A Fork In The Road: To Be a GC or a Broker or a ?

Question

Hi all,

I am at a crossroads and I am looking for a suggestive nudge in the right direction.  I am a former engineer, turned vocational teacher, turned stay at home dad due to young children at home during remote schooling.  The one thing that has stayed consistent career wise is my love for real estate.

I have hustled hard the past 7 years working late nights and weekends building my humble but performing investment portfolio.  Trying to keep my expenses extremally low, for each project I designed, engineered, GC'd, labored, listed, rented, and sold all by myself utilizing almost no subs.  This includes, the skilled trades, plumbing, mechanical, and electrical.

During remote schooling / being a stay at home dad I discovered an addiction to my newly found freedom and decided to put in my notice at the school district and make my side hustle a full time gig.  I had a project in process and dedicated my time to finishing up a major remodel, refinancing the completed project, and then finding great tenants to love an enjoy the house.

Just as my last project was finishing, we found our dream house and moved to an area I can see myself for the rest of my life.  It is the first time we have had a home.  Every other house we lived in was purchased as an investment and was a stair step to the next project.

I have spent this year (2023) recovering from the burnout I have experienced the past several years and I have been trying to be intentional with how I make my next step.

Pictured is the last house I sold.  Of the many roles I took on for this home, I enjoyed analyzing, finding, and buying the home along with analyzing, listing, showing, and selling the home.  I am a licensed, insured, bonded GC but I have only utilized my services for my own projects.

My question for anyone that has made it this far is if you had the capability to be a GC or a real estate broker which would you choose?  Would you go a completely different route?  Would you suggest trying to partner with someone? My short term goal is additional income but the ultimate goal is to buy more real estate.  I recognize eventually I can do both but I don't think I can take on starting two business at once.

My intention is to do something in the real estate realm that compliments my goal of buying more rentals as soon as I can.  I am reluctant to return to engineering or teaching though this would be the only option that guarantees a paycheck and therefore it makes lenders happy in a shorter period of time.

Thank you to anyone who takes the time to read this.Matt

James Hamling · Answer

@Matt Joplin nothing of what you have detailed of having done is (a) Running a Remodeling/Building Business nor (b) running a Real Estate Retail Brokerage or Team.    What you HAVE done is the functions of those, completely without any of the business aspects, operating with the easiest of clients in the world, YOURSELF.

To start a business in either, to be brutally honest, your clueless.

Both are lead devouring business's. So you will have to learn and master the art of lead generation. That means the Engineer must become a Marketer, and those my friend are 2 polar opposites of the spectrum. You would have to learn how NOT to follow-through, how to NOT-plan things, to become impulsive, jumping potential too potential, hitting dead-end after dead-end and just shrugging it off with 0 thought because your memory spans all of 7 seconds and your onto the next potential. Because that IS sales. And if you can some how move from Engineer too Marketer, than you'd have to flip too Salesman.

Easily 80% of the business, for both a R.E. Brokerage or a Remodeling/Building firm is Marketing & Sales. To the extent that it is a saying in the Remodeling world that "We are a Marketing & Sales Company who just so happens to sell Remodeling".

What you have done, what you detailed loving, is NOT running either a Brokerage or Remodeling/building firm. At best, the closest is being a Sub-Contractor doing the work, or being an agent doing the work. Not running the "ship".

What I DO suggest is, do MORE of what your loving, and doing well at. The only issue is scale, right, so SCALE. Add O.P.M., and that solves the $ issue of scaling does it not? Expand, formalize, give those with the capital but without the capabilities of operations like your brilliant Engineering mind naturally has, a chance to invest IN YOU.

Your answer is not getting distracted, it's in EVOLVING.

Evolve UP your REI business. It's OPM time my friend.

James Hamling · Answer

I think maybe a re-frame of things could best detail and give clarity.

Picture this wild-world of Real Estate as a "Big-Top" Circus. Seriously, as in Barnum and Baileys.

