General Contractors refusing to quote without them buying materials
Rental Property Investor · Member since 2023 · 5 posts · 16 votes
General Contractors refusing to quote without them buying materials
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Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votesAs a long-time Contractor I would never bid on a job where the customer wanted to provide materials themselves. Nothing but headaches....and it's just plain rude. You want to buy the products, but I bet you won't be there to meet the trucks, inspect the materials, unload them or see to their security until they are installed. Right?
You expect the GC to do all that for you for free correct? And then when there is a mistake in the order (because the customer never knows what the H they're doing) then it's a big delay which gets blamed on guess who? Yep, the GC....
@Svetlana Kazantseva if you want to save money (or use your CCs), then it's only fair to pay the GC the money it is costing them to do this your way....I would offer them 20% to start and see what they say. But you will lose any good GCs and end up with the new, inexperienced, unlicensed guys...it just ain't worth it....
132 Replies
- Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes2y
Quote from @Shayee Senbore:
Well, there is no itemized line item in the Labor Only quote that's for loading & unloading materials (to be clear, this is a small rehab where all he's had to pick up are small things like paint, trim, etc. He's not carrying 300 pieces of drywall for my project :-)).Quote from @Bruce Woodruff:
Quote from @Shayee Senbore:
I haven't read all the replies and comments on here so someone might have already suggested this.
I was mentored by a fellow BP member (https://www.biggerpockets.com/users/olus) to request Labor Only quotes from Contractors. Materials are handled by opening a Home Depot Pro account, and setting up Text2Confirm. My contractor goes to pickup whatever materials he wants himself, but checks out at the Pro Desk with my Phone Number. Home Depot Pro Desk texts me that the contractor is trying to checkout and lists all the items in their cart. I can do a quick review and make sure all the items correspond to what he is doing for the job. I reply by text to confirm the purchase and the transaction is approved and the materials are billed to me.
This might work for you.....Great! How much do you pay your Contractor to go pick up materials for you? The shopping/loading/unloading/taking responsibility for everything? Just curious...
I would assume if you're a fair person, it would be about 20% on top of materials cost? If your Contractor is doing all of this for free, then you should fire them, because they're just stupid, and working with stupid Contractors will eventually get you in trouble........
He also has a Home Depot Pro Account which he would normally use to get materials, so my workflow is no different than what he normally does for his business (except he bills directly to me).
To your point about firing stupid contractors, can you pls elaborate on why? Maybe I should fire mine for not charging me 20% on top of materials cost to pick up materials. But I'd like to understand the "Why".Because when working with a GC who is operating "stupid" it shows they don't have experience in what there doing, and are too arrogant in their ignorance to be honest on that.
Do you think that "stupidity" stops at their billing????
It's the kind of person who hang's cabinets with a framing nailer, yup including on a plumb wall. Who repairs a leaking toilet via copious amounts of fleck seal. Who uses general caulk for window glazing, duct-tape for sealing a drain leak under the sink, and the list goes on.
And yes, these are all things I have personally seen, coming from "well this guy was so cheap I just thought....".
I have seen nails blown straight into/through plumbing lines, toilets that just about fell through the floor from caulked in water-fall-leaks, and all kinds of stupidity that made that "cheap guy" way WAY-expensive because of all the repairs needed to their "cheap" work.
When a person does not operate their business in a normal ordinary way, that should be a RED-Flag not a high-5.
- Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes2yYeah I have to agree with this. “Cheap is expensive” is a real thing and getting all materials from HD is not the most cost-effective or professional way to do business. It’s fine for a handyman doing a small job, but that’s it and only a very small percentage of handyman types who take on small jobs actually know what they’re doing at all. I saw one trying to cut with their circular saw blade on backwards at a property the other day, pretty hilarious and the homeowner was convinced they had hired a great handyman because he showed up on time and talked the talk a little bit. The cuts were literally burned through the wood, not actually cut and nobody noticed what was happening. Someone will have to redo every single thing he did, no doubt and it’ll be a miracle if he doesn’t hurt himself. That’s the kind of person who does all their shopping at the box stores IME, and the kind of ignorance that many home owners display when hiring strictly based on price, trying to save a buck. Most people know very little about anything construction-related and have no business trying to insert themselves into the process such as by ordering their own materials. Hire a pro and let them handle it, or hire amateurs, buy your own materials, but don’t be surprised when you end up paying more for less quality then have to do it all over again because the job was botched horribly.
Quote from @James Hamling:
Quote from @Shayee Senbore:
Well, there is no itemized line item in the Labor Only quote that's for loading & unloading materials (to be clear, this is a small rehab where all he's had to pick up are small things like paint, trim, etc. He's not carrying 300 pieces of drywall for my project :-)).Quote from @Bruce Woodruff:
Quote from @Shayee Senbore:
I haven't read all the replies and comments on here so someone might have already suggested this.
I was mentored by a fellow BP member (https://www.biggerpockets.com/users/olus) to request Labor Only quotes from Contractors. Materials are handled by opening a Home Depot Pro account, and setting up Text2Confirm. My contractor goes to pickup whatever materials he wants himself, but checks out at the Pro Desk with my Phone Number. Home Depot Pro Desk texts me that the contractor is trying to checkout and lists all the items in their cart. I can do a quick review and make sure all the items correspond to what he is doing for the job. I reply by text to confirm the purchase and the transaction is approved and the materials are billed to me.
This might work for you.....Great! How much do you pay your Contractor to go pick up materials for you? The shopping/loading/unloading/taking responsibility for everything? Just curious...
