Custom Home Building Business, Interest Rates Explained, Zoning Laws (With Karl Bach)

Guys, welcome back to another episode of Inside Canadian Real Estate where we talk all things Canadian real estate. Today I have a really exciting guest on. I have Carl Bach from Prestige Homes. They are a custom home builder. They work with clients to build basically the home of their dreams. Incredible company, family run.

Been around since the the 90s and we're going to be talking today about the custom home industry, what it's like to be in that world right now if you want to start a business, become a custom home builder. But also we're going to talk about the client side. If you just want to build a custom house, that's always been a dream. We're going to talk about all those things today along with some information about the real estate market and some other fun pits. So let's jump right in and get going with Carl. All right.

Carl, thanks so much for coming, man. I appreciate it. Thank. You very much for having me. Cool. So why don't we jump in and tell everybody who you are a little bit about yourself and the company?

I'm a custom home builder, second generation mostly we operate in Mississauga anywhere from Toby, go down to Burlington sort of along the Lakeshore area, build custom homes, luxury custom homes, renovations and additions as well. Sort of been doing that for you know probably about 15 years or so. Started off with my dad and yeah, we we, we keep it sort of pretty tight. Small operation, handful of projects and very sort of. Intricate projects. No, That's awesome, man.

So you guys are, are, are, are two generations in. You're now running, I guess for the most part, prestige. It's kind of falling. Into your banner. Yeah, yeah, that's awesome. My dad stepped back a little bit, you know, just before COVID.

He stepped back a bit and actually brought my wife on board. Nice. It works really well. She sort of handles all the selections and dealing with the customers and on that end, whereas I run more of the operations on site and trades and. Things like that. So it works pretty well.

That's really cool. Yeah. So I mean the custom home space is, is really interesting to me and I think to a lot of people from a couple angles. One is the business angle. It it's it's exciting and sexy. At least from the outside it looks exciting and sexy.

You're going to tell me maybe more behind the scenes, but it does look like a really cool industry to be in. And of course building these beautiful homes from the ground up is is an experience for you guys and the clients. And then from the home buyer side, it's it's exciting too, because a lot of people aspire like that's the thing in their heads. It's like I want to, I want to become wealthy, I want to build wealth and I want to have this beautiful custom home like it's that item, it's that thing that we all want. So you're kind of servicing both ends of that, but let's talk about that for a SEC. As a as an industry, how has the custom home industry been kind of evolving because we went through a pandemic, The real estate market's changing.

What are you seeing day-to-day on the ground in that industry? Well, ever since the pandemic. Here it was, I mean. It changed quite a bit. It went through a whole bunch of waves, right When pandemic hit, there was shortage of materials. I mean you have to totally adjust to timelines and things like that.

I mean you what used to be a two week timeline now used to be now it's turned into eight, eight weeks or 10 weeks, right. So you have to adjust that way and keep the customers happy at the same at the same time manage trades with lockdowns and things like that, but. Definitely where I see the, the trend going is you know prices rising constantly. So I mean if you, if you planning to build, I think you should build sooner than later because I don't see it slowing down. I don't see it reversing at any point because I don't see how. And is that more pricing of like land and property or is that based on materials like everything's getting more?

Expensive land and property as you probably know. I mean it's sort of softening now but the material is is definitely going to stay there or it keeps going up all the all the suppliers, you know every year every six months 8 percent, 10% increases and then also you know labour. Labour I don't see going down either because cost of living is still expensive for guys need to, you know. Provide for their families. So yeah, that's only going up. I mean, there's a big push for that across the board is people need the whole concept around living wage.

And then of course, if a living wage gets pushed up, all wages have to get pushed up, right? If you're at a good wage before, it's got to be a better wage now. So I'm sure that's going to keep going. Let's back up a little bit. I mean, why? And maybe this starts with kind of your, your dad's story, but what got him initially into custom homes?

There's a lot of areas he could have gone. Why was that the place? He was, he was into the commercial commercial side of you know building before and then he sort of ventured into the custom custom stuff and he liked it. You know he did it. He actually when he was in it, he did more of the build and sell and flip type of a scenario. Whereas I when I got on board, I said well, we can service customers as well and just kind of.

