General Contractor costs

9 Replies

hi, guys. I was curious if anyone knows what the typical "going rate" is for a general contractor on a normal single-family residential flip. this will be in Georgia. i've been communicating with one who wants to be paid a weekly rate nearing $1k and also 5% of the project costs on the back end. I haven't signed anything yet, but plan on buying a property soon and need to know if I'm getting ripped (or rather, if it's even a tad bit high). GC has been in the business for a few years and knows I'm newer to the game. rehab costs are going to be in the range of 70-80k, we've speculated. that makes his rate for a 6-8 week project somewhere around $9,000. that's a ton of money for someone who isn't driving a single nail. I understand the purpose of the GC position isn't manual labor, but that still feels steep for simple supervision, especially considering the budget is tight. if this was a school/hotel/restaurant/etc I could understand. do GCs normally charge both a weekly rate and a flat percentage on the end for single-family jobs? we already have all of the subs lined up, about half of which I brought. any input from you guys? all feedback is appreciated but please try to stay on track w/ the question at hand, which is: is this customary and reasonable? need to get this ironed out relatively soon. thanks in advance! you guys are great.

@Justin Todd

I don't like this.  Never have we engaged with a 'GC' profile.  It is not conducive to learning.  If I were you, I'd put together a project plan, and then bid out the phases separately yourself.

I don't know that there's a typical on a GC; with regards to what they charge on the free market.  Often for commercial scale projects they are salaried and the companies that hire them are bidding projects.

Unless your GC can articulate very, very specifically what and how he / she is providing value, and you can have contractual protection to that effect, you're going to be on the receiving end of a bad deal there.

Here's some thought experiments:

  • What if your GC is slow?  After all, if someone is getting $1k a week for.... doing nothing - what would prevent him/her from doing nothing?
  • Does your GC have 'special' relationships with various suppliers (such as drywall crew, framing crew, etc) where he/she anticipates significant cost savings?  If so, would he/she pass them along ahead of time (simply refer them over)?  Why would GC actually use these folks?
  • What do you do if you're not happy with quality or cost progress?  How can you fire said GC?
  • If you lined up subs why do you think you cannot line up the rest of the subs?

Sounds like someone seeing $$$$$$$$$$ and not acting in your interest, to me.  Doesn't smell right.

@Justin Todd

I don't really like this either. Maybe I'm just not completely understanding this, but is this GC using his crews or subs and running the job and paying everything or is there already the subs that you're paying and he's supervising? If that's the case, it's more of a project manager type role. 

I would think you would want the GC to have a reason to not drag things out and to be responsible for the project. I worked with a guy that had me run rehabs for a bunch of bank-owned houses. He paid me a fee plus I also billed for any work I did. He paid the painters, flooring, roofers, etc. I was responsible for keeping things on schedule. The problem was that these guys knew I wasn't writing the checks for them so when issues with the quality or time came up, it was a problem getting on the same page. With my own crews, things were a lot smoother. 

This set up may well work, but I believe there are better ways for you to go about getting the project done. It sounds like a pretty big rehab. I would hate to see a post in a couple of months about how you are having issues with this house. Personally, I would check around a little more.

Good luck with it.

Do not pay him a weekly amount.  He has no incentive to get the job done fast.  He has an incentive to make the job last as long as possible.  If you want a 'as you go' type of a payment, then break down the tasks to something like, depending on your tasks:

demo complete XX$

rough electrical and plumbing signed off by building inspector XX$

drywall complete, building inspector sign off  XX$

paint complete, cabinets installed, BI sign off  XX$

final plumbing /electrical BI sign off  XX$

final BI sign off on entire project, permit closed  XX$

punch list complete, final payment, if done by XX date, $ XX bonus.

Just FYI, I work a lot with a specific GC and actually pay him his cost plus 15%, but I also know that they get a good price, not milking it to get more off the 15%.  I give him a lot of business and he has a waiting list of customers, turning difficult ones down.  But don't pay by this method until you have worked several properties to completion with the guy.

Forgot to say before, but a good GC is worth their weight in gold!  Having one person coordinate who comes when, adjusting schedules when there is an issue, keeping a dozen balls in the air at once, keeping a project on schedule is not an easy job.  If you only have one project going you can do it yourself, but you will pay more for trades people than if you had a GC getting the bids.  And having one call if you have a problem and not dealing with the trades people is nice too, especially if the problem is a finger pointing type of an issue.

First off, $9,000 to supervise a $80,000 renovation is nothing. That's actually really cheap. That GC (if they are any good) is worth every penny of that money. Like others have expressed, don't pay the GC weekly rates. They will draw out the project as long as possible. You screw yourself when you do anything other than a fixed price contract. As that 5% of total project costs goes up, so does the GCs paycheck. 

Get a scope of work signed off. The project shouldn't look cheap (if it does it only causes more issues). Include what finishes you provide and what the GC provides like labor and maybe some wood materials.

I don't like this arrangement either. 

I should mention, the weekly pay schedule is shown on the contract for a 7-week period. So really beyond that, I wouldn't be obligated to anything at this point. Good call, though.

Weekly GC fees are typical with higher end contractors that are trustworthy. The % at the end, is that total cost of job? I know of some getting $2500/month + 13% but those are multi-million dollar houses. $1k/week is steep IMO esp if they're not using all their own subs. For that price they should be literally doing everything and just telling you when to cut the checks and what day to bring in the realtor and photographer. There needs to be penalties for poor work and going over the time frame in the contract. If you're bringing your own subs though, they probably won't want to sign off on being responsible for their work but for that price, you're a babysitter no matter who is doing the work. Have you received any numbers from other GCs for comparison or is he the only one that will respond so far? 

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