House Hacking... and does this bid seem high to anyone?

Question

Hey BP Community,

My wife and I purchased a home in March, and part of the reason we liked it was that it was zoned for Multi-Family.  The garage is a nice size for a studio apartment, and there is plenty of demand for those in the area.

I just received this bid back from the contractor, and wanted to know what y'all's thoughts were on it.

The space is roughly 300 sq ft.  It already has drywall on 2 walls, and the only interior framing we're doing is for the bathroom, the closet and the laundry area.

My biggest surprises were:

The $7800 for framing and drywall.  I calculated the material costs to be around $2000 for that portion, so $7800 seemed like a lot, especially for such a small space.

$6200 for framing in a garage, installing and painting about 84 sq ft of siding and trim.

$2000 for 300 sq ft of flooring?  That's $6.65 a sq ft for tile.

$2400 for a ductless mini split system?  I've found decent ones at HD for $1200, so $1200 to install?

The rest seemed fairly reasonable to me.

Here's the floor plan:

James Pearson · Answer

That all sounds quite insane actually.  I believe that whole job could be done for about half that price.  Maybe I should start a traveling construction company to Florida!!!  I have done bigger jobs for half the price.

Manolo D. · Answer

This looks like a 15-20 day 2 person job, say 40 man-days x 250/day, you are looking at 10,000 in labor. Note that 250/day gets you a contractor that is exempt from Worker's Comp, add 30-40% if they have (8% employer taxes and MC + 22-32% WC insurance). You're looking at 14k max in labor for a full blown company with licenses, insurance, and etc not just contractor's bond minimum requirement by the state; just go with that, and buy the materials at homedepot or some sort, more miles on your credit card.

Account Closed · Answer

That does sound high. I'm not in the area and don't know the quality of materials you're looking for, but that sounds expensive, especially for the size.

In addition to what you mentioned, the electrical and plumbing might be a bit high.

I've done some handyman work and sometimes price a job at 2x the cost of materials (including both the material and labor) if there is a lot of material and a lot of labor (I got the idea from a very experienced handyman). So the framing and drywall does seem high. Not entirely sure about the ductless mini split system; I don't have much experience with HVAC, but if it's ductless it doesn't sound like it should require too much work.

Probably the best thing to do is get several other bids. $38,900 for 300 square feet, even with major repairs, seems high. Houses sell for less.

Best wishes,

Stephen

Andrew Davis · Answer

Hey Barbara G., come on down, the weathers great!

Joey Chan · Answer

It does sound a bit high to me, but not knowing the market in that area I wouldn't really know.  The HVAC number is actually very low.  A typical mini-split unit is about 1000-1500, for your size then u also need to install it as well.  Not much in the way of profit there. The rest of the work based on the quality of work seems up there though.

Manolo D. · Answer

Glad to be of help.

Barbara G. · Answer

ReportAug 24, 07:53 AM

Hey @Barbara Goodman, I think you may have added a decimal place there.  The rule/guideline is 1-2%, so if you're invested at 40k, ideally the property will rent for $800 per month.

so sorry.  I knew math was  weak point

What was I thinking?

The decimal is certianly in the wrong place

Yes its very good

Vincent Crane · Answer

I'd get 2 more bids for a project that big. The price on drywall is way too high, I think they tried to sneak that one in on you.

Barbara G. · Answer

So if the cost is approx $40,000 how much rent would you be getting for this apartment?  It does not sound like it will cash flow.  If the cost is $35,000 you would have to charge approx $3,500 a month rent to have a positive cash flow?

I would not be happy doing this.

Andrew Davis · Answer

@Jeff Leach thanks for your input, it was a little high!

@Stephen Graveling my thoughts exactly, thank your for sharing your experience.

@John Weidner I tried to get 3 more but I never heard back from one of the contractors!

@Miles Rivas my numbers were right around there.

I really appreciate all of your thoughts and responses.  I just received 2 more bids, both were right around what I was expecting to pay.  Great learning

House Hacking... and does this bid seem high to anyone?

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