Being your own contractor on a rehab lowers your material cost and gives you control of the schedule. It does not lower your carrying costs, speed up a building department, or find you competent people to run the job when you are not standing on site. That is the honest split between the real edge and the imagined one.
Orlando Marrero has been on both sides of it for 25 years in South Florida. He runs Star Homes as the acquisition and hold entity, White Star Construction for the work, and Bath Trends, a fixture store in Fort Lauderdale he recently expanded from 4,000 to 9,000 square feet. He also holds 11 properties across Miami-Dade, Broward and Palm Beach.
What follows is where that vertical setup actually pays, and the three things it never protects you from: permit timelines, post-closing tax and insurance resets, and staffing.
Key takeaways
- Owning the labor and materials side buys wholesale pricing on fixtures and control over crew scheduling — it does not buy free labor, and it does not shorten a permit timeline.
- Treat permit friction as a line item in hold-cost assumptions. Marrero’s go/no-go test now weighs project size, duration and jurisdiction behavior before it weighs the spread.
- Post-closing reassessment is a real underwriting risk in South Florida. One Broward County assessment came back $3,500 higher than the prior year on a single property, and two of his properties were reassessed materially higher.
- A lease option with the seller carrying the note on exercise is simple enough that sellers say yes. Marrero pitched that exact structure to two sellers and both accepted.
- When the operator steps away, sales drop and crews take quiet shortcuts. Two years away from the store put the books sideways until he hired a new accountant in 2025.
From the Real Estate Pros Show
This article draws on an interview with Orlando Marrero of Star Homes on the Real Estate Pros Show, hosted by Scott Bursey.
What Controlling the Construction Side Actually Buys You
Two things: material cost and scheduling control. Nothing else.
On materials, Marrero buys at wholesale through Bath Trends — vanities, tile, plumbing fixtures, smart toilets, over a hundred vanities on display. That is a real line-item advantage on every bathroom and kitchen he touches, and it compounds across a portfolio. It is also the part most investors overestimate when they imagine what a license does for them.
The second, less obvious edge is knowing what is selling before it shows up in a comp. “When somebody is doing a renovation, they’re doing yesterday’s renovation. I’m already in tomorrow’s renovation,” he says. Finish selection is one of the few rehab decisions where being six months ahead changes days on market, and being six months behind quietly costs you a price reduction.
On scheduling, White Star can run up to four crews of three to four people, which puts nine to fifteen people in motion at once. That means he can sequence his own rehabs against client work instead of waiting in a subcontractor’s queue. Anyone who has lost three weeks because a tile setter took a bigger job understands what that is worth.
What it is not: free labor. Those crews get paid whether the job is his or a homeowner’s, and every hour spent on his own property is an hour not billed to a customer. The construction company and the store are the cash flow engine; the portfolio is the long-term play. Confusing the two is how investor-contractors end up thinking they rehab at cost when they are really rehabbing at opportunity cost.
Underwrite the Building Department Before You Underwrite the Spread
Marrero’s go/no-go criteria changed, and the change is instructive. Early on the test was gut: can I do this? “I can take on any project, I’m not afraid of it, I can jump in any property no matter how ugly it is.”
Now the first questions are how big the project is, how long it will take, and what the building department is going to do to him. His words on why: “You can find a deal with a nice little cushion, but the building department can kill that cushion right away.”
That is not a complaint, it is an underwriting instruction. Permit friction is a carrying-cost multiplier, and it does not appear anywhere in a purchase price or an ARV. If your model assumes a four-month hold and the jurisdiction takes ten weeks to issue and another six to inspect, the deal you underwrote is not the deal you bought.
Practical version for anyone running numbers across multiple jurisdictions:
- Score each jurisdiction you buy in separately. Miami-Dade, Broward and Palm Beach do not behave the same way, and neither do the municipalities inside them.
- Carry the permit timeline as its own hold-cost line, not as a vague contingency buried in the rehab budget.
