Saving Money During Apartment Remodel (50 units +)

[Connor Stark]

Hi BP,

My team and I are remodeling a 92 unit in San Antonio. I wanted to reach out to see if anyone has any creative ways to cut costs when buying materials for the units. 

A lot of times we go through home depot, or we have our PM handle it. Our current property manager has their own sister company that sells materials, and we've been going through them. The prices are fair, but they are bland and the quality is decent at best (see part of catalog below).

For example I can get a modern style kitchen faucet with matte black finish off of Amazon, with very positive reviews, and have it cost $45. Over 100 units, that would be saving $3,000 for a better looking finish. 

When dealing with large quantities of flooring or other material, I've heard of owners potentially going directly to suppliers/warehouses. 

Has anyone had any success in creatively sourcing materials for larger remodel projects?

Connor

[Tom Malloy]

Generally plumbers go to plumbing supply houses.  There the quality is generally better than HD and they can order however many they need with quantity discounts.  It might be worth your time to go to a couple of those places and price up and look at the quality of their fixtures.  They also tend to be more helpful explaining the products and installation because most of the guys behind the counter were plumbers at one time.  

The same could be said for light fixtures.  Find a few lighting supply stores and price them up.  Lights can be tricky on the commercial side because architects want certain colors and other options.  However, on the residential side they are pretty standard unless you have a picky architect demanding certain colors and brightnesses.

Most MEP (Mechanical, Electrical, Plumbing) materials and fixtures go through several brokers but buying direct is difficult unless you have continuous large orders.  With a supply house you can get some discounts on volume that HD will not do.  Note: due to continuous and large quantities of orders some manufacturers give larger MEP firms huge (40% and more) discounts.  A developer who puts in 150 units a year might get a 15-25% discount.  At that point it makes more sense to have the contractor buy the materials and put his 20% markup on it.  You can have that discussion with your bidders and have them actually price up the materials and equipment separately and you can compare bids.

Flooring can be bought direct a little easier but you need to be good at knowing exactly how much to get for each unit.  If an apartment room is 10'x12' and the flooring comes in 7' wide rolls then you will need at least 2 roles 10' long or one roll 20' long and you end up with 2'x20' of waist per room.  If you go to a flooring installer with an office they can pretty easily mark up your blueprints on CADD (Computer Aided Design Drawings) and give you exact quantities to order.  We actually get those drawings with bids from most flooring contractors but I work for a large commercial contractor.  You may have to (and should offer to) pay for this service because it is very valuable.  Once you have the quantities you can send it out to different manufacturers and ask them to price it up.  

It's important to note that contractors make part of their profit on material and equipment markup.  Generally it's about 20% and it's an important part of their business.  When you take it away they are only making money on their labor which cuts out the hedge that the material markup provides if something goes south or the extra profit if things go better than planned.  Some contractors won't let you take the materials from them.  With those guys you should ask what their discount at the supply houses is.  If they can get 35% off and only charge you 20% markup it's better to let them have it if you can only get a 10-15% discount from the manufacturer.  

Millwork (cabinets and countertops) can also be bought from large millwork companies that do not do--or subcontract out--installation.  There are big companies in Utah, Oregon and other states that can be contracted to supply all the millwork.  Finding a contractor to do install only is much easier because paying for all those materials gets costly versus just installing.  This is a good place to save some money.