Hi everyone.
I am looking at a sfh that needs a complete update of the kitchen, baths & cosmetics throughout the rest of the house. This will be my first rehab. I am trying to determine whether I should hire a contractor who will hire the subcontractors, or choose a remodeling company that does all the work.
I am curious about how some of you go about making this decision. I appreciate any incite you can give me into this process.
Thank you for your input. It’s greatly appreciated.
bwglobal
Hi,
There is a lot to this answer so let me address GC (General Contractor) who subcontracts all or most all of his work. This GC will bid a price to you that includes all the subcontract cost's plus the GC will charge generally 10% overhead and 10% profit plus add a reserve as a prudent reserve to all the other cost's for incidental items in his original bid he may have forgotten or were unknown items or unseen at the time of bid.
Each sub-contractor will also figure all of there labor and materials and generally add 10% overhead and 10% profit plus add a prudent reserve for any unknowns or forgotten items! So when you hire the GC you will be paying a full overhead, profit and prudent reserve margin to every contractor on site. A $3k plumbing bid contains $750 in overhead, profit and prudent reserve, just like a $4k electrical bid will contain $1k in overhead, profit and prudent reserve.
Now when you use a remodeling contractor who runs his own crews he is only adding all materials and labor along with a one time charge for overhead, profit and prudent reserve. Say total cost is $20k his bid price contains a one time charge of $5k say for overhead, profit and prudent reserve.
Generally a good remodelling contractor with his own crews will be more cost effective than a GC. Depending on the state depends on whether a remodelling contractor can do all the work or not, in California a GC can legally perform all subtrades including electrical, plumbing and HVAC on one type B General Contractors license. However in some states a GC can only legally perform work exclusive of electrical, plumbing, HVAC or "Fire / Life / Safety issues!
I will use a remodeling contractor for projects where we are not moving any plumbing, electrical or changing framing or structural elements, and are maybe just replacing a furnace or condenser unit.
If the project involves new structural framing, concrete or masonry work, rewiring sections or all of a property and re-doing a full waste and drain and water service or replacing or adding duct work and new service air I prefer individual sub-contractors because they are more experienced and experts at there trade.
Make sure that who ever you use you request a critical path schedule, and set them up on draws according to there work performance, also request lien releases for materials and labor and hold back 10% of each payment to the GC as retainage, this ensures the GC’s performance and desire to complete punch list items at the end of the job.
If you need some additional help or advice PM me with your number and I can help you out!
Good luck,
GR
bwglobal,
You say your house needs a complete update–are you going to fix and flip it or hold and rent?
If you are going to hold it and rent, sometimes a squeeky-tight budget will help you keep your costs down.
I buy and fix up homes for furnished rentals. Last year we bought a nice middle-income type duplex. It had older double-paned glass windows. The Realtor said, “Of course you’re going to have to replace those windows.”
They were really dirty and the plastic frames were cracked and faded. Wait, I thought–new windows cost thousands $. Don’t want to spend that money now. Let’s just try to clean them first. I had the cleaners just scrub the heck out of those windows.
They really didn’t need replacement! New mini-blinds, sheers and curtains cover the windows. The windows are further masked outside by nice standard screens.The duplex has central heat and air. SO THE TENANTS NEVER OPEN THE WINDOWS.
Okay, someday someone will need to replace those windows, maybe me. But for now they are energy-friendly and function fine.
My renovation rules:
Before making a replacement decision, CLEAN, CLEAN, CLEAN.
Before replacing a floor surface, remove the current floor material. We just discovered pristine white Congoleum in my daughter’s kitchen. Under nasty brown shag kitchen carpet. My daughter was screaming and jumping around that kitchen in her little foreclosure house.
Another time I discovered an OAK bathroom floor under layers of beat-up linoleum tile. A little wood putty and sanding, and 3 coats of high-gloss urethane, that bathroom floor gleams. Tenants love it.
As for kitchens…NEVER TEAR OUT THOSE SOLID WOOD CABINETS, to replace them with particle board and laminate. In the kitchen, CLEAN, CLEAN, CLEAN. Paint if you have to. Always remove those dated handles. My current fave spot for hardware–HOBBY LOBBY. You can get hand-crafted solid black iron cabinet handles for $1.50 each when they have the regular 50% off sale. New black iron handles totally change the look of old cabinets. Don’t use the handles that all landlords use, the bulk stuff from Home Depot, etc. Let your rental stand out.
If you have a bucket of money, yes, go for the rehab contractor. If you don’t, stand back and THINK. Planning is everything. Plan for a clean, charming, unique home. Charm sells. Cleanliness sells. Uniqueness sells. A cookie-cutter standard rehab will be just that. And it will only bring in standard rent.
Furnishedowner