Got a proposal from GC today for a major/complete remodel. It's a higher-end custom builder in the area and it seems like he would be a good fit for our project. He charges cost plus 20%. I was expecting about half that but admittedly have zero experience in this. This is pushing the remodel cost north of $150/ft2. Any thoughts on this?
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Last: 1 yr ago by Jason_InfinityRoofer
I do higher end remodels and 20% would be the minimum markup. Remodels just tend to take more time, scheduling/ coordinating, unknowns to deal with, etc.
New construction might be 10-12% markup, but my experience is that's a tight margin. Getting into custom work, more customer meetings, etc, that percentage is going up, especially in today's market. A market bust might change that but I don't foresee it, at least in my business.
New construction might be 10-12% markup, but my experience is that's a tight margin. Getting into custom work, more customer meetings, etc, that percentage is going up, especially in today's market. A market bust might change that but I don't foresee it, at least in my business.
Agree with toolshed. 20% across the board is good. Times have changed, and not sure if they will ever come back. If you have faith in the quality/service you are to receive, it's tough to put a price on 'peace of mind'.
Conversely, if you shop around and you find the crew that will do it for let's say, $50k less (just guessing on the overall scope of your project), the likelihood of a stressful project is high, and a level of quality that you will live with (and be disgusted with) forever.
I know money doesn't grow on trees, but please consider the whole package as opposed to just the price. Good luck and ask more questions here if you like. I always like a customer who has more questions than unspoken expectations.
Conversely, if you shop around and you find the crew that will do it for let's say, $50k less (just guessing on the overall scope of your project), the likelihood of a stressful project is high, and a level of quality that you will live with (and be disgusted with) forever.
I know money doesn't grow on trees, but please consider the whole package as opposed to just the price. Good luck and ask more questions here if you like. I always like a customer who has more questions than unspoken expectations.
Recently had work done with a general contractor. He is a friend of a friend and gave me a "deal" at 15%. He normally charges 20%.
Sounds like a fair price.
Does he have a website?
Does he have references?
Does he give off a good vibe?
Do you like him?
Does he have a clear and outlined contract?
Does he have a clear and outlined schedule of payment that is not half down, all up front, or something that would indicate that he does not have the funds to commence without your payment?
How long has he been in business?
Just ask yourself some questions. If he says he's been in business 20 years but requires half down to get going, that's a huge red flag for me.
I've posted before about how to find a good roofer, but in most cases you can substitute contractor for roofer and the same things apply.
One thing you can do is give him a call after your contract is signed. Make sure you have a legit question and call 2 days later. See if he answers. I know a few contractors that won't answer the phone once they think they have the deal locked down and that's now how I'm going to roll.
You have three days in this state to cancel that contract.
Either way, do not focus on just the dollar figure. Quality and reliability aren't cheap.
Does he have a website?
Does he have references?
Does he give off a good vibe?
Do you like him?
Does he have a clear and outlined contract?
Does he have a clear and outlined schedule of payment that is not half down, all up front, or something that would indicate that he does not have the funds to commence without your payment?
How long has he been in business?
Just ask yourself some questions. If he says he's been in business 20 years but requires half down to get going, that's a huge red flag for me.
I've posted before about how to find a good roofer, but in most cases you can substitute contractor for roofer and the same things apply.
One thing you can do is give him a call after your contract is signed. Make sure you have a legit question and call 2 days later. See if he answers. I know a few contractors that won't answer the phone once they think they have the deal locked down and that's now how I'm going to roll.
You have three days in this state to cancel that contract.
Either way, do not focus on just the dollar figure. Quality and reliability aren't cheap.
Thanks.
Does he have a website? Yeah.
Does he have references? Yes. Several friends and family know him personally and/or professionally.
Does he give off a good vibe? Yes.
Do you like him? Yes we do.
Does he have a clear and outlined contract? Not yet.
Does he have a clear and outlined schedule of payment that is not half down, all up front, or something that would indicate that he does not have the funds to commence without your payment? He expects proposal will lay out a six-draw timeline. This is required for the "construction" loan.
How long has he been in business? In TX, I think 4 yrs. Out of state probably 20.
