Avoid Costly Change Orders: Construction Advice Every Real Estate Investor Needs

Paris Anastasios (00:00)
It will save you money without a doubt. Everybody that I come in and we work to an owner’s rep side. It’s I related to power steering, like, you know, like it’s just once you go in there. So ⁓ I talked to you have to have it. So I talked to the people that are that are out there doing by that are buying and flipping. Work it in in the beginning to get an owner’s and find out. Make sure you got an owner’s rep who’s also a licensed GC and has the experience because now what we see in Florida.

Michelle Kesil (02:01)
Hey everybody, welcome to the Real Estate Pros podcast. I’m your host, Michelle Kesil. Today I’m joined by someone I’m looking forward to chatting with, Paris Anastasios, who does luxury construction and is an owner representative for construction for luxury properties and investors in the Miami area. So really excited to have you on the show today, Paris.

Paris Anastasios (02:30)
Thank you, Michelle. I appreciate it. being on the show. Yeah, I love to talk about this stuff because on the owner’s rep side, feel like people that are buying, people that are building, people that are renovating just aren’t educated enough on how important it is to have somebody who’s a subject matter expert in construction on their side as they get through whatever their project is.

Michelle Kesil (02:55)
Yeah, absolutely. So let’s dive in. So yeah, first off for those that aren’t familiar with your world and specifically about owners reps, can you share a little bit more about what your focus is?

Paris Anastasios (03:10)
Yeah, so I come from the world of construction. ⁓ I ⁓ came from a family of builders up north, Northern Virginia, DC, Maryland. So I spent my summers swinging the hammer and learning the trades from the inside out. ⁓ When it comes to construction, you usually hire somebody to do a renovation or build you a home. And for a long time, that’s what it was. You’d go out, you hire the person, and you put your trust into the builder, and you just went on your merry way. As things have evolved, especially

⁓ in different marketplaces. Now I’m in South Florida. Where are you guys, Michelle? Where are you guys from?

Michelle Kesil (03:45)
Well, I’m personally in California, but I think our listeners

are all across the US

Paris Anastasios (03:51)
Yeah. Yeah. Okay. So Cali is probably similar to because we work where I live in Fort Lauderdale, Broward County. It’s a very, very high end luxury market, lot of waterfront, yachting capital of the world. And the job, the houses out here are, ⁓ insane. Like I said, the last big project that was almost over 70,000 square feet for the house. And that’s becoming, you know, pretty common down here, as far as these mini mansions are concerned. What comes with that is a lot of

players involved from the beginning, whether it’s the, you you start with the, the architect, the engineers, the design team, and you put this beautiful project together. But, when you start dealing with these types of products and in any, any construction these, these days, there’s certain ways to do things in certain ways that, that things aren’t necessarily done as efficient and proactive and mitigated, as they should be. So in construction,

There are a lot of moving parts. So like I said, you hire the builder, but what’s becoming more prevalent today is that you’ll see a lot of these jobs

coming in and they’re coming with what’s called an owner’s rep. And that’s what my consulting firm does primarily is owner’s representation. What does that mean? That means exactly what it sounds like. We come in and we protect the owner. We actually protect, we actually work both ways because efficiency is efficiency.

budgets, a budget schedules, a schedule. So if I can help keep both parties on task, ⁓ it’s a win-win. ⁓ however, it’s owner’s rep because essentially we’re designed to be on the owner’s side. If I’m an owner and I come in and I’m going to build a house, I don’t, you know, I think I know, you know, the basics of building, or maybe I’m smart enough to know that I don’t. Cause in construction, there’s so many moving parts and so many things that can go wrong. I always tell people you don’t know what you don’t know. So.

How do you know if you’re getting the right advice? How do you know if the project’s going ⁓ to par? How do you know if you’re getting the best prices for your subs? So it’s really important down here, especially if you’re doing buying flips, because if you come in and you just throw an arbitrary number at a job site before you do a deep investigation or understand what needs to be done to get that job site renovated, updated, ⁓ so you can turn around and put it on the market, that can…

you know, pretty much mess up your entire margin on the project. So I think it should be pretty much standard these days because I come in, I’ve been on the builder side, I’ve done everything in my tenure of construction from superintendent, project manager, ⁓ construction manager, VP of operations. ⁓ And then I also have a unique background, which is not so common in…

Um, construction is that I have a very strong IT background.

So I come

IT

did that for years as well. Um, but I say that because there are now a lot of tools and a lot of things coming into play that, um, and every industry, especially, right. I won’t even get into the whole AI thing, but even without that, we have construction management tools. have tools that help budget tools that help, um, you know, do buyout considering like, you know, what you’re going to buy, whether it’s.

whether it’s drapes, whether it’s materials, whether it’s bathroom granite, any of that. So we have all these tools in the back end. Now, notoriously for years, construction was pretty much run off a legal pad. The old school cats like my older brothers, that’s what it was. It was one of those long legal pads and it was da-da-da-da-da-da all the time. And then they started getting on computers and it was the Excel spreadsheets, super long spreadsheets.

