I have a client that wants a house renovated for purposes of flipping. The house is in very bad shape. He wants me to price everything out. Thats fine but its difficult due to the nature of some of the things going on in this house.
He wants to spend about half of what the job is worth.
I know what I need (moneywise) to give him the product he wants, the problem is itemizing it.
When you price a large reno (piffin, Mike Smith, Jim Allen), do you just give a working budget (set of parmeters) or do you go through and itemize everything?
I know there will be change orders on this job. The floors are a wreck and i’m kinda afraid of what i’m going to find when I open them up.
In reality this house should be torn down but the client wants to save it and he wants me to do it.
Family…..They’re always there when they need you.
Replies
I'm thinking give some estimated costs in general breakdowns.............flooring x/ doors Y..etc. & see what he does. Or tell him $500.00 or whatever # that willl cover your time. This sounds like a chance to chase smoke.
"this dog may be old but he ain't cold. And he still knows how to bury a bone."
Lattimore
http://www.rehmodeling.com
Thats what I started to do.
Like I said, I know what this job will cost. Its smack in the middle of my stomping grounds and he likes the pics of my work and wants me to do the same at his house.
This house is so bad I kinda wish I was chasing smoke. He seems hell bent on fixing this house and like I said he wants me to do it. Thats great, but I need the budget I need.
As I sit here trying to itemize i'm finding my numbers are pretty well lining up with the budgets I have already given him.
Family.....They're always there when they need you.
Hmm,, I'd go at it with a time and materials idea. Give him a rough idea of what the job might cost,,and explain that this is the best way for him. If he's not happy with the progress, he can pay you up to the hour that you're there, and you can part ways. You're a hard worker, but not a miracle worker, and if he wants the job done correctly, you will deal with the little blips that flew in under the radar. Otherwise you'll be forced to cut corners to do the job on a price. Give him an overall and an explaination that the job will be $. And you'll keep him posted on problems along the way. I'm a reno guy,, but not that long doing it,,,, hope others give you better advice!
Take it or leave it,, my 2 cents!
I'm glad to hear that I was not necessarily wrong in thinking of budget by trade.
I'm not sure I like time and material, but if he would be up for it i'd be happy to do it.
Family.....They're always there when they need you.
I NEVER make as much on large jobs as the small ones. But they do get me work in the future,,and it's nice to know you're going the same place everyday.
I often on the bigger ones don't charge a big mark up on materials , if a mark up at all. I figure if you're working for a month or two or three and making your required wages to cover your expenses, the loss of headache is better than ....
But then again,, I'm just a small guy,, who's making a switch to timberframing as a lead hand. Loss in wages, but regular work, and no headaches!
This house is so bad I kinda wish I was chasing smoke. He seems hell bent on fixing this house and like I said he wants me to do it. Thats great, but I need the budget I need.
I once had a client like that, the new owner of an old farm house which he was determined to save, even though he knew nothing about renovations and their costs.
He simply assumed that it would be cheaper to fix it up than to demo it and build new. That POV is always logical to the uninitiated.
Prior to meeting me, he'd had talks with two different builders who'd advised him to burn it or bury it, then build new. Neither of them had bothered to show him prices because neither one wanted to do the renovation that he had his mind set on.
So when I met him and heard about those prior conversations, I decided to offer him a T&M deal. I figured that he could make his own decisions as we went along, keeping control of everything including the expenses.
He told me that the budget was restricted by how well his business did, month by month and that his main purpose was to make the place liveable as a weekend get-away.
As in your case, the house was near where I lived and I needed the work so I decided to be as flexible as possible about the business side of things, except my hourly rate and when I'd be paid.
We started out with his idea of "fixing it up a little", repairing and reshingling the roof, and continued from there. The way the roof went should've been a sign to him that this renovation was going to take some serious money, but he soldiered on, thinking that the roof was the worst of it.
His business went well enough to keep me and one helper working. He kept adding "new ideas" to the "fix it up a little" concept, things that didn't fit his original concerns at all.
In the end, he'd spent more than he would've to build a new home of the same size and all he had was a poorly designed living space with a new face on it.
