How do I find GCs that will work within an investor budget?

[Viet Hoang]

I'm looking for a general contractor in Jersey City, NJ to do a full gut renovation for a 707 sqft rental property.

How do I get "Investor Pricing" vs "Retail Pricing" from GCs? The bids I'm receiving vary wildly.

Bid #1: $95k (includes materials and labor) 

Bid #2: $60k (includes ONLY labor)

Bid #3: $30k (includes materials and labor but has inconsistent quality and reviews)

Thanks!

[John Errico]

Hi @Viet Hoang I'm an investor, but also run a construction company in north Jersey. In addition to the other comments here: do you have architectural plans for this project, and have all of the GCs you've spoken to reviewed them? I'm assuming, given the scope, that this is going to be a requirement for permits/the building department. In my experience on both sides of the table, it can be very hard to both describe the scope of the project, and understand the scope, without seeing it written down (and also very time consuming for contractors to come up with an estimate without the plans). Construction drawings will fairly clearly show what walls need to be taken down, plumbing, electrical changes, etc etc. 

Assuming when you say "full gut" that you mean new plumbing/bathroom(s)/kitchen, the $30k with materials quote is essentially impossible--materials alone would probably be approaching that number. So either the contractor doesn't understand what you're doing/requesting, or they plan to change order you significantly (i.e., charge you for additional work and labor) as the project goes along.

One important thing I would add re: contractors is--because one contractor is cheaper than another, this doesn't meant that you will actually spend less money. This is true for at least two reasons: first, as I alluded to above, there are (frequently) changes to the scope of construction as the process unfolds--either because you want something different, the building department requires it, or unexpected things are found. A higher quote will sometimes accomodate this, a lower quite might not--you should have this conversation with your contractor. Second, and probably most important, there are hard, tangible carrying costs to owning a property. If you're using, say, hard money (possible double-digit interest rates), or even your own cash (in which case you're looking at the opportunity cost of not investing elsewhere), there's an easily calculable "per day" cost to owning the property while vacant or not sold (interest/opportunity cost, taxes, insurance, etc). If a contractor costs, say, $10k more, but is able to finish the job 2 months faster, that quite possibly could be "cheaper" to you than the cheaper bid/GC, when you consider the carrying costs of the property. 

GCs are pretty notoriously bad at figuring out how long something will take, though sometimes this is because of complications/issues with permitting/the city. (By way of example, I had to spend about ~4 months resolving an electrical issue at a flip in north Jersey, simply because the electrical inspector was hard to deal with--that's FOUR months of carrying costs gone because of one issue). 

Anyways: long way of saying--the bids you received may cover quite different scopes of work, timing, and tolerance for unknown/undiscovered issues. That probably more accounts for the wide variety in prices more so than a GC thinking you are a "retail" or an "investor" client (though, frankly, I haven't gone out of my way, in my capacity as a GC, to charge more or less to clients based on if they are a "retail" or "investor" client). Beyond ensuring that they are all licensed and insured, I would ask them about some of the issues I suggested above and gauge their responses.