TRANSLATABLE SKILLS Remodelers who do choose to invest in real estate can use their knowledge of neighborhoods to find properties and use their crews to remodel them. Deimler says that many buyers can’t see a property’s potential or can’t afford to purchase a property and put additional money into remodeling it.
McCloskey says that remodelers’ estimating skills serve them well in selecting houses. “They can look at the house and know the value of the work that needs to be done,” he says. McClo-skey has a 3,000-square-foot storeroom where he keeps surplus materials from remodeling projects for use in his investment properties.
Jordan says that most remodelers are good at sales, a useful skill for renting or selling the properties. Their knowledge of systems is especially useful in property management and maintenance.
The Deimlers own a separate corporation that purchases property for rent or to sell. They currently purchase and renovate one property per year. “It’s not our primary focus,” Craig says. They use their construction crews to renovate and maintain the investment properties. “Things were slow over the winter, and even though we did not have work for them in the construction company, the crew was not laid off,” he says.
McCloskey often sends his carpenters to his investment properties to work under the supervision of the full-time subcontractors. He says the properties also provide a good training ground for his crews, as the low-pressure work is not custom or for specific clients.
But it’s important to make sure you follow tax rules. “If you’re doing work for a related party, the IRS likes to see you charge a profit or at least cover your overhead,” Maltzman says.
“Once you understand how it works, it’s simple,” McCloskey says. “The hardest part is tracking the paperwork and getting started.” He says the development company is the core of his retirement strategy. “Right now, I could not live off my rent on the rental properties. I’m trying to time my mortgages — where almost all my equity is — to my retirement.”