Are any serious investors self-performing their rehab&#x27;s?

Jassem A.

Investor · PA · Member since 2013 · 1k+ posts · 602 votes

Do as much work yourself as you're comfortable with and it will save you some money. I feel like it's much better exercise than a desk job and it's also more productive than going to the gym.

Ritch Bonisa

Specialist · Indianapolis, IN · Member since 2016 · 841 posts · 480 votes

I oversee a lot of projects. 90% of the time I always recommend a GC and I recommend GC handle the materials - it's about fewer issues, less confusion, quick turn around, etc. But if you like it and if it is helping you understand what you need out of the investing side - I say do it. Do it until you have to shift focus to acquiring and unloading. Then, get a good GC and slowly transition until you gain trust with a few good GCs.

I do think that when you work on your own you become more tied to it - there can be an emotional sort of tug. Normally, I tell people - this is a way to generate profit - be fair and honest with your deal, but don't fall in love with the property and make decisions that decrease profitability.

We're only here for a while, so enjoy it!

Account Closed

Investor · Denver, CO · Member since 2016 · 736 posts · 582 votes

I've bought and rehabbed three homes since last September and rented them out. All in various states of needing repair. I'm not sure if I'm "serious" about it though :)

The next 6 months to a year will be about flipping some developed land - working on two parcels this year and will have about 5 parcels to work on next summer...with one or two more homes purchased along the way. Not sure about the rehab.

...this year, I need to concentrate on my personal residence (especially exterior paint) so I'll be busy on that instead.

J ScottPro Member

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Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes

Podcast Guest on Show The Truth About Real Estate Investing in 2024 (What Investors NEED to Know)

Remember, if you're saving $25/hour by doing the carpentry (or whatever) yourself, you're essentially earning $25/hour. The question you need to ask yourself, "Is earning $25/hour the best use of this time?"

When it comes to real estate investing, finding deals and finding money are the things that really generate income. If you find a deal that will generate $20K in profit, and it takes you 10 hours to find that deal, you're essentially earning $2000/hour for that effort. Likewise with raising money.

So, the question is, would you rather be earning $25/hour by not having to hire a carpenter, or would you rather be spending that time earning $2000/hour by finding another deal and raising money for it?

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Frank Grigus Jr

Coal City, IL · Member since 2017 · 34 posts · 14 votes

I am a carpenter by trade and throughly enjoy it. I haven't acquired an investment property yet as my wife and I are still self educating and she's also finishing her classes to obtain her agent license. I will so my buissness plan is similar to yours, I do plan on doing whatever rehab is reasonable for me to do. Reason being I do enjoy it, I want to maximize my profits as much as possible on my first few deals to add to my capital, and I feel like I'd be throwing away my talents if I don't do the rehab. Once I get a few deals under my belt and the business grows I will then scale back and slowly turn rehab over to a trusted GC.

JD MartinBusiness Member

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Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 17k+ votes

Podcast Guest on Show #243

Also keep in mind that most people (not all) that choose to do much/most/all of the rehab, at least at the beginning, are substituting sweat equity for liquid equity. In other words, if you don't have any money to start with, it's a way of letting your back get you further into the game. Nothing wrong with it - lots of CEOs started running coffee - but know when you've reached a point that you either don't have to do it any more, or are squandering your time on jobs that are unprofitable compared to an alternative use of your time. Using @J Scott's example above, if you're going to spend those hours finding something really profitable, you should probably do that. If you're going to spend them watching the Walking Dead and eating nachos, well only you can decide if the leisure time is worth more than what you were getting paid to do the labor.

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Account Closed

Investor · Denver, CO · Member since 2016 · 736 posts · 582 votes

Originally posted by @JD Martin:

Also keep in mind that most people (not all) that choose to do much/most/all of the rehab, at least at the beginning, are substituting sweat equity for liquid equity. In other words, if you don't have any money to start with, it's a way of letting your back get you further into the game. Nothing wrong with it - lots of CEOs started running coffee - but know when you've reached a point that you either don't have to do it any more, or are squandering your time on jobs that are unprofitable compared to an alternative use of your time. Using @J Scott's example above, if you're going to spend those hours finding something really profitable, you should probably do that. If you're going to spend them watching the Walking Dead and eating nachos, well only you can decide if the leisure time is worth more than what you were getting paid to do the labor.

