All Forum Posts by: Jeffrey Stasz

@Karthik Krishnaswamy feel free to email me. [email protected]. We are a General Contractor. The reno budget works but I think the buy window needs to be adjusted. Probably a better conversation for the phone. 

@Karthik Krishnaswamy Where are you currently located. What price point? 

Sounds low. I'm a GC. I'd look for 100K in project management fees and probably another 100k in profit

@Frank Greg

What an unusual conversation...but I'll play. 

For background I am a GC doing infill rehabs and new builds in Charleston SC. Typical house is 800-2mm. 

Only way I can really answer this is by going backwards. 

So: Typically see labor as about 60% of a build. We aim for gross margins of 50-60% (Industry Standard) with net profit between 10-20%. We do under 5mm a year in gross revenue. 

So to get "your number" take your materials total and multiply by 1.5 then use that as the base for your labor estimate. So the marked up number is your 40%. Infer your labor cost from there. How it breaks across trades is unknown. 

I do agree with others here that this does not seem like a great approach. And for a seasoned developer to insist on cutting out the GC would be a red flag. 

We no longer allow clients to be responsible for anything that goes into a house. Too many headaches and too much additional work for us as the builder. 

Also...before you argue with me about the 50-60% markup please trust that I have done A LOT of diligence on this including getting access to many many many other companies books and working with coaches that have been in this industry for years. That is the number. How it get's computed varies.

Does this number come down with scale? Yes. Can it be as little as 2%? Yes. Does the owner of that 2% net profit contracting business already have a jet? Yes. 

I am a contractor. If you want to PM me. 

I could use that. Shoot me a DM 

@Allen Tracy seems to be it would be smart to invest in one of the cost books. I've heard Xactimate is good and I've used Craftsman with reasonable results.

Other than that, I think going to the trade association meetings is probably where you can get the best data. 

@Michael Arnold the contract package from NAHB is pretty good. That's what I use. I'm a builder and don't like the AIA contract as it shifts more of the liability from the Architect back to the builder. The NAHB contract seems more reasonable to me. 

@Omer Bar great question and yes. I have since dropped Prebuilt in favor of BlueBeam Revu. It's a one time fee instead of a monthly subscription. 

I also recommend reading David Gerstel's book "Nail Your Numbers- A path to skilled construction estimating and bidding" 

I've also updated my excel model/process. 

I know go >> 

Plans > BlueBeam (I do my materials takeoff in BlueBeam) > Export BB numbers to Excel and add labor costs. I've started using the NAHB cost codes as it really helps ensure nothing gets missed. 

A super useful tool I recommend to all my investor clients: MagicPlan and Laser Measure. Pay for the MagicPlan app and buy a compatible laser measure. Learn how to use it and you can generate a floor plan in about 20 minutes. A floor plan and some pictures from your walk through and you're good to go to implement the other items. 

Happy to talk through in more detail just shoot me a DM. 

JS

@Gene Knighton this is a tough one and you may owe the contractor some money to cancel the contract. I am a builder and have built on similar rehab products. Typically the bank expects the contractor to bridge the financing. As a result many builders (myself included) increase our costs for these types of projects because we are also being asked to provide high risk mezzanine financing. 

Sometimes you can get around this problem by writing a contract that has a significant deposit or profit payment built in to the execution of the contract. I typically do both. I will ask for a chunk of my profit due upon execution of the contract and then charge the going rate for mezzanine financing in my area.