General contractors (GCs) and developers both play critical roles in building new real estate developments. But they aren’t the same role. CGs and developers have different responsibilities, priorities, ownership stakes, and risks.
Understanding the difference between a general contractor and a developer makes you a more informed real estate investor, and helps you evaluate deals more comprehensively.
What Does a General Contractor Do?
A GC oversees the day-to-day construction activities of a project. They serve as the manager and coordinator, making sure the project is completed according to specifications, on time, and within budget.
Key responsibilities of general contractors include the following:
- Project planning: Setting the construction schedule, knowing when to purchase materials, and creating an efficient workflow.
- Construction management: Coordinating and supervising builders, subcontractors, laborers, vendors, and suppliers.
- Safety compliance: Making sure everyone is adhering to safety protocols on-site.
- Cost management: Tracking expenses, managing change orders, and generally controlling the budget.
- Quality control: Upholding industry standards, building codes, and project requirements.
The GC’s key focus is on relationships. They work closely with architects, engineers, subcontractors, and suppliers to execute the developer's vision for the project. They need to maintain good working relationships to coordinate the project smoothly.
General contractors typically do not have any ownership stake in a project. Instead, they are hired by the developer to manage the construction process effectively.
What Does a Developer Do?
A developer conceptualizes real estate projects, secures financing for the build, and acquires the land to build on. They are ultimately responsible for the success of the development.
Key responsibilities of developers include:
- Land acquisition: Finding and purchasing suitable land or properties for development.
- Project design: Working with architects and engineers to design the structure(s).
- Financing: Securing funding through loans, investors, or partnerships.
- Legal and regulatory compliance: Making sure the project complies with zoning laws, permits, and environmental regulations.
- Marketing and sales: Promoting the completed project for sale or lease.
The developer’s key focus is on risk and reward. Developments are opportunistic investments, so they come with more financial and legal risks, but they also provide better return potential than safer real estate investments.
Developers often invest their own capital and leverage their own industry expertise to maximize profitability.
Key Differences Between General Contractors and Developers
There are several important differences between GCs and developers, including:
- Ownership. Developers typically hold an ownership stake in the project and bear the financial risks associated with its development, while GCs do not.
- Scope of work. Developers are involved in all aspects of the project, from inception through the sale, while general contractors are only involved in the construction.
- Financial role. Developers secure funding and oversee the complete budget throughout the project lifecycle, while GCs are responsible for budgeting and costs related specifically to construction activities.
How Gatsby Investment Provides Opportunities for General Contractors and Developers
Gatsby Investment is an experienced real estate sponsor that brings developers, general contractors, and investors together to build successful projects.
We are always looking for high-performance developers and GCs to collaborate with:
- In Southern California, we are looking to team up with General Contractors who can develop the property, ensure the quality of the build, and manage sub-contractors.
- In areas outside of Southern California, we are looking to partner with Developers who can scout new real estate projects, build on raw land, and supervise the entire development from start to finish.
We serve GCs and developers by bringing the deal to our established network of nearly 20,000 high-net-worth real estate investors. This also serves our investors by establishing a pipeline of new projects in which to invest.
Find out how Gatsby consistently exceeds investor expectations, and learn more about partnering with Gatsby as a developer or CG today!