General Contractor vs hiring subs

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General Contractor vs hiring subs

Bin Chen
Investor · New York, NY · Member since 2016 · 65 posts · 38 votes

Hi all,

I've read articles online about how if done right, hiring a bunch of subcontractors and managing your own projects is cheaper and more cost effective. From what I've read, general contractors only do what they know how to do and sub out the work to subcontractors anyway. I have done other renovations before but have always worked with general contractors. I'm looking for some insight on if its worth it or not.

A little about the project:

I am converting a 2 family house to a 3 family so I think it is a fairly large renovation project. I need to do 3 new kitchens, 5 bathrooms, add some walls, new stairs, 3 new boilers, new split air system, polish and stain 2 floors of hardwood floor and redo the wood flooring on a 3rd. Sprinkler system and new concrete sidewalks. The house is about 3000 sf. Ive been getting quotes around 200k. I've read that GCs generally gave a 15-20% markup so if I can get better quality work and save 30-40k I am willing to do the extra work but just want some insight.

I believe I would need to hire:

Demo crew to take out existing fixtures

A carpenter for the framing of the walls and stairs. (installing the moldings/cabinets? not sure who does that)

Electrician to make sure everything works and make repairs

Plumber to install the sinks and tubs and boilers

Hvac person to install the split air

drywaller to install and plaster the walls

Tiling crew for the bathroom and kitchen tiles

Painter to paint

Flooring crew to polish and install new hard wood

I tried to put things in order but not sure if its done in that order.

Thank you in advance for any advice

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Alfred Edmonds
Contractor · Greenfield, MA · Member since 2017 · 107 posts · 99 votes
9y
Bin Chen A good GC is worth it. Scheduling subs and understanding the flow of construction is not as easy as some would say. A good GC has relationships with subs already in place and many times subs will be way more flexible with their schedule with someone they work with regularly. Homeowners trying to act as GC to save a few bucks almost always lose money. If one is not intimately familiar with how things work they will inevitably overlook things and that can sometimes mean redoing work or opening up already finished work in order to get inspected. Time is $. A good GC is worth every penny. A bad one is worthless so do your homework and ask for references. Make sure they are licensed and insured and have active workmans comp.
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  • Christopher Phillips
    Real Estate Agent · Garden City, NY · Member since 2016 · 3k+ posts · 1k+ votes
    9y

    @Bin Chen

    Do you have a contractor's license?

    The subs can work under a GC without a license if the GC has one. If the individual subs have their own license you won't save any money and they'll probably make you deal with all the permits. It would also mean instead of getting one quote and materials discount under the contract you have to get quotes for every trade.

    1Reply
  • Alfred Edmonds
    Contractor · Greenfield, MA · Member since 2017 · 107 posts · 99 votes
    9y
    Bin Chen A good GC is worth it. Scheduling subs and understanding the flow of construction is not as easy as some would say. A good GC has relationships with subs already in place and many times subs will be way more flexible with their schedule with someone they work with regularly. Homeowners trying to act as GC to save a few bucks almost always lose money. If one is not intimately familiar with how things work they will inevitably overlook things and that can sometimes mean redoing work or opening up already finished work in order to get inspected. Time is $. A good GC is worth every penny. A bad one is worthless so do your homework and ask for references. Make sure they are licensed and insured and have active workmans comp.
    4Reply
  • Bin Chen
    OP
    Investor · New York, NY · Member since 2016 · 65 posts · 38 votes
    9y

    @Christopher Phillips I was thinking of getting the subs with licenses. I don't actually know a lot about the process since the articles and videos about it don't really go into detail. Does that mean unless I have my own contracting license, its never advantageous to hire out parts of the job to their respective trades?

    0Reply
  • Christopher Phillips
    Real Estate Agent · Garden City, NY · Member since 2016 · 3k+ posts · 1k+ votes
    9y

    @Bin Chen

    It's a mixed bag. If you're doing only two or three things, it's not a big difference. But if you're doing major work across the entire house, you'll end up with a lot of labor from different trades that will need to be under someone with a license.

    0Reply
  • John P.
    Rental Property Investor · Swansea, MA · Member since 2009 · 13 posts · 8 votes
    9y

    Bin,

          I don't know your level of knowledge. So please forgive me if this is off base. However, If you've never done it before, you should read up on it. In my opinion, sometimes a hiring a good GC is worth it especially if you can't be on the job site everyday to keep things on schedule. Knowing who does what and what order they need to do it in might seem straight forward but there are always issues. If there's a problem that requires an executive decision and you aren't there or can't be reached, it can lead to costly delays. What if you can't make it to meet an Inspector and the next time he's available is next week? You need to know your what your holding and operating costs will be if you don't meet your deadlines by 1-2-3 months. What will that dumpster cost if you keep it another week? Utilities, Lost Rent? Communication with the subs as to timelines and expectations is key. It's not impossible to do. It's just not as easy as people think without some experience. 

