Ep 11: Should You GC Your Own Flip or Hire It Out

Should You GC Your Own Flip or Hire It Out

 

[NEIL] Same street in Norwalk. Same nineteen nineties ranch house style. Same rehab budget on paper, thirty five thousand dollars. One investor walked away with real profit. The other one barely broke even after a year of interest payments.

 

[MAGGIE] Same numbers on the spreadsheet, two totally different outcomes.

 

[NEIL] One decision made all the difference, and it wasn't the purchase price.

 

[MAGGIE] Welcome back to Flipping Iowa. I'm Maggie Monroe, sitting across from Neil Timmins, who apparently has a story today about two nearly identical houses in Norwalk with two very different endings.

 

[NEIL] Same street, six months apart. We'll get into it.

 

[MAGGIE] I went deep on this one for the blog this week at littleguyloans.com, and it kept coming back to one question every flipper eventually has to answer for themselves.

 

[NEIL] Should you run the rehab yourself, or hand it to a general contractor.

 

[MAGGIE] That's the one.

 

[NEIL] And there's no universal right answer. It depends on the deal, and it depends on you.

 

[MAGGIE] Then let's figure out how you're supposed to know which lane you're in.

 

[NEIL] Fair. Let's start with what the job actually is, so nobody's lost.

 

[MAGGIE] Start basic. When you say GC your own flip, what does that actually mean day to day?

 

[NEIL] It means you're the general contractor. You're calling the electrician. You're scheduling the drywall crew. You're walking the site every day, catching problems before they turn into change orders.

 

[MAGGIE] Versus hiring somebody to do all of that for you.

 

[NEIL] Right. A hired GC does the exact same job, coordinating, scheduling, catching problems, except now you're paying them for it. Usually fifteen to twenty percent on top of labor and materials.

 

[MAGGIE] Give me that in real numbers on a real rehab.

 

[NEIL] Take a forty thousand dollar rehab budget. Fifteen to twenty percent markup is six to eight thousand dollars. That's the number sitting on the table depending which lane you pick.

 

[MAGGIE] So the pitch for self-GCing writes itself. Keep the six to eight grand.

 

[NEIL] That's exactly how most people think about it the first time. And it's not wrong, it's just incomplete.

 

[MAGGIE] Does the answer change if somebody's doing a straight flip versus a BRRRR, buying to rent and refinance instead of sell?

 

[NEIL] It shifts a little. On a flip, every extra week is a week of carrying costs you're never getting back once it sells. On a BRRRR, you've got a little more room, because the property's going to sit in your portfolio afterward anyway, so a slower self-GC timeline stings less. But it's still not free. Your refinance is tied to an appraisal, and lenders want to see the work finished and permitted before they'll lend against the new value.

 

[MAGGIE] So BRRRR gives you a longer runway, but it doesn't erase the clock entirely.

 

[NEIL] Right. It just moves where the pain shows up. Flip, you feel it in the sale price. BRRRR, you feel it in a refinance that gets delayed a quarter because the rehab dragged.

 

[MAGGIE] Incomplete how?

 

[NEIL] Because the markup isn't the only number in the equation. There's also what your time is worth, and how many other deals you're trying to run at the same time.

 

[MAGGIE] Walk me through what you actually get when you self-GC. Besides keeping the markup.

 

[NEIL] You control the sequencing. You can start a crew Monday instead of waiting on somebody else's calendar. You can swap out a sub who's dragging without renegotiating a whole contract. For somebody doing one or two deals a year, that control is worth more than the money.

 

[MAGGIE] And you build relationships along the way.

 

[NEIL] That's the part people underrate. A plumber who trusts you to pay on time and stay off his back becomes the plumber who takes your call first, not last, when he's booked six weeks out. That relationship compounds over years. You don't get that the same way going through somebody else's GC.

 

[MAGGIE] Okay, so what's the case for hiring the GC instead? Because clearly it's not nothing, or nobody would ever do it.

 

[NEIL] Three things, mainly. Time, liability, and momentum.

 

[MAGGIE] Start with time.

 

[NEIL] Self-GCing a rehab eats five to fifteen hours a week, depending on scope. Fine if you're running one flip. Falls apart at four or five running at once, because the hours don't scale evenly, they multiply. Every rehab you add is another site to walk, another sub to chase, another delivery to confirm. Take a Beaverdale bungalow with a forty thousand dollar budget. Add three more like it at the same time, and you're not doing four times the work, you're doing something closer to eight times the headache.

 

[MAGGIE] So the math that worked at one deal breaks at four.

 

[NEIL] Breaks fast. And it breaks quietly, because nobody notices they're overextended until a delivery gets missed or an inspection gets pushed back two weeks.

 

[MAGGIE] Break down what those five to fifteen hours actually go toward. Because on paper that doesn't sound like much.

