How much rehab do you do on your own vs. contract out?

Involved In Real Estate · Naples, FL · Member since 2014 · 68 posts · 34 votes

I have the opportunity to purchase some great property that will need new flooring, a new tub, new cabinets, paint, etc.

My question you experts is how much of this do you generally do on your own and how much do you sub out? I'd love to move into the property while I flip it and do a lot of stuff on my own but I'd be learning so much of it as I go. How did you learn how to do things like install a new tub or new bathroom vanities?

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J ScottPro Member

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Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes

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100% outsourced. I wish I could outsource more, but it just won't go past 100%... :-)

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J ScottPro Member
Moderator
Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
11y
100% outsourced. I wish I could outsource more, but it just won't go past 100%... :-)
Podcast Guest on Show The Truth About Real Estate Investing in 2024 (What Investors NEED to Know)
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Chris Farrugia
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Involved In Real Estate · Naples, FL · Member since 2014 · 68 posts · 34 votes
11y
Originally posted by @J Scott:

100% outsourced. I wish I could outsource more, but it just won't go past 100%... :-)
Wow, that's impressive. Don't you find that it cuts too deep into your margins?
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Peter MacKercherBusiness Member
Residential Real Estate Broker · Saint Louis, MO · Member since 2014 · 1k+ posts · 567 votes
11y
100 % contracted out. I do too menny do the work myself.
[email protected]
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Peter MacKercherBusiness Member
Residential Real Estate Broker · Saint Louis, MO · Member since 2014 · 1k+ posts · 567 votes
11y
I did the first 4 family gut rehab on my own with with help and a one man contracter that taught me how do most things. After that i started subbing out things that i did not want to or that i was not good at.
Living in a rehab sucks.
[email protected]
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Chris Farrugia
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Involved In Real Estate · Naples, FL · Member since 2014 · 68 posts · 34 votes
11y
Originally posted by @Peter MacKercher:

Living in a rehab sucks.
Yeah, I'm thinking if I buy a place to rehab and live in it at the same time, I'd have to do the kitchen first and a bathroom while I then work on the rest. I grew up in a home my parents built but I was too young to learn the process well enough to do it on my own.
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J ScottPro Member
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Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
11y
Originally posted by @Chris Farrugia:

Originally posted by @J Scott:
100% outsourced. I wish I could outsource more, but it just won't go past 100%... :-)
Wow, that's impressive. Don't you find that it cuts too deep into your margins?
The alternative would be cutting too deep into my time. And my time is more valuable than the amount of money I could save by doing the work myself.
You can generally hire contractors for under $50/hour...my time is worth more than that. If I spend 20 hours finding another deal that generates $20K in profit, that's $1000/hour.
Podcast Guest on Show The Truth About Real Estate Investing in 2024 (What Investors NEED to Know)
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Richard C.
Bedford, NH · Member since 2012 · 2k+ posts · 1k+ votes
11y
I'm a poor carpenter, but a good project manager.
Therefore, I neither do the work of subcontractors nor employ a general contractor.
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Kyle Hipp
Investor · Appleton, WI · Member since 2012 · 1k+ posts · 464 votes
11y
I do a lot of the work myself. I manage 19 units (owning all but 3). I do my own pm work as well. My first property, a I lived in the lower of a duplex and was able to do a lot and learn a lot while working on that property. I do rally enjoy working on my properties and the savings financially fits my goals at this time. I turn 30 this year and plan to retire from employment by no later than age 40 which should be more than attainable.
I do hire out more work than I used to as I have grown to have more financial resources while my I me gets stretched further. I don't touch roofs, I hire out the majority of windows. Major Plumbing I usually assist my plumber on the job but his expertise leads in every way. By doing a great deal of work myself I have sped up projects. I can turn a unit in a week to 10 days even when there is a ton work because I can work 20 hours day and I can't find a contractor to do that. By knowing what needs to be done I can get good pricing as I know what it takes to accomplish a job. For someone to say it would take a week with their crew and I can do myself in 4 days I know they are poor at their craft or scammers.
I will slowly hire out more and more as it is wise to but I don't see myself without a toolbox in my truck for a while. On living in a rehab. That brings up the other key for me. I have a fantastic wife and my 4 year old son loves to help. We are moving our kitchen to a different room of the house currently, taking out a wall, new electrical, plumbing all that. My little guy has demoed the plaster and loves it. It is a mess but we all know why we are doing it :)
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Kenneth LaVoie
Rental Property Investor · Winslow, ME · Member since 2008 · 826 posts · 281 votes
11y
I sub nearly 100%. I might run around and change a lock just to prove to myself that I can do more than change a lightbulb! My main "jack of all trades" is $23/hr for painting and $27/hr everything else. My repairs and capex expense IS quite a bit above industry averages though. Combined they were 25% 2014 which is the lowest since I started in 2009 but we are literally "rebuilding" these buildings piece meal. I own a web design company and lawn care company as well though. The only company I do all my own work is the web design...
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David Moore
Investor · Crystal, MN · Member since 2013 · 486 posts · 277 votes
11y
Hello Chris,
On our 2nd home investment, it needed a moderate rehab. It needed a new roof and gutters, carpets, paint, windows, some doors, furnace, etc. We contracted out the roof and gutters, furnace, and found a handyman friend who helped with some exterior siding problems, door repairs and we took care of exterior painting, plumbing (with help from our handyman), carpet, interior painting, and windows. Stuff we knew, we did.
It took way, way longer than I thought it would. Our 3rd house required much, much less, because I'm passing on the huge rehab houses, and focusing on the low rehab, low time commitment. The guys above hit the nail on the head. You need time in this business.
I'm contracting out nearly everything on home 4 and 5. I'd rather look for deals.
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Account Closed
Investor · Chicago, IL · Member since 2014 · 39 posts · 12 votes
11y
Great question,
I myself do everything. I seem to be the exception. I really don't know how people make much money by subbing out everything unless they are getting the property super cheap. Here in Chicago labor is really expensive.
The first reason i do all my own work is because i enjoy it. I like taking an ugly house and making it nice. I look at as my part time job. The second is because i have the knowledge and it fits my personality.
I don't know if i am completely wrong in my approach or everyone else is.
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Lynn Currie
Investor · Austin, TX · Member since 2013 · 452 posts · 309 votes
11y
100% subbed out for me. I am moderately skilled swinging a hammer and really suck at getting things squared up, but I can boss folks around like nobody's business!
6 Reply
Karen Rittenhouse
Flipper/Rehabber · Greensboro, NC · Member since 2010 · 623 posts · 615 votes
11y
I don't know how to install a tub or bathroom vanities - nor do I want to. There are plenty of people in the world to do that and it makes me zero money. Whatever you think you're saving, you're wasting the valuable time you could be spending talking to buyers and/or sellers. THAT'S where you make your money.
A millionaire makes $500 per hour. If I can hire it out for less, it's hired out. There are not enough hours in the day to do everything we need to do. And, by the way, we buy 8-10 houses per month, then sell most of those in the same amount of time. We could not do that if we were in a bathroom hammering away.
Best to you!
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Crystal SmithPro Member
Moderator
Real Estate Broker · Chicago, IL · Member since 2014 · 2k+ posts · 1k+ votes
11y
100% outsourced.
312-681-7487
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Chris Farrugia
OP
Involved In Real Estate · Naples, FL · Member since 2014 · 68 posts · 34 votes
11y
Originally posted by @Karen Rittenhouse:

