Implications Of Playing GC Myself
Hello All:
I am working on my 3rd rehab. First two were in MD and now I am getting started in NC on my first.
The property is held in my LLC's name. I have vacant building general liability insurance and builder's risk on the property.
Rehab will cost around 30K (I purchased for 15K, ARV=75K). Sits on .25 acres on corner lot in blue collar section, but family oriented. Best exit is probably L/O, but I would rather sell outright. It is pretty much a complete gut of the interior and I will add a bathroom to make it a 3/2. Adding windows, siding, roof. Electrical need updating, plumbing ok.
I would like to pull the permits myself and hire subs myself. Of course, I would hire licensed electrician, but what about the "grunt" subs/handymen? I do not want to be stuck holding the property for X amount of time b/c I messed up. Should I also make sure that my handymen have their own workman's comp, etc?
Any enlightenment will be appreciated......
God Bless!
Now that I have read my own post after reading NC_Yank's article from last September, my post seems very elementary.
I just want to be sure that if I play GC myself, that I won't have to hold the property for 1 or 2 years before I can sell. Of course, I don't plan on physically doing the work myself.
Any comments, warnings, etc. are very welcomed here.
Certainly you should GC it yourself. That should be a goal.
But realize that hiring and managing contractors is a skill, and not a little art. Otherwise, as Trump recently noted on "The Apprentice," they'll pick your pockets.
I'm not saying contractors are bad. I'm saying most people are weak in this deal. Until they've gained savvy. And you'd be surprised how many people think they have that savvy and do not.
I believe that contractor managment is one of the three most important skills in REI, next to acquiring property and selling it. But it gets little attention. You'll lose more of your equity during contractor dealings than hardly any other time. And often you won't even know it.
I suggest you read the posts on this site about contractors. Check my profile if you want more info.
You may want to check to see if a GC license is required. I can't imagine that it would be required, if you're working on your own house, but it may be worth a quick phone call to find out.
There's books and things out there to give you a general idea of flow of things. Lowe's has one called, "How to be a General Contractor" or something like that, that will give you the general flow of the way the project should go. Not very detailed, but it's something to start with anyway. I know you said you'd done a couple already, but still, it's worth a couple of hours to read it.
I'm not sure the advantage or the difference between being a homeowner hiring an electrician to put in a new circuit or being a GC and hiring an electrician as a sub to put in a new circuit.
In either case the electrician has to be licensed and the rates charged have the potential to be identical, he has to have insurance and WC or a waiver if he has no employees. In either case a permit needs to be pulled, you pay for it either way, either yourself or by reimbursing the electrician.
I much prefer having the tradesman pull a permit and make the final payment contingent upon the work passing inspection. That is a great tool to get the work done on time and right.
Actually, a homeowner can have pretty good luck hiring those guys, too. If you need sheetrockers, for instance, run an ad in the Sunday classifieds for sheetrock subs. ("Subs" is the magic word). You'll get tired answering the phone. Ask them what they get paid for hanging rock. They'll tell you. Usually with a little mark up..... but maybe not. If they're making $3.00 a board, for instance, they'll likely tell you $3.50...or $3.25... or maybe even $3.00! How much they'll charge often depends on how savvy they deduce that you are to this contracting game.
This has got to be a typo...........impossible to build a 180k house for 20k..........(laugh).
Hey Rehab,
I too question such comments.
I am amazed that so many people think that being a GC is a quick way to get rich. There are quite a few people on this site that like to trash GC's but have never been in their shoes....they talk a good game but they are mostly interested in peddling their goods to some poor sucker. I have yet to get a response from one poster about being a GC himself in my state that sets himself up as an expert in the field.
As one of my articles stated, I could care less if a person wants to act as their own contractor (doing it legally).......but for anyone to think it is easy......that's a joke.
In regards to GC's being crooks...................yes, just like EVERY business........you are going to have some bad apples.........we here at TCI have them as well.
I have seen people act as their own GC.......the vast majority of them run into problems.......others are calling a GC "friend" that is giving them "free" advice or tutoring in the project.
The majority of those that do it seldom will do it again, at least on larger projects.
What my subs offer to me over Harrier Homeowner is service and loyalty.............some big discount......I have never seen that either...........suppliers....yes, on some things but not as much as one would think.
NC
Quote:
On 2004-11-24 23:54, linlin wrote:
The difference can be the price. As a GC what I pay subs is a lot less than homeowners pay because my subs work for me regularly. Also, I am more familiar with the pricing srtucture than most private homeowners.
It is amazing the differences. I was recently in a development where the houses sell for $180-$350K. The 180K house cost $20K to build from top to bottom. They spent another $3K kitting it out - tile, baths, etc.
The $350K house cost around 50K to build. A typical homeowner cannot get that kind of bargain but a developer can because he says I am paying X rate for this part of the job and that is that.
NC_Yank - exactly.
I think when Linlin said a $180,000 house costs $20,000 to build I think she really meant to say a $180,000 house cost $200,000 to build. Which would be more realistic. LOL!
Yep, I am always amazed when somebody thinks they can just be a GC with no consequences down the road.
I would love to ask them "If you were going to hire a GC to do the work would you hire one with no experience?" You know their answer would be no way! Then I would ask them, "Then why in the world are you even considering doing it yourself?"
:-D
"I would love to ask them "If you were going to hire a GC to do the work would you hire one with no experience?" You know their answer would be no way! Then I would ask them, "Then why in the world are you even considering doing it yourself?" "
EXCELLENT!
[addsig]
Does this include location, location, location, lot, improvements, water, sewer, electrical, tv cable, driveway, landscaping, garage, garage door, garage door opener, deck, gutters, interior paint, and a host of etceteras.
I can build you a $180,000 house for $20,000. No problem, as long as you don't want any input.
It's a very wide open statement, and the devil is in the details.
[addsig]
Quote:
On 2004-11-30 12:46, linlin wrote:
I meant exactly what I said. 180K house was 20K to build.
What the developer did was to preset what he would pay per item - so for the roof and upper deck he paid $2500, for the block frame - 50 cents per block etc. End result - 20K to build selling price - 180K.
No Way!!!!!
Im calling you on this one.
It is impossible to build a 180k house for 20k
The developer doesn't dictate the cost. He may dictate the price of his lots, who builds there etc....but if you are trying to tell us that he or anyone else for that matter built a 180k house for 20k then you do not know what you are talking about......with all due respect.
If you can not verify this information, which I know you can not, then rest assure that this information you are trying to pass off as facts will be deleted just as any other post that has bad information or false claims are deleted.
I know for a fact that MY construction cost as a builder, without profit and overhead, run close to $60.00 per square foot for a vinyl home......excluding lot. While some areas of the country may be a little cheaper, not much.....there is not place where a person can build a 180k house for 20k.
NC Yank
mikejaquish - you don't even have to take any of that stuff into consideration in regard to the lot. Even in linlin is just talking materials, IT AIN'T GONNA HAPPEN.
I know of only one way to build a house that will appraise for $180,000 for $20,000 in materials and labor.
Build a crap shack 1 room house costing you $20,000 and put it on on a lot worth $180,000. Somebody will buy property for $180,000 and tear down your shack and build another house on it.
LOL!
"Build a crap shack 1 room house costing you $20,000 and put it on on a lot worth $180,000. "
YOU SWIPED MY BUSINESS PLAN!!!!!
:-D :-D
[addsig]