Thanks all for the input. Maybe I'm just not mentally ready to drop half a meg on a house regardless of the GC rate
Does he have a website? Yeah.
Does he have references? Yes. Several friends and family know him personally and/or professionally.
Does he give off a good vibe? Yes.
Do you like him? Yes we do.
Does he have a clear and outlined contract? Not yet.
Does he have a clear and outlined schedule of payment that is not half down, all up front, or something that would indicate that he does not have the funds to commence without your payment? He expects proposal will lay out a six-draw timeline. This is required for the "construction" loan.
How long has he been in business? In TX, I think 4 yrs. Out of state probably 20.
Thanks all for the input. Maybe I'm just not mentally ready to drop half a meg on a house regardless of the GC rate
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AG
Offer to pay in straight dollar bills. My cost dropped considerably, but I got a lot of questions asked every time I went to the bank to pull out $50-$60k at a time.
Most of the high end GC's in my area are at 20-30%. I know of one that I work with that is at 15% but I think that's only if you're over $1 MM on your budget.
I'm in the wrong business
20% doesn't go that far.ABATTBQ11 said:
I'm in the wrong business
Probably got flagged and had your info sent to the IRS as well....vmiaptetr said:
Offer to pay in straight dollar bills. My cost dropped considerably, but I got a lot of questions asked every time I went to the bank to pull out $50-$60k at a time.
MoreCushing4thePushing
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AG
Yeah. Anything over $10k gotta fill out a form for anti-money laundering purposes. Told them I was handing out a lot of Christmas cards this year.
People ask me for cash discounts. I don't do them. I'm going to report it cash, check, whatever. I'll be the poor shlub that gets audited as soon as I take cash and don't report it!
Aggietaco said:20% doesn't go that far.ABATTBQ11 said:
I'm in the wrong business
Please enlighten me. How far does it have to go…what expenses does a GC have that I'm not aware of? Thanks
lead said:Aggietaco said:20% doesn't go that far.ABATTBQ11 said:
I'm in the wrong business
Please enlighten me. How far does it have to go…what expenses does a GC have that I'm not aware of? Thanks
The GC expense is their time
Putting up with an endless amount of bull**** from the customer.
Putting up with subs halfassing their work and apologizing for them
Dealing with pandemic shortages and getting creative with the leftovers
…
…
This, plus office staff you're not billed for, fuel you're not billed for, trucks & maintenance you're not billed for, the office rent, etc. I can keep going if you'd like.Roger That said:lead said:Aggietaco said:20% doesn't go that far.ABATTBQ11 said:
I'm in the wrong business
Please enlighten me. How far does it have to go…what expenses does a GC have that I'm not aware of? Thanks
The GC expense is their time
Putting up with an endless amount of bull**** from the customer.
Putting up with subs halfassing their work and apologizing for them
Dealing with pandemic shortages and getting creative with the leftovers
…
…
Now in commercial construction work, all of these items are part of what's called general conditions, which can be an agreed upon lump sum amount or a maximum budgeted price that the contractor bills against.
I can add...Corps_Ag12 said:This, plus office staff you're not billed for, fuel you're not billed for, trucks & maintenance you're not billed for, the office rent, etc. I can keep going if you'd like.Roger That said:lead said:Aggietaco said:20% doesn't go that far.ABATTBQ11 said:
I'm in the wrong business
Please enlighten me. How far does it have to go…what expenses does a GC have that I'm not aware of? Thanks
The GC expense is their time
Putting up with an endless amount of bull**** from the customer.
Putting up with subs halfassing their work and apologizing for them
Dealing with pandemic shortages and getting creative with the leftovers
…
…
Now in commercial construction work, all of these items are part of what's called general conditions, which can be an agreed upon lump sum amount or a maximum budgeted price that the contractor bills against.
Clothing/shoes/safety gear
Tool and vehicle maintenance/cleaning
Dealing with injuries/sickness
Purchasing...chasing down errors, doing returns, scouring the internet for specific things
Warranty work...hardly any job of size doesn't have some type of call-back...and may not be your fault?!
Employee issues
Needy or high maintenance customers (repeating this one from a previous post because it can be huge.)
It all adds up.
