Ep 10: How Do I Find a General Contractor I Can Trust? Part 1

There's a progression most investors start to feel after wholesaling real estate for a while. They want to stop the quick transactions and actually get their hands dirty. They want to actually transform the property and make it into something a family will actually appreciate. So what is the next step of your investing journey? Today we are going to dive into the opportunities and risks of working with general contractors. We will talk about the costs, tax advantages, and how to structure the relationship.

We will also talk about why you may NOT want to work with a GC, including more control and increased profit potential.

Of course, Bob and Tim have history with contractors, both good and bad.

SUBSCRIBE TO THE VALUE DRIVEN INVESTOR PODCAST

Listen Now!

Watch the Episode!

In This Episode (timed with podcast)….

4:26 Finding a GC is not easy

5:05 Tim's story about working with his first GC

13:23 Bob's reason for looking past a GC and doing it himself

20:58 Two reasons to work with a general contractor

22:32 The reasons you will want to do it yourself

32:24 When working with a GC started working out for Bob

39:15 Why defining your roles is critical

Miss an episode? Catch up!

Full Transcript

Tim Murphy (00:00):

Welcome back to the value driven ambassador. I didn't give you by buddy Bob grand grand. No. How the hell are you doing buddy? I'm doing great, man. Busy week already feels like Friday and it's only Wednesday. You know what? It is Friday for me because I'm taking off head into Michigan and I'm going to go snowmobiling with my buddies. And I am stoked for that. You know what? The beauty of life on our terms, right, man, that is true. I'm actually jealous of that. Like I should be doing something cool like that too. This next project done I'm out.

Tim Murphy (00:35):

You know what, everybody, I'm glad that you're joining us for this episode of how do I find it? General contractor. I can trust because finding general contractor when you're in the survival phase and you're just getting started and you want to, and maybe not be that wholesaler anymore. And you want to get into the nitty-gritty of transforming properties, which is what Bob and I just love so much is taking something that's run down, beat up neglected and transforming it into, into a beautiful property. And, and not only that, but I think, you know, as a Value Driven Investor, it's, it's about transforming it into something that another family will come and say, man, I've been dreaming about this house, man. This is the house I'm gonna raise my kids in, man. This is just everything I wanted. And when I think about that, like the vision I would paint for you is this, you know, when they have the reveal on, on all those house shows those, I flipped it or flipped it for your family or whatever those house shows are.

Tim Murphy (01:30):

And they, they have like, they hide the house and the family has been wondering, what are we going to do? What are we getting? What is it going to look like? What is it gonna look like? And then they pull the truck away or they pull the sign away or they pull whatever it is away. And the family sits there and like, literally in awe of what you did, I will tell you, you know, Bob and I have both experienced that feeling. And it is honestly, it's, it's just, it's the best feeling in the world. It's like that feeling when you're like, man, I want to do that again again, when that

Bob Grand (02:00):

House comes together in the last week, boom, that gun. And you're like, oh my God, somebody is going to love this feeling too.

Tim Murphy (02:08):

And like the people walk through the house and they can't believe that it's going to be there. It's like, this is theirs. And this is, this is there's and this is, this is what they get to experience every day. They wake up and I don't know. It's really cool. And that's one of the biggest reasons why it's hard for me to leave that transformation phase of investing because I just, I love it. I love it. So today though, you can't transform anything unless you have a general contractor and that's what we're talking about today. And you're probably sitting there going, okay, I want to be a, I don't want, you know, wholesaling is great or I got my feet wet here, but you know what? I really want to transform something I want to, I want to take something that's ugly and dilapidated and I want to flip it and transform it.

Tim Murphy (02:54):

And the other thing is I'm really realizing like wholesaling is great, but man, I think those guys making more money on those projects than I am. I want to get started on that. And that's what we're going to talk about now. What is the first thing that you need to think about is you need to think about what are you getting involved in? And I want to kick it off with a story because you know what? Yeah, you just can't, can't really give you guys. I can't give you guys a real good picture of what it's like to work with a general contractor when everything goes wrong. Now I'm not telling you a story about pain because I'm wanting to deter you from doing it. But I want to bring reality to the topic that we're talking about. Finding a general contractor is not easy. So when you jump into this, don't think like the first guy you call is going to be the magic man, and he's going to walk up and he's going to just make everything perfect. And you're not going to have to do anything when it comes to the construction side, because reality is Bob. And I will tell you numerous different people

Bob Grand (04:00):

And God did. And

Tim Murphy (04:03):

The other thing is I have also, which is fantastic. And why I love having Bob on this podcast is because we've gone. We've taken different routes. So we're going to be able to give you different perspectives. So anyways, let me start with my story. I'm gonna keep this short and sweet. My story starts like this. This is back when I first started rehabbing properties that were small properties. Uh, this project was like $125,000 that we bought. And we were buying properties from the bank all the time. The market was actually going down. So when I bought that property at $125,000, it was losing money every single day. Not only am I carrying costs, but the value was going down every single day. And so people thought I was crazy. What are you doing? Buying real estate when it's going down. And I said, nobody else is doing it.

