Ellicott City MD contractor charging >$300 sqft for rehab

Rehabbing & House Flipping
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Ellicott City MD contractor charging >$300 sqft for rehab

Waverly Rennie
Rental Property Investor · Dunedin, FL · Member since 2015 · 121 posts · 61 votes

Our architect has done a good job helping us draw up plans to rehab a wing of an 1880 property (including some tear down and re-creating) and suggested working with one of the three contractors he often uses. The contractor seems like a good guy but I can't believe how expensive the rehab is- $315k for an 800 square feet space! granted that's with a kitchen, bath, new roof etc. but dang! This is our primary residence, not one of our investment properties, and it would be turnkey, so we are paying retail.

We agreed way back to work with this contractor after meeting the three choices, but I am wondering if we should somehow bid this out instead of just going with the proposed contract. I don't want the builder to be out of pocket for his work preparing the estimate and doing the prep work he has done so far, and would be happy to pay him, but I wonder are we crazy to spend $300k on a MIL suite on a house that's worth $800k! 

Ideas? thanks in advance!

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Roy N.Pro Member
Rental Property Investor · Fredericton, New Brunswick · Member since 2013 · 7k+ posts · 4k+ votes
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@Waverly Rennie

There is nothing unethical about saying "stop, these prices are ridiculously high!"

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  • Ryan Dossey
    Real Estate Broker · Indianapolis, IN · Member since 2014 · 3k+ posts · 2k+ votes
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    I'm sorry..... Did you just say 315k for an 800sqft rehab? Is this an addition? 

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  • Matt M.
    Realtor · Denver, CO · Member since 2013 · 2k+ posts · 1k+ votes
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    3 bids minimum. ALWAYS. 

    I pay for design myself, then bring in guys to bid.

    1Reply
  • Colin L.
    Architect · San Diego, CA · Member since 2013 · 244 posts · 101 votes
    11y

    >300$/SF for just an addition seems very high unless you are going for very high end finishes.  how much work is being done in the existing home?  depending on the size of the home and the scope of work being done to rehab the existing portion, it may not be that out of line.  a home built in 1880 may need all new electrical, plumbing, hvac, insulation, sheetrock, roofing, etc, etc throughout.  

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  • Roy N.Pro Member
    Rental Property Investor · Fredericton, New Brunswick · Member since 2013 · 7k+ posts · 4k+ votes
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    Wow!   Even if you allow a premium one the per ft^2 cost due to "historical rehab factor", it would still be scary.   You could pull it down and build a replica to Passivhaus efficiency standards for less.

    Look here to see what Jason built in Maryland for $90/ft^2.

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  • Colin L.
    Architect · San Diego, CA · Member since 2013 · 244 posts · 101 votes
    11y

    I may have misunderstood, the problem.  if it is just a rehab and not an addition, that is crazy high.  

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  • Waverly Rennie
    OP
    Rental Property Investor · Dunedin, FL · Member since 2015 · 121 posts · 61 votes
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    @Ryan Dossey The architect said when we started on all this, oh the guys I work with usually come in around the same amount so it's better to just choose one and work with them. We started this process over 2 years ago before I had started getting into REI and I was pretty naive. So now I don't know if I can go back, ethically, on what we agreed to!

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  • Roy N.Pro Member
    Rental Property Investor · Fredericton, New Brunswick · Member since 2013 · 7k+ posts · 4k+ votes
    11y

    @Waverly Rennie

    There is nothing unethical about saying "stop, these prices are ridiculously high!"

    6Reply
  • Waverly Rennie
    OP
    Rental Property Investor · Dunedin, FL · Member since 2015 · 121 posts · 61 votes
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    @Colin L. They are in fact knocking down the end part of the wing (what had been a free-standing billiard room that was then connected to the main house by a summer kitchen) and re-building it from scratch. So that's demo and then new construction, with a master bath addition built out from that. The middle section, the summer kitchen is going down to the studs, and a second floor with dormers being added on top. The section next to the main house, also a bath, is being taken down to the studs as well. 

    as you say, it's all "new electrical, plumbing, hvac, insulation, sheetrock, roofing, etc, etc throughout"

    but he is charging 25k for the demo! which indicates to me he's charging a LOT.

    @Roy N. thanks for the link.

