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Why are Rural Builders so hard to find?!

By
Real Estate Agent with Dirt Road Real Estate / AZ Rural Land Pro SA658321000 /ROC323435

I just got a spam call from Angie's list trying to enlist me to take on projects in the rural areas I service. I had to explain to the gentleman that the rural market is a different animal and can't be handled the same as an in town project. He didn't quite get the point of what I was telling him but it made me think.

Any rural market has its challenges when it comes to getting people to show up to do a job, big or small. Here's how it works in my head;

Being in business is expensive.

Being in the construction business is absolutely expensive. Rural contractors can't do the volume of in town guys. Volume keeps the wheels on the bus turning. The more business you get the more labor you can keep on the rolls and the more large and small projects you can do profitably.

As a small rural company, I can't go do small jobs and make any money. Here's how it breaks down; Average job call out 5 days.

Insurance: Liability, Auto, Workman's Compensation annually = $13,500 or $1,125.00 per month. Average $37.50/day or $187.50 for the week

Fuel costs: We drive trucks, big ones that don't get good mileage. I tried getting my tools into a Tesla once, it didn't work out so well. We drive an average of 100 miles round trip to any job. Our vehicles get 12-16 MPG. So that 6.25 gallons per vehicle. Average 2 trucks per crew, 12.5 gallons at $3.69/gal= $46 /day or $230 for the week.

Labor: I can't get labor to show up in the rural areas for less than $25-$30/hr. I should be marking up my labor to cover overhead and profit. At a minimum I have to charge my guys out at 30% over cost or $32.50-$39.00 /hr. and that's too low really to make a profit, due to the unforeseen elements in the rural areas that eat your lunch. Final labor cost $40.00-$48.00/hr/man. Three man crew for 5 days only working 8 hour days because I still have to pay them for the drive time which is another 2 hours. Cost $400-480/day/man or $2,000.00-2,400.00/man or minimum $6,000.00 for the week.

Vehicle, trailer and equipment wear and tear: Where we live and the condition of the rural roads, we have to charge for seen and unseen damage on the thing that get us to the job and the things we use when we're there on the job. 3% is minimal but it has to come from somewhere, and that is a job expense and needs to be accounted for. Taking 3% on just labor comes to $180 for the week. 

So customer Bill Smith wants a deck and a patio cover built, the lowest I can go,  stay in business and actually make a profit is $6,597.50 for a 3 man crew delivered to the jobsite per week. We still haven't talked about the required materials...another $6,500 minimum for this deck and patio cover. For a whopping total of $13,097.50 Project Total!

Being rural, how many of these jobs do I or can I possibly line up? I guarantee not enough to make a living year round.

So Johnny and Freddy (Labor) go back to the other things they have to do to try and make a living. I (The General Contractor) begin the unpaid portion of my business which is looking for more work. 

I'm not griping, I chose this life and I'm happy with it. But next time you or your clients are complaining about the price of rural construction, try to remember how much it really costs to be in business, let alone the difficulties of business in the rural areas. We have licenses and insurance and expensive tools that we like to maintain, the local handyman can do the job for less, but this is the reason why legitimate contractors don't chase rural work and thus harder to find.

Kat Palmiotti
eXp Commercial, Referral Divison - Kalispell, MT
Helping your Montana dreams take root

That's a very interesting overview from the builders perspective about both costs and prices. Where I am, there are many rural properties getting new homes built. In fact, I'm in a rural area and had a home built about five years ago. I'm even more grateful about that now that I've read some of the builder's challenges.

Carol Williams - suggestion for Second Chance Saturday.

Update: I just saw you are with Dirt Road Real Estate and work with Leanne! Welcome to ActiveRain!

Apr 24, 2024 05:28 AM
Leanne Smith

Yes Sean and the other agents with Dirt Road have been encouraged to join Active Rain. The co-founder of Dirt Road, Judith Ritter who was retired just rejoined Dirt Road in a limited capacity. Sean built several homes and his own home with Elise Harron broker for Dirt Road.  He is very knowledgeable.

Apr 27, 2024 07:35 AM
Sean Harron
Dirt Road Real Estate / AZ Rural Land Pro - Kingman, AZ
Rural property specialist

Of course I was mainly speaking about scenarios in my own market. It varies from state and county regarding the availability of local labor sources.

Apr 24, 2024 10:56 AM
Dorie Dillard Austin TX
Coldwell Banker Realty ~ 512.750.6899 - Austin, TX
NW Austin ~ Canyon Creek and Spicewood/Balcones

Good morning Sean Harron ,

Welcome to active rain and thank you for a great overview of the perspective from the builders about both costs and prices and working in a rural market. It does stand to reason and you have some very points..

Apr 27, 2024 05:30 AM
Wayne Martin
Wayne M Martin - Oswego, IL
Real Estate Broker - Retired

Good morning Sean. Great post breaking down the real costs that many never think of incurred by a rural contractor, Thanks! Enjoy your day.

Apr 27, 2024 06:07 AM
Leanne Smith
Dirt Road Real Estate - Golden Valley, AZ
The Grit and Gratitude Agent

Thanks Sean Harron for sharing your knowledge in this post and future posts. Yes building in a rural area is indeed different. You did fail to mention road access and that sometimes builders must grade roads to get to the desired vacant land parcel.

Apr 27, 2024 07:36 AM
Hannah Williams
HomeStarr Realty - Philadelphia, PA
Expertise NE Philadelphia & Bucks 215-820-3376

Sean Harron  I understand completely. I also do commercial Real estate so you are preaching to the choir. Many of my workers are friends, and they give me prices and they explain to me why. Also, many of them are getting older jobs they used to do by themselves they now have to hire helpers and find reliable people Hah 

Not to mention the price of supplies has jumped 

Apr 27, 2024 12:42 PM
Michael J. Perry
KW Elite - Lancaster, PA
Lancaster, PA Relo Specialist

Building cost have greatly increased since we have been Building Back Better !!! ……….

Apr 27, 2024 12:56 PM
Judith Ritter
Dirt Road Real Estate - Prescott, AZ
Rural Land & Homes Specialist

Hi, everybody. Thanks for welcoming me back to Active Rain. Sean has been very clear about some of the costs of rural building. He is very rural! - About 40 miles from Kingman Arizona. 

As rural realtors we have to be aware of the difficulties our buyers may have achieving their building dreams. 

 

Apr 28, 2024 02:34 PM