First Flip Dilemma in Philadelphia

[Tomer Shani]

Hello BP people 

I've been buying and holding in Philly for the past few years. 

I'm looking at my first flip deal and came across a fundamental question. 

The deal is: A historic home of about 3,500 sqf. needs everything pretty much. Sitting on a great lots.

Purchase price is about 100k 

comps are around 300k 

I've found a GC that quoted me $50 a square foot. comes to to 175k for everything. which is very nice, but where's my profit?!

My question is, should I be my own GC / Project Manager and just hire subs?

From my estimates, I can probably bring the project for about 105-120k. 

What are you flipping practices? do you just invest it all on one guy, or do you load yourself with work (gaining massive XP) and saving some cash. 

What am I risking by not going with a general contractor? 

One more detail, if I do it by myself then most of the deal (if not all) will probably be cash. 

Thank you for your help

[JD Martin]

If the GC that quoted you $50/sf looked at the place, I'd find another GC because they should be able to give you a fairly detailed estimate with a contingency. If you called them on the phone and they gave you that number, there's nothing wrong with that because they are giving you a rough guideline on what you can figure if you are rehabbing a total basket case, and they have no idea what finishes and timeline you want to work with. 

As someone who has built before, I will say this: a good GC will run circles around you acting as GC. They should be getting better prices through their subs than you can get with their subs, and the spread is their profit. In other words, for an honest GC, there's not going to be a big spread between what you save if you do it and what you spend if you hire it. GCs that turn high volume get better pricing on everything - labor, materials - and have connections with inspectors and other pertinent individuals. 

If you do a good volume flipping, then you would save a bunch of money being your own GC and having crews of subs that you deal with directly. 

Keep in mind that a bad GC can cause you all kinds of headaches from disappearing materials to subs putting liens on your property from not being paid/being underpaid. So choose wisely.