    Can I tell him i need to bid this thing out, and pay him for the time he has put into this so far?

    0Reply
  • Matt M.
    Realtor · Denver, CO · Member since 2013 · 2k+ posts · 1k+ votes
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    Remember, this is business. Did you agree to that price 2 years ago or was it just sprung on you? Call around to 2 other people OTHER THAN whom your architect recommended. Really you should find a recommendation from someone you trust rather that finding someone in the phonebook.  

    For point of reference, Denver is about $150sqft for new construction. My cousin builds multimillion dollar homes in Breckenridge for $250-300 a sqft. The finishes on his homes are spectacular as he has several medals from the parade of homes over the years. 

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  • Derek T.
    Real Estate Investor · Prince Geroge's County, MD · Member since 2012 · 392 posts · 104 votes
    11y

    $315k is insane in this area.   If you can give are detailed explanation of work that may help me give you a rough number but $315k is ridiculous. 

    1Reply
  • Roy N.Pro Member
    Rental Property Investor · Fredericton, New Brunswick · Member since 2013 · 7k+ posts · 4k+ votes
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    @Waverly Rennie

    We often perform deep energy retrofits and take places back to the studs.  Mind-you we would be using lower end finishes, but still.  We just finished a full gut renovation on this place in April at a cost of ~26/ft^2. That does not factor in my time (sweat equity), but does include my trades.

    From what I can tell, but following Jason's home build, our relative costs are higher here in New Brunswick than in Maryland.   Even with high-end finishes, I wouldn't expect more than $100 - $120/ft^2 on a renovation unless you are importing the rare and exotic for everything.

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  • Ryan Dossey
    Real Estate Broker · Indianapolis, IN · Member since 2014 · 3k+ posts · 2k+ votes
    11y

    You seem like a very nice lady. 

    I don't know about the ethics of your decision. But the ethics of their price don't look great. 

    Unless you're making the coolest 800sqft MIL ever!

    2Reply
  • Waverly Rennie
    OP
    Rental Property Investor · Dunedin, FL · Member since 2015 · 121 posts · 61 votes
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    Thanks so much @Matt M. and @Derek T. for your inputs. When we were first talking about this two years ago we were thinking it would be 200-250K, as I remember. I had a friend come by who is married to an architect who works here in the DC/MD area and she looked at what we were planning and said, boy that looks like a 300K rehab to me, and I was surprised.

    Would I be allowed to copy in what the estimate said if I left off identifying info?

    0Reply
  • Matthew Paul
    Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
    11y

    First you are in Ellicott city , in the high dollar area , so you get hit with premium prices . Now without seeing the plans , site and interior details , the price could be high , or it could be right on . 

    1Reply
  • Colin L.
    Architect · San Diego, CA · Member since 2013 · 244 posts · 101 votes
    11y

    I don't think its out of line for you to ask him to bid certain items out.  Ask your architect to help you identify areas for savings and line items which you both agree are high, such as demo.  That way he's not rebidding the entire job.  I don't know typical construction prices for your area but its a big home with significant work being done and it's probably not too far off.  

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  • Ryan Billingsley
    Investor/Realtor · Wentzville, MO · Member since 2014 · 846 posts · 431 votes
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    Unless it is a diamond counter top and wood floors from the petrified forest, 300k for a 800 sqft home is a scam!

    1Reply
  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
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    That pricing is insane unless you have specified everything custom. For that price NV homes can throw a 3000sf house/addition on your property. 

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  • Gilbert Dominguez
    Investor · Chicago, IL · Member since 2015 · 677 posts · 309 votes
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    It does not matter what has transpired up to now.  You have the right to cancel his contract pay him for work completed up to now and end of story. 

    Just stop the project and get bids from 5 contractors to finish it. If they are all in line then you may consider proceeding with your original contractor but $315K for 800 sq. ft?

    I have been contracting for over 30 years in one of the world's most expensive markets and I have never heard of such a high price. 

    Snap out of it and open your eyes. You are being charged retail price on a per square foot basis. Something is definitely fishy about your architect and the relationship he has with his suggested contractors. 

    I would definitely put the brakes on and check with other contractors , not someone recommended by your Architect that is for sure. 

    At least give yourself a chance to verify things on your own before just accepting to be gauged. 

