Do I pay myself for labor?

[Maria Taylor]

When a hard cash loan funds the rehab of a house,  and we do the labor ourselves, do we pay ourselves from the reimbursement? If so, would it be better not to incorporate the cost of labor at all and have to pay interest on less money? 

[Zach Westerfield]

That is a personal decision. At the end, all the money funnels back to you. When I set my budget for a flip, I factor in paying labor for everything, that way if I decide I dont want to do something its already accounted for and im not stuck (learned this the hard way). If I do wind up working on a project, I pay myself. I actually have a separate company I use to charge for any hands on labor, such as installing cabinets on a flip or mowing grass on a rental property. At this point, I only do things I enjoy. I use the proceeds to buy tools and such, that I use for the business (tax deductions). For me personally, I like woodworking and working on things as a hobby, so I would be buying the tools anyway. 

This method also helps when you partner on a deal. I have had partners that put up the money for a flip. If I did labor work, I paid myself just like I would have paid a contractor.