Who Pays for Material? Flipper vs Contractor

Tuesday, February 20, 2024

The Larossa Workshop Blog/Who Pays for Material? Flipper vs Contractor

Who Pays for Material? Flipper vs Contractor

"I am skeptical about providing a quote if [I] cannot use [my] own material”

is what a house flipper/real estate investor was told by contractors when trying to collect bids on an investment property. She posted this onto Bigger Pockets and got quite the barrage of responses from both contractors and fellow investors. Which just further reminds me of what a disconnect there is between those two groups, but that’s not the point of this article. The point that I’m trying to make is whether the contractor or the investor should be buying the materials. After thinking through this a little deeper, I stumbled upon a different POV.

Let's start by hitting some highlights of each choice.

Investor Purchases Material

1.  It’s a built in Project Management tool
You get to pick the material you want
You save money (kind of)

Built In Project Management Tool
This one is a strong positive. By knowing what the contractor(s) need for the project you automatically know what is going on. For example, if they are doing framing for a new bathroom and ask you to get 200 2x4s it immediately raises a red flag and you can go investigate (extreme example of course). This is great if you don’t have any other Project Management systems.

Pick Your Material
If this is your thing, picking your own material will certainly give you more control over picking the colors, styles, etc. that you want.

You Save Money
You are certainly going to save money DIRECTLY by doing this. You will obviously drop whatever mark up the contractor would have on the material and you would most likely shop for better deals on the material. The contractor will likely be more focused on efficiency of the project than shopping the best deals for each item. I highlight DIRECTLY because I believe that you will pay for those INDIRECTLY elsewhere (I’ve printed or filmed plenty of opinions on this).

Contractor Purchases Material

1.  Get a Higher Quality Contractor
2.  Preserve your Bandwidth
3.  …….(see below)

Higher Quality Contractor
Someone who demands this knows their business. To know your business you have to have been around long enough to learn some hard lessons. If you’ve been around, it’s likely because you’re good at the trade. You want this. It goes even deeper. This means they know business. This could be a great partner/alliance as you build your business of flipping houses (for rent or market).

Preserve your Bandwidth
Do you really want to be roaming the aisles of Home Depot or Lowes? Is it worth it? How much do you actually save (if anything)? Even if you do save, try tracking the countless hours you will put in then divide that by the amount you saved. See if you still think it's worth it……


This is when I had a revelation as I was thinking through all of this.

I can’t believe I even got this far. This is so against my belief system on business and flipping houses. Classic 80/20 rookie mistake (that's a book that you should read BTW). Why would we even think about wasting our time with being the material b****. To save a few bucks? Nah! We need to stay FOCUSED on:

  • Acquire Deals
  • Execute Budgets/SOWs
  • ​Making Profit

There are hundreds of things you should be doing other than running materials if you want to be a profitable and full time house flipper who doesn’t sacrifice all their bandwidth for the cause. I made a list (check out this accompanying YouTube Video). Here is a way less entertaining and shorter one:

  • Recruit New Contractors
  • Build Relationships with existing ones
  • Find Deals
  • Educate Yourself!
  • Network
  • Etc.

There are 4 Main things you CONTROL on every House Flip and you need to know where to focus your bandwidth.

   1.  Deal    2.  Strategy    3.  Work    4.  Market

This is basically the acquisition price and the cost of financing. Acquisition price speaks for itself. For financing. Even if you are paying cash you need to account for the cost of financing. Don’t fool yourself into thinking that you have a good deal with that little trick.

What are you going to do with the property? What increases the value the most or the quickest or for the least amount of money? Make a plan that maximizes the ROI of every dollar that you put in, if that’s your strategy. Or maybe you just want to get some really quickly with the least amount of additional risk. Should you subdivide the lot and sell the land and flip the house? How about adding a bedroom or opening up a wall? How about making a SMART SCOPE OF WORK where you focus on only what you NEED and not what you WANT.

Now it’s time to execute the strategy. If you’re here, construction is most likely the biggest piece of the work. There are two pieces - the material and the labor. In the type of SOWs we make, labor generally is a bigger part than material. This is because we are always focused on saving whatever we can. Here we focus on 2 main things:

  • Tight Project Management (Using Larossa Systems)
  • Recruiting and Maintaining the Best Vendors

NOTICE - neither one of those 2 main things were go fetch material all day

Flip or Rental. The MLS or the Bank (for refinance). Sure you can save some money on finding cheaper real estate agents or property management companies. Heck, you can even do it yourself. That would be a much better use of your time than material runs. When it comes to the Market, it just is what it is. The market gives you what the market gives you. Hopefully you already knew the answer to that question before you got here. Now there is a range in that market of a few percent and a great RE agent or PM will put you at the higher end of that range through great marketing and sales/negotiations. When it comes to that for me I have only one person I trust, that’s my wife and her team at WorkingMomsRealty.com.

There are also title expenses, insurance, refi costs, etc to be aware of. None of these things make or break a deal though. If they do, find a new deal.

Okay, I’ve made my POINT. Obviously I don’t think you should be spending your time buying materials. So where should you FOCUS your attention???


Sure you have to be mindful of all 4 controls and even other things to maintain your business, but those are where you employ the 80/20 rule. Basically do what you need to do to get by. The DEAL is where you OPTIMIZE. You put as much bandwidth as you can at all times into getting better deals on the front end. This makes everything easier. You will get better lending partners with ease. You will allow for many errors (which you will absolutely make) in the strategy and the work. You will be able to hire contractors that are actually capable of landing the plane. Then the market will meet you with PROFITS. Control the DEAL - control your FUTURE.

ANYTHING, including paying a little more (arguably) for materials, that keeps me focused on finding better deals, becoming a better Project Manager, and working with better vendors/contractors is the right move - ALWAYS.

AND YES! I’m a cheapskate and always looking for ways to save here and there, but NEVER at the expense of the big picture. If you agree with this way of thinking, stick around.

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Hi, I'm Ross Paller

CEO Of Larossa

After flipping over 300 houses, holding a portfolio of 150 properties, and creating a successful construction company for over a decade, I felt compelled to pay it forward by sharing the wealth of knowledge and experience I’ve accumulated on my journey.

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