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Question DetailsAsked on 2/5/2015

do you have any rule of thumb of the ratio between labor and materials for a major home renovation project?

lets assume 4000 soft and total gut/rehab

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5 Answers


That big a gut and redo would be more typically a $ per sq foot, not so much a "ratio between labor and materials". Since we don't know where you live, the rates could vary quite a bit. Are you going to be your own GC? Are you planning to hire one? You left out so much info that it would be pretty much impossible to help you. Of course, since AL doesn't bother to provide fields to prompt for any such info, this is pretty commonplace.

Granted the materials that you choose in places can also affect the labor, etc. But as far as I'm concerned labor is to "get it done", regardless of the materials that I provide and pay for - which should have no bearing on how many hours a mechanic takes to install it.

In other words, oak wood floor that costs $2.5 - 3 a sq foot should cost the same to install as brazilian teak wood floor that costs $6 a sq foot. Just because I spend more on some materials doesn't mean I'm going to pay extra for the labor to do a standard install ...

If you are seriously considering a total gut and rehab then you should already really be on top of your game as far as your costs go. If you bought the place without already knowing your rebuild costs ... ouch ...

Answered 5 years ago by Jefferson


Thanks Jeffereson-

NYC area- costs will be about $350psf-

We are our own GC-

The Archtiect will be the onsite Owner's rep and drive the project throgh the contractor-

the contractor will be responsible for all subs-

He is a bulder by trade-

My rule of thumb is that labor = about 40% of total costs-

so if we have 4000sqft and $350psf that equals $1,400,000

so in this case labor would be $560K and materials the rest.

Just a ballpark.

Your thoughts here??

Answered 5 years ago by FosterM


You say the "contractor" will be driving the subs, etc - sounds like he IS the GC, and if the architect is the owner's rep that means you are not going to be on-site full time to handle subcontractor coordination and such, so sounds to me like your "contractor" is the GC, and you are the owner/developer, not the GC.

My two bits - for new construction 33-45% materials is the range I expect, except as I think Jefferson said, if high-end materials then materials cost percentage can drop a bit. Though I have found that higher-end materials also means more labor (and commonly higher-priced specialty labor) expended in getting everything perfect as the owner is expecting a more "perfect" end product, so you can expect the punchlist (which is commonly (hopefully) almost all labor cost) to be more extensive too on that type job, so tends to average out whether a remodel or build job.

For a total gut and rehab, especially if in urban conditions with tight working conditions and poor parking and such (visualize the plumber walking 2 blocks to get a new washer from his truck, or having to circle for 1/2 hour looking for a parking place after a parts run), I would expect labor to be a higher percentage - leaving materials closer to the 25-35% range.

I do wonder why percentage in materials is of any concern, unless this is a cost-plus job - because ideally you would have the architect do the design, then put the job out for bids to several pre-screened bidders, usually taking the overall lowest cost for the project from amongst the responsive bidders. That way you might get a more economical job from a bidder with normal labor costs who has a very good purchasing man who can get more bang for the materials buck, or alternatively from one who uses smaller, lower labor and overhead cost subs. The bottom line is what you are paying for, who really cares how the percentages break down.

Answered 5 years ago by LCD


Thanks for the additional info. My first reaction, and I was born and raised in NY, buit a custom home in NJ and have done major renovations here near Philly - is that someone (arch? contr? both?) is building in a LOT of profit for themselves and if you have signed something already then you will be paying a premium to help someone else retire early.

Have you already bought this property? Are you contractually obligated to work with the:

- architect?

- contractor?

If this were me, and I owned the property but wasn't under contract for everything else yet, then I would start with being my own GC - at least to start - and get a full gut demo done. After that you will actually know what you are looking at, and what needs to be done to bring things up to code, etc. A full gut should be about $2000-3000 for the dumpsters - you'll probably need 2 big ones - 30-40 size. The labor for a full gut should be - at MOST - $3 per sq foot. You can probably have it done for between 2 - 2.50.

Clearly you aren't going to be living there while it's underway, so doing things in stages can really make sense, and you can contract for discrete pieces of the project. And this can really help you to control your costs. What you'll find is that most contractors "start strong" ... for a day ... a week ... a month and then become unreliable and need to be fired. We've done a lot of renovations and GC'd everything ourselves. That way, we can keep on contractors who are doing it right and fire others at will. We've had some with us start to finish for our projects and others didn't last more than 1-2 days. People in the trades can be notoriously unreliable ... it is what it is.

