Even if you’re a general contractor, doing the rehab work yourself on a fix & flip can cost you money. Here’s why.
Running a successful fix & flip project means dealing with a lot of moving parts at the same time. Real estate investors handle keeping all these things running smoothly by bringing on contractors and service professionals to handle the renovation and rehab work, but outsourcing the work can get expensive quickly. If you’re handy, you might consider just doing the work yourself to save a few bucks, but is it really worth it in the long run? Should you do the rehab work myself or hire a contractor to help you out?
The answer to this question largely depends on your experience and expertise in flipping properties. If you have a strong background in construction or are familiar with rehabbing properties from your own experience, you may be able to handle the rehab work yourself. However, if you’re not experienced in construction or rehabbing, hiring an experienced contractor may be good to help with the project.
So let’s talk about the pros and cons of being a DIY fix & flipper. Plus, I’ll give you a tip for how you can have the best of both worlds so that your property stays under budget while still getting it in sellable condition on time. Let’s dive in.
The Pros of Doing the Rehab Yourself
Pro #1 – Saving Money
The obvious pro is that you get to pocket whatever you would have paid hiring a general contractor. In addition to these savings, you would also save on any potential up-charges a contractor may require. Contracting up-charges always affect your overall potential profit.
Pro #2 – Speed
If you are familiar with the process and have the necessary tools, you can get the job done much faster than if you were to hire a contractor. This is especially true if you are working on your own home and don’t have to worry about other commitments.
Pro #3 – Control
One of the most significant benefits of doing rehab work yourself is having complete control over the project. You can decide what needs to be done, when it needs to be done, and how much it will cost. This gives you a lot of flexibility in terms of timing.
Pro #4 – Learning on the Job
As you serve as your own general contractor, you receive more experience and on-the-job training. They say the best way to learn is to do. By doing this, you can learn a great deal about the general contracting business and understand how contractors operate. You also receive more training on processes, such as systems and fixture repair and replacements.
The Cons of Doing the Rehab Yourself
Con #1 – You May Not Know the Codes
One of the pros of hiring general contractors is they will have previous experience dealing with building codes. They will know which permits need to be pulled. They will also know how to obtain approval from code enforcement and inspectors. If you have no experience with this, you may want to look into hiring a contractor.
Con #2 – You May Not Have the Equipment
General contractors have access to a wide range of equipment, such as power tools, saws, hammers, and ladders. If you do not have these items, you may find it difficult to complete the project on your own.
Con #3 – You May Be Exposed to Risks
Asbestos, lousy wiring, mold, these are all things you might get exposed to during a rehab that can drastically affect your health. If you don’t have the proper safety precautions in place, you could do some severe damage to your body, whereas a contractor typically comes prepared and understands how to avoid those risks.
Con #4 – The Project Could Take Longer Than You Want
The project could take a long time if you do it yourself. You may not have the same level of experience or expertise as a contractor. Also, as the business owner, you’ve got a lot of other things to take care of that require your attention. This could lead to delays in the project.
Con #5 – You Would Be Liable
With great power comes great responsibility. And with great contractors comes all the blame. More often than not, the liability falls on the general contractor if there is an accident or if anyone gets hurt. If you decide to be your own contractor, be sure to invest in worker’s comp insurance. Also, if something goes wrong with the work, it will come back to you. Likewise, if a buyer discovers a problem with the quality, you would be directly responsible.
Con #6 – Contractors Can Get Discounts
If you’re not a contractor with years of experience and solid networks in place, you can expect to pay full price for materials. Many general contractors with good reputations can get discounts on materials. They can also help you save money on sub-contractor labor. Therefore, it may be wise to invest in a good contractor to save money in the long run. Plus, you can more likely get the project done right the first time with a general contractor.
Con #7 – Contractors are Professionals
Experienced contractors tend to know the best and most efficient processes to get jobs done quickly. General contractors know which items need to be completed, how long it takes to complete them, and how to schedule their sub-contractors accordingly. You can definitely learn on the job by serving as your own contractor, but you may not have the time or money to compensate for a learning curve.
Which Is Better for You?
There are pros and cons to both options, so it really depends on what you’re looking for.
If you can, it’s always better to have someone else do the work. They’ll be able to do things faster, more efficiently, and with less chance of mistakes.
If you’re able to do the work yourself, that’s great! You’ll have more control over the process and can make sure that you’re getting the most out of your fix & flip. However, if you’re not experienced and don’t have a good contractor network in place, you may end up spending more money and time than necessary.
It’s important to weigh all of your options before making a decision!
One More Thing to Consider – How to Have the Best of Both Worlds
One of the better ways to hire a contractor for a more involved project while taking care of more straightforward tasks (such as painting and tiling) yourself. You can save a great deal of money that way and still have someone to help with more complex tasks.
In conclusion, it is up to you whether or not you want to do the rehab work yourself. There are pros and cons to both options. However, if you are not experienced in rehabilitation, it may be best to hire a professional company to help you with the process.