    1Reply
  • Waverly Rennie
    OP
    Rental Property Investor · Dunedin, FL · Member since 2015 · 121 posts · 61 votes
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    Thank you all for your comments and advice. It is true that this is a very expensive location, it's all custom work, there are two bathrooms and a kitchen, and it is retail. 

    But I think I may do as @Gilbert Dominguez and others day and say to the builder, "Wait, stop, how much do I owe you up until now? I am going to bid it out to see what the market says. " If nothing else, if the bids all come in similarly high, I can feel good that at least I tried not to get gouged. Or I might do as Colin suggests and see where we can cut some cuts- we had already sat with him to see where we could cut some costs e.g. changing some of the way the architect had designed the cathedral ceiling in the (as @Ryan D put it) coolest MIL ever.....

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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
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    Waverly Send me a pm with the plans and I can take a look and let you know rough estimate what it will cost. And no I am not looking to get paid for this or bid the work, but I am very knowledgable and experienced to be able to tell you what it should cost
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  • Manolo D.
    Contractor · Los Angeles, CA · Member since 2015 · 4k+ posts · 1k+ votes
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    @Waverly Rennie Don't pay any more than $200/sf, demo is demo, no more than 5k, pay for dumpsters about 600-800/load that's it. Cancel the contract NOW. Your architect is a scammer. I hope you have an itemized contract with him that you know how much is for what. line item for drawings, for pulling permits, for estimates, for supervision, etc. The architect has no less than 50k on the back end if that 315k contract. Cut your loses and don't pay that demo charge, that's called front loading, they pack heavy price line items/big profits on the start (demo, earthworks, rough plumbing, rough electrical) then there's no profit on finishes like cabinets, painting, flooring, etc. legally they could get away with it since both of you signed the agreement.

    0Reply
  • Jason Hatfield
    Investor · Elkton, MD · Member since 2015 · 89 posts · 21 votes
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    Originally posted by @Chris Seveney:
    Waverly Send me a pm with the plans and I can take a look and let you know rough estimate what it will cost. And no I am not looking to get paid for this or bid the work, but I am very knowledgable and experienced to be able to tell you what it should cost

    Chris, you are why I love BP!  Your not looking to profit from helping your fellow investor.  Sure as hell beats the Gurus who would steal your life savings for the same advice

    1Reply
  • Jon Klaus
    Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
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    I think there is some good advice here so far. Something else to consider that may or may not work for you. Sell this home and buy a bigger home.  Shop around a bit, run the numbers, and see if that doesn't make more financial and lifestyle sense.  

    0Reply
  • Waverly Rennie
    OP
    Rental Property Investor · Dunedin, FL · Member since 2015 · 121 posts · 61 votes
    11y

    @Manolo D. that's very interesting information. We have been paying the architect step by step as we have gone through the various stages, up to SD and construction drawings which are done. Permits have been applied for but not pulled.

    @Jason Hatfield, you are right. @Chris Seveney is so kind to offer to review.  My husband is amazed at all the helpful advice and now understands why I have spent a little time responding to a few other people's queries talking about what I have learned in my limited experience.

    @Jon Klaus you are thinking out of the box! but we've been here, sharing the house with my sister and her husband, for 18 years. It has taken that long for the copper beech to get taller than my head! the wing on the right is what we are renovating and doing a second floor on the middle section with the two shuttered windows.

    0Reply
  • Alex M.
    Investor · Philadelphia, PA · Member since 2013 · 185 posts · 97 votes
    11y

    These costs seem astronomically high to me. Reading your post, it looks like you are a very "ethical" person, and that you do not want to just cut the guy loose. However, you do have a choice: 

    Why don't you call in 3 or more contractors - find them from folks here on BP - and ask for bids on the scope of work. Based on their prices, you could then turn to your original contractor, let him know what the other prices look like and ask him if he would like a chance to reconsider his costs and put in a more competitive bid. If yes, and the numbers are significantly better, great! go with him. If no, then go with the other contractor that you like best. 

    There is something to be said about liking the contractor, and getting high quality work on your own home, but you do not owe this guy anything for his initial plans (unless you have this in writing). I would encourage you to think of this as a business decision. You need to understand the comps (other contractor bids) and decide based on what best meets your needs and budget - not what makes you feel like you did right by a guy who is clearly pricing high based on his knowledge that there is no competition.

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