# Rehab Project



## Brian (Apr 10, 2007)

I looked at a 248 unit apartment complex yesterday. The place is a mess-- broken windows, weeds over my head, missing drywall, etc. Apparently it was crack head heaven until they ran everyone out.

I've bid a few projects like this in the past, and never won the job. (I'm not sure if getting the job is winning or not.) 

I know I can't use my normal production rates for 2 reasons: 1. They aren't looking for the same quality we normally deliver; and 2. This is primarily simple painting-- i.e., the same stuff over and over and over.

So what kind of production rate gains can I reasonably project on a job like this? 

I have come to the conclusion that money can be made on projects like this, but only if they are properly planned and executed. I'm interested in trying some bigger projects.

Three years ago our biggest project ever was $25K. The past three summers we've done projects between $60K and $90K. I was scared to death the first year, a little concerned the second, and looking forward to the third. Each was our most profitable project of the year. Thus my interest in moving into something bigger.

In the past year I've bid about 10 jobs that came in at the $200K+ level, but we have not won any yet. I've tried to modify our normal rates because of economies of scale, but suspect I'm not doing so properly. Many of these are nice properties that aren't going solely on price, but 10% or 15% higher is a pretty big number at that level. 

Am I in the wrong game? Or am I trying to play it by the wrong rules?

Brian Phillips


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## vermontpainter (Dec 24, 2007)

Brian

I just spent about 20 minutes crafting a response and when I hit submit, it didnt post. Hopefully the mods can rescue it as I dont think I could type that much again just now. 

Pro? Slick? Nathan? Can the super sleuths track it down?


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## NEPS.US (Feb 6, 2008)

Is it going to be run like a new construction job? 

Will there be new trim, doors and drywall?

Have you ever bid to this GC before?

Has this GC been awarded the job?

What is his reputation.....work? payment schedules?

What is the work schedule look like?

Does he write up P.O.'s for extra's?

Is it a blow~n~go?

What type of materials are spec'd?

What are the expectations ...back to apts or selling as condo's?

Any state money involved?

The size or the dollar amount of the job shouldn't matter as long as your dealing with a ethical GC. Many different variables to consider to qualify a GC nowadays.......


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## NEPS.US (Feb 6, 2008)

Brian said:


> Ibut 10% or 15% higher is a pretty big number at that level.
> 
> Am I in the wrong game? Or am I trying to play it by the wrong rules?
> 
> Brian Phillips


Under bidding by 10% -15% would be a bigger problem at that level. Normally, with no inside contacts, this job is going to the low bid. I don't want to be the low bid and I know you don't either!


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## vermontpainter (Dec 24, 2007)

Brian

On the quality issue...I have found it really challenging to "dumb down" our process and product for jobs or customers that require it. If you go down that road, its critical that you communicate clearly to the painters exactly where in the process they can dial it back. It is difficult for them to figure this out on their own, and they typically will do what they have always done, budget or not.

On economy of scale...as you know, I estimate projects in the 10k s.f. range each year. An inexperienced painter will convince himself that it ought to cost about the same as two 5k houses. This doesnt work. With large scale, if quality is a constant, your production rates and unit costs should still apply. The largest variable is if the job is run by a GC. The question becomes, how much of the place is available to us at once, and when? The difference is, in the 3-5k s.f. house you are more likely to get the place to yourselves for a while. On the 10k house there will be dozens of other tradespeople in the house for the duration. We always try to have an entire floor as much to ourselves as possible. This way you can multi-task like crazy. Big picture benefits are your burdens are lessened in the amount of advertising, estimating, scheduling, receivables, job to job transition, daily set up and breakdown that it takes to keep a crew working. 

I think you are looking at it the right way. The six figure jobs still give me the butterflies every time. Its a fun challenge.


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## [email protected] (Feb 24, 2008)

I bid a 350 unit complex once. The investors were looking to sell the property and wanted to spruce it up, well, when they realized how much it was going to cost (around $650 per door)..... needless to say, it still is not painted and this was almost 2 years ago. By the way, that figure is just for the exterior. That included painting the light poles and stenciling the carports and... painting the mailboxes.... Everything but the striping on the pavement.... There were so many painters bidding on that project...

I bid it at $250,000 which is a bit more that $650 a door.

J


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## Brian (Apr 10, 2007)

vermontpainter said:


> On the quality issue...I have found it really challenging to "dumb down" our process and product for jobs or customers that require it. If you go down that road, its critical that you communicate clearly to the painters exactly where in the process they can dial it back. It is difficult for them to figure this out on their own, and they typically will do what they have always done, budget or not.


I understand your point and agree that it is always a concern. This is where my situation is beneficial. I have crews with differing quality levels as their MO. I have crews that won't have to "dumb down" their quality much for a job like this. 




vermontpainter said:


> On economy of scale...as you know, I estimate projects in the 10k s.f. range each year. An inexperienced painter will convince himself that it ought to cost about the same as two 5k houses. This doesnt work. With large scale, if quality is a constant, your production rates and unit costs should still apply. The largest variable is if the job is run by a GC. The question becomes, how much of the place is available to us at once, and when? The difference is, in the 3-5k s.f. house you are more likely to get the place to yourselves for a while. On the 10k house there will be dozens of other tradespeople in the house for the duration. We always try to have an entire floor as much to ourselves as possible. This way you can multi-task like crazy. Big picture benefits are your burdens are lessened in the amount of advertising, estimating, scheduling, receivables, job to job transition, daily set up and breakdown that it takes to keep a crew working.


This is where I'm not sure I totally agree. Two years ago we did the interior of a private school. It was mostly walls and the guys became rolling machines. Their rates went up 20% to 25%. 

I would expect something similar on an apartment complex. If they are doing the same building 24 times, or the same apartment interior 250 times, I would think they'd get into real groove. I might be totally wrong about this, but based on what I have seen in the past, it seems reasonable.

I do agree that the savings in set up, break down, etc. are very real and significant. How much more is part of what I'm trying to figure out.

I'm also aware that this is a different market. A lot of the value I sell to a repaint home owner isn't as important to the apartment owner. I dont have any trouble selling at a higher price to the home owner, but I'm finding it is much more difficult doing so in this market.

Anyhow, thanks for the input. You guys have given me some things to ponder.

Brian Phillips


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## vermontpainter (Dec 24, 2007)

Good points Brian. As NEPS mentioned, maybe the biggest wildcard is prep and how much new wall and trim surfaces to bring up. If things go your way it could be a profitable job. In years past I did just enough work for property management companies to understand (though not quite accept) how little they want to spend. Sounds like a similar conundrum.


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## scpainting (Sep 13, 2008)

if its a crack house there should be enough painters for a crew. lmao could save a little in labor if you pay them in cash and dont report it.


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