I would assume if you're a fair person, it would be about 20% on top of materials cost? If your Contractor is doing all of this for free, then you should fire them, because they're just stupid, and working with stupid Contractors will eventually get you in trouble........
He also has a Home Depot Pro Account which he would normally use to get materials, so my workflow is no different than what he normally does for his business (except he bills directly to me).
To your point about firing stupid contractors, can you pls elaborate on why? Maybe I should fire mine for not charging me 20% on top of materials cost to pick up materials. But I'd like to understand the "Why".Because when working with a GC who is operating "stupid" it shows they don't have experience in what there doing, and are too arrogant in their ignorance to be honest on that.
Do you think that "stupidity" stops at their billing????
It's the kind of person who hang's cabinets with a framing nailer, yup including on a plumb wall. Who repairs a leaking toilet via copious amounts of fleck seal. Who uses general caulk for window glazing, duct-tape for sealing a drain leak under the sink, and the list goes on.
And yes, these are all things I have personally seen, coming from "well this guy was so cheap I just thought....".
I have seen nails blown straight into/through plumbing lines, toilets that just about fell through the floor from caulked in water-fall-leaks, and all kinds of stupidity that made that "cheap guy" way WAY-expensive because of all the repairs needed to their "cheap" work.
When a person does not operate their business in a normal ordinary way, that should be a RED-Flag not a high-5.
- 2yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Quote from @Steve K.:
Yeah I have to agree with this. “Cheap is expensive” is a real thing and getting all materials from HD is not the most cost-effective or professional way to do business. It’s fine for a handyman doing a small job, but that’s it and only a very small percentage of handyman types who take on small jobs actually know what they’re doing at all. I saw one trying to cut with their circular saw blade on backwards at a property the other day, pretty hilarious and the homeowner was convinced they had hired a great handyman because he showed up on time and talked the talk a little bit. The cuts were literally burned through the wood, not actually cut and nobody noticed what was happening. Someone will have to redo every single thing he did, no doubt and it’ll be a miracle if he doesn’t hurt himself. That’s the kind of person who does all their shopping at the box stores IME, and the kind of ignorance that many home owners display when hiring strictly based on price, trying to save a buck. Most people know very little about anything construction-related and have no business trying to insert themselves into the process such as by ordering their own materials. Hire a pro and let them handle it, or hire amateurs, buy your own materials, but don’t be surprised when you end up paying more for less quality then have to do it all over again because the job was botched horribly.Quote from @James Hamling:
Quote from @Shayee Senbore:
Well, there is no itemized line item in the Labor Only quote that's for loading & unloading materials (to be clear, this is a small rehab where all he's had to pick up are small things like paint, trim, etc. He's not carrying 300 pieces of drywall for my project :-)).Quote from @Bruce Woodruff:
Quote from @Shayee Senbore:
I haven't read all the replies and comments on here so someone might have already suggested this.
I was mentored by a fellow BP member (https://www.biggerpockets.com/users/olus) to request Labor Only quotes from Contractors. Materials are handled by opening a Home Depot Pro account, and setting up Text2Confirm. My contractor goes to pickup whatever materials he wants himself, but checks out at the Pro Desk with my Phone Number. Home Depot Pro Desk texts me that the contractor is trying to checkout and lists all the items in their cart. I can do a quick review and make sure all the items correspond to what he is doing for the job. I reply by text to confirm the purchase and the transaction is approved and the materials are billed to me.
This might work for you.....Great! How much do you pay your Contractor to go pick up materials for you? The shopping/loading/unloading/taking responsibility for everything? Just curious...
I would assume if you're a fair person, it would be about 20% on top of materials cost? If your Contractor is doing all of this for free, then you should fire them, because they're just stupid, and working with stupid Contractors will eventually get you in trouble........
He also has a Home Depot Pro Account which he would normally use to get materials, so my workflow is no different than what he normally does for his business (except he bills directly to me).
To your point about firing stupid contractors, can you pls elaborate on why? Maybe I should fire mine for not charging me 20% on top of materials cost to pick up materials. But I'd like to understand the "Why".Because when working with a GC who is operating "stupid" it shows they don't have experience in what there doing, and are too arrogant in their ignorance to be honest on that.
Do you think that "stupidity" stops at their billing????
It's the kind of person who hang's cabinets with a framing nailer, yup including on a plumb wall. Who repairs a leaking toilet via copious amounts of fleck seal. Who uses general caulk for window glazing, duct-tape for sealing a drain leak under the sink, and the list goes on.
And yes, these are all things I have personally seen, coming from "well this guy was so cheap I just thought....".
I have seen nails blown straight into/through plumbing lines, toilets that just about fell through the floor from caulked in water-fall-leaks, and all kinds of stupidity that made that "cheap guy" way WAY-expensive because of all the repairs needed to their "cheap" work.
When a person does not operate their business in a normal ordinary way, that should be a RED-Flag not a high-5.
One thing to keep in mind as well depending on what your buying for instance many plumbing items are not state approved.. they can sell them no problem but if they fail and the person you are working for knows the laws and or you use them in a rehab and they fail.. your going to end up replacing them at your cost with approved plumbing componants.. for instance Fergusons only sells state approved thats why plumbers buy all their materials from those type of companies. I learned this the hard way personally. - 2yBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
Yes, @James Hamling, @Steve K., @Jay Hinrichs, all good points....
