How much rehab do you do on your own vs. contract out?
I have the opportunity to purchase some great property that will need new flooring, a new tub, new cabinets, paint, etc.
My question you experts is how much of this do you generally do on your own and how much do you sub out? I'd love to move into the property while I flip it and do a lot of stuff on my own but I'd be learning so much of it as I go. How did you learn how to do things like install a new tub or new bathroom vanities?
Originally posted by @Scott K.:Oh please, Most people on this forum are small timers like me. We have 1-10 rentals and would be broke if we hired out everything that is needed to be done.
All this talk about you are wasting time not finding the next deal. Yeah for the J Scotts and Wiil's of this board this is true. But for 80% of this forum that's just not so.
Example: guy wanted 400 to take out all the old carpet in my recent house. I LOL'ed at him and had it out and in a dumpster in 2-3 hours.
Amen.
So this past Fall, another one of my rooftop AC/Heater units bit the dust. (4plex).
The bids to replace the unit were all between $4,500 - $5,500. My handyman (unlicensed, but over 20 years experience with low income housing non-profits) told me that his buddy (full time HVAC tech) could do it as a side-job but it was impossible to buy the unit in CA without being a licensed HVAC contractor.
So I went up on the roof, wrote down the model number and manufacturer of the last unit that I had replaced and Google'd it. I found a supplier in Chicago that had the unit for $1,600 and would ship the unit to CA for FREE and charge no tax.
Three days later I had the unit at my house, on my trailer. I scheduled a crane ($300) to remove the old unit from the roof and place the new unit up on the roof. I paid my handyman (and his HVAC Tech buddy) $400 to install the unit and reseal the flat, asphalt roof around the unit.
So for about $2,300 (and my T I M E ), I got the job done, and the job done right. And I saved $2000-$3000 in the process. AND I learned that I can buy all of the HVAC equipment that I need, with no HVAC contractor license, over the internet, with no shipping fees and no sales tax, delivered right to my door.
While I didn't actually "do the work" myself, I was however there, for the two or three hours that it took to install the unit and reseal the roof. Some would argue that it would have been more cost effective to have just hired the job done for $4,500. I'm just not wired that way.
To each his own.
DL
Obviously it's tough to get anything done even if you know what you're doing on your own. Living in the mayhem only compounds the problem. However I have to disagree with those who say you should be focusing on other things. It sounds like you are in "bootstrap mode". Until you have the ability to maximize your time on other areas of the business you are getting both an education in construction/ construction and project management. You won't need to do it forever and you shouldn't or something is wrong but it's good to learn and do when you are first starting out.
If I knew nothing I wouldn't attempt to do any of it on my own. If you know enough to be dangerous youtube whatever you are going to do. If you are demoing something take it apart carefully. Don't do the wrecking ball style that you see on TV. It's a good way mess up something you might want to keep, bust a pipe or hurt yourself. You are your biggest investment and the greatest ability is availability. Also square and plumb are your friend.
Originally posted by @DL Martin:
The bids to replace the unit were all between $4,500 - $5,500. My handyman (unlicensed, but over 20 years experience with low income housing non-profits) told me that his buddy (full time HVAC tech) could do it as a side-job but it was impossible to buy the unit in CA without being a licensed HVAC contractor.
So I went up on the roof, wrote down the model number and manufacturer of the last unit that I had replaced and Google'd it. I found a supplier in Chicago that had the unit for $1,600 and would ship the unit to CA for FREE and charge no tax.
Three days later I had the unit at my house, on my trailer. I scheduled a crane ($300) to remove the old unit from the roof and place the new unit up on the roof. I paid my handyman (and his HVAC Tech buddy) $400 to install the unit and reseal the flat, asphalt roof around the unit.
So for about $2,300 (and my T I M E ), I got the job done, and the job done right. And I saved $2000-$3000 in the process. AND I learned that I can buy all of the HVAC equipment that I need, with no HVAC contractor license, over the internet, with no shipping fees and no sales tax, delivered right to my door.