And of course he blamed me for letting him spend all that money. But all he'd ever asked me, when one of his brainstorms arrived, was..."Can we put in new windows, a new bathroom, etc.", not..."Does it make sense to put in new windows...etc."
"Can we?" I replied, "of course we can". Then I'd figure a rough estimate for whatever it was and we'd proceed.
I didn't try to talk him out of anything because he seemed to have a handle on the budget and was making decisions according to his own desires and whims.
So, in my opinion, the thing we have to tell this kind of client is, "Once you start putting money into this place, you'll have a vested interest in completing it. It could easily turn out to take a lot more money than it's worth so, before you begin, think carefully."
Edited 8/21/2008 6:36 pm by Hudson Valley Carpenter
I've already warned him a couple of times that some of the things on his list could be opening up cans of worms he wants nothing to do with.
Last meeting, he asked if we could do this for under 20k? I emphatically said no, then he proceeded to walk the house pointing at more things he wanted done.
I nicely reminded him that everytime he points it costs more.
Family.....They're always there when they need you.
Thanks guys and keep them coming. I have to start writing this tonight to present him with something tomorrow.
The RE is now suggesting he add a master suite to this debacle.
I told him the garage is too close to the house. He says make it an attached garage.
I say great, now we have to rip the roof off the garage cause two parallel gables will make a great place for leaks and rot from all the leaves.
Family.....They're always there when they need you.
You are dealing with an investor. He has a number he is willing to spend. If that number is 20 grand and you know it can't be donefor that price, he is wasting your time and you are letting him.
Stop.
If you like spending your time for no return I have a rehab I'd like to discuss with you.
I agree. Mark, don't waste any time. Just float him a number that you mentally think you can hit and ask him if he will do the job at that price. If he says yes, then get to work verifying your budget.
It's the old ballpark trick. Ballpark it high and negotiate between his budget and your ballpark till you reach the compromise. This is important because he's already set an unrealistic budget and you have to regain control of the situation....or walk.
I was just talking with my HVAC guy about this. I'm gonna put a broad proposal together tonight and tell him this is what we need to do the work, period.
The big problem is that he doesnt even know what he really wants to do here.
First he wants to just fix the house, then a master suite, then a dormer.
The way this foundation is pieced together i'd be afraid to put a dish on the roof let alone another floor.
Family.....They're always there when they need you.
Personally I would let the invester float me a number. It will typically be way low and make walking away real easy.
He already did and it was lllllllooooooowwwwwww.
Thanks to all that offered suggestions on this. T&M worked out great for this proposal. I just finished writing it and I feel good about it. This way the guy can choose exactly what he wants done and everyone should be happy.
Thanks Again
Family.....They're always there when they need you.
MSA... let's know how the presentation of your Proposal went... very interestingMike Hussein Smith Rhode Island : Design / Build / Repair / Restore
Edited 8/22/2008 7:58 am ET by MikeSmith
All good.
I met with the client today.
He's in the field (I believe the marketing side) and was NOT crazy about T&M. I explained to him why this was best for his situation.
He finally relented, and we agreed to repair the foundation and see how well we can work together.
He cut me a nice deposit check for this portion of the job and we start the first week of September!!!!!
Thanks to all for the help.
Family.....They're always there when they need you.
Edited 8/22/2008 7:05 pm ET by MSA1
Hip Hip Hooray!!!!!Nice going Mark!
Thanks,
For whatever reason it didnt really occur to me to try T&M but once I explained how it would benefit him, and explained what he really needed to do to have a good product to sell he said okay.
For now were "starting" with the foundation. I think he wants to make sure my numbers are close enough then we'll go from there.
I told him with a proposal like this, if he's not happy we'll settle up for the week, shake hands and move on.
I think its going to work out well.
Family.....They're always there when they need you.
Geez I didn't realize you were that slow to start a job of this size in a week. Good for you in landing it.... I'm out till mid November for small jobs and spring for anything big.
Hope all goes well for you.
I've had nothing for two and a half weeks. The last three days I havent been able to stand still. I have another large one to give initial estimate for this weekend, then I have to look at a deck project, and a crawlspace job on Monday.
Hopefully we'll see a trend develop here.
Believe me i'm not complaining one bit, but its kind of funny with all this down time, he's closing on this house one week before I close on mine.