Turn it into that, you know that you know, move it, move the business that way a little bit. That's interesting. I didn't realize that because that, yeah, that's always the question even in my mind like we're we're doing some small stuff now, we're actually building our first custom home. It'll be for resale. But something I always think about of going more into that space is, you know how do you choose, do we do this for ourselves, build and sell, is it a resale proposition or is it, is it client side? Are we building for a client?

Like how do you kind of determine from a business case which one of those makes sense or maybe what inspired you to go more client side? Well, I mean the building for spec, especially if you're doing something really nice is, is, is quite satisfying because you know, you do. It's like your art project, you get to choose everything it, you know, it's your your, your little baby, right? It's a lot of fun, but it has to be profitable, right? So as as if you're building for someone who's an end user, then you know, they buy the lot the the cost to build and then the number they end up with, right? If they're happy with it, that's fine.

But you as a builder, if you do it on spec, you have to have the margin and if it's not there, then you know, yeah. It's it's not worth doing right. So is that this is relevant to me because I'm going through it, but is that is that harder and harder to find now where you're bill like to actually build for resale, is that getting harder to make the numbers work right now? Definitely. Definitely, yeah. Is that just because of materials or is it, is it the land cost that's messing with everything?

Like what's What's driving? It both, but it's a land cost definitely and also it's because the market has been, I don't know. Why? But it's just the market has been so unpredictable for I don't know how long, but it's just you never know what's going to happen within two years or something, right. So you if you're going to do it, you have to jump in fast, get in and out. That's the that makes sense.

But yeah, we talk about it all the time. I mean across the board with real estate, it's compressing timelines is key. The faster you can get in and out of something is, is the best advantage you have because it mitigates risk. The longer you sit on something the more likelihood something's going to go wrong especially with I mean this year was interest rates like that $2,000,000 house, they put 30% down and they'd be paying something like four or five grand a month. Now they're paying a $9000 a month and it's it's completely changed dynamic and if you're halfway through a project it starts to get really, really dicey, especially if you were building for resale.

It's a it's a hard proposition to make. So it makes sense to build on spec for a client because at least your from a company standpoint, your profit, your revenue is sort of fixed like you know where you're going to be. And they don't really necessarily are as sensitive to the end price because they're doing it out of motion like this is my home as long as I can afford it makes sense, it makes sense. I'm not. I'm not selling right? Right, right.

Yeah. If you're, if you're not doing it to to to sell right away, you don't care, right. Yeah. But before, I mean I don't know if it is for the past what 20 years the the, the real estate values kept going up, up, up. So by the time you buy the property, you develop it and sell it that that profit on the land, those are, you know you're gaining from that too. Was now it's sort of reversing trends.

So it's hard to do if you're buying the the land for X amount of dollars and you're building and all of a sudden it reverses, so you you know you're in a negative. Yeah that makes sense. So are you guys mainly doing, is it now mostly client? Is there a mix like what does it look like? Now it's pretty much 100% all client, client work. That's cool, because yeah, the one thing I was going to ask you about, but I'm not sure, have you guys ever dabbled in like the subdivision space?

Like building out larger? We try. I mean, we sort of, Yeah, we. We had the idea, but it's just there was so much every every time we tried there were a lot of red tape behind it and used to time by the time you do buy something and then maybe rezone it by the time you get in and sell it, it's just, you know, sometimes it's just take little projects bit by bit and then you know, it's much safer to go along that way than just put all the eggs in one basket. Wait for 3-4 years and try to get out right? No, I I can see that.

Like we we bought a new home in Bradford. It's being built, it's great. Golf as the builder, luckily, cause hopefully they won't run out of money before they're done. But I can see they're having a hard time selling like the projects. These these are all in that $1.5 million range is kind of the pocket and they're not selling all that fast like you drive that it it there's a hundred homes they released when we first got in it was about two months ago they had sold maybe seven homes. I went back the other day, so it's two months later, maybe they sold 20.

So they got a long way to go still like before, people would line up and those things were gone the first day. Like they wouldn't even last 24 hours. And now they're, they're putting in work, trying to move these things and it's just not moving. So I can imagine for a smaller builder that's doing that and that's like they put all their eggs in that basket like you said. And now we can't sell 3/4 of the the the properties like, what do you do like? So I'm imagining, are a lot of these guys going on a business, the smaller ones, Have you heard of this?