Tim Murphy (04:50):

So how many people in my bidding against very so it's all about what you buy it at. It's not what you sell it at. That's why I kept doing it. But anyway, so I bought that property. I got into it. I knew the numbers were going to be tight because when you do smaller projects like that 125, I think we were flipping for two 50 to 75, something like that. Um, when you're doing small projects like that, you have a, a smaller margin. So if something goes wrong, let's say, oh yeah, we're going to be good. That furnace is going to be fantastic. And then you get into the project, you own the project and you find out what the furnace isn't going to be fantastic. And that's, that was an dollars to get a new furnace. You're like, oh man, I just went from a 20% return on investment down to 15% return on investment.

Tim Murphy (05:33):

Something like that. I don't know the exact numbers, but I mean, when you drop that much, that fast on one thing, you're like, whoa, this is getting real. Now that's the same thing. When you find a general contractor. So I went out there and I was like, we had probably at the time I had four general contractors I was working with, we were doing a lot of these small flips. Um, and I was like, okay, this is a tighter, you know what let's, let's see if we can find a newer guy. And we, my partner at the time he had this newer guy and you know, you're, you're always think that cheaper's better, especially when you're cheaper, you can do it. The more money you can put in your pocket. Well, I can tell you that that philosophy has burned me more than it's helped me.

Tim Murphy (06:19):

So I would tell you do not always think cheaper is better. Uh, I would tell you that this story demonstrates middle of the road is probably the best. So anyways, this young cat comes in and he found us because he drove by a couple of our projects and he realized, man, these guys don't do just one house. They do a couple of different accounts. You know what? This could be good for me. This could be my opportunity to break in. And he seemed like a really good kid. You know? I mean, he's young, he's probably in his twenties, late twenties. And he had been remodeling a general contractor for a couple of years. He was well-spoken he promised a lot. I mean, he promised, you know what, you know what, I totally know what you guys are doing. Yeah. Okay. Those are your numbers. I mean, you guys have to understand, we knew our numbers.

Tim Murphy (07:01):

Like we knew what we needed. We knew we, there was, he didn't have to do anything, but build, like we had designers involved. So we knew what the product we want. And we would look like we had our numbers figured out and we knew exactly where to go buy the product. All you had to do as a general contractor was just plan. Right? Yeah, man. I can do that. Oh yep. I'm set up over at Menard's home Depot. I'm set up here. I'm set up there. Yeah. We're good. We're good. Yep. I can hit those costs. And so it all came down to you. Okay. And you're cool with this profit, right? Oh yeah. Yeah. I'm totally cool with that profit long story short goes, this goes like this. We get them involved. We're like, okay. You know what, my buddy and I were like, yeah, you know what?

Tim Murphy (07:41):

Let's give them a shot. Let's give them a shot. And we did, and we got them on a contract and we said, okay, let's go. Now. We also knew because we were going with a cheaper guy. Hey, do you have a line of credit? Oh, uh, uh, well, not really. I mean, I'd probably need, you know, cause the job was going to be, I think like 45,000. He's like at cobbling, like half down and we're like, okay, well we're not doing halftime. We won't do that. But we'll do how about 10,000? And he's like, okay, I can do 10,000. Yeah. Let's do 10,000. That'll get me materials and get me going. So we give them 10,001 day leads to another second day, third day. Supposed to be on the job. Where does he, where did he go? Why didn't he show up? [inaudible]

Tim Murphy (08:30):

I were texting him then finally on day six, after he gets his $10,000, he shows up to the job. Hey man. Clayton, you can show up. Oh yeah. Oh, I forgot to tell you. I had a vacation plan. Oh you did? Oh, so you got the $10,000 in just luckily you had a vacation plan. Yeah. It just worked out like that. Okay. No, my partner, I both said, okay, I get it. Good for you. You got to get away. I'm getting away. You got to get away. All right. So he gets on the job. He's on the job five days in a row. Nothing's really happening. We're wondering like, why is this taking so long? Why can't you demo this? Why can't you put up a framed wall? Why are you what's going on again? Long story short. It was probably, we gave him probably six days on the job.

