Involved In Real Estate · Naples, FL · Member since 2014 · 68 posts · 34 votes
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?
One of the upsides of doing your own work if you have the knowledge and you are the homeowner you generally don't need licenses to get permits and do work on your own house. Plumbing, electrical,roofing etc.
That being said, you obviously do need to have a great deal of knowledge in those areas.
I myself have an electrical contractors license, am certified in residential and commercial wiring and have a degree in Heating and Air conditioning and twenty years experience doing all of the above.
If you do work in one particular town the municipalities building department and inspectors will also get to now you and see what quality of work you do
...I just adore working on this place. I am by nature, extremely nurturing, and loving this abused and long neglected old lady back to her former humble but perfect beauty is gratifying beyond words.
Part of why I like real estate is because I like working on houses, but I can only live in one at a time. Buying and holding rentals gives me an outlet for doing the fun stuff :-)
Overall, I'd say it depends on the extent of the job. Am I rehabbing to hold, or to quickly flip? I have houses to rent, so I try to buy ones that don't need a total overhaul. I do some of the work myself, because I enjoy it and because I know I'll do a better job than many (interior wall painting -- I'm ace at cutting in!). Stuff that's bigger -- plumbing repair, electrical, HVAC -- gotta have professionals & permits. So far I haven't borrowed to rehab, so I haven't had to have a licensed contractor in charge.
Hiring subs makes sense when you've got a pipeline of properties to keep your contractors busy. I do one or two houses at a time with long gaps in between, and as a result my job typically gets back-burnered by contractors who don't see real opportunity for repeat business. Contractors have consistently been my biggest bottleneck and the source of 95% of job frustration. I have found that if you don't work alongside them, they just don't work effectively. They'll show up the first day, get half the job done, and won't show up for a week (probably doing retail jobs for homeowners.) Once they decide they're done, you'll inevitably find some glaring omissions from the SOW or a filthy mess they left behind. They'll fix it, but add another week to your time line because "I've got another job to finish up." It's much easier to show up there every day and yell at them when they pack up at night without having cleaned the paint splatter off the sink.
I should mention that this is almost always the situation even when the job is 100% pay-on-conpletion, which is what I negotiate for.
The answer is truly unique to each investor, their goals, strategy, market, skills and scale of business.
Your budget and expendable time will tell you how much work you will have to perform youself.
Also, don't let anyone tell you a "succesful investor" is one who does no work themselves. A successful investor is one who meets his/her investment goals, regardless of the strategy. Define your success; don't let anyone else define it for you.
I outsource 100% of the actual work but will stay pretty involved in the project management / scheduling side, especially for new construction. Leaving a sub in charge of schedules and project planning will almost always cause unnecessary delays and a lower velocity on your capital.
100% outsourced. I wish I could outsource more, but it just won't go past 100%... :-)
J, my high school football coaches always talked about giving 110%. I always questioned the feasibility of such, but they were always adimant about it. Maybe they knew something we don't. I was an extrmely good math student but I could never work it out. Maybe it comes with age.
I think it all comes down to assessing your strengths & weaknesses--and being honest about them. Me? I can hang a picture w/ a hammer & nail, & that's about it, lol--so yeah, I'm outsourcing all of it. Someone who's a contractor by trade or otherwise knows what they're doing will of course probably do a lot better with some or all the work themselves.
At the end of the day, you either spend the time or the money. If you're competent enough to do it quickly and save money, great. But if not, you might as well spend the money to get it done quicker--or you'll be wasting tons in carrying costs anyway while you stumble around trying to figure things out!
My post reflects what I do today and have done for the last several years. That said, my very first and second rehab, I did quite a but of the work for two reasons, my time was not as useful elsewhere at that time and most importantly,doing a lot of the work taught me not only how the process goes and in what order, but how long it should take and how much. These lessons were essential to my success moving forward. Powered with this info, I could properly negotiate with contractors and subs for the right price and right timeline.
The other argument made to doing it yourself because you enjoy it - perfectly reasonable and more power to you. Speaking from running a business, the better choice is subbing it out but you have to make a choice between this being a business or a hobby.
The answer to this question varies so widely among us investors because it can depend on a number of different factors. For instance: your ability, your experience level, your desire to do the work, whether or not you can afford to pay someone else, the amount of free time you have, whether doing the work yourself would be the highest and best use of your time, and the list goes on.
