General Contractor costs

[Justin Todd]

hi, guys. I was curious if anyone knows what the typical "going rate" is for a general contractor on a normal single-family residential flip. this will be in Georgia. i've been communicating with one who wants to be paid a weekly rate nearing $1k and also 5% of the project costs on the back end. I haven't signed anything yet, but plan on buying a property soon and need to know if I'm getting ripped (or rather, if it's even a tad bit high). GC has been in the business for a few years and knows I'm newer to the game. rehab costs are going to be in the range of 70-80k, we've speculated. that makes his rate for a 6-8 week project somewhere around $9,000. that's a ton of money for someone who isn't driving a single nail. I understand the purpose of the GC position isn't manual labor, but that still feels steep for simple supervision, especially considering the budget is tight. if this was a school/hotel/restaurant/etc I could understand. do GCs normally charge both a weekly rate and a flat percentage on the end for single-family jobs? we already have all of the subs lined up, about half of which I brought. any input from you guys? all feedback is appreciated but please try to stay on track w/ the question at hand, which is: is this customary and reasonable? need to get this ironed out relatively soon. thanks in advance! you guys are great.

[Charles Goetz]

@Justin Todd

I don't really like this either. Maybe I'm just not completely understanding this, but is this GC using his crews or subs and running the job and paying everything or is there already the subs that you're paying and he's supervising? If that's the case, it's more of a project manager type role. 

I would think you would want the GC to have a reason to not drag things out and to be responsible for the project. I worked with a guy that had me run rehabs for a bunch of bank-owned houses. He paid me a fee plus I also billed for any work I did. He paid the painters, flooring, roofers, etc. I was responsible for keeping things on schedule. The problem was that these guys knew I wasn't writing the checks for them so when issues with the quality or time came up, it was a problem getting on the same page. With my own crews, things were a lot smoother. 

This set up may well work, but I believe there are better ways for you to go about getting the project done. It sounds like a pretty big rehab. I would hate to see a post in a couple of months about how you are having issues with this house. Personally, I would check around a little more.

Good luck with it.