Should You Be Your Own General Contractor on Your First Deal

I used to be a general contractor.

Now I hire them.

That is not a contradiction. It is the natural progression of someone who learned the business from the ground up and eventually built enough volume that managing a GC became more efficient than being one. But the fact that I now hire GCs does not mean hiring a GC is the right move for everyone at every stage of their investing career.

For someone doing their first deal it might actually be the wrong move entirely.

What a General Contractor Actually Does

A GC coordinates the trades, manages the schedule, handles material procurement, pulls permits, and takes responsibility for the project from start to finish. On a well run project with an experienced GC who has done this type of work before in this market the value is real. You are paying for expertise, relationships with reliable trades, and the ability to manage a complex sequence of work without your direct involvement at every step.

On a poorly run project with a GC who won your job on a low bid and is now managing your project alongside four others while his attention is divided across all of them the value disappears quickly. The schedule slips. The quality suffers. Change orders appear. And you are standing on the outside of your own project trying to get information from someone who has no particular urgency to give it to you.

Here is the thing about being a first time investor working with a GC. You do not yet have the knowledge to tell the difference between those two scenarios while it is happening. You will figure it out eventually but by then you will have paid for the education in ways that go beyond the GC's invoice.

What Being Your Own GC Actually Costs

The argument most investors make against being their own GC is that they do not have the knowledge or the trade relationships to do it effectively.

That argument is exactly backwards.

You do not be your own GC because you already have the knowledge. You do it to get the knowledge. The firsthand experience of coordinating trades, managing a schedule, reading bids, catching problems before they become expensive, and being physically present on a project while it is being built is the most valuable education available in this business. It is not available in a book. It is not available in a course. It is available on the job site of your first project if you are willing to show up and pay attention.

The cost of being your own GC is time. Significant time. More time than you will spend on any subsequent project because you are learning while you are doing. That time cost is real and it belongs in your deal analysis the same way any other cost does.

But here is what you get in exchange for that time.

You get to know exactly what your project costs at every line item because you built the budget yourself. You get to know what your trades are actually doing because you are the one checking their work. You get to know what your project is worth because you were present for every decision that determined its quality. And you get to know what a GC actually does because you did the job yourself before you ever handed it to someone else.

The investors who hire GCs effectively are almost always the ones who have been their own GC at some point and know from experience what to expect, what to verify, and what questions to ask. The investors who get taken advantage of by GCs are almost always the ones who handed over the keys to their project before they understood what managing one actually required.

What You Can Hire Instead

The cost of a general contractor on a residential renovation project is typically ten to twenty percent of the total construction cost. On a forty thousand dollar renovation that is four to eight thousand dollars.

For approximately the same money you can hire a combination of individual professionals who give you the oversight and expertise you need without surrendering control of your own project.

A licensed inspector who walks the project at each phase and tells you what is done correctly and what is not. An independent estimator who reviews your bids and tells you whether the numbers are accurate and what is missing. A project manager who can be on site when you cannot and who reports to you directly rather than to a GC whose interests may not always align with yours.

That combination costs similar money to a GC markup. It produces significantly more learning. And it keeps you in control of the decisions on your own project rather than dependent on someone else's judgment and attention.

When to Hire a GC

There is a point where hiring a GC becomes the right move. When your volume of projects makes personal oversight of every one impractical. When your time is more valuable deployed elsewhere than on a job site. When you have enough construction knowledge to evaluate a GC's performance accurately and enough relationship history to know which ones are worth trusting with your projects.

I am at that point now. Which is why I hire GCs.

But I got to that point by being my own GC first. By learning the trades from the trades. By making the mistakes that taught me what to watch for. By building the construction knowledge that now allows me to evaluate a GC's bid, a GC's schedule, and a GC's work with enough accuracy to know when I am getting what I paid for and when I am not.

You cannot skip that part. You can defer it. But deferring it means paying for the education through the mistakes your GC makes on your behalf while you stand on the outside of your own project not knowing what questions to ask.

Be your own GC on your first deal. Hire the inspectors, the estimators, and the project management support you need to do it well. Stay on the job site. Ask every question. Learn every trade sequence.

The knowledge you build from that experience will be worth more than any margin you save by handing the project to someone else before you understand what managing one actually requires.

The Note

GCs are not bad. The good ones are genuinely valuable and I work with several who I would recommend without hesitation.

The point is not that GCs are the wrong choice. The point is that they are the wrong first choice for someone who has not yet built the construction knowledge to evaluate their performance, manage their work, and protect their own interests on a project they are funding.

Build the knowledge first. Then hire the GC.

Not sure how to get started managing your own first project? That is exactly the kind of question worth a conversation.
Schedule a call at calendly.com/jeph-reit or reach me at Jeph@REIGuideService.com.