Need advice local GC rates & Approach for Fixing Up Foreclosure
Laconia, NH · Member since 2016 · 27 posts · 9 votes
Hi - I recently bought a foreclose in Lakes Region (Gilford) that I am planning to rent to my Mom (so not looking to cut corners too severely). The house has work needs to be done with support beams (rotted) and a lot of rotted siding spots where new wood, insulation and vapor seal need to go up. It is too hard for the contractors to estimate so they are asking to bill hourly.
#1 - How do I know what a fair rate is for decent GC's in Lakes region (Is $80/ hour a fair rate?)
#2 - How do I structure this project so I don't get taken advantage of (I won't be on the property every day so won't be seeing their actual hours)
TIA and advice on doing this best way possible!
Hi - I recently bought a foreclose in Lakes Region (Gilford) that I am planning to rent to my Mom (so not looking to cut corners too severely). The house has work needs to be done with support beams (rotted) and a lot of rotted siding spots where new wood, insulation and vapor seal need to go up. It is too hard for the contractors to estimate so they are asking to bill hourly.
#1 - How do I know what a fair rate is for decent GC's in Lakes region (Is $80/ hour a fair rate?)
#2 - How do I structure this project so I don't get taken advantage of (I won't be on the property every day so won't be seeing their actual hours)
TIA and advice on doing this best way possible!
I don't know what local rates are for a GC in your area so I cannot comment on that.
How not to be taken advantage of...I could write an entire novel on this topic...but it starts with the following: hire reputable people, pay them well, make sure expectations are being met, and that you are communicating clearly.
I would get several bids from local GC's and provide them all with a bid template so the bids are uniform, otherwise they will come in all different formats and it will be difficult to compare everything.
Resist the temptation to go with the lowest bid. If you get too cheap on the labor and you end up hiring someone that does a bad job you will end up paying someone else to come in and fix it. So just pay for good quality labor up front and it will save you time and money.
What a GC charges for their work is highly subjective, meaning there is no standard rate that someone would charge. It is influenced be a number of factors including time of year, how the project is financed, how long the project will take, and even how difficult the owner will be to work with.
1. $80/hr would not raise eyebrows here in northern New Mexico, so it's probably good or even on the cheaper side for the northeast.
2. First, make sure you know the GC and he has several good references. THIS IS THE MOST IMPORTANT THING! Best if you have worked with him in the past; I have a guy out here I would absolutely trust to be straightforward in your situation. Second, bully him into giving you at least a verbal estimate of how many hours the job will take, or (better yet) see if he'll sign something that states the job will take x man-hours with a y% margin of error in either direction.
Finally, you need to check in at least daily. Even if it's late and you're tired. Even if it's a long drive. You need to be a visible presence,walking around the jobsite, giving out Gatorades, and asking questions. Your house needs major surgery - if it were just a new roof or HVAC or a driveway, you could be absent, but for something this major you've just gotta be there IMO.
When doing rot work it is hard to tell how long it will take, as there is usually more than what you can see.
$80 is a decent man hour rate to find in NH. But also remember that is per worker.
The time spent at the job site is not all that is calculated for time as there is travel time and also time to get materials and also to dispose of materials.
The best way I see to structure it so that you can make sure the contractor is not taking advantage of you not being there, is to either have someone check in towards the end of day just to see progress. Now keep in mind things may have gotten done behind things that you don’t notice. Also ask the contractor to take pictures as they find more things that need replaced so you can see it.
Best thing also is to find a reputable contractor that has good references so that you know they aren’t just a fly by night contractor.
Are you hiring a General Contractor to perform the rehab, or several Contractors for each trade?
If you want a GC, and you’re not under contract yet, get two more GC bids, references, past jobs and possibly pictures from all three. Also, as stated above, go there daily or have some one go. This will keep them on there toes, and also serves as quality control. Take a lot of pics of before and after.
A simple typed, dated and signed agreement, stating scope of work, pay structure and all expectations. A request for pictures of ALL, before, during and after work should be included in the agreement. The agreement should also clearly state that, any additional work not initially proposed, MUST be documented via pictures and approval, before performed.
You can go a lot further, with things like, a punch list, performance contract...., all depends on your individual needs or wants. Good rehabbing.
Hi - I recently bought a foreclose in Lakes Region (Gilford) that I am planning to rent to my Mom (so not looking to cut corners too severely). The house has work needs to be done with support beams (rotted) and a lot of rotted siding spots where new wood, insulation and vapor seal need to go up. It is too hard for the contractors to estimate so they are asking to bill hourly.
#1 - How do I know what a fair rate is for decent GC's in Lakes region (Is $80/ hour a fair rate?)
#2 - How do I structure this project so I don't get taken advantage of (I won't be on the property every day so won't be seeing their actual hours)
TIA and advice on doing this best way possible!