This is 100% true and why I've done things myself. I said this in another thread a few months back and I'll say it again - sometimes I have time, sometimes I have money. When I have both time and money, I go on vacation (that doesn't happen very often).

Ian Tudor

Specialist · Charlotte, NC · Member since 2013 · 260 posts · 245 votes

@Preston Dahl - It sounds like you enjoy doing the work. If that is true, then there is no reason to refrain from doing what you enjoy.

What are your goals with real estate? Do you want to build a large real estate fund worth millions of dollars? Or are you looking for income replacement of your job? Both require different time demands.

If you personally want $10Ms of real estate then your time is better spent sourcing deals. But again, it is all what you want out of this.

Just be sure to value your time appropriately.

Sarah D.

San Diego, CA · Member since 2015 · 273 posts · 226 votes

@Preston Dahl My husband and I just finished rehabbing our first 4 unit and did most of the work ourselves. We did it mostly out of financial necessity, but there were other benefits as well. I'd like to think I'm a serious investor, but only time will tell. I know I could spend my time sourcing deals and money, but as I'm working on the first project and have no other experience/cash to invest I doubt I could have done better with my time than painting, flooring, demo, kitchen install, etc. Plus, the knowledge and comfort with rehab I have will be invaluable when hiring things out in the future.

Like you, I don't enjoy my white collar job and find few things as satisfying as working with my hands; personally I love flooring and landscaping. Nothing like laying out 4 tons of landscaping rocks to make you feel accomplished! So I understand where you are coming from as far as enjoying the work as well.

Have you ever worked at a start up and seen a CEO take out the trash or a VP of research stock lab supplies? They don't plan to do it forever, but they do it to save precious cash while the business takes off. That's how I view our decision to utilize sweat equity in the first properties. In a few years when we have more doors, more experience, and much more $ it will be silly to do $50/hr work (it's expensive to hire work in San Diego!).

One thing to help make your decision will be how long it will take you to do the work vs hiring it out. How much will you save vs lost rent? Also, don't forget that hiring out work doesn't mean you can set it and forget it. You really need to be on top of contractors.

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Account Closed

Johnson City, TN · Member since 2014 · 586 posts · 705 votes

My biggest problem is that I know how to do just about anything involving a house and do a pretty good job at most of it. I know how long it takes to do a job and what is involved in doing it. Over the years I have learned to hire more and more things out because I either don't want to wear my body out doing it or I just don't want to do it. There are too many contractors out there that are trying to get rich off of one job. When a guy pulls up in a new 60k diesel and starts yapping about insurance and overhead and licensing and certifications I know I am about to get it laid to me. If I can fix a plumbing issue for $20 dollars and a half a day of time, I won't pay a plumber $300+ to do it. I don't do things like drywall first because I am not good at it and second I hate it. With all of that said, you have to remember that time is money. Do the jobs you can save the most money on and hire out the basic labor jobs to start with.

Andrew Holmes

Rental Property Investor · Chicago, IL · Member since 2015 · 275 posts · 271 votes

@Preston Dahl

I think we are all a product of our experiences. We all will have an opinion based on our our experiences.

If you love doing rehab then go ahead and do the rehabs yourself. I think over time it become a business decision. No harm in doing the work yourself but it you want to grow you will have to hire other people and manage them. Then eventually mange the managers.

If the goal is growth at a rapid pace then you have to give aways as much of the work as possible. Knowing how much time it takes, what to pay and how to get work done from other people is more important than doing it yourself. Just my opinion.

Doesn't hurt to be handy but we are not in the rehabbing business we are in the investing business. Rehabbing is a part of our business not THE business.

I don't know if there a right or wrong it more based on your goals and your abilities.

Tim Knabe

Investor · Richland Hills, TX · Member since 2017 · 12 posts · 15 votes

I used to do some work and convinced myself i was saving money, or that I liked to be on the job, managing the site or whatever...But Now on the very few days I go to job sites and pick up a hammer it is more of a day off, relaxing having fun with it and getting away from the mental grind of running the business. My best use of time is not pulling out fence posts(which i did for a while today and really enjoyed it). I let the painters paint and the plumbers plumb and the carpenters saw wood. Its the best use of their time and not mine.