And although this is a teeny bit off the OP, it is similar in my mind to homeowners or investors that hire unlicensed people to work on their projects....or use 'Handymen' for jobs over the $500 allowed amount. Somehow they just figure "it's ok".
No it's not. There is always a reason that someone does not have a license. Always.
(Except in very few cases I've known where the Handyman was a skilled craftsman and followed the rules, only actually did small jobs, and was a true professional).
- Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes2y
Quote from @Jay Hinrichs:
Quote from @Steve K.:
Yeah I have to agree with this. “Cheap is expensive” is a real thing and getting all materials from HD is not the most cost-effective or professional way to do business. It’s fine for a handyman doing a small job, but that’s it and only a very small percentage of handyman types who take on small jobs actually know what they’re doing at all. I saw one trying to cut with their circular saw blade on backwards at a property the other day, pretty hilarious and the homeowner was convinced they had hired a great handyman because he showed up on time and talked the talk a little bit. The cuts were literally burned through the wood, not actually cut and nobody noticed what was happening. Someone will have to redo every single thing he did, no doubt and it’ll be a miracle if he doesn’t hurt himself. That’s the kind of person who does all their shopping at the box stores IME, and the kind of ignorance that many home owners display when hiring strictly based on price, trying to save a buck. Most people know very little about anything construction-related and have no business trying to insert themselves into the process such as by ordering their own materials. Hire a pro and let them handle it, or hire amateurs, buy your own materials, but don’t be surprised when you end up paying more for less quality then have to do it all over again because the job was botched horribly.Quote from @James Hamling:
Quote from @Shayee Senbore:
Well, there is no itemized line item in the Labor Only quote that's for loading & unloading materials (to be clear, this is a small rehab where all he's had to pick up are small things like paint, trim, etc. He's not carrying 300 pieces of drywall for my project :-)).Quote from @Bruce Woodruff:
Quote from @Shayee Senbore:
I haven't read all the replies and comments on here so someone might have already suggested this.
I was mentored by a fellow BP member (https://www.biggerpockets.com/users/olus) to request Labor Only quotes from Contractors. Materials are handled by opening a Home Depot Pro account, and setting up Text2Confirm. My contractor goes to pickup whatever materials he wants himself, but checks out at the Pro Desk with my Phone Number. Home Depot Pro Desk texts me that the contractor is trying to checkout and lists all the items in their cart. I can do a quick review and make sure all the items correspond to what he is doing for the job. I reply by text to confirm the purchase and the transaction is approved and the materials are billed to me.
This might work for you.....Great! How much do you pay your Contractor to go pick up materials for you? The shopping/loading/unloading/taking responsibility for everything? Just curious...
I would assume if you're a fair person, it would be about 20% on top of materials cost? If your Contractor is doing all of this for free, then you should fire them, because they're just stupid, and working with stupid Contractors will eventually get you in trouble........
He also has a Home Depot Pro Account which he would normally use to get materials, so my workflow is no different than what he normally does for his business (except he bills directly to me).
To your point about firing stupid contractors, can you pls elaborate on why? Maybe I should fire mine for not charging me 20% on top of materials cost to pick up materials. But I'd like to understand the "Why".Because when working with a GC who is operating "stupid" it shows they don't have experience in what there doing, and are too arrogant in their ignorance to be honest on that.
Do you think that "stupidity" stops at their billing????
It's the kind of person who hang's cabinets with a framing nailer, yup including on a plumb wall. Who repairs a leaking toilet via copious amounts of fleck seal. Who uses general caulk for window glazing, duct-tape for sealing a drain leak under the sink, and the list goes on.
And yes, these are all things I have personally seen, coming from "well this guy was so cheap I just thought....".
I have seen nails blown straight into/through plumbing lines, toilets that just about fell through the floor from caulked in water-fall-leaks, and all kinds of stupidity that made that "cheap guy" way WAY-expensive because of all the repairs needed to their "cheap" work.
When a person does not operate their business in a normal ordinary way, that should be a RED-Flag not a high-5.
One thing to keep in mind as well depending on what your buying for instance many plumbing items are not state approved.. they can sell them no problem but if they fail and the person you are working for knows the laws and or you use them in a rehab and they fail.. your going to end up replacing them at your cost with approved plumbing componants.. for instance Fergusons only sells state approved thats why plumbers buy all their materials from those type of companies. I learned this the hard way personally.I actually saw a case like this a few years back. Home had copper damage, I think line freeze or something, investor bought it as-is, had a "handy-man" do the work because he was cheaper. Than I come in as they are looking to sell it and had the joy of letting them know out-door sprinkler line is NOT allowable as in-door water line! Lol. Yeah, the guy plumbed the place using sprinkler line.
They tried selling via whatever know-nothing agent would take the listing. And, it was an issue, and yes, they had to re-plum the whole place. And up to the newer more enhanced codes to boot. All to save a few bucks on some pex or copper....
- 2yCorey ConklinPro MemberInvestor · Member since 2021 · 129 posts · 209 votes
I’ve been in commercial construction for over 10 years as a project manager and estimator and have struggled to find residential guys that I can trust for my properties. I’ve even had some commercial guys do work for me and paid a premium to not deal with the residential guys.
What you are doing isn’t anything crazy when you ask for labor only quotes to get your contractors apples to apples. The lousy bids that these guys put together that have almost no scope definition make it hard to compare bids so it’s one of the only ways to get a true bid comparison. They’ll always cry wolf when they do the work and claim “that work wasn’t in their bid”, if there isn’t a detailed scope of work how can they be held accountable? Every contractor will claim that they are legit and that they know what they are doing. 90% of them are no where near what they say unfortunately, even the guys that always talk about “that’s what you get for hiring the cheap guy”. I’ve heard that phrase from some companies that I wouldn’t let build me a dog house.
