There is always going to be some management of your project whether you hire your own crew or a GC. It will just depend on how many projects you’re doing at a time. Once you get to a point that you have three or more projects going at a time you may want to hire your own crew of contractors. By doing this you can have a crew on your jobs at all times and eliminate down time waiting for your contractors to finish other jobs. Also, I find that costs of bidding a job out are generally around $40 to $80 per hour depending on the trade. However, having your own crew can save you significantly. Granted you’ll have to buy your own materials, insurance, and manage your own jobs or hire a project manager. But even so you can still save 20% to 30% labor costs and that will add up. It is important to emphasize that you need to have a solid crew who are self-motivated and good at what they do.
Implementing a System for Every Rehab Project
After you’ve done a few rehabs and have your methods down, it’s time to create systems. You can standardize your process down to the paint color or carpet style for every project. By doing this your projects will become a lot easier to bid when you have a short list of preferred contractors that know the products you like to use and how you want things done. Having 2 to 3 standard appliance packages, paint schemes, and preferred floor covering types to roof colors will cut your time and costs down dramatically. In this case you can get discounts on materials and your contractors will generally give you the best prices because you both know what you want. Make sure to update your standardized process to stay up to date with trends. This also allows you to utilize left over paint, flooring and other miscellaneous items on future rehabs.
Time is Money
Speed is priority in rehabs as interest costs can add fast and every time you sell a flip property you get your money back to buy another one. Finishing a project in a timely manner can mean an extra couple of deals or $30k to $40k in your pocket more every year. Make sure that you have your system down before rushing through your project, having to go back and do something twice will be counterproductive and cost you more in the long run.
Remember that a rehab all started with walking room to room measuring floor sizes, cabinets, vanities and drawing layouts for the kitchen and baths. This doesn’t happen overnight. You will need to learn on the job and take the time to know what you’re doing.
From this comes systems, speed and that means more dollars in your pocket. Not to mention the ability to do as many at a time as you want. In real estate investing the sky is the limit!
There are pros and cons to hiring a professional team, or working alone on your rehab projects. What you spend on professionals may pay off in the end, allotting more time for more investments. Consider your options wisely. Starting Point Real Estate is happy to provide the latest trending information for all things real estate. Follow us on Twitter, Facebook, and Pinterest!