Last fall I offered a builder $30,000 to build a 1,800 sq ft house. for a house that he said would run in the $100,000 plus range for construction costs. He said that he would have to charge double that for it to make it worth his while. those numbers seem a little excessive to me. I was under the impression that the going rate was 15 – 30 % of cost. can anyone tell me what builders are charging these days.
P.S. I live in BC Canada
Performance improvements for the prized homes of an influential developer who wanted us all to be able to own one.
"I have learned so much thanks to the searchable articles on the FHB website. I can confidently say that I expect to be a life-long subscriber." - M.K.
Dig into cutting-edge approaches and decades of proven solutions with total access to our experts and tradespeople.
Start Free Trial NowGet instant access to the latest developments in green building, research, and reports from the field.
Start Free Trial Now
Replies
Exactly what his he going to be doing to build that house?
Set in the office, call sub's when needed, pay the bills, and visit the job once a week and has a full set of specs down the to brand and style of the door knobs.
Or his he going to be laying out the foundation, doing the rough framing, coordinate your visits to the supply houses for tile, cabinets, appliances, plumbig fixtures, trim, etc, etc. and then doing the finish work on the house.
well...basically I would do the foundation and framing with him. (I am an experienced framer, but not builder) he would deal with all the other subs ie: plumbers, electrical etc. I would also assist him with the finish and trim carpentry. He would most likely do the painting as he is an experienced painter and does his own painting for the houses that he builds. Again that would be something that I could assist in. same could be said for any flooring other than carpet, as he usually does his own tile work or hardwood flooring. most other stuff would be hired out and he would be in charge of that including site supervision... we didn't get too far into specifics, because he right off the bat said that it wouldn't be worth is time for the price. But what I've laid out is usually how he builds his houses, except that in general he prefers not to do the framing. ( I have framed 2 of his houses with him ) Other wise he subs out the framing.
Edited 5/7/2005 2:16 pm ET by nails
Nails,
You seem like a good guy, so please don't take this the wrong way.
You expect him to do 1/2 the foundation, 1/2 the framing, more than 1/2 of the trim, all the painting, all the tile and hardwood and supervise the rest of the subs on an 1800 sq ft house for 30G?
Now I understand how you're looking to come in around $55/sq ft.
No offense meant, but I'd walk away too. It's not a very good deal for him.
Unless, of course, I missed something.... wouldn't be the first time.
If the project is located in some place like, Turtletown, TN, I would believe these numbers. Framing goes for under $5/sf there, and pretty nice places get built for less than $60/sf.
British Columbia? I have no idea. And, the currency is different.
Good points Gene... sometimes I get lost in my own little world!
$5 a sq ft? Better be a slab on grade, one story, low pitch vinyl wrap job with four corners! I just put a proposal together for 2250 sqft addition that's averaging out around $18! Youch! I wish I could afford me! LOL.
No offense taken. I am a framer ignorant of what builders charge. That's why my post is titled "what's the going rate?" all I know is that. I read recently that that builders tend to charge 15 - 30% of cost. He told me that his last house cost $100,000 to build, i wanted him to build something the same, $60,000 is 60%. So I am just trying to make some sense out of my ignorance and his numbers. The $30,000 also was arrived at because he had offered me $30,000 to build houses that he would finance. We would build the 1st one or 2 together then I would get $30,000 per house to do the same tasks which he had done.
Well, judging from your last post and some of the information provided in others' posts I'd say the numbers sound reasonable for your locale. So I guess I'm not sure what you want to know.... sounds like you already know your answer.... either that or your partner is bad at math.
It sounds like you're saying that this guy thinks it would be ok for you to do this work for half of what he wants you to pay him to do the same work. Am I getting that right?
EDIT: Maybe this fella just has a problem with working for someone who used to work for him... even in a subcontractor relationship. Maybe that's why you got the brush off? Me? I'll work for anyone doing pretty much anything if the money's right! Ain't too proud to make money.
