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DIY vs Employing - The Numbers

Discussion in 'Renovation & Home Improvement' started by Andrew H, 7th Apr, 2016.

  1. Andrew H

    Andrew H Well-Known Member

    Joined:
    4th Jul, 2015
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    204
    Location:
    Cairns, QLD
    Hi all.

    Not sure if this is the post is in the right spot, Its specifically Reno related i am thinking.

    So i thought i would crunch some numbers on employing vs DIY on a spreadsheet (attached).
    This is the scenario. I can do a lot of things myself, i'm pretty handy and not afraid to take things on. I also don't like doing this when else someone else can do it , either allowing me to complete other jobs, move onto more properties faster. I am also going on a pre-booked holiday in the middle of a reno for 2 weeks and don't want any time wasted/ money wasted on the reno when my other option would be having things done whilst away. Speeding up the refinance and equity pull is also hard to account for in numbers with my limited maths skills.

    I have a few minions and bribes in my bag of tricks to do my work, really want to make sure this is accurate for now and the future reno work.

    The spreadsheet has the following assumpitions:
    a) Fast Reno's means faster rent comes in, hence counted as a holding cost.
    b) Purpose is to Buy, Hold, pull equity and repeat. NOT buy and Sell.
    c) Holding costs of Council rates, Insurance have been left out as they would have to be paid regardless if tennants were in or not, also tax deductable either way (purpose being to lease out an IP).
    d) You can do the same job with the same result as the person employing it would do. This is purely focusing on numbers.

    What am i missing or not taking into account in the numbers? Would the end 'Per Day' (x) cost mean that if i can find someone to do a days work for (x), it would be exactly the same as me doing it?
    I will post an ammended spreadsheet if improved.
     

    Attached Files:

  2. jodes

    jodes Well-Known Member

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    A couple of things that came to me (that may or may not be correct depending on if I understand your question correctly)

    a) If you are not counting holding costs of council, insurance etc should you not be excluding interest repayments also (as they would have to be paid regardless of tenants being in their or not and are tax deductible)- I would say your only "cost" really is the "lost rent"

    b) have you considered lost income? ie if you are paying a tradie $500 per day (and assuming it would take you the same amount of time), if you earn $1000 per day, and have to take that day off (even if its an annual leave day), you are better off paying the tradie. If you only earn $250 a day, it makes sense to hire the tradie.
     
  3. Andrew H

    Andrew H Well-Known Member

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    Location:
    Cairns, QLD
    thanks @jodes very good point on a)! It really is no different. In my case i have a personal loan to do a quick reno (was the only way to secure the IP). In which case it would be the differece in interest rate from large personal loan rate minus the new home loan rate to factor in.+ Tax return amount. As this would have an effect on taking more time on the reno.

    and yes i did not factor in loss of income either! thanks, i will ammend the spreadsheet and repost. thanks
     
  4. bob shovel

    bob shovel Well-Known Member

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    I'll have to have a look at your sheet but I wouldn't make the assumption that trades would take the same time as you. I'd calculate them being more efficient, not saying your slow but a tradie is equipped for the job and will have tools and materials ready to go.

    Say a new kitchen is going in, they could have 2 guys in and out in a day. You might take 3+

    Plus the tax side of claiming the work done needs to be factored. I'm not to sure about the tax side but you can "claim" the costs spent on them
     
  5. Andrew H

    Andrew H Well-Known Member

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    4th Jul, 2015
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    Location:
    Cairns, QLD
    Thanks @bob shovel another good point, which can be reflected as a number also. Will add that too!