Smaller builders, Yeah. Like, are they getting worse? I know what the, you know the the building costs hurt them too. So if you pre sell a unit for what I don't know, 600 or $8000 and your building costs all of a sudden jumps up like lumber and all that, they're under contract right? And I've heard that some builders increasing prices on on people that put deposits down really like midway. Yeah, Midway.

I know, I know. There's a clause in there somewhere that you know holy crap. People do that, but. I guess that's the way we're getting to get around it. But yeah, I mean what else, what else is the option? It it's a tricky spot because we do, we need more housing, right?

But also it's not profitable to build housing. So how how do you circumvent that is kind of the issue and then that just leads to more the same issue because if no one can build profitably, the existing inventory just continues to increase in value making it more attainable. So it becomes kind of an issue. I think in the customs side there's always going to be people building, there's always going to be people that have money to build. What I see recently the trend is sort of going is a lot of empty nesters like older people that have, you know, their money, they want to build something small maybe like, you know, not more small compared to, you know, today's world, but 2500 square feet somewhere in a trendy little village or something.

And just build the custom that way. Or you go see all the way people building like 12,000 square feet, 15,000 square feet, those type of people, but the ones in the middle sort of, you know. Not not happening right now. Interesting. So it's a soft middle, but both ends you're still seeing are pretty. Strong.

Both going to both extremes, right. Wow. Yeah, that's a that's a good point. You probably know this better, but down South of the Kui or anywhere you have in a custom market, it's more resilient than than subdivision or presale or things like that, right? Yeah, There's always, there's always people with money and I think it's it's smart to be aligned with that because yeah, your risk is very minimal. Like they're coming to you off the bat and you're building something you know is going to get built.

You're not building it and then waiting and hoping you can find a buyer. You're basically setting all that in stone before you start. And they'll always, they'll always be those people. Like, do you see, I was going to ask you too, like pockets because you mentioned like trendy little towns. Are there spots you're seeing now kind of come up that maybe are new that you haven't seen in the last 3-4 years are getting popular? Well, I've been sort of, I've been, I've been building a lot in poor credit and I've been seeing it develop and that it's been developing big time as a big, big, you know.

Big development right in the middle of it. I'm actually doing a, you know, custom in there right now that's that's very trendy. And then I'll, I know I'm more on the on the West End, I can't really say too much on the East End of Toronto, but I know Bronte is a very trending place, all those places by the water really much. That's what I see, right. But then during the pandemic, a lot of people are going up north too. Right.

Little little towns and things like that. I wanted to get out. Definitely. Those prices shot up like crazy too. Yeah, like you're definitely seeing up north for sure, north of Simcoe towards the Muskoka's a lot of where where land was cheap. You're seeing people.

You guys were operating. So we're in Maple or and then and we're we're, we're now, now, yeah, exclusively like Innisville and north of that. So from Innisville to like Brace Bridge is probably the farthest N yeah, maybe even a little more W to Penetanguation area. Midland, like all those pockets of theirs mainly where we are, that's for house flipping, which is kind of different. But even development like the house we're building is in Bracebridge, like we have a 20 acre lot, it was empty and the cost of land and that's the only reason it's feasible. The cost of land was so low because like our whole off market thing that it can make sense and there's people coming up there.

There's people leaving the city saying I can either work from home now or I retire during the pandemic. I want my little paradise, but I want it quiet. I want some land and you can do 20 acres in Brace Bridge with a 2500 square foot custom home with beautiful and still pay under 900. And so there's a value proposition for people there that makes sense. The city, I don't know as well, but I'd assume there's even more demand. The only problem in this area, which maybe you can elaborate for me is like obviously land availability.

So I'm assuming are a lot of these infills that you guys are doing like on older lots? Yeah, Yeah. It's all infill, right? It's all infill. Oh, that makes sense. Does that cost wise?

Is that typically more cost efficient or less cost efficient than finding a building lot? But I guess in your area you can't even find building. Well, where we where we deal? Mostly it's all 100% building lots or infill, right? It's old, old, old bungalows or old places that we tear down and redevelop. That makes sense.

Yeah, we. Haven't ventured out too much up north, whereas the vacant lots exactly. Is that something you guys would ever explore? Are you kind of like locked into your market? We've toyed with the idea, but there's a lot of. A lot of things that you know are different about that, right.

