Sarah Larbi: REITE Club Nation. Welcome to a special episode. I'm Sarah Larbi, and today we are talking all about renovations and Dave Ould from Blackjack Contracting is going to teach us a lot of great things. Today we talk about how to book a contractor, plan your project accordingly, how to price things out, when to get permits and all of that good stuff in between.
If you're flipping, if you're doing the BRRRR strategy, if you are just simply doing some rent to own, even on your primary home, there's a lot of great insights, lots of great tips from Dave Ould who has been investing in real estate himself and doing some acquisitions for over 14 years between BC and Ontario.
Today he is the project consultant. At Black Jack Contracting and you know, Dave Ould has a great wealth of knowledge when it comes to renovations and so much more. I hope you enjoy today's episode and don't forget to check us out for free at thereiteclub.com and we've got a lot of great content videos, additional podcasts, forums, all of that good stuff. Thanks very much for tuning in and see you soon.
Our first presenter tonight is Dave Ould, and actually Dave and I originally started talking on Instagram. I wanna say, I don't know if it was six months ago, nine months ago. Currently he is working as the project consultant for blackjack contracting, and he's got 14 years of combined real estate investing and acquisition experience.
From BC spanning all the way to Ontario. He's touched a lot of the different aspects of real estate, buying, selling, investing, landlording, all of those and of course renovation and property conversions. You know, I'm really excited to be introducing Dave Ould. There are gonna be some slides.
There's gonna be some questions and we are really gonna focus on the key to successful renovation and how to best prepare. Cause I'll tell you, you know, whether you're doing a flip a BRRRR. Or any of that stuff. It is very important to understand the rental process, how to do the right rentals at the right time for the right properties, and everything that comes with that. Welcome Dave.
Dave Ould: Thanks Sarah. It's really an honor to be here and get to present with you and as you said, we've known each other for, it seems like such a long time, but it's probably not as long as, you know what normally would take in, in terms of the integration of combined interests and our passion for real estate. It's really great to be with like-minded people and it's an honor to be here. Thank You.
Sarah Larbi: Amazing. All right, so you know what, I wanna get right into it and that I know that, everything has been affected in terms of materials and costs, like with things going up and down throughout the pandemic. Before we really dig deeper, can you just give us a little bit of an overview of where we are right now, in terms of like, pricing, contractor timelines, like what you're seeing in the industry, material availability and all that good stuff in September of 2021.
Dave Ould: Well, it's definitely been a point of contention, no question about it. I think unlike any, you know, normal year pre covid, if you will, everything's been literally the opposite of what we thought it would be. In terms of supply and demand, inflation, everything from lumber prices skyrocketing to materials not being available in supply chain issues. If it was March of last year, you wouldn't have been able to predict that.
There's been a lot of impact there. At the same time, the biggest surprise, as we all know, is the boom, which has been real estate, and especially for the investor driven real estate market. We haven't slowed down one bit. As I was saying to a colleague of mine today, I don't have time to go get leads because they continue to come to my desk and I can't keep up with them. It's really quite a boon. There's pros and there's cons, but we continue to push forward soon.
Sarah Larbi: I am finding that it's hard to book contractors and they just seem like they're very busy. It's just important that you know, if you're buying something, I would just say, you know, ahead of time before closing the line, all of that stuff up. What are you seeing with, like wood pricing? Have you checked it lately and what that's been doing?
Dave Ould: It's kind of like Bitcoin. I keep watching Bitcoin, I keep watching lumber, you know, the two go hand in hand. Fortunately, lumber prices have, definitively deflated, and, normalized, if you will. They're basically almost at half of what, you know, the peak was. So we're starting to see a bit of a normalization there. I think, from different articles you read here and there, the lumber companies are starting to come to the realization that maybe they got a little bit greedy.
The reality is they had to come back down because there was no more. Can't always use Covid as an excuse. Considering I have a friend who works in British Columbia in the lumber mill, he said, We're stockpiled, we have no room for all the lumber we're producing. It wasn't that there was a shortage, that's for sure. But we're definitely at a better place than we were just even three months ago.
Sarah Larbi: You know, I'm glad that you mentioned it cause it was one of the things that we were thinking as we were building our development stuff that should we pre-buy materials and lock the prices in. Thankfully we actually didn't cause it to end up coming down. But that was a question mark, right?
