DYI or Sub it out?

Question

So I am new to the forum, just made my first investment property purchase last week and bought a house for $25,000 cash.  3 Bedroom, 2 bath, attached garage on slab with fenced in back yard and shed.  Comps in the area are $85-$115. It is currently cut 4ft. up drywall, floor removed and full of junk.

We have to put down new floor, small amount of electric after a new panel, redo most plumbing(above slab), new roof, new HVAC, new bathrooms, most likely new garage door.  Here is the question...

My partner and I have full time jobs.  I am a digital advertising director and my partner is a full time contractor.  We have been rehabbing other people's homes for the past few months now and are comfortable doing all of this work ourselves, neither of us have any licensing.   How do I know if it is worth it save money on doing it ourselves and not having a renter in it vs subbing it all out to gett a renter in it faster.

Need some advice for a newbie...

Jassem A. · Answer

You will probably save money doing it yourself. You may not have to pull any permits if you are just changing out or installing a panel and not upgrading service.  If you are not moving any plumbing lines then you should not need to have to get a permit for that either.  If the house is condemned right now then they will probably require an assortment of permits from licensed contractors and maybe an engineer report from a structural engineer. Some places allow unlicensed contractors to pull the permits and do the work if you complete a form that they may have and have it notarized.

Clayton Miller · Answer

Thank you everyone for the responses. I think what I have gathered from these  is sub sub sub and when you can't get a guy or gal in there to do something now, do it yourself.

We have rehabbed, for other people, 3 places now in the past 6.5 months. There is about the same amount of work to be done so we can guess 2-3 months will be easy. Opportunity cost wise, my time could be spent finding more money and the next deal so I think there you have it. Send my partner in to work in the off hours and send myself to the bank or prospecting.

Thank you all for the advice. I will keep you posted on how it goes.

Jeff Bridges · Answer

The speed of paying someone to do it A) quickly B) correctly by a licensed trade usually seem to outweigh the cost savings of having both of you do the projects in your spare time, resulting in lost rent and extra holding costs. You'll end up saving nothing by doing it yourself part time over several months. Also, there might be ill will between partners if one of you ultimately puts in more effort on the project and carries most of the weight of the project. What if both of you end up being too busy and it takes 6 months to complete? Calculate the length it will take you to do all of the projects in your spare time on the weekends/evenings and add up all of the lost rent plus holding costs. See how this total will compare against paying multiple subs to do this for you in a month or so and start getting rent in 30-60 days or get it sold ASAP if a flip.

Also, if you are selling down the line, then there will be an expectation from the buyer that this was done professionally and using licensed contractors and you might have some liability if they were to find out your renovations were sub-standard and unlicensed, and the sale might backfire when an inspection is performed and fines many problems that don't meet code...

Finally, this doesn't preclude you participating in small projects you are confident about to save money here and there as time allows, but the completion of the project might not be totally reliant on your labor and can be easily covered by a contractor if you don't have time to finish..

Thomas S. · Answer

Expect contracting it out to cost twice as much. Figure out your time verses carrying costs compared to possibly 1/10 the time but twice the cost.

I would figure if you could not complete all the work yourself in 2-3 months maximum it isn't worth doing yourself. Take a quicker turn around at a lower profit and move on to the next one.

J Scott · Answer

Here's how I like to think about it:

How much is your time worth? I don't mean that in some sort of cliche fashion, but literally, how much is your time worth?

Is it worth $10/hour? $20/hour? $50/hour?

In other words, if you spent that same amount of time doing other work  (whether it's your career, a paid hobby, flipping burgers, etc), how  much would you be earning? This is sometimes referred to as your  "opportunity cost."

Now, if the amount your time is worth is *LESS* than what you'd be  paying a contractor, then by all means, do it yourself. But, if your  time is worth *MORE* than what you'd be paying a contractor, then you're  making a bad financial decision to do it yourself.

Btw, as a real estate investor, your time really should be worth more  than what a handyman gets paid. A good real estate investor should be able to earn $500+ per hour doing things like finding deals, raising money, networking, improving their processes, etc.  I don't know many contractors who cost that much.

So, in my opinion, there is rarely a good time to be doing it yourself...unless, of course, you're doing it for non-financial reasons...

Mindy Jensen · Answer

I believe the rule of thumb is if you aren't living in it, you can't do the electric/plumbing. Of course, those are local ordinances, so check with your code office.

New floor I would do myself. It's easy to knock out. Ditto bathrooms.

I'd sub out the rest just to start, and then take a realistic look at your schedules for the next two months. Nights and weekends can knock it out in 30-60 days, but do you have the time available?

If you do have the time available, how much are you going to save by doing it yourself? If you prefer to hire it out, do you know someone who can do the work? If your partner is a contractor, that might not be your biggest issue.

I'm a HUGE fan of DIY, but only when it makes sense.

DYI or Sub it out?

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