I am a general contractor by trade and have thus far saved up money to buy all of my rental properties (and their necessary improvements) out of pocket. I have recently opened a line of credit to be able to do something like the BRRR method, by buying a cheap/ rough property and improving it with the line of credit and then refinancing it once its completed in order to "recharge" the line of credit and do it all over again. At that point the property rental income would be used 100% to pay its own expenses-- mortgage, insurance, updates, etc.
My question is, I know that I need to include within the budget for improvements the labor that I'm going to have to pay out to my employees, but I'm having a disconnect with justifying paying myself in this same way. Given that by focusing more on my own properties I am going to be virtually eliminating paying work from clients that I would otherwise be doing, should I figure in a wage for myself alongside the wage that I pay my employees when deciding how much money to borrow? Does anyone pay their own personal wages out of credit like that? Or is that a terrible idea?
The justification I have for it is that virtually any other investor who hired us to do work would be getting the same amount of work done and paying my rate as well as my employees rates... functionally putting them in debt the same amount I would be-- and since I am doing the work of scheduling, ordering materials, overseeing, carrying insurance, quality control etc. etc. it makes sense that I be paid for that work, even if I am my own client.
The reason against this is more of an ideological one which-- is that it sounds an awful lot like "living off credit" which I've had an opposition to my whole life and just can't seem to say out loud without getting a cringe.
Anyone have a similar situation or any insight about how they handle it?
-Mike