Tony WooldridgePro Member

Rental Property Investor · Walla Walla, WA · Member since 2016 · 480 posts · 346 votes

@Preston Dahl, first let me start off by congratulating you on taking the large step from education and analysis to pulling the trigger on your first deal, well done! I am relatively new to REI myself and closed on my 1st deal a couple of weeks ago and have started the demo work. I too believe in the whole work on your business not in your business thought process. However, I also believe especially as a new investor, that I want to learn and be involved in a GR8 deal if not an overwhelming majority of the whole process of flipping a house. Not because I absolutely love to punish myself with hard work (outside of the work I already do at my W2 JOB) but rather to understand what it takes to do a good majority of the work and how long that work will take and how much the money it takes to buy certain materials for the rehab. It is important to me to learn this so I feel that I can grow in my business and in turn grow my business so I can eventually hire a good majority if not all of what I mentioned above out.

So personally to answer your question, I am going to do a majority of the work myself, unless of course it is something I have not done before and have zero interest in wanting to do. I have actually found a good enough deal that in the event that I am not able to perform as many task on my own I still have enough meat on the bone to hire a contractor and still make money in the end. So for my first couple of Flips, I personally do intend on doing a good majority of the work myself to help me gain a through understanding of the whole process. I forgot to add that I have a fairly decent background in the construction/contracting world from years past. Well, I certainly hope that your up and coming purchase is a GR8 success and hope you will keep us posted of your results. Thanks for allowing me to share. Here is to wishing you a successful 2017 in your REI ventures!

Ryan Phillips

Investor · San Diego, CA · Member since 2017 · 54 posts · 30 votes

@Sarah D. I love your example of the start up CEO taking out the trash. That was such a good analogy. The CEO may not plan on doing it forever, but there is truth in keeping the books super tight during the start up phase when frivolous expenses could make the difference of taking off or stalling. My wife and I had to do most of the work on our first flip (all flooring) and outsourced the kitchen due to a load bearing wall that needed a cross support beam and permits. We built the fence and laid the sod. We also loved getting our hands dirty and doing it together. I've always had an issue with those who say your time is not worth that line of work because I enjoy the manual labor and sometimes its a means to an end. The biggest down side to me is that it has created an emotional attachment to each home.

Samantha Magina

Real Estate Agent · Westford, MA · Member since 2016 · 92 posts · 52 votes

I'm eyeing my first flip, I'll be using sweat equity for as much as possible because of financial constraints that I project for the first few properties. I did a lot of work on my single family home previously, which does not make me an expert, or talented, or time efficient but it has provided me enough experience to know that if cash is tight I'm capable of certain work such as landscaping, painting, drywalling, patching walls, adding baseboards and trim (it's satisfying to finally use geometry). I've even done a roof before and would consider doing it on a single story home or garage. Long term, I have no plans to do reno work but I do believe the more hands on I am in the early flips the easier it'll be for me to spot a good contractor from a bad contractor. In your case I think you should do one or two properties but keep a close eye on your time vs how long a contractor would take. Also, there is no reason you can't have a satisfying side project ongoing while you have most of your projects being run by a GC if the manual labor makes you happy. Gotta be happy otherwise why are we all doing this?

Ian WalshBusiness Member

Lender · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes

I know a lot of guys that swing a hammer and flip their own properties. They do it well because they are business owners first and contractors second.

Bob James

Specialist · Portsmouth, NH · Member since 2017 · 4 posts · 0 votes

I have done seven of my own rehabs. A couple flips and a couple buy-and-hold. I do like doing the work but I find at the end I've been focused on completing the rehab and find myself twiddling my thumbs trying to locate another deal after. I'm leaning towards subbing out all the work on my next one to see how quickly it can be done when I step away. Also to work harder on the pipeline so there is no downtime and continue to chug forward without missing a beat. I do find that you save quite a bit of money but all things being relative, time is money and if it can be completed faster without being so hands-on I'm all for it. I am of the same thought where I enjoy doing the work and sitting in an office is just out of the question. So a balance between the two is more than likely the best bet.

Linda S.

Investor · Richmond, VA · Member since 2016 · 1k+ posts · 2k+ votes

@Preston Dahl,

When I got started, my mentor gave me some great advice "Hire a college kid to do the easy stuff and accelerate the process." We do 90% of the work ourselves with myself/my partner and 1-2 college kids, who I may add, after 5 renovations are very handy!