Anyone figure out how to be in to places at once yet?
Family.....They're always there when they need you.
I don't do many really big jobs anymore, but I do an itemized spreadsheet budget for all of my jobs except for small ones, like bathrooms, etc. For that I do a lump sum.
I started attaching the budget to the estimate when I decided to work for myself, and it has been a great marketing and management tool. I know I can potentially make myself venerable to nit-pick clients, but it's been a good gauge of client personality, and it has only been a benefit so far. It makes the design process much easier because they don't have to have me re-estimate every time they make a revision or change. They just look at the budget and do the math. The transparency has won me a few jobs already, since I don't know anyone else in the area who does it.
It also shows to unrealistic clients that this stuff costs money, and they can see where it's coming from. If someone has a budget that was created by unicorns then I let it go. It's not worth the time, and they probably can't afford the job anyway.
Edited 8/21/2008 6:59 pm ET by remodelman
First of all, I hope you're gonna bill him for this estimate. If you're not gonna do that, just take Blue's advice and float him a ballpark and see which way the steam comes outta his ears. Under no circumstances should you do a full breakdown and estimate of this job without getting paid for all the time it takes you to do it.
Second: There is no way I would touch a job like this except on straight T&M. Anything else would be certain to turn into a disaster.
Dinosaur
How now, Mighty Sauron, that thou art not broughtlow by this? For thine evil pales before that whichfoolish men call Justice....
Second: There is no way I would touch a job like this except on straight T&M. Anything else would be certain to turn into a disaster
You're like the 200th person to tell me this, but something about the way you worded it has struck a nerve.
I have enough sub prices in place and this way I can address his every whim on interior items and he can set his own budget.
Family.....They're always there when they need you.
#201 ...
if U really want a chance to get that job and lose that money ...
just ballpark it.
ballpark everything ... in phases ... high.
I do it all the time when I'm thinking someone's not serious.
this way ... they either fall over dead from sticker shock ...
or say ... "Ok, that's about what we were thinking".
looking to sign a job in the near future where I did that. Didn't think they were seriously ready ... also didn't think they knew what the real costs would be.
Now, far as I can tell ... the only thing holding up a signed contract is me pricing everything out completely so I know what my real costs are gonna be.
I ballparked "high" .... they said Cool. Then I sat down and walked myself thru it.
"high" ... was good ... as I remembered some stuff my ballpark forgot.
But ... since I went high ... everything should still fit nicely into that ballpark
win / win / win
we met quick and they got numbers quick. I might be doing a job I would thrown away. all the numbers should work out just fine in the end.
Jeff Buck Construction
Artistry In Carpentry
Pittsburgh Pa
Or if your first ballpark number turns out to be low, you call back and say, "I figured the price for that new addition we talked about and it came out just like I said. Now, did you want a roof on that?"
Yup!
on a side note ... I've noticed a trend over the last coupla years.
when I look at soemthing the take a wild a$$ guess ... (and keep that guess to myself) I almost always end up within a few percent off the actual numbers that took time to add up.
I also most always guess "high" ... just a bit ... but always to my favor.
and I seem to believe my guesses more.
when I sit down and put pencil to paper ... I always find myself thinking ...
"that can't be right ... that's TOO HIGH"
and I start looking for ways to shave a bit here and a bit there.
start to question the numbers.
I've foudn that on small jobs where I simply "guess" ....
I do better, and save time!
I remember one in particular ... 2 story addition bid. Worked on the neighboring house, HO's talked about getting financing and things looked good.
I guessed ... $80K.
spent a coupla days drawing and adding ... added up to $78.5K!
never got the job ... HO's decided to wait till spring ... hold on to that financing ...
by next Spring they called and said they wanted the same addition for $50K
somehow lost $30K over the winter!
jeff Buck Construction
Artistry In Carpentry
Pittsburgh Pa
by next Spring they called and said they wanted the same addition for $50K
somehow lost $30K over the winter!
Someone probably told them that contractors starve during the winter, so they'll be ready and willing to work cheap on the first couple of jobs in the spring. Or they dreamed that up on their own.
I've heard that kind of #### more than a few times.
and I seem to believe my guesses more.
