Dear fellow Bigger Pockets members,
Finalizing a renovation of a 90 yr old apartment building. Feel most comfortable with a Cost + job with my GC as it allows me to get multiple bids for each line item and to review them and beat down the price etc. GC has a great reputation but I am unsure of his Cost + rate.
What is a fair Cost + percentage for a GC to charge on a $1M+ Project renovation in SE Florida Market?
I've seen 10% and up to 20%. Higher numbers should justify lower percentage.
You could go with cost-plus-fee. This is the same as cost-plus-percent, but, the GC will only make their fee if the project is way over or way under. They also removes any incentive for the GC to present the three higher bids instead of three lower bids. You are also not taking money out of his pocket by going with cheaper subs.
The fee is going to vary by project. I would budget 5% for a cheap GC or 10% for a good one.
I think your approach may be a bit off. The reason to work on a cost + fee percentage isn't to beat down pricing. It's for full disclosure and allowing you input on how the project team is put together. You are going to have a difficult time building trust and finding someone to work with you if the main objective is to beat down cost. Look at it as a method to maintain some level of control and disclosure and you won't be disappointed.
Get a construction manager to get everyone together and protect your interest, not a general contractor. 1M is not easy to manage, it could be a year before the project gets done. A fair pay is around 7-10k/mo in LA, maybe 5-7k in other states. Cost plus method is dangerous to your end when spending 1M.
Here in Asheville its 15-25%. Sometimes more if they are really good. I don't know how hands on you're wanting to be but a good rule of thumb when dealing with labor is the less you pay the more head aches you'll have. So in my opinion I wouldn't beat price down to much. As an investor though I understand why you would want to beat down price though.
Good luck with it! Hope all goes well
@Wesley Davis 25% on a 1M+ spend, really? Wow, refer me one, i’ll give you 20% of what I make. If he spends 2M within a year, then I’ll get 500k. I won’t mind sharing it with you.
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