How do I be an effective general contractor?
New to Real Estate · WI · Member since 2022 · 35 posts · 7 votes
How do I be an effective general contractor?
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Banker · Minneapolis, MN · Member since 2017 · 257 posts · 143 votes
4yDo what you say you are going to do. If you tell someone you'll be there at a certain time show up at that agreed upon time or communicate if you need to reschedule/running late. Under promise and over deliver. Communication is my number one thing.
73 Replies
- Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes4y
Not in order of priority.
1. Learn project management. There's several different programs that will help with timelines, etc.
2. Don't make promises you can't keep. If you don't know something, admit it and then find the answer.
3. Use numbers based on reality at the time.
4. Know what you know.
5. Take pride in your work, and you'll get referrals, though don't overthink every single thing.
6. Know the laws regarding contracting, liens, etc. and make sure you're covered. 8.
7. Plan for the worst and hope for the best
8. Don't be afraid to ask other contractors for advice.
9. Learn the permitting process for the type of jobs you're going to do.
10. Learn codes.
- Member since 2021 · 88 posts · 80 votes4y
It’s excellent to enter the GC business with this attitude, so stay in that mindset.
I’m a lifer in construction that evolved to a GC then to design-build (design-remodel really).
Its been said above; don’t talk, write. Get an excellent contract based exactly on your business model, makes sure its correct for your state, get one from a construction attorney in your area, worth every penny. Do detailed scopes of work and do detailed release schedules that match obvious progress points that a homeowner easily recognizes. Either blatant to the naked eye or evidenced by a signed inspection record by municipal authority or 3rd party inspector. Make it make sense to the owner why it’s time for the release due. Make it follow your course of construction plan or flexible enough to jump around. Documents reduce debates. I mean, its called General “Contracting” for a reason, not General “Construction”.
Something not mentioned. Insurance. Never……Never…..Ever……Operate without CORRECT type of insurance for your EXACT business model. If you put it in a contract, subbed or not, make sure your insurance knows you sell that scope of work and cover it. Follow procedures that keep you qualified in your insurers eyes, and ask them blunt questions about how you could screw up your coverage. Construction is one of the worst businesses to gamble in (ie profit and liability), from injury to defects to contractural disputes. As a small GC you could be ruined instantly if uninsured and sued. DO NOT be one of those guys that says that’ll never be me, I’ll never have a dispute I cant resolve, I’d never need to be sued by anybody…. Thats not how it works. Figure out your insurance rates, factor them into your bids.
- 4yBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
@Nicholas Valente has a good point. Working for investors sucks. Try to stay in the high-end home category.
- New to Real Estate · WI · Member since 2022 · 35 posts · 7 votes4y
Quote from @Karen Margrave:
Not in order of priority.
1. Learn project management. There's several different programs that will help with timelines, etc.
2. Don't make promises you can't keep. If you don't know something, admit it and then find the answer.
3. Use numbers based on reality at the time.
4. Know what you know.
5. Take pride in your work, and you'll get referrals, though don't overthink every single thing.
6. Know the laws regarding contracting, liens, etc. and make sure you're covered. 8.
7. Plan for the worst and hope for the best
8. Don't be afraid to ask other contractors for advice.
9. Learn the permitting process for the type of jobs you're going to do.
10. Learn codes.
Thank you! I definitely want everything to be legal and have all necessary paperwork signed and filed. Project management will be a new step, and that's why I'm going to make sure I know the processes of everything I do before I start with any bigger jobs. Learning all of the codes is going to be a constant task so I am thinking of ways to stay up to date with all of the legal aspects and at the same time exceeding them where I deem neccessary.
- New to Real Estate · WI · Member since 2022 · 35 posts · 7 votes4y
Quote from @Joel Forsythe:
It’s excellent to enter the GC business with this attitude, so stay in that mindset.
I’m a lifer in construction that evolved to a GC then to design-build (design-remodel really).
Its been said above; don’t talk, write. Get an excellent contract based exactly on your business model, makes sure its correct for your state, get one from a construction attorney in your area, worth every penny. Do detailed scopes of work and do detailed release schedules that match obvious progress points that a homeowner easily recognizes. Either blatant to the naked eye or evidenced by a signed inspection record by municipal authority or 3rd party inspector. Make it make sense to the owner why it’s time for the release due. Make it follow your course of construction plan or flexible enough to jump around. Documents reduce debates. I mean, its called General “Contracting” for a reason, not General “Construction”.
