WORK ON YOUR BUSINESS, NOT IN YOUR BUSINESS.
This post is of a general nature but I would like to hear what all of you are thinking out there if you are willing to comment.
The subject states it all (sorry for the caps but I copied this from another post for emphasis). This seems to be a recurring theme throughout this site. Not that anything is wrong with that, however, I've always been a bit of an old fashioned sort who believes that if you want something done right then do it yourself. I’m very big in DIY (Do It Yourself) Home Improvements. I very rarely call a contractor (in fact in my own home I have never called one) to make home improvements. I realize that when you are investing in RE that your ultimate goal is to profit as much as possible from that investment and sometimes, time is a factor that must be considered.
My point is that by doing the work yourself (sweat equity) that you can save a bundle in labor charges. All it costs you is time (again a factor). However, this will flow directly to the bottom line.
Some discussion points I would like to hear back about are as follows:
A. Do any of you do rehab work yourself?
B. If so, how much?
a. Just simple things like painting and cleaning?
b. Or, more complicated, yet still simple things like
i. Tiling
ii. Carpeting
iii. Dry wall repair
iv. Etc…
C. If any of you do more complicated things yourself like:
a. Window/Door replacement
b. Roofing
c. Major plumbing
d. Electrical/HVAC repair/replacement, then I’d like to hear from you as well.
D. What criteria, if any, do any of you use to judge when to call a contractor or do it yourself?
a. Strictly time considerations?
b. Or, possibly complexity issues?
c. Equipment/Tools?
d. What is it that you all use as a determining factor?
E. If you don’t do any work yourself then why?
a. Is it for the reasons in C. above or something else?
One final point, in choosing to work ON your business & not IN your business (exclusively) aren’t you ultimately sacrificing potential narrow margin deals that could net a nice $4K-$7K or so just to wait for that big $10K+ that might take months to find?
Ultimately, I’d like to find a happy medium between work I can complete myself & work that I should contract out for timeliness reasons. There aren’t many things that I feel I am unqualified for out there (save HVAC/Major electrical, for instance) but I need to evaluate when it is in my best interest to hand off certain things to my contractors.
Your responses are greatly appreciated,
Tucker
should
Well Tucker, I do a little sweat equity myself, mostly paint and minor patch work. I used to take up the old carpet, but the installers only charge about $100 a house, so now they do it. Besides time and money for DIY repairs, there is a legal issue, too. I wouldn't do deck repair (wouldn't look good anyway ) because if it broke or failed and caused injury, the person could sue whoever built it, if it was due to faulty construction. Electrical and masonry is the same way. Also, if you're busy working on DIY repairs for one house, how are you going to find those marginal deals, and close on them?
Roger
Tucker, I can see your point about saving money by doing things yourself BUT if u look at the bigger picture, the time u are spending doing all your own work to save a few hundread bucks you could be missing a great deals out there that could make u 20,000 or more on each deal.
How many deals could u do in the time it would take to put a room add. on your house???????????????????????
Good points all. Thanks.
I had mentioned marginal deals before. I was wondering what amount of potential $$$ do you all require before going ahead with the deal? $2500, $3000, $7500, $10000 as a minimum?
Tucker
Hello Tucker
As you mentioned before in your posting, and others reafirmed latter on, time is a must in this busines when I go for a deal I look at two thinks proffit and time and that tells me to pass or take it. For example, if face a deal that yield 3500 or 4000 and it'll only take me a couple of days of painting and patching I'll go for it if it'll take a week I'll pass.
hope this help.
Most experienced rehabbers won't touch a deal unless there's $20k profit on the back end. I won't either anymore. Those "quick" $5000 deals turn out to be nothing but break even too many times.
Tucker
I started as a remodeler for 15 years specailizing in $30k bathrooms and $60k kitchens. I don't wast my time with retail clients anymore.
I do enjoy working on my rehabs. I never sweat equity, I charge myself so my labor is labor never to be confused with profit. This way It doesnt matter who does the work I can hire some or all or do it myself without clouding cost vs profet issues. Makes it easyer to evaluate my next deal.
Tucker,
I have the same questions. We bought a rehab about 5 yrs. ago, but lived there while we working on it. Now it is a rental. But now we want to do more rehab projects NOO. My husband wants to do all the work himself, which will probably take a long time to complete. After we close the deal, we will be responsible for maying monthly payments on the house, utilities, taxes, loans, as well as find materials to fix the house. If we go with a contractor, the repairs could be done in little time, with the property going back on the market for resale 4-6 months sooner. So we will divide up the work, paying my husband for the labor. That way if we take partners, there will be specific lines of net profit. I also know that is some areas, replacing a kitchen sink must be done by a licensed plumber and must be inspected if the property is NOO.
This is a very stressful subject for most people... For alot of people the reason that they started doing this type of thing was to be able to work on a property and DIY. For some, they can't afford to hire it done the first couple of times, so they do it themselves until they can afford otherwise.. For others, blah blah blah..
Honestly it is entirely dependent upon the person(s) involved.. Do you feel comfortable doing any and all repairs, do you know that you can only do some repairs, can't do any-but want to learn, etc. etc.
For myself, (I am and have been a licensed General Contractor in several states), whether or not I do things myself is dependent upon how the project will take shape... Honestly, I know for a fact, that I can go into a rehab home and turn it around in a very short time... But alas that comes with years of doing it...
One thing that I do usually do in a rahab is I figure out what it would cost to have someone do the work, then figure out what it would cost me to do the work and weigh the differences, do I have time, etc... Also, I have to agree with one of the other postings as We always always pay ourselves for our work, as we can legitimately cover all of our expenses just in case we have to work with an escrow from an outside money source...
It also keeps your project's budget inline with reality.. Too many people go way overboard...
Good Luck and Good Rehabbing
DavidBrowne,
That is a great idea about paying yourself for labor work. Even if you were 'cheap' labor, you'd still have a clear separation between true profit and costs.
Roger
My husband and I are redoing a 100+ year old house. We have been ripped off by contractors so, it would not be likely that we would use one again. We have done drywall, taken the upteen layers of paint off the woodwork, and stained, pulled up the carpet, underlayment, patched the holes, floated sawdust onto the floor, sanded and refinished the floor, and I am sure there are a million things I am forgetting. We live in the house which makes it easier/harder on us. When house is complete, we are going to rest for a couple of days, load the house with period and one of a kind pieces, sell it as a turn key.