1) Hire a GC let him figure it out and just make sure he stays on track?
2) Hire the individual contractors yourself and act as the GC?
3) Go all HGTV and do it all yourself?
4) Fill in the blank.
The reason why I ask is some of the bids we have received. It seems like paint and flooring can run well into the thousands in a hurry. I've seen some people post flip details and I am amazed at how little it cost them. I do obviously understand that a big part of it is avoiding sweat equity.
Any of the above can work. You can do it cheaper if you act as GC but you obviously need to know more and be able to find good subs. If you are part of a REIA, you can talk to other investors and get some recommendations. Same for a GC. You'll want to find one who works with investors pursuing the same strategy as you (rehab may be different for flip vs buy/hold).
Doing it yourself can be cheapest but will take lots of time and increase your holding costs.
What do you have? Money, time, or skill? Use what you've got.
Ryan D. You can't necessarily go by the numbers posted on BP for some rehabs. It really depends on WHO posted them. I can guarantee you that you and J Scott or Will Barnard could complete the exact same flip - same labor, same finishes, same product, same everything - and they can get that done a heck of a lot cheaper than you can. They leverage economies of scale and relationships built over time that you have no access to at this point.
There are arguments to be made on both sides, particularly in the first couple of flips and if you have no construction background. It can help you understand the process and the work better. In the end, it's important to properly value your time, and it's generally not effective for you to be doing hands on rehab work.
My advice is to find a contractor experienced with rehabs. Check with your local REIA. Negotiate. Don't just take the price that's given and don't just go with the lowest price. Find a contractor you want to work with and then work to get a deal done. Maybe you can negotiate a lower price for labor, if you promise to use him for all your rehabs.
Another thing...get a detailed breakdown of the costs involved. You may find there are significant labor hours associated with things that don't require any special skills, like demo. That's a way to save some money with DIY, where it won't affect your finished product.
There's no right or wrong answers...just what's right or wrong for YOU.
The three big questions to ask yourself:
1. How much time do you have?
2. How much room in the budget do you have?
3. How much experience do you have?
Answer those three questions, and it should lead you down the path that's best for you...
Btw, if you're doing a lot of deals, there's another option (one that I personally like) for managing your deals: Hire a project manager. This is someone who isn't technically a GC, but who can deal with the day-to-day management of the project, can hire/fire contractors, can manage schedule and budget, can deal with materials, etc. Typically, they'd get paid either a salary or a combination of salary/commission. I prefer the small salary plus a piece of the profits.
Just another option if/when the time comes...
I personally do #2.
another option that seems a little risky at first but can cut a budget quite a bit is to hire a GC at a reasonable hourly rate vs a bid.
I typically pay $17/hr for good educated help here in the Midwest and they pay their crew $10-$12/hr on average. Walk through with the GC and agree to a list of everything needed done. Try to get an "approximate time frame for completion at X hours per day/per week so you can add a rough total in your head of where you will be at. Add a 20% or so buffer to cover how long the work will realistically take vs. What the GC originally says and I almost guarantee you will be far less out of pocket than most any bid.
Like I said ; a little unorthodox but has worked for me with a solid crew at a solid price.
I hope I added the link right. It goes into depth on contractors and the difference with GC' ing it yourself. As @Dawn Anastasi states that a lot of the time, the budget is what you need to work with mainly. It is far too easy to go overboard and do more than what is needed. Also depends a lot if it is going to be for resale or a rental. I wouldn't cheap out on a rental either, just that you wouldn't want to put a Jacuzzi tub in a mid class rental. but if you have a high end rental or sale, you might benefit with the upgrade. Also if you factor in your time and if you want or have the time to spend at the property. Even as a GC you get calls, questions, trips to the property to check on work, sometimes drop things off, or see any issues the contractor might run into. homewise.com gives you some ideas for costs even for being a GC.
I personally do the process of acting as my own GC and hire subs, plus, I also have a project manager as J suggested as an alternative. For me, I do very large and complex renovations on high end homes and I do multiple projects at once so it is necessary for me to have a project manager while also performing the GC duties.
There are many factors that go into each process and each individual situation will determine which you choose. So often, I see beginners make the mistake of thinking they will DIY and save money when the reality is, they waste more time which increases costs and they do not donate same quality a professional can do. Add in the fact that the longer time also adds opportunity loss.
I have done some recent financial comparisons between hiring a GC and doing a project as the GC with a hired project manager and the later actually comes out better almost every time. This assumes the project manager is experienced and is of quality.
Join the Largest Real Estate Investing Community
Basic membership is free, forever.