"Sub out" your renos or hire a GC on smaller properties?
Investor · Cleveland, OH · Member since 2019 · 147 posts · 156 votes
Wanted to get everyones opinions..
We just closed on 22 units mid march and went back and forth on whether to organize the reno work schedule ourselves (schedule the demo guys, painter, buy floor, schedule floor installer, install vanities/fixtures, etc..) or just hire a GC that would oversee the whole shabang.
We ended up hiring the GC and the work has been good overall, but we're not as happy with the timeline.. we have a 18 month term bridge loan in place currently and planned on having these initial units done in half the time it has taken the GC. We're considering firing him and scheduling everything ourselves.
Just wanted to see for something this size what ya'll would do in this situation - especially knowing we have 18 months to refi and want to show our target NOI for a few months before the refi.
A problem that I see all the time being in the construction industry is that sometimes people can have very un-realistic time frames/expectations for the size crew they're running. I've seen may companies fail because they took on projects that were way too large for the crew they run. There's only so much one person can do in a day and there's only so much 5 can do without stumbling over each other.
A good way around that maybe would to be hiring multiple GCs on a large project with well defined contracts and plans. Then having one project manager. That entirely depends on how many apartments are vacant though and how many you need fixed.
Ex: if you had 6 apartments vaccant, hire out 2x GCs and give them each 3x units to do within a fixed time span at the same time. Then act as a project manager and make sure both gc are adhering to the plans/doing quaility work. Yeah they might get annoyed that they aren't GCing all 6 but having 3 Is better than 0.
Honestly the problem I forsee if you fire this guy and manage it yourself you might end up overwhelmed as well. Managing subcontractors isnt as easy as it looks.
I think you'll sleep better at night if you hired a reputable GC. I subbed out a small house remodel and I think I spent just as much time working with contractors as I would have if I had just done it myself. If you want to find guys who can do the job right at a fair price and time line you will put in the time to find them. If you have a day job forget about that!
A problem that I see all the time being in the construction industry is that sometimes people can have very un-realistic time frames/expectations for the size crew they're running. I've seen may companies fail because they took on projects that were way too large for the crew they run. There's only so much one person can do in a day and there's only so much 5 can do without stumbling over each other.
A good way around that maybe would to be hiring multiple GCs on a large project with well defined contracts and plans. Then having one project manager. That entirely depends on how many apartments are vacant though and how many you need fixed.
Ex: if you had 6 apartments vaccant, hire out 2x GCs and give them each 3x units to do within a fixed time span at the same time. Then act as a project manager and make sure both gc are adhering to the plans/doing quaility work. Yeah they might get annoyed that they aren't GCing all 6 but having 3 Is better than 0.
Honestly the problem I forsee if you fire this guy and manage it yourself you might end up overwhelmed as well. Managing subcontractors isnt as easy as it looks.
To tag onto the other comments, it does depend on a bunch of factors. Your profile is blank so I don't know anything about you. Is your timeline realistic? Do you understand "construction" and the "trades" well enough create a realistic schedule? What about municipal permits and inspections? How did you factor in labour availability?
Look back at what went "wrong" with your current GC... What went wrong? You say the work is fine. Did you agree up front to a schedule? Did you ask about the size of his crew and access to additional labour and trades? Does the GC think there is anything "wrong?"
To completely reno a 22unit property is certainly no small task. To GC the job yourself, do you have trades and vendors that you can rely on? That have affordable pricing? Do you have the time and competency to oversee the work, keep the trades and vendors coordinated, handle the logistics (e.g. dumpsters, deliveries, etc.)? Why didn't you GC the job yourself in the first place? Have you done similar projects before?
I hope "answering" my rhetorical questions helps you. I don't know what is the best course of action for you as I'm not sure what "broke down" in your process. That being said, its your project. Depending on the scope of your reno, I concur with @George W. plan of attack. Hire multiple GC's to reno specific units. Chunk up the work, and try out a bunch of GC's. See which one or ones you like. Also, I think this might be more appropriate since finding smaller "GC's" (reno'ing a unit at this point I kinda consider them just a "contractor" for the scope of your overall effort) is much more likely. For a 22unit property I would have favored hiring an actual construction firm to do the GC function.
I know this was rather long winded, but I hope it helps. Good luck.
@Michael Orlando, if this is your first construction job, welcome to the world of contractors. Whether they are general or sub they are still contractors and generally you get what you pay for.
As mentioned, there is not enough info here to give pointed advice, so here is some general advice. There is a reason construction management is a degree available at many universities. Not to say a lot of people don't learn it on the fly, but those that are good at it typically have worked in construction for years, starting as a carpenter and working their way up to bigger and bigger projects. You need to know the timelines to create them. I have some great contractors I use (after years of decent to bad ones) that truly estimate correctly, and build in buffer to cover the what-ifs.
Most commonly, even when you ask a contractor how long something will take, you can safely add 50% to that timeline and still be pushing against the deadline.
One thing I have learned about contractors, they all love to point out what other contractors have done wrong. Therefore splitting the job between several could be a great thing. They will all be competing to be faster and better than the others. It may cost a little more since you don't get the scale of one doing all 22, but as you are learning, it costs money to fire a contractor. 90% of the time you cannot get someone in to finish the job for the same amount you still owe the first guy.
An additional benefit of having multiple contractors doing essentially the same work is they will do it differently, and you can ask why one does it this way, and the other does it that way. I.e. I have some contractors swear you can use green board and redgard in showers, and others say that is not right. It needs to be cement board and redgard. Hear them both out and it can help you learn the trade-offs of each approach.
I bought an 18-unit portfolio and did not hire a GC. 7 of the units were vacant at purchase and I was able to renovate them fully within a 3-month period (roof, siding, flooring, new drywall, paint, kitchens, bathrooms, etc.). Every inch was renovated or replaced. It took another 3 months to fully lease them during fall/winter slow season.
With respect to the remaining 11 units, those took us a total of 6 months to renovate (9 months for the total project). I did not do any of the physical work, but I did manage the subs.
Thanks for the responses!
All good input... Didn't want to make the post too long by throwing in tons of info, but @Evan Polaski and @George W. that definitely makes sense to hire two and have them do similar work to compare. I think we'll give that a try on our next acquisition / potentially on the rest of this one.
@David M. all good questions! We did have a timeline set up, but not necessarily in writing (although I'm not sure if that would have helped the situation). But I do think next time, we'll have the timeline written out for them and agreed upon so at least it's tougher for them to come up with an excuse for not being done on time.
Wanted to get everyones opinions..
We just closed on 22 units mid march and went back and forth on whether to organize the reno work schedule ourselves (schedule the demo guys, painter, buy floor, schedule floor installer, install vanities/fixtures, etc..) or just hire a GC that would oversee the whole shabang.
We ended up hiring the GC and the work has been good overall, but we're not as happy with the timeline.. we have a 18 month term bridge loan in place currently and planned on having these initial units done in half the time it has taken the GC. We're considering firing him and scheduling everything ourselves.
Just wanted to see for something this size what ya'll would do in this situation - especially knowing we have 18 months to refi and want to show our target NOI for a few months before the refi.
It all depends on your expertise and bandwidth. If you have the time and skills and it's mostly cosmetic you could certainly get it done. If you want to grow and scale you need to hire a GC turnkey.
As for hiring a GC you need to make sure you hire the right one. You want a pro who does the type of work you need done. You need to vet them throughly, check references, visit current projects in process as you can tell lot about a GC by the job site. You also want to pay attention to their level of responsiveness and how detailed and professional they are with the paperwork side of things. Never go with the cheapest contractor if they are well below the rest.