For the next rehab in the park I told all contractors bidding they had to give one flat price for parts and labor. I interviewed about 10 applicants who responded to a craigslist add, and after reviewing their references invited the four most promising out to give bids on the house. It’s a pretty rough house, and three of the four were scared off by the prospect of giving one flat price and they never submitted bids. The only bid I got came in on the higher side. I was wondering if other park owners could help me out with a couple of things:
Even on your rougher houses do you always require contractors to bid one upfront price for parts and labor?
Here is the one bid I’ve received, how does the pricing look to you?:
I would love to compare that bid to others, but no one else even chose to bid on it!
In the past I have had rehabbers bid for their labor only and the park would supply the parts, but that has the obvious drawback of inviting waste and embezzlement of supplies.
I’ve looked at your bid and it looks reasonable considering how much work this house needs.
But given the amount of work needed, my initial question is, what is the age and size of this home? If this is a 1970 12-wide ‘beater,’ then I’d suggest you scrap the home (which may cost $0 - $2,000 based on salvage value, if any), and spend your $10k on a new Legacy home (they will finance the remaining $20k with $10k DP).
If this home is a 1990 or newer, then I’d probably go through with the rehab provided I could have it rented or, ideally, RTOed, at $500/mo. or more.
We only work with flat bids on homes, except in unusual cases where we may have to tear into a wall and can’t know exactly how much work will be needed until we do a little demolition. Even then, we get a bid for ‘if no surprises’ and ‘if surprises’ once we get into the wall.
We would usually divide up this amount of work for a total rehab between a few vendors (e.g. the heat and air work vs. the painting vs. the flooring), but we are still getting fixed bids from each vendor.
The work scoped in your bid looks like very-easy-to-see work (painting, flooring, and attaching a vapor barrier). This looks like ‘no surprises’ work to me, so vendor(s) should be comfortable committing to a fixed bid for some or all of the work. We stay away from vendors that won’t commit to do the work at a fixed price. But it is reasonable for a vendor to expect you to front the cash for materials. We never expect our vendors to come out-of-pocket when they do work for us (although several are comfortable doing so).
Thanks for the advice and insights Jefferson, that helps me out a lot. I think you’re also spot on with “surprises in the house”. Despite the aged condition of the house after years of abandonment, it doesn’t show any significant water damage, so the contractor should be able to tell first walk through what needs to be done.
I hadn’t even considered scrapping the unit, even though it is an early 1970s unit. My park is in Ohio though, so Legacy couldn’t be a provider. If I tore down the current unit, bought a repo, moved it in, and rehabbed it, the bill would probably run pretty high. I would also have peripheral costs like upgrading the concrete runners under the home and any other hidden lot repairs that wouldn’t pass the home moving inspection.