Tim Murphy (09:22):

He then flaked out, walked away. Didn't show up. What? Another week? Another two weeks doesn't show up were the writing's on the wall. We're going okay. We gave this guy 10 grand. He probably hasn't even used the 10 grand yet. He probably spent half the 10 grand on his vacation. And now he's sitting in there trying to figure out, Hmm, I got this Ponzi scheme going on. How the hell am I going to finish this project enough to get another 10 grand out of it? And again, I'm making assumptions, but you know what? I've been down around the block long enough that we realized we are involved in a Ponzi scheme and it was reality. And, and you say a Ponzi scheme, what do you mean? He's just a general contractor. Yeah, but this is the thing about general contractors. A lot of them are not good at managing money.

Tim Murphy (10:07):

And this young kid was not good at managing money. Obviously he wanted the money to go on vacation. And so the fact that he spent our money to go on vacation, which is what I thought he did. I can't, you know, can't guarantee it, but I'm pretty sure that's what happened there. That they don't know how to manage the financings. And so w what they'll do is they'll take money from a job that they're have coming up and they will use that money to finish the job that they're on. Well, that's all good until that Ponzi scheme falls apart collapsing. And when that Ponzi scheme falls apart, who is left, screwed me, me property owner, me, the guy who hired him, me, the one that needs to finish the job. And I don't have the money that I'm supposed to have in my budget just went up.

Tim Murphy (10:54):

So again, I'm not trying to paint a picture of doom and gloom, but to be real with you guys, that you have to have your head on a swivel, you have to understand what is this contract, or you have to interview the contractor. You have to understand what their real position is. You have to be very careful with contracts and giving them enough money just to get going so they can prove themselves when you're starting with a new GC, you have to have your wits about you, because if you don't, you'll end up right. Where I ended up, which was $10,000 light on my pocket book, $10,000 more on my budget. And I was able to work my way through it, because again, I had three other contractors and I had to call a favor and I had to get a guy in that I could trust.

Tim Murphy (11:42):

And he helped us. And he got us through it. The margin was less than I thought. I mean, I was shooting for a 20% margin. I think we made 5% and that money that we lost that time, we lost all the overhead. We lost, uh, you know, it, it went from 20 to 5% and I was like, you know, but it is what it is. And you know what, those are the lessons that you learn along the way. And if I didn't have those lessons, I wouldn't be able to talk to you guys. Number one, but number two, I wouldn't be able to be where I am today. So that's the story. Uh, and I survived it, but now I want to talk about, okay, should I work with the general contractor? Should I do be the general contractor myself? Grando your, your own general contractor with the fact too when you first got started? Because I believe when you first got started, you had this same question in your head, and then you choose man,

Bob Grand (12:36):

Uh, me starting out. I just started swinging a hammer. So I, you know, back then, I felt like I had more time on my hands than money. So that was kind of the reasoning back then for me to get started. And I was like, you know what, I'm not going to get so deep into something that I can't handle it. And I'm, and I wanted to learn everything about construction. And I was a firefighter and construction was an important aspect of just being able to know building construction. So I thought it'd be great to do, um, you know, looking back, I wouldn't change that. And I became a GC over the years because of being burned, just like you talked about, you know, so as you grow, you've got to make changes your time, you know, becomes very valuable and you end up needing to put people in place to do that type of stuff. So, yeah, I mean, that's how I got started out with that. And, and I, I thought it was great and it gave me a lot of experience. And, you know, it's just one of those things that you, it's a personal decision. Do you have the skills? Are you willing to learn the skills or do you not, you know, and, and do, do you need to find somebody with those skills? Um, I felt like,

Tim Murphy (13:40):

I think you nailed it. You said, um, the reason that I made that decision was because I had more time than money. And I think that is a huge factor in a lot of people's decision-making fortunately for me, I had built a pretty solid real estate business. So I had not more money than time, but I had a position where I could take a chance on someone and, uh, maybe, you know, lose a little money because I took that chance on someone else, but I was able to leverage my time. And so I looked at it from an opportunity cost perspective is like, Hey, meet Tim Murphy. Number one, I did a lot of trades when I was a young kid for summer jobs, which was great. I worked on a house with my uncle, which was great, but I also knew, like I had no passion whatsoever to do construction. That is not what I wanted to do. I wanted to do more. I wanted to, you know, think smart work smarter, not harder. Um, that was always my philosophy. And I was just like, if you're going to do that. So that was my philosophy going into is that one way or hell or high water, I'll find somebody to make it work. Bob, don't bring us back on your first project. So were you a GC when you did your first project hammer or Brunel that story?

Bob Grand (14:54):

I mean, going back like this is like, I mean, way back, this was like 2004 when I was just working on my own house is kind of that, what I call that micro flipping type concept, where you live in it, you fixed it up over two years and sell it. That's what I was doing, you know, and that's what a lot of that's how a lot of people get started and they learn, they love that business. And so my first house, I just bought, you know, that ranch style home that was dated from the seventies and went through and just started ripping out, like, okay, now I'm going to learn how to tile. Okay. Now I'm gonna learn how to paint and I'm gonna learn how to do flooring, all that stuff, you know? And then, you know, over time, you know, I grew that to, um, having a fascination with wanting to install granite countertops.

