As a real estate investor or property owner, you'll often hear that slapping a fresh coat of paint on your walls is a quick, easy way to give your space a makeover. Repainting is a great way to appeal to buyers if you're looking to sell a home, and it's a good way to entice tenants if you're putting a rental unit up on the market.
And if you're flipping a home, you're no doubt aware that a good paint job can go a long way toward getting a property into sellable shape. But while painting has historically been a low-cost option for improving a given space, that's about to change for the worse.
The cost of paint is rising
Anyone in the construction, renovation, or real estate investing space is no doubt aware that the cost of common building materials has soared over the past year. Now, paint is joining that list.
A big reason boils down to the global supply chain crisis that already has the potential to destroy the upcoming holiday shopping boom. Just as retailers are struggling to get their hands on inventory, so too are many renovators and house flippers starting to have a harder time finding certain types or colors of paint.
But even if paint, for the most part, ends up being fairly easy to come by, property owners and house flippers can expect to pay a lot more for it. Sherwin-Williams, for example, is grappling with a shortage of raw materials and supplies it needs to produce its paint. So far, the company projects that its raw materials costs will increase more than 20% during 2021's fourth quarter. Because of that, it's paying more to source those materials. And the company will, in turn, have to pass some of those extra costs onto those who buy its product.
How real estate investors can cope
Right now, paint suppliers are being battered not just by global supply chain problems but also by local issues. Hurricane Ida, for example, has resulted in a slowdown in production for Sherwin-Williams.
Property owners who are simply looking to spruce up their own homes may want to wait a few months and see if supply chains can catch up with demand. Once that happens, paint prices should come down.
House flippers, however, don't have that luxury, since they commonly aim to move homes off the market quickly. This means they'll have to eat the higher cost of paint and perhaps seek out savings elsewhere.
Of course, in the grand scheme of home renovations, painting is still a fairly inexpensive prospect, even if the cost of paint winds up skyrocketing to the tune of 20% in the near term. For this reason, it's generally not worth skimping on it in the course of improving a home to put it up for sale, or freshening up a residential or office building in the hopes of getting more leases signed.
The Millionacres bottom line
The cost increases that real estate investors are facing don't just apply to construction and renovation materials. Inflation and supply chain slowdowns have raised the cost of everything from fuel to groceries to automobiles. And while real estate investors might pay a premium for paint, those on the residential side in particular are also in a great position to command higher asking prices for the homes they list. That could more than compensate for paying up for the right shade of yellow.