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BRRRR Method

General Contractor vs Self-Managed

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General Contractor vs Self-Managed

The BRRRR rehab can be managed by a general contractor (higher cost, lower effort) or by you (lower cost, higher time). The choice shapes your capital efficiency and scaling speed.

Key takeaways​

  • General contractors charge 15–25% markup over trade labor and materials; the fee covers project management, scheduling, quality oversight, and liability insurance.
  • Self-managed rehabs save the GC markup but require your active presence: job-site oversight, trade coordination, material ordering, and real-time problem-solving.
  • GC-managed is preferable at scale (5+ properties) when your time becomes limited; self-managed is viable for 1–2 properties while learning the business.
  • Hybrid models exist: hire a GC for specialized work (roof, electrical), manage cosmetic finishes yourself, reducing overall cost and learning the business.
  • The decision depends on your market knowledge, available time, willingness to be on job sites, and capital constraints.

General contractor model: cost and benefits​

A general contractor (GC) is a licensed professional who takes full responsibility for the rehab project. The GC contracts with you, estimates costs, hires and manages trades, coordinates schedules, obtains permits, conducts inspections, and delivers a finished property.

Typical GC compensation:

  • Labor markup: 15–25% over the net cost of trades. If a roofer charges $8,000 directly, the GC passes through a $9,200–10,000 invoice (15–25% markup).
  • Material markup: 5–15% over the cost of materials. If electrical supplies cost $2,000, the GC invoices $2,100–2,300.
  • General overhead: Sometimes a flat $2,000–5,000 for estimating, permitting, and job-site supervision.

A $35,000 rehab with a skilled GC (15% markup) costs $40,250 ($35,000 × 1.15). With a less efficient GC (25% markup), it costs $43,750.

Benefits of using a GC:

  1. Time savings: The GC manages the project; you are not on-site daily. For BRRRR investors scaling to multiple properties, this is critical.

  2. Expertise and relationships: An experienced GC knows contractors, negotiates rates, avoids common mistakes, and has relationships with suppliers. These relationships translate to faster turnaround and better pricing.

  3. License and bonding: In most states, GCs are licensed and bonded, meaning they have insurance covering job-site injuries and property damage. If a trade causes damage, the GC's insurance is first in line.

  4. Problem-solving: When the plumber discovers corroded cast-iron pipes requiring replacement ($3,000 scope increase), the GC addresses it immediately, adjusts the budget, and keeps the project moving. You don't need to intervene.

  5. Permits and inspections: The GC secures permits, schedules inspections, and manages the relationship with building departments. Permit issues are solved by the GC.

  6. Quality control: A reputable GC ensures trades meet local code, work is inspected before payment, and defects are addressed. You have a single point of accountability.

Costs of using a GC:

  • Markup (15–25%) adds $5,250–8,750 to a $35,000 project.
  • Potential inefficiency if the GC is slow, unresponsive, or low-quality.
  • Less direct control: scope creep or cost increases require negotiation rather than immediate correction.
  • Dependence: if the GC is unavailable or of poor quality, your project suffers.

Self-managed model: cost and effort​

Self-managing means you are the GC: you contract directly with trades, coordinate schedules, order materials, oversee work, manage the budget, and handle permits and inspections.

Direct cost structure:

You pay trades at market rates without GC markup. A roofer charges $8,000 directly. Electrical is $3,500 direct. Materials are purchased via your accounts (contractor accounts at supplier stores offer 5–10% discounts). Total rehab cost is your estimate without additional markup.

A $35,000 self-managed project costs $35,000 (no GC markup). Savings: $5,250–8,750 vs. a GC model.

Benefits of self-managing:

  1. Cost savings: Eliminate GC markup, preserving capital for the portfolio or improving deal margins.

  2. Direct control: You decide prioritization, trade selection, and material choices. If a trade is underperforming, you replace them immediately.

  3. Rapid decision-making: No negotiation or communication delays; you approve changes and move forward.

  4. Learning: Managing rehabs teaches you construction, cost control, and vendor relationships—invaluable for scaling.

  5. Relationship building: Direct trades relationships often lead to volume discounts and availability priority for future projects.

Costs of self-managing:

  1. Time: You are on-site 3–5 days per week minimum. For a 120-day project, that is 60–100 hours of your time (minimum). Multiply by 5 properties, and you are working full-time as a project manager, not as an investor.

  2. Expertise gap: You may make contractor selection mistakes, miss code issues, or underestimate scope. These errors cascade into cost overruns and timeline delays.

  3. Emotional labor: Contractor conflicts, quality issues, and scope surprises are stressful when you are directly managing. A GC absorbs this friction.

  4. Permit and inspection complexity: If a permit is denied, an inspection failed, or a building department issue arises, you are directly responsible for resolution. Some jurisdictions are adversarial; this requires knowledge and persistence.

  5. Insurance and liability: You are directly liable if someone is injured on-site or property is damaged. Some property or general liability insurance policies exclude self-managed construction, increasing your risk.

  6. Scheduling complexity: Coordinating multiple trades, materials, and inspections requires spreadsheets and constant communication. One miscommunication (roofer scheduled the same day as the electrician) cascades into delays.