Bob Grand (15:35):

And so, uh, I started cutting my own granite countertops in my garage. And then that's why I became a GC. I have, cause you had to be a general contractor. You want to install it for other people. So that was like, I wanna install granite for people cause I just loved building it. Yeah. Um, but then, um, you know, going back, I ended up deciding, you know, I sold my places, toll, rolled all my money down the road so I could build my first house. And that was my first GC project or a GC. My first house was a 4,000 square foot, like $600,000 house that I built. I did work on it, did that. And it was a huge, I mean, it's like the equivalent of like four houses and one, the logistics that go into that and that was before an iPhone existed, you know?

Bob Grand (16:11):

So it's like you're sitting there with paper and pencil and figuring all that crazy crap out. If you needed to Google something, you had to go to a coffee shop to get internet. You know, it's like, I think back, that's not that long ago, but that's weird. You know, like it's all on my phone. I can link it up to my math book right there. You know, it probably would have a hotspot or something on a site of a project that big now, you know, it's just crazy to think, you know, looking back, but that's kind of how I got rolling in that direction and realizing quickly me person working on eight house as a single person I'm unskippable. So I only have so many hours during the day. So if I'm going to be able to do more projects, do another project, be able to keep this rolling.

Bob Grand (16:52):

I'm going to burn out quickly when it's all my hours trying to, you know, they'd be the, what is it? The butcher, the baker and the candlestick maker, you know, it's like, that's, that's what happened quickly. And I'm feeling that pinch right now in my own business, you know, again like where I was still G seeing and we're picking the projects and not even that much more of a workload, but just enough to overwhelm me because I'm a, I'm not that great of a project manager, multiple projects or even one, like I can do it, but I have to kind of be there all the time and be checking in and answering questions. So now we're to the point where, you know, we've got another site GC that's working and, you know, um, and a project manager designer, you know, kind of like how you kind of have it set up where I'm a little bit more reboot.

Bob Grand (17:32):

Um, but looking back, the cool thing about it is I can walk into any site, read any set of construction plans, go through and I can test a GC really quickly. And the cool thing about our newest GC is why I love him so much. And we'll talk more about it later, but he's amazing because he's willing to admit when he doesn't know. And that's like his, when not raped, when he said that he goes, you know, I can do this, this because I'm weak on the framing aspect of it. He goes, yeah, he goes, I can replant, but I'm probably not that great. I go, cool. I go, you just have to be willing to admit that you either screwed up or don't know something. I go, and we can always move forward from that point. Because most people, most general contractors, their egos are so big. They can't, they can't do it. It's crazy.

Tim Murphy (18:14):

So, yeah, I think you touched on a couple of really good things there because I learned that same lesson when I was with my uncle and we were building that $800,000 house. It was like 4,700 square foot house. And he was trying to do everything himself and I Y observed, and I, I thought the same thing that you just said there, like he can only do so much and look at all the time that he's putting into this. You know, I didn't see a lot of great leverage. I didn't see work smarter, not harder. I didn't see that philosophy going on. And so that was another reason why I was like, ah, that's not what I want to do. Um, is, is that so that you made some really good points and also that point there with your general contractor, I think you lead in really, really nicely into, um, the fact that you have to be self-aware yourself, of what you're capable of, not capable of what you're going to find a great general contractor.

Tim Murphy (19:06):

They have to be the same way because there's either insecurity because a general contractor never wants to tell you, oh, I can't get it done. They're men because they feel like if they say no, they're going to lose the work. Right. Number two is there's ego because what man, who is a contractor, usually the alpha guy or the stud or the redneck, you know, like route guy, like he's not going to even admit that he doesn't know how to use something because then he's, and nobody wants to be weak. But in the end, at the end of the day, the strongest person is the one that can be the most. Self-aware, uh, not the one that can tell you, they can do it and then screw it up. And then you're the one going, you know, I thought you said, you can do this. Didn't work out the way I thought.

Bob Grand (19:53):

Yeah. Like, can it's just been a while, like,

Tim Murphy (20:00):

Yeah, man, that's so true. Yeah. Well, here's a couple things. Well, why work with a general contractor instead of doing it yourself, I'm going to give a couple, you know, there's a million points here and this is the beauty of talking about, you know, working with the general contractor and finding general contractor. This is a subject that Bob and I will be on and we're have a podcast on probably countless times over the next five years because it's never ending conversation. So I just want you guys to know that we're just scraping the very, very top of the iceberg here, but why work with the general contractor? Here's a reason. Number one, work smarter, not harder. That's my philosophy. And number two, part of that philosophy is opportunity cost. If you understand economics opportunity cost is, Hey, if I spend my time over here, what is my return on that time?

