How many of you rehab your properties yourself?

Seattle, Washington
Seattle Real Estate Forum
7yFollow

How many of you rehab your properties yourself?

Eric Wang
Seattle, WA · Member since 2019 · 7 posts · 8 votes

Hi all, I'm quite new to investing and am jumping in feet first with a full time job and part time student. I've looked to Turnkey in the Midwest to get my first deal, but now am looking closer to home as that seems to be how most of y'all recommended and have done. I'm looking into the value added type of properties, but am reluctant to take most of my free time to work on the properties myself, especially when most properties are incredibly far away (my research pointed to Spokane with my budget) and me not being quite handy myself.

How many of y'all rehab your properties yourself? Is it efficient monetarily enough to exclusively hire contractors to rehab the houses into rent ready conditions?

1Reply
128 views

Most Popular Reply

Brenda E.
Member since 2019 · 29 posts · 22 votes
7y

If you're not knowledgable about rehabbing, and you are going to trust it to a contractor, make sure it is a contractor you can trust and get EVERYTHING in writing, and make sure it's close enough for you to stop by to see what he's doing! I am not trying to be negative, but there are many frauds out there.  Make sure he's licensed; ask the building inspector(s) in the town(s) where he works, about him. If he is bad, the building inspector knows him.

Before you hire contractors, you have to know how much is the going rate for something is. Then it's simple math: Does the sum of the parts equal more than the sum of the whole?  House: $100K, bathroom $5K, floors $10K, kitchen $10k, new windows $5K, paint,$3K, landscape $2K and 20% for error ($7K) - Total $142K; that's your breakeven point. If you can sell it to cover that and make yourself the profit you need to compensate for all the headaches that you'll have had encountered, then do it. 

And make sure you know your market. Where I live a 3 bedroom 1.5 bath, 1400 sqft ranch goes for $325,000 in one town, but 15 miles down the road either way, you're lucky if you could get $250,000 for the same house in the two abutting towns. 

5Reply
See this reply in the discussion

37 Replies

Jump to latestLatest
  • Brenda E.
    Member since 2019 · 29 posts · 22 votes
    7y

    If you're not knowledgable about rehabbing, and you are going to trust it to a contractor, make sure it is a contractor you can trust and get EVERYTHING in writing, and make sure it's close enough for you to stop by to see what he's doing! I am not trying to be negative, but there are many frauds out there.  Make sure he's licensed; ask the building inspector(s) in the town(s) where he works, about him. If he is bad, the building inspector knows him.

    Before you hire contractors, you have to know how much is the going rate for something is. Then it's simple math: Does the sum of the parts equal more than the sum of the whole?  House: $100K, bathroom $5K, floors $10K, kitchen $10k, new windows $5K, paint,$3K, landscape $2K and 20% for error ($7K) - Total $142K; that's your breakeven point. If you can sell it to cover that and make yourself the profit you need to compensate for all the headaches that you'll have had encountered, then do it. 

    And make sure you know your market. Where I live a 3 bedroom 1.5 bath, 1400 sqft ranch goes for $325,000 in one town, but 15 miles down the road either way, you're lucky if you could get $250,000 for the same house in the two abutting towns. 

    5Reply
  • Brenda E.
    Member since 2019 · 29 posts · 22 votes
    7y

    ***

    2Reply
  • Account Closed
    Specialist · Paradise Valley, AZ · Member since 2018 · 3k+ posts · 2k+ votes
    7y
    Originally posted by @Eric Wang:

    Hi all, I'm quite new to investing and am jumping in feet first with a full time job and part time student. I've looked to Turnkey in the Midwest to get my first deal, but now am looking closer to home as that seems to be how most of y'all recommended and have done. I'm looking into the value added type of properties, but am reluctant to take most of my free time to work on the properties myself, especially when most properties are incredibly far away (my research pointed to Spokane with my budget) and me not being quite handy myself.

    How many of y'all rehab your properties yourself? Is it efficient monetarily enough to exclusively hire contractors to rehab the houses into rent ready conditions?

