Not using a GC?

15 Replies

We have our first project that will be closing in a couple of weeks. We learned the hard way that finding good contractors can be a challenge. No offense to the contractors out there! We are finding that many of the contractors are fat and happy. Not fat in terms of physical size but fat in their work load and pocket book. This means they don't have to care about customer service or worrying about their bid being competitive. So where does that leave those of us that are newer to the business and don't have the connections yet?

We've been advised in classes to not do this ourselves because we should let the experts do what they do best. I agree with this but when the experts are so expensive that it's difficult to make a profit is it worth it to just GC it ourselves? I must add that we are not new to real estate or rehabbing houses. We've built and rehabbed primary residences so we aren't that naive couple that doesn't know what a phillips screw driver is. 

It can certainly be a challenge.  Get bids on specific projects from people you find through your network or through Craigslist etc and if they do good work then see if they would be willing to work alongside you or for a daily rate in order to cut costs.  Paying a pro who can do everything to include re-wire or redo plumbing in a whole house doesn't necessarily have to cost more than 15-30 bucks an hour.

As someone who works as a commercial GC for my day job, I'd say it's certainly possible to substitute yourself as the GC.  The most critical part is finding the correct subcontractors to make your GC role successful.  

The podcasts have mentioned several times that it's a good idea to show up at your local Home Depot and/or Lowe's at 6am and see which contractors are there.  These guys are typically doing real jobs and are actually active in doing work (as opposed to guys you give bad estimates and/or never show up).  Get some business cards printed up and hand them out as you see fit.

Be slow to hire and quick to fire.  Ask for pictures of recently completed work and/or tour current jobsites if possible.  The highest quality guys have nothing to hide.

Always get quotes in writing and clarify the scope of work to an agonizing level of detail.  Even the best subs can't read your mind.

Require a release of liens before issuing payment, and never pay in cash.

As far as leaving things to the professionals, I agree when it comes to work that requires a trade license (electrical, plumbing, HVAC) but tend to lean more towards DIY on the remainder (flooring, painting, etc.) because of the sincere cost savings and "on the job" education.  Nothing beats being able to call a sub out on a BS quote because you know better through your own experience.

@Erica Nagle

Like Ryan, I have spent years in commercial construction.

If you are going to hire subs, you should have a good schedule and not stack trades on top of each other.

Erica, what do you mean by first project?  Is that different than the rehabs you have done?  

I say go for it! I learn best by jumping in with both feet. I GC my own properties but I have a lot of experience in residential rehabs. I got that experience by just jumping in, taking on challenges, and being a decisive problem solver. The rehab can go as fast or as slow as you want. Set your own pace you're comfortable with on your first one. Once you start to learn the order of operations then introduce a little speed. Final thought would be if you are finding your margins to be too tight maybe you are over paying for your deals. Never be afraid to low ball an offer on a property. Who cares if they are offended, thats their problem. Sellers are sometimes just happy to stop the bleeding and will accept a ridiculous offer. Wish you lots of success!

Great advice! Thanks all for your input. The good news is that we got a great deal on the house and we are both very handy so we can do some stuff ourselves. BUT time is money so we'll have to find a balance. 

@Andy Sturm Yeah I could give 2 sh*ts if people get offended. We have to make money too. 

To clarify this is our first rehab purely for profit that we aren't living in for some period of time. 

I GC'd my first flip. I had some bad subs but some great ones, too. When you find a good one make sure to ask if they know of other subs. For example, my electrician knew that I was looking to have major HVAC work done and he asked if I wanted the number of a guy he knew. The HVAC guy was awesome! And since they both had reputations to keep up they didn't want to let each other down. My painter recommended a floor guy. The builder knew a plumber. Etc. etc. 

Can you get a contractors licence yourself? I don't know about your state, but in most of the states I have lived in you can't act as your own GC and pull permits unless it is your primary residence. If you are just doing cosmetic changes like changing flooring and replacing fixtures you could do it yourself, but if you have any work that requires pulling permits you can get into trouble.

Oh deffenitly go for it, my husband and I do as much as we can on our own (luckily my husband has experience in some construction areas and his profession is installing AC units and air duct) But we both do a lot of work like demo, sheet rock, painting, installing the cabniets even the roof. But we leave tile work, granite, foundations, stucco ect. to the people that know it best. You will save a lot of money ") good luck.

Wishing you success;) 

Lucero & Cris 

@Adam Anderson

We actually wanted to have Eddie get a GC license but you unfortunately can't get a GC license that easily in Massachusetts. They have minimum hour requirements that you need to have worked for another GC that you can prove. However I don't think you have to have one to pull permits or we'll have the subs pull permits as needed.

Do it yourself. hire labor directly and prepare to babysit....but no fear, you were going to babysit anyway no matter who you hired. good news, you've now reduced your costs significantly.

Great thread @Erica Nagle .  I've been thinking about the possibility of GC'ing my next property as well, mostly because I feel like the timeline has gotten completely out of control on previous projects under other GC's.  Have you considered what additional insurance and/or Workman's Comp you might need if you go this route?  

I am currently in the middle of rehabbing my first property as well. I worked in the commercial construction industry and kinda knew the ends and outs of dealing with subs and what was needed but since I was working a full time job 45 min the actual project site, I knew I physically wouldnt have the time or freedom to just drop in whenever and check on subs and such daily. I ended up going with a GC which has helped me keep my mind at ease when I cant be there. 

I have since quit my full time job and work part time in residential construction with plans to aquire my own licences to pull permits and such. I still have the GC on because now he is almost acting as a paid mentor. I have more time to hang out at the house, see it get built and join in on the hard work on MY project. I dont plan to use one on my next flip purchases, but the on-the-job training i'm getting now, along with some tips and tricks from an experienced contractor, is invaluable to my future and the money i will save. 

I'd say if you have the time to be there everyday ( not all day but definitely checking in) maybe making some hardware and material runs so guys can keep working, and you have basic knowledge of residential construction where you kinda understand the basic timeline and task are needed for a certain project to be completed. You should have no problem being your own GC. and like @Ryan Shaw

 said, Be slow to hire and quick to fire.

Originally posted by @Erica Nagle :

@Adam Anderson

We actually wanted to have Eddie get a GC license but you unfortunately can't get a GC license that easily in Massachusetts. They have minimum hour requirements that you need to have worked for another GC that you can prove. However I don't think you have to have one to pull permits or we'll have the subs pull permits as needed.

Sorry to hear Massachusetts so difficult to get a licence.  Although I personally believe just about anybody can do it themselves, the licensing requirements in many states make it impossible without first working for a licensed contractor.

I will admit that I have done work in the past without a licence in another state, all it would have taken was an inspector to stop buy and I could have been in a lot of trouble. 

Texas doesn't have any licencing requirements, so you could always move here and do it yourself.

For those advising to go ahead and do the General Contracting yourself I would advise caution. Make sure you understand the laws in your state and know what licencing is required to avoid costly mistakes.

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