Doing the work yourself. - Posted by Jim Kennedy - Houston, TX
Posted by Jim Kennedy - Houston, TX on July 02, 2002 at 06:59:23:
Many will disagree regarding this point. I’ll give you my opinion and let others give you theirs.
I’m of the opinion that there are TWO profit opportunities involved in a rehab. One is the profit intrinsic to the “deal” - the investor’s profit. The other is the profit intrinsic to the “repairs” - the contractor’s profit.
If a rehabber does the work himself, he should expect to earn BOTH profits. Unfortunately, what I see happen more often than not is for the rehabber to give up one of the profits simply to justify doing a skinny deal. Basically, in this situation, there are two ways to look at it. One is that the rehabber is not an investor, but rather a contractor who is “buying” himself a job. The other is that the rehabber is an investor and is working for free as a contractor.
Neither scenario is acceptable, at least not in my opinion.
To take this line of thinking one step further, let’s consider the scenario where a rehabber does the work himself BUT insures that he earns BOTH profits. This, too, is a foolish way to approach the business, IMHO. Why? Because the contractor’s profit is so much smaller than the investor’s profit. And while the rehabber is pursuing the contractor’s profit (doing repair work), he’s not available to pursue the next investor profit (doing deals). To put it simply, I can’t afford to spend my time swinging hammers and slinging paint. It’s much more profitable for me to hire the work done than it is for me to do the work myself. This way I can spend my time doing that which is most productive - doing deals.
This is just my 2¢ - I hope it helps.
Best of Success!!