    Since you don't tell us what city and state you are in, I'm guessing you are in outer slobovia and no properties in your area are worth pursuing. I started off in a place called Seattle and learned to wire to code, plumb to code and on and on. I started with taking properties Subject To and doing small things and then learning & building skills as I went on to the point where I could take a project from start to finish. I always let the side sewer, roofers, foundation & HVAC guys do their thing since they are better and faster than me.

    At this point I only do the things that speed up the process rather than wait for some contractor's schedule to fit. I act as the GC and since I've done pretty much all of the various tasks, I can tell pretty much right away whether the guy I hired is as good or better than me. I've seen some pretty crappy (sorry for the French) work and was able to catch it before it became an issue.

    Now, what is your real question?

    3Reply
  • Manaia Alalamua
    Contractor · San Antonio, TX · Member since 2019 · 80 posts · 70 votes
    7y

    Hi @Eric Wang

    I would say it just depends. I rehab my rentals to a certain degree, I know what to rehab and what is more time/cost-efficient to sub out. If you don't have the skill, it will be a steep learning curve, especially if it's a bigger renovation. It can be extremely beneficial, economically-speaking, and incredibly gratifying; however, you might want to look at the opportunity costs. What are you giving up in order to take on the project? Money? Time? Etc? Also, what are the up and downsides of doing the rehabs yourself...

    Also, take @Brenda E. advice, it's good to get quality Contractors. I have guys I have worked with over many years, and I can count on them being there when I need them (they fit me in their tight schedule when I call). If you find a good Contractor, hold on to them tight b/c they are worth every penny. They get you out of tight situations.

    Lastly, if you decide to take it on yourself, @Account Closed's advice is great too. You might want to act as a General for yourself and sub tasks out. The Quick response is (1) yes rehabbing is great, but with caveats and (2) it all just depends.  

    2Reply
  • Kevin Sobilo
    Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes
    7y

    @Eric Wang, you can customize your approach to your own goals, skillset, etc. Some people want to make their decisions on a spreadsheet, but that isn't the whole story either. If you intend to do this for a long time, you will want to develop your knowledge and skills and that takes work.

    So, if you want to increase your rehab knowledge and skills by being hands-on then do it. Don't let people tell you it isn't cost effective. It might not be on this one rehab, BUT you aren't planning one rehab. You are planning on doing many rehabs over the years. By being hands on now you can learn more and be able to do many things better such as :

    1. 1. Evaluate deals better
    2. 2. Develop the scope of work for the rehabs better
    3. 3. Negotiate with tradespeople better
    4. 4. Direct less skilled handymen and laborers to do work
    5. 5. and MORE!

    I would identify what work I wanted to take on in a rehab and hire out the rest. The work I would take on would be 80% work Im comfortable with and 20% that would be NEW for me. This way I'm not getting myself in over my head and with each rehab project my skills are growing. 

    5Reply
  • Jeffrey M.
    Spokane, WA · Member since 2019 · 33 posts · 17 votes
    7y

    I intend to do limited rehabs on our investments but at the current time I am avoiding major rehabs here in Spokane. I just walked on a good house that needed structural and a 20K wiring re-do just because I want my first investment to be somewhat simple. Why? I'd say that the post by @Brenda E. spells out the same concerns that I have.

    Somewhat of a tangent: 

    To anyone confused about where Eric is focusing, note that this is the local Seattle forum and Eric mentioned "Spokane" in his original post so its safe to assume Spokane or maybe Seattle.

    One thing I dislike about the BP forum is that when I post in Spokane forum I almost always get non-Spokane replies (that said I have gotten some good out of town replies). I guess people just see a new post and reply without knowing what local forum they're in or not reading the full text of the OP. A bit of a flaw in the BP forums, imo but so be it.

    1Reply
  • Eric Wang
    OP
    Seattle, WA · Member since 2019 · 7 posts · 8 votes
    7y

    @Brenda E.

    Thanks for the response! I didn't quite mention that I am from Seattle, so many markets that make sense in terms of ROI are far away. Is it worth it do value added real estate investing if the market I want to invest in could potentially be over 2 hours worth of driving away? Especially with the busy schedule?

