All Forum Posts by: Patrick Philip

@Patrick Philip You said you can be the super/back office person doing ten homes per year, but want to grow beyond that.  To do more homes, you need to create repeatable systems, and hire/train someone to do the things you don't like to do or aren't good at.  If you love being in the field, hire/train a back office person.  If you love the numbers/books/etc then hire/train someone to be a superintendent.  

The mistake I made when I started was not having systems.  I had everything in my head, and when I hired a superintendent, I expected him to know everything I knew.  Problem was, I had been working on rentals with my father since I was ten years old and framed for four summers going to college.  The super wasn't very successful until I created a system of checklists and a schedule that he used.  The best way to think of it, you are creating a franchise type system like Subway or McDonalds.  You job is to be able to create systems that non-experts can use to create great results.  If you think you can just hire experts in today's tight job market, you are mistaken.

On your question about paying cost plus 10-15%, you will have to pay that markup on all the costs in a home if you hire a GC.  GC's won't let you piece out the home building and buy the lumber/drywall yourself.  They will want to be in charge of the entire build so there isn't breakdowns with schedules, miscommunications, etc.

10% in a slow market, 15+ in a hot market. It's a big chunk to me, but reasonable in this climate. 

I feel you are at a crossroads.  You need to decide if you want to run a home building company, with employees doing the majority of the work, or you can develop land and pay a GC 10-15% to build the homes.  The 10-15% amount is the going rate, with it being closer to 15% right now because the market is hot.

I don't know your market, but if your average sales price is 500k per house, you are building 5m per year.  That's about the magic number for builders, because that volume allows you to hire a superintendent for field stuff and a bookkeeper/controller/office manager for the back office side of it.  If you create good systems these two people should be able to build 10 homes a year easily, especially if they are spec homes.  Your GC is going to get you for around 500k per year in fees on ten homes and you should be able to hire a super and back office person for half that amount once you account for benefits, truck, etc.

The key is to have good systems in place.  If you have no systems, a super will flounder around and make mistakes and your back office person will call you 20x per day with questions.  If you get serious about home building, we can connect and I can point in the right direction with some basics.

 yes health insurance  its HUGE for most people.. also as self employeed if you have a small group policy your personal health insurance will be lower doing it as a group.. especially now when labor is so stinkin hard to attract and retain.  other wise you can higher them as independant contractor but have to be careful that you keep them independant and the best way to do that is make sure they have their own jobs going as well.. thats what i did with my GC in Charleston SC.. if they only work for you some states will nail you saying they are really employees and really hit you for back tax.s etc.  Use caution there.

if your not already you get your GC license then you hirer a staff person to build them for you under your license.

this should be done for about 10k a house I would think..

coming out of the GFC I was able t hire this person for 3.5 a house doing 20 a year.   I suspect you will have to pay 75k to 100k for this person as salary

maybe add some bene's to. 

Sounds like you've reached your max capacity at about 10 builds per year.

If you bring on a GC, how many builds per year can you scale up to? He/She may take about half the profits in salary, but if you're doing 30 builds per year you're still in a better position than you were before...

We're in a market where GC's all will make a killing, regardless of skill or quality... at least that's my opinion....

Are you building and selling or keeping? If the houses are all in the same neighborhood, scaling would/should be a lot easier.... you can look at all of them with one trip, instead of multiple trips to different locations. 

Systems make the ordinary extraordinary. I think Ben Kinney said that.... Are you using systems? I use a few somewhat basic ones which help a good bit. 

if your not already you get your GC license then you hirer a staff person to build them for you under your license.

this should be done for about 10k a house I would think..

coming out of the GFC I was able t hire this person for 3.5 a house doing 20 a year.   I suspect you will have to pay 75k to 100k for this person as salary

maybe add some bene's to. 

@Patrick Philip

What are you doing right now? Are you GC hiring subs or do you have employees?