If you when I talk to a people is when you when you develop up there, you have to be up there. You can't do both because then I don't think anybody who's going to be happy at the end. At the end of it, yeah, it's a whole different. It's a whole different thing. The drives are not fun. Going up two hours every time you got to get somewhere in back.

It definitely makes it difficult. Sub trades, if you don't have, are difficult because it's a whole different market. Like who's driving a pentangu chain every day? Like it's not the same. Yeah. And then, you know, when you have trades, you want them to work close, right?

You want them to be. You're you're sort of, you know, focused on one area and people work in that area. If you make people go all over the place, it doesn't, it doesn't really necessarily work. Yeah, yeah. What about like when you're doing these infills timeline wise. So if someone's listening to this saying, yeah, I I've always wanted a custom home, maybe now is my time to do it.

What are they looking at in terms of of timeline? Like how long is that infill project taking beginning to end? Well, from from this, from when you actually demo the old place or start digging, it's. Give or take, it's usually about 10 to 12 months turn around time. But then before that there's a lot of, you know, the planning stage, permit stage, things like that. So it's not bad.

Yeah, that's not. Bad. That's what makes it more difficult now these days too, right? If you used to be able to buy a lot and carry it at like 1.52% mortgage, now it's getting more difficult. If you're doing all that for, for six months, for one year, you have to carry it, right? Yeah, that's 7% and that's sort of.

Putting a little bit of the damper on the on the whole market I would imagine, I mean it seems like I know there's a lot of people getting into now infill, but from the multifamily standpoint with the new changes where they're allowing, have you heard of this like the the, the allowing of three units now in any single family lot? In Innisfil, no. Across the GTA. So most of the GTA actually across Ontario now they're saying they're they're gonna allow. I'm not sure how close, if this is fully through or it's just in the process, but it is happening. But across Ontario their default now single family home lot will be allowed up to 3 units without rezoning.

So you can build 3 units. You still need building permits. Obviously you can do it as an infill, you can do it as a as a as a ground up build, but you can do 3 units, no rezoning and then some pockets allow up to 4 units. So like Toronto proper is allowing up to 4 units you can get in without any rezoning. And apparently, out in British Columbia, they've done the same thing, but they've actually have pockets up to 6 units. They're calling it around, I guess, transit zone.

So there's certain areas of transit where they, they've drawn a circle and said, hey, if you buy a house here or a lot here, you can do 6 units, no rezoning. We just want to get it approved. And I've seen a lot of people come in and that now doing infills either on spec for investor clients. So they're builders. They're just building that and then selling to an investor that's taking it over, leasing it up or they're just selling the whole thing or they're keeping it themselves. That seems like maybe even where we might see more opportunity cause like as that land cost comes up and there's less people willing to just hold land for their like that kind of project that might be something that's viable.

Yeah. And I I don't know much too much about that. But yeah, I, you know, might be good for in certain neighborhoods, but I don't, I don't agree with it. And then you know one of the exclusive neighborhoods, like if you're buying a house for, you know, five $6 million and exclusive and then all of a sudden the guy next to you. Builds a little laneway house beside you in your backyard. Like, who wants that stuff, right?

Yeah, so that that. Is a little bit of a compromise, I think. I don't know the details of that, but that's that's the pushback they're having is exactly that, right. So there's certain pockets saying like, whoa, whoa, whoa, like this history is also family homes. We paid three $4 million. Like, you're telling me someone's going to throw up a fourplex next door.

And the problem is it because of the way they set this up, because you don't have to apply for rezoning. You're not. The whole public scrutiny is no longer applicable. So no one's able to like they're not voting on this and and saying, OK, here's our plans and the community can come in and voice their concerns. That's not an option anymore. So you can't even oppose it.

You can't even oppose it. It's just it's just going to go up assuming that the city approves a building permit. I mean AII get it, we do need it. We need the housing. But B, what you said is a valid concern, like how, what does that do and does that hurt property value those areas like you built a $6 million custom home and now there's. AII don't necessarily agree with that.

I think that the the permit process should be a lot quicker. That's what should happen, right? It should be able to just approve permits way faster. But that's what increases housing. Not just, you know, going that way, in my opinion. But yeah, no, I I I totally agree.

