Should you use a Contractor to Rehab a Flip or do the Work Yourself?

I do many fix and flips a year, and I always use a contractor to rehab them. A few years ago I decided to rehab a fix and flip myself without using a contractor. I thought I would save money on the labor a contractor would charge by doing the work myself. Doing the work myself may have saved me money on the labor, but in the end I lost money on this deal because of how long it took me and the opportunities I lost. Now I always use contractors to work on my fix and flips and long-term rentals.

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What kind of flip did I decide to rehab myself?

When I did the repairs myself on this fix and flip, I thought I would save money on labor costs. The problem was I am not a professional contractor and I had to learn how to repair the home. This particular house was about 60 years old, needed paint, carpet, new floors, new doors, new windows, a new kitchen, a wall taken out and a lot more minor repairs. I may have been qualified to paint the house and that was about it. It was a long process!

Here is a great site to help you find local contractors.

Why doing the work myself did not save as much on labor costs as I thought

This home needed a lot of work and although I had done minor repairs on houses before, I had never done anything to this extent. I was sure that doing the work myself would save me thousands of dollars. The problem was it took me six months to finish the work on this house. I had to learn how to do all the work on the job, and that took me at least three times as long as it would have taken a professional. It may have saved me a little money, but not much because it took me so long to make the repairs.

Why taking a long time to make repairs will cost you money on a flip

When I fix and flip a house, I use financing for most of the purchase price. I also get insurance on the home, pay utilities, taxes and many other costs. All those costs add up very quickly and that is why it is important to sell a fix and flip quickly. For more information on how to finance fix and flips check out this article. The longer it takes to make repairs on a home, the less profits you will make on a home.

How much does it cost per day to own a fix and flip?

Let’s walk through what it will cost per day to own a fix and flip with my bank financing. I am lucky that I can finance 75% of my purchase price with a 5.25% loan, because most flip financing is much more. Based on this financing this is how much it costs to own a $100,000 purchase with a $75,000 loan:

Interest:       $10.79 a day

Insurance:   $4.11 a day (insurance is more expensive on a flip)

Taxes:           $2.33 a day (my taxes are very low in Colorado)

Utilities:       $6.25

Total:            $23.28

My costs are cheaper than most fix and flippers because I have great financing. The cost per day could easily double if you were using hard money to finance a fix and flip.

How much do costs increase with hard money on a fix and flip?

If you use a hard money loan, the costs for a fix and flip will increase greatly! A 15% interest rate is very typical for a hard money loan. If we use an interest rate of 15% on our fix and flip example, the financing costs increase to $30.82 a day. But with hard money however, you may be able to finance the entire purchase price or more (one advantage to hard money). If the loan amount was $110,000, the financing costs jump to $45.21 a day for a hard money loan. Now your daily costs are $57.80 a day to own this fix and flip.

The costs of a fix and flip add up very quickly

The $23.28 per day to own this fix and flip equals about $708 a month in costs for me or $1,758 a month with hard money. Owning a fix and flip can be costly, and for someone who must use hard money it is dangerous to hold a property too long. It takes me about six months to sell a fix and flip once you figure repair time, marketing, getting a contract and closing.

For me I would pay $4,248 in carrying costs over six months or $10,548 for someone using hard money. Remember those costs do not include repairs, buying costs or selling costs.

The costs of a fix and flip go up with a higher priced home

A $100,000 fix and flip is a cheap house in my area and most areas of the country. If you are buying fix and flips that cost more money, your daily costs are going to increase as well. Don’t be surprised if your daily costs double on a house that costs $200,000 instead of $100,000.

How much money did it cost me to do the work myself on this flip?

I know it took me at least four months longer than it would have taken a contractor to repair this house. It cost me at least $2,832 in carrying costs to do the work on this home myself, which is less than a contractor would have charged me for labor. That actually isn’t too bad, but the truth is it cost me much more than that.

One of the most important things you can do on a fix and flip is sell the house quickly. Not only does it save on costs, but it allows you to use your money to buy more houses and complete more fix and flips. If all your money is tied up in one house for eight months, you may miss out on an incredible deal because you don’t have the ability to buy another flip.

The longer you hold onto a house, the better chance the market will change. We are in an appreciating market now, but that could change quickly. I like to sell my fix and flips quickly because I never know what the future holds.

I did not save all the labor costs because my time is worth something

I may have saved money by doing the work myself, but how much time did it cost me? My time is worth something and I was a Realtor when I did the fix and flip. My business suffered greatly because I spent so much time working on this house. I had my worst year of my life as a Realtor because I had no time to go after business.

What was the opportunity cost of doing the work myself?

Not only did my real estate career suffer, my fix and flips suffered as well. This was the only fix and flip work we were doing at the time because I was not looking for new projects; I was busy with this house. It cost me tens of thousands of dollars by focusing on this house and not looking for others.

Was I able to do good work on this home as a beginner?

Another factor I hate to think about is the quality of my work. I am not a professional contractor, yet I was doing jobs a pro should do. I was learning and definitely not doing the high quality work my contractors do. There were some jobs like taking out a wall and putting in a header that I had a contractor do, because I didn’t want the house to fall down. Other jobs weren’t done as well as they should have been that I did myself.

How much money did I lose by doing the rehab myself on a fix and flip?

I hate to think about how much the decision to do the work myself cost me on this house. Not only did it cost me months of my life, it frustrated me, it cost me business as a Realtor and it cost me business flipping homes. It’s hard to put a number on the figure, but I estimate this decision cost me at least $25,000, even though on the surface I may have saved a couple thousand dollars by doing the work myself. The work was not that great, and that may have cost me even more money on the sale of the home.


In some cases it may be wise to complete the rehab yourself on a fix and flip. If you are a contractor, then it may make sense. If you don’t have a job and plenty of time to work it may make sense. Otherwise you are probably costing yourself a lot of money by trying to do repairs yourself on a fix and flip. Hire the pros, who can work quickly and do it right.





  1. Cheri March 25, 2014
    • investfourmore March 26, 2014
  2. Tony March 25, 2014
  3. Shane Veltri March 24, 2014

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