“Starting Your Career as a Contractor” by Claudiu Fatu fills an integral part of my knowledge of the world of real estate. As a real estate investor, there are four top professionals you will interact with to perform the best deals: lender, property manager, real estate agent, and general contractor.
I have already read books on all the other three professionals, so this book helped close my education gap in general contracting. To say I learned a lot would be an understatement. General contractors (GC) are entrepreneurs running their own big-time businesses.
They account for tools, materials, overhead, labor, and taxes. A lot is going on in the world of general contracting, and not everyone can survive life as a general contractor. After reading this book, I am confident I have the tools to pick an above-average general contractor out of a line-up. But first, let’s get into my five takeaways.
1) Renovations can be a very lucrative business because a home is built once and renovated many times. Being a general contractor in this space allows you more freedom with less permitting and stress than building houses.
2) Although you can become a general contractor without needing construction skills, you should have valuable construction experience if you want to succeed. Your track record on other jobs is your credibility. Your credibility is your currency and what allows you to secure contracts and hire top talent.
3) It is on you to collect state taxes from your client. You charge them on top of your total costs and estimates. If you don’t charge them, you will have to pay THEIR state taxes out of your pocket.
4) You are required to provide a lot of insurance for yourself, your workers, and the job site. Some of the insurance requirements are contractor’s license, liability insurance, worker’s compensation, and disability insurance.
5) Pick a great name and logo and use them everywhere, including business cards, websites, and letterhead. Also, having t-shirts made for your team is an invaluable way to advertise.
Accounting for overhead and your salary is vital to staying afloat and receiving your fair payments. Overhead consists of car insurance, loans payments, equipment maintenance, internet, phone bills, etc. You can choose your salary amount as well.
If you choose your salary to be $100,000, you will need to have enough revenue from jobs to cover this amount. You will account for overhead as either a weekly amount or a percentage of each job. Your salary comes as part of the labor costs per job. Never underbid a job and take a hit to your profit margins. You’ll regret trying to complete a job but losing money.
Overall, this book gave me a deep insight into general contracting. I have no intention of being a contractor, but I will deal with them in the future. I have had good experiences with GC, but I have also had many bad ones.
Reading this book now shows me little details I can expect from an exceptional GC. Things like letterhead, estimates, t-shirts, timeliness, etc., add up to give a professional appearance. The chances are that if they look professional, talk professional, and act professional, they will be professional. I highly recommend this book to future general contractors and all real estate investors.
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