In a super-organized (probably larger) company, or maybe in certain fields of contracting, some of these may be minimized. Costs and profit levels may be monitored much more closely. It may be niche work that limits variety and you can focus on efficiency. Yes, there are some contractors who make lots of money....
But most of us don't. We do okay, maybe we write a lot of personal stuff off with our companies and that helps...but after 32 years of doing this (interior residential reno) there is always something that comes out of left field to make you ask 'why am I doing this?'. Overall enjoy it, but like every job....sometimes....SMH.
Internet searches for specialty items is a time killer!! I'm doing a job with a big custom whiskey bar and a large walk in save room/ gun room with displays, drawers, etc for long guns, pistols, memorabilia. Looking for brass railings, display hooks, hood to put out all together from random internet pictures from the customer totally kills any custom built into those areas.
Liability insurance is a big cost. Builders risk per job can be line often and assigned to each job.
Liability insurance is a big cost. Builders risk per job can be line often and assigned to each job.
remodel business standard is at 50% over costs: the 30% uptick covers the admin & overhead; the additional 20% is profit which gets eaten into by too many go backs because of picky customers and/or knucklehead contractors, and the inevitable surprises. But, that's the game that is played.
MS08 said:
My friends in remodel business are at 50% over costs: the 30% uptick covers the admin & overhead; the additional 20% is profit which gets eaten into by too many go backs because of picky customers and/or knucklehead contractors, and the inevitable surprises. But, that's the game that is played.
If I'm playing +50% for your expertise you better damn well believe I'd be a "picky customer." Hell, at that rate I'd expect you to review and catch anything before me.
You have to put it in context monetarily: if your desired remodel costs $20,000, you think a remodeler is going to do it for $26,000 (30%)? To oversee the work and put their name on it, manage the customer/homeowner, all of the different trades, and design, and procure materials for $6,000? Not worth it.
Nm
Fair enough - you should be satisfied and they should be on top of the project as a whole. That's what separates a good one from a not so good one. One stays in business for a while and the others don't.
I would say it's like The pricing of a house (in typical scenarios: the smaller ones have a higher price per square foot than the larger ones. So the smaller the remodel job, the more markup you may experience, but May experience less markup on higher jobs.
On the other other hand, you want to tackle a $100k remodel job and are looking for an experienced professional to run that job and oversee it and accomplish that project - you have to ask yourself what your willing to pay to see that happen.
I would say it's like The pricing of a house (in typical scenarios: the smaller ones have a higher price per square foot than the larger ones. So the smaller the remodel job, the more markup you may experience, but May experience less markup on higher jobs.
On the other other hand, you want to tackle a $100k remodel job and are looking for an experienced professional to run that job and oversee it and accomplish that project - you have to ask yourself what your willing to pay to see that happen.
1988PA-Aggie said:I can add...Corps_Ag12 said:This, plus office staff you're not billed for, fuel you're not billed for, trucks & maintenance you're not billed for, the office rent, etc. I can keep going if you'd like.Roger That said:lead said:Aggietaco said:20% doesn't go that far.ABATTBQ11 said:
I'm in the wrong business
Please enlighten me. How far does it have to go…what expenses does a GC have that I'm not aware of? Thanks
The GC expense is their time
Putting up with an endless amount of bull**** from the customer.
Putting up with subs halfassing their work and apologizing for them
Dealing with pandemic shortages and getting creative with the leftovers
…
…
Now in commercial construction work, all of these items are part of what's called general conditions, which can be an agreed upon lump sum amount or a maximum budgeted price that the contractor bills against.
Clothing/shoes/safety gear
Tool and vehicle maintenance/cleaning
Dealing with injuries/sickness
Purchasing...chasing down errors, doing returns, scouring the internet for specific things
Warranty work...hardly any job of size doesn't have some type of call-back...and may not be your fault?!
Employee issues
Needy or high maintenance customers (repeating this one from a previous post because it can be huge.)
It all adds up.
In a super-organized (probably larger) company, or maybe in certain fields of contracting, some of these may be minimized. Costs and profit levels may be monitored much more closely. It may be niche work that limits variety and you can focus on efficiency. Yes, there are some contractors who make lots of money....
