What hourly rate would you pay yourself? (what would be your break even) to opt out for GC vs doing it yourself
$345/hr
I think you’ll find great insight on this topic in the Feedback Forum.
It’s not only about money, its about control over quality too. Though if you don’t know what you’re doing, then hire a GC.
Top 2 Contractor with a CFA & MBA or hacksaw.
I think it depends on the scope of the project. Are walls moving, will major electrical/plumbing/hvac need to be moved, will you be pulling a permit, etc. The more involved, the less my value my experience has, the lower the break even. My last kitchen remodel I took everything back to the studs and subfloor, but didn’t do any major moves to gas/electric/plumbing. I hired a few subs and did a ton of stuff myself, and I’m perfectly happy with the results. I’m considering a house right now that would need a wall taken out in addition to the full kitchen gut and I’d almost certainly have a GC, just to make sure that all the subs are coordinated and I’d be able to move in on a decent timeline. Tons of considerations such that I don’t think you can put a general dollar value on it for all cases.
whats the best plumbing school in the US?
An apprenticeship with “Little Joey” Carbone at UA Local No. 1.
CSK:
It depends what kind of project you have going. We remodeled our kitchen and my wife (stay-at-home) did the GC work and it was great. But we had a cabinet maker who did a lot of the plumbing and framing also, so he kind of worked as a quasi general. My wife just had to coordinate the architect, tile guy, drywall, painter and decorator.
If you get one guy that you know well and let him kind of lead (carpenter, cabinet maker, etc), you can do the rest of the work.
superficial projects (kitchens, bathrooms, fixtures, carpets etc.) you could manage yourself
given you know what needs to be done and how to get there, but don’t want to do it yourself
taking out walls, major renovations, taking out load bearing walls, things which require code approvals, adding bathrooms, and things you don’t understand get a GC
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as far as paying yourself — I’m not sure I completely understand. Its more like you’re avoiding GC costs. Unless your ‘crew’ decides to take you on another project at the same rate, this figure seems largely irrelevant.
I can see paying himself being relevant under two scenarios:
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The permit fee is a function of the cost of the renovation, so he needs something reasonable in there so the local building office doesn’t reject his application.
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It’s an investment property and he can gain the tax benefit of his “salary”.
Ok ok. For 1 - I know nothing about permit fees or rejection thresholds.
2 - Can you give an example how you gain tax benefits from this? I’ve always been bad at taxes, but like to know more.
There is no tax benefit from a “salary” you pay yourself. Out of one income bucket and into another. In fact if it added to a passive loss, then you are likely worse off.
If it is an investment property and he capitalizes the cost of the renovation, including his “salary”, he’ll pay a smaller tax on the gain when he resells it. Of course I’m assuming that he will not declare that “salary” when doing his taxes for this year.
You can’t expense (or capitalize) a salary to yourself in this context.
Well, that sucks.
Yeah that would not make sense, because otherwise, you can deduct an absurd self salary, deduct that from your cost basis, and then when you sell the house, roll into a new property and avoid paying capital gains tax at all.
Even if you can’t capitalize salary, every hour you spend on activity you can outsource, can be measured using opportunity cost. I rather be playing games and reading books or playing with my son, then worrying about framing and plumbing code.
Time is not free, so if i am giving up my free time, i want to make sure i am compensated well for it. For example, i refuse to iron my shirts, because this would save me maybe $10 an hour which is completely unreasonable. Same for taking longer commute which would save $3.
So i guess the question is how much you value your free time. Your employeer value it at exactly the same rate as your salary.