Tim Murphy (20:50):

Or if I can spend my time over here, what's my return on my time, because your time is a limited asset. You only have so many hours in the day. How can you maximize your time and your use to maximize your return on investment? Um, you know, that's what I'm always thinking about. And that's why I was like, well, me being a general contractor is not going to allow me to maximize my opportunity costs or my, you know, profit. And that was one of the big reasons why I, I, you know, I fought down that path to find that perfect general contractor. And I never even thought about resorting to become the general contractor because of those thoughts in my head. Now, now what I've come to find out also being the developer and not the general contractor, there are some pretty sweet tax advantages.

Tim Murphy (21:38):

Um, and so we can go down that another time. But that's another thing that I discovered, uh, was that being the ju uh, the developer and not being the general contractor. Now you can have a general contracting business and a development business, but having them separate, there's some big advantages to that, but now why would you do it yourself? Bob, go back when you were a general contractor and as you were doing these flips and you were doing it yourself, why would you, why did you do it yourself? I know you said that, you know, you had more time than money, but going from more of a business perspective, like you, you could have, there was a time where you were still doing it, but you could have hired it out, but you didn't. What were you thinking?

Bob Grand (22:23):

I think a big portion of me was just control of the product, you know? So like I was, I was worried and that's what happens when you've been burned by contractors. I was so worried that it was going to go wrong if I wasn't paying attention to it. And if I wasn't on it now and watching every aspect of it and being there and answering questions that they had a question. And, you know, so even though I could be gone, I'd roll back in two, three times a day, just to be able to answer those questions and, and do that if they're working in or I'd be watching that the HVAC guys, you know, cause like I know how it goes in. I know electric, you know, the electrical goes out, you know, how the plumbing goes in and I'm just waiting for the red flag, you know?

Bob Grand (23:00):

And, and uh, you know, my wife actually said it best the other day. She said that she goes, you know, you'll drop, you'll drop somebody so fast. And, and we're actually just a little bit of an argument that we had about, you know, my, um, reservations with people and my inability to trust like contractors. Like if they screw up, once she goes, you're almost asking them because of that. And I was like, that's because I've been burned so many times and she's taking over the aspect of working with these contractors and she's building an amazing team because she's more of an amazing team builder than I am. And I thought I was pretty good, but like looking at it. So she's building these people, I get if something's messed up, like once something basic, it's like, they should know that it's like, that's.

Bob Grand (23:38):

That's check number one. Uh, I can see where this is going. They've got a two year shelf life, you know, I start saying, and that's like my embeddedness from over the years. So that's, what's caused me to stay in that box, you know? And so like to have that control and we had this long conversation about it and about me not being able to release that. And it caused me to really be like, you know what, you're right. Like I'm probably potentially, I probably lost some great people and that made some obvious mistakes. And I just asked them because I've been burned before and thinking act like, you know, how much better could my business have been? And it caused me to really over the last few weeks really connect with that and think like, geez, you know, that's, that's one of those moments where you have to be like, you know, you've gotta be able to trust people.

Bob Grand (24:22):

You've got to be able to release it. But you know, it's tough sometimes in this business because contractors, like when you're not finding the good ones and stuff, you know, you gotta, you gotta be careful because you lose money and, you know, I wasn't willing to, you know, and the other big portion of is I wasn't willing to risk, you know, I've said this multiple times, I'm not willing to risk, you know, my family's livelihood for my mistake, you know? And so like my brother, uh, my wife, everybody depends on our family business to operate. And so like, to me, like, I feel like that weights like on my shoulders. And so it was just like, I was like, I've got, I got to be there. I gotta be there. It's just now, you know, it's just, now I'm starting to release all that and feel better about it, but

Tim Murphy (25:01):

Grand. Oh yeah, you nailed it control. It was definitely, uh, one of my big concerns at the beginning, because you do have to give up and be willing to give up control. Um, and I think another great point that you made was, you know what, I had my GC license. So I understood if I was giving up control. I knew though, like, are they doing it right or not doing it? Right. And see, that was something that, that was a hard lesson for me because I never had my GC license. So I did learn all the aspects of building. I learned a lot with my uncle, but then I learned a lot more when I just started going through the process and I was a lot more heavily invested in, uh, controlling the project, watching the project, managing the project and being on site more, to look at every little nuance of the process.