But most of us don't. We do okay, maybe we write a lot of personal stuff off with our companies and that helps...but after 32 years of doing this (interior residential reno) there is always something that comes out of left field to make you ask 'why am I doing this?'. Overall enjoy it, but like every job....sometimes....SMH.
"Ok, but can you itemize my proposal?"
Jason_InfinityRoofer said:
Sounds like a fair price.
Does he have a website?
Does he have references?
Does he give off a good vibe?
Do you like him?
Does he have a clear and outlined contract?
Does he have a clear and outlined schedule of payment that is not half down, all up front, or something that would indicate that he does not have the funds to commence without your payment?
How long has he been in business?
Just ask yourself some questions. If he says he's been in business 20 years but requires half down to get going, that's a huge red flag for me.
I've posted before about how to find a good roofer, but in most cases you can substitute contractor for roofer and the same things apply.
One thing you can do is give him a call after your contract is signed. Make sure you have a legit question and call 2 days later. See if he answers. I know a few contractors that won't answer the phone once they think they have the deal locked down and that's now how I'm going to roll.
You have three days in this state to cancel that contract.
Either way, do not focus on just the dollar figure. Quality and reliability aren't cheap.
Jason, don't take this as a personal shot, I'm speaking in general, but It's easy for a roofing contractor to say "don't work with someone who requires a 50% payment upfront", when a large portion of roof work is insurance and the contractors usually convince the owner into an assignment of benefits contract, plus roofing jobs are short term in the majority of cases.
There's no way I would be willing to float a "high end" remodel as it more than likely means several weeks of work and multiple subs. Materials can easily take up 30-50% of the project, Very few companies have the financial means to do that, and I can't think of one that doesn't require some kind of upfront payment. I know I won't.
No offense taken at all. You are correct. I'll temper that comment i made. It's a bit different for remodels.
My general stance is that folks should just use their judgment and set up contracts carefully. All other aspects of picking a contractor remain and should be followed. They all need to be hit on. If half down is required, that's OK, but make sure its clearly outlined under what conditions that is to happen. If i run into a contractor that has been doing it for 20 years, needs half down, but can't produce a well written, clear contract, some sort of office or backend staff, references, copious amounts of completed projects, etc....I'm not going to use him no matter what. We all know that taking a contractor to court is all fine and good...unless you can't find the contractor anymore.
As for roofing and insurance benefit assignment, I see your point, but it has little bearing on the process. That only means the customer has agreed to send the funds to me. It is a little better only because I know how much they have gotten and I know when they hit their bank account (mostly). They still have to write the check like anyone else would.
HOWEVER...
To your point, what is far more relevant is that a roof takes anywhere from 1 day to 3 weeks depending on size and materials, so it's a bit of a different ballgame over a remodel that takes 6 months to a year or more. I get that, and I recognize that and you are right, it's not the same. Even on the high end, I may be floating a 100,000 dollar tile roof in The Dominion, but I will get a part of that payment at completion, and hopefully the rest within 3 months barring some bizarre insurance issue which is rare since we square that away first.
My general stance is that folks should just use their judgment and set up contracts carefully. All other aspects of picking a contractor remain and should be followed. They all need to be hit on. If half down is required, that's OK, but make sure its clearly outlined under what conditions that is to happen. If i run into a contractor that has been doing it for 20 years, needs half down, but can't produce a well written, clear contract, some sort of office or backend staff, references, copious amounts of completed projects, etc....I'm not going to use him no matter what. We all know that taking a contractor to court is all fine and good...unless you can't find the contractor anymore.
As for roofing and insurance benefit assignment, I see your point, but it has little bearing on the process. That only means the customer has agreed to send the funds to me. It is a little better only because I know how much they have gotten and I know when they hit their bank account (mostly). They still have to write the check like anyone else would.
HOWEVER...
To your point, what is far more relevant is that a roof takes anywhere from 1 day to 3 weeks depending on size and materials, so it's a bit of a different ballgame over a remodel that takes 6 months to a year or more. I get that, and I recognize that and you are right, it's not the same. Even on the high end, I may be floating a 100,000 dollar tile roof in The Dominion, but I will get a part of that payment at completion, and hopefully the rest within 3 months barring some bizarre insurance issue which is rare since we square that away first.