Real Estate is a singular thing, much as the "show" at a circus is a singular thing, but both are compiled by it's many, uniquely individual contributing "parts".

And each of those parts, be it a GC or high-wire act, are worlds unto themselves, right.

Now, as "The Investor", you don't spit-fire, tame lion's or any of that, your "The Greatest Showman on Earth". Your at the heart of everything, and doing none of it. And without you, none of it comes together.

So with this, stepping out of that role to do those other things, does nothing to further "the show". Yes, "the show" needs each of those components but jumping in to be those yourself is a slippery slope that results in a Circus of 1, which isn't much of a thing now is it?

The best way to make it the best "show" you can, is by focusing on "the show" and not any of the "acts". You recruit act's, manage them, organize them, but not do them yourself.

Make sense?

The biggest problem can sometimes be from being too capable of doing things, I speak from personal experience. I hear all the time "wow, why aren't you doing ____" because yes, i can, at a very high performance level, but just because I can, doesn't mean I should. Because of TIME, the #1 most valuable resource in existence. It is limited, and diminishing.

A wide focus can light a room, a narrowed focus can cut through steel! Focus = power.

Barry Ruby · Answer

@Matt Joplin

Matt, depending on what kind of engineering you have done, you might want to consider getting into ground up development.

Civil engineers in particular have a great head start in doing development. They understand and are involved with the front end of the project in both its design and permitting.

Feel free to contact me if you’d like to talk about this.

In any event, the best of luck to you!

Matt Joplin · Answer

Thank you @Ran Iarovich, @Scott Mac, and @Marcela Hoag for your replies.  I appreciate the encouragement and feedback.

@Scott Mac, thank you for the complements about making "a quirky looking house much prettier".  It is my specialty : )  Most of my projects have had aesthetic challenges that I have had to overcome.  It makes for a fun puzzle, and it helps to limit competition when making offers.

Scott Mac · Answer

Why not just hammer-swing your own projects into an empire of cash flowing properties.

Then if you want to sit in the warm McDonald's sipping coffee all morning because it's cold and raining that day--your time is your own.

Nice job making a quirky looking house much prettier, much more curb appeal.

James Hamling · Answer

The "General Slang" I utilized is Broker = Managing Broker/ Team Leader, and Agent = all things below Managing Broker including associate broker. Because a Managing Broker and a Team Leader have the same dilemma of being lead generation focused, with actually very little "doing" of actual deals. Yes, some Team Leads do more of the "doing" but in general it's of running the group not doing "deals".

I have no question of your capabilities in execution of operations. This reply reverberates my point, that doing a business of either mentioned would be one that has a majority necessity on the one thing your worst at; Lead Generation.

Continuing in unfiltered honesty, the thing is how good or poor one can actually do there service means very little to near nothing when it comes to Lead Generation. Fact in hand, there is several companies who are wildly more expensive than competitors with equal or sub-par products/service yet they are wildly successful. Why? Because they are masters of Lead Generation.     And there is those consistently delivering a poor product or service experience and again, doing exceptional great financially speaking because again, masters of Lead Generation.       And at same time, in the same market, there is those who deliver an amazing quality of product/service, yet very few know of them. yes, they keep busy, but that's it, just keeping busy, not growing at scale that matches there fantastic offering and price-point. Why? There failure of Lead Generation.

I will use this real world personal example.

Some years back I started up a window & door line, as a manufacturer direct distribution to end consumer. When I first launched many laughed at me, I was 2X-3X the price point of everyone else, with a comparable product to others, that had some bells & whistles that were without doubt "over the top" such as out tipple pane package.     Within 18 months all that flipped 180-degrees to asking how in the hell I was selling so well at a 2x-3x of everyone else, how we were busy when others were not, how my greatest struggle was enough labor to keep pace with sales.      Lead Generation.

I can not stress how vastly different running a retail business that requires servicing clients is than doing that same work for yourself. For yourself there is 0 work to retain clients, when selling a product/service the entire work is retaining clients.

Just having a product or service, no matter how great, no matter how demanded for, does not = sales.