But definitely an interesting option 'cause I think from a development standpoint that can make a lot of sense. As far as investment, yeah, for investment, yeah. But from a community standpoint, that could be tricky, I know. So where where do you see, I mean, like where are you guys heading? Like what's the future prestige homes? Are you guys kind of trucking along with what you're doing?

Is there new avenues you're looking at? Like, what's the next five years hold for you guys? We're pretty much just sticking to what what we're doing works pretty well. We do a handful of projects a year custom, you know, anywhere from small to big, I mean anywhere from 2000 square feet to sometimes you know, 6500 square feet. That's the average sort of window. But yeah, that's we we, we sort of want to stick with that.

It works really well. Yeah. Yeah. It seems like you guys are doing great. I mean it's it's family run business, which is cool. So you guys have all that support in house, but what's one of the most challenging parts of that right now?

Like what's one of the most challenging parts of being in your shoes, running this kind of business? Well, I mean we we're going to stick with that. But I don't, you know, eventually I want to go with something, go into spec too, you know, go back into spec. Because it's like I mentioned before, it is pretty fun to do something you know you can you you can really show off your your, your expertise and all these things that you finishes. You can put in there things that you know you think are good and just. Have a showpiece, right?

That's that's something that we want to do on large scale, preferably, But now, now is not the greatest time We'll see. Just wait for the right window to jump in until you know, yeah, I mean it might. It might be as things start coming down, there's there's more and more opportunity to scoop land and scoop property that you wouldn't otherwise have gotten. It might start to make sense. There's a lot of people that have been sitting on land for a while now that held a little too long and now they're getting a little stuck with it and they might need to get rid of it. I'm seeing more of that.

And so that might be, yeah that might be an opportunity in the in the near future especially in those pockets where land is actually still. Available. Yeah. I think the the, the opportunity is actually getting better now because the the prices are coming down slowly and you want to jump in now before the inflation keeps going, right. So maybe might, maybe now is a bit of a sweet spot. I I think for sure over this winter and this spring, anyone looking to buy anything for any reason is going to be in a good spot before those rates come down.

You don't want to wait till then 'cause then it's going to change the dynamic again. But yeah, this whole winter's going to be a great time to start looking for, for, I think, opportunity 'cause it is soft. Like I'm on the sales side now. So I I list all of our properties, all the flips and all that, and I see how soft it is now versus earlier in the year, even last year. It's like you put up something, even if it's like everything we put up is fully renovated, it's clean, it looks great. It shows well.

It's still, it's still soft like the average time on market, I think that TREV Pub published was somewhere just past 30 days. So you're somewhere around 31 or 32 days is your average on market when two years ago was like 3 days. So things are sitting now, you're not getting all those offers. And when buyers do come with offers, it's loaded with conditions that they have the balls in their court, whatever they want, they know they're going to get it and they're not, they're not shy about it. They're they're willing to come in lowball, put all the can then just see what happens and that's that's becoming the norm. So we're already seeing that softening.

Like if it wasn't for we we market very aggressively. Like if I have a listing, there's a lot of money that goes into marking that property. It's a very active thing. But a lot of agents that are not that just list and wait, they're sitting 30 days, 40 days, 50 days and you can't move stuff that like I said two years ago was moved in a day. So that's creating opportunity for sure for people that are willing to say, OK, it's a buyer's market, now's my time to buy, to invest for whatever reason. Even if it's like, if in in your case, if there's a client that can eventually build a house that would want to work with Someone Like You, they can start looking now at like, what can I buy that might be really undervalued.

And just even if I got to sit on it for six months, just start talking to someone, now's a good time to find that lot in that that dream area, that dream street. I think now's the time to do that. I think, I think it's a good time now. Yeah, for sure. I think so, man, because that's I I don't see getting much, much better than this because as soon as those rates come down, we don't know when, but when they do, there's a lot of people waiting on the sidelines. Do you think the rates will going to come down next year or no, I don't know.

I wish I knew for sure. I wish I knew for sure. I'm I'm a bit of a like a weird economics nerd. So I follow this stuff a lot. When they raise interest rates, there's a bunch of economic KPIs they're tracking. There's certain things they look at and what they're what they're looking for is do we slow those down.

So they're they raise rates and then for the next quarter they look at these KPIs and they go, are those moving downward? No. OK. We raise more and they look at it again in the quarter. The last time we just had this, the last time we talked rates, they looked around and said, OK, yeah, it's slowing. So retail sales, two quarters of a row are slowing.