Here are some red flags when you are choosing a contractor to do your work.
- 1. Did they show up on time to any on site meetings with you to look over your property to provide a bid? If they are unreasonably late or don’t communicate that they’ll be late – RED FLAG
- 2. If a contractor refuses to provide a detailed scope of work that clearly defines what is in their bid, such as materials – RED FLAG. This means they are not good communicators. Is that something you want when they haven't shown up on your job for the last week with no heads up?
- 3. Will they provide a schedule to get the work done? If not, RED FLAG! They lack accountability and will have a ton of excuses throughout the project.
- 4. Do they need a deposit to pay for the materials? RED FLAG! You offered to pay for the materials which eliminates the burden on them to cash flow the materials. A GOOD contractor will understand what the materials costs and add 10% to that number to include into their bid for handling owner provided materials. This eliminates the need for them to cash flow your project while also compensating them fairly for the work involved in handling your materials.
- 5. Any other excuse they have to not be held accountable – RED FLAG
At the end of the day any contractor that says it’s their way or the highway, ALWAYS chose the highway. They must have plenty of work and don’t need your work.
Now for you as the owner you aren’t off the hook. You have the responsibility to be a good client and understand that your contractor is your partner, not some low life that you can squeeze to make yourself rich. It’s important that you treat your trade partners fair, pay them timely, and help them be successful on your projects. After all it’s how they make a living. Treat contractors how you want to be treated and hold your contractors accountable to do the same to you.
- 2yBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
Quote from @Corey Conklin:
I’ve been in commercial construction for over 10 years as a project manager and estimator and have struggled to find residential guys that I can trust for my properties. I’ve even had some commercial guys do work for me and paid a premium to not deal with the residential guys.
What you are doing isn’t anything crazy when you ask for labor only quotes to get your contractors apples to apples. The lousy bids that these guys put together that have almost no scope definition make it hard to compare bids so it’s one of the only ways to get a true bid comparison. They’ll always cry wolf when they do the work and claim “that work wasn’t in their bid”, if there isn’t a detailed scope of work how can they be held accountable? Every contractor will claim that they are legit and that they know what they are doing. 90% of them are no where near what they say unfortunately, even the guys that always talk about “that’s what you get for hiring the cheap guy”. I’ve heard that phrase from some companies that I wouldn’t let build me a dog house.
Here are some red flags when you are choosing a contractor to do your work.
- 1. Did they show up on time to any on site meetings with you to look over your property to provide a bid? If they are unreasonably late or don’t communicate that they’ll be late – RED FLAG
- 2. If a contractor refuses to provide a detailed scope of work that clearly defines what is in their bid, such as materials – RED FLAG. This means they are not good communicators. Is that something you want when they haven't shown up on your job for the last week with no heads up?
- 3. Will they provide a schedule to get the work done? If not, RED FLAG! They lack accountability and will have a ton of excuses throughout the project.
- 4. Do they need a deposit to pay for the materials? RED FLAG! You offered to pay for the materials which eliminates the burden on them to cash flow the materials. A GOOD contractor will understand what the materials costs and add 10% to that number to include into their bid for handling owner provided materials. This eliminates the need for them to cash flow your project while also compensating them fairly for the work involved in handling your materials.
- 5. Any other excuse they have to not be held accountable – RED FLAG
At the end of the day any contractor that says it’s their way or the highway, ALWAYS chose the highway. They must have plenty of work and don’t need your work.
Now for you as the owner you aren’t off the hook. You have the responsibility to be a good client and understand that your contractor is your partner, not some low life that you can squeeze to make yourself rich. It’s important that you treat your trade partners fair, pay them timely, and help them be successful on your projects. After all it’s how they make a living. Treat contractors how you want to be treated and hold your contractors accountable to do the same to you.
Overall a pretty good post....from a non-Contractor point of view :-)
Except - say a Contr. is installing $100k worth of cabinets and needs a 50% draw to pay his cabinet sub, then that is fair and reasonable IMO....
- 2yCorey ConklinPro MemberInvestor · Member since 2021 · 129 posts · 209 votesIf the contractor doesn't have credit with their subs or suppliers that's also a red flag. I personally would never give 50k to a middle man, especially before any work is in place. If the contractor doesn't have the credit or means to handle this amount of money until the work is in place then as an owner I would want to pay the sub/supplier direct or provide a joint check. I don't know how many times I've experienced/heard of contractors not paying their bills which makes an owner pay for the work twice. For every good contractor, there are 10 bad ones.
Overall a pretty good post....from a non-Contractor point of view :-)
Except - say a Contr. is installing $100k worth of cabinets and needs a 50% draw to pay his cabinet sub, then that is fair and reasonable IMO....
It is never a good practice to pay large sums of money for work that hasn't even started. If you do so I would only do it with the most reputable of companies and only until I have proven that I am a worthy client, at that point I would expect that I would no longer need to take the risk of paying prior to work being put into place. - 2yBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
Quote from @Corey Conklin:
If the contractor doesn't have credit with their subs or suppliers that's also a red flag. I personally would never give 50k to a middle man, especially before any work is in place. If the contractor doesn't have the credit or means to handle this amount of money until the work is in place then as an owner I would want to pay the sub/supplier direct or provide a joint check. I don't know how many times I've experienced/heard of contractors not paying their bills which makes an owner pay for the work twice. For every good contractor, there are 10 bad ones.Overall a pretty good post....from a non-Contractor point of view :-)
Except - say a Contr. is installing $100k worth of cabinets and needs a 50% draw to pay his cabinet sub, then that is fair and reasonable IMO....
