Make ready: The cost of doing it yourself

DIY landlords lose moneyMany times a landlord will want to perform repairs or “make readies” themselves, in an effort to save money. After all, contractors and hired labor costs can add up. It seems tempting to just buy the materials and do it yourself. How hard can it be, right?

But let’s consider the real cost of doing it yourself. Here is a common example: Owner has purchased a second property to use as a rental. They closed on February 15 and a few repairs were needed. Instead of hiring someone to get the work done, they chose to do it all themselves on evenings and weekends when they’re off work.

Because there were several items needing attention, and because the owners work full time jobs, it took until the beginning of April to get everything done. In other words, it took about 7 weeks.

That doesn’t seem bad, right?

But let’s consider how much money they lost by not having a tenant all that time. The average rental in Las Vegas is around $1300 per month. In our example, the “make ready” took half of February, all of March, and a week in April. If they’d allowed us to get our professional vendors to do the work, we could’ve had it done in about a week. So let’s not count that extra week in April for this calculation. This owner spent an extra month and a half on the job.

As a result, the owners lost out on 1.5 months of rent by doing the work themselves. $1300 x 1.5 = $1950, or about $2000. There is a good chance that the labor cost would’ve been that much or less, had they used contractors. Lost income is a real cost and must be considered when thinking of “saving” money by DIY-ing the work on your investment.

When it comes to rental property repairs or improvements, we must also consider that the average homeowner cannot work as fast as professionals who do this kind of work everyday for a living. Whatever you are saving on labor, may not be as much as what you lose by keeping the property vacant longer. Every day the property is vacant, costs about $43 ($1300 / 30 days) for an average rental home in Las Vegas. That doesn’t sound like much, but when a repair project stretches into weeks or months, that lost income really adds up.

Plus, you will likely spend more on supplies and materials. The average homeowner simply does not have as many supplies and tools as a pro has in his truck. You will have to buy things they won’t. That adds to your cost.

Bottom line: Doing your own repairs or improvements on your rental investment may actually cost more than hiring professionals. Consider the extra time it will take you to do it, and how much that extra vacancy time costs you. Unless you really love spending your nights and weekends on hard labor, put down the hammer and relax! We can have a professional vendor handle the heavy lifting at a reasonable price 🙂