I don't know what local rates are for a GC in your area so I cannot comment on that.
How not to be taken advantage of...I could write an entire novel on this topic...but it starts with the following: hire reputable people, pay them well, make sure expectations are being met, and that you are communicating clearly.
I would get several bids from local GC's and provide them all with a bid template so the bids are uniform, otherwise they will come in all different formats and it will be difficult to compare everything.
Resist the temptation to go with the lowest bid. If you get too cheap on the labor and you end up hiring someone that does a bad job you will end up paying someone else to come in and fix it. So just pay for good quality labor up front and it will save you time and money.
What a GC charges for their work is highly subjective, meaning there is no standard rate that someone would charge. It is influenced be a number of factors including time of year, how the project is financed, how long the project will take, and even how difficult the owner will be to work with.
Be your own GC. Identify major updates, set priorities and solicit project estimates. You may save up to 25% and avoid employing the same contractor to replace rotted support beams and fixing up the siding just because he has time to spare.
Be your own GC. Identify major updates, set priorities and solicit project estimates. You may save up to 25% and avoid employing the same contractor to replace rotted support beams and fixing up the siding just because he has time to spare.
No offense...but this is really bad advice. I would never recommend to anyone, even experienced investors, that they "be their own GC". You are just asking for trouble. Unless you have years of experience running your own construction projects and a rolodex of subcontractors you have worked with you are setting yourself up to get screwed. Especially with anything like you mentioned (structural) it is not entry level construction or things GC's do "in their spare time".
Drywall and paint is one thing but let's say you encounter structural problems, underground plumbing, code related issues with engineering or problems with local inspectors. Or let's say your electrician walks off the job halfway through the project because you're out of funding. Maybe the framer takes a deposit and disappears. Or maybe your welder ignored your drawings and shows up to the job site with $50,000 of now useless aluminum you already paid them for. There are tons of horror stories I could share with you about things that can go wrong on a construction project and someone trying to do this themselves thinking it's going to save them money is in for a world of hurt.
As Jonathan Weiss, my former sales manager at Marcus & Millichap, used to say to me "you don't know what you don't know".
Also with some residential programs like 203K HUD you cannot be your own GC anyways. You have to hire one. So if you're going to go through a bank for your financing, the bank is going to require things like workman's comp, licensing, liability insurance, builder's risk insurance, etc. Are you going to carry all of those yourself?
You will need to rely on an experienced contractor who has contacts in the industry, a track record of completed projects, their own insurance, and the ability to financially carry a project. A good GC is your partner in the project and you should not overlook their importance. It really irritates me when investors act as if they do nothing and they can get the same results for less money. I bust my @$$ 7 days a week doing this!
I cannot tell you how many projects I've seen where people tried to "be their own GC", got in over their heads, and the bank or HML took the property back from them.
My advice is to hire a good GC and learn from them. Then eventually you can take the reins yourself.
I do not dispute that a decent GC can save time and add value to a rehab project. However, the devil is in the details:
In NH, GC's do not require a license by the state. In the absence of licensing requirements, the occupation is popular with tradesmen who may have difficulty finding gainful employment due to a criminal record and/or drug addiction.
Liz hails from Laconia that is only a few miles from Gilford. The proximity lends itself to a hands-on approach to dealing with contractors.
I don't see what value a GC can contribute to rotted support beam replacement - a project that should be based on a structural engineering report. As a cost-saving measure, the GC may choose to forgo hiring a structural engineer and deal directly with carpenters.
Siding replacement is another project that does not seem to require GC involvement. Many projects around the house (other than electrical, plumbing and asbestos remediation) can be handled by a handyman.
I would recommend reading a book or two on the subject of rehabbing houses before talking to contractors.
I do not dispute that a decent GC can save time and add value to a rehab project. However, the devil is in the details:
In NH, GC's do not require a license by the state. In the absence of licensing requirements, the occupation is popular with tradesmen who may have difficulty finding gainful employment due to a criminal record and/or drug addiction.
Liz hails from Laconia that is only a few miles from Gilford. The proximity lends itself to a hands-on approach to dealing with contractors.
I don't see what value a GC can contribute to rotted support beam replacement - a project that should be based on a structural engineering report. As a cost-saving measure, the GC may choose to forgo hiring a structural engineer and deal directly with carpenters.
Siding replacement is another project that does not seem to require GC involvement. Many projects around the house (other than electrical, plumbing and asbestos remediation) can be handled by a handyman.
I would recommend reading a book or two on the subject of rehabbing houses before talking to contractors.
I'm not saying you should call a GC for everything. There are plenty of projects I refer out. At the same time your comments on the lack of state licensing contributing to criminals and drug abusers getting GC licenses sound really biased and judgmental. Oversight by a state licensing board has nothing to do with that. There are Doctors and Lawyers that have criminal backgrounds and drug problems too.