Hybrid model: selective self-management​

Many BRRRR investors use a hybrid approach: hire a GC for specialized, high-complexity work (roof, electrical, plumbing, structural); self-manage cosmetic finishes (paint, flooring, fixtures, kitchen/bath vanities).

Example hybrid structure:

  • GC manages: Roof ($8,000), HVAC ($4,500), Electrical rough-in and panel ($3,600), Plumbing rough-in ($2,900). Subtotal: $19,000 with GC markup (15%) = $21,850.

  • You manage: Flooring ($4,900), Kitchen ($4,100), Bathroom ($2,200), Paint ($2,000), Fixtures and trim ($1,000). Subtotal: $14,200 direct (no markup).

  • Total cost: $21,850 + $14,200 = $36,050 (vs. $40,250 all-GC or $35,000 all-self).

Hybrid benefits:

  • You reduce GC costs (markup only on 60% of budget, not 100%).
  • You learn finishes work (flooring, painting, fixture installation) without the complexity of systems work.
  • You delegate liability for systems work to the GC.
  • Finishes work is less time-critical; delays don't impact the critical path as severely.

Hybrid challenges:

  • Coordinating GC and your work requires precise scheduling (GC finishes rough-in, you begin finishes without delays).
  • Some GCs resist hybrid models, preferring full control; find a GC willing to do "systems only."
  • You still need to manage the project timeline and quality, even if you are not doing the work.

Timeline and scaling implications​

For an investor managing 1–2 properties simultaneously, self-managing is often viable. Two projects with 120-day overlaps mean 100–150 job-site hours spread over six months—a part-time commitment.

For an investor managing 3–5 properties with staggered overlaps (one closing, one rehabbing, one stabilizing, one refinancing), self-managing all becomes infeasible. You would need 200–300 hours per project per year, or 600–1,500 hours annually—a full-time job as a project manager, not an investor.

At scale (5+ properties), hiring GCs and focusing on deal sourcing, underwriting, and portfolio management is the only path. Your time becomes your scarcest resource.

Scaling timeline:

  • Properties 1–2: Self-manage or hybrid. Learn the business, build contractor relationships, understand costs.
  • Properties 3–4: Hybrid (GC for systems, you for finishes). Maintain cost discipline while beginning to delegate.
  • Properties 5+: Full GC for all projects. Delegate project management, focus on deal sourcing and refinancing.

Contractor selection and vetting​

Whether you use a GC or manage trades directly, contractor selection is critical.

For GCs:

  1. Get referrals from other BRRRR investors.
  2. Check licenses and bonding (verify via state contractors board).
  3. Request references (speak to prior clients).
  4. Interview 2–3 GCs; ask about experience with BRRRR, turnaround timelines, and cost consistency.
  5. Request a detailed bid; ensure it itemizes labor and materials.
  6. Clarify change order policy: How are scope changes priced? Who approves them?

For direct trades (if self-managing):

  1. Get referrals from other investors or contractors.
  2. Verify licenses (if required in your state).
  3. Request references and inspect prior work if possible.
  4. Get competitive bids from 2–3 trades per major item.
  5. Clarify terms: payment schedule, timeline, change order policy.
  6. Confirm insurance (most lenders require trades to carry liability insurance).

Red flags for either:

  • Unwilling to provide references.
  • Drastically lower bid than competitors (often indicates low quality or underbidding leading to cost overruns).
  • Unwilling to discuss timeline or scope in detail.
  • Poor communication or responsiveness.
  • No license or insurance when required.

Financial comparison: 5-property example​

Assume five properties over five years, each with a $35,000 rehab budget:

All-GC model (15% markup):

  • Rehab cost per property: $40,250.
  • Total for five properties: $201,250.
  • Your time: minimal (5–10 hours per property for oversight and decisions).

All-self model:

  • Rehab cost per property: $35,000.
  • Total for five properties: $175,000.
  • Your time: 100 hours per property = 500 hours over five years (9–10 hours/week on average).
  • Your hourly value of time: If your alternative income is $50/hour, your time cost is $25,000. Net savings: $175,000 − $40,250 − $25,000 = $109,750 (vs. all-GC cost of $201,250).

Hybrid model (GC for 60%, self for 40%):

  • GC cost (60% of $35,000 with 15% markup): $24,150.
  • Self cost (40% of $35,000): $14,000.
  • Total per property: $38,150.
  • Total for five properties: $190,750.
  • Your time: 40 hours per property = 200 hours over five years.
  • Your time cost: $10,000 (if valued at $50/hour).
  • Net cost: $190,750 + $10,000 = $200,750 (vs. all-GC of $201,250 or all-self of $175,000 + $25,000 time = $200,000).

The comparison is close. Self-managing is cheapest but demands your time. Hybrid balances cost and time. All-GC is most expensive but frees your time for deal sourcing and portfolio management.

The optimal choice depends on your stage: early, learning-focused, capital-constrained (self-manage or hybrid); scaled, time-constrained, capital-abundant (GC model).

Decision framework​

Next​

With the BRRRR framework complete—sourcing, underwriting, financing, budgeting, timeline, and execution—you are ready to deploy the cycle repeatedly. The conclusion returns to the compounding power of BRRRR and the portfolio-building implications for long-term wealth.