It's kind of a yes/no to your question.. yes, we hire, but cheap labor ($10/hr) , and we have taught him to do the bulk of the tasks... but no, we definitely aren't hiring anyone else unless it's a big job like foundation/HVAC/electrical. I personally can't imagine doing it ourselves without any help, the amount of time it will take you, sounds daunting! Yes, you can save money.. but your time is valuable! You need someone else there with you to keep you on track, and push you to get it done. I love working with my hands, but I would never want to do all the work myself, too lonely and draining! I give props to anyone who has it by themselves, but again I'd get lonely and burn out. Small teams are where it's at :)

Ps. Cute house btw!

Tony WooldridgePro Member

Rental Property Investor · Walla Walla, WA · Member since 2016 · 480 posts · 346 votes

@Linda S. if I may ask how did you find the College kids, I guess a better way to phrase the question is how did you advertise for getting the help you got from the college kids? Interesting way to keep the cost low and get a helping hand! Did they have any back ground in this before or did you teach them everything yourself? What type of interview process or experience did you expect them to have? Sorry for all of the questions, but I suppose that is the beauty of how this learning thing works. Thanks ahead of time. Here is to wishing you a successful 2017 in your REI ventures!

Linda S.

Investor · Richmond, VA · Member since 2016 · 1k+ posts · 2k+ votes

@Tony Wooldridge,

My partner is a shop teacher at a high school, so he knows the good/hardworking kids, and kids that were really excellent students, so that's been our main source. We only have 2 helpers, so small but efficient! They just had basic skills before, but since one of them has been with us for 5 rehabs, he often just goes there himself and does the tiling or painting.

If we didn't have that connection, I'd just post an add on CL, list the skills you need and see what happens! A lot of tradesmen like plumbers, electricians, etc, will do stuff on the side for easy cash, but with that I'd just make sure to verify employment.

Also-- check out a local tradeschool and talk with say the drywall teacher, and see if he has any students he recommends? It's the best $$$ IMO, and has allowed us to do full rehabs at a much quicker pace!

Preston Dahl

OP

Investor · Grand Forks, ND · Member since 2015 · 20 posts · 17 votes

Wow. So many valuable, helpful responses. Thanks everyone for chiming in.

@Sarah D. That is such an awesome example of the CEO taking out the trash. Of course he does not plan on doing that very long, but its where he's at now.

@Linda D sounds like you have a really interesting business model. I have a few people in mind and have already reached out to them that I think have a good attitude and work ethic. I am also hiring a 60 year old retired guy who used to build spec homes. I think he is bored and looking for something to do and will hopefully be a good teacher. I also plan to hire out hvac/electrical/plumbing.

@J Scott complete side note. I really thought your ideas about how to analyze a market were very interesting. Would be fun to learn more sometime.

Well I close next week and will be doing a combination of hiring out and self-performing. My bank gave me 45 days no mortgage payment so............Wish me luck!

Manolo D.

Contractor · Los Angeles, CA · Member since 2015 · 4k+ posts · 1k+ votes

Preston Dahl It's all about what you want to do with your time. I pay my workers doing government work at basically $60/hr, out the door with all taxes, overhead, insurance, it's roughly around $80/hr. I have a small crew now of about 6. Basically throwing 480/hr. Now, I can spread out my 1 week (that's 6 guys at 5 days = 30 days) into working myself for 30 days well maybe even more because I'm a slow worker and don't do it daily and save about 15k. Or do I get more projects and keep the crew running for that whole month and make say 30-40k where i drive around, boss people around and make phone calls to ensure materials are there for the crew to work on. Either way, it's my choice. Arm Muscles or Brain, my choice. I think I'm good at bossing people and pushing them hard to make me more profit.

Tony WooldridgePro Member

Rental Property Investor · Walla Walla, WA · Member since 2016 · 480 posts · 346 votes

@Linda S., thanks for answering my questions!

Manolo D.

Contractor · Los Angeles, CA · Member since 2015 · 4k+ posts · 1k+ votes

Linda D. I've had that program before, cheap and cool. There were a lot of things to train but I did hire an excavator operator and he was with me for 2 years. After that 2 years, he knows how to operate 5 machines, a grader, loader, backhoe, road compactor and that excavator he first started. He got a pretty good offer of 3x his salary when he was with us and we couldn't afford it. Too bad but life moves on, he went out smoothly. We also got some who were just there to comply with their time, they didn't last long.