Hire one general contractor or piece it out with multiple contractors?

Question

I'm about to close on a house that I plan to rent out. It's a definite fixer upper (estimated renovations around $20K-25K). Should I look to hire 1 general contractor who can take care of all the repairs? Or should I try to interview and hire out all the different renovation projects (i.e. a plumber, an electrician, a roofer, etc) separately? The latter requires more time. Is there any cost savings? What do all the rehabbers out there tend to do?

Note: I'm still new to real estate investing. This is my 2nd rental property. :)

James Sinclair · Answer

My experience is a good GC can be great, a bad one can be your worst nightmare.

Account Closed · Answer

@Jeni Lu

Great question. As both a GC and singular tradesmen professional I concur with Michael. If you have a good relationship with a GC that has awesome referrals and he understands your true plan and end an goal in the beginning hiring a GC is the best way to go. As you move forward then go with individual tradesmen once you start to understand the ins and outs of construction.

Time is money and if you run across issues you are not familiar with during the renovation process it may set you back weeks, months and etc there fore affecting your bottom line.

The difference between myself and others in my market is the people I invest with is "we have a plan for everything" and even with that we often must adapt during the process. If not for all the professionals I am surrounded with being here in NJ I would get swallowed up. But  because of these people that are all aboard when it comes to the plan and exit strategy (which may include holding a property) we thrive.

Michael Lemieux · Answer

Jeni,

I think that would depend on your comfort level as a project manager. A GC should be comfortable over seeing the whole job and all other trades. If you are comfortable with being the PM, I would sub the individual tasks out. I heard in one of the podcasts, ask each trade who they would like to follow; ie ask the painters who they would recommend for the sheetrock, etc. I wish I could remember who said that, I think it's a great suggestion. Another one came from @J Scott's podcast here, that was go to Home Depot @ 7 am, check out the contractor's desk, see who's hanging around, those are the guys that are getting things done. Another great suggestion.

Jeni Lu · Answer

Thanks for all the responses! Love the BP community. You guys have given me a lot of pros/cons to consider and I think I'm personally better off working with one GC. There isn't much to be gained from trying to hire each tradesman individually since I don't know much about each trade yet.

@Jeff N  "Time is money." So true. I learned that hard lesson with my first rental. Not something I need to learn again! I like your suggestion of working with a GC to learn the ins and outs before trying to hiring everyone individually.

@Chris Christianson  Step flashing, counter flashing, sheathing. You drive home a good point. I have no clue. :)

@Mike Simmons "Time is better spent  looking for more money and looking for deals, not hiring electricians,  plumbers, roofers, etc." I agree. Trying to obtain financing for the next deal should be my main focus.

@Michael Lemieux  I'll check out those podcasts. Thanks for making me aware of them.

Mike Simmons · Answer

I think it boils down to your overall investing strategy and timeframe.  If you want this done relatively quickly, and you plan on doing more projects this year, I would say find a good GC.  If this is the only investment property you will be doing this year and you are in no big hurry, you can save some money (generally speaking) if you subcontract out the work yourself. Holding costs should be considered here too.  If the money used to purchase the property is expensive, time can turn into a cost issue.

I almost always advise investors to use a GC.  Your time is better spent looking for more money and looking for deals, not hiring electricians, plumbers, roofers, etc.

Chris Christianson · Answer

In my opinion the GC on a job should know each and every trade sufficiently to maintain your desired level of quality.  They're the only person who stands between your finished product and the trades.

For instance, you mention roofing, do you know what step flashing is?  How about counter flashing?  When do you need to replace sheathing and what's the correct method?  I have a great roofing crew but I tell them what I want and how I want it done on each job.

Every trade has its own set of issues.  A good GC knows how each step needs to be done and can ensure the work is done to your pre determined standards.  If you have great trades that you trust fully or if you're comfortable chasing after them if they do something wrong, and you can identify that they did something wrong before it's too late, then take it on yourself and save the expense.  If not, I'd start with a good GC for at least a few projects.

Account Closed · Answer

@James Sinclair

Agreed. From a GC's perspective a shoddy tradesmen can destroy a whole team.

Hire one general contractor or piece it out with multiple contractors?

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