Doing the work yourself?

Question

Got a few pages into J. Scotts The Book on Flipping Houses - Starts out recommending paying others and investing time into other more profitable things.

I completely understand the trading money for time ideology, but as a beginner does that still apply if I do a majority of the work?

I look for cosmetically ugly houses that have good structure. I don't mind paying someone to install a roof or a furnace. However, If I can do a kitchen or bathroom from stud to done over a couple months for around $3k myself wouldn't that be better in the beginning?

Mostly I enjoy doing the work this far, and it has paid off. Paying an electrician to change a switch and a plumber to replace a faucet makes me cringe...Ideally the plan is to do a couple more and have the cash flow to hire out. Is my long term better to hire out now, or keep doing what I'm doing?

Side question:

Is it better to regret making a decision that was costly, or regret not making a decision that was profitable?

Carl Millsap · Answer

Account Closed one size doesn't fit all. I recommend you put in the work until it makes sense to have someone else do it.

I worked on our units kicking in carpet, installing tile floors, painting, cleaning etc. until I could afford to have someone else do it.

The Pros: I learned what it takes to do a job; I have an appreciation for what it takes and I pay my guys accordingly.

The Cons: I can't think of any....maybe some missed time with my family....but I'm free now to spend as much time with them as they can stand.  The education of sweat equity has paid off.

When it comes to evaluating whether you should do a job or not simply ask: What else could you do that would make you more money?

Should you pay someone $45 to install a $45 faucet? Sure, if you use that time to find your next property and you can afford to pay the $45. You're going to write the labor off on your taxes anyway. So what did it really cost you.... maybe $30.

No two paths are the same...find what works for you, learn from others mistakes and then execute.

Bob Norton · Answer

Account Closed Be careful that you are not tripping over dollaers to save dimes.  Every day that you delay converting the property to positive cash flow is costing you money.  You have holding costs, whether that is the interest on the loan for the property or the utilities for the property, you are spending money on the property.  I recommending taking the shortest path (least amount of time) to convert the property into positive cash flow.

So, when you are estimating the cost of doing the work yourself, you need to add in all your holding costs.

If it takes 3 weeks to get a contractor to do the work and you can get it done yourself in that time, then by all means do the work.  Keep in mind that while you are doing the work, you will not be able to do much of anything else.

If you have a full time job, then hire a contractor.  I made this mistake on our first flip.  We made money, as long as I didn't add in the holding costs, but once I added the holding costs, I had lost money.

Now I just point and write checks!

Account Closed · Answer

Thanks everyone for the input!

I think I did leave out that we are living in them as we go. The holding costs are pretty much the three days between moving out and the closing date. We have to occupy for at least one year to avoid taxes.

Plan is to do a couple more, be at a point where our home is stable and should be set to speed things up and contract out.

Sounds like doing our own work is feasible, we would just need to re-evaluate and establish the when and what.

Ivory Coats · Answer

There are always exceptions to the rule but as a recovering “we can do that’er” I now realize we grow better when my time is spent on the revenue generating activities like finding and securing the deals. When you get to the point that you want to scale and grow you will find you will have less time to diddle in the more laborious parts you enjoy and ultimately you can pay someone else to do.

Ultimately this should be guided by what your objective is.

Mike McCarthy · Answer

I completely agree with @Carl Millsap. If you’re planning on doing 5 deals this year, your priority should probably be finding and closing the deals. But if you have some time, there’s nothing wrong with doing things that save money and you’re good at.

My two thoughts on it though are to make sure you can do a good job. Everyone notices a bad tile job... and if you’re not trained, you shouldn’t be doing electrical/gas/etc work.

Also, understand which items are worth your time and which aren’t. My first flip, I hung, taped, and finished a bunch of drywall. I did a fine job, but later realized I could have gotten a pro in to do it all in a few days for maybe $3K. That would have been money well spent - as opposed to the 2+ weeks it took me. My time could have been much better spent on areas that would have been higher value.

Karl B. · Answer

I saved every penny for my first investment property (a 4-unit). And so I had little choice but to do the things that I could do. I had to learn how to do some of the repairs and some were simple and mundane (painting).

Sure - if someone's a doctor or lawyer and decides to invest it makes sense for them to pay for someone to do the work.

But for most who are starting out - it's not an option. Plus it's good to learn how to do repairs so when the time comes to hire it out you know the amount of time it takes to perform the repair.

Even now I would much rather fix drywall damage myself than get gouged paying somebody to show up three times to perform the repair.

I mainly only hire out the things I don't know how to do/don't want to do (roofing, plumbing, electric).

Doing the work yourself?

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