Like, even just six months ago, like, do you potentially pre-buy at a certain price. If things go up, you're kind of saved from that. If things go down, you know, unfortunately that's a downside too. You know, that's definite, That was the real thing. I think today, things are becoming a little bit more affordable.
You know, here's the big question, especially with the, after the election. There is an inflation problem, so we gotta just always look out for that. Next question though, for you Dave. Obviously an investor needs to prepare, and work with a contractor. Once they hire the contractor. Are you able to, you know, obviously because this is what you do. This is your bread and butter. How does somebody prepare, you know, what, in this market or another market, just like their funds and like understanding like how they're gonna work with the contractor, the timelines? Are you able to share a little bit about that?
Dave Ould: Absolutely. That's a great question. We get that often, especially when there's a first-time investor not understand the process. One, you know, there's a general lack of information out there in terms of what things should cost. How to pay for these said tasks such as renovating a property? What we like to do is, you know, we see ourselves personally at Blackjack contracting as more of educators and a partnership if you will, to help guide everybody at their different levels. So depending if you've bought 10 houses and renovated 10 houses, or it's your first one, it's gonna be a different journey.
The financial part definitely is obviously paramount, is understanding what it costs to renovate. Whether you're doing a BRRRR or you're doing a flip or you're doing a duplex conversion on a single-family home. There can be a lot of misinformation. I think that's one thing that we've found, and I know I've found particularly, it's kind of my daily battle is trying to have the discussion around money at the outset so that we can determine expectations.
What are you hoping to do with this property? What are your plans? What is your vision? So let's help match that vision and that goal with what the budget allows. It also goes a bit further than that, and it parlays into okay, if this is your said budget, you know, tell me why that's your said budget. Where are those funds coming from? Obviously exercising our ability at blackjack as we're all investors, ourselves, understanding our partners who are also private investors, private lenders, where the private money is, the general lenders, the B or A lenders who are easier to work with.
Even educating around things like, mortgage plus improvements, these types of products that are available in the market. It surprises me that a lot of people are not familiar with these options. Once we get into that, it helps us really realign. Our goal isn't to just try to be the lowest bidding contractor, it is to align what their purpose is and understand what that means to them. That comes down to the term values. We are not price driven in our cell, you know, ourselves. We try to take our customer mind off just the price driven direction. That's kind of our approach, I should say.
Sarah Larbi: That's cool. Like for somebody, like, not necessarily for you guys, but just in general, like how should somebody work with a contractor in terms of payment schedule, like what do you recommend, whether it's you or somebody else? Cause obviously, there's people across Canada here. You know what it is, cause you hear those horror stories about people paying contractors and then all of a sudden they're out and they're MIA. What are some of the things that we should do? Is it assigning a contract? Is it ensuring that there's a certain payment schedule? Can you walk us through that kind of stuff?
Dave Ould: Excellent. There's actually, I know there's a history, of the contracting business, kind of a negative connotation with that, with construction, companies kind of bailing on people and leaving them hanging or held hostage. I know for personal experience, I've been in that situation and it's not nice. It's a terrible feeling. What we see as, really the proper way to do things is lay that out in terms of whatever the cost of the job is, into segments of progress. Obviously, you know what's in our company anyway, I can't speak for other contractor companies, but what's reasonable and expected is a 10% deposit upon the total sum of the project and then going farther. You go 10% at every phase until you get into the specialty phases. So such as electrical and plumbing.
We begin to exercise 20%, 20% up, up until completion. We hold back another 10% until the satisfaction of the customer has been met. Any deficiencies have been rectified. At that time, then there's a full payment. And that way there's skin in the game for both parties. No one's being held hostage. The work is getting done. It just makes both sides feel more comfortable. That's the key, and at least from our perspective we want to maintain that our clients, despite their experience or years of experience, or net worth, they need to be comfortable at all times. .
Sarah Larbi: Absolutely. Don't pay your contractor too much ahead of time. Make sure that you vet them. I will say, just to go back, I mean, you know, you guys, I'm sure there's other ones out there, but blackjack in general, you work with investors. When you were mentioning, specifically that you find out what their rentals are like, what their budgets are and why?