It is never a good practice to pay large sums of money for work that hasn't even started. If you do so I would only do it with the most reputable of companies and only until I have proven that I am a worthy client, at that point I would expect that I would no longer need to take the risk of paying prior to work being put into place.First of all, there are far more good Contractors than bad ones! And your lack of experience is showing. 10 yrs of commercial PM experience is nothing. You've obviously never been on the Contractor side of the equation. You absolutely NEVER let a customer make you put your money in the game while they have no skin in the game.
- 2yCorey ConklinPro MemberInvestor · Member since 2021 · 129 posts · 209 votes
Quote from @Bruce Woodruff:
Quote from @Corey Conklin:
If the contractor doesn't have credit with their subs or suppliers that's also a red flag. I personally would never give 50k to a middle man, especially before any work is in place. If the contractor doesn't have the credit or means to handle this amount of money until the work is in place then as an owner I would want to pay the sub/supplier direct or provide a joint check. I don't know how many times I've experienced/heard of contractors not paying their bills which makes an owner pay for the work twice. For every good contractor, there are 10 bad ones.Overall a pretty good post....from a non-Contractor point of view :-)
Except - say a Contr. is installing $100k worth of cabinets and needs a 50% draw to pay his cabinet sub, then that is fair and reasonable IMO....
It is never a good practice to pay large sums of money for work that hasn't even started. If you do so I would only do it with the most reputable of companies and only until I have proven that I am a worthy client, at that point I would expect that I would no longer need to take the risk of paying prior to work being put into place.First of all, there are far more good Contractors than bad ones! And your lack of experience is showing. 10 yrs of commercial PM experience is nothing. You've obviously never been on the Contractor side of the equation. You absolutely NEVER let a customer make you put your money in the game while they have no skin in the game.
I've been in construction for 20 years. 10 years in the field and 10 in the office for large/small GC's and Subcontractors. I also have a degree in commercial construction management. I feel I know a little more than most and absolutely understand the contractors side of the equation. But I also understand the owner's side too.
I've never paid any contractor to do work for my personal properties before the work is done, NEVER! If that is their stipulation I will move on to the next guy. If I can't find a good residential guy, I call up my commercial guys and go that route. I also choose to do most of my renovation/construction work myself to avoid outside contractors as much as possible.
I can write books about all the times I've had to help clean up the mess from someone dealing with crap contractors, or dealing with them first hand. There are a lot of good contractors out there, no doubt, but it's easier to find a bad one.
- Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes2y
Quote from @Corey Conklin:
If the contractor doesn't have credit with their subs or suppliers that's also a red flag. I personally would never give 50k to a middle man, especially before any work is in place. If the contractor doesn't have the credit or means to handle this amount of money until the work is in place then as an owner I would want to pay the sub/supplier direct or provide a joint check. I don't know how many times I've experienced/heard of contractors not paying their bills which makes an owner pay for the work twice. For every good contractor, there are 10 bad ones.Overall a pretty good post....from a non-Contractor point of view :-)
Except - say a Contr. is installing $100k worth of cabinets and needs a 50% draw to pay his cabinet sub, then that is fair and reasonable IMO....
It is never a good practice to pay large sums of money for work that hasn't even started. If you do so I would only do it with the most reputable of companies and only until I have proven that I am a worthy client, at that point I would expect that I would no longer need to take the risk of paying prior to work being put into place.This is just an argument of a polarized world view, from a person working in commercial construction, expecting everything to work as commercial construction, biased that commercial construction is the "right" way to do things.
So I pose this; would you like to see your residential project operate as a commercial construction project operates?
Because that would mean your bidding process will take 3-4 months. And from there is mobilization phase of another 3-4 months. And yes there is paperwork, ooohhhh all the pretty paperwork and details upon details upon details, that FYI you the client paid for because let's remember that in commercial construction a nail doesn't get hammered in for less than $20 nor a sink caulked for less than $100 because of the ridiculous amount of red-tape associated with everything and paying for 7 people to do all that red-tape so 1 guy can hammer a nail or caulk a sink.
And than unions, we can't forget the unions oh-no what would we ever do without the unions. We need a 49'er to unload trucks, and we have to calculate all the costs of everyone standing around waiting for the 49'er to unload a truck, and the breaks, and the time it takes to get to a designated break area, and and and.....
There is a reason why commercial job's move at a snails pace. Yes, vendors in commercial construction, sub's, wait months to get paid on completions, and that fact get's billed into the job so now your paying more for that which would make it... financing.
You want a gant chart with per line item break-downs of ever last material item and labor second, ok, that can be done, AT CHARGE. Oh..... you don't want to pay for that you say.... yeah well I'd like to get the lambo for the corolla price too.
One CAN get all these things your saying you want in residential, it's called a Design Build Firm, I know because I founded and operated one for a couple decades. The issue is everyone wails how it's too expensive. And it is for the majority of REI projects unless in HNW (High Net Worth) projects, as we majority did. Our "average" project was $145k.
So by all means, hire a Design Build firm, but expect the bill to be commiserate with the service. Expecting an average residential remodeler, to operate as a Design Build firm, and to deliver such FOR FREE is ridiculous.
