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Updated almost 8 years ago on . Most recent reply

User Stats

17
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1
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Benjamin K.
  • Real Estate Investor
  • Springfield, MA
1
Votes |
17
Posts

Bid Packages for Speculative Homes?

Benjamin K.
  • Real Estate Investor
  • Springfield, MA
Posted

All,

Does anyone who is building a spec house create a "bid package" and send it out to the local contractors for bids? Anyone GC themselves and split it up (site work goes to one group, framing to another, etc) and have multiple bid packages?

Is it worth it vs. just calling a bunch of contractors and having them come out and take a look?

Most Popular Reply

User Stats

249
Posts
359
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Scott Choppin#4 Land & New Construction Contributor
  • Real Estate Developer
  • Long Beach, CA
359
Votes |
249
Posts
Scott Choppin#4 Land & New Construction Contributor
  • Real Estate Developer
  • Long Beach, CA
Replied

Hi @Benjamin K.

I would be happy to help guide you at a higher level, and then get into more detail if needed. 

The way to approach this process is as follows (Edit: I see you have previous experience from your later post, use below as you need and if has value for you).

For now, we'll assume that your zoning is in place and works for your design.

1. Hire an architect to create your full set of CD's (Construction Drawings), with the component plan sections as follows: Architectural, Mechanical, Electrical, Plumbing, Structural, and (sometimes) Civil Engineering. 

2. Inside your plan in the notes in various sections, or in a separate specifications book ("spec book"), you would (or your architect) list the various materials, paint, carpet, countertops, flooring, appliances, etc that you want the contractors to bid. You don't have to do a separate book. On smaller projects, normally the specs are integrated into the plans. Sometimes, when a developer knows what they want they don't have any specs, just the drawings to build, they supply the materials specs to the contractors separately, or sometime not at all when a contractor has worked with you a lot, they know how to bid it already.

3. Submit your plans and specs to general contractors to give you a bid, and tell them to bid "per plan and specs" so that when you receive bids, you are requiring them to bid the same package of plans/specs as everyone else. 

If you don't have construction experience I would stay with using GC's. It will have a higher cost, but will allow you to observe an expert in action, see how they choose and manage subcontractors, and how the process moves along. Just make sure you pick the right GC, use your trusted network for referrals, choose a GC that has done your type of project before, check references including active build projects, and go see active build sites (look for clean, well managed site conditions). Do a few of those, and you can they start to think about managing the process directly using subs. My 34 years of experience is this: use a GC, free up your time to pursue more capital and more deals to work on. That's where the real value in the real estate development process is, not in the physical build out. You can hire folks to do that while you work on deals.

Hope that helps. I am an offer of help.

Thanks.

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