Something not mentioned. Insurance. Never……Never…..Ever……Operate without CORRECT type of insurance for your EXACT business model. If you put it in a contract, subbed or not, make sure your insurance knows you sell that scope of work and cover it. Follow procedures that keep you qualified in your insurers eyes, and ask them blunt questions about how you could screw up your coverage. Construction is one of the worst businesses to gamble in (ie profit and liability), from injury to defects to contractural disputes. As a small GC you could be ruined instantly if uninsured and sued. DO NOT be one of those guys that says that’ll never be me, I’ll never have a dispute I cant resolve, I’d never need to be sued by anybody…. Thats not how it works. Figure out your insurance rates, factor them into your bids.
"Its called General 'Contracting' for a reason, not General 'Construction'". That is my favorite quote. You've given immaculate advice to me and I can't thank you enough! I have to understand where all the pieces of the puzzle go. I can't sit around and assemble the puzzle all of the time. I can help build here and there, but my main responsibility should be making sure everything is going where it needs to be. Both in the field and in the office.
- New to Real Estate · WI · Member since 2022 · 35 posts · 7 votes4y
Quote from @Nicholas Valente:
@Nick Grewe
Honestly. You should probably avoid investors/flippers until you get better at what you do. Get a few home owner projects under your belt. Test out your sub contractors before you get in over your head with investors. (Most times) they have a system in place and if it goes sideways or south which I can guarantee you it will sometimes. You will ruin that relationship/referral. Real estate investors don’t pay good at all, but their rich friends do. Keep that in mind
I agree completely! I want to start off with the small house calls first. I'm in the process of finding a mentor and might have someone that would be willing to have me help him with his rental projects. After I build the confidence that I can have all my ducks in a row, i will then branch off to find other, more advanced scopes of work.
- Rental Property Investor · Lehigh Valley, PA · Member since 2017 · 200 posts · 191 votes4y
On-time, on budget, provide options
- 4yJohn MorganPro MemberRental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
Send the investor receipts. It’s like pulling teeth to get people to send me receipts. And I don’t have a problem with unforeseen issues. Those always come up and I’m happy to pay for it. Just be straight up and honest about it right away when random extras pop up. Honesty is my #1 trait I look for in a contractor. Most of my guys rip me off or lie about things. That gets annoying.
- New to Real Estate · WI · Member since 2022 · 35 posts · 7 votes4y
Quote from @John Morgan:
Send the investor receipts. It’s like pulling teeth to get people to send me receipts. And I don’t have a problem with unforeseen issues. Those always come up and I’m happy to pay for it. Just be straight up and honest about it right away when random extras pop up. Honesty is my #1 trait I look for in a contractor. Most of my guys rip me off or lie about things. That gets annoying.
I plan to be up front with all charges and most definitely send receipts. This would also cover myself if there is ever miscommunication on what exactly was charged or not.
- Handyman · MN · Member since 2020 · 92 posts · 46 votes4y
Understand that time is important to the investor, 24 hours on your time starting mid-week might mean a tenant sitting for 5-6 days without a kitchen or bathroom.
Find someone who can start with a hole in the ceiling and have it painted, textured and cleaned up like nothing happened within a couple hours. I believe it's called hot mud, and we call for that guy all the time.
Be realistic, we know you're busy and things are weird right now. If you can't take it on at this time be honest about it. At the same time, if your always too busy and even the phone call sounds like a nuisance on my end - I'll help you out by calling someone else next time.
If you make the person who called you look good by taking care of their resident, your'e guaranteed to have more work coming then you can handle!
- 4yBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
The most successful (not best) General Contractors were not good workmen and didn't ever put bags on,,,..they actually didn't have bags or know which end of a hammer to grab...
They just drove around in big fancy trucks and did all the paperwork and meetings correctly. And have other people do the work.
Unfortunately, I was just compelled to keep putting on the bags. Definitely gave me the cool factor, but they got the $$. Figure out what you want before you start.....
- New to Real Estate · WI · Member since 2022 · 35 posts · 7 votes4y
Quote from @Bruce Woodruff:
The most successful (not best) General Contractors were not good workmen and didn't ever put bags on,,,..they actually didn't have bags or know which end of a hammer to grab...
They just drove around in big fancy trucks and did all the paperwork and meetings correctly. And have other people do the work.
Unfortunately, I was just compelled to keep putting on the bags. Definitely gave me the cool factor, but they got the $$. Figure out what you want before you start.....
I want to have a wide knowledge of my field where I can fill in when needed. The end game, however, is to make the profitable business that others look towards for when they have work that needs to be done. That would require me to be in that truck making sure that everything runs smoothly, but I do want to make a point to be on site. Having the owner on site is somewhat inspiring to the good workers and a deterrent for the bad ones.
- 4yBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
@Nick Grewe And figure out early on exactly what your SOW will be. Are you going to run by and do patchwork, like @Account Closed mentioned? Or are you going to do larger remodels?
There's not really any money for guys like us in the small job game, you can't even cover your overhead. I'd leave that stuff for the handymen....