Why do most residential remodelers not have detailed per line item scopes broken down into material, labor O&P, because there cutting OUT all that over-head of doing such, so they can offer that lower cost. Most residential remodelers have OPTIMIZED there systems to deliver everything needed, cut-out all things un-necessary, so to reduce cost's there in reducing price, to give YOU the consumer a better service price.
It's called EFFICENCY. I understand this is a foreign concept for the commercial guy's, but it's a reality none the less.
- 2yCorey ConklinPro MemberInvestor · Member since 2021 · 129 posts · 209 votes
Quote from @James Hamling:
Quote from @Corey Conklin:
If the contractor doesn't have credit with their subs or suppliers that's also a red flag. I personally would never give 50k to a middle man, especially before any work is in place. If the contractor doesn't have the credit or means to handle this amount of money until the work is in place then as an owner I would want to pay the sub/supplier direct or provide a joint check. I don't know how many times I've experienced/heard of contractors not paying their bills which makes an owner pay for the work twice. For every good contractor, there are 10 bad ones.Overall a pretty good post....from a non-Contractor point of view :-)
Except - say a Contr. is installing $100k worth of cabinets and needs a 50% draw to pay his cabinet sub, then that is fair and reasonable IMO....
It is never a good practice to pay large sums of money for work that hasn't even started. If you do so I would only do it with the most reputable of companies and only until I have proven that I am a worthy client, at that point I would expect that I would no longer need to take the risk of paying prior to work being put into place.This is just an argument of a polarized world view, from a person working in commercial construction, expecting everything to work as commercial construction, biased that commercial construction is the "right" way to do things.
So I pose this; would you like to see your residential project operate as a commercial construction project operates?
Because that would mean your bidding process will take 3-4 months. And from there is mobilization phase of another 3-4 months. And yes there is paperwork, ooohhhh all the pretty paperwork and details upon details upon details, that FYI you the client paid for because let's remember that in commercial construction a nail doesn't get hammered in for less than $20 nor a sink caulked for less than $100 because of the ridiculous amount of red-tape associated with everything and paying for 7 people to do all that red-tape so 1 guy can hammer a nail or caulk a sink.
And than unions, we can't forget the unions oh-no what would we ever do without the unions. We need a 49'er to unload trucks, and we have to calculate all the costs of everyone standing around waiting for the 49'er to unload a truck, and the breaks, and the time it takes to get to a designated break area, and and and.....
There is a reason why commercial job's move at a snails pace. Yes, vendors in commercial construction, sub's, wait months to get paid on completions, and that fact get's billed into the job so now your paying more for that which would make it... financing.
You want a gant chart with per line item break-downs of ever last material item and labor second, ok, that can be done, AT CHARGE. Oh..... you don't want to pay for that you say.... yeah well I'd like to get the lambo for the corolla price too.
One CAN get all these things your saying you want in residential, it's called a Design Build Firm, I know because I founded and operated one for a couple decades. The issue is everyone wails how it's too expensive. And it is for the majority of REI projects unless in HNW (High Net Worth) projects, as we majority did. Our "average" project was $145k.
So by all means, hire a Design Build firm, but expect the bill to be commiserate with the service. Expecting an average residential remodeler, to operate as a Design Build firm, and to deliver such FOR FREE is ridiculous.
Why do most residential remodelers not have detailed per line item scopes broken down into material, labor O&P, because there cutting OUT all that over-head of doing such, so they can offer that lower cost. Most residential remodelers have OPTIMIZED there systems to deliver everything needed, cut-out all things un-necessary, so to reduce cost's there in reducing price, to give YOU the consumer a better service price.
It's called EFFICENCY. I understand this is a foreign concept for the commercial guy's, but it's a reality none the less.
I didn't come here to argue with a couple of "know it all's". I came here to offer advice to a real estate investor.
I hope you have a good one!
- Laveen, AZ · Member since 2016 · 584 posts · 528 votes2y
Quote from @Svetlana Kazantseva:
Hi all! We have a really hard time finding a general contractor for our repair project in a buy & hold SFH in Kansas City, MO. We hired a property manager after purchasing the house and both contractors they sent in are "skeptical about providing a quote if they cannot use their own materials". In their experience "it has lead to a lot of headaches and delays with the project". We are out of state investors and were going to stick to David Green's advise of getting quotes without the materials for fair comparison + being able to select the material we want, put it on our credit cards. Do you think it's reasonable for contractors to refuse a quote without materials? Should we keep looking?
This one lit a fire!
I can say I've done both. The deciding factor has been the size of the project.
For example when i had rooms and a recording studio built, I did NOT buy materials. The contractors did. You don't even want to get involved in trying to shop for everything they need.
When its something smaller, like installing tile floor, doors, blinds, light fixtures, etc. I've provided the materials. These are usually a handy man, or small time contractor job, like a contractor that regularly does turnovers for vacant dwellings and some rehab is needed.
Once you get structural, involve utilities, or it's a very big job, you can appreciate why you need to let the GC get the materials themselves. You don't know enough to buy what they need, it's inefficient for them to wait on you and your schedule, if you get the wrong thing or wrong size it costs everyone money and slows things down.
- Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes2y
Quote from @Corey Conklin:
Quote from @James Hamling:
Quote from @Corey Conklin:
If the contractor doesn't have credit with their subs or suppliers that's also a red flag. I personally would never give 50k to a middle man, especially before any work is in place. If the contractor doesn't have the credit or means to handle this amount of money until the work is in place then as an owner I would want to pay the sub/supplier direct or provide a joint check. I don't know how many times I've experienced/heard of contractors not paying their bills which makes an owner pay for the work twice. For every good contractor, there are 10 bad ones.Overall a pretty good post....from a non-Contractor point of view :-)
Except - say a Contr. is installing $100k worth of cabinets and needs a 50% draw to pay his cabinet sub, then that is fair and reasonable IMO....
It is never a good practice to pay large sums of money for work that hasn't even started. If you do so I would only do it with the most reputable of companies and only until I have proven that I am a worthy client, at that point I would expect that I would no longer need to take the risk of paying prior to work being put into place.This is just an argument of a polarized world view, from a person working in commercial construction, expecting everything to work as commercial construction, biased that commercial construction is the "right" way to do things.
So I pose this; would you like to see your residential project operate as a commercial construction project operates?
Because that would mean your bidding process will take 3-4 months. And from there is mobilization phase of another 3-4 months. And yes there is paperwork, ooohhhh all the pretty paperwork and details upon details upon details, that FYI you the client paid for because let's remember that in commercial construction a nail doesn't get hammered in for less than $20 nor a sink caulked for less than $100 because of the ridiculous amount of red-tape associated with everything and paying for 7 people to do all that red-tape so 1 guy can hammer a nail or caulk a sink.
And than unions, we can't forget the unions oh-no what would we ever do without the unions. We need a 49'er to unload trucks, and we have to calculate all the costs of everyone standing around waiting for the 49'er to unload a truck, and the breaks, and the time it takes to get to a designated break area, and and and.....
There is a reason why commercial job's move at a snails pace. Yes, vendors in commercial construction, sub's, wait months to get paid on completions, and that fact get's billed into the job so now your paying more for that which would make it... financing.
You want a gant chart with per line item break-downs of ever last material item and labor second, ok, that can be done, AT CHARGE. Oh..... you don't want to pay for that you say.... yeah well I'd like to get the lambo for the corolla price too.
One CAN get all these things your saying you want in residential, it's called a Design Build Firm, I know because I founded and operated one for a couple decades. The issue is everyone wails how it's too expensive. And it is for the majority of REI projects unless in HNW (High Net Worth) projects, as we majority did. Our "average" project was $145k.
So by all means, hire a Design Build firm, but expect the bill to be commiserate with the service. Expecting an average residential remodeler, to operate as a Design Build firm, and to deliver such FOR FREE is ridiculous.
Why do most residential remodelers not have detailed per line item scopes broken down into material, labor O&P, because there cutting OUT all that over-head of doing such, so they can offer that lower cost. Most residential remodelers have OPTIMIZED there systems to deliver everything needed, cut-out all things un-necessary, so to reduce cost's there in reducing price, to give YOU the consumer a better service price.
It's called EFFICENCY. I understand this is a foreign concept for the commercial guy's, but it's a reality none the less.
I didn't come here to argue with a couple of "know it all's". I came here to offer advice to a real estate investor.
I hope you have a good one!
That's an ironic reply from the guy who has been vehemently arguing his way is "the" way.
I gave specific reasoning fact's for what I stated. Do you want to lend anything beyond opinion and "this is how I do it"? Like, facts, reasonings why? All I read was opinion, opinion that a GC should float a project, sub's etc.. Which, as i said, is called "financing" so it's asking a GC to finance a project is it not? Which is an a-ok expectation, but one has to expect such at charge. Financing is not free, to anyone, the one getting or the one giving.
- New to Real Estate · NJ · Member since 2023 · 71 posts · 20 votes2y
Quote from @Marcus R.:
Oh wow, learning a lot on this thread. Great points of view that I never thought of. I was also in the camp of buy materials yourself for most of the reasons David Greene has highlighted.
I guess as long as I can use a credit card with the contractor for final payment of the materials it's all the same. My main reason for wanting to buy the materials yourself are the rewards/cash back. It's a real nice benefit on some of these projects. So far it's worked out as a few of my contractors place the orders with their distributors and then I call in for payment (@Svetlana Kazantseva - this might be a good compromise).
Hi Marcus,
I liked your comment here, would be able to go in deeper as to how exactly you can be able to compromise here and still reep the rewards of gaining the personal points when having this projects done?
Anything is appreciated, thanks!
- 2yBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
Excuse me for being blunt..... but you guys need to forget about your damn points. The rest of us serious people are trying to run a construction project here.
Jesus....
- Houston, TX · Member since 2015 · 261 posts · 170 votes2y
I appreciate the perspective of the GC's on here and I am seeing their reason and point of view. I too hired a GC to redo some bathrooms and I asked him if I can pick up the materials myself. He explained it to me that I could BUT he rather do it because he knows exactly what materials he would need for this particular job and he can get it all in one trip to the store as opposed to doing multiple trips because i picked up the wrong part or whatever. On the otherhand, the GC"s should see the perspective of the client especially on why the markup on materials? what is the scale used to determine the markup %. If a GC would take the time and explain their pricing and give a detailed/ itemized writeup of the work, a lot of these missunderstanding and misscommunications could be avoided. In my opinion, before hiring a GC you should really understand the scope of your project. Take the time and get a minimum of 3 quotes, more if possible and asked for a detail description of the work, time frame for completion and any other relevant information. A good GC will gladly show pictures/ documentation of past work.
- 2yBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
Quote from @Gustavo Delgado:
On the otherhand, the GC"s should see the perspective of the client especially on why the markup on materials? what is the scale used to determine the markup %.