 

[NEIL] It's never one big block, it's a dozen small ones. Answering a sub's text about a material delivery. Driving over because a plumber says the water heater's a different size than quoted. Walking the site Tuesday and Friday to check progress against the schedule. Calling the building inspector's office to get a rough-in scheduled. Chasing a lumber yard because your order's sitting on a truck somewhere. None of it takes long by itself. All of it together is what eats the week.

 

[MAGGIE] So it's death by a thousand small interruptions, not one big time sink.

 

[NEIL] Exactly, and that's why it's so easy to underestimate. Nobody blocks off an afternoon for self-GCing. It just quietly consumes the gaps in your calendar until there aren't any gaps left.

 

[MAGGIE] What's the liability piece?

 

[NEIL] A licensed GC carries insurance and pulls permits under their own license in most Iowa jurisdictions. Self-GC, and that liability sits with you. A framing mistake, an electrical panel swapped without a permit, a sub who walks off the job without insurance, that's your name on the inspection file now, not theirs.

 

[MAGGIE] And momentum?

 

[NEIL] Every hour spent tracking down a tile guy who didn't show is an hour you're not spending underwriting the next deal. If your bottleneck is finding good deals, not managing rehabs, hiring the GC frees up exactly the hours that grow the business.

 

[MAGGIE] What if somebody wants a middle path? Self-GC most of it, but hand off a piece.

 

[NEIL] That's actually the most common setup once somebody's past their first flip or two. I know an investor in Ankeny running three rehabs at once this year. He self-GCs two of them, the ones close to home he can walk daily, and hires a GC for the third one out in Indianola because the drive alone eats an hour round trip every time he'd need to check on it.

 

[MAGGIE] So distance factors into the decision too, not just how many deals you're running.

 

[NEIL] Absolutely. Time isn't just deal count, it's also how expensive each site visit is. A rehab you can drive by on your way to work costs you almost nothing to check on. One forty minutes away costs you real hours just getting there and back.

 

[MAGGIE] And if somebody does decide to hire a GC, how do they actually pick one? I know we've covered vetting a contractor before on this show.

 

[NEIL] Same fundamentals apply. References from other investors, not just homeowners. A license and insurance you actually verify, not just take their word for. And a written scope of work before anybody signs anything, so the markup you're paying for is buying real accountability, not just a phone number to call when something goes wrong.

 

[MAGGIE] So how do you actually decide, deal by deal? Because it sounds like there isn't one permanent answer.

 

[NEIL] There isn't. I run three numbers before I pick a lane on any given deal. What does the GC markup cost in real dollars on this specific rehab. What's my hourly value worth right now, based on what I'd otherwise spend that time doing. And how many other deals am I actively running, does self-GCing this one delay the next acquisition.

 

[MAGGIE] And if the markup's small relative to your time, or you've got capacity to spare.

 

[NEIL] I self-GC. But if I'm juggling three rehabs already and a seller's about to walk because I haven't called them back in four days, I hire the GC and pay the markup happily.

 

[MAGGIE] You mentioned two houses on the same Norwalk street at the top of the show. Tell me both versions.

 

[NEIL] Two mid-nineties ranch houses, same street, both rehab budgets around thirty five thousand dollars. First investor was between deals, had time on his hands. Self-GC'd it, saved something like six thousand five hundred dollars in markup, job ran six weeks with only minor delays.

 

[MAGGIE] Clean outcome. What made it run that smooth, since not every self-GC job goes six weeks without a hitch?

 

[NEIL] He'd already built the relationships. Same plumber, same electrician, same painter he'd used on two prior deals. Nobody was learning his standards for the first time. He also set a ten percent contingency aside before he ever started, so when the water heater turned out to be the wrong size, that was a phone call and a line item, not a crisis.

 

[MAGGIE] So it wasn't luck, it was preparation plus experience.

 

[NEIL] Mostly that. Luck's a small piece of every rehab. Preparation is the part you actually control.

 

[MAGGIE] So that's investor one. What changed for him the second time around?

 

[NEIL] Three months later, same investor picks up a third property two streets over, nearly identical scope, but now he's got two other flips running at the same time. He hires a GC for that one. Costs him about six thousand dollars more than self-GCing would have.

 

[MAGGIE] But?

 

[NEIL] But it freed up the hours he needed to close on a fourth deal that same month. Same rehab budget, same neighborhood, two completely different calls, because his deal volume was different each time.

 

[MAGGIE] That story's actually close to one I know from a different borrower, somebody who financed just the purchase through us and figured he'd save money doing the rehab himself.

 

[NEIL] I know the one you mean. Handy guy, planned to do a roughly thirty five thousand dollar rehab with his own two hands. No contractor, no rehab draw, just his own labor to save on cost.

 

[MAGGIE] What happened?