And both Real Estate and Remodeling are intensely competitive industries with a plethora of offerings out there, making both the "Olympics" of marketing.

The time energy and capital required to learn that skill set or marketing for lead gen, I believe will be far better served in utilizing to learn the art of O.P.M.. Because as you re-stated here, your sole focus is for your investing actions. So why get distracted from that?      It's like saying you have this good going hamburger stand, and now want to open a full restaurant, so your going to open a restaurant supply company so you can get more keyed in to gain ability to open a restaurant. No, it won't work, (a) because your heart isn't in it from the get-go and (b) it's a distraction from your actual focus.

It's a vastly different world dealing with clients, trying to find clients, convey value to clients, retain clients. Lead Generation is not a simple item, and not everyone can do it, and most can't ever do it well.

Matt Joplin · Answer

@James Hamling,  Thank you for the reply and for the brutal honesty, I appreciate it.  Some of the best advice comes without filter and that delivery method results in a point that is hard to miss by the one receiving the advice.  I also like the motivation provided by a bet against me, I like to prove people wrong when they say something cannot be done or I am incapable.  I love a challenge!I also appreciate the "none of the above" suggestion your mentioned as a path to explore outside of what I have listed.  What I want in the end is to own more real estate.  If I am a GC or a realtor I will be earning money, paying taxes on that money, and then using what is left to buy real estate.  OPM would certainly help me to scale more quickly.  My issue (and most everyone else's)  currently is deal flow and funding.  I'd love to unlock the secret to obtaining OPM but I have yet to break the code outside of private money from family and friends.  The first step is to get out in the world and this post is a step in that direction.  Both paths I originally brought up (being a realtor or GC) were not simply to make money but to help me with deal flow and networking, the other issue I have with my investing business.  Some added information for anyone else who might be confused is in WA state the nomenclature used is Broker (real estate agent) and Managing Broker (Owns or Supervises a Brokerage).  Based upon your response, it seems as if you thought I was trying to open my own brokerage which is not my intent.  Each of the managing brokers I have interviewed locally have great training opportunities and mentorship programs in their office.  I would disagree that I am clueless regarding being a GC but would agree 100% that because, I have sold 2 houses ever, that I certainly am not qualified to run alone as realtor or act a managing broker.  My point was from personal experience, I would rather write contracts and show houses than be in a attic for days on end in the summer running wires or in a trench fixing a failed sewer line.  In the greater Seattle area it is so difficult to find a GC who is not a hack / scam artist.  All the good GCs have way more work than they can perform and they are booked out farther than most would want to wait.  I have a degree in engineering, a BS in business, certifications (and experience) in project management and I grew up in a family that had a construction company that I worked for as a teenager through college.  I am not saying that I will hit the ground ruining as a high end custom luxury home builder or that I am going to build a 500 unit commercial apartment complex.  I will say though, that I could easily manage an ADU / DADU build, basement conversion, addition, kitchen remodel, bathroom remodel, etc.  I got that no problem and there is enough work locally to make a decent living providing these services.  I've been working overly hard all my life taking the longest most challenging routes.  It is time for me to make myself known, ask questions, and listen to experienced people such as yourself and to start working smarter.  If you have any more suggestions to steer me down the path of wisdom instead of the path of brute force I would be a gracious student.  Sincerely,

Matt

Henry Clark · Answer

Look at doing commercial. If your doing that much, you should get a bigger paycheck.

Erik Estrada · Answer

Your edge over thousands of agents/brokers is your experience being a GC for your projects. You will be able to help people understand how much their new purchase is actually costing them and be able to tell them what to look out for when buying a home.

Thousands of agents/brokers sell homes without having a clue of what goes into one. Combine both and you will be a killer broker

Sherief Elbassuoni · Answer

@Matt Joplin, GC & Realtor both need skills in sales, lead generation, and bring deals to close.

If you like construction, manage jobs, deal with subcontractors, being a GC may fit you better

A Fork In The Road: To Be a GC or a Broker or a ?

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