That's not doing the work yourself. That's sourcing the materials yourself and scheduling the work yourself. These are things someone new should *always* do themselves, as it helps you learn the players, the process and the scheduling behind doing this sort of work in the future.
These are all necessary lessons that will help you tremendously in your future investing endeavors. That said, had you actually gotten on the roof to do the install yourself, that would have been a waste of time (in my opinion), as you wouldn't have learned anything that would benefit you in the future (again, in my opinion).
Btw, now that you know how to source HVAC equipment and labor, there's no reason why you can't hire out that work (to a project manager or your handyman, for example) for $15-25/hour in the future. You might spend an extra $100-200, but if you use that time to be doing higher-value stuff (sourcing deals, finding funding) you'll find that the extra $100-200 is well worth the many hours you'll save.
Originally posted by @Chris Farrugia:
I have the opportunity to purchase some great property that will need new flooring, a new tub, new cabinets, paint, etc.
My question you experts is how much of this do you generally do on your own and how much do you sub out? I'd love to move into the property while I flip it and do a lot of stuff on my own but I'd be learning so much of it as I go. How did you learn how to do things like install a new tub or new bathroom vanities?
We outsource everything 100%. The most we've ever done is act as our own GC; i.e. contract direct to licensed tradesmen; hired handymen for work that does not require license & used the big box stores for flooring.
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Real Estate Agent Illinois (#475. 112189)
- 3126817487
- https://www.chicagodiscountproperties.com/
@DL Martin Who's the HVAC supplier in Chicago?
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Real Estate Agent Illinois (#475. 112189)
- 3126817487
- https://www.chicagodiscountproperties.com/
Originally posted by @Crystal Smith:
@DL Martin Who's the HVAC supplier in Chicago?
Moderators, I don't know if I'm allowed to post this so delete if a violation of TOS.
Alpine Home Air
https://www.alpinehomeair.com/aboutus.cfm
I have a crew of 10 year pro's that save me a ton of money in a very competitive market. Any time I try to farm something out when I get really busy, I end up with problems and stolen tools :(
Originally posted by @J Scott:That's not doing the work yourself. That's sourcing the materials yourself and scheduling the work yourself. These are things someone new should *always* do themselves, as it helps you learn the players, the process and the scheduling behind doing this sort of work in the future.
These are all necessary lessons that will help you tremendously in your future investing endeavors. That said, had you actually gotten on the roof to do the install yourself, that would have been a waste of time (in my opinion), as you wouldn't have learned anything that would benefit you in the future (again, in my opinion).
Btw, now that you know how to source HVAC equipment and labor, there's no reason why you can't hire out that work (to a project manager or your handyman, for example) for $15-25/hour in the future. You might spend an extra $100-200, but if you use that time to be doing higher-value stuff (sourcing deals, finding funding) you'll find that the extra $100-200 is well worth the many hours you'll save.
@J Scott , you have way more faith in humans than I do. : )
1. I've been using my handyman's buddy for HVAC repairs for several years (The buddy is Spanish Speaking and my Spanish is limited). AND I make a special effort to pay the handyman for EVERYTHING that he does for me, even when he thinks that it is unnecessary. (Restaurant gift cards work well sometimes if people refuse to bill you for something that they have done for you.) After ten years, I love the guy. And, I believe that loyalty is a two way street.
2. In California, I would never trust a $15-$25/hour guy to source material and schedule peripheral tasks outside his area of familiarity/circle of acquaintances. When I get to Ohio, maybe I will be pleasantly surprised with the talents/abilities of a $15-$25/hour guy. But here in CA, no way.
3. I did get up on the roof. I learned a lot. Specifically, that I don't need a genius to do "parts replacement" type jobs like this. A heating/cooling guy with three years experience is very likely just as good as a heating/cooling guy with twenty three years of experience, when it comes to simple "replace existing component" type jobs. Troubleshooting and new construction are different animals, and you probably need to pay the experienced guy for that.
