Should I Hire A General Contractor?

Updated: Apr 1, 2019

The answer: it depends on your business model.

A trusted GC can make your life much easier. Find one you can view as a partner. They allow you to focus on leads and ultimately, increased volume.

So what does a general contractor even do?

A general contractor is an individual who has extensive knowledge in construction and project management. They stay up to date on codes, building trends and the cost of material and labor. They oversee projects from start to finish, and some even provide in-house design services. Finding the right GC could take some trial and error, but finding one you can trust with your investment is one of the most important and critical steps to a successful real estate business. Below are a list of items that GC's are involved with on just about every project:

  • Scope of Work

  • Bids from sub-contractors

  • Coordination with architects and engineers

  • Design Services

  • Project Estimates

  • Permits

  • Inspections

  • Project Management and Project Schedule

Is it worth it to use a GC?

The answer: it depends on your business model.

There are two types of investors that we typically see. First, there is the investor that purchases one house at a time and who has the ability to work on the property themselves. Typically these investors don't hire a GC since they are acting as the GC themselves. They may do all the work themselves or sub out some of the more difficult work like plumbing or electrical.

The other investors we see are those who have multiple investment properties going at any given time. They may have 2 on the market, 3 being rehabbed, and a couple more that they are trying to close on. Finding and closing leads takes a lot of time and effort, and it's more advantageous for them to hire a GC to take on the rehab side. Also, these investors are typically the ones who understand the power of hard money loans. They are focused on volume and investing as little cash as possible on each property.

General contractors don't work for free. There will be a charge for their service, which is typically anywhere from 15-30% of the project cost depending on the complexity of the project. Some might charge a fixed fee while others may prefer cost plus contracts. Regardless, this could be money well spent. If your business model revolves around volume, or you don't have much experience with home improvements, you should hire a GC. At a minimum, hire a general contractor and learn from their expertise until you're comfortable running a project yourself.

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