The fraudster has compromised your builder’s email account and provided new bank account details for you in an attempt to con you out of money. It’s important to know about this so that if you do receive suspicious communication, you don’t immediately assume it’s from your builder. It’s also vital for builders to ensure that their hardware and security is regularly updated so that they prevent fraudulent activity from affecting you and their other clients.

Reverse mortgage fraud 

When you hear about reverse mortgage fraud, you might think that the only one who can lose money from it is you – the homeowner who’s persuaded to take out a reverse mortgage by a conman. However, there are also losses that can be faced by the construction company. Sometimes, a reverse mortgage scam makes use of fraudulent contractors who persuade senior homeowners to pay for repairs or other home improvements. If you as the homeowner can’t afford these, the criminal will persuade you to take out a mortgage which enables the contractor to get paid.  Since a reverse mortgage scam can involve a criminal contractor who’s connected to the fake reverse mortgage company that’s conning people out of their money, you should keep an eye on all money that your contractor requests. If the contractor you’re working with is charging thousands of dollars for renovations or repairs that don’t need to be done, that’s a red flag that fraudulent behavior is occurring in the company. By knowing about fraud targeting homeowners, such as reverse mortgage scams, your builder can protect you against such criminal activity.

The use of lower-grade building materials 

 If a supplier on a building project is committing fraud by using low-grade materials and charging for it, this can result in repairs being required for the unsatisfactory job at a later stage. The result is higher building costs, and sometimes more serious construction failures that can be dangerous. What the fraudulent supplier gets out of this is saving his or her higher-quality materials for another building project, while still getting money for less-worthy ones. As a builder using the materials supplied by a subcontractor or supplier, it’s important to be aware of any costs that don’t seem to match the quality of the materials provided. As a homeowner, you should also stay on top of supplies and costs so that you notice any discrepancies.

Lack of defined scope 

The scope of the building project needs to be properly outlined before it goes ahead and the price is set. This might not seem like a very important thing but if it’s not done, corrupt workers in the construction company can take advantage of it. This can include fraudulent activity such as cost overruns and bill padding, which is when subcontractors or suppliers request payment for things they haven’t done. Whether this refers to materials they haven’t supplied or hours of labor they haven’t put into the building project, bill padding is anything that’s added to the bill which you as the customer haven’t received. The fraudulent supplier or subcontractor might promise to complete a job but then disappear after being paid, leaving you with an incomplete project. It’s vital to have building contracts written up from the start of a new project to safeguard you and everyone else involved in it.

Construction fraud targets homeowners, with a large amount of fraud occurring within the industry itself. If you’ve hired a builder, it’s important to know about the latest scams, such as those listed in this article. By being informed, fraud can be minimized for homeowners and construction companies alike.

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