Should you use a General or Subcontractors as a Real Estate Investor?

You have a couple of options when repairing rental properties, flips or even your personal residence. You can use a general contractor who will do everything and hire all the work to be done. Or you can hire subcontractors who will each do specific jobs on a rehab. When hiring subcontractors it takes more work from the homeowner, but can save a lot of money. Using a general contractor can make the process easier, but can also cost a lot more. I have used both options, but I like to use subcontractors for as many jobs as I can for multiple reasons.

How does it work when using a general contractor to repair houses?

When you use a general contractor to do the entire job, they will handle almost everything that needs done. They will figure the entire scope of work, hire subs, schedule, budget and plan the entire project. It can get very expensive using general contractors, because they have so much work scheduling and planning everything. The other problem with using general contractors is they can be very slow if they have to do all the repairs on a house. Some contractors may be able to handle huge jobs and get them done on time, but others may struggle the more they have to schedule and plan.

How does it work when using subcontractors to repair a house?

When you use subcontractors to repair a house, you have to hire out certain jobs and schedule the work. The benefit of hiring out specific jobs is they can get done quicker and cheaper than a general contractor. Many times subcontractors will specialize in just one thing like:

  • Electrical
  • Plumbing
  • Roof
  • Foundation
  • Sewer
  • Landscaping
  • Flooring
  • HVAC
  • drywall
  • kitchen and baths
  • paint
  • windows

Subcontractors can save money, because that is the only job they do and they are really good and fast. A general contractor has to use his own crew or hire out a crew to complete jobs. While a general contracting crew can usually do many jobs, they are not as fast or have the expertise of a sub who specializes in one thing. Many general contractors will also try to have most of the work done by their crew, which takes a lot of time.

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With subcontractors I can have multiple jobs being done at once, which saves a lot of time. The roof can be done, the plumbing can be done, the electrical can be done all at once. Some of the biggest contracting problems I have had, was when I gave an entire job to one contractor. They got overwhelmed, took forever and one basically quit on me.

Please check state laws regarding making repairs. Some states have stricter guidelines for who must be licensed and how to use subs.

Here is a great site to help you find a contractor

How do we repair rentals and flips?

I have tried many ways to repair my flips and rentals. I have used general contractors, subs, hired an employee to run my projects and even did the work on a flip myself. I have had some luck with general contractors, but many times they bite off more than they can chew, over promise and under deliver. I think most contractors will say they can handle everything and may even believe it, but are not equipped to handle large remodels on their own. I have had really good luck using subs for parts of jobs and then contractors for the majority of the work. Here is an example:

Subcontractor jobs:

  • electrical
  • plumbing
  • roof
  • landscaping
  • HVAC

Contractor jobs:

  • replace doors
  • replace windows
  • paint
  • kitchen
  • baths
  • fixtures

While the contractor is working on his jobs the subcontractors can be working on their jobs. In cases like this I do not use a general contractor, because I do not need someone to schedule and hire everyone. I would do the scheduling and hiring or someone on my team would.

This last year I hired a full-time employee to handle the hiring, scheduling and project management on my rehabs. I thought this would be a great way to give myself more time and possibly start a new business in the future (contracting for other people). However, this venture has not gone as well as I hoped and we are bringing the management back in-house for my team to handle. My new plan is to hire as many subs out as I can. Here are the benefits.

  • I should be able to get jobs done faster, because I will not have to wait on a contractor to have time to complete a big job. I will have a list of subs and can use the ones that are able to get work done the fastest.
  • I will be able to save money, because subs are usually cheaper due to the reasons we already discussed.
  • I won’t be relying on one contractor to get things right. If a subcontractor messes up they will only mess up part of the rehab and other work can still be done. If they contractor messes up, it can screw up the entire project.

I will still use some contractors and still look for great new contractors to repair my houses. Maybe someday I will find that magical contractor who is affordable, has a huge crew, is honest and fast. When I doing ten flips at once it is tough to find contractors that can handle that much volume without falling behind.

Here is an article on how to find a great contractor.

Is it smart to start using subcontractors right away?

The more experience you have the easier it will be to find subcontractors and hire jobs out. If you have no contacts and must find all new subs from scratch it can be a bit daunting. It might not hurt to try to find a general contractor and then slowly start looking for subs. If you are just starting out try not to take on huge remodel projects that require an awesome contractor or many subs. As your business matures and you gain more experience you will meet good subs and contractors. Make sure you keep track of their names and contact information!

Sponsored By: ac repair by Ambrose Air, Inc.

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