True Cost of DIY Rent-Ready Work after Tenant Move-Out

Rehabbing, Fix and Flip, Rental Properties
1

How much does it really cost you to get your property Rent-Ready when a tenant moves out?

We know a property owner that had tenants move out of a rental property in November and the property still isn’t ready to rent out 7 months later. He insists he’s “saving money” by doing most of the fixing up on his own. As he’s losing about $800 per month in rent while it’s vacant, a total of $5,600 so far, we’re not following how he’s really saving any money.

This is an all too frequent mistake made by DIY’s. Of course, it all sounds like a great idea at first – do all the fix-up work yourself after the day job and on weekends, pocketing all the savings!

Seasoned property owners are probably already smiling as they remember making their own mistakes doing exactly this. Those that were lucky enough to avoid making this mistake themselves are probably smiling at thinking of all the “newbies” they’ve seen make it.

So, how does this great idea turn into an expensive nightmare?

Well remember how the work was going to get done after work and on weekends? Many DIY’s severely over-estimate their available time to actually get to a property and do the work. They underestimate their other commitments – working late, traveling for work, practice & games with their kids, birthday parties, the family/friend that comes into town for a few days, the unexpected invite to a sporting or entertainment event, the list goes on and on.

Before they know it – the project that was going to take 30-45 days to fix-up and rent out has now taken twice that long and still isn’t generating any income. Even worse, some start throwing “good money after bad” by thinking that they’ve already lost so much rental income that they have to finish the project themselves to try to get back to “even”.

That thinking rarely works in Las Vegas and probably isn’t going to work in this context either.

Let’s analyze this logically. Are you going to save any money on materials when you DIY a project? Very unlikely. In fact, if you don’t really know what you’re doing, you could easily spend more than a contractor on materials due to your mistakes and waste. So, we’re really only talking about a DIY trading their time for the contractor’s time to save on labor costs. The only other variable to consider then is the time to complete the job. We can all probably agree that a DIY will almost always take longer to do something than a professional. So, the only way for a DIY to actually save money is if they can get a property Rent-Ready fast enough so their lost rents are less than the cost of the contractor labor. We can even put together a mathematical equation to illustrate this:

(DIYTime – ContractorTime) x MonthlyRent < ContractorLaborCost

Which can be rewritten as:

DIYTime < ContractorLaborCost/MonthlyRent + ContractorTime

Example: If rent is $1,000/month and the contractor is charging $2,500 in labor for a 2 month project, than we have this:

DIYTime < $2,500/$1,000 + 2 Months

Or:

DIYTime < 4.5 months

In this example, if the DIY can’t get the project done in less than 4.5 months, than it’s cheaper to hire a contractor to do the job!

Now there are more than a few property owners out there that can pull something like this off successfully. The majority though, for various reasons, can’t or won’t.

By the way, this same logic can be applied to rehabbing a property just purchased – with the intention to rent it out or flip it (resell it)!

So, can you be honest enough with yourself about your available time to make the right decision on your next Rent-Ready or Flip project?

2

I am a firm believer in DIY, but also realize that hiring someone to work with me can often save more than half the time of doing it myself. There are also some jobs I do not tackle myself (roof and siding) because the property is open to the weather too long. Beside saving on labor and materials (yes, I almost ALWAYS save on materials by buying from craigslist and at the Habitat for Humanity Re-Store whenever possible) I also get the satisfaction of having things done the right way … MY way. I build to last forever. Once I finish rehabbing one of my properties I never want to have to deal with those problems again. Its hard enough to get contractors to build to code … just try getting them to build better than code.

3

RoyalRoseProperties,

A great post. I think you have nailed the topic.

Those who like to do the work can do so as a hobby. They can even spend more doing so if they like as most hobbies have a cost rather than make money.

Most of the time people will be selective about what they believe and they will find facts to justify their choice. DIY projects or contractor run projects can go off the rails so there is enough chaos to prove almost any preferred path.

A DIY investor who really is good at investing will generally make more money from finding deals than they will doing maintenance. If that is the case, they should hire out the lower return activities.

4

I can’t afford to do my own make readies. I get my houses cleaned for $300 which includes windows and it gets done in a day.

5

I do it both ways. I don’t mind doing work but if I am too busy I hire it out. That way I get to pick what I am doing. I didn’t paint the outside or put carpet in or change the AC unit even though I can do all three.

I do install countertops and toilets because both can be done very quickly and are expensive to have done.

6

It all depends. I had 2 quotes in the neighborhood of $30,000 for a repair. I did it myself for about $100 in materials and a couple of days labor.

So whether your buddy was saving money or losing money by doing it himself, depends upon what the repair was and what the quote from the professionals was.

7

My husband and I work as a team, he’s the handyman and I’m the “cleaning crew” We only have studio apartments, but we tackle them together and get everything done in 2 days, steam cleaning, dry cleaning, small repairs, paint touch ups etc. Our projects aren’t as large as most landlords since our units are smaller and we rent on a monthly basis, but we wouldn’t dream of letting an outsider touch our units being that most local handymen won’t do things our way. Many of them cut corners, over charge and the work is very messy. We are just blessed that we can do the work ourselves without having to hire contractors.