Use a General Contractor?

[jrockfl]

I was thinking about using a general contractor for a potential rehab. How should I go about doing it? Would I contact 3 different ones and get estimates?

[kdhastedt]

Try to get references, especially from other REIs...maybe from members of the local REI association...

Keith

[jrockfl]

Thanks for the reply, I do have one reference so far. How does the process typically work? Would the GC walk the property with me and be able to give me a ball park?

Then would they be able to provide a firm estimate?

[kdhastedt]

Depends on the contractor...some will charge for that.  Some will charge for it but will deduct that from the final bill if they actually do the work for you...some will do it for free.

Keith

[jrockfl]

What about payment terms? Should I have to put any money down?
Let's say the contractor wants 50% down, can I say no and pay draws after certain parts have been completed?

[DannyTheGreat]

If the GC wants 50% to get started, you will see neither your money or the GC ever again. I usually spend 10% in the beginning for material but I pay for them directly not the GC. You should absolutely divide up your payments to the GC into draws. I pay in 3-6 draws depending on how large the job is and only after the work has been completed.

Control the GC. You tell him how you will pay him. Only sign YOUR contract in the beginning. And say no to change orders (unless absolutely necessary).

[cherdwelth]

This is funny. I'm a general contractor (licensed) for 10 years and if you start controlling me, I stop work. If you don't pay me, I won't carry you and work will stop. So if you want the job done correctly, honor your contract unless there is some major workmanship problem.  I don't ask for 50% down and do ask for draws depending on the total contract. And why do you not trust ME - should I trust you that you have the $60,000 in rehab costs in your account? It works both ways. Never start a job not trusting who you've chosen to work with - it will be a disasterous situation.

And I won't let you go buy materials. If you do, I can't warrantee them.  I'm a professional and I'm in business. I have my subs and suppliers that I use and trust to supply quality products. Maybe you have run into some non-licensed so-called GC's that were unscrupulous.

Another thing ... signing YOUR contract puts you at a total disadvantage in any disputes. He who writes the contract usually loses. Use the contractors contract and READ it.

Also, change orders are normally wanted by the client - not the GC. You'll come to me and say, gee we really need a couple more can lights in the kitchen - after we've done the electric and put up the drywall. NOW .. who's paying for that? Not me. That's a change order and we hate them. They mess up our whole schedule and create problems. So if we do a change order - don't be surprised if we charge you for materials and labor and a percentage for the inconvenience and additional overhead.

We'll go look at a job and give you a ballpark price. If you want to hire us, we'll give you a fixed bid. We don't usually do rehabs or remodels because they are full of indecisions and can get very expensive and time consuming. We usually build new very high dollar custom homes.

Any good GC will gladly give you people to talk to and projects to see. I love showing off my happy customers and beautiful homes.

[DannyTheGreat]

On my job sites I demand full control. If a GC doesn't like that he will be dismissed immediately. After all it is MY job site and I did hire them to work for me. The GC is there to manage the subs so I never step on his toes.

Ofcourse you should always honor your contract and pay the GC appropriately. I never trust anyone that I work with for the first time and wouldn't expect them to trust me either.

Unscrupulous is a word ever present in every profession I know of. This is why I only sign my contracts and buy my own materials. In my company I have several licensed contractors on staff who bring in numerous vendors. I only use a GC when my staff is all tied up and the project is too far from my office.

In luxury home building I certainly understand that clients are picky about things like light fixtures but that's a different business than what I deal with. My jobs are thoroughly planned out before anyone comes to give a ballpark estimate. Change orders come about (from my perspective) when a sub or GC made a mistake on their price and tries to back pedal.

The bottom line is if jobs are thoroughly planned and well organized from the beginning then projects run very efficiently and smooth. I normally never have problems with GC's because I keep them on a tight leash in the beginning until I can trust to give more slack. But when someone is doing something for money they will not turn down the opportunity to make a little more.

[cherdwelth]

All I can say is .. your GC's must really need the money and really need the work.  Are your GC's licensed? I doubt it because if they are true business people they would never concur with how you do business. I would never need a job that bad. Good luck.

