Features | From Pivot Magazine

Renovating your home? There’s an app for that

HomeStars became a favourite by helping Canadians find contractors. But new, more feature-heavy apps are coming up from behind

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photo illustration of a home being built on a smart phoneAccording to a CPA Canada survey, 31 per cent of respondents plan to spend more on home maintenance, yardwork and gardening this summer compared to last (Illustration by Matthew Billington)

When fans approach Canadian contractor and HGTV star Bryan Baeumler, they often say, “Hey Bryan, how do I find a good plumber?” Or, if pipes aren’t the problem, people will ask for referrals to the best electricians, carpenters or painters. The question is so common that Baeumler recently helped launch an app, called HeyBryan, so he doesn’t have to answer it personally anymore. The platform allows customers to select from 16 project categories (roofing, flooring or junk removal, for example), browse lists of tradespeople—all of whom have passed criminal background, credit and reference checks—and then hash out the details through an in-app chat.

The timing is smart. Canadians are ready to give their homes a makeover. According to the latest Canadian census, just over 920,000 abodes are currently due for major repair work. That includes plumbing and electrical upgrades, as well as structural fixes to walls, floors and roofs. In addition, 60 per cent of Canadian baby boomers plan to renovate their homes between now and 2023.

The long to-do list is one reason Canada’s residential renovation market has exploded over the last two decades. In 2017, we spent a collective $77.7 billion repairing and revitalizing our spaces, outpacing the amount we spent building new homes. According to a CPA Canada survey, 31 per cent of respondents plan to spend more on home maintenance, yardwork and gardening this summer compared to last. “The uptick in renovation spending has a lot to do with the way Canada’s real estate market has evolved, particularly in hot spots such as Toronto and Vancouver,” says Krista Thompson, building construction and real estate partner at KPMG Canada. “When affordability is affected, more people choose to renovate rather than move. There’s also the Airbnb phenomenon—people fixing up their places to make them rentable.”

One headache homeowners face when tackling a renovation project, though, is hiring people to do it. A 2018 Ipsos survey of Toronto homeowners found that 78 per cent had trouble tracking down a contractor.

HeyBryan seeks to solve the problem. The platform launched in Vancouver in 2018, the Greater Toronto Area in 2019, and has plans to spread to five more cities by 2020. So far, there are more than 2,000 service providers listed with the app, many of whom signed up because the platform takes care of one of their major worries: getting paid.

“Payment gets processed through the app as soon as a project is finished,” says Lance Montgomery, founder, president and CEO of HeyBryan. (Montgomery got the idea after struggling to get his dishwasher repaired; Baeumler signed on after Montgomery pitched him through his website’s Contact Us page.) “We’re also making it easier for tradespeople to schedule their jobs and market themselves—which is why we’ve had about 350 per cent growth in sign-ups from service providers and 260 per cent growth in customers.” HeyBryan gets its revenues by adding a 20-per-cent surcharge for service providers and a 7.5-per-cent support fee for customers.

Payment and marketing services are the main reasons that Mississauga, Ont.-based painter Steve Zappa signed up for HeyBryan in early 2019. Since listing, though, he hasn’t had any project leads. “I think it’s just too new,” he says, noting that he gets most of his work through word-of-mouth or free posts on Kijiji. Currently, there are 4,000 customers on the app, though Montgomery points out that 50 to 60 new ones sign up every day—a growth rate that he hopes will make the startup profitable by the end of 2019. 

The trick will be pulling homeowners away from their current go-to resource: HomeStars. Founded by Canadian entrepreneur Nancy Peterson in 2006, the site is now owned by IAC, a New York City-based media holdings company with annual revenues of more than $3 billion. HomeStars doesn’t process payments or have Uber-like scheduling capabilities. But, as with HeyBryan, it does verify all the contractors featured on the site with criminal and credit checks.

It also allows its loyal following of 1.2 million homeowners to rate and review—sometimes with brutal, unvarnished honesty—each of the 1.8 million tradespeople, even those who pay for premium, upgraded listings. “Our content integrity team will verify the content of the reviews,” says Peterson. “And if it’s accurate, we leave it up. That honesty has always been core to the company—it’s why people trust us.”

Ottawa’s Errol Judd decided to list his water treatment company, Hills & Valley Water Systems, on HomeStars in 2013, critical reviews be damned. Despite paying roughly $14,000 per year for the Yellow Pages marketing engine and Google AdWords, which boosted his company to the top of searches for water purification systems, most of his referrals came from HomeStars, a site he wasn’t even paying for. “Google just features your name in a search,” says Judd. “There’s no context. When you get enough positive reviews on HomeStars, it builds a lot of trust.” 

Eventually, Judd decided to upgrade his HomeStars account for $2,000 per year. Now, about 90 per cent of his new clients refer to HomeStars to decide whether to hire his business, and his revenues doubled in the three years after the upgrade.

On top of HomeStars, HeyBryan will also need to compete with the likes of Houzz, a California-based app with more than two million designers, architects and home-improvement pros at the ready. For plumbing, lighting and painting (and dozens of other odd jobs short of a full-on renovation), customers can also turn to the New York-based Handy app or Toronto’s Jiffy, which handles booking, payment, invoicing and customer service.

The competition is fierce, but HeyBryan nonetheless has an aggressive goal to file for an IPO on the CSE this summer and be profitable by year’s end. “We have big plans,” says Montgomery. “Beyond expanding across Canada, we’re looking at moving into the U.S., starting with the Pacific Northwest. For us, it’s all about the best way to fuel growth.”

RENO THE RIGHT WAY

Three tips to make your renovation dollars go further
1) Choose the right financing plan
Obviously, cash is the best way to fund a renovation—no debt, no worries. But if you need to borrow, not all loans are created equal. With a personal or home-improvement loan, you borrow a fixed amount of money over a specified time period (five years, for example) and pay it back in monthly instalments. If you instead add to your mortgage, remember that the new amount gets added to the principal and can incur significant interest in the long run. Taking out a home equity line of credit (HELOC)—in which you borrow and pay interest on only the funds you need—may get you a better interest rate, but because there’s no built-in payback schedule, they’re riskier than they seem. “HELOCs can be dangerous, since you only have to pay the interest on a regular basis,” says Toronto-based financial expert and CPA Ann Hebert. The key: be disciplined and avoid treating your home equity like an ATM. “You need a plan to pay off the balance.”

2) Move in before you spruce up
Spending some time in your new home will help you decide which improvements—redoing the cramped kitchen, updating the old-fashioned bathroom—should be the priority, Hebert says. This is especially true for younger couples or owners who carry large mortgages. 

3) Keep your eye on the ROI 
If your intention is to sell after renovating, focus on projects that will most increase your home’s resale price. Kitchens are a safe bet and, according to Remodeling Magazine, new garage doors, decks and updated siding can also yield great return on investment. Keep renovations in line with the look and feel of the neighbourhood. Going overboard may not always guarantee a good return.