@Emanuel Rivero
Check into the licensing requirements of contractors in your area. I suggest this since we are investing out of state and discovered that contractors only file for a permit and do not need to have any experience or pass any trade exams. In California a contractor takes classes and exams similar to a real estate agent however the classes are focused on building and construction. Contractors must know the UBC (universal building codes). Know the state laws also. For us there is the going rate on the street and what I'm willing to spend. Negotiate hard. When they cite the cost of insurance and workman's comp ask for the insurance certificates. Many do not have them. in CA, maybe other states, owners may not be covered make a call. We have a couple of guys who show up as labor now (home state) and will work for $150 and or $250 per day cash money at end of job. Some work needs to be redone, and we pay for it, but work is 98% on. One does everything except plumbing and electrical the other is a licensed contractor and only takes our jobs when he has no work for his guys.
In CA contractors can only charge 10% of the money upfront. We stick to that and set time and materials limits in contracts. Not to exceed ____ days or repairs to be completed by _____. Materials costs not to exceed _________. For long projects we also set draw dates for payments and what will be completed for the draw to be paid with a 20 to 30% hold back until completed. There may be 2 to 4 draws. If the work is not completed by the draw date we do not release partial payment. If the contractor states he doesn't have money for payroll we tell him not our problem we have a contract. We also keep track of who works on site and obtain labor releases from each person. When we make final payment we make check payable to contractor and any company that delivered materials directly to the site if no materials release has been provided. In CA contractors can place a lien, material providers if delivered directly to the house, and the laborers; hence why we ask for releases.
A couple personal experiences.
We ask our bids to break down labor and materials so we are not taken advantage of by one being inflated. For example we did a 2000 sq foot addition on a house and took the "approved" plans to a supply company who took a week to calculate all building materials needed. The wood alone as just under 9k. The contractors who arrived just quoted $175 to $250 per sq foot finished. The ones who broke down costs listed lumber costs as $27K. We were direct and asked how 18K profit was reasonable. We finished the project at $65 per sq ft finished!
When we consider labor we ask how many people are working the job and how many days. Keep in mind, in CA construction labor ranges from $125 to $250 per day, depending on trade and skill level. An assistant or runner may even be $100. We have been given bids for beam installation and told it will take 3 guys 4 days, cost $5k and that the beam was very expensive. We already priced the beam it was $375.00. As we talked we learned there was one gut one day, 3 guys another and 2 the final day (maybe one). We calculated in our head this as 6 people working one day, at $250 per day, highest wage this amounted to $1500 labor, beam $450 with mark up, $2k to $2.5k sounded fair. We laughed at the $5K bid. He said the beam was free and dropped price to $4K. We said the beam was $375 we will have it on site when they arrive. He then said labor was very expensive that he pays his guys $300 per day and had costs of close to $1000 per day plus his profit. We went with someone else, I helped lift the beam into place (26 ft beam) since they came with two people one day. It cost $1500 in the end and we used brackets which the contractor wasn't willing to buy.
I would suggest researching what amount of work a skilled and unskilled tradesman can complete in a given day. For example in concrete a single skilled laborer should be able to finish and set +/- 500 sq feet in one pour. If you are pouring 1000 sq feet you don't need 5 finishers only 3 at most. Know the scope of work with each type of project. If electrical is being done ask if the person doing the work is the licensed individual. We have had contractors bill for "electrician" but person wasn't licensed so we renegotiated. We are not the most popular with contractors, but we pay, pay on time, keep ourselves out of litigation, and avoid many problematic contractors. The two times we did not stick to our guns we had to redo the job since walls were crooked and not straight and went to arbitration with the "best" contractor in town. We did prevail but didn't get the whole amount of money asked for.
Sorry so long winded.
