breaking into the new home costruction trade

Bob Murray

All good advice above. 70% of my business is new construction with 2 GC's. The rest is service. I am a one man shop. Forunately I live in an upscale, tourist, retirement area and business is good. Many high end homes get built here. However, I am making a living. That is about it. If I could do nothing but service, I would. I would drop new construction in a heartbeat. It is nice work. It is good knowing there will be a place to go this winter while 50% of the service customers fly south for the winter. But it is difficult to stay competitive in new construction. I do top notch work, but that is a hard sell for the GC's. In order for me to keep making the money I am making, I basically have to be at the GC's beck and call (sp?).
If you have a good service base, build on it and stay there. You will be much happier and make more money.

Believe it or don't!!

daniel ( doctors heating & cooling)

we are a fairly young business that has established a great residential customer base . now we would like to know how to get our feet in the door of single & multi-home new construction. any advice would be greatly appreciated! send it to my e-mail if possible. thanks & keep up the good advice everyone!!

Kniggit

Don't Back off your bids

Basically the same thing applies to all customers, if you need a price to do something correctly, then thats what you have to charge, you can't operate at a loss, or cut corners. My single biggest pet peave is when General contractors hire a contractor "half" my price, and I am back making repairs less then 2 years later.

Good Luck
K

Bill Nye_2

Low bidder

In this day and age it is crazy but true, the job is awarded to the lowest bidder! You have to be crazy to compete to be awarded the opportunity to install the worst job money can buy!

If they don't want you for your talent and ability then I don't see why you would want to compete for price.

I have been around new construction ALL of my life. My dad was a new house plumber for over 30 years. He was employed by the builder. He never got rich but he made a living. He made more money on the weekends doing his own thing.

I also did new construction plumbing. My prices were competitive with other contractors but I installed more product and devoted too much time and effort on quality. I gained an excellent reputation but never was paid what I was worth. I went broke doing knock your sox off work.

So, you either need to get paid what you are worth and find the few elite builders who want and are willing to pay for quality or decide to be the lowballer and do down and dirty cut throat work to compete with your peers.

I usually did custom work directly for the home owner. They knew what they were getting and were willing to pay my price. Beware of the GC's though, they can be your best friend but remember any money they have to pay you is less money in their pocket.

I see the work in new homes these days and I am seldom ever impressed.


Don't get me wrong you can make a good living doing it but you have to find the right builders, the right customers and really good help. You have to have a crew to get in and get it done.

Ken D._2

New construction

That business is tough to make money on. Be very careful not to get in too deep. The general contractors will always pay themselves first and make you wait. And wait. And wait.... Be careful you do not get "on the hook". The GC. will end up owing you a lot of money and then use it as leverage so you keep doing work on the promise you will be paid when the next house sells, which hardly ever happens. The paid part, that is. They beat you over the head to get cheaper and cheaper, until you make nothing or less. I've seen it when a builder will constantly make changes in subcontractors with every cheaper price. The new subs are usually newcomers to the construction business and really don't know the pitfalls. The GC takes advantage of them until the sub goes belly up and its off to another sub. And watch extras. The builder will have you do a lot of extra work in the course of construction that he doesn't officially contract for, and stiffs you because you did not get anything in writing or signed for. The law is on his side. Listen to the other subs. If they are not getting paid, you won't either. The previous good advice take heed. Do not back off your price. Be sure you make money. If you don't. then what's the point? You can go fishing and not make money and have a better time. Be very careful. The GC will be on his yacht in Palm Beach while you are in the poor house wondering how?.

ScottMP

I was going to jump in here

But Ken just said it all. Well put.

Thats not to say there are not any good contractors out there. We'll actually.. there's not .... Only kidding. They are few and far between and YOU need to go meet the boss and compnay and use your gut to decide if you want to get in bed with them.

Be Very Carefull.

Scott

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Robert O'Brien

Why?

Expand YOUR customer base,not someone else's!Why be a sub if you don't have to?

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Steve_35

Work your residential base instead

Four years ago 70% of our gross sales was to 2 GCs. Good contractors, but really scary. This year it's around 5% and I'm much more comfortable with that.

There are many disadvantages to working with GCs and only 1 advantage I can think of. The work falls in your lap. You don't really have to do anything to get it.

OTOH, with residential sales I have to sell every single job. But the rewards, both personal and finacial, are much greater. And when I give the client a bill, I leave with a check. You may wait a couple of months or more with a GC. Especially, if they start having problems.