A bunch of things that they look at are slowing. And if that's the measure, they shouldn't be raising anymore. The next time they look around, it should be OK, mission accomplished. Things have slowed. We're good. It seems to be slowing now for sure.

I think so. So I'm expecting a hold, maybe another hold and probably by summer rate decreases. But slow, like, I think 1/4 percent of the time every three months, little by little, it's not going to be OK Now we're back to 3%. I know they can't do it too fast because it's like, you know, putting fuel in the fire. Exactly. So now it's a management game of just like we don't want to crash the whole economy, but we also want to make sure it doesn't just boom again like crazy.

And we have the same problem that we had. So it's going to be, it's going to be interesting to see how they manage that. But I think by the summer we'll see rates coming down, I think slowly, slowly. And that's going to still affect people wanting to get back in. There's a lot of people waiting on the sidelines that have been renting, holding money from the last sale. Their home, they sold in the peak.

Now they're renting, they're waiting, they're waiting. And as soon as they hear that rate drop boom, everybody comes back in. So I think between now and spring is a good time to look if you're going to. Buy. Yeah. And if you're not affected by the interest rate too much, let's say you you, you buy a property but you buy it for you know almost cash or have a small mortgage.

Then it's definitely good time to jump in now because whatever you're putting into the house like renovations or or building is going to be cheaper now than it will be next year 100%. Because even when when I build now through the especially. So this is COVID. Like every house we build, I look back, oh, last year, Oh my God, look at this budget. Look at this budget. And it keeps going up, up, up, up.

So yeah, like we said before, I don't see it reversing. So if if you you know if the interest rate doesn't affect you that much and there's opportunities then jump in. Now I I agree especially from a from a buy standpoint like I'm I'm talking as an agent now, but if you're trying to buy a house and you have a strong financial situation, you have a lot of leverage right now because every other offer that that seller is getting has a bunch of conditions. Cash is king, right? Yes. If you can come in now with cash and clean offers you're getting like people will knock 50 grand off, 100 grand off, if it's a clean offer, depending on the House because everything else they're getting is conditional.

Oh, I got to sell my house first. Oh, I got to do an inspection and I need financing. And then financing doesn't come through and the deals fall through. We're seeing so much of that now. So if you're in a strong financial position, not only is it you know good to get in, it's the best time to get in because people will actually like that means something. Two years ago that meant nothing.

Everybody's offers are clean. Now if you come in with a clean offer it's like OK, it's worth a pay less but like let's do it. So you're in a really and that's how we buy most of our, I mean all our deals are off market but still the fact that we come in cash is is king because they know if they if they list it's going to sit, they're going to get conditions, they're going to get all, it's just a mess. Yeah, there's always that what if right? Sometimes you see a condition to sit for a week or so and then boom, it falls through. Yeah, no, you have to go back.

You're back at square one. And then if you have to relist it, then, then you know, the nobody really wants to jump on. It's like, well what happened exactly right. You get one, it's one, you get one good first impression on the market and you got to make it count, you got to make a splash and that's getting harder and harder to do. And we're actually, we're seeing a lot of deals fall through. I'm seeing a lot of deals now where they go through, they release the condition of financing and then two weeks later I get a document saying they want an amendment to purchase a sale to add new people on title.

Cause actually they didn't get financing. They realized later down the road it's not gonna work and they need to bring more people on it. We're seeing more of that all the time now. You need four people on title to get a house closed. It's crazy. Never used to see that.

And I think, I mean that is good. If you own a house and you're worried about like is the is the market gonna crash? I think that's something to think about is before the market crashes in single family homes, you'll just have more families living together. There'll be more people that will just pool their money and pay more than just start paying less Across the board. That's what's gonna happen. You see it in Europe all the time.

It's just you'll have families living together, splitting these costs. That's what it's gonna. BE Yeah, that's what they were saying. Maybe that, you know, goes to sort of that Europe living style, right? More renting, less owning. Yeah, it it's a natural progression, but somebody will always have to own it, yeah.

So as long as you can be on on that side of the fence, you're gonna be good to go. Yeah, yeah, I love that, man. Well, cool. Hey, anything else you want to add that I missed here? Because I think that was a pretty good, pretty good overview. Yeah.

