ᐅ How much savings on building materials can effectively serve as near-wholesale equity?
Created on: 11 Feb 2022 00:07
J
Johnny82
Hello forum,
we are currently gathering information about building a house.
Today I learned something about employee conditions:
I recently started working for a company that, among other things, also deals a lot with building materials, and I can get the materials at the wholesale cost + x% + VAT.
I am not involved with the building materials department, but I share an office with two ladies from that department. Today I asked one of them how it would work if I wanted to build a house, etc.
She said that it’s not a problem for the tradespeople if you supply the materials yourself. It’s basically the exact same materials from the same source, and it probably reduces coordination efforts for the tradesperson. She also said something like, “I’ll handle teaching them if needed!”
So let’s just take that as a fact for now.
My mother works in the Black Forest region for a landscaping company that belongs to a construction company which also builds single-family homes. Their structural construction manager estimated around 600,000 euros for a turnkey house with 140-160 sqm (1500-1700 sq ft) of living space.
We’re currently using this figure as a rough benchmark.
On the landscaping side, materials are charged to the customer with an XX% markup. Let’s assume the structural construction company applies a similar markup and that this is standard in the market.
I am aware of the values for X% and XX%. (I don’t want to sound mysterious; it’s just to avoid a situation where a tradesperson shows up at my colleagues’ work tomorrow saying, “You sell your employees materials at XX% less than what you charge me!” and causes a fuss. Some of you might be able to guess which company I work for.)
What materials are available through my employer:
Everything for the shell construction, windows, doors, flooring, insulation, paints, plaster, gypsum, stairs, bathroom fixtures, everything for interior roof finishing, etc.
I’m not sure if we have the following:
Plumbing materials (pipes for water supply, heating, etc.), electrical installation materials, heating systems/heat pumps.
BUT: We have a building services installation team (three-digit number of employees, so a large team) covering heating/water/air/electricity (including photovoltaics), so this kind of equipment should be available to order.
What we don’t have:
Wood (e.g., beams) for the roof frame itself and “decorative” wood—meaning not the aesthetically visible wood, but only things like battens and similar.
So, long story short, here is my question:
Is there a factor or rule of thumb to estimate how much cheaper the 600,000 euro house would be if I got the materials basically at wholesale cost plus x% plus VAT?
Or maybe something like: If the house costs 600,000 euros, the shell costs 100,000 euros, and of that 30% is material costs? Something along those lines?
And similarly for other trades.
And one more question, even though it might be a bit early for this:
What might be roughly saved if you did the following work yourself:
Painting inside and outside
Laying flooring yourself in the bedroom, three children’s rooms, hallway on the first floor and second floor, basement (so more the “non-public” areas)
Roof interior finishing
My brother-in-law is a master painter and also does external insulation and possibly plastering; he would probably be available at a reduced rate.
I know a lot of “ifs” and “buts,” but rough estimates would be helpful for now.
If we were building in the Black Forest, I would:
Not have the employee purchasing conditions
Only have one brother-in-law with limited skills nearby
But have a friend who could possibly handle the electrical work
And an acquaintance for gas, water, and pool technology
Possibly, the landscaping could be cheaper through my mother’s colleagues
Due to the distance, my own work would probably be limited to painting inside and laying floors in areas where they are not urgently needed (so manageable), and eventually doing the roof interior finishing. Basically a fully turnkey project otherwise.
I’m trying to convert these differences into a monetary amount or at least get a feel for it.
Thanks for your insights!
we are currently gathering information about building a house.
Today I learned something about employee conditions:
I recently started working for a company that, among other things, also deals a lot with building materials, and I can get the materials at the wholesale cost + x% + VAT.
I am not involved with the building materials department, but I share an office with two ladies from that department. Today I asked one of them how it would work if I wanted to build a house, etc.
She said that it’s not a problem for the tradespeople if you supply the materials yourself. It’s basically the exact same materials from the same source, and it probably reduces coordination efforts for the tradesperson. She also said something like, “I’ll handle teaching them if needed!”
So let’s just take that as a fact for now.
My mother works in the Black Forest region for a landscaping company that belongs to a construction company which also builds single-family homes. Their structural construction manager estimated around 600,000 euros for a turnkey house with 140-160 sqm (1500-1700 sq ft) of living space.
We’re currently using this figure as a rough benchmark.
On the landscaping side, materials are charged to the customer with an XX% markup. Let’s assume the structural construction company applies a similar markup and that this is standard in the market.
I am aware of the values for X% and XX%. (I don’t want to sound mysterious; it’s just to avoid a situation where a tradesperson shows up at my colleagues’ work tomorrow saying, “You sell your employees materials at XX% less than what you charge me!” and causes a fuss. Some of you might be able to guess which company I work for.)
What materials are available through my employer:
Everything for the shell construction, windows, doors, flooring, insulation, paints, plaster, gypsum, stairs, bathroom fixtures, everything for interior roof finishing, etc.
I’m not sure if we have the following:
Plumbing materials (pipes for water supply, heating, etc.), electrical installation materials, heating systems/heat pumps.
BUT: We have a building services installation team (three-digit number of employees, so a large team) covering heating/water/air/electricity (including photovoltaics), so this kind of equipment should be available to order.
What we don’t have:
Wood (e.g., beams) for the roof frame itself and “decorative” wood—meaning not the aesthetically visible wood, but only things like battens and similar.
