Pitfall: I can save loads of money by doing the rehab myself

We'll start this blog off with a common pitfall that I believe many investors realize after they start their first project: I can save loads of money by doing the rehab myself.

Yes, and no.

While it is true that by taking care of the labor yourself you will save yourself plenty of money (this is especially true for those of you who are already skilled in this area), trust me, this isn't the place or time to learn how to be a carpenter or plumber. Time is money. If you are skilled in this area, you have a definite advantage over those of us who aren't.

However, I notice people who are skilled in rehabbing want to take care of the entire project themselves. While this seems like a good idea, if you are serious about real estate investing then you should take your investing and treat it like a business. I suggest everyone read the book by Michael Gerber The E-Myth Revisited. The basic concept I'm taking from this book is as a business owner (even if you're small time, a "weekend warrior," this is BIG money and should be treated as such) you have to learn to wear all the hats of a business owner equivocally.

That means balancing the checkbook, finding new deals to work, making your exit strategy, getting marketing ready, working on your project, balancing your timebook, and making time for family, friends, and yourself. Many of you probably have another job where you work, as well. You need to do all these things equally, not too much work on the project or you'll miss out on some good deals. Not too much time finding new deals or you'll mess up your exit strategy. You see where everything's interconnected here?

You must be the manager, mechanic, and entrepreneur all at once. And the different jobs must be balanced.

People who do the work themselves usually find they spent more time on the project that what they anticipated. Especially if you're not already a professional in this area. You are a professional real estate investor.
Let the professional plumbers, carpenters, electricians, etc do their jobs great so you can do your job great.
You are a leader. You may be a great carpenter, but if you're not a great leader, your business will fall short.

That's what I mean by saying those who are already skilled in these areas have an advantage. When it comes time to rewire a house, I don't know what type of wire to buy or what size breakers to use or anything of that nature. I must rely on the professionals. But if you are a skilled electrician, then you probably already know the best way to get the job done. Which doesn't mean should go do it yourself. Rather, that you will know how to make sure the project you are leading gets done the best it can.

I'm not saying don't do any work yourself. If you are skilled in these areas, by all means you could save some money by doing some demolition yourself, or getting a few friends over to knock out some painting in a day. But don't try to do new wiring and plumbing, etc etc because you will find yourself tied up being the mechanic, and the entrepreneur won't get time to find new deals and come up with creative solutions. And the manager won't get time to balance the checkbook and timebook and do some marketing. And you'll find yourself with less personal time.

So, read the book The E-Myth Revisited, that's required reading for today, and learn to manage your time and rolls in your business efficiently.