I come from a finance background, and work at a family office that does a lot of development deals. Our team runs lean and so I've had to wear many hats, which has given me a lot of knowledge and experience within construction despite not coming from a construction or project management background.
Down the road, I plan on starting my own development shop once I get more experience. A lot of the general contractors I've worked with have been super unimpressive and unorganized.... the amount of times I've had to call out BS change orders and reallocations with no rationale is ridiculous, GCs straight skimming with the subs, amongst other gripes.
Would it make sense to begin the process of taking the GC licensing exam for my state so that I would be able to self GC at my own shop? Granted this is much easier said than done, but I think being able to have complete control of the project and defer a portion of the GC fee to the backend to get better economics would be pretty valuable. I plan on staying in my state long-term.
Is the juice worth the squeeze? At the very worst it'd be a good learning experience. Would love to hear input from those here with more development experience - cheers.
Typically, the legal barrier to entry in construction is not very high. It's a lot easier to become a licensed GC than a licensed land surveyor, structural engineer, architect, etc.
I would look at the GC license as a minor thing compared with the actual knowledge needed to be a GC. I don't know what kind of projects you've been working on, but there's a massive difference in complexity between single-family residential on one hand and high-rise buildings on the other, and between light rehabs on one hand and ground-up new construction or changes in use on the other.
You could easily get a commercial construction license that legally allows you to pull a permit on a project that you have absolutely no business running as GC. So, don't treat the license as evidence of much of anything. Get it when the time comes, if you go that route, but focus on getting the experience, which is what actually matters.
This is absolutely correct. I recently took the CSL exam for my state and used my dad (an actual GC) as my credentials (you need to have worked for a GC or in a trade for at least 3 years or 2 years + bachelor degree to even apply for the license to take the exam) and I passed the exam fairly easily, but I am by no means a general contractor. Ironically, my brother-in-law on the other hand, does not have his CSL license (he doesn't want to study the code book), but is very passionate about construction (he watches youtube videos on construction for fun) and could manage a ground up construction from scratch. Having a CSL license and knowing construction are two completely different things.
To OP, this is a prime example of the Dunning-Kruger effect. This is the equivalent to you using an app with a glitch and complaining to the developer that there is a glitch and then thinking you could build a better app despite not knowing how to code...
Let me ask you a series of questions to gauge your construction knowledge:
Generally speaking, can you walk be through the entire construction process of a ground up single family home? For a window to be considered an egress window, what is the minimum width and height and what is the maximum distance from the ground the window can be? When does a window need to be tempered glass? What is the minimum U-factor that your windows must be in your state? What even is a U-factor? What is the minimum and maximum height of a stair riser? What is the minimum and maximum depth of the tread? What is the difference between wool batt insulation, fiberglass, foam board, and spray foam and when should each be used? What is the difference between open cell and closed cell spray foam? What is R-value? What does it mean to "fur" out a wall and why would someone want to do that? When would you use a 2x6 vs a 2x4? What is an LVL and when would you need one? What is the minimum ceiling height? What is the minimum hallway width? If you are designing a kitchen, what are some standard sizes for the refrigerator, cooktop, cabinets, dishwasher, sink? Similarly, for a bathroom what are standard sizes for a vanity, shower, bathtub? When is a fire sprinkler and alarm system needed? What are some solutions to soil that is not suitable for construction? What are some solutions if you have contaminated soil such as high level of PERC or arsenic?
Owned. Keep to the numbers OP.
Thanks for the detailed response @Fred Fredburger, this is helpful unlike Ozy's usual self-aggrandizing, condescending garbage. I imagine him to be like Gerald Broflovski's internet trolling arc in South Park.
For context I am two years out of undergrad and wanted to see if it was worth it to start focusing more on the construction side in the view of a 10-year plan where I end up starting my own development shop. Most of the GCs I've had to deal with so far have been for middle market deals, which as others have noted is pretty hit or miss. Was unsure of how steep the learning curve would be on the construction side - conclusion: pretty fucking steep.