Edited 5/7/2005 10:33 pm ET by dieselpig
"He told me that his last house cost $100,000 to build,"Define cost?Was that just the cash that he had to payout for materials and sub-contractors. Or does it include "equalivent wages" for this on the job labor.Those details makes a huge difference.
Hi Bill, costs were for all expenses outside his labour. It was based on his orignal proposal to me. For more info see my post to SamT.
Edited 5/8/2005 1:41 pm ET by nails
Look at it this way, if you tie the guy up for six months for $30K he's making peanuts. If he can slam it up in 3 months he may not do too bad depending on his overhead.
A house in the 100K range is another story
He does his houses in about 4 months with minimal overhead.
Where about in BC? Hope you are not close to Vancouver, it's boom time there isn't it?
If it's general contracting without him actually getting into the trenches, I would say 15-20%. But if he's swing hammer and toweling mortar, you have to pay him for that.
$55 per sq ft? Is that just the frame? Kind of low to me.
Vancouver Island, (courtney, to be specific)
what would you charge? (roughly - i know you do not have any plans to look at) with construction costs at around $100,000
I'm not trying to say that I am right, I just want to understand the pricing. what does a builder make in a year. As a lead hand framer $50,000 - $60,000 a year it's hard to support a family here in Canada. I want to become a builder, but it seems to be a mystery as to what a builder makes or charges. You said 10- 20% and more if he pick's up a hammer. Well 30% is more. how much more do you mean? according to his numbers he wants 60% Is that about right? If so - ok.
I'm in Burnaby, can you send me a small plan set? I am doing a house, and a garage suite this summer, so my numbers are current and in CDN $...Cheers,Phil."If 'tis to be,'twil be done by me."
I don't have a plan set as the idea never got that far. I abandoned the project. I do have a copy of the last house that he did which would have been similar. However I think it would be inappropriate for me to send them to anyone without permission. I do very much appreciate your offer. - cheers to you
I am in your area, and for a good quality built home, that price is completely fair.
Hi Nails........I'm Nails also. checked your profile and see that we are in very different areas . I've been around since before the reorganization in 2002 a nd from time to time have asked some really dumb questions and wouldn't what my comments to reflect on you . I don't know how to do it but maybe Taunton can help us clarify the procedure to establish " whos who". Welcome and isn't strange how great minds think alike? :)
we wouldn't want his posts to reflect poorly on you euither. All hee needs to do to avoid confusioin is go to his profile by clicking on his name andchange his screenname to nailstoo or nailstwo or toenails, or what ever he wants.
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
Hi nails, I will modify my name. You were here 1st. nice to meet you :) nails2
>>I was under the impression that the going rate was 15 - 30 % of cost.
That sounds like Markup or Margin
It sounds like you may be confused about 'Cost,' 'Selling Price,' 'Profit Margin,' 'Markup,' and, 'Over Head.'
So if you are offering $30K in addition to his $100K costs, ($130K) I could see it.
>>he would finance. We would build the 1st one or 2 together then I would get $30,000 per house to do the same tasks which he had done.
Now there, he is offering $130K to you for you to build a house that costs you $100K. That is not the same as you offering $30, and him coming up with the additional $100.
Now a Joint Venture, where you put up 30 and he puts in 70, may work. The Venture should pay all subs and material. You and he would be subs to the Venture. He would be the Project Manager hired by the Venture. The Venture should pay him for use of his GC license. The profits made by the Venture get split 30:70.
SamT
Hi Sam, thnks for input. few things
>>>It sounds like you may be confused about 'Cost,' 'Selling Price,' 'Profit Margin,' 'Markup,' and, 'Over Head.'
I'm sure that I am. I am not a builder and have never been involved with the costs of building a house, outside what I get paid as a framer and the small side jobs I have done usually alone or with a hired helper. I've been trying to learn more about the financial side of things from books and so on. One thing a bit frustrating for me, is that all books I've found are by U.S. authors. The principles are the same but dollar amounts are hard to compare. (more in involved than simply the exchange rate) So I am trying to learn more.