- Weigh scope against permit exposure. A cosmetic rehab that stays out of the permit queue may beat a heavier project with a bigger paper spread.
- Kill deals on duration, not just on margin. A long project in a slow jurisdiction is a capital trap even when the spread looks fine.
Owning the crews does not move you up in line. It only means you are paying your own people to wait.
You can find a deal with a nice little cushion, but the building department can kill that cushion right away.
— Orlando Marrero, Star Homes / White Star Construction
Carrying Costs That Reset After You Close
The second thing a contractor’s license does not fix is what happens to your expense side after closing.
Marrero opened a Broward County tax assessment that came in $3,500 higher than the prior year — on one property. Two properties he opened that same day were both assessed materially higher. Add insurance, which in South Florida he describes as flatly uncertain: “you don’t know who’s going to hit you with a bill any second.”
For a buy-and-hold underwriting model, that is the difference between a property that cash flows and one that does not. If your spread on a hold is thin enough that a four-figure annual tax increase erases it, you did not buy a cash-flowing asset. You bought a bet that nothing reprices.
His response was to stop pretending thin current cash flow was the point. He is running the long-term equity play now, and he has been cleaning house to support it: he sold one non-performing property, wants to sell another, and wants to pay off a third. He also carries three small mortgages across three properties that he would rather retire than refinance, on the view that reducing debt raises the real value of the portfolio.
There is a broader lesson for anyone holding in a reassessment-heavy market. Underwrite the hold on equity growth and debt paydown if you cannot underwrite it on cash flow that survives a tax reset. And re-run your numbers on existing holds when the assessments arrive — not at refinance time, when the damage has already compounded for two years.
Creative Financing When You’d Rather Not Tie Up Capital
Two of the deals that built Marrero’s portfolio came from the same pitch, made to two different sellers, and both said yes.
The structure: rent the property with an option to buy, and when he exercises the option, the seller holds the note for as long as they like. That is it. A lease option stacked with seller carry on the back end.
Why it gets accepted is that it asks the seller for very little up front. They keep receiving income during the option period, they are not forced into a closing timeline, and the note they hold when he exercises gives them a yield they were not going to get from a cash sale. Nothing in it requires the seller to understand a subject-to structure or a wrap. Complexity is what makes sellers say no; the simpler the ask, the higher the hit rate.
For the buyer, the appeal is capital efficiency. You control an asset without deploying the down payment at day one, which keeps your cash free for the deals that need it.
That connects to the thing Marrero is more emphatic about than the structure itself. Deals are not scarce — readiness is. “There’s always opportunity. The thing is, are you paying attention and are you capital ready? A lot of times when the opportunities are before you, you’re just over-invested or over-leveraged and then you have to let that opportunity go.”
Creative structures are one way to stay capital-ready. Not over-leveraging in the first place is the other, and it is the one that actually gets you to the table.
The Proximity and Follow-Through Rules That Protect the Margin
Marrero’s buy-box rule is geographic and it is absolute: he has to be able to drive to the property on a moment’s notice. Everything he owns sits between Miami and Palm Beach.
His observation about why investors get this wrong is worth sitting with. People overlook properties in their own community, then stretch into markets they cannot watch — and that stretch is where the money leaks. His view of South Florida in particular: “It’s really rare that you can find competent people that will actually care enough for your money like they care for theirs.” If that is true where you live, remote ownership means paying someone to care less than you do, out of sight.
The second rule is reputational, and it is the one that keeps his construction pipeline full. Every job is a resume for the next job. He finishes every project regardless of the outcome — “whether I win or lose, I will still finish it.” The context is that South Florida contractors routinely ghost customers on punch-list details, so simply coming back to finish the last five percent is a differentiator. It has kept him busy to the point where he turns work down.
Proximity also sources deals. His first house was on the corner of the next street from his sister’s — abandoned, no windows, a hole in the roof. He gathered $7,000, bought it at $75,000, and sold it seven years later for $210,000, the highest sale in the community at the time. Then he bought the house next door, from a neighbor he had been good to for years. That is off-market sourcing that no list-pull replicates.
