Contractor team

[Josh Sterling]

How are you guys building your teams for rehabs?

The way I see it there are 4 basic options:

1) Hire a guy (or two) to work directly for my llc (W-2 employee) pay hourly.

2) Hire a guy (or two) to work on a project by project basis (1099 them) pay by the job.

3) Hire a general contractor and have them handle everything (sub-out work, order materials, etc)

4) Act as the general contractor myself. Take care of subing out some of the heavier work (electrical, plumbing) but mostly have a couple guys that are handy to do the lighter work (cabinets, flooring, hang doors, etc)

I'm leaning towards option #4 but mostly concerned about materials. I can put together a big order and have most of the material on the jobsite, but there will still be alot of things that are missed, requiring the "handy-men" to make multiple store runs. I don't really like the idea of paying someone $15-20/hr to be spending a couple hours a day running back and forth to the hardware store, plus I would have to trust them with a company credit card, and not to buy a bunch of stuff that never made it to the job site.

Thanks for any advice
SR

[J Scott]

This is how I do things...

First, I have a full time project manager (a W2 employee) who is essentially the GC on all projects; if I didn't have him, I would do this myself.

Then, we hire everything else out to subs.

In terms of our subs, here is the list of subs we have:

- Licensed HVAC Contractor
- Licensed Plumber
- Licensed Electrician
- Roofer
- Expert Carpenter / Deck Builder
- Cabinet Supplier/Installer
- Window Company (Supplier/Installer)
- Countertop/Tub Refinisher
- Sheetrock Installers (for very large jobs)
- Hardwood Installer

Everything else is handled by a main crew of contractors that are essentially just really good handymen. They all work for one company and are responsible for:

- Painting/Pressure Washing
- Basic Carpentry
- Sheetrock Repair
- Exterior Siding/Trim/Sill/Soffit/Fascia Repair and Replacement (they can completely reside and retrim a house)
- Finish Electrical
- Finish Plumbing
- Installing Carpet/Vinyl
- Flooring Trim

The main crew of contractors probably does 75% of my work. I bring in the other specialized contractors as needed, but the main crew is generally the first on the job (demo), the last on the job (punch list) and are there almost every day in between.

While they definitely have a scope of work for each job (and get paid by the job), they know that their job is to ultimately make the house look perfect. For example, if they're hanging drywall and notice that some framing has rotted or has termite damage and my PM and I can't be reached, they won't wait around for us to tell them what to do -- they will fix it, let us know about it at the earliest convenience and, if it was more than a $50 fix or so, they charge it to us at the end (if it's a cheap fix, they may not even tell us about it until it comes up in conversation later).

Another nice thing about having a general crew that does most of the work is that you don't need to deal with a lot of scheduling issues. Not only do they know what to do and in what order, but there are always little nuances to scheduling that now take care of themselves. For example, if you repair sheetrock and paint early in the project, you will find that there's often a lot of touch-up needed after the flooring goes in, the cabinets go in, the light fixtures go in, etc. But, if you hold off to repair sheetrock and paint until later in the project, you need to be a lot more careful about not screwing up the stuff you've already done.

Our guys are doing touch-ups (sheetrock, paint, trim, etc) throughout the project, and there's always at least one guy with a paintbrush in his hand at all times just touching-up as necessary (and as we point things out).

Obviously, it takes a while to find a crew that you can trust like this (I would trust most of my contractors to babysit my 1 year old son), but once you do, this business becomes about 100 times easier.

My best advice is that you shouldn't be scared to go through 100 contractors to find 3 or 4 good ones. Don't settle for mediocre. If someone does a decent (but not spectacular) job on a project, it's tempting to keep him around as you know you'll at least get decent performance on future jobs; but in my opinion, I'd rather cut him loose and try to find someone who is better than decent.

My next piece of advice is that when you find a great contractor, treat him like gold. It's taken us about 2.5 years to find a great group of subs, and all the effort that went into it was well worth it and -- unless there is something really out of whack -- we don't even negotiate with most of our guys anymore. They know that as long as they give us fair prices and do great work, it will be a long-term win/win from both sides.