All Forum Posts by: Hugh Ayles

@Deborah Cavallaro

What you are looking for is a feasibility study.  Start with an architect.  I would expect you might come out of pocket $500-$1,000 for this, maybe more.

You want to make sure you are properly capitalized before startling this project.  This may mean spending a few thousand dollars and then deciding this project is not worth pursuing.

You may want them to provide schematic drawings and scope of work.  With that info, a competent GC should be able to get you a reasonable estimate.

Schematic documents are very preliminary, so keep that in mind.  As an owner I would put 10% contingency on top of your contractor's budget at the schematic phase.

You are jumping right into the deep end of the pool for a potential first project.

Just backing up what Scott is saying-only your general contracting revenue is pertinent.

As it sounds like you are just starting out, Texas Mutual will most likely be your most favorable worker's comp insurance.

Allied is good for the remainder of the insurance you will need.  I believe most business brokers have access to both of these companies.

A certain amount of build out allowance is included.  In my post above I indicated what I have found.

Never assume anything.  I found some landlords do not offer any build out allowance.  This is where having an experienced leasing agent comes in handy as they can help you with your proforma. 

Typically, a build out allowance does not include the entire cost of build out.  This means the tenant will be out of pocket a certain amount of money at the front end of the lease.

My experience has been both as a GC doing finish outs and as a business owner leasing a space.  In other words, how do you budget to a build out allowance (GC) or how do you budget an office rent and the associated expenses with moving into an office (business owner).  Build out allowance was a part of my decision process when looking for an office.

I have never been involved in determining how much build out allowance should be offered or how build out allowance is recovered.  hopefully a commercial leasing agent can chime in here or offer a suggestion on how to find a good leasing agent.

@Jason Yarusi

In contracting, "independent contractor" has to do with worker's comp insurance and taxes.  It determines who is responsible for paying worker's comp in case of a claim and who is responsible for certain payroll taxes.  This is established either by language in the contracts and subcontracts or, at least in Texas, there is a form that is signed acknowledging the subcontractor as an independent contractor.

As you can see, the term can be confusing.  Sometimes I think a term is heard and starts getting used without an understanding of it.  As an employer, I also have to be familiar with the use you indicated and its very legal consequences regarding employees are people hired as independent contractors, but that is a discussion for its own thread.

I don't know the leasing side but I know the construction side and I have signed a lease for my office space.

Build out allowance costs are built into the lease.  When I shopped for lease space for my business, I was quoted a rental rate and told what the buildout allowance as.  For small office spaces in the Austin area, $5/sf was common.  That bathroom you mentioned will be $7500-$10,000, at least in Austin.

When I was on the GC side, in large offices the build out allowance was $15-25/sf.  These were typically 3 story or more office spaces.

IMHO, if your building only had 2 spaces, it might not be prudent to break it down into even smaller spaces.  This is where having a property manager or leasing agent might be helpful to you.  They woudl be able to help you decide if it is feasible to break down the areas into smaller spaces or hold out for tenants who can use the spaces as already divided.

@Sean Salandy

As the owner you have the right to approve subs.  Be prepared that if you veto a sub, it may cost more to use the next sub.

Regarding pay, by paying direct, you are headed for contract issues.  When you pay a sub directly, you are effectively contracting directly with them.  Please be careful with these books.  To be fair, I have not read any of them but some of the interpretations I see are troubling. 

If you do not trust your GC and you want to make sure your money is going to pay for the subs' work on your project, you can opt for joint checks.  A joint check is where you make a check out to both the GC and the sub.  You are not losing any of the linear contract agreements this way.  By linear I mean your contract is with the GC and the GC's contract is with the subs.

@Sean Salandy

Here is the irony: people complain about how they have to babysit their contractors.  They beat them down on price and have contracts that cause issues on site.

If you have reasonable pricing expectations and reasonable contracts, you get good contractors which end up saving you time, conflicts, and eventually money.

 That is a horribly bad idea.  You just neutered your GC.  When I was on the GC side, if we got that as a condition of work, we passed.  Why hire a GC if you are going to manage the subs?

The subs push back if the GC gives direction is their contract is with you.

 Think of it this way: get a W9 for whoever you are writing checks to.  If you are writing a check to a GC and he is hiring subcontractors, you only get a W9 from the GC.  If you are directly hiring a subcontractor, you will get a W9 from them.

Get conditional waivers from your GC and their subs as a condition of payment.  When final payments are made, get unconditional waivers.

 Why?  It is not that complicated but you need to have a good touch in case existing utilities cross the utility trench you are digging.

The best excavation operator I knew probably had 10 years of experience and he god dig an egg out of a sand pile with a backhoe (something done at backhoe rodeos).