The Upside Of GCing Your Own Projects
It's not for everyone but, if you're scrappy enough, it might just pay off.
Hey. Welcome to the next edition of Brick + Mortar where readers get insight into the acquisition, financing, design, construction, and operations of small-scale real estate development projects.
First, an update on 501 Main. Then, the upside of GCing your own projects.
🎵 I can see clearly now…
Most of our windows finally arrived this week.
3 weeks delayed after 17 weeks in production. And we’re still missing 6 of them.
But, hey, at least we’re able to start making progress again.
Apart from a couple that came with defects, I think they look pretty slick.
These are a mix of fixed and casement windows from Kohltech. All triple pane (here’s my rationale on going triple).
Some of these windows were HEAVY. We took bets and settled on 300 lbs for the big boys.
And they all had to be installed from the exterior.
So, after some thought, we rigged up the setup below (full credit goes to Jeremy for the idea).
A couple 4x4s ratchet strapped to the boom lift with a 2x4 stopper running perpendicular. This allowed two guys in the lift to transport a window into place while another two helped position it from inside.
It was a tiring day and a half but we made it.
It’s hard to run a bakery if you don’t know how to bake bread.
I’ll be honest.
I knew little about construction when I started planning 501 Main.
Like embarrassingly little.
I had done two smaller renovation projects before. No ground-up development.
And certainly not as the general contractor (GC).
But that didn’t stop me and I jumped in head first.
There are two reasons I took on the role of GC:
I wanted to learn construction. As in—intimately learn. Not just by reading Fine Homebuilding or attending onsite meetings once a week
I needed to cut costs. The project couldn’t handle the industry standard construction costs in my area given the rental market so I had to get creative
Learning construction—
If I planned to pursue small-scale real estate development long-term, I needed to understand construction.
Fundamentally, it’s integral to:
Underwriting construction budgets and pro formas;
Designing early concepts (does that cottage court idea even pencil?);
Value engineering once the architects and engineers have drafted plans; and
Hiring a 3rd-party GC down the line (it’s easier to confidently vet candidates if you’ve spent time in their shoes)
There are a few ways to go about this, but I always learn best by doing. And there’s no better way than by strapping yourself into the driver’s seat.
Plus, I really wanted to be actively involved in building something and thought I’d enjoy it.
So that’s what I did.
A trial by fire.
Yes, there was more risk. But I thought I could hedge that with the right team of contractors, architects, engineers, and advisors.
I’ll tell you right now—it’s been hell at times.
But I’ve learned more in the past 7 months than I ever imagined. On site. Every day. Most days not just acting as GC, but also working as a member of our 4-man carpentry crew.
The education has been much broader than just best construction practices, too. It has been a masterclass in:
Managing subs and building relationships
Experiencing how conceptual design decisions materialize in the field (some ideas that seem great on paper lead to unnecessary costs during implementation)
Witnessing how long it should take to complete activities and being able to build a realistic project timeline
Understanding what good talent looks like across trades
Cutting costs—
Initial estimates for the project were $300+/SF for hard costs.
I figured by cutting my GC fee (from 10% to 5%) and being onsite daily to make design and procurement decisions on the fly could help shave costs.
Fortunately, that seems to be paying off.
Right now, we’re trending at $240/SF in hard costs (excluding soft costs—e.g. A&E, general conditions, GC fee).
Yes, we’re still 25% over what I initially budgeted. I attribute this to a combination of material/labor increases, scope changes, and (admittedly) under-budgeted expenses in some areas.
But we’re still coming in below that initial $300+/SF benchmark.
My biggest contribution to the project, though, has nothing to do with experience (obviously since I didn’t have any to begin with).
It has everything to do with being scrappy.
I spend a lot of time thinking about how to optimize by spending less and doing more with the resources we have.
A few examples of areas I focus on:
Materials: More and more, I’m monitoring the marketplace for cost effective options. For instance—sourcing factory seconds for our 3” rigid exterior insulation gave $5,000 in savings. And here’s another $4,000 example
Operations: I recently brought on a lower cost laborer to take over job site cleaning, hauling materials, etc. This frees up the two experienced carpenters for higher value work
Design: I made last minute changes to the parking lot placement and dimensions while walking around the site to maximize use of space and eliminate excess site work
Here’s another example from just last week.
We’re gearing up to install drywall so I started pricing our 600 sheets.
So far, I’ve purchased 90% of materials through the local building supplier.
Partly because I’m a fan of supporting local. But mostly because their contractor sales guy is top tier and, as a long-time contractor in a previous life, he has been an invaluable resource for me on this project.
Well worth the added markup in many cases.
But, on some things—like drywall—I don’t need that level of high touch. It’s a commodity product that just needs to get from some warehouse to my site.
So I shopped around.
Turns out (big surprise) that Home Depot is cheaper.
$7,000 cheaper, in fact. That’s a 40% discount we’re talking about.
Well, it also turns out that HD doesn’t send a lift with the delivery (the local yard does for free).
Just a forklift.
So, barring any other planning, that means we’d have to haul 200 sheets to the 2nd floor and 200 more to the 3rd.
By hand.
And we’re talking 5/8” drywall at 70 lbs/sheet.
My back hurt just thinking about it.
So I called up the crane operator we used to set trusses. For a modest $500 fee, he came one morning and lifted the pallets of drywall into our window openings and we shuffled it inside.
In and out within 90 minutes. Compare that to the 6+ hours it would have taken our 4-man crew to haul by hand.
The point is—it’s this kind of thinking that’s allowed the project to reduce costs in significant ways.
At every step, I’m thinking about budget. Whereas a 3rd-party GC may have just purchased the more expensive material if it meant getting a lift with delivery.
A single instance of this might not move the needle that much. But the cumulative effect of these incremental cost savings over the course of a whole project adds up.
Sure, there are efficiencies gained from experience that I likely miss (though I’m getting better every day!).
But the net effect of GCing myself remains positive.
I haven’t run the numbers, but the savings are easily now in the tens of thousands of dollars ($25,000-$50,000 if I had to guess).
Scrappy pays, folks.
Until next time.
— Jonah 🧱
P.S. Want to connect? Find me on LinkedIn and my projects on Instagram.