Tim Murphy (25:50):

So I could get that knowledge that you have as a general contractor. So then I knew, okay, wait a minute. He's doing something to me here. Or, oh, wait a minute. He said that fridge is going to be this. And it's not that, or wait a minute, you know what I mean? So, because it's there, there's all these gaming going on between the contractor and, and their clients or you, or whatever, because things, you know, they're making assumptions on what things will cost, which is a risk of theirs that they take on as a general contractor. And it doesn't always pan out. So when it doesn't pan out, that Ponzi scheme comes back and it's like, okay, I sold them. That fridge was only going to be 4,500, but it actually turned out to be 5,500. How am I going to make up that thousand bucks? That's always going on all the way to this day. It goes on everywhere. So control is super important. Um, but Bob, talk about this one when you're doing it as a general contractor, didn't you think when you started doing it that way, man, I'm going to be able to increase my profit potential because now tell us, like, where were you where your mindset was and like, is your mindset still there that yes, we're increasing our profit potential or maybe not so much.

Bob Grand (27:00):

Yeah. Yeah. I saw it as like, well, if I could do, um, five projects in a year and make the same amount that I would be making for, you know, seven or eight projects, like it's a great place for me to be right. It's less risk. You know, when I, when I spend my money out there, because the second we put our money into something, you know, we're partnered with a bank we're partnered with that private money lender. We're partnered somewhere, you know? So then, then there's the stressor of that, making that. So it, I felt like it also insulated me a little bit, you know, because of like a market shift or anything like that, you know, it allows you to kind of have that control and be able to, um, you know, really kind of make sure that a project will get done, you know, cause it would rest on my shoulders to get it done.

Bob Grand (27:44):

Um, and, and working with the other people that kind of came in there and did that. But you know, at the end of the day, um, you know, I re I, you know, now realize it's better to take a less profit and find an amazing team to get it done because I like that the work of one can do one, right? The work of two can do three. And so maybe the work of three could do six. And I saw it yesterday on our project, three guys putting in a beam. Could I put that beam in? No, you know, I'd always need another person. So I am paying for another person and you know, it's labor, you know, it's like, I didn't necessarily need to be doing labor. You know, my time's better spent going out and finding the next project. So this whole team can stick with me and say, that's the leader.

Bob Grand (28:29):

He runs the team. He's finding our next project. We don't have to think we can sit here and work. So I'm not worried about where my next job's coming from, because that's what will start happening to contractors. They'll take your job. And then they're instantly panicking. Like, oh God, okay, this one's here. I got it. Now let's work at work at work, but oh gosh. In three weeks, this is done. You know? So, so you're you, you got to think a little bit, I guess, bigger picture and scalability has probably been the biggest thing that I've had to focus on over the last six months. You know, if I'm going to be in this business and growing this business. Cause I love it. Like you do. I don't see myself being out of the flipping. I see myself doing more of everything else, you know, so, but I always want to be here. And so that's kind of like trying to figure that out, just thinking like how can I scale it? It can't be scaled with me inside working on a project.

Tim Murphy (29:16):

So let's circle back here and just get real clear on. So do you, did you then say that, yeah. You know what, at the beginning I thought I'd be increasing my profit, but we realized because of opportunity costs, maybe Bob's grant grants times used better elsewhere that you were able to leverage, you know, another general contractor and you're not making as much profit maybe on that single job, but you can use your time elsewhere because you have somebody doing the work on that job. Now you can make a little bit less process profit on 2, 3, 4, 5 jobs all at once, which ultimately increases your overall profitability and increases your ability, right?

Bob Grand (29:57):

Yeah, exactly. I mean, yeah. Doing five projects with profitable, Sam makes 75,000. I go, but what if I can do 12 projects and still make 60,000? I mean, exact same thing. And then the other aspect of it is, you know, my GC, like our people, most of them, they like hourly. They like to be paid per hour, which is great. So we don't have to deal with all this bidding of everything all the time. I feel like, okay, we know this and we can start judging hourly. So as like when I broke it down per hour, like I value my time at probably $300 an hour, that's the type of work. And the level of work I should be doing, you know, three, $500 an hour. I was doing 40 to $50 an hour work. You know, it's like, it's skilled. It's great. That's a great living wage for somebody, but it's not helpful for me when I'm trying to scale my business and make more profit, you know, down the road. So, but that person loves what they're doing, you know? And I didn't love that. I was just doing it because I felt like I had to in order to survive and make everything work.

Tim Murphy (30:52):

Exactly. Yeah, Bob right there, what he just said, summarized opportunity costs. So if you didn't hear that, you should rewind that and you should play that back because that is the debate. You should have it in your head. If you want to grow and scale. Now, if you just want to flip one house and make as much profit as possible, great go for it. But if you want to actually build a business, then you need to hear what Bob just said. So Bob, you know what we want to make this episode a little shorter than some of our other episodes. Give us the story though. Like I don't, I gave the kind of horror story of what to look out, or I don't want doom and gloom. I want you to leave us on this podcast with some hope. Like there is

Bob Grand (31:32):

One out there, right. There is dude that the light at the end of the tunnel is where I'm at right now, man. This is what's great about, I love like evolution and me getting over my stuff and you know, and having to struggle with things and just solve these problems. Um, you know, so, uh, you know, I brought my wife and his project manager and she's like a very high level project manager then managing like, you know, 250 $300,000 weddings and like, you know, very expensive weddings, lots of base of stuff that you have to be doing a lot of micro flips on her own house, doing a lot at which as an episode. Yeah. Doing a lot of stuff on her own. So she's got the skills. Um, so allowing her to build a team. So she, we're starting to work with people and she's connecting and building.