No, that was that was pretty good. Nothing I can think of right now, but it's you just got to keep watching the market, right and then see what happens. So I think everybody's anxious to see what's going to happen over the winter and and people are on the sidelines. But my impression is that, you know, over the winter now people, that's what happens usually when I when when I build 2, all of my projects is everything sort of comes in waves. And I think that has to do with sort of mindset and psychology in the market in in general, you know people, it's everything is good, people jump in and then a few months later or six months later, one year all of a sudden the projects start totally you know there's a dampening, everything softens and you'll see that there's always a delay.

Yeah. But yeah for that's what's going to happen now I think it's going to soften a bit, but next year hopefully is going to be pick up and. People are going to jump back in, but there's always going to be work around, so there's always going to be people building and renovating. So yeah, I agree. I will wrap up with one more question on the business side because someone might be listening now saying, hmm, yeah, I've wanted to get into custom building for a while. That sounds fun.

What's kind of your, your, your big piece of advice if someone's listening now saying I'd like to get into building custom homes, I want to get into that business. What do you tell them? Oh, you mean like you want to get into business building homes? I want to get into the business of building homes. I listen to this and somehow I'm inspired and I want to do it. What's your advice to me?

Start slow, right, Start slow and and you would take it step by step because IA lot of the guys I see even over the years I've seen guys come and go in in our areas is that they try to get ahead of themselves. You know, they they build one home and then you know, they try to grow too fast. Yeah, I think growing slowly is is much better and organically than than than you know, building one house and pumping a whole bunch of money into it, getting getting a few, a few trucks and foreman start, you know, pumping projects out. But in the end, no one's happy, clients are not happy because there's a lot of things that get missed, get you know, a lot of things that get done in proper and things like that.

So I think that, you know, grow it organically and grow it slow and just. You know, educate yourself and go step by step. That's that's how I did it. I mean, I just started slow with my dad, You know, I started working on all the little trades and then it slowly started managing and then sort of went into that. But I never really jumped into it, right, which helped a lot. Slow, slow, slow growth is better.

I think. I agree. I think that's true for every business. That's every business. That's the way to do it. Too many people go too quick.

They leverage too quickly. They it's all about the fancy flashy stuff. They gotta get the trucks, the branding, everything, and no one's making money and no one's happy. And in the end that that doesn't count, right. What counts is that you have copy customers and they give you a a referral and then you do it that way and then that's how you grow organically but not, but you know like you said, having big fancy trucks and flashy. I agree.

How do you feel about, you just made me think it's one other thing. How do you feel about franchised home builders? Like a lair? Oh, Alaire, I've heard of them. Yeah. Is that a like, like, 'cause obviously I would like if I want to build houses and I want to do it for clients, I have two options.

I start on my own or I could go with a franchise. Have you seen any benefit? Is that something that, yeah, it's too overwhelming you should go with a franchise? Or is it something that's still? Honestly, I think, I think things like Alaire are for people that don't know how to run a business, right. If you want to, you want a franchise, you want to do it, but you don't want to.

Sort of. Figure out the business and yourself. Then they lay it out for you just like any other franchise, right. You don't want to open up a coffee shop and do everything, although like work yourself and and and make it your own. You just buy a coffee shop and they do everything for you. Just run it.

But yeah, I don't know. I don't. I don't. I don't think in the end. I mean, I think it's much more satisfying and if you grind in the beginning and and really push hard and then. Grow it yourself.

You'd be much more satisfied. Yeah, much more fulfilling for yourself, too. Definitely. I I I agree. I know someone who has an alert franchise. And I mean, part of his frustration, he always voices, is the control they have.

It's like he can't do, even for advertising, everything he wants to try to do. It's like there's someone's thumb on it, like always needs approval. Like they scrutinize everything. What are you spending here? What are you spending there? What's the messaging here?

What's the look there? You don't have that same control. Everything has to fall on that standard. So yeah, you're right, it's good. If you have no experience and you're starting it's, it's maybe going to be a little quicker because they're going to hand you the blueprint, but the same time you're going to lose all that that control along the. Way.

I didn't think about that. You know how they how it's controlling right? Like if you have an awesome idea, you can't implement it because you control. So yeah, yeah, it's, it's, it's it's a give and take. Yes, that's good because I think a lot of people are interested in the in the topic from the business standpoint like starting in this industry as well as owners that I want to build and live in a. Home, I think.

