Future Home Build - Hire a GC?

[dmccarty]

Lots to say but not much time...

A GC knows the local contractors. A home builder not in the business will NOT know the local contractors. You will have to find a plumber. How to you determine which plumber to use? Just using their cost to do the job is not the best metric. Lets say you have to choices Bob and Joe. How do you pick Bob or Joe? Are you a good judge of character? Can you tell that Joe is great word smith and grand talker but can't do squat? The GC would know that you pick Joe and not Bob. The GC would know that Bob is a great BSer and pulls out a six back that has been sitting on ice in the water cooler to drink his lunch. Part of what you are paying the GC is know WHO to hire.

The trim contractor on our job was great. Fast and did excellent work. They used to be a heroin addict but he got cleaned up. The GC knew he had gotten his act together and did good work. I on the other hand would have been lucky to know that he USED to be an addict but had clean up his act. I could have picked the guy when he was an addict. A good GC is connected with the contractors and knows their strengths and weaknesses.

If the GC calls up Joe and says I need you on Monday and the home owning builder calls up Joe and says I need you on Monday. Which build site is Joe going to on Monday? Joe is going to the GC. Joe knows the GC is going to call him the future and has called him the past. Joe has loyalty to the GC. The home owning builder does not have that advantage.

A good GC is going to know the inspectors, how they think and interpret the code. The home owning builder has almost zero chance of knowing the inspectors.

One can get a good GC or a bad one. A GC might have an excellent reputation but can then go down hill. It is a gamble to some extent but the GC should lesson the risk of hiring contractors.

We looked for a builder for years to build our house. I did the design meaning I drew up the blue prints that were used to build the house. Floor, elevation, electrical, bathroom, kitchen, foundation plans were all mine. No way in heck did I know the local trades, who to hire and who to avoid. Nor did I have time to find out and manage the work. Over the years we talked to a number of GCs. Some I would not let build a bird house and not trust with a stick of gum. Others were competent and trustworthy but I did not get along with them so they were out. When we found our GC, the wife and I talked with him for a couple hours on a job site. As we left, we looked at each other, and just like in a movie, we said we just found our builder. :thumbsup:

Our builder became a friend. There is not much better praise I can say about him and it is not something many can say about their builder.

Later,
Dan

 

[rtimgray]

I think that a lot of good advice has been offered on this thread from folks with multiple backgrounds and opinions, and in all honestly, I don't think I can disagree with any of the recommendations - it all depends on the comfort level of the owner as far as knowledge of what it takes to get a house built.

I know that in our area, I hear of 4 or 5 contractors that are considered "premier" and there has been a waiting list of about a year or more before they can start your project. With the recent downturn in the local housing market, a couple gave up the business (retired) and the others could start on a job immediately and would often finish prior to having another lined up.

More recently, we are experiencing a bit of an "up-tick" in housing construction (again, I'm speaking locally - a couple of small towns, not even a region of the state), and there is once again a waiting list for those guys. Additionally, there are a few new guys starting in the business.

The way that I know about these going-ons is that I do houseplans for folks as a small side-business. I usually offer anything from the minimum of what the bank requires, which is usually a survey plat, foundation plan, floor plan, and two elevations. Other folks that I work or have worked for want a lot more details, including kitchen/bath elevations, perspective renderings, window/door schedules, fixture schedules, etc. I don't think I have ever had one home built that people didn't make at least a few changes to it once they got started, but that's just part of the process. Usually once I give them the final plans and they pay me, I very seldom have any more contact with them unless they decide to do an addition and they want it documented on the plans.

I know that a lot (and I mean a lot) of spec homes built by contractors have either no or very little documentation as far as a floor plan goes, and I've know of many folks that have had homes built with basically no plans (a photocopied page from a floorplan magazine or something printed off the internet) and I don't think there is anything wrong with that, but it does leave a lot to the interpretation of the builder.

I think a recurring theme in this thread that I wholeheartedly agree with is thorough reference checks and thorough documentation. That can save a lot of headaches down the road.

Good luck and take care.

 

[txdon]

I was faced with the same question and went with a GC and glad I did. I did not realize how much I did not know about construction and he offer a lot of good suggestions I would not have thought about. The GC also has more control over the contractors because they want to continue to get his business. Our house was completed in 5 months. Our GC worked for a home building company and I think that was a good thing because he also had a boss to please besides me.

 

[cartod]

A good GC is worth there weight in gold. Mine has done things that I would never thought of. He put a floor drain in the garage that spans the entire floor. He put water lines and sewer lines in conduit under the driveway so the big trucks won't crush them. He waited until the roof was on before installing the window because he has seen shingles blown off the roof and through a window. He covered the finished garage floor with tyvek because the drywall process really messes up the concrete. He insisted I build the walls with 2x6 instead of 2x4s for sturdiness and r-value. He insists the jobs are clean and has a crew of only the best carpenters, plumbers, electricians and hvac people. When I want to change something he says yea that's going cost you about 45 minutes of labor.