I don't know how to install a tub or bathroom vanities - nor do I want to. There are plenty of people in the world to do that and it makes me zero money. Whatever you think you're saving, you're wasting the valuable time you could be spending talking to buyers and/or sellers. THAT'S where you make your money.
A millionaire makes $500 per hour. If I can hire it out for less, it's hired out. There are not enough hours in the day to do everything we need to do. And, by the way, we buy 8-10 houses per month, then sell most of those in the same amount of time. We could not do that if we were in a bathroom hammering away.
Best to you!
Thanks. I'm looking to buy one house. I don't have the cash for more so I do have a bit of time.
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Account Closed
Contractor · Raleigh, NC · Member since 2014 · 651 posts · 510 votes
11y
@Chris Farrugia This business is different for everybody. Some enjoy doing many deals while others enjoy making money while engaging in a very satisfying craft.
If you are trying to learn how to rehab a house, living in and working on your own is a good approach. If you are methodical, you can learn to do most remodeling tasks yourself. And having to live with the process and results will teach you to appreciate and understand the importance of producing work of a high quality.
If you then go on to do other things in real estate, this experience will only help.
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Mark Forest
Real Estate Investor · Fenton, MI · Member since 2008 · 946 posts · 153 votes
11y
My wife and I just installed a new bathtub in one of our houses. Youtube is your fiend. We knew nothing about how to do this till we researched it on the net. If we ever have to do this again we will be much faster.
I have never understood how landlords make money by not working on their own houses, but judging from the responses here it looks like they do. If you get cheap labor from craigslist how do you handle workers comp insurance? If you go with a big company that already has insurance you will pay retail prices. If you pay for your own insurance it can be pricey and it gets tricky with what they will cover.
I do most of my own plumbing and electrical except for major stuff like installing a main panel. I also wont do roofs because I may fall. I plan to take an HVAC course one of these days so I can at least trouble shoot.
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Arlen Chou
Investor · Los Altos, CA · Member since 2014 · 942 posts · 1k+ votes
11y
@Chris Farrugia I think your question is more about how to learn the skills that are applicable to your current situation. If I understand correctly, you are looking to do the rehab with a limited budget and to learn some new skills. If that is the case go to Home Depot and buy your self the orange Do It Yourself 1-2-3 book. Next go to youtube and watch as many videos as possible on the specific skills you need. Also many of the guys working the isles at HD are retired tradesmen. Ask them questions and get advice when you need it.
Most of the basic rehab skills you mentioned are really not that difficult to acquire. The most important thing to know is that buying the right tools makes a huge difference in the frustration level you will experience. Live in the place like you plan, learn the hard way, what it takes to do the various jobs.
Don't do anything that might create hidden dangers, like trying to pull your own electrical wiring or framing. When you do call in licensed people to do work, follow along watch them and ask questions. The knowledge you gain by going through the process will be a valuable tool in the future when you negotiate with contractors and you will be saving yourself some cash!
Good luck!
-Arlen
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Mark Forest
Real Estate Investor · Fenton, MI · Member since 2008 · 946 posts · 153 votes
11y
Originally posted by @Karen Rittenhouse:

Whatever you think you're saving, you're wasting the valuable time you could be spending talking to buyers and/or sellers. THAT'S where you make your money.
But do you really spend all day talking to buyers and sellers? Maybe I am doing it all wrong, but I find that I have to work on my own properties or the costs will overwhelm me.
This is a good thread.
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Mark Forest
Real Estate Investor · Fenton, MI · Member since 2008 · 946 posts · 153 votes
11y
Originally posted by @Arlen Chou:

Don't do anything that might create hidden dangers, like trying to pull your own electrical wiring or framing. When you do call in licensed people to do work, follow along watch them and ask questions. The knowledge you gain by going through the process will be a valuable tool in the future when you negotiate with contractors and you will be saving yourself some cash!
Actually wiring and framing are not hard to learn. Go to Amazon and get books like Wiring a House by Rex Cauldwell for electrical. There are many good framing books too. You are right in that by watching contractors do the work you will learn a lot. I have to admit I am probably a pest to any contractors I hire because I ask questions and watch everything they do.
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Mark Forest
Real Estate Investor · Fenton, MI · Member since 2008 · 946 posts · 153 votes
11y
I just noticed that this thread is in a flipping forum. Maybe that makes a difference. I am only a long term buy and hold landlord.
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Mindy JensenPro Member
BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
11y
@Chris Farrugia We live in our flips while we are working on them. Since it is our primary residence, we live there for two years, not rushing the work, and then sell and pay zero in capital gains.
Or at least we did until we had kids. Having children, especially small children, really hinders the work you can do on a flip.
YouTube, the do-it-yourself classes at the big box home improvement stores, and the DIY section of the library is where we learned how to do almost everything.
I am with you, I don't know how people make money off their flips when they hire everything out. I have a couple of really great carpenters I have used, and a whole bunch of people I will never call again... It is such a crapshoot finding a skilled laborer to do the work.
J. Scott had a great recommendation for finding a good contractor - go to the home improvement store at 6 or 7 in the morning. The guys there are preparing for the day, and picking up supplies before they start the day. The guys at 10 or 11 generally are there because they slept in or forgot something.
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Darrell Shepherd
Rehabber · Smyrna, GA · Member since 2013 · 864 posts · 510 votes
11y
I manage my own rehabs, but do zero work in houses, I point and write checks. You're not increasing your margins by doing the work yourself, you're buying yourself a job. Nothing wrong with that if your time is worth what you'd pay someone else right now, but there are all kinds of things I'd rather be doing for what I pay my guys. Plus I'm a finance major, my work would be terrible... I highly recommend reading eMyth, 4 hour workweek and some of Kiosaki's stuff for perspective on what your goal is for your business should look like. You obviously can't start that way, but eventually you want to be able to leave your business for a year and it improve while you're gone...
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Ned CareyPro Member
Moderator
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
11y
I do not personally do any of the work. I can't think of a successful investor I know that does the work themselves. I know several unsuccessful ones.
Time is more valuable than money.
Keep that quote in mind the next time someone complains they are putting up all the money.
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Josh D.
Investor · Webster, NY · Member since 2014 · 19 posts · 14 votes
11y
Very interesting to hear all of these points of views on this subject since it's something I'm always reflecting on. In my opinion, the only way you can set yourself up to make serious money in this business is to sub out 100% of the work due to one simple factor: time.
However, I choose to do 100% of the work myself and here is my reason why:
I think it has to do with your personality and what makes you happy. It took me a long time to realize that I like doing 100% of the work myself. It alleviates alot of frustrations. My phone's not stuck to my head calling subs, not frustrated with anyone that didn't do their job, it's just me and the radio in the background.
It feels good to fix something and then stand back and look at it. I also like the satisfaction of knowing that I am making more working on the flips as an investor rather than a carpenter in a dead end job which I did for years growing up.
I grew up in a construction family and was surrounded by friends who grew up in construction families. I had to learn every trade, it's the only way to get out of digging a ditch when you're the low guy on the totem pole. I also learned how brutal it is to work in the hot sun, severe cold and in areas where one slip could mean a broken neck. I worked my way through college swinging a hammer just so I wouldn't have to go back to a dead end construction job like so many of my friends and family.
Now fast forward many years and I have traded my cushy desk job to get back to my roots in construction and I do that through investing. I just couldn't stand sitting in front of a computer screen any longer. I am now thankful to have learned the trades and have the option of doing the work myself.
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