4. My time is simply not that valuable. If I wasn't working on RE projects, then I would be goofing off playing Madden or grinding undercoating off the bottom of a 40 year old Porsche 911. Ugh. That's what I did for 4 hours yesterday.
5. I'm 50 years old. My best friend (best man at my wedding) owned 25 (or so) Goodyear tire stores here in SoCal and Las Vegas. He was, per one of the trade magazines, the 35th largest independent tire dealers in the United States. He grossed 50 to 55 million in revenue every year, after starting with one single store. He slept 4 hours per night during the entire time that I knew him. He had five girlfriends at any one time. He owned 4 homes. During the 15 years that I knew him, he bought and wore out MANY brand new Ferraris, (including 550's (2), 575's (2), a 360 spyder and a 430 spyder, along with two Lambos.) He used Bentley GT's as commuter cars, using them to commute between Socal and Las Vegas. And on and on and on..
He died in his sleep two years ago at the age of 56. Didn't use drugs, never drank alcohol. No heart attack, no stroke. Coroner said that his heart simply wore out. We (my family and I) were heartbroken. Still are.
Through my buddy, I have seen what it takes to "have it all." I'm not interested in that lifestyle.
DL
Originally posted by @DL Martin:
5. I'm 50 years old. My best friend (best man at my wedding) owned 25 (or so) Goodyear tire stores here in SoCal and Las Vegas. He was, per one of the trade magazines, the 35th largest independent tire dealers in the United States. He grossed 50 to 55 million in revenue every year, after starting with one single store. He slept 4 hours per night during the entire time that I knew him. He had five girlfriends at any one time. He owned 4 homes. During the 15 years that I knew him, he bought and wore out MANY brand new Ferraris, (including 550's (2), 575's (2), a 360 spyder and a 430 spyder, along with two Lambos.) He used Bentley GT's as commuter cars, using them to commute between Socal and Las Vegas. And on and on and on..
He died in his sleep two years ago at the age of 56. Didn't use drugs, never drank alcohol. No heart attack, no stroke. Coroner said that his heart simply wore out. We (my family and I) were heartbroken. Still are.
Through my buddy, I have seen what it takes to "have it all." I'm not interested in that lifestyle.
It sounds like you're arguing more for my viewpoint than you are for your own!
My "having it all" is all about spending time with my family. And I DO want to have it all.
I work on my real estate business fewer than 15 hours per week these days. When I'm working on real estate, I'm doing only the most important things (finding deals, raising money, networking and some mentoring). I'd rather be spending all the other time with my wife and kids, doing fun stuff, starting other businesses that I enjoy, teaching, etc., instead of doing contractor work or even managing contractors.
If I were spending time managing contractors, procuring materials, handling rehabs, etc., I could easily fill up 50-70 hours/week. That's not the lifestyle I choose at this point in my life. Which is why I hire as much of the work out as I possibly can. That allows me to scale my business without scaling my time. In other words, optimize my income AND my work/life balance.
It sounds like you're in the same boat -- you don't want to stress over the job, you'd rather be playing video games and relaxing, etc. I can empathize with that, and my advice throughout this thread is geared towards providing people the ability to do those sorts of things (or whatever it is that's important to them).
Given that, I'm not sure why you think my advice isn't good? :-)
I did about 50/50 but I watched every bit of what any subs did. I did this to learn. Knowing what is involved and how things work and what they cost is all helpful in negotiations with future subs and gives you an advantage when walking future deals. When you know what it takes to take out a wall or reroute plumbing before you make that offer you have the advantage. As you get busy sub more out by then you will know what you are paying for and it will be hard to rip you off. Just my .02.
#3 Contractors Contributor
- Contractor
- Los Angeles, CA
100% in-house employees for me, but Im a contractor, not sure if that counts. LOL. I sub-out asphalt paving though.