Honestly, I can't imagine that this should take more than $200 per square foot, even in the NYC area. You should be able to build what you want for maybe $1 million including materials. Some contractors try and build in a 20-35% markup on materials. Considering the scale of your construction that would be lunacy. You might as well buy what you need - at least most of it - and let contractors buy some of the misc stuff.

Note: if you are clever about sourcing materials, you can both save a lot of money AND get very seriously nice stuff that gives a super high-end look without a massive premium. Examples include:

- natural stone tile (you can get great stuff for $2.5 - $4 sq ft)

- exotic hardwood flooring (you can get great stuff for $5-6 sq ft)

- fixtures

- cabinets

- etc.

I also recommend doing the full gut and then taking a break so that you can REALLY know what you are in for - your plans could easily change depending on what is behind the walls ... this is a perfect chance to put in lots of additional wiring for power, data, etc.

There can be all sorts of additional electrical, plumbing, heating, insulation, etc that need to be dealt with. Bear in mind - once you do a gut EVERYTHING after that must be brought up to full modern code. And ... this is also a great chance to do things that will help in the long run to keep utility costs down - like using spray foam insulation.

If you wish to know where we sourced some of our materials please reach out to me through my profile. Thanks and good luck!


Answered 5 years ago by Jefferson


Jefferson had some real good thoughts there, as usual - especially on cost factors and on contractor reliability and how it is tougher to get rid of a bad sub who is working under the GC than one working directly for you.

I was also surprised by the cost, which struck me offhand as being high by 50-100% - because checking a few current industry guidelines and cost estimating books I have access to did not put a gut and rehab as high as your number for much of the NYC area - though did appear valid for some of the highrise mixed-use areas of upscale Brooklyn and Manhatten and Staten Island north shore area and such. However, your architect, unless one of the new breed who refuse to prepare cost estimates (possibly to avoid any repercussions from their designs running way over budget), should be able to give you a preliminary project cost estimate up front (once the basic scope and general level of quality is defined), then refine that to a construction cost estimate once the plans are nearing completion.

He also had a good point on the gut first, then contract for the rebuild side, from the aspect of knowing what you are into, so the plans and scope can match the actual conditions and contractors aren't bidding on what is hidden behind the walls. Reduces your risk and contingency numbers a lot. Downside of that approach is much longer total job duration waiting for revised as-is plans and revised remodel plans after the demo, plus you are not getting contractors on board till that is all done so there will normally be a month or two or even more delay between finishing gutting and getting a GC on board and working. Also strings out entire project so permits for blocking street parking near the building and neighbors complaining about appearance, noise, etc can become more of an issue.

One other thing you risk - especially in large cities - is if you gut first without a remodel scope and permit typically that is a demo permit. THEN you would be applying for a deparate construction permit, so inspectors commonly are a lot pickier about the stripped existing building condition than if it is a single remodel permit. Some ages ago I worked several NYC and Boston area jobs where developers or building owners got into that mess - and ended up spending millions in remedial structural work and major fire protection and exit features which may or may not have been really necessary because the inspector saw the existing totally stripped-out condition all at one time. Also gets you into the issue of potentially having to bring the entire structure up to code, where with a remodel permit the structure itself is commonly not required to be brought up to current code standards escept with regard to fire protection issues, unless the total job cost exceeds half the value of the structure. Local architect with experience in planning and zoning rules and permits can help you with this issue.

However - the downside of acting as GC - you take on a lot more risk yourself, contractors are generally very leery of working for an individual without a GC especially on a gut job, if you are not available basically full-time to honcho the job it can get out of hand REAL quick, and you probably run a lot more risk of significant permitting or construction violations because you are not used to doing this type of work. Also, a lot of contractors willl take advantage of a homeowner trying to act as sub unless he has a lot of construction background, so you have significant overrun and delay risk there. Also, contractors will almost always give their priority to the GC's they routinely work for, so as Jefferson said they might start hot but quickly turn cool with regards to progress and staying active on the job.

Certainly, if you are not able to stay on this basically full-time (i.e. no day job) or have never built a house yourself or acted as GC on a similar size job, I would emphatically (but respectfully) disagree with Jefferson and recommend you NOT try it on this type or size of job.

Answered 5 years ago by LCD

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