I choose to do some work myself because I enjoy doing it, I have the ability to do it, and I honestly think I do a better job than most of the people that I could pay to do it.
Other work I do not enjoy doing, or I don't have the ability to do, or I just don't think it would be the best use of my time - so I hire that work out.
With all that being said, I do think there is a LOT of value in doing as much of the work yourself as you can when you first start out. It is a great way to learn the business, and it can help you down the road to speak intelligently to contractors about the work and also to help you recognize when a job has been done properly or not.
100% outsource based on my skill set and where my time is most valuable. If you came into this game from the contracting side, then your perspective is much different.
...I just adore working on this place. I am by nature, extremely nurturing, and loving this abused and long neglected old lady back to her former humble but perfect beauty is gratifying beyond words.
Part of why I like real estate is because I like working on houses, but I can only live in one at a time. Buying and holding rentals gives me an outlet for doing the fun stuff :-)
Overall, I'd say it depends on the extent of the job. Am I rehabbing to hold, or to quickly flip? I have houses to rent, so I try to buy ones that don't need a total overhaul. I do some of the work myself, because I enjoy it and because I know I'll do a better job than many (interior wall painting -- I'm ace at cutting in!). Stuff that's bigger -- plumbing repair, electrical, HVAC -- gotta have professionals & permits. So far I haven't borrowed to rehab, so I haven't had to have a licensed contractor in charge.
Anna, if you are pulling permits in Georgia (and definitely in Atlanta), generally speaking, you must utilize a licensed contractor. The owner cannot pull a permit unless he/she lives in the property and even then the total rehab must be less than $2,500. A building, electrical, or plumbing permit can only be pulled by licensed contractors. I fully realize many folks don't follow the law here, but serious consequences will occur if caught.
I only do the things that I really enjoy doing and will save me some money. I like to do my own hardwood floors, hang cabinets, and some light plumbing. The smartest thing I did was find a good and reasonable painter. It sounds like easy work, but it is a real pain :)
Don't even worry about trying to learn how to fix or install anything. That's not your job. Just focus on finding good deals. Let the experts do what they do best. Your job is to supervise them. If you try to cut corners by doing it yourself, it will cost you a lot in the end. Its always a good idea to move into the house while you are fixing it up. I did that when I first bought my first house, but I never even finished doing the painting because I found out I was not caught up to be a painter let alone a plumber. If you enjoy buying houses, you won't have time to fix them.
@Chris Farrugia I've been learning to do some work myself as I'm relatively new to the business and have more time than money. What I've come to realize though is that it's good to do work myself to the extent that it doesn't slow down the completion time!!! If the project is plodding along as I DIY then I've gotta weigh what I'm saving against the additional carrying costs and lost time/income! So I'm trying to strategize so that I chose some DIY projects that I can handle in the timeframe, without slowing down the schedule or being in anyone's way.
As far as how to learn the DIY skills, Youtube is amazing! I also really like sites that give written instructions with pictures as I find them easier to follow. Personally I learned a lot because I was dating a carpenter during my first big project and got him to show me things, but that strategy is not necessarily easily transferable... :-p
As far as living in a rehab, I've done that too. It's wonderful if you like all the comforts of camping without the beauty of the great outdoors.
Very interesting to hear all of these points of views on this subject since it's something I'm always reflecting on. In my opinion, the only way you can set yourself up to make serious money in this business is to sub out 100% of the work due to one simple factor: time.
However, I choose to do 100% of the work myself and here is my reason why:
I think it has to do with your personality and what makes you happy. It took me a long time to realize that I like doing 100% of the work myself. It alleviates alot of frustrations. My phone's not stuck to my head calling subs, not frustrated with anyone that didn't do their job, it's just me and the radio in the background.
It feels good to fix something and then stand back and look at it. I also like the satisfaction of knowing that I am making more working on the flips as an investor rather than a carpenter in a dead end job which I did for years growing up.
I grew up in a construction family and was surrounded by friends who grew up in construction families. I had to learn every trade, it's the only way to get out of digging a ditch when you're the low guy on the totem pole. I also learned how brutal it is to work in the hot sun, severe cold and in areas where one slip could mean a broken neck. I worked my way through college swinging a hammer just so I wouldn't have to go back to a dead end construction job like so many of my friends and family.
Now fast forward many years and I have traded my cushy desk job to get back to my roots in construction and I do that through investing. I just couldn't stand sitting in front of a computer screen any longer. I am now thankful to have learned the trades and have the option of doing the work myself.