Just to add to that, I think it's also like if you're renovating to pay, you're renovating to buy it might be a bit of a different, you know, different type of renovation and you guys don't really work with homeowners, but the after repair value is going to be critical. If you're like a wall, you're gonna renovate so differently than you might if you're doing maybe a midterm in Burlington as an example. What do you think of that?
Dave Ould: Excellent point. To that point, that's a sign of a good contractor. The contractor asked those questions. Are you BRRRRing? Are you buying and holding? Where are you buying? Where is the set property? What kind of property is it? These are key elements. You know, part of my actual, my function is to go out and see the properties at the, you know, of interest, whether they've even be, purchased or not. To help guide these, future customers on, you know, good sound buying decisions. But Absolutely if it's something like in Burlington, obviously the price per square foot, if you will, is gonna be far different than it would be in Welland.
Despite the rent roll rates that you can get as quite surprising, even in a city like Welland now. But, again, every scenario is a little bit different. The key to feeling that warm and fuzzy feeling and knowing that you're in a safe place is when those questions are continually asked from that contractor to the client. Because if they're not being asked, it's kind of leaving things kind of open for interpretation, and to me that's a red flag.
Sarah Larbi: Awesome. Well, thanks for sharing. And you know, one of the things too, there's mistakes made all the time, right? From a reno standpoint, Like, are you able to share some of the most common mistakes that you see investors make out there when they're renovating? Maybe just some things that they could do to try to avoid those mistakes.
Dave Ould: Common mistakes are one, it kind of goes around understanding what they can afford. Two, not having your, as we say, are ducks in the role, right? Do you have funding in place? Is your account aware of what you're doing? Do you have a lawyer ready to go? Is your real estate agent aware of the type of purchase that you're trying to do, and are they educated in the investment market?
Are they showing you the right properties? Are they guiding you on information that's accurate, such as what the cost of renovating a home will be? Is that property in the right zoning? That's a big one that we've come across, numerous times now where someone has purchased a property. Perhaps they were misled or misguided, if you will, that they couldn't do what they were expected to do in that particular area or that town. They have to get variances and so forth. It's not going to be such a smooth ride. I think a few other missteps are trying to do a renovation with a permit.
That's a big one.
We hang our hats on permits all day long because there are safety nets, there are client safety nets. It gives you your blueprint. That's really what the term blueprint is, right? Comes from, you know, what you're going to end up with, when everything's all said and done. I think a lot of people try to forgo that, and again, guilty as charged. When I first started my endeavors in Vancouver, I used to try to find Somebody who could do it for the sake of beer or cash on the side or things of that nature. It always came back to really cost me more in the long run, whether it was emotionally, financially, or otherwise.
This is something that we really try to again, educate our clients. But if you're new and you're searching for a contractor, we encourage people to get three quotes, talk to three different parties, see if the message aligns. That can't be understated because this is a lot of money. You're taking a risk and you wanna mitigate that risk as much as possible. With that in mind, align yourself and prepare yourself for the plan that emphasizes mitigation. That's our stance and that's my stance personally.
Sarah Larbi: Absolutely. I think you said a couple things that were interesting there and just in terms of zoning and can that property actually be converted as an example, right? Could you take a single family property and turn it into 2, 3, 4 units or whatnot? It is definitely important to have a BCIN designer on your team. I think they're under four grand. They put the drawings together, they submit it to the city, They communicate back and forth to the city and your contractors to me, That's like the stuff I hate doing.
I love delegating it for the price. It is well worth it. They're like speaking that language, and likely are gonna be able to do it much faster than you would yourself. That's one of the things I took from what you said there. And you talked about permits, right? If we're doing conversions, of course we need permits. There might be some things that you don't need permits for. Like what are some of the things that you could do? Without requiring permits and what are some things that we need to do with an absolute must that we can't skip the permit?
Dave Ould: That's actually a great question. Of course, some of the obvious ones that require permits are such things, if you are rezoning your property or repurposing your property, obviously the safe bed is to get a permit to do so. That's going to expose a lot of things such as your zoning. What the city allows in terms of square footage or bedrooms or fire separation and these types of things. A permit will help facilitate that. If you're opening a wall, obviously low bearing walls are a big no-no, you wanna make sure you have a permit there. Anything electrical.
