Flipping Houses as a Contractor

9 Replies

I am just starting out doing my own flips (working on closing on my first property actually) and I have been reading plenty of articles and opinions that flippers should not do their own work.  My situation though is that I'm a licensed contractor and the idea of hiring out work I am able to do just as quickly and cheaper as another contractor pains me.  I also know that I've had to go in and fix other contractors mistakes, so quality is another reason I'd be hesitant to hire out as well.  Right now I'm only taking on one property at a time so I'm looking for input from others, that if you are able to do the work yourself at the same quality level as a hired contractor does it make sense to do that?

Down the road I'm expecting my contracting business to build from just my one man operation to a bit larger, which would obviously change my flipping model, but I'm looking for some advice on the current situation I have.

Thanks in advance guys.

Calvin,

I have yet to buy my first rental but working on that.  However, I will offer my opinion since you asked.  It all boils down to your time.  It sounds like you are more than capable of the skill needed in doing your own work.  Ask yourself if your time could be used more efficiently securing deals, finding more contract work for your business, time with family friends, doing volunteer work, and simple free time for your self.  If you have the time to save money doing your own work I say go for it.  If you are spread thin and can make better $$ hiring out work then consider that alternative.

Check out a book that Brandon Turner mentioned on a podcast titled Who Not How:

https://www.amazon.com/Who-Not...

This book opened my eyes up in a few areas I needed to let go and hire others to do.  

Best of luck in your journey!

Sincerely,  JW

@Jeffrey R. White if your going to be a full time flipper then your time is better spent flipping. If your a full time contractor and going to build that business and your flipping is just a side business/investment then doing your own is good way to save money. It sounds like the second option is for you at this time, by building your portfolio with sweat equity.

If I may add a perspective from the lender's side, a private lender at that.  I am particularly cautious about a contractor that is wanting to conduct their own renovation.  I'm not saying that I have never loaned a GC or Contractor purchase and renovation capital, but it boils down to mindset and expectations.  Many contractors do not want to meet my expectations because of the way they have worked in real estate in the past.  You know this better than most its a cash flow heavy business.  Many contractors cut their teeth by floating one job by paying for that job with money ear marked for another job, planning on using the final payment from the finished project to go into paying for the project the money was originally ear marked for.  For the very select few contractors that are actually able to get out of the "rat race" and establish for themselves enough liquid capital to handle an entire project before even NEEDING the project capital, well those contractors many times have excellent credit and can get construction funding from a bank that is extremely attractive and even makes the most seasoned RE Investor jealous.  Its simply about mindset and expectations.  Happy to discuss more a lenders perspective if you want.

@Calvin Winters if you can do all the work yourself then you have the upper hand when buying props. You can pay more as the rehab will cost you much less, just sweat equity. The only downside is you can only take advantage of your talent in your local markets.....Still you have an advantage...

Calvin,

I am a contractor flipper and have been at it for ten years. My profits were very small in the beginning (only 10k on my first flip) but I just kept rolling it into the next flip because my job paid my bills. I now have two homes worth over a million each and am now, for the first time considering doing multiple flips at once. I don't believe in risk vs reward. There is no reward, just risk. Reward comes after long days and sleepless nights. If you are like me, one job gone wrong could have broke me. 

So, with that said, every project I took on I did myself. Including the one I have now listed at 1295000.00 in Asheville. If you are a contractor, you now it only takes one sub to ruin a profit. My advise would be to keep your day job, work your flips, get no sleep, get paid. 

Best of luck to You

Originally posted by @Calvin Winters :

I am just starting out doing my own flips (working on closing on my first property actually) and I have been reading plenty of articles and opinions that flippers should not do their own work.  My situation though is that I'm a licensed contractor and the idea of hiring out work I am able to do just as quickly and cheaper as another contractor pains me.  I also know that I've had to go in and fix other contractors mistakes, so quality is another reason I'd be hesitant to hire out as well.  Right now I'm only taking on one property at a time so I'm looking for input from others, that if you are able to do the work yourself at the same quality level as a hired contractor does it make sense to do that?

Down the road I'm expecting my contracting business to build from just my one man operation to a bit larger, which would obviously change my flipping model, but I'm looking for some advice on the current situation I have.

Thanks in advance guys.

I started the same way as a contractor first then investor/developer later on. Being a contractor and a flipper/investor are two different businesses all together but they. can work well together. I scaled from zero to $30 million in my construction company in 7 years and invested the profits along the way into other deals for over $250 million so it’s really up to you how far and fast you want to scale. One thing for certain is you can’t grow and scale if you want to do everything yourself so you need to decide what you want and what’s right for you. There no one size fits all answer or right or wrong it’s all about the individual.

@Calvin Winters We have partner with Contractors in the past. We think its a good idea. You can certainly save on costs as well as get the job done quicker. Best of luck in all your endeavors.  

Most of the advice against doing it yourself as opposed to hiring a contractor is the simple fact that most are NOT contractors and their time is better spent finding, funding, and managing deals, not swinging a hammer. However, if you are a contractor, then you can hire your own subs, do some of the work you are very good at and make more per flip as you hold down costs and manage the project efficiently. Once you have several under your belt, and you learn from mistakes (there will be plenty, trick is to keep the mistakes small), then you can scale by hiring more to your own crews and hiring a project manager to keep them efficient. I was a real estate investor/developer/flipper/holder first, then became a contractor and I run two businesses simultaneously. That is no easy task but a road I was willing to take to get to my goals.