Who here does nothing?

Question

So last week we closed on a single family that we plan to rehab and resell. I mentioned in an earlier post that I've begun working with an investor in my area who has agreed to take me under his wing. As a way of helping me oversee and understand each aspect of the process, I have been hands-on with every task so far.

The house has been demo'ed, sheet rock has been patched and compounded, we started painting the second floor, rewired the electric in the bathroom/ master BR, and the list goes on.

I understand how important it is for me to experience each part of the process so that I know how to do it, how long it should take to complete, and how much it should cost. I'm curious, however, which parts of a rehab do you guys participate in? Do you demo your own properties? Structure the financing only? Electric? Plumbing? Selling?

So far I've enjoyed swinging hammers and getting down and dirty but i can see from a point of leveraging my time and resources that there will come a day when I should hire out most of the work.

I'm wondering- what specific parts of the rehab do you feel the need or desire to complete on your own and why?

Will Barnard · Answer

While I agree with J completely, I also recommend (and did what I recommend) that when starting out, you spend as much time doing as many things as you can without doing anything that could jeopardize quality or cause delays by screwing it up.

More importantly than actually swinging he hammer in my advice, being there from start to finish through as many items as possible is important to give you that feel of time and effort it takes for each item, which items should go first,second, third, and so forth, as well as spending that time managing the contractors/subcontractors.

J Scott · Answer

I don't do any of the rehab myself...and it's probably better for the end-buyer that I don't.  Even if I had construction skills/experience, I personally believe that being involved in the construction side of things is a waste of my time and money.

The best and highest use of my time as a business owner is to grow, scale and make my business more efficient.  That is what ultimately will make me, my employees and my contractors the most money.  The tasks I like to focus on are the things where a few hours of work will earn or save the business thousands of dollars -- essentially, these are the tasks that are generating hundreds of dollars per hour.  For example, defining strategy, building systems, raising money, focusing on acquisitions, etc.

I'd much rather spend my time doing those things that are earning hundreds of dollars per hour than doing things that will only save me $15-20 per hour (the construction tasks).

The most successful business owners are the ones who spend more time working ON their business and less time working IN their business.  The most successful restaurant owners don't cook the food, even if they're accomplished chefs.  The most successful technology business owners don't write software or build hardware (even if they're good engineers).  The most successful movie producers don't spend time directing or acting in their productions (okay, other than Quentin Tarantino :).  And the most successful real estate investors don't spend their time swinging hammers.

Just my $.02...I'm sure there are some who will disagree...

Levi Gale · Answer

I feel the need to find the deal, create the scope of work, bid the work out, and create a final "punch list". Ultimately I will seek to outsource some of that, but fist I want to create my process and then pass that to someone else. I have no interest in doing any of the rehab work myself; however I did hang the blinds in my latest project. I do small things if I am there, and have the time. But I'm really looking to ramp up the number of rehabs I do so that definitely won't happen anymore. Now if I could find a great contractor to rely on I probably wouldn't see the property much at all.

Don Hines · Answer

It took me two flips and two years (a Year each) to learn what I want to be when I grow up in this business. Even if you don't have a full time job, 2 painters is faster than one. Plus they can be painting the same time the roofers are busy, or floor layers, blind hangers ETC.
Don

Bill Gulley · Answer

Back in the day (as old guys begin) I did it all, grandpa was a builder, I started cleaning bricks like 3rd grade. As a teen worked for a developer gun the footing for a water tower by hand. Ran a new build when I was 19 for the same guy. I got my own and painted, sheetrocked, framed decks and porches, laid a little brick, roofs, so yes I swung a hammer. Jerked wire, plumbing, septic and laterals, laid carpet and some tile, set windows and doors and a couple small additions. Back then if you owned it you could work on it, inspectors walked through, if they didn't get hurt you passed, some places had no inspections!

What I have not done, put vinal siding on, never laid formica, never cut granite, not a cabinet maker but I built inset boxes/cabinets, never did log siding or logs, no real slick concrete finish, no foam insulation work, no hvac except ducts hung, and other odds n ends, so lots I never did.
 
Last one with me inside was about 88 or so, since I ran my own jobs with others as needed. I'd work at the office and change clothes for the night shift then.

Volunteered with habitat, did some gut rehabs with non-profits, 
Today, I may be doing one this summer, I'll walk through and run my mouth that's about it. A younger carpenter type is trying to get me to get him started, probably will, he's a great guy....so why not? But yes, I'm retired and I'm sticking to it!

I'd say if you're really in RE, you need to get on sites and work and learn. I was never great at any of it, probably ditch digging, but I'm no finish carpenter, but you need to know how it's done IMO. When you can strating out, save money or make money, same thing, as you grow you'll do what pays you best. Good luck

George Paiva · Answer

Really good advice given here.  I believe Taylor as long as you have a plan.  Learn and improve as much as you can so you can focus more on the business than swinging hammers.  It is important you are getting down and dirty and eventually move more to the business side of things.  I am basically half way there.  I still like to get hands dirty but I do not hesitate to call plumbers and electricians to do the more tech work.  like others have said if they did it themselves it would cost more and take much longer to complete.

Rob K. · Answer

I totally agree with this and would just like to add a couple things. Doing some work yourself on the first few will give you an understanding of what is involved so you know if a contractor is giving you a good price or not. Without knowing all the details and amount of work involved, it's very easy to get "sticker shock" when someone gives you a bid. You will have a way better idea if you are getting a fair price.

Also, you will have the upper hand over a contractor if you are ever in a time pinch and get a high price. If they know you are capable of doing a job on short notice and disagree with their price, they are more likely to come down as they will know that you are not bluffing.

Dawn Anastasi · Answer

I agree, for the last house I rehabbed (one I am renting out for March 1), I did ALL the painting for the interior (1424 square feet).  This was ceilings, walls, and trim.  Plus replaced all the light fixtures and all the outlets and switches.  And cleaning out the cabinets and floors.  Installing a couple bath mirrors.  It is A LOT of work!!!  (All while holding a full time job.)  I am feeling pretty stressed out right now.

J Scott · Answer

Just to be clear, I 100% agree with Will and James...

My point about not being involved in the work doesn't mean you shouldn't be at the house learning what is involved in the work, how things are done, how long they take, how much they cost, how they are scheduled, how dependencies are managed, etc.  These are all very important things to have a general understanding of.

But, you certainly don't need to be swinging a hammer to learn that stuff, and once you learn that stuff, your time is better spent elsewhere, IMO...

James Vermillion · Answer

This is exactly what we did when we started rehabbing.  The experience you can gain from being around the site and getting a little dirty is irreplaceable, but like Will pointed out, we did not want to screw anything up.  We got involved in the demo and then again at the end of the project with the final touches (putting on switch plates, installing light fixtures, cleaning, etc).  Now that we have done several projects I tend to get less involved, but I do still enjoy pitching in when I can.

Who here does nothing?

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