Should I use a general contractor for my first flip?

[Samantha Lanphere]

Is it a good idea to use a general contractor for your first flip(s)?
What is going to be the average percentage that a GC will charge?
I would prefer to use one on my first flip(s) however my business partner wants to contract each job to specialty services to save money.
She works full time and does not have the schedule to oversee them during most of the day. Most likely I will be the one *groan* doing that since I already work for myself and have a flexible schedule.
The flips I am looking at are brick homes in Decatur, GA that are built around 1965. I'm trying to stick to cosmetic flips with few repairs. Staying away from mold, flood damage, foundation issues or anything else that appears to be too much for me to handle the first time.
How much time would I be looking at daily to be at the house to manage the specialty contractors? Do you need to be there all 8-10 hours of them working on the house?

[J Scott]

Hey Stephanie,

There is no right or wrong answer here...

Certainly, having a GC can allow you to free up your time to do more important things (find more deals, optimize your business, etc), and can also help you learn the process of flipping houses (how to do inspections, how to schedule, how to plan, etc), so if you're in a situation where you need the education or can better utilize your time, then by all means hire a GC.

That said, hiring and managing the subs yourself can both save you money and give you more control of the rehab schedule and budget, so there are advantages there.

Here's how I did it:

- On my first two flips, I hired a GC to bring in the subs, manage the project day-to-day, maintain the schedule, etc. I spent a good portion of my time on the work site learning from the GC -- I got a good idea of how to do inspections, how to schedule subs, how to coordinate works between subs, etc. These two projects were HUGE learning experiences for me, as I previously had no construction experience whatsoever.

- On my next couple projects, I brought in the subs myself, scheduled them, managed them, etc. At first, I needed to spend a good bit of time on the work site (not 8 hours per day, but close), as I didn't know the subs and didn't trust them on my project without me there.

- After a couple of these projects, I brought in a full-time project manager who's job is to hire and manage the subs day-to-day. He spends his days making sure all the projects are on-schedule, on-budget and managing the contractors. We generally have 2-4 projects going at once, so on a typical day, he'll spend about 2 hours at each house.

- After about a dozen flips, we found a crew of contractors that we really like. We completely trust them (and they trust us), they do great work, they charge very reasonable prices, and they work fast so that they can move from one of our jobs to the next. Not only that, but they know exactly what we do in all our houses (from the paint colors we use to the finishes), so even if we didn't have someone managing them (and some days we don't because we're so busy), I'm confident they'll get the job done on-schedule and on-budget without any issues.

So, as you can see, there was a progression from where we started to where we ended up. That was the plan the whole time. Because we knew we wanted to do a lot of flips per year, we had a good idea of where we needed to get to, and we worked our there over the course of a year or two.

So, my recommendation is to figure out where you want to be in 6-, 12- or 18-months, and take the steps you need to get from here to there.

There's no right or wrong answer, and your specific circumstances will help you determine the best solution.

Btw, looks like you're in my area...feel free to shoot me an email if you'd like to grab lunch some time. I'm happy to introduce you to some of my contractors, and my wife is an agent if you need any help on the marketing side.