What Breaks When the Operator Steps Away
Marrero spent roughly two years building other businesses while management ran the store. The results are the clearest argument in this whole article for why a vertically integrated setup is not self-operating.
The books went sideways. He did not regain control of them until 2025, after hiring a new accountant who, in his description, is accountable and actually cares — and who had to unwind everything from the previous one who did not. His own rating of the financial side went from a crisis to a nine, entirely on the strength of one hire.
The store suffered too. He describes coming back to find it “hurting with the wrong staff.” His honest self-assessment of the sales process: a 10 if he is involved, a 6 if he is not. And on what would break if he disappeared for 30 days — sales drop, and shortcuts return in the corners where nobody is accountable. His example is small and telling: things get buried in a box in the back, unmarked, that cost the business money but cost the employee nothing.
His stated fix is two-part and neither half works alone: qualified, passionate people plus documented systems. He had SOPs before COVID, started the process, and lost the thread when everything changed.
He is also candid that the people half has gotten materially harder. Before COVID he could find employees anytime, anyplace. Since then it has been a struggle, and the asks keep rising. His personal real estate investing is on pause until the right systems and the right employees are in place — which is, in itself, a disciplined answer.
Frequently asked questions
Does owning a materials supplier or construction company actually lower rehab costs enough to matter?
Yes on materials, and yes on schedule, but less than most investors assume. Buying fixtures, tile and plumbing at wholesale is a genuine per-project saving that compounds across a portfolio, and controlling your own crews means you sequence the work instead of waiting in someone else’s queue.
What it does not do is make labor free. Crews get paid whether they are on your deal or a paying client’s, so every hour on your own rehab is an hour not billed out. Treat the edge as material margin plus timeline control, and keep underwriting labor at market cost.
How should I account for permit delays when underwriting a flip?
Carry the permit timeline as its own hold-cost line rather than folding it into a general contingency. Score each jurisdiction you buy in separately, because two counties in the same metro can behave nothing alike, and municipalities inside a county vary again.
Then use duration as a kill criterion, not just margin. A deal with an attractive spread that sits in a slow permit office for months is a capital trap, and owning your own crews does not move you up the queue.
What should I assume about property tax reassessment after buying in South Florida?
Assume your post-closing tax bill can be materially higher than the seller’s, and stress-test the hold against that. Marrero received a Broward County assessment that came in $3,500 higher than the prior year on a single property, and had two properties reassessed materially higher in the same period.
Insurance in the region is similarly unpredictable. If a four-figure annual increase in taxes or premiums wipes out your projected cash flow, the deal is an equity play, not an income play — underwrite it that way or pass. This is a general observation, not tax advice; confirm specifics with your own professional.
How does a rent-with-option-to-buy plus seller-carry deal actually work?
You lease the property with a contractual option to purchase at an agreed price, and when you exercise that option, the seller holds the note instead of you going to a bank. Marrero pitched exactly that to two sellers and both accepted.
It works because the ask is small: the seller keeps receiving income during the option period, faces no forced closing date, and earns a yield on the carried note afterward. Keep the structure simple — complexity is what makes sellers decline. Have an attorney paper it in your state.
How far from home should I buy if I plan to hold and self-manage rehabs?
Close enough to drive there on a moment’s notice. That is Marrero’s hard rule, and everything he owns sits between Miami and Palm Beach.
His argument is that investors overlook deals in their own community while stretching into markets they cannot physically watch, and remote ownership means paying people to care about your money less than you do, out of sight. Proximity also generates off-market deals — both of his first two purchases came from being physically present in the neighborhood.
The bottom line
If you are weighing whether to bring construction in-house, price the edge honestly: wholesale materials and schedule control, not free labor. Then go do the harder work it does not cover — build a jurisdiction-by-jurisdiction permit timeline into your hold costs, re-run every existing hold against a reassessed tax and insurance number, and get systems and qualified people in place before you scale, because the moment you step off site is the moment the margin starts leaking.
