Sherwood, OR · Member since 2014 · 13 posts · 5 votes
Contractors seem to be everywhere, but the right contractors to fit my business seem to be elusive. I've Compiled lists and cold called by searching places like homeadvisor or angieslist, as well as go through my networking of contractors that I currently work with, but where I seem to hit a road block is finding the select few contractors that are willing to work with in my business model. Specifically I'm looking for contractors that have a work force that can tackle multiple projects at once, are motivated by repeat business, and will give me solid consistent pricing (in return for the volume of work I give them). The catch is I have access to all my finish materials (flooring, tile, cabinets, counter tops etc..) at cost direct from the manufacturers. This means they don't get to mark up the materiel. I still expect to be charged for all the install labor and any coordination time it takes in delivering materials to the job sight or scheduling between different trades. I've been very successful in the last year running my flips as the General contractor but find that I need to bring on multiple GC's to keep up with the amount of work I've been putting in the pipeline. I don't want to keep running my own projects so I can work more ON the business and less IN it. Any creative suggestions or advice about how to track down the types of Contractors I'm looking for??
Rental Property Investor · Knoxville, TN · Member since 2011 · 701 posts · 531 votes
11y
My plumbers took me out to lunch a couple weeks ago. We got into the topic of bad contractors and customers (from their perspective). One of them said this, paraphrasing, "if the guys says to me 'I've got a bunch of work and want to build a long-term relationship with you' I get back in the van." This is used often towards them and isn't seen as a positive by many.
The reality is they're interviewing you as much as you are them. Us investors have a reputation as being cheap, hard to work with, unrealistic, and sometimes difficult to get payment from. They view us as negatively as we do them. So when you're interviewing them remember they're interviewing you too and think about how you can gain their confidence and trust.
Finding good ones is a tough part of this business.
I own a commercial subcontracting business. When I see in the specs that all of the material I traditionally furnish will be owner furnished and they only want a labor quote, I save my time and move on.
Here is why: The owner just removed the least riskiest portion of my scope- material and they want me to only take on the riskiest portion of my scope- labor with a reduced profit.
The only way I take on labor only contracts is by greatly increasing my profit margins on labor to offset my added risk exposure.
If you want top tier subs and contractors, you need to treat them as such.
Great discussion everyone!
I'm surprised to hear that from a contractors prospective, everyone is concerned about the Owner furnishing materials...
On the commercial side, it is customary for the contractors to furnish and install all materials on the project. This is typical because there is months of planning that include designing, engineering, creating drawings, specifications, finish schedules, fixture schedules, etc...
On the residential side, and specifically in rehabbing, we typically do not have the luxury of months of planning for creating drawings and specifications, and finish schedules upfront.
This is why I typically prefer to have the contractor provide 'rough' materials such as framing/drywall, MEP rough-in materials, and I will provide the 'finish' materials such as tile, vanity cabinets, light fixtures, plumbing fixtures, etc.
Before I solicit bids from contractors, I will put together a detailed scope of work detailing every work item on the project. If necessary, I will also put together rough floor plans with notes & floor plan changes to help visualize the project.
On my detailed scope of work, I will provide a list of the materials that are CFCI or OFCI (Contractor-Furnished, Contractor Installed or Owner Furnished Contractor Installed)...
By limiting the contractors proposal to rough materials & labor, this gives me ample time to finalize the finish selections on the project.
Once the finishes are selected I will make a bulk delivery from Lowes/Home Depot to have all or most of the materials on-site (sitting in the garage), ready to be installed by the contractor.
Here are my thoughts on advantages / disadvantages of OFCI Finish Materials, & I would love to hear everyone's thoughts:
Advantages of OFCI Finish Materials
Owner takes risk on materials - cost, procurement, scheduling & delivery is Owner's responsibility
Contractor has less estimating risk - Contractor eliminates the quantity survey, & material estimating from his scope...Less estimating = Less Risk
Contractor spends less time estimating - Contractor saves time estimating the project because he doesn't have to look up SKU#s and prices for all of the OFCI finish materials
Minimize material changes & material change orders- Owner can make material changes/fixture changes without hassling the contractor & requiring a change order
Saves Project Management Time - Owner spends his time procuring, purchasing & delivering materials to the job site, so the contractor doesn't have to...
Owner can save money on the materials - During the planning period, the Owner can shop around, find coupons/deals to save money on materials...The Owner may also save on contractor markup
Owner can build business credit & Southwest Airlines points by purchasing materials :)
Disadvantages of OFCI Finish Materials
Owner is responsible for procurement/scheduling - If the owner doesn't purchase the finish materials according to the schedule or doesn't purchase enough material, the project can be delayed, costing the Contractor time & money
Contractor loses out on extra markup on materials - Contractor will lose out on material mark-up...
On the last point, Contractor Loses out on Material Markup - The contractor doesn't need the Owner's finish material cost to markup their bid...
If the project has $10,000 worth of OFCI materials & the contractor typically marks up material 15%, then that's an extra $1,500 worth of material markup...
What's preventing you from just bumping your labor estimate by $1,500?