I've never been good a guessing, mainly because I'm always too optimistic, never think about lost time, things not going as planned.
I suppose that's a good way to look at life, but it also means that I've never made the % of profit I was aiming at.
Thanks Jeff, I can still hear this guy tomorrow say, "yes, but what will it cost?".
This way I can say "whatever you want it to".
I know how much it'll cost and I know what will bring him money at the end.
The question is will he listen?
Family.....They're always there when they need you.
here's one of my favorite lines ... feel free to use it.
"we can fix anything .... make any problems go away ... just depends how much money U want to throw at it".
Jeff Buck Construction
Artistry In Carpentry
Pittsburgh Pa
Or the motto of my old carpenter's local, coined by yours truly, "Anything we phuck up...we could fix".
Edited 8/21/2008 8:21 pm by Hudson Valley Carpenter
I have a slightly different twist. . .
"you can fix anything with time and money, it just depends how much of each you want to spend."You cannot convey tone in an email.
I've been plagarising you for years.
Family.....They're always there when they need you.
Amen. I hope he gets it. There's a lot of experienced guys here saying basically the same thing about this type job for this kind of client.
Edit: Good, MSA1. You did get it. I thought he made that point very well too. There's something about hard won experience. It transmits clearly, even on message boards.
Edited 8/21/2008 7:49 pm by Hudson Valley Carpenter
I didn't try to talk him out of anything because he seemed to have a handle on the budget and was making decisions according to his own desires and whims.
I did a job very similar, t&m on everything, and I needed the work at the time. So much wasted money. Guy kept trying to build the taj majal out of a pig's ear. Difference was, we all tried to tell him so - but he wouldn't listen. Turns out it wasn't his money he was spending, it was his investor's.
It ended ugly - investor took a huge loss, had to liquidate everything he owned and move into the money pit, drive 2.5 hrs. to work, and 2.5 hrs. back.
Bottom line - even if you'd told him, its doubtful he would have listened. As you said, the handwriting was all over the wall from the beginning, he didn't see it because he didn't want to. Later on when reality came and slapped him upside the head (as it always inevitably does), he just needed someone to place the blame with so he could go on believing his fantasies about his own judgement.
The guy I worked with is bitter about how things turned out, but doesn't take ownership of one iota of blame himself. Some people just never get it.View Image “Good work costs much more than poor imitation or factory product†– Charles GreeneCaliforniaRemodelingContractor.com
The job I mentioned became a rental for the HO who'd spent too much on it, within a couple of years after completion. It probably took him fifteen years or more to recover his investment but it's still in his family, pumping out income every month.
Most of the smart guy's around here go T & M on remodels with projected costs for each area . Imo you need to talk about the unknown possibilities of extended rot or undiscovered damage costing more then estimated .
Sounds like putting a Band-Aid on could be a big boo boo .
regards dusty
Here's my foundation woes. House was originally a pier house. Some yo-yo came along and built an actually good foundation under half the house, too bad he built it three inches too low.
That makes task number one crawling into the crawl space and jacking up literally half of this house and inserting and additional sill plate.
The other side of the house (about 25') is still on undersized piers (the only thing I saw holding up that side was dimensional 2x4's), so that side need a foundation.
Then one room has a huge hump in the floor from where the house used to end. We have to pull up the floor, remove old piece of foundation, and resupport this area of the floor, then reinstall flooring.
I coud start another thread about the attic alone.
You get the idea.
Family.....They're always there when they need you.
Edited 8/20/2008 10:55 pm ET by MSA1
Edited 8/20/2008 10:55 pm ET by MSA1
Like Jim said, we don't break down prices. We typically have the figures in house and will talk about an item or two in conversation but that is it. Funny how many people act iritated when you tell them that and call back later to book the job. Just had it happen last week. DanT
We don't break out any prices. If a client has a specific reason for knowing a specific part of the job, and tells us during the interview process, we'll make exceptions and break something out. They might have an uncle who does the flooring and wants them to do it if it will save them a bunch.
So, on your whole house renovation, including the foundation work, they'd get one lump sum price. There would be a bunch of items with allowances on them. We set the allowance price based on the interview. In your case, everything would be at builder grade low budget because you've already stated he's under-budgeting.