Obviously, if you are redesigning your electrical system, not plugs or switches, things of that nature, changing light bulbs or fixtures, but if you're changing your panel from a 100 amp panel to a 200 amp panel, you're gonna need to get a permit. You're gonna want your ESA on that to ensure that everything's done correctly and to code, right?
It's really important because of the cost of not doing that. Is far greater than the cost of getting your permit in the process to get that. I think that's really key messaging there. Plumbing, you know, in some instances you're going to need, if you're retro plumbing, anything that's being dug underground under foundation, that's a permit job.
If you're changing out a toilet or a sink or something to that effect, that's a non-permitted job. You won't need a permit for that type of thing. Now, encompassing a whole scope of work, You're gonna have your permit regardless. I think the big one I'd like to really touch on is having a permit is kind of your, it's your ticket
It ensures that everything's going to be done to code, it protects you and moreover, as we talked about the financial aspect of things. It adds value to your property. When the appraiser comes in after you've done your work, said renovation, and you're going to have your home reappraised to see what your lift is. They're going to look okay. Was this work all done, to code? Do you have your permits so forth? When you have that, this really is very impactful in terms of your investment strategy. Permit is worth its weight in gold. If you're ever in doubt, Ask a contractor.
Sarah Larbi: Absolutely. I will say too, cause you mentioned electrical, like electrical is ESA, it's actually a difference. It's not like you're going through the city. I always like, regardless of what I do, if I like I shouldn't say this cause I'm recording it, but sometimes like I get my father-in-law to like do some plumbing and stuff like that. Right? But from an ESA standpoint, like electrical, they don't even necessarily go through the city.
It is the easiest thing to do. Always do ESA for electrical. If you're doing conversions, always do a permit. Don't cut corners. I mean, you know, at the end of the day, especially from a refi perspective, a tenant, landlord perspective, you definitely want somebody in legal units as much as possible.
Dave Ould: Sarah, I'd like to add just one thing too. If, for example, a set application or process was supposed to be permitted and it wasn't, and the job is stopped and halted, now you will, you're gonna face months of delay. When you think about getting to your end goal, your end game where you're trying to get renters in, for example, on a buy and hold, now you're delayed and that's rent, money lost.
Also you have to then reissue your paperwork for permits and drawings and so on and so forth. You're talking four to six weeks for each process. You know it, the smart move is again, if you're in doubt, ask your contractor. But moreover, you are likely to get a permit and it'll save you a lot of time and hassle and money.
Sarah Larbi: One question as well, When you're hiring the contractor, you're hiring your trades, is it important or would you say it's something that you would always recommend or maybe not to ask if they have insurance, What kind of insurance? Is there a check that you would wanna make sure that they actually have the proper designation or insurance? Like what are we needing to be aware of for that piece?
Dave Ould: In terms of the contractor service?
Sarah Larbi: Contractors and trades.
Dave Ould: Trades, absolutely. You know what, we are a sales carrier, I think it's $5 million of liability insurance. All our trades they're all legal trades. They're insured individually. Very important, but also for the homeowner. The person who owns the property also has to have insurance on their property. That insurance has to have a rider that explains that the home is in a renovation phase, if you will. That's really important actually, cause if something does go wrong, we know how it goes. If you don't have the right insurance, they find every reason to walk away from you and leave you stranded. Another very wise investment.
Sarah Larbi: Amazing. Dave, that was really insightful. Thank you so much. Where can The REITE Club community reach out if they wanted to find?
Dave Ould: I think we're losing a little bit, Sarah.
Sarah Larbi: Sorry about that. Where can people reach out to you if they want to ask you questions? There we go. We've got blackjack contracting.
Dave Ould: That's me.
Sarah Larbi: blackjackcontracting.com. Amazing. Thank you so much Dave. It was excellent. I really liked your insights and thank you.
Dave Ould: Thank you so much.
DJ: Thanks for listening to The REITE Club podcast and joining our community of real estate investors online at thereiteclub.com, where the focus is about helping you grow. We look forward to seeing you again next week. Thanks from your hosts, Sarah Larbi and Alfonso Salemi.
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