And now we have construction management tools like Procore. have builder trend and especially with the AI tenure, there’s all kinds of things coming into play. I say that because from a builder’s perspective, you do need to be up to speed and implement these things that we don’t necessarily. People in the construction arena don’t notoriously go by people that are tech savvy. Okay. They built.

They go out there, they build, they understand it, this and that, but they don’t necessarily get on the computer. And that can be a little bit of a disconnect because without these tools, not only can you be more efficient and keep your budgets in check, because that’s really what it boils down to with your clients, right? Your clients are, know, I want my budget to be, I don’t want change orders, and I want my schedule to stick to a schedule, which are in Florida, I can tell you 70 to 80 % of jobs do not stick on schedule or budget.

and that the change orders that come in are usually upwards between 20 to 40 % above what you netted for the job. How can we fix that? We can fix that by proactive mitigation. And that’s what my company does. So if I go to the table with, if you hire me from the beginning, or you hire an owner’s rep or somebody who’s a subject matter expert to be looking out on your end, we know everything the builders should be doing and the process they go through to make sure you’re protected. And I’ll give you an example.

We call it buyout in the industry. Buyout is pretty much if I hired a GC and I’m going to say, now I want to hire the plumber. Now the GC is going to be like, I got these two plumbers. I love these guys. They’re great. Fantastic.

But you don’t know what the relationship is with the GC and the plumber and you don’t know if that relationship with the plumber is brand new or it’s a long time. You can ask them, but you never know. what’s become standard in the industry is you get three bids.

and three bids ⁓ are sent out to, you could send it out to five, but the goal is to get three bids that are comparable apples to apples. And then you, what’s called level the bids and you say, okay, this is the best price, you know, this is the best price out of the three or this is the best price or this is the most inclusive. And as the GC, you’re supposed to come back and say, here’s three bids, apples to apples, and here’s who I recommend. Now,

I lay everything out so the consumer can see that it’s called the transparency side of this, right? Now, when it comes to the getting those bids, one of the most important parts of the whole process is what’s called the RFP, the request for proposal. And what you’re starting to hear is you’re starting to hear a lot of things that are common terminology in the construction world. I’m sorry, in other business worlds, IT and this and that, that are coming in and making these terms common in construction, meaning

God, years ago, did we ever do RFPs? No, but how important is an RFP on a $5 million renovation? It’s extremely important because that RFP is what sets the presidents

and sets the details out of what you’re asking the subcontractor to bid, right? Otherwise, here’s what happens 90 % of the time. GC gets the plans, they send them off to five different subcontractors.

And if you’re lucky, if they even get that far, a lot of the guys don’t even go through the proper process to, you know, to get the three bids and vetted to keep everybody honest and get the best price for your sub, for your client. But the RFP is everything because whatever’s in the RFP, the request for proposal, it’s going to be every detail that I need to get the job done. Which means when I give it to the subcontractor, the subcontractor is going to look at that and be like, okay, this is what I’m bidding.

Not only do I have my set of plans and I look at what the plans dictate, hopefully I’ve got a set of designer plans that they’re involved as well, but I’ve got this list from the GC that says this is how he wants my bid. And that goes over every detail. If that’s not done by a subject matter expert or somebody outside of that realm, the GC, ⁓ how are these guys bidding? Here’s how they’re bidding. They’re taking a look at the plans and take it. They’ve got 10 other jobs they gotta bid before the week’s up. So they’re gonna look at the plans.

They’re gonna look at the notes on the plans, they’re gonna do this, they’re gonna do this. Almost nine out of 10 times, something’s gonna be missing. And if you don’t set the RFP perimeters from the beginning for the three bids, they’re all just kind of going off their own deal, right? So how do you compare them apples to apples? So if you don’t set the RFP, you gotta get the bids in, you gotta be like, my God, this guy’s including materials, this guy’s not. This guy’s doing it this way, this guy’s doing it that way.

it’s almost impossible to level to give an you know, ⁓ accurate layout to your client. So you can see there’s policies and procedures that are becoming standard in the industry that happen behind the scenes that people just, you and I don’t know, or consumers that are buying or renovating, they don’t know. And they’re like, okay, well, we might be able to work it out or we get through it. The problem is when things,

start to unravel, ⁓ don’t even know until it’s a little bit too late. And you don’t understand, have to be completely, the GC has to be completely transparent with you because simple things like change orders, change orders will probably come up. Change orders have to be validated. How do you know as a consumer if the change order is good? Now, if I tell you,

