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Construction Industry- True or BS?

Discussion in 'Business Models, Niches, Industries' started by White8, Dec 6, 2007.

  1. White8
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    White8 Contributor

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    I've backed off recently in my search for a contracting company to buy but came across an ad to day and wanted to get the opinions of people close to the industry:

    " With the slowing housing market, more owners are focused on remodeling their current homes. This is a great opportunity to get into a growing industry. "

    True or BS?
     
  2. BEAR
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    BEAR Contributor Read Millionaire Fastlane Speedway Pass

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    I would have to say BS.

    No equity = no improvements

    With the economy the way it is now most people are just holding and watching.
    When the RE boom was on, things were different, people had a lot of equity to cash out and home improvements received a large amount of that money. Now, its only those that truly NEED to fix things whether it be because something is broken or they need to sell.

    I own a construction business that caters to the remodel/upgrade industry and have seen a significant slowing in the past year.

    Not a great time for the remodel business
    My .02
     
    Rob Burgundy likes this.
  3. SnyCorp
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    I've been a contractor for 7 years now, I must say this is one of the hardest markets.
    I can go bid jobs for penny's and still not get it. People are really watching to see what the market does.
    If your looking to become a contractor, my best advice is keep your overhead as low as possible. There are 10 other guys that will do the job for as little as $200 in profit, find your bottom line and do what it takes to make it happen...
    It's a great business when times are good!!!!!
    I've been dead for 2 months and all of a sudden someone turned the switch on, I've got 50K waiting for me to find time..:hurray:

    I hope this helps....
     
  4. piranha526
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    It's BS for the residential market.

    However, the commercial market in Manhattan is amazing. Spaces are renting for 200/ft in midtown (and that's for an average space - low class A).

    Companies are fighting to rent this space and get complete build-outs in the neighborhood of 100,000 to 500,000 sq. ft. Yes, that much space at 200 sq/ft. Imagine paying that monthly rent (yes, seven figures a month).

    JLL and CBRE can't find the space fast enough for these clients. But, it's NYC, so you must be union to get in on the action!
     
  5. EasyMoney_in_NC
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    Maybe its bad where you guys are, where subprime loans were all the rage. But here, I se more inspection boxes going up by the day. Lot values and home prices have gone up so much here, that people are turning to expansion of their existing instead of trying to stretch for a new place. I happen to be one of those. I can't buy the same size lot I'm on now for what I have in my entire lot/home construction costs (built by me [a GC] 5 years ago). If people have been in their houses for 5+ years, most of them have tons of equity now and are expanding. A friend of mine (been in the biz 20+ years) and I are in the beginning stages of partnering up and getting back into the addition/remodel business again.

    Moral is I would strongly disagree as a blanket statement that this is a bad time, more like its a local market/state market issue. Materials (other than concrete) are cheap again, labor is hungry......time to capitalize!
     
  6. Diane Kennedy
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    I'm with Easy on this one.

    I have clients all over the country and it's amazing how the market changes from area to area. My Seattle clients are doing great. OMG Biloxi, MS is ON FIRE for investors. So Cal is in the doldrums. It gives me great perspective on how real estate is doing in the country. This forum gives you the same broader viewpoint.
     
  7. SnyCorp
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    OK simple question?
    What industry?
    Construction is a blanket, I'll stand by my statement in the Home Improvement things have been very slow..
    But have picked up, in the last quarter of the year....
    The clients I deal with don't deal in sub-prime loans so I really don't think that comes into play. I have clients that spend $10-20K in there garage, not really something that the middle -class do unless there trying to keep up with the Jones's..
    Thanks :chatter:
     
  8. SnyCorp
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    Looking at White8's location, Things in OR have been great. RE has been going like crazy, I think they where in the top 10 in the nation in Feb or so.
    But depending on the line of construction he is talking about, I think we all have valid points. :coffee:
     
  9. White8
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    Thanks for all of the replies.

    I've been looking at various trades that have a maintenance component as well as new commercial and residential construction such as electrical, plumbing, roofing, HVAC, etc with the intent, over a period of time, of adding additional divisions and building somewhat of a vertical monopoly to use for my own projects.

    The local market is starting to cool. Home inventory is on the rise and a large developer auctioned 250 new homes in Portland recently. However, median home prices are up.
     
  10. Bilgefisher
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    Bilgefisher Bronze Contributor Read Millionaire Fastlane

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    I have to agree with those who stated commercial contracting is doing fine. At least here in Colorado. My 2nd cousin owns a drywall business here in town. (80 employees) While the residential market is lackluster for him atm, the commercial drywall side of his business is booming.
     
  11. BEAR
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    Yes, if the question was directed at commercial, then my answer would be very different.
    My commercial market is booming, so much that I started a separate company dedicated just for it. :thumbsup:

    The question was specifically about residential home remodels, and in my area and other area's that I have associates in, the market is cooling off and soon to be cold.

    I would say to check the foreclosures and unemployment rates and home prices in your specific area to get a better idea of where things are heading.:smxB:
     

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