To GC or not to GC?

Question

Hey everybody,

I’m sure this has been answered somewhere but none typically fully answer my questions;

Should I hire a GC for my future flips?

A bit of background on myself, I’m 23 and am new to real estate investing. I have my llc set up and I’m ready to go, but, I work a full time job from 7-5 Mon-Fri on average. It’s a job I don’t plan on leaving yet which causes some problems. I do not want to put off investing either.

In that situation would you deem it more necessary to use a GC to handle it, as I won’t be able to manage it myself with such a close eye (at least for the time being) ?

What would be some advice you could offer with investing part time? Is it doable?

Thanks in advance

Terrell Garren · Answer

Check your local building code.  It will likely have a project dollar threshold (e.g. $30K) and scope (e.g. foundation, load bearing, etc.) that will legally require a licensed builder on the permit.

Certainly, you don't need a licensed builder for things like painting, flooring etc.  Certainly, not all licensed builders are all good or all bad.  Certainly, if you start messing with foundations, joists, girders, load bearing walls, steps, decks, headers, studs, trusses, beams, rafters, roofing, drainage, etc. you better have someone that knows what they are doing. Most building codes dictate that be a licensed builder.

Gabriel Moreno · Answer

I’m not unfamiliar with construction, as my full time job is being a field engineer for a civil construction firm (different focus, same industry). The problem isn’t necessarily not knowing how the build goes (although permitting is something I’m not the most familiar with in residential), but managing it well, or being prepared for last minute problems that need my attention asap, since most of my focus is at work during the day.

I appreciate everyone’s input, I’ll definitely think more in depth about this decision. If anyone else wants to chip in that’d be greatly appreciated!

Kerry Noble Jr · Answer

Definitely get a GC to handle it while youre at work

Evan Polaski · Answer

@Gabriel Moreno, when I read some of the responses, I think people are blending definitions.  A GC technically will act as more of foreman, managing all the subs.  But in reality most GCs for residential flips are handymen that do some of the work themselves and sub out other pieces, while marking up their bids for the subs.

Where a GC is valuable: you don't have to deal with schedules.  As Nicholas mentioned, you can't lay floors or drywall until plumbing is done.  A GC will be overseeing all of this and coordinating pushing the tile guy, since the plumbing work ran long.  Some GCs have so much work for their subs, they can control their subs schedules better than you ever will.  They understand construction and will often find flaws where a sub is cutting corners before it is too late.  You are not responsible to pay subs, GC is (benefit and potential issue).

Downside to GCs: the project will be more expensive.  You are trusting someone with more responsibility that could be abused.

If you are new to construction and trades, I would say hire a GC.  As George mentioned, the deal should work with this budget, and if not, it is not a good deal.  But remember, it is still your money and your project.  A GC is not a reason to assume it will be done right.  Show up on site, several times per week.  Before or after work, you are heading to the property to make sure things are done right and on schedule.

When hiring a GC, make sure you are both clear on when draws will be paid.  There should be CLEAR benchmarks and dollar amounts.  I.e. 50% progress is a no-no, as is any percent based draws.  But Passed plumbing and electric rough in is a very distinct benchmark.  Same with Drywall complete, flooring or cabinets installed.

George W. · Answer

Budget for a GC. Budget to have others do the work for you. Otherwise you'd be better off going into the construction business and starting a company doing that instead.

Many will disagree with this but, if paying someone to do the work for you is killing your profits on rehabs then you don't have a good deal!

One thing everyone has in common is that we all only have 24 hours a day. Im a plumber and these days most things around the house and rentals I hire out anymore.

Why? Because, I value my time. I know that I can make way more money doing what I am good at vs trying to do tasks like sheetrock, tile or laminate flooring. Yes those tasks arent necessarily hard but they are time consuming. Paying someone to do those time consuming tasks allows me to focus on more important things that ultimately makes me more money to reinvest.

Being your own GC may be an option if you acutally know what you're doing, have a good network of sub-contractors and dont mind babysitting them.

Tanya Solomon · Answer

Hi Gabriel

I disagree with the other ppl that have responded. It sounds like they, like you do not have that much experience. To quantify my experience, I have bought-sold over a dozen homes in Northern California and currently live in Northern NJ.