Bob Grand (32:13):

And so it's one young kid is like, you know that classic, you know, like, Hey, you know, I'm so excited to work with you. And we just got him for like a day, cause we need somebody to fill in. He's like, oh, this is suck. This is the type of work I've been doing. He goes, I've been working for this restoration company and I have to do the worst work ever. And he goes, it makes me appreciate work like this like finished work and stuff and he's excited. And he goes, because you got to meet my father-in-law or kind of [inaudible] surrogate father or whatever he is, you know, he's like, you gotta meet him. Awesome. He's like, I've technically worked for him. And I was like, yeah, great. You know, great. Let's see. I was like, heard this before, you know? Um, and so it was kinda like one of those things where like, yeah, I'll see you when I believe it.

Bob Grand (32:47):

So we were using them a few more times, just he's just filling in when we needed somebody, you know, on stuffs doing some trim work, doing that, you know, just to fill in handy guy. Um, and so one day he like wants to, he wants, I actually come home and he's like over at our house. And so he's like, Hey. And like, and Shelly was like, yeah, he wanted to sit down and talk to us. And he goes, I want to work with you guys because I liked the way you guys think he goes, I can see you guys are going places. And I was like, I know, you know, I was like, yeah, okay. I've heard this before. And he's like, he goes, he goes, um, I want to work with you guys all the time. And he's not even the dude that I'm actually talking about.

Bob Grand (33:18):

Right. I didn't even know his father-in-law writers, surrogate father. And so we're going, I was like, okay, I go, you know what, dude, let's just keep dating. You know, it's great. You know, I appreciate you're. You're like 28 years old and you're ambitious. I get it, man. I go, that's awesome. Um, let's just keep this process going. We'll fill you in wherever we can. And so then on the next project, you know him and, uh, his surrogate father, I didn't know what to call them, but he, um, they're working on all the trim on this house that Shelley's got this project rolling for a client and they're, they're working on all the trim. And so I finally get to meet him and he was like, man, these cool dude, you know, this and that. And so he starts kind of working a little bit more and then, you know, I'm talking to him more and more and I'm finally like realizing this dude is a great guy.

Bob Grand (34:00):

You know, he won't overstate what he can do. He always is willing to figure it out. And I started thinking, I was like, this could be the GC that we need to be managing these people. And then we're like, ah, like somebody bailed out on something. He goes, oh, I know a guy. He he's like, okay. I was like, then that guy comes in and I'm like, this is a great guy. You know, like the plumber, you know, like this plumber is a great guy, you know, it's like, and so I'm still in this kind of controlling phase of things, trying to like be in and be involved in. And so this is what's causing my wife and I'd have this talk where it's like, you know, you need to like decide where you're going to be at in this and that. And I go, you know, I go, I actually think, you know, Gino is a great guy.

Bob Grand (34:37):

Like I think he could be a great GC for us. I'm like, let's talk to him about it and let's do it. And so now for the first time ever, like I'm stepping out and I'm having trouble stepping out, it's weird. Cause you're like, ah, you know, and that's why you have to give up that control. That's why yesterday I was there watching them, put the beam in, you know, it's like, and so he's on site now and she's working with him, he's the GC on site. And the guy is just so great because he's he's number one. He's willing to say what he can't do and or if he needs help with it, he's also, you know, when there were more people on the job site that needed, he was like, you know, actually we don't need extra people this and that because I want to save you money.

Bob Grand (35:15):

If possible, I was like, this is even better, you know, like getting rid of somebody when they, so they're just not standing around. But ultimately at the end of the day, you know, it's like, finally I feel like there's a contractor that I can trust. That's got a lot of experience that worked for another company and he loved working there, but they both were like, you know, the work is good, but we're looking for different, you know, we're looking for to do something cool, like a work with somebody that we can really help out that we can feel like we're doing great things. And they were doing like insurance work, you know, for a restoration company where everything is just like, you know how insurance companies are like, we pay for this and not that. And so it's just stressful work, horrible working, like demoing stuff out.

