Start GC business?

[Larry Flanagan]

I've been kicking around the idea of starting a contracting business. I know lots of contractors make the move to flipping houses, but havent heard of many investors going down the GC route. Deals are tight in my market, not a ton of flipping opportunity right now. I like to market, so I dont think getting business would be much of a problem. I'm not starving, so I wouldnt be tempted to take difficult or low-profit jobs. I could do a lot more projects at once than I do now, and bigger projects too. And there is less market related risk than flipping (decrease in values, lemon house, changes in buyer financing, no debt, etc). Any input? How much $$ can good residential GCs realistically make?

[Steve K]

You can make a pretty good living as a residential GC but it's a terrible business to be in and own unless you just truly love construction. Lots of headaches, your constantly dealing with morons for employees and subcontractors, and clients are generally a nuisance who are always trying to pick your pockets.

Another point to consider is that your risk isn't really that much lower by being a contractor vs an investor. As the GC you're constantly open to litigation and financial risk by the basis of how well you bid a particular job.

Not painting a very rosy picture, am I? I've owned a home building / contracting business that has been somewhat successful for the last ten years so just sharing my viewpoints.

If you do decide to get into the business here are some ways I find myself being more profitable with less stress:

1. Build specs
2. Don't touch residential jobs under 100k
3. Focus on commercial work
4. Diversify. Own other businesses and investments. You'll make a fortune in the boom times, and you'll make a whole lot less in the trough so you'll want to make sure that your income is somewhat protected.