Worth it to become a contractor?

[Joel Harrison]

A short history of me... I became seriously interested in REI two years ago when a co-worker was telling me about his adventures in REI. He shared this community with me, and kept telling me his stories and showing me pictures of his investments. He has since all but quit the industry we used to work in together (I’m still in it), and has gone full-time REI. So much that he recently told me that what has now become a family business is acquiring a new property every month or so. I’m sure this is small potatoes to some of you hard hitters out there, but it’s incredible and huge to me. My friends father was a contractor when he was growing up, and he worked for his father through high school so he had that experience already. This seems like a huge advantage in the world of REI. As for me, my experience regarding any construction work was as general labor on a framing crew during a couple of summers in high school. Not much. So, fast forward to now, and I have bought my first house with the intent of doing a live-in rehab into a decent rental over the next two years, the first of which I am well into. I purchased the house in March. My girlfriend and I have done most of the work ourselves up to this point, but it’s has been mostly just cosmetic stuff. I did hire a friend of mine to help tear down a wall and put up a header beam in its place. Also to help build a wall for what will eventually become the master bath. (This house needed/needs a LOT of help.) I also had to get the HVAC replaced in its entirety. Duct work, unit, pump... EVERYTHING. There had been rats nesting in the old ductwork, and the pump was full of nest material and who knows what else. We lived with it for a couple of months before we realized the extent of gross that the rats had caused. Then the AC unit developed a Freon leak. It had to go anyways, so instead of throwing over $1K into the old unit that needed to be replaced within a couple of years anyways, I went full-tilt and spent $5800 on the all-new stuff. There is a house two doors down that just got scooped up by an investor who seems to be pretty well established in an off-market deal. We just noticed that the unsavory neighbors that were there had a giant garbage bin in the driveway one day, and it was filling with junk. Then, about a week later, there was a crew tearing out kitchen cupboards and walls and such and filling a new bin with it. So, a couple of days ago, I saw who seemed to be the crew chief out taking a short break, and went to talk to him. I thought that perhaps he was the investor, but he wasn’t. He told me that he is just the guy who runs the rehab crew for the investor, and that the investor is a contractor. He also showed and told me what they had done to the house. It was a TON! I was blown away that they could do so much and still turn a profIt! This got me interested in what benefits were to be had by being my own contractor. Also, what knowledge comes with earning that title. So, here I am. I’d like to ask those who are contractors if they recommend it for someone who is not interested in it for any other reason than for REI purposes. Specifically, my own investments. Would it be better to just develop a solid relationship with someone who is already a contractor, and just hire out the rehab work from now on? I will say that I still enjoyed framing out the walls and putting up the header beam, I am NOT liking ANY part of the drywall work or trim work. Painting is fine as well. Yard work is fine, though I’m certainly no pro with it. Is this just a matter of speed and efficiency at some point? We’ve been concentrating on the main living space upstairs at this point. I am very tempted to have a contractor come in and give me an estimate on the rest of the work for me. I had been trying to keep the rehab costs down to $15K or less, and I’m now at around $10K. I still have the kitchen, master bath and basement to finish. Not to mention a deck and some yard work. It doesn’t feel like there is less than $5K worth of work to be done, but then again, I don’t have much experience in estimating repair/renovation costs. That’s a whole other topic.