How much to pay contractor for cosmetic renovations?

Question

How much do you typically pay contractors for cosmetic renovations? Typically, I sub everything out and average $15,000 - $22,000 unit for full cosmetic renovations. Here, I want to delegate this job to a contractor to supervise, pay, manage subcontractors but I'm having trouble coming up with a fee.

There's 18-units for this particular project and I want to throw other units at the contractor once I purchase. Is 10% of cost reasonable? Thanks,

Tony

There's 18-units for this particular project and I want to throw other units at the contractor once I purchase.  Is 10% of cost reasonable?  Thanks,

Tony

Matthew Irish-Jones · Answer

Not every contractor subs everything out.  If its all cosmetic you can probably fine a mid tier staffed company that is fully staffed.  In that case you don't need to worry about mark ups or %'s they will provide a quote and handle all work in house.   We have a construction arm that caters to investors, we provide a scope of work to get the place rent ready, a hard quote to do the work with options, and an open portal for you to see the work being done.  Our clients get daily logs showing progress with detailed notes from the on site foreman.  Our customers can see all of this through our software so they do not have to stop by the job.

I think there are many mid tier construction companies in every market.  If you pick one that is too small, they can't handle the volume and have no business systems, if you pick one that is to big they will have too much overhead and the numbers won't make sense.  Find the right company and it can be a great benefit to you and them.

Most important aspect of this relationship is transparency and honesty.  Bad contractors will nickle and dime you to death and drag out jobs forever because they are taking on too many at one time.

Bryan Hartlen · Answer

@Tony S. if I understand you correctly you're asking what would the general contractor fee be for managing the rehab of 18 units at a total cost of $270 - 330k... with a potential for more business down the road.  In the single family rehab world, we assume that we're paying a 10 - 15% premium to a General Contractor to manage the rehab. For this premium they are responsible for selecting and managing subs, managing material purchases and for all work being performed to spec (this is a financial risk for the GC also - if work needs to be redone it's on their dime).

It sounds like you're still planning to select the subs and you just want oversight - like a foreman. If that's the case I would expect you would pay less than 10%. It would also depend on whether you believe this will be a fulltime job for the life of the project. If it is you might be able to pay an hourly rate. In either scenario the final fee, may depend on your local labor market.  Finding trustworthy, knowledgeable contractors is still tough in our markets.

Ashley Cross · Answer

It depends on the scope and what exactly the GC or project manager is responsible for. Like will he be hiring and firing the subs? Choosing material? Or will you be heavily involved and readily available for questions? Once you have that narrowed down, interview at least 3 GCs with references & see what you come up with.

Eliott Elias · Answer

Depends on the contractor, they usually won't tell you their fee on top of what they're paying. Just give you a total number, how they come up with it is beyond me. If you're hiring a project manager separately 10% is appropriate

Mike Mocek · Answer

Great question @Tony S. I think it depends on the size of the unit, materials you are using, etc.  I have seen renovations on a 3/1 home for around $7,000 and I have seen them for around $20,000.  I do not mind paying a little bit more for a quality return.

How much to pay contractor for cosmetic renovations?

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