What is a General Contractor?
A general contractor (GC) is a licensed professional who manages and coordinates construction and renovation projects. The GC serves as the single point of contact between the property owner and the various tradespeople who perform the work. They hire and supervise subcontractors, manage the project timeline, procure materials, ensure code compliance, and are responsible for delivering the finished project according to the agreed scope of work.
For real estate investors, the relationship with your general contractor is one of the most important in your business. A reliable, competent GC who delivers quality work on time and on budget is worth their weight in gold. A bad GC can destroy a deal's profitability through delays, cost overruns, and poor workmanship.
What a GC does
The GC's responsibilities span the entire renovation process: reviewing the scope of work and providing a bid, obtaining necessary building permits, hiring and scheduling subcontractors (electricians, plumbers, HVAC, flooring, painters), coordinating the sequence of work, ordering and managing materials, conducting quality inspections throughout the project, managing the project timeline, scheduling municipal inspections, and delivering the completed project with a punch list of any remaining items.
GC fee structures
| Structure | How it works | Best for |
|---|---|---|
| Fixed price | GC bids a total price for the complete scope | Well-defined projects with clear scope |
| Cost plus | GC charges actual costs + a percentage (10-20%) | Projects where scope may change |
| Time and materials | GC charges hourly labor + materials at cost | Small or uncertain scope projects |
Most investor renovations use fixed-price contracts because the SOW is defined before work begins. Fixed-price puts the cost risk on the GC — if the job takes longer or costs more than estimated, that's the GC's problem, not yours (unless the overage is caused by scope changes you authorized).
Vetting a GC
Before hiring: verify their state contractor's license (active and in good standing), check for complaints with the Better Business Bureau and your state's contractor licensing board, request and call 3-5 references (specifically from investor clients, not homeowner remodels), visit a current or recent job site, verify they carry general liability insurance ($1M minimum) and workers' compensation, and request a written contract before work begins.
Red flags: no license, no insurance, asking for more than 10-20% deposit upfront, unwillingness to provide references, verbal-only agreements, no written contract, and being unable to provide a timeline with milestone dates.
Managing the GC relationship
Pay based on milestones, not a single upfront payment. A typical payment schedule: 10-20% deposit, progress payments tied to completion of defined phases (demo complete, rough-in complete, finish work complete), and final 10% held until the punch list is complete and final inspections pass. Never pay ahead of completed work — once a contractor has been fully paid, your leverage to ensure quality completion drops to zero.