    -JP

    0Reply
  • Bin Chen
    OP
    Investor · New York, NY · Member since 2016 · 65 posts · 38 votes
    9y

    @Alfred Edmonds

    Thanks for your advice. I guess I should just get more quotes and interview more GCs and see from there

    @Christopher Phillips 

    Oh ok. Since my project is the entire house I guess it wouldn't be practical. Thanks

    1Reply
  • Bin Chen
    OP
    Investor · New York, NY · Member since 2016 · 65 posts · 38 votes
    9y

    @John P. My experience on the day to day operations is next to none. I have always hired a general contractor to handle the entire job. I was just looking at option to see if I can make more money. I guess this would be something that I wouldn't be able to do until I retire from my full time job. But you're right if something does get delayed then I would have to reschedule from the other contractors which would lead to scheduling conflicts and more delays. Thanks for the insight

    1Reply
  • Manolo D.
    Contractor · Los Angeles, CA · Member since 2015 · 4k+ posts · 1k+ votes
    9y
    Bin Chen That's not even the tricky part, if subs call on you that they are a week out, and your schedule is fixed, who do you run to? What do you do? We have solutions to these kind of problem, and we know who adheres to our schedule and who is likely to flake. You can't install tile if plumbing isn't done, etc. Also do you know which trade stops where? Say you install a kitchen, do you know who puts the plywood before the countertop or who does toe kicks, is it the flooring guy who does baseboards or is it the cabinet guy which is part of the cabinet? Who installs the sills of a window, is it your carpenter who framed the window or is it your glaze contractor who is installing the window? Some points you need to know so you don't have to pay extra for scope creep. You can try it on a smaller project, say 2 week job, 2-3 trades, worth 20k and see how it feels, then you can climb from there. Not on a 200k job. There are a few types of GC, there is one who only pushes paperwork eho charges you for putting up with BS and managing them, there are those who have employees that do some or most of the work, then there is your a man with a truck and tools type, the middle might save you some money because they don't have to pay subcon profits. With regards to licensing I think Christopher Phillips might be off a bit, subs can't work under a GC unless they are licensed, OR unless they work for us as employees, all subs need to be licensed in their trade, but I do see licensed subs working under pulled permit from the GC, I also had a job that I made subs pull their own.
    0Reply
  • Christopher Phillips
    Real Estate Agent · Garden City, NY · Member since 2016 · 3k+ posts · 1k+ votes
    9y

    @Manolo D.

    You are correct. If a GC doing a kitchen brings in a subcontractor like an electrician that person needs a license.

    I referring more to the employees that work under the contractor's license.

    You make a great point about coordination and timing. A plumber might cut a hole in a subfloor to run a drain, but they'll expect someone else to do other work before coming back to finish the job.

    0Reply
  • Christopher B.
    Rental Property Investor · Knoxville, TN · Member since 2011 · 701 posts · 531 votes
    9y

    Bin you should read and reread what Alfred posted, its very solid advice. I do larger projects and manage them myself. That isn't advice to do it my way either. I have good knowledge of how to put a house together with a good rolodex of subs and I often still struggle to keep my projects on schedule to be honest. It's tough, the subs will try to take advantage of any little detail they think you may not know about, they'll try and get you to do all their dirty work, and they'll do it on their schedule. 

    I'm in the process of trying to removing myself from that side of the equation. The challenge with hiring a GC is 3 fold 1.) They'll want to use their subs which is fine except they don't care if their subs charge 20% more than fair market value to replumb your house 2.) There's an insane amount of work out there right now so it's tough to get in with a GC if you don't already have an established relationship, 3.) It's tough to find one that doesn't want to rake you over the coals for their service. The last GC I talked to about managing a rehab wanted 40% of my profit to do so. 

    So, hiring a GC is preferable and they're worth it as long as they don't try to squeeze all the juice out of your deal. 

    0Reply
  • Manolo D.
    Contractor · Los Angeles, CA · Member since 2015 · 4k+ posts · 1k+ votes
    9y

    @Christopher B. Imagine that, 40%. Why not charge per visit (2-4 hour blocks) with guaranteed maximum price, simple and easy. That's more of a construction manager job though not a GC, typical GC contracts you get a single price not variable, you have no control over the day to day activities nor who supplies what in materials and labor, give them scope of work, specifications, plans (if applicable), a milestone deadline, and off they go, they can only get more/less money if you change anything on SOW, Specs, or Plans. I've done some third tier GC works (it means Owner (acting GC) - GC - GC(me)), it wasn't fun.

    0Reply
  • Christopher B.
    Rental Property Investor · Knoxville, TN · Member since 2011 · 701 posts · 531 votes
    9y
    Originally posted by @Manolo D.:

    @Christopher B. Imagine that, 40%. Why not charge per visit (2-4 hour blocks) with guaranteed maximum price, simple and easy. That's more of a construction manager job though not a GC, typical GC contracts you get a single price not variable, you have no control over the day to day activities nor who supplies what in materials and labor, give them scope of work, specifications, plans (if applicable), a milestone deadline, and off they go, they can only get more/less money if you change anything on SOW, Specs, or Plans. I've done some third tier GC works (it means Owner (acting GC) - GC - GC(me)), it wasn't fun.

    Are you saying you think 40% of the profit is fair payment to a GC for that? I'd be happy to hand-off my SOW and budget and let a GC go to town but not for that large of a cut. I just haven't found someone I trust to do or would charge a reasonable GC fee for that yet. Maybe that's on me though. 

    0Reply
  • Manolo D.
    Contractor · Los Angeles, CA · Member since 2015 · 4k+ posts · 1k+ votes
    9y

    @Christopher B. No, I'm saying find a construction manager not a GC. Paid CM/PM are way more valuable than a GC working for you.

    0Reply
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