So do you expect no markup on materials? I would suggest you go back and read all the posts about why they are marked up and still cheaper, or why a GC needs to mark them up period. We're supposed to go select the right stuff, load, unload, store, provide security, etc, etc... for free?
- Houston, TX · Member since 2015 · 261 posts · 170 votes2y
Quote from @Bruce Woodruff:
Quote from @Gustavo Delgado:
On the otherhand, the GC"s should see the perspective of the client especially on why the markup on materials? what is the scale used to determine the markup %.
So do you expect no markup on materials? I would suggest you go back and read all the posts about why they are marked up and still cheaper, or why a GC needs to mark them up period. We're supposed to go select the right stuff, load, unload, store, provide security, etc, etc... for free?
Ok sure mark it up, but my question is what is reasonable? How is the markup determined? yes you are supposed to load and unload and store it safely that should be a given. Why not bill for mileage, the time it takes to get to the job, and get back home ect.. That's why I concluded with get multiple quotes, compare them, ask for previous work examples and a breakdown of the work. The issue I think is people don't take the time to get quotes and would rather discount the GC's work, which that too is a problem
- Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes2y
Quote from @Gustavo Delgado:
Quote from @Bruce Woodruff:
Quote from @Gustavo Delgado:
On the otherhand, the GC"s should see the perspective of the client especially on why the markup on materials? what is the scale used to determine the markup %.
So do you expect no markup on materials? I would suggest you go back and read all the posts about why they are marked up and still cheaper, or why a GC needs to mark them up period. We're supposed to go select the right stuff, load, unload, store, provide security, etc, etc... for free?
Ok sure mark it up, but my question is what is reasonable? How is the markup determined? yes you are supposed to load and unload and store it safely that should be a given. Why not bill for mileage, the time it takes to get to the job, and get back home ect.. That's why I concluded with get multiple quotes, compare them, ask for previous work examples and a breakdown of the work. The issue I think is people don't take the time to get quotes and would rather discount the GC's work, which that too is a problem
I own a contracting business , we provide a finished project for a price . We mark up our labor , our materials , our subs , our office staff , even our dumpsters . We are not a day labor provider.. It doesnt matter what we pay for materials , they are just 1 part of a larger equasion .
If my crew is on your job for 6 months full time , the customer is making our truck payments ,pay checks fuel payments , insurance , taxes , shop rent , a portion of tools , cell phone , office staff , etc , AND a profit over and above all that .
This is why we quote the entire job . If someone wants a labor plus materials quote , I would quote it around $185.00 PER MAN HOUR plus materials . From the time the men leave the shop until they return .
So the customer supplies materials and is short some 2 by 4 s , lets say 10 . And I have 2 guys on site , 1 guy sits there while the other drives 1 hour to get there 1/2 hour at the store and an hour back . The materials are $40 , labor to get them $925 .
This is why we dont quote labor and materials .
The customer is paying for the finished project , and our skill . We have a system in place to deliver at a specific cost ( and make a profit as we should ) . If I quote a price of 10 grand for a roof if I do the job in 4 hours correctly or 4 days you still pay the same . If I do time and you supply materials the job will be 6 days
- 2yBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
Quote from @Gustavo Delgado:
Quote from @Bruce Woodruff:
Quote from @Gustavo Delgado:
On the otherhand, the GC"s should see the perspective of the client especially on why the markup on materials? what is the scale used to determine the markup %.
So do you expect no markup on materials? I would suggest you go back and read all the posts about why they are marked up and still cheaper, or why a GC needs to mark them up period. We're supposed to go select the right stuff, load, unload, store, provide security, etc, etc... for free?
Ok sure mark it up, but my question is what is reasonable? How is the markup determined? yes you are supposed to load and unload and store it safely that should be a given. Why not bill for mileage, the time it takes to get to the job, and get back home ect.. That's why I concluded with get multiple quotes, compare them, ask for previous work examples and a breakdown of the work. The issue I think is people don't take the time to get quotes and would rather discount the GC's work, which that too is a problem
A Contractor must get his overhead and profit out of all time invested on every project.
So at least 20% is considered adequate. But 25% is better (25% markup = 20% margin)
- Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes2y
@Matthew Paul But a "guru" of REI said wipe UP, not down, UP, so we must all do this, he's a "Guru" of REI, he fart's roses and cherry blossoms, defecates gold bars, in 3rd grade instructed his teachers on calculus, knew how to ride a bike before he ever saw one, and not only walks on water but waltz's on it.......
He is an REI "Guru", everything he ever does must be THE way..... We saw him on YT, he told us so, so, it must be so, the internet tells no lies........
- Real Estate Agent · Denver CO · Member since 2019 · 209 posts · 332 votes2y
@Kyle Sosnowski - I usually have the contractors place the order for materials and then call the supplier or retailer to pay over the phone. Or when they go to pickup the contractor will call me and then hand the phone to the company to complete payment. Been doing it like this for a while and it's worked well.
@Bruce Woodruff - Tell me more about your point of view? Wouldn't this help the contractor since they don't have to front the money?
- Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes2y
Here is where people get confused ...........The " Contractor " or " GC " is the person dressed nice with a clip board who sizes up the job , prices it , meets with the owner , provides a contract with all the details , they run the business .
The people doing the work are called " employees " or " carpenters " or " plumbers " also called " Laborers " etc .
Rarely will the " Contractor " strap on a tool belt , even though he can .
Its kinda like a football team , The contractor ( coach ) calls the plays , and the players execute the plays .
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