GC Costs

[Josh K]

Hi all - I'm a new investor here and am just starting out. I want to get into rehabbing properties and for my first one I want to flip my own house prior to moving in. Since I plan to live there for at least the first year, I want to take advantage of one of the programs available to owner-occupants called the Homestyle Renovation loan (similar to 203k but conventional financing instead of FHA). One of the problems with this product is they require you to use a general contractor for all the work. My preference would be to be my own GC - by hiring out the different subcontractor trades and pulling permits myself (and maybe doing some light finish work myself). I want to do this because I think I can save money and I like to maintain the control. Of course I have a full time job and I realize managing a job this size will be a struggle - I have some construction background but I've never owned my own home or overseen anything like this.

I estimate there is about $80k worth of labor and materials if I manage the project myself. My question is, how much more will I spend if I hire a GC to complete the work? I'm trying to weigh the option of using HML - if I go that route I pay much more in interest and points, but I save on the GC costs. If I do the homestyle reno loan, I pay more for the GC but less in points and interest (and maybe save myself a big headache trying to manage my first big rehab job all by myself). Then there is another big consideration which is time to close - I'm told the homestyle loan can take 45-60 days to close whereas HML can close in 14. If the seller needs to close fast I might lose the house by specifying a 45 or 60 day closing in my offer.

Anyone have any advice for someone in my situation?

[Mark D.]

Good advice from Karen. Don't forget to ask for references and to see some of their completed work. If you have a schedule in mind make sure they know this up front - it can and will influence pricing.

Being the CG is a lot of work. Construction happens in a certain order and having subs show up out of order will slow your project down and cost money.

If you hire a GC my advice is to 'play' GC as well. Think through what you would do first, second, etc. Then see what GC's order of operations and expenses are. There is always something to learn.