When they are way under budgeting, I wouldn't waste too much time. I'd take the info home and do nothing and call them the next day and float them a trial balloon with a number that I might be able to reach.
jim....<<< 108646.9 in reply to 108646.1
We don't break out any prices. If a client has a specific reason for knowing a specific part of the job, and tells us during the interview process, we'll make exceptions and break something out. They might have an uncle who does the flooring and wants them to do it if it will save them a bunch.>>>>if the owner wants to take care of a portion of the job ( in this case , the uncle doing the flooring ) i always include the markup for that portion in the lumpsum of the job... face it, you will interact with the uncle just as much as yo would with your own sub... probably more... so there had better be money to administer that alsoMike Hussein Smith Rhode Island : Design / Build / Repair / Restore
"if the owner wants to take care of a portion of the job ( in this case , the uncle doing the flooring ) i always include the markup for that portion in the lumpsum of the job"
I do the same. In fact if I am installing client provided material I include markup for that knowing if we damage it or if they bought a bit to little we will have to go get more keep production going. By making some money on it I can cover these costs and not worry about it.
Where are my tee shirts? DanT
good question !
i'm looking at them....
ooops
XXL is scarcer than hen's teeth.... if you lose some weight and drop down to an XL I got lots....
I'll send you out my last RhodeFest XXL in tomorrow morning's mail.... just went to the post office... they say 3 days Mike Hussein Smith Rhode Island : Design / Build / Repair / Restore
"XXL is scarcer than hen's teeth.... if you lose some weight and drop down to an XL I got lots...."
Wait a minute. You asked me for a XXL and I promptly cough it up, and now you want me to lose weight???????!!!!!!!! :-) DanT
More so. Thats one thing i've learned.
Cousin Larry will be a much bigger hassle than your own floor guy mainly cause he's gonna come in for one hour on Thursday, three hours on saturday and should be done a week from whenever.
Family.....They're always there when they need you.
Break it down like this:
1 gallon unleaded: $3.79
1 book matches: no charge
Being at the bowling alley across town with the owner when the place goes up: Cost plus contract to construct new dwelling
Hi are you a gc ?? or a carpentry contractor ? seems to me that most good carpentry contractors always become good gc ! seems to me like he wants to be the gc but just wants your brains give specific bubget details numbers for the areas of work related to carpentry ! wait till he has to run the electrician and hvac guys let them give him the extras !! plumers boxes pipe chases blocking for outlets
T+M, Fixed bid, you still have to invest the time to start with a realistic estimate. I really like Shelternerd's tagline "you can't possibly work hard enough to overcome a sloppy estimate" (or something like that).
And of course, SOMEONE has to pay for the time to do that estimate. You might get paid in dollars/hr or you might decide to work speculatively and invest the hours to ultimately get the job. Either way, the time spent estimating has to be accounted for in the estimate.
Of course, the bigger the risk, the bigger the potential gain. At least that's what we hope.
Of course, the bigger the risk, the bigger the potential gain.
Words to live by.
Family.....They're always there when they need you.
I'm GC on this. I've gc'd about 8 of them (most my own projects) and i'll be doing some carpentry too.
I like both and it usually works out well. Strangley enough, for all the work this house needs, there (at first sight) doenst appear to be much for sparky to do here. The guy wants to avoid opening up walls and the panel is newer.
The thing is, I know what this job will/can/should cost and if I cant convince him of that tomorrow I have to move on.
I'm really hoping T&M will work with this guy as he can now pick and choose as his budget dwindles.
Family.....They're always there when they need you.
i know what you mean !! its just so hard when you know how it should be done and what it should cost to turn your head !! im not very good with typing my thoughts but boy i can talk you to death LOL
really sounds like the energy in the proposal & contract will have to be planned out very well good luck !!is this job in an area where you have a good name ?? if so tell him you do not sell hyndais
Its right in my wheelhouse in Ferndale. I know everyone in the building dept. and I have a very good reputation with them.
The job is about three minutes from my shop so when I (per usual) forget a tool its right around the corner.
Family.....They're always there when they need you.
WELL DID YOU WIN ???? I HOPE SO