First Flip - DIY rehab or contract it out?

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On my first flip I ended up 'DIYing' a few of the 'easier' items like demolition, painting, carpentry, landscaping, etc in order to save money and make the numbers work.I had a full-time job where I was working 50+ hours a week & then going to the house after work until 10pm at night. It was miserable, it was tough, and looking back it was not the best use of my time.At the very least, I would strongly recommend you analyze your deals as if you are hiring contractors to perform the work. This will put your projects in a strong financial & profitable position from the start.

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Hi @Claire D. congrats on your first flip. Are you or anyone you know experienced in construction, rehab, plumbing, electrical, carpentry, paint, etc? If so then I would glean off some of those relationships.. If not, I would advise to hire if you are able. You made great points about the cons of both, however there are other Pro's of hiring out other than labor. That includes relationships with investors they may have, ability to learn from them by watching them work and gain a greater understanding of the process. I'd also advise to research pricing on labor and material. Some contractors include in their fee going to go and get materials for you. At the very least you should know what materials are used, how much they are and as you grow in your career, you'll be able to size up the cost of a job on your own. Lastly either route you decide to go, try and get a mentor that is experienced with fix and flips in your area. This alone has exponential value. When I first got into real estate, that's what got me to where I am. Someone who made plenty of mistakes and had a great system in place. Hope all goes well for you. Congrats again!

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Congrats on decision. it depends in my opinion on how good you are at finding deals.most dnt know where to look for a good/smoking deal. Therefore, they are stuck having to rehab themselves to save money to make a decent profit. Depending how you are paying, hard money etc all.I deal with pay 100% of rehab, purchase price depends on how good deal is. I had several of my deals funded 100% rehab and purchase etc. For Example, purchase price was 485k rehab was 56 and i sold it in less than a month for 829k they had no issue funding all that lol. As far as rehab good to know places to get materials etc at great prices outside of big box stores. Big box good for some stuff but some stuff cheaper alternatives. Lastly, knowing where to save money on flips is crucial.

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Let me start by saying congratulations on starting out young investing in real estate! We started out doing the majority of work ourselves, and have added areas we hire out as we have gone along. My husband had a lot of experience in construction starting out though, but google can be a wonderful teacher. I would advise to definitely hire plumbing, electric & HVAC since you are not experienced in those areas. When you are looking for a contractor it is imperative to see their work so you know what you can expect from them. There are a lot of contractors who do sub-par work out there. Make sure your agreement is in writing to avoid miscommunication and misunderstandings, and don't make the final payment until you are completely satisfied with the job. Honestly, I wish we had hired to majority of the hands-on work out from the beginning and ran the jobs instead of doing the work. You have to look at the value of your time when considering which direction to go too. Are you better off hanging the drywall, or working to find another deal? Good luck to you!

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Great advice from all! It seems since I'll be working a full-time job and have no rehab experience my time would be best focused on managing the project rather than doing the work myself. Might pick a cosmetic thing or two to try out on my own just to get my hands dirty. Definitely planning on spending time educating myself on the cost of materials and labor in my area, spending time to find great contractors and hopefully find a mentor soon.Thanks for the great responses!

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Claire, if you do not have construction experience my advice would be to not put your investment on the line to learn. You will lose money, you will go over budget, and over your time frame that you plan on the flip. Poor workmanship will show up quite obviously when you go to put your home on the market and it will destroy your profit margin.

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I would do a combination And sub out big stuff you need permits for but you learn a lot from being involved and active.

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I eco most of what has been said to date and your pros/cons are valid. Without knowing your deal details and condition of the property here's my general recommendation... Since you have no construction experience I would absolutely stay away from rehabbing the property yourself. You're in the business of real estate investing not construction. Allocate the time you would have used on manual labor to vet out various tradesmen and find new deals. If you want to paint and do some fit and finish work yourself that's fine but I would still advise you to hire that out. Don't be fooled, painting correctly takes skill.Don't forget to track your hours! Many investors tell me they saved a significant amount of money in labor costs because they did it themselves however if you take their profit and divide that by the time they had onsite their hourly "wage" is far less then they had thought. Execute on a deal that you can hit your profit margins without picking up a single tool other than your pen to write checks. Good luck!

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@Claire D. I would evaluate whether or not to do the work yourself based on a couple of things. First, how quickly can you complete the work? If you cannot complete it in nearly the same amount of time as a contractor I would say you may want to consider subbing it out. Thinking about holding cost in this scenario. Second consideration would be, could your time be better spent doing other things. If the amount of money saved (minus the value of your time of course) does not far outweigh the amount of money you could make or position yourself to make with that same amount of time then you may want to consider subbing out the work. I have heard from multiple investors who have completed rehab work on a project while holding down a job that it is miserable and they would not make that decision again.

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wendy makes great points. In addition it depends on investor many like to be hands on. They usually grow slower cause you cnt leverage yourself lol. Only one person one deal at a time. I was always taught never do any work myself even though I can't anyway lol. Time I am doing that is time i could be finding next deal etc. As far as contractors there are many ways to find good ones.