 

[NEIL] Six months in, property's still not on the market. We extend the loan. Nine months in, still not done, extend again. A year in, still not listed.

 

[MAGGIE] A year, on a rehab that should've taken what, three or four months?

 

[NEIL] Four to five, with a contractor on a normal timeline. And here's the thing about a hard money loan, the interest clock doesn't stop running just because the rehab isn't finished. Property taxes accrue either way. Insurance keeps billing. Every month unrenovated is another month of carrying cost eating straight into his profit.

 

[MAGGIE] Did the deal work out in the end?

 

[NEIL] It closed. Property finished, sold fine, loan got paid off. He made a couple dollars on it. But nowhere close to what he'd have walked away with if he'd hired a contractor and wrapped it in four or five months instead of twelve plus.

 

[MAGGIE] So the labor savings from doing it himself got eaten by the extra months of holding costs.

 

[NEIL] Eaten, and then some. That's the trap in self-GCing when you don't actually have the bandwidth for it. Saving money isn't about spending less, it's about controlling the timeline. Speed is the variable that actually decides your profit.

 

[MAGGIE] Here's the objection I hear from people just starting out. I don't have relationships with subs yet. Doesn't that make self-GCing basically impossible on a first flip?

 

[NEIL] It makes it harder, not impossible. Everybody starts with zero relationships. You build them the first time through, slower, with more mistakes, and by deal three or four you've got a bench of subs you actually trust. The first flip is always the expensive tuition either way, self-GC or hire a GC.

 

[MAGGIE] So a first-timer shouldn't rule out self-GCing just because they're new.

 

[NEIL] Not automatically. What matters more than experience is capacity. Do they have five to fifteen hours a week free to actually run the site. A first-timer with a flexible schedule and no other deals running can self-GC just fine. A first-timer working sixty hours a week at a day job is setting themselves up for the Norwalk story I just told you.

 

[MAGGIE] What about somebody who tries to split the difference, self-GC most of it but hire out one or two trades?

 

[NEIL] That's actually common, and smart. Electrical and plumbing almost always go to licensed subs regardless, most Iowa jurisdictions require it. The self-GC decision is really about who manages the scheduling and sequencing on top of that, not whether you personally swing a hammer.

 

[MAGGIE] One more. What about somebody who assumes hiring a GC removes all the risk, since now it's somebody else's job to worry about?

 

[NEIL] That's the most dangerous assumption in the whole conversation. Hiring a GC doesn't remove risk, it transfers some of it and leaves plenty behind. You're still the one who signed the loan. You're still the one who has to catch it if a GC's subcontractor cuts corners. I tell every borrower the same thing, hiring a GC buys you back hours, it doesn't buy you the right to stop paying attention.

 

[MAGGIE] So even hiring it out, you're still walking the site.

 

[NEIL] Less often, but yes. Weekly at minimum. The investors who get burned aren't the ones who self-GC and aren't the ones who hire a GC, they're the ones who do either one and then disappear for a month.

 

[MAGGIE] Before we wrap, this is the part of the show where we close out with a piece of Iowa history. What have you got for us this week?

 

[NEIL] This one's about a town that used to run completely differently than anywhere else in the state. Back on June first, nineteen thirty two, the members of the Amana Colonies voted to end nearly eighty years of communal living and turn their farms, mills, and workshops over to a new corporation called the Amana Society.

 

[MAGGIE] Communal living, meaning what exactly?

 

[NEIL] Meaning before that vote, nobody in Amana drew a paycheck. The community provided your house, your meals, your medical care, and that was that. After what they still call the Great Change, people could finally hold a job, earn a wage, and build something that was actually theirs.

 

[MAGGIE] That's a pretty direct line to what we just spent this whole episode talking about. Owning your own outcome instead of somebody else running the whole show for you.

 

[NEIL] Didn't even plan that connection, but it fits. Eighty years of one system, then overnight, people deciding to run their own lives instead. Sounds a little like deciding to GC your own flip instead of handing it off, honestly.

 

[MAGGIE] Let's leave people with the big three. What should they walk away remembering?

 

[NEIL] First, know the real markup cost on your specific rehab. Fifteen to twenty percent is real money, but it's not automatically the wrong call to pay it. Second, be honest about your capacity. Five to fifteen hours a week per active rehab is the real cost of self-GCing, and it multiplies fast. Third, speed decides your profit more than labor savings do. A slow self-GC job can cost you more in carrying costs than a GC's markup ever would.

 

[MAGGIE] Run the numbers deal by deal. Not the same answer every time.

 

[NEIL] That's the whole episode in one sentence.

 

[MAGGIE] If you got something out of this one, share it with a friend, and be sure to subscribe so you don't miss the next one. Catch you on the next episode.

 

[NEIL] Thanks for listening, everybody.