Oh, and he saved me almost $30,000 in Andersen windows because of the business he gives them. They treat him well and he passes savings along to the customer.

 

[woodlandfarms]

So what is the real finances of a general contractor? Meaning, what do they get paid on the surface, and what do they skim from underneath? What can a person expect to save by being their own GC? To some this may be hard to answer but don't get hung up on the details. Yes, we know GC can probably get a better deal on materials than a one off, but how much of that better deal is passed on to the client? And yes, we know a one off might go through three subs finding the right electrician.

I ask this as my neighbor was his own GC. He worked hard at it, it was a full time job on top of his full time job. But the savings he mentioned to me seemed too good to be true.

 

[paulharvey]

So what is the real finances of a general contractor? Meaning, what do they get paid on the surface, and what do they skim from underneath? What can a person expect to save by being their own GC? To some this may be hard to answer but don't get hung up on the details. Yes, we know GC can probably get a better deal on materials than a one off, but how much of that better deal is passed on to the client? And yes, we know a one off might go through three subs finding the right electrician.

I ask this as my neighbor was his own GC. He worked hard at it, it was a full time job on top of his full time job. But the savings he mentioned to me seemed too good to be true.

When I worked for a multi family builder (apartments, condos, wood framed, 2 and 3 story) we added 11% to everything, materials, sub contracts, plus included money for a superintendent and "general conditions" (temp water, power, permits, dumpsters, ect). When I worked for a commercial building contractor we tacked on 15% plus general conditions. Now, keep in mind the multi family jobs where all $7,500,00+ up to $35,000,000. The commercial jobs where from $750,000 to $5,000,000. As you shrink the total job price the % will go up.
I would hazard to guess between 25% and 33% over and above materials, subs, and general conditions. All this assumes subcontracting nearly all work. The day of a home builder have 12 carpenter, concrete finishers, roofers ect is over. The truth is that it is nearly always cheaper to sub these then self perform as the builder.

Now what can you save as the GC? Your probably going to pay ~10% more for materials then the contractor, so that is a possible 15% net to you. Same deal with subcontractors, probably net 15%. General conditions will be about equal or more for you. If your good, have things go your way, put in the time ect you probably can save as much as 10-20% total.

Perhaps what I should say is that if you do Separate contracts for say pool, septic, and site work(clear, house pad, drive way, culvets, ect) you could save the most money with least time/effort invested.

 

[woodlandfarms]

This would be in line with my neighbors experience. He did a lot of his own work as well. Electrical, plumbing, and insulation and sheetrock plus all finish work to be specific. I feel he had a good 40% savings over the price of what I felt the value of the house was. But, it took him 1.2 years, and he had a run in with his bank (excessive time on construction loan). And he did hire a GC as a consultant, it was the only way the bank would give the construction loan.

 

[buckeyefarmer]

I was my own GC and would do it again.

 

[txdon]

Buckeyefarmer, did you have any experience with building or how did you acquire you knowledge on homebuilding? How did you locate and hire your subs?

 

[rtimgray]

As far as saving money goes, just by being your own GC, I think that you can save in the range of 20%, plus or minus a few. If you do some or any of your own work, your savings can multiply quickly.

My experience, and once again my experience only, is not that sub-contractors give a smokin' hot deal to a GC that uses them all the time and as opposed to a single builder. I think they will definately give preferential treatment, especially in regard to timing of the work, and probably some on the pricing, but in my experience, it's not like they do it for half price. And again, the GC will almost always mark-up the subcontractor work by a 10-20% range, which eliminates the alleged savings.

In our area, the current $/sq. ft. price for a mid-range home is about $125-$150. Materials cost makes up somewhere around 20 to 30 percent of this, the rest being overhead, labor and mark-up. I am not begruding anybody a living, and I feel that the mark-ups that are applied are quite fair, or else they wouldn't be the business norm.

I've also just about given up using any residential contractors. The one area that I am really weak in is HVAC troubleshooting, as in when there's a problem with a unit. I have found that I could never get a technician from any of the local HVAC suppliers to show up when they said they would, and then they seemed incompetent when they did. I found a large company that does industrial and commercial work, and also does some residential, and my satisfaction is 100%. They show up on time, they have the proper tools and training, and the equipment gets fixed right. It is more expensive, but this is a luxury that I will pay for, similar to the reason that people will pay a mark-up to have a GC handle a job for them (saying all that just to say that I do understand there is a time and place for professionals in many lines of work).

Good luck and take care.