June 2014

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You think that major weather disasters don’t effect you and your market area?  Better think again.  For example, in 2005 when Hurricane Katrina hit the Gulf states, the effects of it was felt nation wide through the real estate market.  Not only for those immediately needing shelter and eventually driving the price of housing up higher in the Houston, TX and other surrounding areas.  But what most don’t note is the small area where DIY house flippers and house remodelers felt it the most.  Within a month of that event, the price of construction materials had increased due to the massive storm surge damage (a true supply and demand issue). Many materials became diverted to the distressed areas forcing stores in other areas to increase their material costs.  The price of building materials jumped 50% in some areas such as sheetrock and tools that affected most real estate investors overall rehab costs.  Other trades such as plumbing had found that the price of copper soared too, but this was in part to China’s massive buyouts of raw materials such as steel, aluminum, copper, and gold. Electrical, home décor, flooring, and paint were other areas that had seen their fair share of price increases.

When my husband and I started doing reconstruction of homes, it only used to take about $10-15,000 to flip a moderate sized house of 1500-2000 square feet in most cases.  Ten years later the cost has now risen to $15,000 to $20,000 for the average single family home.  Yes, that even includes the average 4% increase due to inflation which for the most part has been about the same since 2008 given the current economy.

So, the next time you see a possible large weather event that will effect someplace else far away from your area.  You might want to plan ahead and purchase the tools and some of the most common materials for your trade ahead of time.  Part of the reason that JJ and I purchase our insulation and windows in fall or spring/summer and purchase our A/C needs and landscaping in late fall or winter.  Learn to think opposite of the masses to help yourself save on costs when it comes to house flipping, maintenance, or rental repairs.