New to House Hacking - Do work myself or Hire out???

Question

Question: When House Hacking, does one do the work themselves or hire out?

Account Closed · Answer

Even when you have a high-paying job you are still far better off to lose money by taking off from your high-paying job and do a lot of hands-on physical work and management. I've been in the construction business since 1965 and I've had as many as 60 workers. I still have 18 plumbers and construction workers today.  Even at 71-years old, I still work on every real estate project from beginning to end because in my past 55+ years in the construction business I never found a person who could manage a project, get it done fast, get it done for a reasonably low price and never found someone who had the ability to make the decisions to think like I think to make changes as projects move along e.g. should I change the heating system or keep it, should I paint the ceilings or are they okay, should I change to new double pane glass windows, etc.

While you think you could meet with your crew to iron everything out you can do a so-so job, but later you will find that many critical construction issues were ignored e.g. "I didn't tell you because I didn't think changing the bathroom sub floor was necessary and now the floor tiles are crooked and popping off an unstable floor.

When you actually do physical work you get a better sense for what is necessary, how to do a better job and you get to know how much workers should be paid. Otherwise, when using contractors I always pay double to triple to get a job done and the work is always inferior to what I do. There are more contractors who talk much better than the work they perform and you pay them big bucks for inferior work.

Faith Kirk · Answer

Thank you so much. Great information to consider.

Joe Splitrock · Answer

@Faith Kirk as with everything in real estate, the answer is "it depends". The advantage of doing it yourself is reduced expenses. Sweat equity is a great way to maximize return, but don't forget that your time has an expense. In some cases your time is better spent financially other ways. For example if you billed $100 in your profession, it is not financially a good use of your time to clean your property, when you can hire someone for $25 an hour to do it. The other factor is how you want to spend your time. Maybe you have children or a hobby you are passionate about. In that case, hiring a job done frees up your time to pursue what is more important to you.

I would keep in mind additional things:

1. In a house hack, the expense needs to be prorated between personal and business. For example, if you are hiring someone to remodel the kitchen in a three bedroom house with two tenants and you living there, only a third of that expense is deductible.

2. Understand tax treatment. Evaluate if the expense is a capital improvement or repair/cleaning type expense. Capitalized expenses need to be recaptured when you sell. That means a deduction today, could become a tax liability in the future.

3. Consider the value of work being done. People have a tendency to hire out complex work and do simple tasks themselves. I think this is a mistake, because you are selling your time short. Complex tasks like pluming, flooring or electrical cost much more per hour than simple tasks like cleaning, lawn mowing or demolition. You will save more money doing complex work and save more time hiring the simple tasks out to other people.

Katie Phillips · Answer

@Faith Kirk What kind of work are you referring to? Property management can easily be done yourself because you are already living in the house, and it will save you a good chunk of money. Home renovation projects should be hired out if you are not a DIY person :)

Antonio Cucciniello · Answer

@Faith Kirk That depends on a few things (in my opinion).

Are you good at doing the work yourself?

If you are then you might want to do some stuff yourself.

If you aren't I would maybe do some smaller things (like paint) that are easier to learn and do to save some money, if you have the time for that!

Matthew Brill · Answer

The first question is for you: do you want to do it yourself? If it's a skill you want to use or want to learn then go for it.

Beyond that, it becomes a financial/time decision. Is the amount of money you would save worth the time you would spend? I have done a couple house hacks and I hire everything out. I look at the cost of my time of my tasks that make me money vs how much time I would spend on the maintenance or management and determine which pays me a better hourly rate. I have a high paying job so I am better picking up extra work to make money compared to work on my house to save money.

Faith Kirk · Answer

Thank you

Landon Bleau · Answer

Faith, if you know you can do it and do it right, I'd suggest doing it yourself.  It'll save you some money and give you more experience fixing it up.  If you don't know how to do it and it's a bigger task, I'd hire it out as it could end up costing more if it's not done correctly.

New to House Hacking - Do work myself or Hire out???

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