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10 Reasons Why This Is An Excellent Time To Finish Your Basement

By: Steve Johnson

7/13/2009 - 106 Comments

They always say the best way to invest is to buy low and sell high, even though that means buying and selling at exactly the opposite time that everyone else is.

The same idea holds true with other investments like building a house or finishing your basement.  A few years ago, everyone was building and it was difficult to resist the trend, but if you did than now is the time to take advantage of the many skilled workers and suppliers that resulted from the housing boom and have yet to go out of business. 

To take advantage of this opportunity, a few weeks I hired a contractor to finish the basement of my home and here are some of the things I’ve learned.

10 Reasons Why This is an Excellent Time to Finishing Your Basement:

1. Availability of skilled carpenters

The housing boom created a training ground for carpenters to sharpen their skills and the housing correction has caused only the very best carpenters to remain in business. This is perhaps the best time to take advantage of highly skilled carpenters that will be difficult to find in a few years.  Many carpenters will change careers and will no longer be available.  The few that stick it out will be expensive as they raise prices to remain in business.

2. Projects can be completed very quickly

The housing correction has created a glut of skilled carpenters with little work, making them available very quickly.  A typical project can be completed in half the time because of the over supply of skilled workers. Also city inspectors, which are usually half of the delay, are much more available.

After one week, my project had run through several subs including the wood framer, electrician, plumber, heating installer, sheetrock installer and the tapers were half done, plus two inspections.  On top of that, the cabin builder, flooring installer and ceiling installer all stopped over to ask when they are scheduled to complete their part.  This project is moving alone much faster than I anticipated.

3. Willing to work with you

Contractors are much more willing to work with you on special situations. For example, if your brother or your friend is a electrician or plumber, contractors are much more willing to work with your friend rather then their sub-contractors because they are desperate for your project.

4. Lower wages, 20%

In talking with my contractor, he said that many of his sub-contractors have already dropped their prices two or three times, about 10% each time.  That means that the labor part of my basement project is running about 20% cheaper than it would have cost me just a few years ago.

5. Lower material prices, 20%

Material costs are also down about 20%.  Many of the materials that are used in new homes are in abundance because of the many manufacturers that were built up during the housing boom and are still over producing based on the drop in demand.

Everything from wood studs, plywood, sheetrock, windows, trim, carpet, flood tile and cabinets are available in abundance.  A few years from now, many of these manufactures will stop producing and these products will be expensive and in short supply. 

6. Easy credit is still available

Because of the banking bailout, thousands of banks are still in business and are under a lot of pressure to lend people money on new projects.  Home equity loans are still very easy to get with virtually hassle free at very low interest rates, although I would be careful not to get a loan based on prime interest rates because they are likely to climb for years to come.

7. Low interest rates, 4-6%

Another option is to consider refinancing your home while interest rates are still low and using the money to remodel your home.  Of course many have already extracted and spent the equity in their home during the housing boom and are now underwater without any money to extract. But if you are one of the few, this is a good option because inflation is going to reduce the value of your loans so now is the time to borrow as much as you can and invest in something that you can enjoy.

8. A good way to get rid of your dollars

This is also a good time to get rid of your cash if you have a lot of cash that you pulled out of the market during the market correction last year. Cash is going to lose value sitting in a CD or bank savings account as inflation speeds up.  But don’t remodel with the intention of making money by selling your home.  That is not going to work because housing is at best going to level off over the next several years as inflation takes hold. 

9. Property taxes will not increase very much for several years because your property value will not increase

I don’t think property taxes will be increasing very much for several years even with the additional upgrade to your home because the actual value will not increase very much until the million+ homes on the market are sold.  That is likely to take years.  Therefore the city assessor will not be able to increase your property value by very much, in fact many cities have already been forced to lower property taxes as home values continue to drop. 

10. Cheaper than moving into a larger house

If you have an unfinished basement and are looking for more space the other option is to move into a larger house.  But, I think that is going to be much more expensive than finishing your basement, when you add the purchasing, financing and moving expenses.

Bonus: Use the additional space to expand or start a home business

Another great advantage of the additional space of finishing your basement is the opportunity to expand or start a home business.   Having your own business puts you on track to someday become financially independent from your job. 

I plan to use one of the additional rooms of my finished basement to expand my business and perhaps hire an intern. 

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