I just got ripped off by a contractor that was all talk and no show. The guy came to me referred through my buyer's agent in NJ and from a reputable elevator company. My mistake was paying too much upfront in the deposit (I had just bought a seven-figure home and the amount seemed small at the time) and not believing the few bad reviews he had. I did so more research today on the guy and it turned out he has ripped off others recently and is probably having his Ponzi scheme implode slowly.

In my experience, it seems very tempting to just trust a GC to oversee the jobs that need to be done around a home but NO ONE can be a BETTER ADVOCATE for YOU than you.

Good GC are REALLY hard to find. When you can find a good one, they are expensive and take jobs months in advance.

As a beginning investor, it is pretty important to understand what is involved in construction. That way you know who is telling you the real deal situation and who is trying to rip you off and or tell you what you want to hear. I have found the experience I have on the job site to be invaluable.

Do RESEARCH, RESEARCH, RESEARCH!!! The best way to find ANY vendor is by word of mouth like "Nextdoor" AND check their references and reviews. The easiest road is usually the one that leads to more expense in the long run and therefore less profit for you.

Maybe finding a young guy like yourself that wants to become a GC and giving him a small job to do at first and then SLOWLY increasing the size and magnitude of the jobs? Like starting with something easy like painting or laying flooring then doing a bath remodel with "like for like," then working up to the kitchen or making changes to the "footprint."

Keep in mind that most of this stuff at the end of the day is not so hard. It just is the knowledge on how to do it and actually executing. The "trick" is in the execution. There is a reason why people hire others for "simple" jobs. But, you can learn how to do just about anything on youtube. Make it a point to watch one or two vids on youtube about what you need done and THEN listen to the vendor tell you how they propose to fix, change, etc. Knowledge is power.

to @Nicholas Field sounds like you changed your footprint if you are framing in a bathroom? Did you do a "rough in" for the plumbing and that is what the concrete is about? Any of the area is going to have weight on it like a bath tub? that might require rebar? if it is less than 4-5 inches thick, I guess you wont need it? I have personally poured a "self-leveling" concrete product when I was in a similar bind with a mudroom in a home I have in Silicon Valley. I did it by the light of my cell phone because I was also doing an upgrade from 100 amps to 200 amps at the same time. Ahhh those were the days....It cured and I put inexpensive linoleum on top and it looks fine and has performed well for over 5 years.

As far as time lines in my experience: it takes 2 days for a small area of concrete to set, a week for larger areas.

Tiling - Best case scenario is one day for "thin-set" and to lay the tile( it is fair to expect the guy to be able to lay at least 50-75 sq ft a day) one day to let dry, third day you can do the grout. I HIGHLY recommend doing a small space between the tiles (1/16 even if you have large tiles) on a floor AND sealing the tile especially if it is going to be a rental.

Nicholas Field · Answer

I second Lynette. Especially for your first one. I'm managing my duplex flip now. My plumber told me to tear up a concrete floor. My carpenter/jack-of-all reframed my bathroom, but didn't lay new concrete. My tiler is trying to figure out if there's enough time for the new concrete to cure before he lays the tiles, so he can't wait for the carpenter to lay the concrete. My schedule for the bathroom has to be done in 2 weeks or I lose my tiler to another job. Nobody else can lay the new concrete, I'll have to pour that concrete myself... TODAY because I can't wait. By the way, I have no idea how to pour concrete... yet.

The point is, things like that are hard to pull off if you have a full time job.

Get a GC.

Lynette Fisher · Answer

I would recommend having a GC unless you can hold it for a while and chip away slowly. My husband and I are currently flipping our first home and have had it 6 months so far. We are just about to list it. We have worked on it 7 days a week from 7am to 3pm and he works his W2 job from 3 to 1am. We just couldn't get the profit we need to get our business off the ground if we paid for a GC and my husband use to build homes so we figured we'd just handle it ourselves. This flip was a tear down to studs, so not all will be that much work, but just to give you an idea. We should make enough off the sale to do a little less on the next flip. It is definitely hard to have a full time job and try to do all that on your own. I wish you the best of luck on your journey!

To GC or not to GC?

Most Popular Reply