After hiring multiple contractors who push the price up and then hire some guy for $10 an hour who actually does the work I am wondering how hard it is to hire those guys directly.
This does not apply to electricians and plumbers as they have licenses. But for handymen, drywall, carpet and painting. Those guys laying the carpet are not getting $50 an hour. How do I hire them direct for the $10-$15 they are actually getting paid?
Ask around in the local area. I bet there are plenty of skilled handymen that would work on the side or weekends to get $20 per hr or so. You can get a lot of work accomplished by those guys in an 8 hr day for under $200 in labor. ($10 per hr is probably too low to lure them into side work or you will get unskilled guys that in the long run with case you stress and more money IMO)
@Toben B. Maybe it's different in Tulsa but around here you would never get a skilled worker for $10.hr or even $15.hr....and I marvel that you think that's all a skilled carpet installer (or painter or drywall guy) is worth.
If that's all your contractor is paying them, then I'd say the same thing to him. How do you know he's paying them $10.hr? Also, do your contractors carry Worker's Comp, in case the guys get hurt? Will you?
I think thats the real fear. Workman's comp, employee/payroll deductions, etc, etc.
Thats where you can get hammered. You have to make sure he appears as an independent contractor and you follow all the rules or you're going to be at risk.
That being said, it hasn't that hard a stretch to do either. Those guys by definition are independent contractors. And there's nothing that says you can't hire them on the side. Just be sure you get their 1099 information if the total pay is going to be above $600 (something like that anyway) because you're supposed to 1099 them if it does.
Or you can not 1099 and just not report the expense.
Contractors in that price range are typically going to give you a great rate for cash that you can't report as an expense or will bump it up if you are going to 1099 them. I, for one, will never pay anybody cash. Thats a problem waiting to happen.
I'd rather pay the bumped up rate. You'll still get a better deal though.
You can definitely save money by paying sub contractors to work hourly on the property. I think some of the comments above are valid. I would ask you who is going to manager the employees, materials, time lines, etc. If your thinking that cheap labor can figure out what materials you need you may be making a lot of trips to the local hardware store. Also, if you don't have experience managing employees I wouldn't make my first lesson in a rough neck industry. Tradesmen are tough guys to motivate and keep in line. The good tradesmen will have jobs or will be looking for stable positions. If you don't have the capacity to give them consistent work they will want to bid out the job and not work hourly.
These guys are right. Beginning painters (1099'ers) are getting paid $13/hr in FL and they have never painted. A carpenter that can install a kitchen properly will be closer to $30. My guys that lay the sod and digging irrigation ditches are getting $10/hr.
I hope this help.
You make your money when you buy, not by cutting corners. If you happen to know a skilled tradesmen looking for side work then go for it but trolling craigslist or the HD parking lot for your labor is a recipe for disaster.
the problem going directly to the employee is that the boss works them too hard and they have no time for side work. and if they do, they are unreliable and won't show up on time or at all. I actually tried this today... a while back I used a company to do glass blocks. the employee called me from his cell and I kept his number and called him today. left a message and didn't get a call back. this is not the first time this has happened.
I keep trying and sometimes I get lucky but generally the cheap cheap labor doesn't last long. like a pair of underwear
and btw, I am so tired of people on here immediately hitting the 1099 topic and insurance claims excuse.
I run into lots of guys with this line of thinking. Lol trust me, you are not going to do yourself any favors trying to go this route. Your going to be tripping over dollars trying to chase down pennies.
1. $10/hour does not get you the laborers your looking for. $10/hour gets you unskilled labor. The kid that cuts the grass for my company makes more than $10/hour.
2. You pay the G.C. to insure the job gets done correctly. Ask any G.C. how many laborers they go through every couple years.
3. Overhead. Tools, Vehicles, Insurance etc....Your going to carry all that overhead for a couple jobs? Makes no sense.
If you're talking about hiring someone for hourly rates by the job, consider -
* People are willing to get paid less when they know they have 40 hours a week assured. If you want to hire them on-again off-again you'll have to pay more.
* You will be responsible for all scheduling, materials, etc.
* People working for $15/hr on/off are going to be unreliable. They're not making enough regularly enough to be loyal and consistent.
If you're talking about hiring someone full time, you need to take a step back and ask yourself if you want to get into the construction business. Most of the time people who play the 1099 game are acting illegally... classifying what should be a employee as an independent contractor.
Workers comp, payroll liabilities, other insurance, tools, etc. are all expensive. Just because I pay a guy $15/hr doesn't mean it doesn't cost me more like $30/hr to keep him in the field being productive and legal.
most of the above comments have said it already. From my own experience I would like to reinforce: (Most of the time ) you get what you pay for!
If you bought properly, and your estimated repairs costs were fairly accurate, paying Contractors and laborers what they're worth shouldn't be a problem.
Best of luck!
It is very much more complicated and costly than you might think if you hire them and they are deemed to be "employees." based on IRS guidelines so it would really have to be worth it to do down that road. You likely want to hire them as "independent contractors" but note that the bar is higher than people think to meet that criteria. Research and understand the guidelines anywhere online. Not that its difficult to meet the criteria, but its easy to misclassify someone as a contractor if you're not careful. And even as a contractor, if they are not insured, you might want to pick that up as well.
With that said, the reason they get paid $10 is maybe they are employees (who pay less taxes than contractors do) or they get paid off the books or whatever.
I ended up posting in the Gigs section of craigslist asking for flat rate quotes and got 30 responses. I posted for painters/drywall work, carpenters/countertop installation, flooring installation and general make ready work. I needed 4 kitchen counters installed with 4 new sinks and faucets, 3 apartments painted, 3 vinyl floors laid, several doors installed, lots of holes repaired, one toilet, one bathroom sink, one outside faucet, lights, blinds etc for a complete make ready. 3 of the apartments were terrible. One apartment only needed touch up and a new countertop/sink combo.
50% were companies charging the equivalent of $50+ an hour. High bid was about $9000 in labor. Low bid was $5000 in labor. In the future I am no longer going to talk to these guys.
40% were experienced guys trying to get the equivalent of $20-$30 an hour.
10% appeared to be people who had no idea how much work I was asking for and quoted what would appear to be minimum wage or less. One guy quoted me $600 for all the above work.
I picked a guy who had experience as a handyman for an apartment and seemed to know what he was talking about. I am guessing the work will take him 100 hours and he will make around $25-$30 an hour for his work.
I could have paid less if I put together a team of 3-4 people, but I decided to spend a little more to make it easy on myself.
Lets see what happens.