Sub Contractors Or General Contractors Which to choose!
Hey Everyone,
I wanted to talk about choosing between Sub contractors or General Contractors. When should you hire one or the other? What should be some deciding factors? How does each one affect your business models? Etc--
Business Models vary by region, South Jersey, Central Jersey, Jersey Shore, Philadelphia but the core of the decision process remains the same.
South Jersey Is mostly a residential development area so the rehabs center around single family homes. Where as in Central Jersey you start to get into more populated areas where your now dealing with Town homes, and bigger multi units. Down at the Jersey Shore you are doing more tear down and rebuild, which is the same for Philadelphia.
So that being said, Sub Contractors. They are definitely the best option for keeping you rehab cost down. They give you the benefit of control over time frame and cost. You also get to choose who is working on the property on the important items, like electric, plumbing, HVAC, etc. The down side for subs is they can be very time consuming. Managing all the different moving pieces can be overwhelming, especially for newer investors. Your budget can also get out of control quick if you don't keep track of what each person is charging.
General contractors are all about leverage. Their main benefit is to New investors who don't know anything about construction and to Seasoned investors who are looking to make the jump from 2-3 properties at a time to 10-12 at a time. While the investor is concentrating on finding deals and money the rehab can be getting done. They would also have their own team of subs that work with them, which means the investor doesn't have to worry about finding them their selves. The down side is they are definitely more costly. There is a bigger level of trust needed with GC's as well. You need to make sure you can count on them to get the job done. Some GC's will take on to much at one time as well which slows them down on your projects.
There are definitely plusses and minuses to both sides. Like I said it really comes down to your business style and what you want to accomplish in Real Estate investing. Think about your goals and personality. Think about the people you like interacting with and what you favor at your own job. These answers will help you choose Subs or GC's.
As a General Contractor Myself, I choose Leverage. Please let me know what you chose and why? This will help us all learn and see what choices are out there.