So, long story short, here is my question:
Is there a factor or rule of thumb to estimate how much cheaper the 600,000 euro house would be if I got the materials basically at wholesale cost plus x% plus VAT?
Or maybe something like: If the house costs 600,000 euros, the shell costs 100,000 euros, and of that 30% is material costs? Something along those lines?
And similarly for other trades.
And one more question, even though it might be a bit early for this:
What might be roughly saved if you did the following work yourself:
Painting inside and outside
Laying flooring yourself in the bedroom, three children’s rooms, hallway on the first floor and second floor, basement (so more the “non-public” areas)
Roof interior finishing
My brother-in-law is a master painter and also does external insulation and possibly plastering; he would probably be available at a reduced rate.
I know a lot of “ifs” and “buts,” but rough estimates would be helpful for now.
If we were building in the Black Forest, I would:
Not have the employee purchasing conditions
Only have one brother-in-law with limited skills nearby
But have a friend who could possibly handle the electrical work
And an acquaintance for gas, water, and pool technology
Possibly, the landscaping could be cheaper through my mother’s colleagues
Due to the distance, my own work would probably be limited to painting inside and laying floors in areas where they are not urgently needed (so manageable), and eventually doing the roof interior finishing. Basically a fully turnkey project otherwise.
I’m trying to convert these differences into a monetary amount or at least get a feel for it.
Thanks for your insights!
Yes, it’s true that there are skilled craftsmen elsewhere as well. However, the German narrow-mindedness you often encounter here can be quite difficult to endure.
The problem is that, as a layperson, you can’t immediately tell who is a good or bad craftsman. This applies equally to those of German origin, of course. I believe that by asking questions, you can at least find out whether someone is just talking nonsense or actually knows their stuff. It gets more difficult to assess if the other person does not understand me well or at all (and vice versa).
The problem is that, as a layperson, you can’t immediately tell who is a good or bad craftsman. This applies equally to those of German origin, of course. I believe that by asking questions, you can at least find out whether someone is just talking nonsense or actually knows their stuff. It gets more difficult to assess if the other person does not understand me well or at all (and vice versa).
Durran schrieb:
And to come back to the question. Material markups of 100 percent are not uncommon. Often even more. Much more. Material markups of 100 percent or more might apply to small items, but certainly not to materials delivered by the pallet to the construction site. Especially not when I can check what the tradesperson (or let’s say in this case, the crook ;-) ) pays for it from my colleagues.
Sparfuchs_:p schrieb:
As long as you don’t know the +X%, nobody can tell you what you COULD save. Without any details about the project or materials, nobody can tell you what you might save on painters and so on. It’s all nonsense like that. That’s why I asked for a rough rule of thumb along the lines of:
“What is the approximate material cost for a shell construction costing 200,000 euros?”
If it were 100,000 euros, I could estimate:
100,000 euros equals mason’s own equity + 25% markup + 19% VAT, so I would pay xx,xxx euros less for the same materials.
I have to start somewhere and at least partially eliminate some unknowns.
Hence the assumptions above of 600,000 euros for a standard single-family home of around 150 m² (1,615 sq ft), turnkey, in value-for-money award-winning quality—so no gold-plated faucets, but they can be from (Hans)Grohe.
Plus the statement from the building material store manager, assuming that this is feasible with the material and if the tradesperson charges a “handling fee,” that can be negotiated. He doesn’t have to pay invoices, has less bookkeeping effort, and no tied-up capital.
And savings of tens of thousands of euros through cheaper materials, help from relatives, and owner-managed construction versus turnkey building can clearly tip the scales significantly in favor of the former.
But I’ll ask a friend of my mother, who is (quote from my mother) an “architect without a diploma” with 35 years of experience as a draftsman and is currently getting really involved with my brother’s plans. Maybe she has some numbers or rules of thumb.
Thanks to you all!
Of course, it depends on what you consider to be a shell construction.
I would roughly estimate the materials to cost a maximum of 20,000 euros. Naturally, it depends on what and how you want to build. But it’s not as much as many people think.
I’m aware of the comments that will come, but I can live with that.
I would roughly estimate the materials to cost a maximum of 20,000 euros. Naturally, it depends on what and how you want to build. But it’s not as much as many people think.
I’m aware of the comments that will come, but I can live with that.
B
Benutzer20011 Feb 2022 21:06Johnny82 schrieb:
I have to start with something and at least partially eliminate some unknowns. Let’s take a shell construction as an example. Costs €180,000 (approximately $196,000), of which around €75,000 (about $82,000) is material. But that doesn’t really help, since you don’t know if or how much extra the tradespeople add on top.
Take screed work, for example. The screed installer obtains the materials at wholesale prices and installs them without any markup. The same goes for electricians. That’s often how I know it to be, and I recently experienced it myself.
driver55 schrieb:
The headline should rather be, “A Swabian building in the Black Forest.” 😀
Seriously though, only you know the x and xx, and there are hardly any pure service providers as tradespeople.
(Are you also bringing the oil for the oil change to the workshop? These guys really exist.) Regardless of the actual topic, even branches allow you to bring your own oil, and I would argue that anyone who doesn’t do this is being foolish. There’s a huge difference between paying €8 or €30 per liter of oil (about $9.50 or $35.70 per quart).
So you picked the worst example in that regard :-)
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