I am a Residential Builder and GC- I only do speculation houses(no customers)need advice.

11 Replies

Need advice, I am looking to grow, and am having a hard time figuring out what to do. Do I hire a GC to run the flip houses? I have always done it myself, but since I can't be two places at once, not sure how to run job. I find the properties( I have my realtors license), design the layout, open walls, etc. I have my own subs, so when I have 1,2,3 or 4 flips at once, what is my best way to manage the houses( always did 1 at a time), I also need help with how to manage my new construction builds? Also, how to compensate for such services? I want to grow and have always done everything by myself. Also looking to buy an apartment building 21 units. This year probably going to do $3M+ flips, new construction. So what is step1,2, etc.? Any advice from people who are in a similar situation or are running larger scenarios, would be greatly appreciated.

Hire a project manager, pay him salary/commission to align incentives and let him handle the day-to-day construction management.

@Christopher Ilvento  We are basically in the same boat. We have a family business. One of us is a broker/contractor, I'm a general contractor/agent, my son is an agent/architectural designer, our son in law is a licensed electrical contractor. 

Right now we run everything on our jobs ourselves, from concept through build out. However; in order to scale up, we have to reorganize. Finding land and figuring out the projects is the most valuable, and we need more time for that. Therefore; we need to hire a bookkeeper and an office person for administrative duties to get out from under that, as it sucks up too much time. Finding someone that can handle all the permitting process would really be a huge help too. We used to have all of this ironed out and running very efficiently, but then relocated to a new area and are rebuilding business. 

Maybe some of the others can weigh in. @Lynn Currie

 @John Blackman @Kenneth Bell  @Will Barnard @Jon Klaus @Minh Le

 and others? 

A Project Manager is the right first step. I'm not sure what systems you have in place for running the back end of your business, office management, ordering, finding specialty subs,  etc., but that is the next logical position to fill if you haven't already.  More projects,  more PMs, eventually more back staff. Once you get two or three large projects going you may want to consider hiring a runner (man with a van) to keep your skilled help out of Home Depot and focused on production. I would caution on filling more than one position at a time giving the new hire and the organization a chance to adjust thoroughly with each new team member. My last suggestion,  which may be obvious, is to hire the most talented people you can afford after rigorous vetting, and to pay competitively so they stay with you. Grooming new PMS from inside the company, is in MHO the best because they have already absorbed your processes and methods. 

Good Luck !!!

@Karen Margrave ,

Thanks for the shout out, but this is not my area of expertise.  I agree with @J Scott's recommendation above.  A base salary plus commission is the way to go.  Commission is a percentage of the net profit.  The more money Chris makes, the more money the project manager makes. Win-win. 

We are all tempted to always do everything ourselves but as you are finding out that has its limits. Rather than be hiring various GC's I would also concur to hire your own project manager and think of offering a compensation plan that will keep him or her with you. There is nothing like working with someone that really knows your business and your particular deals and has an incentive to always watch out for your interests. If you hire someone that is very familiar with all aspects of your business and handle the over sight of more than one project you might find this to be the most beneficial to you. If you plan to grow your business significantly you might think of creating a project oversight department and have a lead person in charge of that with a training program in place to better manage a larger business through people with varying project management skills and experience. This way you can accomplish what you want and also have it be cost effective. 

Consider implementation of a lead carpenter system.

http://www.shawnmccadden.com/job-description-lead-carpenter

Thanks for all your feedback. If I hire a PM, which I have been speaking with a few of them, what would be a compensation package? This would be the first time hiring someone, except for sub contractors. Base Salary, bonus, schedule, expected hours per week(40/50+), I am looking for exact details, what do you guys do exactly, not generalities. I don't have enough projects yet to keep them busy, how do I transfer over to a PM? Right now I own 1  house which I am in the process of rehabbing. 1 lot which I am in the process of getting a variance to build new construction. 2 more renovations coming in in 6-8 weeks. I am thinking about hiring a GC that I know and have him run it, until I have enough deal flow. How would I compensate him? I have all my subs in place. Thoughts?

@Christopher Ilvento If you can get another GC that will run your jobs, there's no need for a project manager too, he can do it all, though it may be more expensive. A GC when going to the jobs knows if something is off, and is experienced working with subs. As for compensation, talk to him. First, make a list of everything that you are currently doing on the jobs, what things are actually worth your time to do (that you doing would make you more money)  and what things if someone else did them would allow you the time to focus on the other things only you can do? (finding new jobs, financing, etc.) Who will apply for permits, do cost breakdowns, hire subs, scheduling, etc.) be thorough. 

What are your strengths? What are your weaknesses when it comes to business? 

Once you know what it is you need to shore up your business, then you'll be in a position to sit down and talk to someone. Find out their experience. Are they tech savvy so that they can do timelines, track subs, etc. with a program designed for contractors, etc.? (such as Buildertrend, Microsoft Project, or one of the many others)  Are they willing to learn? 

Ask them what they'd expect as far as salary, etc. You may want to pay wages, and then a % of the deal if it's done on time, and within budget, etc. 

Great advice from a lot of experienced folks. Overall, I agree with what everyone is saying - you can't do it all.

My advice would be to find the part that you are really good at and love, and off-load the other tasks to others. Then (assuming the folks you brought in are competent), get out of their way and let them do their job.

In my case, I flip it around from what others are saying. I GC all projects (yet do none of the actual construction work) and leave all of the other stuff to other folks. I can handle multiple projects at a time as long as they're staggered (not all starting or finishing at the same time) and geographically close together.

So far, this works well for us. I get to do the part of the gig that I love, which is creating and building beautiful things and I still have time to evaluate and look at deals. My business partner oversees all the financials, and we both have a right-hand-man that helps us out.

When it becomes too much for me to handle the GC work due to volume, I'll likely bring someone in that is a project manager in another industry, and train them to PM jobs. This will allow me to let go of some of the more task oriented aspects of what I do, but still drive the proverbial bus.

I would highly recommend using something like asana.com to manage your project task lists.  This is not so great for GCs, but it is very good for PMs.  This allows multiple team members to see who is working on what and what they are getting done each week without having to write reports or emails.  If their list comes up weak, then you have the evidence to call them out.

I create project templates for each build.  The templates have my checklist (about 300 items) that get copied and applied to each new build.  You can always update your templates and every time a new project is instantiated, the whole list is there.  Tasks can be assigned to other people, comments get automatically communicated, it's awesome.

This is also great for developing your process and sticking to it.

There are a lot of questions in your post and more that come to mind from the responses, I will touch on a few important ones. There is a huge difference between a GC and a PM, and I mean huge. GCs don't typically have an eye for design, they don't typically have a mindset from the investor standpoint, and they often disappoint. With that said, it is a bad idea to hire a GC to do the work of a PM. Hire a PM who has goals in line with yours as @J Scott pointed out. This is a must for scaling your business.

Building systems is another key step. Having checklists, product sheets, checklists, etc is key to saving both time and money and saving time also translates into more money for you.

As to tackling larger higher end projects, make sure you buy right, lots can go wrong and while your potential rewards are higher, so are your risks. Many, but not all of those risks can be mitigated through proper purchase prices and rehab budgets.

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