Bob Grand (35:56):

So they appreciate, you know, where they're at working with us. And you know, so with this project I was like, okay, I'm going to give this project to him. And I got the plans and stuff done. I go, can you get permits with the city? He's like, oh yeah, I can get permits with the city. I'm like, it took me three months to get them on my duplex bill. But I'd like to see, he goes, we didn't have, we have like, kind of we're in the process of permits, but he knows all the inspectors and knows everybody. He's like, I'll get them over here to pre look at it. And he's like, he's a friend of mine, this and that. And he's like, and we'll just make sure that we're getting to go. So he knows that we've done. It's like, that's like the guy, you know?

Bob Grand (36:30):

So you're finding like, I can't even, cause I didn't even have time to make those connections with those people. And now it's like all of a sudden we're starting to use his subs. You know? He's like, well, we could do this or this. Or it goes, I've got a guy too. It's like, I'm like, well, let's see what your guys got and this and that. He calls his plumber right over guy comes over. I meet him. I'm like, I love this guy. I was like, just so it's like, yeah, let's use your God. I was like, awesome. So, and then, you know, and him and Shelley have a great relationship and it's like, and then, and, and the guy that originally brought it up was, you know, the guy that just worked for him under his GC license, you know, he's just like, Hey guys, I just think we need to go this direction.

Bob Grand (37:07):

He convinced them to take a risk on us. And so then he just recently told his main business supplier, the contracting company that gives them all the restoration work. He just said, he goes, you know, he goes, I'm going this path with these people. He goes, I really like where we're at. He goes, this is how I want to finish out my contract and career. Cause he's, you know, he's probably got 10 or 12 years left in him, but that's the path that he wants to go. You know, which I'm like, dude, there is light at the end of the tunnel, Tim, you can find an amazing contractor. There

Tim Murphy (37:36):

Is. And I have a similar relationship with my, my boy, I'm doing this with, for 12 years, you know? And, and it just, when you light up and you're like, yeah, I like this. Yeah. Like that. Well, you can do that. It's

Bob Grand (37:50):

Good

Tim Murphy (37:51):

Because you're really finding the, the, the team because you want it to have a business, no matter what business you're building, you have to have, it comes down to people and people are the hardest variables to not control, but to find the right pieces. Right. And, and, and they, and they let you down and they, and they, they have some wins. You have some losses, but you have to go through that with, with the humans and the teammates that you, that you pick. And so that's really exciting to listen to that, Bob, because yeah, I have, even to this day with my, my good friend, I have the same feeling because there's so much like right now we have a terrible job in the client. We have a very tricky client and it's just, it's been wearing on Chris, but we've defined our roles. And he knows that getting me involved, which he wants, he's asked me to get involved.

Tim Murphy (38:41):

And then I remind him of our roles and he says, you're right. It would only make everything worse. Um, and I said, yeah. And it would also make things worse between our relationship because I do things way differently than you do things. And he's like, you're right. And so basically I'm just the guy that he gets to vent to about this client. That's just very demanding. And so it's awesome, man. And you know what, I'm glad you ended. We ended this podcast with that story, Bob, because you know, I, a, I'm excited to see how the journey with that contractor goes over the next year or two. And I hope that in two years, years excited about him or even more excited because he took the reins and you said, okay, I have a role for you. And he's willing to fit that role because he knows like in, I play hockey, right? Like you have to have a winger, you have to have a center, you have to have a left-winger, you have to have two defensive and you have to have a goalie. Like everybody has to play their role. And if they have to be willing to play that role, otherwise the team sport doesn't work. And that's so awesome. When you have someone that says, yeah, I'll play wing. I got it. Don't worry about it, dude.

Bob Grand (39:44):

It's so funny you say that because that's exactly. I, when I was on the job site just yesterday, he was like, you guys, does it feel nice that you don't have to be like, so like I go, yeah, it feels really nice because you guys, you're smart. You've done the work. You guys, you have me. And he goes, I can, I can help you this. And I was like, I love you more and more. Every single day we work together. And if I can tell you this dude, to finish this thing off, if I, in 2004, if I could have had this podcast episode right here with this amount of experience that just got vomited into 40 minutes, I'd probably be 15 years ahead, you know, 15 years further down the road already, but you don't know what you don't know. And that's the important thing about this community. Being able to have the experience that you and I just went through over the last 15 years that somebody else doesn't have to make all these mistakes.

Tim Murphy (40:31):

Awesome, man. Yeah. And if you guys want to be a part of, of this journey in this community, you go to Value Driven Investor.com and sign up. And we have a Facebook page Value Driven Investor where we're going to share more and more content. Bob and I have tons of projects going on. Uh, we want to share with you guys because we want you to avoid these mistakes. So thanks again for listening to the value of an investor podcast.

Tim Murphy (40:58):

Thanks for listening to the Value Driven Investor podcast, where we lead by giving for more information about our community and what's new visit Value Driven Investor.com. The value-driven investor podcast was produced by digital legend media in Minneapolis, build the or legend digital legend media.com.