Should Real Estate Investors Hire a General Contractor or Manage the Project Themselves?

I've written about contractors and trades a lot because it's one of the most misunderstood parts of this business and the conversation never seems to get easier for most investors.

The facts are actually pretty simple once you lay them out honestly.

If you want to be hands on and deeply involved in your project, reviewing paperwork, interviewing trades, selecting materials, making daily decisions, then you shouldn't hire a general contractor. You are the general contractor. If you want someone to oversee the project or make sure your pricing is accurate you can hire those functions out individually, which is exactly what a GC does anyway.

What you should never do is hire a contractor and walk away hoping things get done. Visit regularly or hire someone who will. You can hire inspectors who specialize in phased inspections at key points throughout the project, before dirt work, rough plumbing and electrical, framing and structural, HVAC, and so on. Not just to make sure things will pass a city inspection but to ensure you're getting better than the minimum a basic county inspector is looking for. Being an investor doesn't mean cheap. It means protected.

Individuals, REITs, property management companies, and local governments have hired me as a consultant to provide fact based information on projects for years. Finding real professionals to work with is genuinely difficult. And one thing I'll tell you from experience is that walking into a conversation early in your investing career and leading with "I'm an investor" will either chase away the best professionals or put you through more hoops than necessary. Let your deals and your follow through do the talking instead.

I can paint a house. I can install tile. I started as a handyman over 20 years ago. But I still hire all of that out and I pay well for it. The person who does something day in and day out is better at it than I am, faster at it than I am, and hiring them saves me time, money, and frustration every single time. On every project I do as an investor I calculate what it would cost to have me do absolutely nothing. Everything hired out including inspections. That's my baseline number.

The reason is simple. I am an investor, not a handyman or a contractor or a superintendent. I can do all of those things but doing them myself means I only get paid once. Hiring them out means I can move on to the next deal.

I broke my wrist once and had to hire out all the small tasks I was planning to do myself to make the project pencil. I ended up making $4,000 on a deal where I paid out $12,000 in work I thought I was going to do for free. That moment taught me something I haven't forgotten since. My numbers were emotional and incomplete when I was calculating my own labor as free. Since then I don't assume anything other than that every project will need someone else to do everything.

Good money. Good work. Good project. Good profits. In that order, every time.

If you want someone who thinks about your project that way from day one, let's talk.

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