Very interesting to hear all of these points of views on this subject since it's something I'm always reflecting on. In my opinion, the only way you can set yourself up to make serious money in this business is to sub out 100% of the work due to one simple factor: time.
However, I choose to do 100% of the work myself and here is my reason why:
I think it has to do with your personality and what makes you happy. It took me a long time to realize that I like doing 100% of the work myself. It alleviates alot of frustrations. My phone's not stuck to my head calling subs, not frustrated with anyone that didn't do their job, it's just me and the radio in the background.
It feels good to fix something and then stand back and look at it. I also like the satisfaction of knowing that I am making more working on the flips as an investor rather than a carpenter in a dead end job which I did for years growing up.
I grew up in a construction family and was surrounded by friends who grew up in construction families. I had to learn every trade, it's the only way to get out of digging a ditch when you're the low guy on the totem pole. I also learned how brutal it is to work in the hot sun, severe cold and in areas where one slip could mean a broken neck. I worked my way through college swinging a hammer just so I wouldn't have to go back to a dead end construction job like so many of my friends and family.
Now fast forward many years and I have traded my cushy desk job to get back to my roots in construction and I do that through investing. I just couldn't stand sitting in front of a computer screen any longer. I am now thankful to have learned the trades and have the option of doing the work myself.
I could not have said it better myself. My nirvana (when time stands still) is when I'm working on a house and thinking through the jigsaw puzzle of how to put it back together. When I lay awake at night trying to release my stress from a banker/computer screen day job, I think about how I will tackle a renovation or repair and it puts me at ease. That's how I found my passion and one of these days I'll be able to do it full time.
100% outsourced. I wish I could outsource more, but it just won't go past 100%... :-)
J, my high school football coaches always talked about giving 110%. I always questioned the feasibility of such, but they were always adimant about it. Maybe they knew something we don't. I was an extrmely good math student but I could never work it out. Maybe it comes with age.
I think it's a "shoot for the stars and you'll hit the moon" concept .... !
My time is worth $1,000 per hour. My contractors charge anywhere from $25-50 per hour. So if I attempt to do the contracting work myself, I am guaranteed to lose money. So I contract out 100% of all the work. Sometimes I even contract out the inspection unless I have to go there and put out some fire. Once you know what your time is worth. The decision is a no brainer.
We do easily 90% with only some of our HVAC being subbed out, but we are GC's and have been in the industry for 20+ years.
One piece of advice I will give is, DONT live in your rehab as your planning to. It will slow everything down and make your life miserable while your at it.
I used to do all of my own work on my rentals when I was living in the area and SINGLE. I moved out of the area and was shocked at how much this work was costing me when paying retail. However, I have found that all construction work is negotiable. Now I don't pay retail and know how much things should cost me so I sub out more work than before so I can spend time with my wife and new baby. That time is priceless.
However, I still find that there are times when I can't find someone to do the job, don't get calls back, lazy workers not getting done on time, etc... This drives me crazy. I just completely renovated two bathrooms in one of my rentals over the holidays because it turned over and I couldn't get anyone to do the work. I was willing to pay someone to do it but it had to be done by Jan 5th. No calls back so I found myself tiling so I could get it rented out.
I am still small time with only one or two deals a year so if I can make more money doing some of the work I will, and I enjoy doing it and learning. It is very hard work though! If I was still single I would surely do more work myself.
My time is worth $1,000 per hour. My contractors charge anywhere from $25-50 per hour. So if I attempt to do the contracting work myself, I am guaranteed to lose money. So I contract out 100% of all the work. Sometimes I even contract out the inspection unless I have to go there and put out some fire. Once you know what your time is worth. The decision is a no brainer.
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.
You need to remember this is a huge forum with most of us just trying to grind it out and get going. In the future I see myself doing less and less. But some jobs I could never pay people to do it.
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.
I totally agree, even as a small timer I always weigh the pros and cons of doing it myself versus hiring it out. If I can do it and save money I will, especially if it is a small job. There are things that I hate to do or not good at and those I am willing to pay for; I also have a full time job. Maybe one day I will be able to justify hiring everything out but that will be when I am a full time REI and doing tons of deals. Or I'm just cheap like my wife says and I will always try to save money... time will tell
I sub out 100% to myself . I am a contractor . Now I would have to fire myself because we are slow on rehabbing my rentals . Its fill in work , priority level ...last . Paying jobs are first .