LA rates and calc methods for Rehab work

6 Replies

Normally contractors give me two possible estimates.

1) Priced Job : They look at the job and send me the estimate for carrying out the whole job.

2) Daily Rate: The tell me the individual daily rates at which they will work on the job.

Because I have a general idea of how long a job would take, I try to ask contractors what their daily rate is and if it is favourable I then ask them to come out and give me priced job. I must be choosing the wrong guys because now, most wont tell me what their daily rates are and they insist on seeing the job first. This is weary for me. I dont want to do an open house and have contractors attend to see a job at once but it is tempting.

Anyway I recently had a guy take a look at a job and give me his labour rate per sf. I have never had a job expressed in this way. It has thrown me as I have nothing to guide me as to whether is reasonable or not. To be precise he quoted at $2.5 per sf for a Job in Inglewood. Is this reasonable what sort of rates am I looking for in LA

We don't usually ask for the daily, hourly, or s.f. rate for a contractor. We have them give us a bid for the job and have them break up the bid into sections so we get an idea of their price for each section. I realize that doesn't help you for what you're trying to do. And your approach seems reasonable, we just haven't had a contractor for a large job even talk about rates.

As for the price per square foot, we've only gotten that type of estimate for things like paint, granite, sod, and concrete. A price per s.f. for a kitchen remodel doesn't make any sense. It depends on what you're doing to the kitchen. And it would be hard to give you an idea if $2.50/sf is a reasonable rate without knowing the extent of the work, the quality of the materials, etc.

Thank you @Mike G. I have a 2500sf property which needed rehabbing but I only wanted an estimate on a section of it most of it included drywall and some electrical. Perhaps if I had had him estimate the entire project which includes a commercial juice bar or kitchen he would not have used that method of calculation. I think if I have some people come out again I will ensure that they hand in estimates in the same format.

For some reason I tend to favour the contractors who are one man bands as opposed to those who have 1800 numbers and already have a lot of staff in place. This tells me they have a lot of overheads they need to cover and project managing my job may not be as easy as with a smaller company.

It's tempting to go with the one man band because it seems like they will be lower. Sometimes they are, but often times it is just that way upfront. The change orders are where it gets costly. Larger companies can sometimes be more efficient. The best way is to compare apples to apples when it comes to an estimate. I've found the best way (I've done 100+houses) is this way:

-hire a general contractor and get a fixed price for the whole thing.

-Get several estimates. Make sure that you have a clearly defined scope of work so you are comparing apples to apples. You will have to spend quite a bit of time typing one up, then you tell them that you want a fixed price for your scope. You can have a few alternates (options), like for the commercial juice bar. Smaller contractors often do not really know how to estimate. They are use to being paid daily or hourly. I DO NOT like to pay someone hourly or daily...it stresses me out to go to a jobsite and they are taking a break or doing something in an inefficient way.

Thank you @Julie Groth for the eye opener, Im new in the LA area which can be difficult to build new relationship with a team of new contractors. I too am not a fan of the daily rate and have certainly never explored the hourly, but I have found the DR to be useful in determining the priced job total.

For instance for a small job a contractor will say that the labour would cost $1500 but when you ask what his daily rate is along with the number of days it would take him, they won't match up. So in this case he would say his daily rate is $100 and it would take him 7 days. I would then say to him how on earth has he arrived at $1500 when he has demonstrated it should come to $700. It then enables him to move down a little bit.

I think the large firms churn out so many bids and just wait for the phone call which will accept their bid. I find that to be less personal touch to the service they are offering. However I am certainly willing to give it a try. Thanks Again

There are also the mid-size firm. That's usually the ticket for me. Look, it takes awhile to find the perfect fit. One thing I also go by is my gut instinct. Do I trust this person? Things can go wrong, you change your mind, you find termite damage hidden in the walls. You want someone who will treat you fairly when the unexpected happens...as it will.

@Annunciata R.

Your best bet is to find contractors that are used to dealing with rehabbers/investors. Typically they are not the types that spend money on marketing, drive fancy brand new trucks or have a bunch of reviews on angies list.

Always get a quote per job, the only hourly contractor I have used is a carpenter and he would give me accurate estimates of the time a project would take and was always under his estimate but everyone else is paid per job.

Let the contractors know you are bidding it out and play them against each other but I agree with @Julie Groth your decision should be based on your trust/gut feel not just price.

Join the Largest Real Estate Investing Community

Basic membership is free, forever.