- New to Real Estate · WI · Member since 2022 · 35 posts · 7 votes4y
Quote from @Bruce Woodruff:
@Nick Grewe And figure out early on exactly what your SOW will be. Are you going to run by and do patchwork, like @Account Closed mentioned? Or are you going to do larger remodels?
There's not really any money for guys like us in the small job game, you can't even cover your overhead. I'd leave that stuff for the handymen....
I plan on doing the run around and do the patchwork for a year or two while I continue to learn. After I have that broad knowledge of everything, I plan on moving to single room renovations, then to 500-750 sq ft single story house renovations, then to two story and so on based on my level of confidence. I can see the road to my destination, it's just going to take a few years of baby steps to get to that point
- 4yBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
Quote from @Nick Grewe:
You going to do all this work yourself? Or sub it out? Or have your own employees?
My point being....those small jobs (especially for investors) do not pay well. By the time you take out materials costs and pay your sub or employee, there will be nothing left...which means if you choose this route, you'd better be prepared to do the work yourself. Get ready to go on a steep learning curve!
- 4yRebecca KnoxBusiness MemberSpecialist · Milwaukee, WI · Member since 2014 · 1k+ posts · 1k+ votes
Congratulations on obtaining your dwelling contractor license.
For me, a 5-star contractor provides excellent overall VALUE----does what they say they are going to do with fair pricing. My favorite contractors are dependable, honest, fairly priced and consistent.
My husband and I run Wisconsin Contractor & Handyman Club and the biggest challenges I see when members voice complaints are the ability to say no, showing up and also ensuring all expectations are clear.
I wish you the best in your venture.
- Handyman · MN · Member since 2020 · 92 posts · 46 votes4y
Quote from @Bruce Woodruff:
Quote from @Nick Grewe:
You going to do all this work yourself? Or sub it out? Or have your own employees?
I guess it also depends on what kind of market you want to go after? Helping investors flip? Small landlords upgrading rentals? Large investor properties?
The problem I run into is finding people to do the small work. I can put a request out to bid siding and have people from all over the place bidding for the work. But trying to get a section of siding replaced on a third level by someone licensed and insured with the proper equipment is a different game. The general I call for that doesn't even get out of his truck, just calls another sub and collects the payment when it's done.
I dont think there is a shortage of people that can do the job, but finding ones that have a couple million dollars coverage, have legal employees that pass criminal background checks and have the patience to sit down and sign contracts and know how to get onto a corporate accounting structure for payments is the real shortage. All just to appease the lawyers, tax codes, insurance agents and sue happy population. Insert GC necessity here.
Damn I wonder why rent is expensive.
To sum up my ramblings, is there a profitable way to have someone take on all of your small jobs while you are off doing the bigger ones?
- 4yJared HottleBusiness MemberReal Estate Agent · Cedar falls IA Waterloo, IA · Member since 2020 · 902 posts · 549 votes
Biggest things for me:
detailed bids/scope of work
know when you can start and roughly how long it will take
I am always nervous when contractors ask for money up front. Be fiscally responsible enough that you can cover materials/labor and have predetermined draw periods if very large projects
I know this can be hard but think as the owner would. As a contractor you may have a plumber you like working with but on big projects I still think getting a few bids is the right thing to do for your client as a general contractor. Try to save them money where you can and provide alternatives that are easier/cheaper to do and would accomplish a similar goal. (resurfacing cabinets vs new/cleaning sink instead of getting new one etc)
Jared Hottle Real Estate59 Reviews - New to Real Estate · WI · Member since 2022 · 35 posts · 7 votes4y
Quote from @Rebecca Knox:
Congratulations on obtaining your dwelling contractor license.
For me, a 5-star contractor provides excellent overall VALUE----does what they say they are going to do with fair pricing. My favorite contractors are dependable, honest, fairly priced and consistent.
My husband and I run Wisconsin Contractor & Handyman Club and the biggest challenges I see when members voice complaints are the ability to say no, showing up and also ensuring all expectations are clear.
I wish you the best in your venture.
I appreciate the insight! I will do my best at being responsible and fair with my business!
- New to Real Estate · WI · Member since 2022 · 35 posts · 7 votes4y
Quote from @Account Closed:
Quote from @Bruce Woodruff:
Quote from @Nick Grewe:
You going to do all this work yourself? Or sub it out? Or have your own employees?
I guess it also depends on what kind of market you want to go after? Helping investors flip? Small landlords upgrading rentals? Large investor properties?
The problem I run into is finding people to do the small work. I can put a request out to bid siding and have people from all over the place bidding for the work. But trying to get a section of siding replaced on a third level by someone licensed and insured with the proper equipment is a different game. The general I call for that doesn't even get out of his truck, just calls another sub and collects the payment when it's done.
