The Art of Shopping Around


It’s been real busy this past week. So far we’ve found a deal, got it under contract, and got inspections. We are closing on Thursday (2/24) and will start the renovation on Friday (2/25).

I wanted to create a blog post on here that will hopefully reach someone in all areas of business, The Art of Shopping Around.

So far on this house I’ve got over 20 bids from contractors. Some were for small $250 jobs, and some were for large $29,000 jobs. Trust me, there is nothing more frustrating than meeting with 5-8 different people per day, for something different. Many people will hire general contractors and not worry about the headache.

I’ve got some experience in rehab & development, as well as project management, so I decided I would find out first hand how much the general contractor would charge me. I got bids from about 20 contractors for all different scopes of work. I got bids from 4 different general contractors, and the rest were individuals doing various things. For each type of work that was needed, I got at least 3 bids on the job.

  • GC #1 bid: $29,450.63 (materials & labor)
  • GC #2 bid: $6,210 (labor)
  • GC #3 bid: Can’t open his attachments, GC’s use PDF or DOC files

Wow. We’re looking at about a $23,000 rough difference.. What gives here? All I need in labor is some paint, granite counters, appliances, and tile. Not $23,000 worth though.. less than half of that.

So I started shopping around and meeting with skilled laborers who do certain types of work (tile, landscape, carpentry, refinish floors, etc). What I found was that these guys are normally the best in their trade, because they focus on one thing and do it all day.. and they normally are cheaper than a GC.

My tile guy will install slate for $1.20 a sq. foot, and ceramic tile for $1 a sq. foot. Thats not too bad at all. What will cost the most in this will be your materials (slate can go up to $3.50 sq. foot). I interviewed and met with 4 tile guys.

My refinish guy will refinish the wood floors for $1.75 plus $200 in materials. My refurbish guy will refurbish the wood floors for $.50c a square foot. I interviewed and met with 3 guys who refinish hardwood, and only one guy who refurbishes (its a very deep clean / seal).

Landscape is tricky.. I budged $300 for landscape in my first deal, and my first bid came out to about $1,200. I told him thanks, but I had to find something more cost effective. This guy was telling me I was getting a good deal because of the sod ($.88c sq. foot) and the plants he wanted in my yard, as well as the mulch.

I priced this out at the local landscaping shop and I feel like I’m going into the wrong business. He was making some money on his end. If we have 2 day laborers removing / adding plants and mulch we will spend less than $250 on our landscape job.

I started pricing out cabinet 3″ pulls and knobs at Lowes and Home Depot. I had originally budgeted $1.50 for knobs, and $2.25 for 3″ pulls. If you’ve ever been to Lowes or Home Depot they have them, but they are not that great.  I started looking at my other options, and found http://www.usaknobs.com had knobs that were 1/4th the price from Home Depot or Lowes. I know the savings is only about $100 total, but each dollar I save goes in to my pocket.

I had some demo guys come over to the house to take a look at what I wanted to demo. They wanted $600 for half a days work and removing some ceiling fans and doors and trash removal. I had to hold in the laugh when he told me the price. I started to price out the dumpsters in my area, and I can get a 30 yrd roll off flat bed in my driveway for $300. Luckily we don’t need a 30 yrd, and I can just get a trailer for $150. This is another duty for day laborers at $10 an hour.

My original cost estimations and budget allowed for a $25,000 rehab with a 5% contigency, so in total we were looking at $26,250 total spent on the rehab end.

My insurance budget was $400 total for the job. I checked with 4 different insurance companies. My first quote was at $980 for builders risk 6 month term. I checked with 3 other places, and I got my rate down to $516.

By pricing materials out myself and eliminating the GC from the deal, we will be saving over $9,0000 on the deal.

This is why from now on, in all aspects of my life, I will be giving more attention to the art of shopping around. It’s not about being cheap.. it’s about being smart.

Until next time,

Danny

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About redannyday
Danny Day is a local Houstonian who has worked in many different areas of real estate. He blogs about real estate investing, trends, and data that relate to micro and macro markets in the United States, and Houston.

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