I do as much as I can with enjoyment included. I will say, it also depends on the volume of deals you are engaged in. My personal opinion is, if you don't have an understanding of basic construction you are setting yourself up for being taken advantage of. Now when it comes to my actual daily business (commercial development) I hire a GC for the whole project, but when it comes to the few rentals I purchase and rehab, I contract out the major components but do the carpentry and finishes myself. My business partner always throws the "my times am better spent finding deals" which I find is often the answer one gets from those who will spend 30 minutes locating the board stretcher.....lol
I hate doing anything related to work. To me, rehab is work and I hate that part of it. My teenage son likes to do it, I make sure the contractors give him something to do, so he can learn.
As the investor, my value is in finding properties not in swinging a hammer. Even when I try to install a light bulb, I always end up breaking something, so I stay clear of anything that looks like handiwork. If your time is worth $100 per hour, doing a $20 an hour job is like throwing money in the pit. Some people think they will save by trying to do it themselves. I have news for you, unless you are a professional you should not even contemplate doing anything you have no clue about. I once read about a billionaire who tried to inspect his roof at night, he fell and killed himself. He could have hired a professional at $20 an hour to do the same job. So be careful what you spend your time on.
I think it depends entirely on you. I personally enjoy the construction portion of it and hate most of the other stuff. I don't mind looking for houses and running comps but it's definitely not my cup of tea(my wife would disagree as its what I'm constantly doing). J Scott has told you and recommends in his books to hire out everything but tells you to get your RE License(no disrespect J, I have enjoyed and learned from your books and blog). I can't stand that portion of it. I would rather have my agent pull comps, scout properties/neighborhoods(I'll obviously still look over them to make certain I agree), and have her do showings, open houses, and someone to stage properties. She will also meet the appraiser at the property for me to try and make certain it gets appraised for what I need it to whether I'm purchasing or selling. I am also willing to pay an accountant because I also hate that portion of it. If doing the manual labor is something you enjoy, then do it.
I always tell people that you have to have something. I strongly believe that it is extremely difficult to pay someone to do every aspect of real estate and leave something left over for you. If you use an agent/wholesaler to buy, a GC to renovate, an agent to sell, an accountant to track expenses, and a lender to fund then all you have done is connect this small group of people and your portion will be comparable. If each person involved in this transaction is going to make on average, let's say $8,000, then the more of those people that you are, the more of those $8,000 shares you get.
Originally posted by @Cody Kauzlarich:
J Scott has told you and recommends in his books to hire out everything but tells you to get your RE License(no disrespect J, I have enjoyed and learned from your books and blog). I can't stand that portion of it. I would rather have my agent pull comps, scout properties/neighborhoods(I'll obviously still look over them to make certain I agree), and have her do showings, open houses, and someone to stage properties. She will also meet the appraiser at the property for me to try and make certain it gets appraised for what I need it to whether I'm purchasing or selling. I am also willing to pay an accountant because I also hate that portion of it. If doing the manual labor is something you enjoy, then do it.
Keep in mind that when I suggest people get their real estate license, the *last* reason I ever give is to make extra money on the commissions. In fact, I have no issue with people getting their RE license and then hiring a real estate agent to handle the purchase and sale.
The main reason I suggest getting an RE license is so you can control your deals. While you may have a great RE agent working for you, nobody cares about your deal more than you do, so having the ability to talk directly to the buyer's agent, directly to the lender, directly to the buyer, directly to the inspector, directly to the appraiser, etc. is absolutely mandatory (in my opinion) to ensure that your success rate approaches 100%.
I can't tell you how many times I've seen agents screw up deals because they didn't ask the hard questions of the lender, didn't properly work with the appraiser, didn't show up for the inspection, etc. That doesn't happen with my deals, because I do that stuff myself.
Now, you might say, "But you said don't do anything yourself!!!" That's not true. I said to do the stuff yourself that's generating lots of money ($500/hour for me). And making sure that my deals don't fall through is worth much more than $500/hour -- so I'm okay doing it myself.
Just my $.02... I completely understand that not everyone agrees...