I say, Michelle, you know what? I love the bathroom. It looks great, but I want to move the wall one foot here. We want to put a linen closet in. That’s me. That’s me going to you after the plans tell you to build it one way. And that is a valid change order. That’s coming from me to that. Now, if you give me a change order and you say, you know what? The tile guy came to me and he had to use, and I’m basing these a lot off actual things that happen in the industry. So you can tell these stories all day,

You know you get this change order and all of a sudden you have to buy $10,000 more worth of thinset to go underneath the tile. Do you know if that’s accurate or not? And why are you paying for the rough materials on that? Well it turns out the shell of the home has a five inch differential from the left side to the right side. When you’re talking about laying tile or wood or anything flat and plumb, how are you going to do that if your floors are crooked?

Well, you have to build up the mud on the back end and that becomes a box of extra materials. Next thing you know, the subcontractor passed through a change order that shouldn’t be a change order for the homeowner. They bid the job ahead of time. They knew what the square footage were. They saw the RFP and they knew ⁓ what had to be done to get the job done within the bid. So these are just small examples that if you go into these jobs, that’s just

You know, it’s like, it’s almost like your insurance policy, right? Even though it’s, it’s not an insurance policy, but it’s somebody, your advocate who’s making sure that things are done right, that things are done ⁓ meticulously right, because, you know, that’s where things start to happen. You know, this doesn’t happen, that doesn’t happen right. And you don’t see it as the contractor. An owner’s rep will usually see those things. They’re on site, they’re looking over change orders, they’re looking over. ⁓

They’re making sure that the RFPs or the bids that are coming in are correct or they’re leveled. These are all things that need to be done. Now, sometimes you’ll get a change order and it’s a valid change order, but it might be something that it just, it happened, right? So whatever the situation is, you’re not at fault. They’re not at fault, but it’s a change order. said, you know what? Okay, fine. You sign off on the change order. What you don’t realize, again, just another example is every change order

Most change orders come with a time variable. And I tell people all the time, you submit your change orders, if it’s gonna affect the schedule, put it on the change order. So now I know that I’m paying an extra $1,500 or $2,000 for this, and it’s also gonna add an extra five days to my schedule. Because if I’m getting through and we’re rocking and rolling, and they’re doing change orders, again, A, if I’ve approved them or not, and we get to the finish line, and next thing you know, you’ve got an extra six weeks to finish your job. Well, what happens if you didn’t plan for an extra six weeks?

you know, the moving company is only holding the stuff, your furniture for this long. It’s because you had a bunch of change orders that was all about the finances. I got a change order. Okay, I need you to pay me $1,500 to approve this so I can get the tile work done. Okay, no problem, thank you, bye. okay, by the way, because it was a change order, we’re doing it different, we need a new tile. That change order was actually an extra two weeks that you didn’t, weren’t educated on. ⁓ Then you get into the contractor issues. So I’ve worked for…

A lot of the big builders down here, there’s a lot of great builders in Florida. There’s a lot of great talent, but we also have two completely different sub categories. We have sub categories that are efficient and perform well on new construction, high-end luxury. Those are not the subs that you’re going to call to do your flips. Sometimes those subs will moonlight and try and get those jobs on the side. And you’d be like, yeah, I’m so-and-so with GC tile.

And you’d be like, he’s part of a big group, but he’s going to do it on the side. Now you’ve got a guy who’s kind of moonlighting. He’s probably not licensed to do the job. And, he’s getting the job for his, oh, I can do everything. I’ve got this. I’ve got electricians I work with, plumberies I work with. It’s not a problem. I’ll save you money. Do you know if they’re a GC or not? You have to find out. These are things that’s important. If he does not a GC, how’s he going to pull the permit? And if he’s, you know, it’s, there’s so many.

details on the back end. why this industry kind of is just it sucks. A lot of people in construction. I grew up in construction and I never wanted to be in it. I knew as the youngest in the family, I was like, this is a miserable industry. I don’t want to do it. But in here I am doing it. But I’ve seen it all done wrong. And I’ve seen some things done incredibly well and right. And honestly, like anything else, when you do it right with the right tools in place, it’s better, it’s faster, it’s efficient. on, know, it’s just that’s the only way to do it. You don’t go backwards.

