Do I Need Specialized Subcontractors?

Question

Hey BP Community,I'm looking at doing my second project early this year. I completed a rehab to rental last year and used a GC. This time I'm considering hiring subs myself. I'm looking for advice from other investors who act as their own GC. I'm trying to gauge how many different subcontractors I need, vs. which items can generally be handled by the same guys. There are some obvious ones that I know I'll need specialized subs (foundation, HVAC, plumbing, electric). For other items, (i.e. framing, roof, siding, floors, windows, dry wall, insulation), do people prefer to use one crew who can handle most of this (typically the interior crew), or are there separate contractors who will handle each of these (or some of these)? It'll be helpful to hear opinions of those who flip regularly. Thanks

Chris Seveney · Answer

@Eric Karabinos

Please don’t take this as harsh

If you have to ask this question then you are not ready to act as a GC. The subs will walk all over you and take advantage of you. I only recommend acting as a GC when the work is very minor (paint and carpet) or you have extensive experience

Trying to save 10-15% acting as a GC with no experience can cause costs to balloon

Glen Wiley · Answer

Over the years I have made a point to ask one contractor for just about every job we need. He isn't the cheapest but he stands by his work, does what he says he will do. The result is that he is willing to actually move guys from other jobs to handle ours because he says we are one of his best customers.

It is tough to put a number on the ability to call a guy and know that your job will get handled reliably every single time.

When possible find small business owners with whom you can build a relationship, it pays off in the long run.

Eric Karabinos · Answer

Appreciate everyone’s insight. Very helpful. Seems like the crews who can handle most of the work exist and are the most efficient route. Now need to weight time/cost benefit of GC or not. Thanks again.

Adam Oldham · Answer

In my experience I have usually found it better to not hire a GC and just get the labor directly, oftentimes the labor is a little cheaper and you get better quality work & turnaround from a crew who is specialized in that trade. When it comes to a lot of the punch work or final touches on the inside I think it is advantageous to have a 3-4 person crew who can knock those things out quickly.

Kyle Spearin · Answer

@Eric Karabinos I'd weigh what your time is worth because you may actually end up spending more time project managing and researching to find the right subs. Another point is your personal construction knowledge and proximity to the project. If you're out of state or less knowledgable about this component, it will be very tough to verify good work vs bad until it's too late.A GC costs more, but if they're good at their job, it's worth it!

Alan F. · Answer

Personally I think it's a bad idea, its tripping over nickels to pick up pennies. Let's the contractors do their work and focus on running your business.

Alecia Loveless · Answer

@Eric Karabinos I have a contractor who can do most things. My contractor keeps an electrician on hand. For larger jobs we have a plumber and we have a gas plumber when we work with gas.

We’ve recently installed gas heaters in 17 units and my contractor is going to get certified to be a technician for them. He won’t handle the gas portion of the plumbing on them though. That will save me $40/hour when they break.

This contractor does all the things you mentioned. For the grunt work he often has day laborers.

It would likely be more efficient to have a whole crew but my costs would be 10X what I pay now. Also the good contractors where I live are booked out by 2 years, so every time I needed to flip a unit if I had to wait 2 years I’d be in trouble.

I think if you get to know these contractors and keep their contact information you should be fine. The key thing I have found is to pay them the day their bill comes out. Then they’re more likely to respond quickly. If you have a larger project follow the terms and pay promptly as the contract is being met. This way the team should be happy to do work for you in the future.

Zachary Cain Humphrey · Answer

You said, "For other items, (i.e. framing, roof, siding, floors, windows, dry wall, insulation), do people prefer to use one crew who can handle most of this (typically the interior crew), or are there separate contractors who will handle each of these (or some of these)?" We are currently doing our first ground up construction. We are using a GC. This GC has taught me a lot about the process. I would like to save money next time by GC the job myself. Id like to find a carpenter who can frame, drywall, siding, windows, insulate. This isn't entirely impossible. Usually wood working subcontractors can do that group of tasks together. Some of them can do all of that except drywall (because they don't want to - dry walling sucks Haha). Calling around and asking questions and following up with vetting those potential subs is the best thing you can do. Seek to get reference and call their references to verify that the work they performed was acceptable. Furthermore seek to operate as much as you can under a signed agreement. Don't agree to work off word of mouth or promises.

Scott Mac · Answer

Talk it over with the contractors you have already used.

Also ask them for recommendations of other contractors who they like to work with and that they think does a good job.

Good Luck!

Michael Thach · Answer

Hi Eric,

I got few flips under my belt and did couple renovation projects for around 20 properties. I have a small team where the main crew basically do everything from demo, drywall, electric, plumbing, paint. So most interior stuff is handled by a small team which have a wide skillset. Roof, exterior paint and specialized electric and heavy plumbing construction will be done by specialized contractors.

The reason is, you want flips to go fast. The quicker you can finish the project, the sooner you can put it on the market, means you money is more active. Velocity of Money ! Is a big difference if you do 4 flips with 10% a year or 8 flips for 8% a year.

Keep the team small with good allrounders, one for interior and one for exterior. Otherwise you are running after to many individuals. It's a scheduling and organization nightmare.

Do I Need Specialized Subcontractors?

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