Now think about that. Let's say you normally end up wieh a 10% net profit at the end of the year. You would definitely be the exception rather than the rule in the contracting field. And let's say a contractor stiffs you for $5K. Just how will that impact your business? You incurred $4500 in expenses you still have to pay. And you need to do another $45,000 in business to pay off that $4500 in expenses. And getting hit for $5000 via a non-paying GC isn't all that unusual.

The other problem with that is you may have very little recourse to recoup the $$$. In NY if the building owner paid the GC you're pretty much SOL. You can lien the building but once the owner proves they paid the GC that's the end of the lien.

My take is if you've got a good residential client base and if you're serious about building your company, your best bet is to market to the residential market and to work your existing base.

heatboy

Not sure why you would want to.......

get into that arena. I don't blame the builder because they all have that abnormal DNA structure. They can't help saying "Can't you come down on price?". Maybe there should be a 12 step program for builders.

They can keep you busy with what could be considered fill in work since it's hard to make your margins. Problem is, they think they should be your number one priority and jump to action for them when they call.

I have found it easier to train a dog to sit than it is to train a builder to give you a weeks notice

hb

mtfallsmikey

There are 2 \"builders\" in my area

Who have bailed out, and taken down payments from HO's, stuffed subs, several who are on the verge of bankruptcy.
If you really want to do this, do the high-end custom work, but nothing else!

B. Tice

New Construction

I can't understand for the life of me why you would want to get involved in new construction. I would run from it myself.

hot_rod

Becareful what you wish for!

new construction can be a real tough go. Almost impossible to "hit" the hours correctly. And if you do get that number down your bid may be higher than most builders or owners will pay.

Unless you find a handful of CG's that value you work and related price, it's often a way to turn a large sum of money into a small sum

hot rod

Mark Hunt

*Edit* Sorry folks

Daniel doesn't need our advice.

Example #1: Date: October 06, 2006 08:19 PM
Author: daniel ( doctors heating & cooling)



your reply is brainless,..............

Example #2: Date: October 09, 2006 10:02 PM
Author: daniel ( doctors heating & cooling)



"where else do you get the basis of factual performance other than owning one and the feedback of satisfied customers. yes they are satisfied because i am a contractor who knows how to design and install. go build a birdhouse or something!"

Say hello to Daniel.


Mark H

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Josh_10

I agree with all here. We are 80% new construction and it is tough. The contractor will always pay themself first if not use your money for their own investments. I am amazed at all of the excusses I have heard for not getting paid.

I would set yourself up in the upper end because you know the contractors are drawing straight from the home owner and you will have one more layer to go to for your cash. Contractors don't like the HO to know about their subs not getting paid.

Also always file a right to lean with every contractor as well as a contract. If they don't want to sign your contract you DON'T want their business!!!

I would clearly define your bids so you can charge for change orders. Contractors will always try to get freebies like fart fans and a gas stub out for the BBQ.

Clearly define your payment terms. We require payment by the 10TH of every month, and if it is even one day late we tack on 2%. If it is late 10 days we tack on an additional 2%. If it is late 20 days another 2% and so on.

Remember it is YOUR money and don't be afraid to ask for it!!! And don't be afraid to demand it. I have never had a contractor with hold retainage because I never give them an excuse to. I give them what I promise and demand they give me what they promised!

And don't lower you bid for anything! That sends a mixed message. It says that hey I was screwing you enough that I can lower my price and still make money. YOU set your price! It is like poker... They will purposly make you sweat for a few days wondering if you got the bid in hopes that you will lower your price. And don't do it for the other guys price either! Let him slit his own throat by low balling not yours!

Plumdog_2

horror stories

Your tales sound familiar. I am often the only one left at the completion of slime-ball builder's projects. I make it a point to meet and communicate with the Property Owner themselves, as they ultimately are responsible for a lien-free title. You can not get far when trying to collect from General Contractors. Do not be afraid to go directly to the Bank; behind the GC's back, when you smell a rat. Spec homes are unstable at best, and tract homes? I don't think any U.S. citizens work there anymore.

Weezbo

Bu rong Yi

it is nt easy as the Chinese say

today i jumped a foot off the ground! three Sundays ago i was hoping i could crawl out of the footings rolling a 500 foot of 1" pex....hobbed around job to job on crutches for about 5 days then went to the body mangelers....some people have old football injuries,...me...old six section boiler injuries:) being on the run in new construction just because you are half dead from exhaustion is not a viable option nor is it the time to take the time off to heal... you sure you want to be "there" ? it aint pretty:)

doing service work ," sorry, i am "booked" right now ."is sufficent reason.