I dont think there is a shortage of people that can do the job, but finding ones that have a couple million dollars coverage, have legal employees that pass criminal background checks and have the patience to sit down and sign contracts and know how to get onto a corporate accounting structure for payments is the real shortage. All just to appease the lawyers, tax codes, insurance agents and sue happy population. Insert GC necessity here.
Damn I wonder why rent is expensive.
To sum up my ramblings, is there a profitable way to have someone take on all of your small jobs while you are off doing the bigger ones?
To get my foot in the door, I plan on doing the small things by myself or with a helper. After a year of doing the small jobs I will try to advance to the next step. I will hopefully have an employee after 2 years that I can leave at the smaller jobs.
- 4yBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
Quote from @Jared Hottle:
As a contractor you may have a plumber you like working with but on big projects I still think getting a few bids is the right thing to do for your client as a general contractor.
I rarely did this. Once I had a plumber who was beholden to me (because I gave them a LOT of work, like $150k a year) they were my guy. I knew their prices were good, not the cheapest but then that's not what anyone should be looking for. And they were at my beck and call, so the project ran smoothly and never stalled. On top of that their work was guaranteed to the customer, by them and also by me.
The customers were smart enough to know that they were getting the highest quality work, done on time. Whether it was $1000 more or less wasn't an issue.
- New to Real Estate · WI · Member since 2022 · 35 posts · 7 votes4y
Quote from @Jared Hottle:
Biggest things for me:
detailed bids/scope of work
know when you can start and roughly how long it will take
I am always nervous when contractors ask for money up front. Be fiscally responsible enough that you can cover materials/labor and have predetermined draw periods if very large projects
I know this can be hard but think as the owner would. As a contractor you may have a plumber you like working with but on big projects I still think getting a few bids is the right thing to do for your client as a general contractor. Try to save them money where you can and provide alternatives that are easier/cheaper to do and would accomplish a similar goal. (resurfacing cabinets vs new/cleaning sink instead of getting new one etc)
I agree completely! One of the reasons why I posted this on BP was to get right to the customers/investors that I will be working alongside as well as investing next to. I have also made a note to learn multiple methods or solutions to a problem. That way money or time could be saved due to the situation.
- Member since 2021 · 88 posts · 80 votes4y
Quote from @Account Closed:
I think there’s only 2 successful business models in General Contracting (residential really)- and I mean successful by means of consistent, quality field construction. Which hopefully translates to profitability, but that’s really another skill set. (Fundamental to this conversation- there’s frankly not enough to meet demand- its an eroding profession)
1- What Bruce already alluded to- the Owner/Builder- we never 100% detach ourselves from our projects, we care and oversee each of them and are a primary communicator with the clients. Issue- its not really a scalable business model, you reach your limits and have to be happy with the profit margins. Or retire.
2- Go big and go Manger mode. You gotta sell more, and build relationships with every sub-trade group, tier each trade according to success and availability, try to keep them on your gigs as much as possible. Familiarity and reliability, strong relationships are the only way it doesn’t become a nightmare. To CYA liability wise, you already found out- legit subs are licensed, bonded, and properly insured. Great ones know their worth and are only available if they want to work for you. Learn their numbers and sell their numbers if you want to profit off their greatness. If you have to book and sell the lower tier skill trades, be prepared for higher jobsite maintenance and oversight, and convincing them to do *bleep* over if it doesn’t meet the mark.
Now- Type 1 above- after years of relationship building- yes you can add small side gigs to primary ones, but only because you grew relationships with sub partners that you absolutely can trust. Otherwise, lots of small gigs to a type 1 operator is just stress and a potential mine field of distractions, which gets tiring after a while that money doesn’t always cure. Thats when type 1 operators dabble with being type 2 operators, and find out they were kinda happier being type 1 all along. (Insert eyeroll emoji)
- New to Real Estate · WI · Member since 2022 · 35 posts · 7 votes4y
@Joel Forsythe you bring a great perspective to mind. Jumping from small job to small job would be very tiresome and stressful due to the amount of projects I'd have to oversee. I can definitely see that being a hassle in the future. Knowing this, I would want to stick with a group of clients/investors in order to keep projects under similar standards. This would keep quality high and rework/problems at a minimum. You have also brought into perspective on why I should vet my subcontractors. Ensuring they are doing work to the standards I have set will be crucial if I want to build relationships and reputation through out Wisconsin.
- Rental Property Investor · San Diego, CA · Member since 2021 · 5 posts · 11 votes4y
@Brandon Plombon This. I have a very good GC. What would make him great is by doing what he says he is going to do when he says he is going to do it. He's good because he would do the task and he would do it well for a very reasonable price. Where he fails is timing and scheduling and then communicating it with me. It's okay if things are running behind schedule- just tell me so I can plan around it.
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