To Contract or Not to Contract

[Joshua Randall]

I am about to begin the process of acquiring investment properties with the intention of using the BRRRR method. Finding financing and deals is not the area where I'm struggling getting started the most, but it's whether I need to seek out a professional contractor to hire and do the rehab or take the time and effort myself and do the cosmetic work/repairs the home needs. Which route is better and what have you found that works best?

[Nicholas L.]

@Joshua Randall

the bottom line is that, for a BRRRR to work, you need a major boost in the ARV.  so that typically means you're either (1) starting with a pretty distressed property, or (2) finding something where you can add bedrooms and bathrooms.

a cosmetic rehab generally doesn't cut it whether you do the repairs yourself or hire them out.

[Stuart Udis]

Self performing can reduce your costs which may help your initiative but you have to weigh the time that goes into the rehab against lost production at your W2 job. Also important to look into the licensing and insurance requirements to pull permits. This may be a barrier depending on the municpality and even if not, once you weigh the time and costs associated with the added overhead you have to determine whether self performing is worth it. From my experience those who succesfully self perform have enough volume where the construction management becomes their full time employment. Also, even if you pay a premium by using a properly vetted 3rd party, its worth it if you are getting a better product.

[Jake Baker]

@Joshua Randall

If this is your first BRRRR, I would recommend getting bids from multiple contractors. This will at least give an idea of what you need to do as well.

[Evan Polaski]

@Joshua Randall, I would say there is an underlying knowledge base needed to properly assess and manage contractors.  Even with multiple bids, do you even know what is needed to be done?  Do you have a sense of the actual scope that is being bid?  

At the end of the day, it is most people's goal to be an investor, not a contractor.  In order to be an investor, you should not be doing the work.  BUT, if you are not somewhat familiar in construction, I am a big proponent of getting your hands dirty, at least a bit.  It will give you a better understanding of what is being bid and therefore know if you are getting a good price.  If you get decent enough at it, it can help you keep a project going even if you need to fire one contractor and wait for another to start.  And, like in my case, there are some projects that I generally enjoy doing on a weekend and can save my jobs money.