And that goes from everything from building a wall, whether you have a nail gun or a hammer. If I’m hammering with just straight nails, it’s going to take me longer than I’m just boom, boom, boom, boom, boom with a nail gun. So I say, I related to tools, but on the back end, it’s really important to do your due diligence as far as whoever’s going to do your renovation or your sub or your new home construction. Without an owner’s rep, I don’t know how you get through the process without a hundred percent trust in your GC.

and is is is is great and as wonderful as a lot of the GC’s out here are a lot of problems aren’t necessarily because they’re not doing their job. It’s because the subs aren’t doing their job and they don’t catch it. So you also have an extra layer of somebody who’s pretty much watching over everything. It’s not necessarily just for you, but it’s for the whole term of the project. So

It will save you money without a doubt. Everybody that I come in and we work to an owner’s rep side. It’s I related to power steering, like, you know, like it’s just once you go in there. So ⁓ I talked to you have to have it. So I talked to the people that are that are out there doing by that are buying and flipping. Work it in in the beginning to get an owner’s and find out. Make sure you got an owner’s rep who’s also a licensed GC and has the experience because now what we see in Florida.

is it’s trendy because it’s everyone’s get an owner’s rep. Now you have real estate agents closing the deal and they’re saying, you know what? I can be your owner’s rep too. You’re a real estate agent. You’re not a GC. Like, no, you can’t. They think they can because they check on things every couple of weeks, but they’re just taking your money. So it’s important to have someone who’s obviously qualified.

But I say in the beginning, put that little bit of percentage extra to make sure you have the owner’s rep. It will make your life 10 times easier.

Your jobs, you will guarantee save on the backend and you will get things done on schedule is a lot better than you could on your own. ⁓ Because when schedule starts to unravel, it’s always an excuse from the GC or the sub, this happened, this happened, this happened, it’s not my fault. ⁓ Do you know if that’s true or not? No, you need someone who knows it from the inside out and be like, you know, to call the BS. ⁓ So I’m not really sure what I’m,

Michelle Kesil (22:29)
Yeah.

Paris Anastasios (22:33)
missing but you know those are all prime examples of just things like the construction industry is one in its own don’t go in alone you know get a good GC you know and I could go on and on about examples you know for example subcontractors for GC’s you know what happens people are busy down there they’re super busy and subs who wants to say no to a six-figure job if I’m tile or framing you don’t so they start taking the jobs and you know what they do

They go out and they have to hire a bunch of guys to keep up with the job work. Well, those guys aren’t necessarily trained or qualified as the other jobs. So as the other guys you have. So now you have guys, you know, subcontractors, they’re just, killing it. They’re raking in, they’re closing all these jobs, but are you getting the same quality and the same workmanship as you were when they were a smaller outfit or when they weren’t as busy? Most of the time, no. And what happens is

Michelle Kesil (23:10)
Right?

Paris Anastasios (23:31)
You find out by accident, they find out by accident on your job. They’re like, ⁓ crap, this guy didn’t do the job right. Or this guy stinks and I brought him in here. You we got to let him go behind the scenes. There’s a lot of people that are getting let go and coming on board,

but you don’t want to be the guinea pig for that.

Michelle Kesil (23:46)
Yeah.

Paris Anastasios (23:48)
Right.

Michelle Kesil (23:48)
Yeah, absolutely.

Thank you so much for no worries. Thank you so much for the thorough explanation and the importance of something that maybe not everyone has heard of. So really appreciate you sharing all of that.

Paris Anastasios (23:51)
Sorry, I talk a lot on that.

Did you have any questions or anything you want me to clarify on?

Michelle Kesil (24:07)
And yeah, before we…

No, everything was super thorough and makes total sense. just before we wrap up here, if someone wants to reach out, connect and learn more, where can people find you?

Paris Anastasios (24:28)
So the company is called Royal Properties and Consulting. ⁓ We have a website. It’s a royalpropertiesconsulting.com. have also it’s RPC SOFLO. So Royal Property Consulting South Florida. Just an acronym for that. But we’re on Instagram, we’re on LinkedIn, we’re on Facebook. So pretty much everywhere. All under the same things, but you call me direct at any time.

⁓ or just follow one of our pages and ask questions anytime you want, be happy to help. even if you’re already in a bind, you don’t have an owner’s rep and you’re like, my God, does this sound right? Does this not sound right? Even if you go to like an AI and you talk about it, AI will give you the answers, but it can constructions. One of those industries. If you don’t understand the construction side, the AI can screw you up pretty bad. So you have to be, you just have to have that person on your side. It really will make your profit margins and your.

your schedule go a lot quicker.

Michelle Kesil (25:29)
Yeah, absolutely. Well, thank you so much for coming on here. Appreciate your time and your story.

Paris Anastasios (25:36)
Yeah, appreciate your time too. Sorry to talk so much. ⁓ But yeah, my phone number, I guess all that information comes up on here or I can pass it on.

Michelle Kesil (25:44)
Yeah, we’ll put it in the show notes. So thank you so much. And for those tuning in, if you got value, make sure you have subscribed. We have more conversations with operators like Paris who are building real businesses and we’ll see you on that next episode.

Paris Anastasios (25:46)
Okay.