[DannyTheGreat]

cherdwelth-

Are you suggesting that investors should give large sums of money to people they've never met after signing their one-sided contracts and hope everything goes well?

As I said, most of my GC's are full-time employees of mine (Licensed). Their job titles are Project Managers becaue they go outside the scope of a normal GC. They choose paint, carpet, appliances, fixtures, etc. along with managing subs.

When I have several hundred thousand dollars invested in a project I require full control over how things are done. I have done far too many projects for a GC who I don't know tell me how things are going to be. You probably work more often with retail homebuyers who are unsure of how things work instead of seasoned investors who rehab more houses in a month than the average GC does in 2 years.

If I do know the GC well I will

[cherdwelth]

Just a difference of business models.   Whatever works.

[imbeautiful1]

Well their are two sides to every story, but there is no way in hell I am going to just up and give any body money, and trust them with it, especially a person that I don't know. Just because a contractor has a good reputation means nothing, because you never know what they will do. Same thing with credit, today I could have a newly discharged BK full off collections and jedgements out the wazoo, but tomorro I can pay every bill on time and in full. On the other side of the coin I could have an 750 fico today never one late with five credit card with limits of 10k or more, and a 100k credit line, but tomorrow, I could max out all of my cards, wipe out my credit line, and hid from collectors. Is it likely maybe not, is it possible, yes indeed, had it happened many times over, and you're right.

Anyway, if a contractor won't let me purchase my own materials than I think one thing, they want to tax (tax, a hood term if you will meaning, to inflate prices) on my materials, and why should I put up with that? I guess you shouldn't trust me either, but atlest you could put a lien on my property. I can't put a lien on your *** if you take my money and run.

I am a very controlling person, and on my rehab, it would just amaze me, for my GC to try to control me. A GC's job it to control the subs, I control the GC, and that is how the puppet show goes, period. Actually the thought of it any other way is laughable.

And reading the contractors contract, doesn't help unless he will put all of my terms in their. That is like me giving a killer the gun and the bullet. It is my house it is my contract, again, insert period here.

[cherdwelth]

For the record - I as a GC don't control anyone - and at the same time won't be controlled by my clients. Trust is a two way street - that's true.

I never said to just sign my contract - I said read it - if you don't like it change it. Not a problem.

He who gives best in business - gets more business ... that's my motto. I am trusting and it works for me. We may live on different plains in the world.

An aside - in our state we have a Registrar of Contractors  - this state entity that we all pay into and who keeps track of contractors as to licencing, mediates complaints, and holds contractors to a very high standard. They also have a recovery fund for homeowners who have problems. Most states don't have this so I understand your concern. The contractor and consumer are protected in our state. That's why its best to hired someone who is licensed.

Do your thing - if it works... cool.

[imbeautiful1]

I never said to just sign my contract - I said read it - if you don't like it change it. Not a problem.

this makes no sense, but being the person I am, I like things my way, so if I didn't like anything in your contract, I'd change everyhing, meaning it would then become my contract.

He who gives best in business - gets more business ... that's my motto. I am trusting and it works for me. We may live on different plains in the world.

Very true, but he who scams in business, never has to work, and unfortunatley a lot of "contractors" have this point of view. Also, I gues it is good for you, that you are trusting, but I am not. I am young, and I learned long ago, no one, and I mean no one is trustworthy. Many people when given a chance to do right or wrong, may choose to do the right thing, but in my book they are still not trustworthy, because you never know what their underlying motives are. I don't even trust my one and half year old, who has found out how to rig the drop bar on his crib to get out when I am asleep, and then destorys the house. He doesn't do it because he doesn't know better. I know that because when he gets caught he literally runs, and hides from me. He does it because he wants to. Even though he looks sweet, and innocent, and trusting; he is not, plainand simple. I apply the same thing to adults. The only person in the world who is looking out for my best interest is me, so trust in my book doesn't make sense. I wouldn't put anything past anyone.

[cherdwelth]

I feel sorry for you.