Question regarding general contractors and the rehab process?

Question regarding general contractors and the rehab process?

Rental Property Investor · Scottsdale, AZ · Member since 2017 · 37 posts · 13 votes

Made up example scenario:  I just closed on an REO I intend to fix and flip and have had an inspector come through and give me his own SOW for the property. I want to hire a GC to pretty much manage the entirety of the rehab because I am a new investor and am not confident enough in my skills to do so. I have my own SOW I made before putting an offer on the property as well the inspector's SOW he and I made during the due diligence period.

Question: Is it realistic to find a GC that could literally handle the entirety of a rehab? I found J Scott's Book on Estimating Rehab Costs quite intimidating when it came to finding the subcontractors as well as providing the materials for them. Could I find a GC that could look at the 2 SOWs I have provided for him and with those he found all the necessary subcontractors, scheduled everything, handled all materials, oversaw the rehab, and paid them on time and accordingly? I obviously want to be hands on and have a say, but having someone like this that could take my vision and make it a reality all while managing the ins and outs would be huge, especially when trying to scale my business. 

It may sound like I'm just trying to not have to put any work in ever, but in all actuality I am simply not confident in my abilities to handle all of these components.. YET! I want this kind of GC so I could watch him, ask questions,  and really get a firm understanding on the entire rehab process. From then I would look to implement J's strategy of having a full time property manager that handles all of our subs, materials, etc with a commission per property pay. 

Thanks BP!

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Justin CooperPro Member
Hard Money Lender / Investor · Denver, CO · Member since 2011 · 50 posts · 34 votes
8y

Thanks @Sean Blomquist!

The short answer @Hunter Harms is Yes, this is exactly what a General Contractor does. On your first couple of deals, it might make a lot of sense to pay that extra that @J Scott mentions so that you can leverage their subs, expertise, scheduling and management.  Some folks only work with GC's to better leverage their time and keep their company smaller/leaner by not having employees.

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  • Sean BlomquistPro Member
    Lender · Blaine, MN · Member since 2013 · 303 posts · 131 votes
    8y

    @Hunter Harms reach out to @Justin Cooper 

    He will be able to give you some good insight on this.  Good luck!

  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    8y

    Yes, this is what GCs do -- you hand them your scope of work and then make sure it gets done.

    Of course, the downside is that you're going to pay overhead for the fact that someone else is managing things, hiring the subs, paying the subs, procuring the materials, etc. -- so expect to pay and extra 15-25% if you hire a good GC.

  • Justin CooperPro Member
    Hard Money Lender / Investor · Denver, CO · Member since 2011 · 50 posts · 34 votes
    8y

    Thanks @Sean Blomquist!

    The short answer @Hunter Harms is Yes, this is exactly what a General Contractor does. On your first couple of deals, it might make a lot of sense to pay that extra that @J Scott mentions so that you can leverage their subs, expertise, scheduling and management.  Some folks only work with GC's to better leverage their time and keep their company smaller/leaner by not having employees.

  • Ned J.Pro Member
    Investor · Manteca, CA · Member since 2017 · 1k+ posts · 2k+ votes
    8y

    The answer is YES....but you have to find the right GC....and they are hard to find. There are SO many that will completely rip you off if you aren't involved in EVERYTHING...... you need to manage the GC and they manage the subs etc. You will have no idea if you can trust the GC until you actually work with them or get a good solid referral from someone you really trust that has worked extensively with them

    No one will protect your $$ and your interests better than you....PERIOD.

    If you put 100% faith into some GC protecting your best interest, there is a good chance you will get screwed

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