Is there profit in being a GC and building?
Member since 2024 · 13 posts · 13 votes
Is there profit in being a GC and building?
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Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votesYou need to get a GC license in Cali to do this. You can only play Owner/Builder on your own primary residence. So your friends are flirting with trouble. From CSLB:
This section defines what an owner-builder is and the laws surrounding the practice.
- An owner-builder is what the term indicates: a person owns the property and acts as their own general contractor on the job, and either does the work themselves or has employees (or subcontractors) working on the project.
- The work site must be their principal place of residence that they have occupied for 12 months prior to completion of the work.
- The homeowner cannot construct and then sell more than two structures during any three-year period.
Getting a GC license and going Legit is pretty difficult. First you need 4 years of Journeyman level experience and a licensed GC to sign that paper for you. Then the test is a bear in Cali, only 12% pass rate...harder than Bar Exam. Then getting legal requires Liability Insurance, Bond, Workers Comp , Etc.
If you do all this, you will probably lose money the first few years while you learn the ropes....but after that you can expect to make about 20% for Overhead And Profit . Your profit will be a little more than half, so on a $800k new build, you can expect to make $80 - $100k. For a years work.
5 Replies
- 2yBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
You need to get a GC license in Cali to do this. You can only play Owner/Builder on your own primary residence. So your friends are flirting with trouble. From CSLB:
This section defines what an owner-builder is and the laws surrounding the practice.
- An owner-builder is what the term indicates: a person owns the property and acts as their own general contractor on the job, and either does the work themselves or has employees (or subcontractors) working on the project.
- The work site must be their principal place of residence that they have occupied for 12 months prior to completion of the work.
- The homeowner cannot construct and then sell more than two structures during any three-year period.
Getting a GC license and going Legit is pretty difficult. First you need 4 years of Journeyman level experience and a licensed GC to sign that paper for you. Then the test is a bear in Cali, only 12% pass rate...harder than Bar Exam. Then getting legal requires Liability Insurance, Bond, Workers Comp , Etc.
If you do all this, you will probably lose money the first few years while you learn the ropes....but after that you can expect to make about 20% for Overhead And Profit . Your profit will be a little more than half, so on a $800k new build, you can expect to make $80 - $100k. For a years work.
- 2yRobert EllisBusiness MemberDeveloper · Miami, FL · Member since 2014 · 3k+ posts · 1k+ votes
Quote from @Jerry Callow:
Hello - I have few friends that are buying empty lots around us, playing a role of GC to build a house (have learned it over the years with education and experience) and sell it. I have few questions
1. Approximately what % of sale price do GC's make? The location would be Northern California within 100 miles of Bay Area? I hear 20-25% is that correct number?
2. How do you learn to be a GC? Are there schools or books? The goal is to buy a fixer / upper and try to update and sell before building from scratch. What is the general learning path?
3. Is there money in building and selling individual properties as GC if you factor in holding cost, etc?
yes there's money in building either spec or for others. home building is one of the strongest businesses around
Section 8 Launch52 Reviews - Flipper/Rehabber · CA · Member since 2023 · 1k+ posts · 1k+ votes2y
Quote from @Jerry Callow:
Hello - I have few friends that are buying empty lots around us, playing a role of GC to build a house (have learned it over the years with education and experience) and sell it. I have few questions
1. Approximately what % of sale price do GC's make? The location would be Northern California within 100 miles of Bay Area? I hear 20-25% is that correct number?
2. How do you learn to be a GC? Are there schools or books? The goal is to buy a fixer / upper and try to update and sell before building from scratch. What is the general learning path?
3. Is there money in building and selling individual properties as GC if you factor in holding cost, etc?
Go to the CSLB website and much is outlined there.
1 Lots of businesses including construction companies shoot for 20-25%, the higher the margin with increased volume=$.
2 Most B1's that I know started as framers, some in concrete, some from underground construction. They all busted *** for years, some took classes too. But working in the industry is where the real education is.
3 Yes, some of the largest wealthiest companies in CA are construction companies.
We definitely need more licensed contractors in N CA.
- 2yRaju BalakrishnanPro MemberRental Property Investor · Santa Clara, CA · Member since 2016 · 223 posts · 112 votes
Quote from @Bruce Woodruff:
You need to get a GC license in Cali to do this. You can only play Owner/Builder on your own primary residence. So your friends are flirting with trouble. From CSLB:
This section defines what an owner-builder is and the laws surrounding the practice.
- An owner-builder is what the term indicates: a person owns the property and acts as their own general contractor on the job, and either does the work themselves or has employees (or subcontractors) working on the project.
- The work site must be their principal place of residence that they have occupied for 12 months prior to completion of the work.
- The homeowner cannot construct and then sell more than two structures during any three-year period.
Getting a GC license and going Legit is pretty difficult. First you need 4 years of Journeyman level experience and a licensed GC to sign that paper for you. Then the test is a bear in Cali, only 12% pass rate...harder than Bar Exam. Then getting legal requires Liability Insurance, Bond, Workers Comp , Etc.
If you do all this, you will probably lose money the first few years while you learn the ropes....but after that you can expect to make about 20% for Overhead And Profit . Your profit will be a little more than half, so on a $800k new build, you can expect to make $80 - $100k. For a years work.
Yes this is right. Except some exceptions like your primary home/or one you plan to own yourself you need a GC license in most states. On the book side of the question, I found this book https://www.amazon.com/dp/B01N5F25CS?ref=yb_qv_ov_kndl_dp_rw quite useful to learn GCing. It also has some discussion about licenesing etc.
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- Contractor · Northern California · Member since 2024 · 6 posts · 3 votes2y
There's definitely money in being an owner-builder and/or acquiring your GC license from experience and education. Links below should give you a good understanding of requirements.
CSLB | ACCEPTABLE SUPPORTING EXPERIENCE DOCUMENTATION
I'm a second generation GC with almost 30 years of experience in the area so let me know if you have any questions, Jerry.
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