    0Reply
  • Eric Wang
    OP
    Seattle, WA · Member since 2019 · 7 posts · 8 votes
    7y

    @Account Closed I posted in the Seattle Forum intending to reach out to more of that community as that's where I am from. Seems like I need to start learning to do some handiwork myself.

    My main concern is that I won't be able to find an effective deal at all in the state if I don't do a value added deal. What I was kinda probing for was how often have the local Seattle Real Estate community been able to invest effectively in distant locations within the state and managed to do it with less rehabbing work them selves.
     

    0Reply
  • Anthony Wick
    Rental Property Investor · Ankeny, IA · Member since 2017 · 2k+ posts · 3k+ votes
    7y

    @Eric Wang . I do as much work as I can, under the confines of local ordinances and procedures. If you need to pull a permit and get a licensed professional (such as plumber or electrician) then make sure you do that. Everything else, youtube is your friend. However, don't turn a $500 job into a $2k job by causing major problems. And yes, that does mean spending most of your free time doing the work when you first purchase a property. I've found the first 30-90 days after purchase is the most labor intensive. Then the work is done and you can relax a little, or start finding another property. Now, if you're looking to flip a property, then disregard having any free time. 

    3Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    7y

    Early in my career, I did a lot of the rehab myself.  Then at some point I started paying people to rehab. Then at some point I started to buy fully rehabbed properties.  Now my last 2 purchases I just purchased new construction. 

    [email protected]301-893-4635Podcast Guest on Show #192
    District Invest Group545 Reviews
    WebsiteView Page
    3Reply
  • Jeffrey M.
    Spokane, WA · Member since 2019 · 33 posts · 17 votes
    7y

    @Eric Wang if you can get to Spokane in 2 hours, I want to see photos of your hot rod :)

    1Reply
  • Aaron Farr
    Real Estate Agent · Spokane, WA · Member since 2017 · 77 posts · 57 votes
    7y

    I would say it wouldn't be a bad idea to do some of the grunt work on your first couple of projects but I would leave the skilled labor to professionals.  The best way to save money is to act as the general and hire subs to do the work.  Once you scale up this wouldn't be practical and you would want to find a general contractor or hire a project manager to oversee the jobs.

    2Reply
  • Ola Dantis
    Multifamily Syndicator · Houston, TX · Member since 2016 · 1k+ posts · 2k+ votes
    7y

    @Eric Wang Welcome to BP!

    If this is your First RE deal + Full-Time job + Part-Time Student (those are 3 things competing for your time). 

    I'd say you should try to either find a property that requires a little of work such as painting so that you can do it yourself or use a contractor, but if you are talking a full rehab, you won't be saving money or time trying to juggle all that you have going on. 

    Start small with a relatively light rehab project and grow in it. Goodluck... 

    3Reply
  • Matt M.
    Specialist · Easton, PA · Member since 2018 · 1k+ posts · 2k+ votes
    7y

    @Eric Wang

    My last rehab I did 98% myself, with the exception of roofing and roughing in a new half bath. I saved myself atleast $25,000

    1Reply
  • Account Closed
    Real Estate Agent · Cleveland, OH · Member since 2019 · 359 posts · 295 votes
    7y

    @Eric Wang My husband and I renovate most of our properties ourselves however, my husband works for a large general contractor so we are able to get a different deal on our labor/materials which makes it efficient for us to hire a contractor as well which we do all the time as life gets busy or projects get big. I can't imagine being a newbie with no contractor connections being the most profitable thing when flipping especially if there isnt a lot of room in the rehab budget.

    0Reply
  • Bob Prisco
    Specialist · Cleveland, OH · Member since 2018 · 1k+ posts · 666 votes
    7y

    @Eric Wang there are markets where you can get double digit net caps, and you do not do a darn thing but close. Its all about the team around you.  It is  actually more work and stress doing it in your backyard as now you are hands on, dealing with all the crap,  not a good idea.... Again allow your team to handle everything , you focus on your job,.

