Estimating Labor And Other Cost Into Your Estimation.
I am currently going to be starting with the use of a General contract to do the repairs for my Rehabs. I currently am able to put together the material cost for all my repairs. However, I am looking for what method other Rehabbers have used for estimating a general contractor’s labor and miscellaneous cost to add to their material cost to come up with total repair estimation?
I know allot of sources add a % of the total material cost into their estimation to account for General Contractor’s labor and miscellaneous cost. Then they are able to subtract that total estimation from their purchase price along with other things (closing cost..ect) to come up with a bid/offer they want to submit on a property.
I am looking for what is a good general rule or rule of thumb in figuring out an avg. labor and other cost that a general contractor puts into his cost?
This is very difficult to answer. Primarily because, everyone prices their work differently. Some will have higher overheads, others will only use sub-contractors vs. in house employees, still others will bid lower, to garner the contract and then move toward upcharging for things down the road. So you can see, where an answer to your basic question remains elusive. The only strong advice I can offer you is, stay-joined-at-the-hip, with your GC. If he (or she) works out for you and you decide to do further business with him, learn how he prices his work. This will help you to formulate a bid on any prospective properties you might be interested in. And learn to add in a GOK (God Only Knows)percentage for each offer you consider making. As time goes on, and your experience increases, your GOK figure should become smaller, making you more accurate in your offers. Which will likely increase your chances of getting the properties and increasing your bottom line .
Crack head bob might need to only charge $10.00 an hour while mister GC might need to charge $60.00
Pg,
Rehab, Dave and myself do this for a living.......we all have and will tell you the same..........there are too many variables involved.
The best advice I can give you is to become knowledgeable in the various phases of construction and with time and experience you may get better at guestimating the numbers........but with that said, ........there is always the unforseen.......or as Dave put it.......the GOK. (I never heard it put that way but it is applicable).
Rehab made an excellent point about the overhead.
Many insurance companies try to do a 10/10 (overhead / profit) percentage to thier estimates........thats not even close......at least in my case. I pay 25 - 28 cents on the labor dollar just for insurances........not to other overhead that exist for running a company......and in regards to profit, rest assure Uncle Sam will STEAL 30% of my profits for his social programs.
Find a reputable GC in your area and he can assist you in learning the business.........after all if you are going to be in the REI business for time, it is to both of yours advantage in helping one another.
regards
NC
Thanks all for the wonderful input that you all supplied. Though you might not be providing specifics and details....it does give me some food for thought and substance to grab onto.
These are just measures for me to be *prepared* as best as anyone can before going ahead. As the number one *advice* that I have either heard or read over and over again is *do your homework* before going into business.
Therefore, thats my angle...thanks everyone...
I just started my own handy man business,I am yet to figure out my over head,but my liability ins runs close to 1000 a year, vehicle ins 1000 both commercial policies1,000,000 liability on my work,100-300 100 on work van plus 30 percent taxes when you include social security,advertising is not cheap ethier,I charge 30 hr cash or 45 hr if its going to be reported and I try to give flat up front prices ,I make more and sell more like that,most contractors mark up every thing 30 percent atleast that has been my exp. here in florida
Its there really two issues going on here.. 1) how do you estimate repair costs and do it fast ? and 2) what are the costs actually going to be? If anyone would like just email me and I will send over an excel spread sheet we use to the quick and dirty cost analysis.. I have found that the costs generally fall within these guidelines assuming that you’re using the same subs or employees over and over again.
Recently i have done three rehab. My experience is first thing you want to go through the property is to decide what you want to change. Apparently you have done it since you have material price. Second thing you can do is write down all the items you want to do on a piece of paper ( No verbal please). Since you already know (?) material cost, you can get three gc to give prices based on L&M & labor only. The use the highest price as the allowance for repairs. Once you buy then work with the low contractor to complete within highest allowance. In rehab work, original planning is important but ongoing control is even more important, otherwise you can spend out lots of money reducing profit.
I would agree... Do not do anything that will come back to haunt you later.. and not reporting accurately will... maybe not for 10 years but the state and federal governments always find out..
Besides if there isn’t enough money in the deal to do it honestly and legally don’t do the deal...
There are enough good deals out there.
This was common practice out here in Colorado about 6 years ago, if you tried to do it today you would get your lunch handed to you.
You need to be in an extremely strong sellers market to make it work. If you are in a market with double digit appreciation you might have the ingredients for doing this.
I have been successful with flips in South Florida also. In New Jersey I would say depends on the area. There is a project in Edison that looks interesting. I am not going to invest in it though I will stick to Florida since there is nosales tax.
Hi,
I am a newbe and am thinking of going in preconstruction in NJ. Any help would be appreciated.
Thanks,
AA
Karen,
Do you have any details of the project in Edison you mentioned? Name of development, builder, location, etc.? Thank you very much...
Louis
Karen,
Where in FL are you flipping, are these pre-con?
HateMyBoss,
Where is the 20% area in New Jersey? I am in the area and looking for a rehab or a preconstruction deal to live/occupy while hitting high appreciation.