When you watch all of the shows on HGTV you’ll quickly notice that one of the first things they do is hire a General Contractor (GC). This is a great strategy for someone with experience, or once you already have relationships in place. As a newcomer to the business you may find hiring a GC is much more dangerous than meets the eye.

On your first few projects you will just be vulnerable, that’s not to say you might not win the GC lottery. You could hire an honest hardworking GC that prices you fairly, finishes the job on schedule, and does a proper job that will last for years, but keep in mind that this is the outlier not the norm.

When you act as the GC you get to build a network of professionals. You will meet and work with electricians, plumbers, carpenters, HVAC professionals, painters, cabinet vendors, countertops vendors, just to mention a few of the components in a successful project. This network will be your most valuable resource going forward. When you hire a GC you are at their mercy, you build no network. The GC is the only person you interact with, this they are in control, if you break the relationship with them you lose all the relationship they have as well. Take my advice, you will need this network if you plan on building a sustainable business.

The next advantage, and one that might not be as clear, is permitting. By running your own project you will learn how to pull permits, schedule and manage inspections, meet construction guidelines, etc. This will teach you what to look for and how difficult specific renovations will be future projects. Just as importantly, it will put you in charge and teach you the administrative side of rehabbing properties.

The final point that I wanted to touch upon during this post is pricing. When you hire a GC they will general give you one price with payment terms. You won’t have the opportunity [to learn what the true cost of projects are. For example a GC might say they can tile a new shower and bathroom floor as part of their overall work, which may include paint, drywall, and kitchen work. If the total cost is $40,000 you will have no idea what aspect cost what. You may be thinking you know how much a tile install costs because you looked at Home Depot and tile is $4.99per square foot...so, simple multiply that by square footage. By being your own GC you’ll learn it’s not that simple. You’ll need backer board, waterproofing, mortar, grout, and possibly other components just for tile. When you GC your own projects you learn about true material cost and true labor cost. Most importantly this allows you to correctly estimate the cost of future projects accurately and budget accordingly, giving you the ability to run a better analysis on whether a project will be profitable or not.

I hope this helped and at least got you thinking about the possibility of being your own GC, at least for the first project or two. If you do go down that route I’m sure you will find it to be an invaluable learning experience. Best of luck!

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