>>>So if you are offering $30K in addition to his $100K costs, ($130K) I could see it.
yes or 30K and i pay the bills, whatever or however we decided to work it. But idea was he gets $30K
>>>Now there, he is offering $130K to you for you to build a house that costs you $100K. *That is not the same as you offering $30, and him coming up with the additional $100.
He is offering me $30K and pays the bills.
no *I never said he had to come up with $100K
The idea was I wanted to offer him the same as he offered me. For his houses he would pay the bills.For my house I would do the same. The reason I didn't go for his idea was because he lives on the island and I live on the mainland, we are five hours with ferry ride apart. My family is stronly opposed to moving to the island even for a couple years. But I still wanted to figure a way to work with him, to get a start in building so i offered what he offered me.I was willing to make the trips to the island thruout the project.
I also proposed a 50/50 financial split. where I would get paid for what ever hours I spent on the project and he would bill for whatever hours he spent. including his time managing all the subs etc..He didn't like that either.
It's a long story as you can tell it's starting to become.
I like the proposal you came up with the 70/30 split, that seams to be a variant of the scenario where we each billed for our hours.
nails
US dollars and markups and such really do not apply. Only YOUR market applies to your situation. Islands are different creatures. It becomes a micro pool in a larger subset. What applies on the island cannot apply on your island. Even though there is only a ferry ride away. The pool to draw from is limited. How many builders on the island? How many want to do a ferry ride every time to visit the site? Market supply and demand is determining your price to build. And at the price of a finished house it doesn't sound like there is a lot of "supply" to choose from.
As to what the GC gets there is a very wide range. 30k might be way too much. Might be just enough. Seems like for all of the labor he is doing himself 30k is WAY low. 30k might be enough to supervise, coordinate and warranty. 30k in addition to hard costs is a 23% margin. I know my OH runs about 24%. But we are not a homebuilder. We sub to GCs.
But your GC is doing framing, tile, etc, and would need to be reimbursed for his contributions in those categories. So if the 100k hard cost includes 2k for tile, 8k for framing, 6 k for trim he could very concievably be getting 46k.
Long story short, there is no "going rate"
Hi SCRAPR, what you say makes sense. Basically you're saying 30k is way low. So 60K would be way high. you're 46K is basically right in the middle.
Edited 5/8/2005 2:37 pm ET by nails2
It sounds to me that he simply does not want to work for you.
Assuming that you work approximately equal hours on your joint projects, he must make an additional cut on his 100k construction costs but I doubt that it is 60k. Therefore money is not the main stumbling block.
He probably likes things the way things are. He is in control and is compensated for it. Once you have done a few houses, the extra work and risk is minimal.
My advice is that you learn as much as you can while you work with him, save your money and take the plunge on your own when you are ready. Good luck.
Thanks, SCHELLINGM. That is what I have concluded. We have worked well togther in the past, but I think you are right in that that he is happy with his set up the way it is. Right now he likes to build a house and then take 4 months or so off then build another. So I din't know if he would want to spend the time on another house. I guess it just boils down to not being worth his time. which everyone has that right to decide for themselves.
Nails2,
>>I'm sure that I am.
Look on the left of your screen. The threads are organised by subject. Click on the subject header/title "Business", thaty will show you the last 50 newest business threads.
At the bottom of the list is a "Next 50" link.
Why don't you take some time to browse the "Business" folder and see what you can learn. YOu won't have to read them all, I suggest starting with the ones indicating mark up, profit, pay rates, and other financial keywords.
Once you complete reading a thread, it will not be on the radar the next time you browse, so if you want to come back later, bookmark that thread.
SamT
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
SamT.... will do.Thanks a million. and thanks for info about using the sight.
nails2