SFR: Subcontract Rehab or Do It Yourself

[Doug Hadley]

I just purchased my first SFR last Thursday and have been doing the demo and rehab myself. The question that I'm trying to answer is that the quotes that I'm getting from subcontractors is much higher than my monthly carrying costs. Should I keep the rental vacant and do the rehab myself or do I spend more upfront on subcontractors and get it on the market quicker?

As an example the interior painting quotes have come in between $2700-4500. My carrying costs are around $900/month. I should easily be able to do the painting myself in a month and save $1800.

I hate painting but hate wasting money more.

[J Scott]

Originally posted by NA Martin:

@J Scott , I'm not following your math. $2,700 ÷$15 per hour is 180 man hours. Divided by three workers would be 60 hours per worker. Why would it take three guys a week and a half to paint the interior of what is probably a 3/2 tract home?

....

Someday maybe I'll be in the position to pay contractors to paint, lay tile, install flooring, etc. But my time is just not that valuable.

It wouldn't take nearly that long to paint the house, which was my point #3 above -- there's no reason the job should cost $2700. I guarantee the OP is overpaying at those numbers.

Regardless, here's the math:

Painters in Texas (where the OP indicates he lives) shouldn't cost more than $15-25/hour, even with insurance. If you're doing work to save yourself $20/hour, that means you're valuing your time at $20/hour.

It's really that simple.

Now, you have every right to feel your time is not that valuable, and if you really believe your time is worth less than $20/hour, I can't argue with that. But, I would challenge you to start thinking differently. The nice thing about this business is that it's possible to make $100/hour, $200/hour, $500/hour or even $1000/hour if you do things the right way.

Personally, I choose to spend my time focusing on the tasks that are earning me at least a couple hundred dollars per hour -- this includes finding more deals, raising money and creating processes to run my businesses more efficiently.

Think about it -- while someone else is spending 40 hours painting their own house (and saving $20/hour), I'm probably spending those same 40 hours finding a great rehab/flip deal? An average rehab deal nets me about $20K, so I just earned $500/hour. Even if you factor in the time I'd spend on the new project and the fact that I needed to hire painters for the original job, I'd still be clearing at least $200/hour for focusing my efforts on finding a new project versus painting a house.

In reality though, I'd rather be spending those extra hours with my family, which is certainly worth more than anything I could be spending my time doing in this business.