Will focus on mastering my niche on the finance and development side, and hopefully will find a good partner with a construction background when the time comes. I will keep to the numbers and entitlement process so to speak.
I work for a large developer ($20-40B AUM) and we have a large construction team on salary, in house. We sign the permit as “Owner/Builder” and contract with the subs directly. We do not have a GC license.
I suppose you could do the same
Interesting - guess you learn something new every day. I did not know what a CSL exam was or the fact such an exam exists.
Anyone here have any suggestions on how to prep for such a licensing exam? Where to even start?
You start by working in the trades or for a GC or architect. You need to have 3 years experience in the trade or working for a GC or 2 years + a Bachelors to even qualify to take the exam. Once you have that experience under your belt, then you study for and take the exam. There are classes you can take to prep for the exam and you almost HAVE to take the classes. It is nearly impossible to study for the exam without taking the class because the exam is not about knowing the code. Its about knowing how to use the code book and being able to quickly look up codes and it is not the most intuitive book to navigate, so you need to take a class to learn how to navigate it and tricks to look things up quickly
What sized deals are we talking about? Are they too small where you can't use the top tier commercial GC's? I know the middle market can be very challenging and if that's where you are going to play I would say yes vertically integrate. Either yourself, or bring a partner on whose skillset compliments yours and can run with it.
Most of the deals I've worked on have been middle market, so yes. Will probably plan on bringing in a partner now from the construction side when the time comes.
Once again the site ate my response, so here's the abbreviated version.
This right here makes me certain OP is a fool. @Fred Fredburger already identified that this guy is a walking example of the Dunning Kreuger effect, and all the ways in which he's completely incapable of being a GC, but I want to reinforce that by pointing out that the attitude contained in here is super dangerous. This level of unwarranted confidence, of completely unearned arrogance, is how people go bust (and inevitably blame it on someone else, because someone this full of themselves is incapable of admitting fault).
OP saw an industry in which most of the players were engaging in behaviors that he thought were "unimpressive" and instead of asking the question an intelligent and thoughtful person would ask, which is "why is this endemic, what am I missing, what do they know that I don't?" he immediately decided that he knew better than an entire industry of experienced professionals.
The single most important lesson to learn, ever, is that unless you are 100% sure you're the smartest and best educated person in a room, you aren't. And in that case, you should sit down and listen to the people with more knowledge and more experience, because they've all made the mistakes that you're about to and you should learn and profit by that experience, and not assume that you know something they don't.
In this case, what OP doesn't realize is that being a GC is really freaking difficult, and on a fee basis alone, not very profitable relative to the headache and risk being taken. Much like being a developer isn't worth it for the fees, but rather the money comes from the back end. So maybe, just maybe, all these behaviors that OP is so unimpressed with are a natural reaction to that fact, and that passing costs on to the owner, and beating your subs up on cost (not outright stealing from them, which is illegal) are some of the ways in which GCs actually manage to control their expenses and actually make a buck.
If I thought I was the smartest person in the room, I wouldn't be asking other development professionals with more experience than myself, who are more knowledgeable, if it would be worth it to start learning construction given my end goal. That is literally what this exercise is - to determine whether this is feasible or am I just using recency bias from a few bad experiences with middle market GCs.
But you do you, it's fitting your username is from a certain Watchmen character (I'm sure you will counter with the username actually stems from the Shelley poem or some shit)
Yeah, it's from Shelley, my man. Though frankly I don't care what you think it's a reference to.
What you were looking for is a pat on the head. And of course you should start learning construction. Learning anything is always accretive. But you were very clearly looking for someone to compliment your idea to start a GC, which isn't the same thing.
If you genuinely wanted advice, then what's the issue? You got it - it's not a very good idea and you've been told that. That you are taking it as defensively as you are strongly implies that either you can't take advice, in which case why bother asking, or you wanted something more than advice.
Most developers I know who GC their own work (coincidentally smaller entrepreneurial guys) have described it to me as 10% of their income and 90% of their headaches. They enjoyed the extra fee income when they were first starting out but have tried to distance themselves from it as their business scaled and larger development fees were more than enough to keep the lights on.
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