Helping with Demos?

Question

Just wanted to get some opinions on picking up the hammer and helping out. Some people say to run a successful rehab business, never pick up the hammer. Others say help out. So, what are your opinions on this? Thanks for the input in advance.

Jake Thomas · Answer

This question depends on where you are in you RE career. If you are in your first few deals I see nothing wrong with picking up the hammer and learning a thing or two. Like someone else said if you are above your skill level hire a pro. I remember I had hardly no money my first few years and I needed to work on my own properties hiring as little as possible to conserve cash. This is easy for guys that have been doing this for 10+ years to say it makes no sense to work on your own houses for things you can hire for $10-15/hr but do you also want to be 10 years into the business and not understand anything going on in your own properties? I just installed two toilets last night in 30 min and saved myself over $150 in labor. Or the previous week I installed a back splash in a kitchen that took us 3 hours to put up and 1 hr to grout. Saved myself over $500+ in labor.  Now, I don't want to be a contractor as a career but it is nice to learn this stuff so when I hire it out I know what to look for and I also know how to estimate rehab costs. As we grow we slowly hire more things out and eventually will get to sub contracting all the work but as we grow but the business will need some of your time in the beginning. I still have plenty of time to look for deals and be a Realtor.

Eric Griemsmann · Answer

@Joe Splitrock. I definitely agree. My time is more important to me honestly. I won't to run a rehab business not do rehab. You know what I mean, I have bigger plans for the BUSINESS.

Joe Splitrock · Answer

@Eric Griemsmann when I first started, I did considerable demolition as a way to save money. It took me way too long to understand the value of my time. In fact, I still struggle with doing things myself. Here is the reasons you shouldn't do this:

- Your time cannot be expensed. If you hire someone, you can take that as an expense and it reduces your taxes. Yes, it reduces profit too but if you wanted a part-time job you could find something better than demolition. Delivering pizza pays more per hour!

- Hiring work done can get it done faster. Bring in four guys and they have it done by lunch time. You will spend three days there to get the same work done. Time is money. Get it on the market faster.

- Your time is better spent on higher value activities like finding new properties. You should be looking for your next deal.

- There are health concerns with demolition. First is the physical wear on your body. Larger concern is the toxic materials are released and can be absorbed through your lungs, eyes or skin. Why even take the risk for the low cost of labor that will do it for you?

Jeffery Waicak · Answer

idk every  flip this house  has the flipper helping with demo.  Lol.

But seriously,

Idk that it  doesent just come down to dollars per hour savings,  in truth it could be none if you had a hard dollar bid. But I 100% believe that it will help build repore' (not sure I spelled it right) with your contractors.  You go from in Their eyes a big shot investor aka the man to somebody who will help them out, especially if it was  hard money. You are improving their hourly rate.

It's also  educational for you. It will help you see if you're getting taken advantage of by contractors, that being said, I always think it will be easier and quicker than it is lol. But that may help you  walk on a deal because you see too thin of margins.

My answer would be if you have the time available, and want to build a team,then yes help out with anything you can. If you're too busy with other things, or don't want to or care to build a relationship with your subs, then dont.

I personally enjoy the work, I wish I had more time to do it. I help where I can but anymore,  I'm basically just an expediter, and even then I drop the ball more than I should.

J Scott · Answer

You can hire someone insured to do demo for $10-15/hour...unless your goal is to earn $10-15/hour in the flipping business, hire it out, as that's what you're earning while you're swinging a hammer...

The more important question is what you should be doing during the time you're not swinging a hammer.  Personally, I like to use that time to focus on the $500+/hour tasks, like finding new deals and raising money to do the new deals.

If I spend 30 hours to find a new deal and 10 hours to find the money for that deal, and then I earn $20K from that deal, I've essentially earning $500/hour for my work.  Much more interesting that earning (saving) $10-15/hour by swinging a hammer.

Luis Correia · Answer

Always pick up the hammer. If you have the time and energy then anything you do yourself will help your bottom line.  You willl gain valuable insight into the rehab process that cannot be learned from being an onlooker.  Be cautious of trying to do work above your skill level.  Could cost you more time and money.  I always help out my subs to not only learn from them, but to also improve my relationship with them.

Jeffery Waicak · Answer

@ J Scott

Excellent point.

J Scott · Answer

My experience has been different.  I've worked with literally hundreds of contractors, many of whom I've had VERY good relationships (I have contractors who have been working with us for nearly 10 years and we go to each other's kid's birthday parties).  But, despite the good relationship, my contractors absolutely hate when I (or my project manager) tries to jump in and "help" them.  Typically, the "help" we provide just causes the whole project to take longer, and when we screw something up (yes, I've even screwed up demo before), my contractors typically just get annoyed.

My contractors would much prefer if we stayed out of their way, and just bought them pizza and beer instead.  They'd much rather eat and drink with us than have us trying to "help" them do their job.

Perhaps your contractors are different...if so, feel free to ignore my advice...

Jeffery Waicak · Answer

@ David Dachtera yes you are correct,  if it comes down to making a deal or helping out with labor, make the deal happen.

Using  the $500/ hour math, you're right I would lose $480+ an hour. Using the same math, if I was able to work deals at $500 an hour for 40 hours a week, I'm making  a cool million,  and taking off 2 weeks for vacation too. I'm not, a seven figure earner yet

As far as liability goes, you should maybe consult with a lawyer. I however don't see too much cause for concern helping sweep up, carry trash, light demo, etc

Again,  the point really isn't the money saved. As I said if you had a hard money bid job, the bid won't change a bit. But, if you can build a better relationship with your contractors, that is where the value really is. For me at least

Patrick Liska · Answer

That is my opinion, like i said, i am not a lawyer, and i suggested a reason what may happen if you decide to do any work. any input from any lawyers on the site would be helpful on that, or if you know one, maybe pose that question to them - if you can be sued personally if you work on the house. I don't take that chance and i am a General Contractor. i would hire a general contractor and let them hire all their subs, this way if there are any problems, it all falls on them.

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