I think a lot of. It's it's a fun business. Yeah. It it looks, you know, it always looks glamorous because like you're always driving around, you know, this guy doesn't do anything, just sit in his truck and you know, there's there's a lot of stuff that happens behind the scenes. It's a lot of stress and and things like that. But yeah, like I said, always looks glamorous from the outside, but it's.

Yeah, just just grow it organically. Yeah. No, I I I love that. I love that. I think there's a bright future ahead for that industry as a whole, especially now like because price wise, sorry I'm going on another tangent here, but price wise buying resale versus building custom is it typically, So let's say on the bottom end like that 2500 square foot home, you know, nice home, good size that versus buying something from a big great builder or buying resale, How big of a price discrepancy is it? Is it much more of a premium to build custom?

Is it a little more affordable? What is it in a custom infill or like a subdivision you're talking about? No, like a custom infill. So like if I if so I want to house for my family 2500 square feet. I have two options. I'm going to either come to you, I found a nice little lot.

We're going to do an infill you're going to build for me, or I'm going to just go buy from a builder in a subdivision or even resale. What are the cost differences there? Are there or just? Buy one that someone built a few years ago or something. Well yeah, now the prices are that way. So if you, you know you, you look at the lot value which is 1.5 to build a house another 1.5 or 2 million which puts you at 3 1/2 and there's there's, you know homes are ready to go in that neighbourhood for 3.5.

Wow. So the the numbers are pretty much the same, the same as if you want to jump in, do it yourself, go through all that and make it your own or or you know, buy something that someone's built, but you know. Yeah, the reason how people can sell it for the same price is they probably built, you know, 2-3 years ago, four years ago, it's cheaper. So, yeah, yeah. But I think in the end it's it's it's if you want to go custom, you do go custom and and that, Well, it's good to know because I mean, I the reason I ask like the reason I'm getting there is like, I'm curious if there was a big premium because building custom is preferable 'cause I get everything that I want, but I'm wondering how much of A premium do I have to pay?

But not really. It's about the same. Yeah, but you gotta make sure you you if you even if you buy something that's resale, let's say you buy a custom one that's been built two years ago. Like who's been built by. Right. Right.

It's been built by Flipper. Who this? Who's the 2nd house? Yeah. And then you you you put your life savings into it. Yeah.

And all of a sudden there's problems everywhere, right? And you have no warranty. Yeah. Well, that you don't want to want to do that, so, Oh yeah, that's true 'cause they lose the warranty at that point, they don't have. Yeah. So a lot of people, you know, as you know, during a hot market, Oh yeah, I'm going to buy a lot built within six months, one year, sell it, right.

And it's been built, it's been built with a purpose to flip and sell. So number one is profit, Number one's not quality and attention to detail, right? Exactly, which is totally different from when you're when they're working with you, you guys are building to make them happy. You're building what they want. Even renovations, right? Flipping, flipping, renovations and things like that.

You see a lot of bad stuff out there. It's never and that that is the shame. Industry is like it gets a bad rap because there's a lot of people cutting corners that don't know what they're doing. There's a lot of house Clippers doing the work themselves. They're just showing up and doing stuff and you get the handyman special stuff which is always fun to deal with. But yeah, when someone's and the goal is just a profit on the resale.

Of course the the numbers, it's always where do we save as much money as possible. How do we make this as cheap as possible? Because every extra dollar we spend is out of our pocket. So there's a valid point. Very good point. I love that.

I love that. Awesome. And well, thank you so much for taking the time. If people want to check you out, where can they? Where can they do that if they want to connect? Hit us up on our website www.prestigecustomhomes.ca.

Or on Instagram. You'll have find the Instagram link on on our website. So nice. Love it. Awesome man. Thank you so much for.

Thanks for having me. Appreciate it. Yeah, thanks for tuning into another episode of Inside Canadian Real Estate, guys. Don't forget if you liked the episode, if you found it enjoyable, if you learned something, if you liked our guest, if you liked our topics, don't forget to subscribe to Inside Canadian Real Estate on Instagram. That's where you'll find all of our clips posted. We're also sharing on YouTube, so just search Inside Canadian Real Estate on YouTube.

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