Hi looking at extending & tidying up PPOR which is a small 2 bedroom house on the Gold Coast on the border of the suburbs of Coombabah /Paradise Point. Looking at replacing asbestos roof and extending the roof 4.6mtr out back of house for outdoor area and make a larger laundry. Wife has a builder doing some plans up and estimated that it will cost 70k approx. Does anyone if a builder will do a Fixed Price for a job like this as i dont want any unexpected extra costs and over capitalize.
We looked at doing a knock down rebuild which would cost appox 230k (+the 130k mortgage we currently have.)but this was more than what we wanted to spend. Current value is 300k , Our vision is to have a mortgage of no more than 220k and start to get some IP's for our future retirement. We are aged 36&41.
Any advice would be great.
Hi, A fixed price would be better, as an hourly rate can really blow-out costs on these types of jobs (we had a "ball-park" figure on a reno, based on hourly + materials, which blew out by 10K). The fixed price is good for saving you the worry of tradies taking longer than necessary to do the job and the tradies usually work faster to get the job done. I'd recommend getting about 4 or 5 fixed price quotes with timeframe incorporated in case there's issues or hold-ups with getting materials. You may be surprised at the difference in quotes. Also, the cheapest isn't always the best option, we've had that cost us too.
Good Luck,
Tamara
Have to disagree with you Adrian.
I wouldn't take out a fixed loan for renos.
At least with a variable product you'd only be required to make repayments on the portion of the loan that's used. Which is important for renos because they can take time to complete so you might find yourself paying tradies bills over the next few months to a year.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
A builder can supply you with a fixed quote, as it's over $12k, you'll be required to sign a contract on the job, and the builder will be required to take out warranty insurance etc.
As a builder, when I'm supplying a fixed quoted price on renovations you quote for the worst case scenario, a higher margin and often a bit of a buffer time wise, as all reno's throw up some curve balls.
I find it's better and usually cheaper if you undertake what is known as a "cost plus" rate.
Meaning you pay the for cost price of materials and labor + 20%. Meaning you only pay for the amount of the time the tradies are there (On a quoted job they might finish 2 weeks ahead of schedule, but you're still pay for the extra 2 weeks), and you only pay for the materials that go into the job (not the extra few thousand $$$ he might allow of each part of the construction to cover himself).
As for tradies working harder on quoted jobs, sometimes that is the case, but it works both ways, would you prefer they take a few extra hours and do it with time and care, and a quality finish, or rush it through because their margins are getting close?
Also you might hear of people getting the construction at cost price, because a builder may have under quoted it, you might get lucky, but people don't like working for nothing, and any little variation of the original build might be charged at a maximum of 100% cost if they don't like the way things are going $$$ wise.
It should be a win-win situation, and despite maybe paying 5% more in labor, you will probably save 20% on materials Quoted vs Cost Plus.
@ Jamie,
Thanks for this. That was a typo. Meant to say "fixed price contract". I've corrected the original message
Hi xkfalcon,
A fixed price contract best is you need to borrow money for the reno off your bank. Both line of credit loans (which are available on some of the more flexible variable rate home loans) and construction loans often require a fixed rate contract in order to approve the funds to you. They then will pay the builder directly at each completion stage, which is assessed by their own valuer/inspector.
I hope this helps
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