    Good Luck 

    1Reply
  • Tom Kaz
    Rental Property Investor · Chicago IL · Member since 2018 · 83 posts · 22 votes
    7y

    @Eric Wang I do all the renovations myself to a certain degree. Value add is a must in today’s market and most contractors these days are outrageous. I’ve ran into a lot of headaches on numerous rehabs but it was all a great experience in the end. Try it out and see where it takes you, if you feel like you are struggling find a handyman in your area.

    1Reply
  • Syed H.
    Developer · NY/NJ/PA · Member since 2018 · 758 posts · 935 votes
    7y

    I never do any work. Pay people to do everything. But my labor costs are pretty reasonable since I do volume. 

    If you do work, make sure you add your time as a cost. Your time has value. If you are worth $100/hr and you are “saving” $25/hr by doing it yourself, you just lost money. 

    Also remember that renovation time is a cost as well. I have paid extra to get things done quicker because every extra week of construction = $$$. 

    1Reply
  • Eric Wang
    OP
    Seattle, WA · Member since 2019 · 7 posts · 8 votes
    7y

    Thanks everyone! All of your perspectives has been very insightful. I'm thinking at this stage in my life I should be making connections for more TurnKey style of properties and/or lighter rehab work type of properties. We'll see how comfortable I end up feeling with a rehab type of model.

    My eventual goal is to get in to larger multifamily/apartment style of properties, which I assume would require more contract work rather than my own.

    0Reply
  • Noah Mccurley
    Belfast, Northern Ireland · Member since 2018 · 128 posts · 56 votes
    7y

    @Eric Wang

    I would only rehab investment properties if I had previous experience in the construction trade.

    2Reply
  • Dakota Rice
    New to Real Estate · Rapid City, SD · Member since 2019 · 24 posts · 11 votes
    7y

    @Eric Wang

    My wife and I are currently chipping away on rehabbing our first place. I have a full time job and she is full time in school, so we spend any extra time we have working on our property. I consider myself fairly handy, but I rely heavily on YouTube for all my rehab questions or concerns. The one thing I have noticed though is that everything is taking us about three times as long as we had originally planned. It has been frustrating at times, but I’m at grateful that we decided to just start in the first place. Good luck moving forward!

    2Reply
  • Nick Rutkowski
    Rental Property Investor · Ithaca, NY · Member since 2015 · 1k+ posts · 1k+ votes
    7y

    @Eric Wang

    I think you need to rehab a few properties before you move up to the next level in your business. You need to gain experience before you can lead someone to do what you want and how you want it done. As far as delegating responsibilities - the sooner the better. Time is the only thing you can’t get back in your life. Good luck

    2Reply
  • Nicholas Clement
    Flipper/Rehabber · Queens, NY · Member since 2019 · 25 posts · 6 votes
    7y

    @Eric Wang ‘Tis the only way. I never pick up a hammer but I do have my own team of guys. Is that still considered a DIY? Lol

    0Reply
  • Brent Wooster
    Investor · Harrison, ME · Member since 2016 · 39 posts · 5 votes
    7y

    @Eric Wang

    On my first flip I hired out 95% of the repairs. My wife and I did the final touches. Our profits were about $11,000 but realized much more savings via new tax deductions. Our second flip we contracted only the roofing, carpets, garage doors, and furnace replacement, and we did the rest. Our profit jumped to $35,000 this time around. I have a full time job and own another company and our boys both play travel sports. The last property took eight weeks, we (the boys help too) sacrificed many nights and weekends in that span. But we reward ourselves with a nice fishing trip to the Florida keys and we all agree it is well worth it. Our thoughts are, the more you can “effectively” do yourself, the more you make, but also the more time you must invest.

    When I say “effectively”, if you have to do it multiple times and or spend too much money on it, you might consider paying a contractor. But, if you learn quickly the first time, you save money there after.

    I hope this helps!

    1Reply
  • Brent Wooster
    Investor · Harrison, ME · Member since 2016 · 39 posts · 5 votes
    7y

    @Dakota Rice

    We are of the same mind set! Besides, it is hard to ask someone else to do things and know they are done right if you have no idea how to do them yourself.

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free