Landlording & Rental Properties

Want to Grow Your RE Investing Business? Stop DIY-ing

Expertise: Real Estate Investing Basics
22 Articles Written
home-diy

I previously wrote a piece titled, “4 Reasons DIY is Dead (An Argument for Outsourcing Everything.” What amounted to a polarizing article was meant to explain why performing the labor in your real estate business is a terrible idea.

Want more articles like this?

Create an account today to get BiggerPocket's best blog articles delivered to your inbox

Sign up for free

I still love that article and agree with my original position, but I wanted to clarify and expand on it. 

It’s extremely valuable to know how to DIY—but extremely low value to do.

Avoid Costly Repairs

If you’ve never worked on a house before, how confident can you be when you walk into one without knowing the scope of work? I had a friend who asked me about a flip he was doing that apparently had all the baseboard installed wrong so it needed to be replaced. He was incredibly anxious about this because he had no idea what baseboard was. To him, it sounded expensive, but he just didn’t know better.

For anyone else that doesn’t know, baseboard is the small strip of floor trim that brings together the walls and the floor. It’s super cheap and super easy to install or replace. If my friend didn’t have me as a sounding board, then you can imagine how easily he could have gotten ripped off.

This is the same old stereotype of the person who knows nothing about cars and gets told they need blinker fluid or muffler bearings. If you don’t know better, you are at the mercy of blindly trusting your contractor, which is not a situation I recommend putting yourself in.

Related: The 10 Most Common Rental Repairs You’ll Encounter

Understanding how a house is put together, what the materials look like at the hardware store, how difficult things are to complete, and how long they take are all things that allow you to make faster and better decisions when you’re doing rehabs. They also reduce the burden of stress, which may be the costliest part of real estate of all. 

For my friends who need to learn more about house construction—but don’t have a project yet— may be wondering, “Alex, I want to learn how a house is built, but I don’t have one to practice on and I can’t quit my job and go into construction. What do you suggest?” Well, I’m glad you asked because I have the absolute perfect solution for this problem:

Volunteer for Habitat for Humanity

home-construction

First, even if you’re a knucklehead who’s never picked up a hammer, they will likely be very happy to have you. 

Second, you get to learn a ton about building homes, what things cost, and you can do it around experienced builders who won’t let you mess anything up too badly. 

Third, you get to meet a ton of people and build some potentially great long-term relationships. Many of the people who volunteer at Habitat are full-time builders that have contracting businesses. 

Fourth, there is no downside risk to this at all. There is nothing you can do that will cost you money. It’s a purely upside endeavor—and those are rare. 

Fifth, and most importantly, you get to give back to the community. Many people claim this as a motivating reason for their real estate business. Well, if you only do it for profit then it’s not as generous as one might claim. 

Manage Your Rental…for a Bit 

These days I use a property manager for my entire portfolio, but when I started I self-managed my rentals. For single-family rental owners, this is a good experience to have. Understanding tenant onboarding, listening to their feedback and complaints, and dealing with a multitude of differing personalities are all things that are going to benefit your business immensely over time.

Even when you turn things over to a property manager, you’ll have a better relationship with them because you’ll have a deep understanding of what they have to deal with and what you’re asking of them. You’ll also be able to hire better property managers in the future because you’ll know what it entails.

One of the biggest problems new investors make is thinking they can buy any property anywhere in the country and just stick a property manager on it and it’ll run well. This, in my opinion, is peak arrogance. You should really know what you’re asking from a property manager before you assume they will just do their job no matter what you throw at them. Property management is a difficult job, especially for C and D class properties. And having some experience in doing so will create a much different dynamic with your manager.

Related: Professional Property Management vs. Self-Management: A Look at the Pros & Cons

Then, Turn Over Management Responsibilities

confident-investor

When is the correct time to turn things over to a property manager? My suggestion is to do so sooner rather than later. I turned my portfolio over at only two units, with about two-and-a-half years of self managing. Your personal timeline will vary and I think it depends on how much you genuinely enjoy having your hands in the business so closely.

Some people genuinely like fixing toilets and managing tenants. If this is you, then don’t feel compelled to outsource things so soon. Enjoying your business is priority No. 1 (in my opinion). If it adds stress to your life, have someone else do it. For most people I think they want real estate to create them freedom rather than just save a few bucks. Giving up 10 percent of gross profit for 90 percent stress reduction is maybe the best trade you can make in this business. Learning to manage the managers will provide the real freedom.

Scale Is the Solution to Every Problem

From an economics standpoint, I 100 percent stand by the point of the original article that DIY is the least efficient way to run your business. This is the whole premise of the book “The E-myth” by Michael Gerber.

Working on the business and in the business is a different skill set. One of those skill sets scales and one of them doesn’t. The skills that scale are the ones you spend your time improving, and unscalable skills are the ones you outsource. 

ad-bookstore

Do you DIY or source out? What would you recommend DIY’ing and what would you leave to the professionals?

Share with a comment below!

Alex has spent his career in sales and finance industries and now invests in rental real estate along with working in the underwriting department at a bank in Las Vegas. Alex is an expert in long-d...
Read more
    Wenda Kennedy JD from Nikiski, Alaska
    Replied about 1 month ago
    I manage my residential rentals myself. I haven't been very successful at hiring others to do that job. I find that being front and center in my business saves me a lot of money and headaches. Good for you, since you've got the right people helping you.
    Alexander Felice Guy with Great Hair from Las Vegas, NV
    Replied 26 days ago
    Wanda I've been both LUCKY, and persistent. Do you network locally with other investors? Maybe you can get good referrals? It's important to know that I didn't get all my great people up front, I've been through a lot of lousy vendors first to find the good ones. that's why I say lucky and persistent.
    Terry Lowe
    Replied about 1 month ago
    Hiring a good property manager is the single best thing we did for our properties. When a tenant moves out it is never weeks or months between tenants, and that alone pays for the property manager. We are still very “hands on” and are part of the conversation regarding repairs, rent prices, etc. We are retired and can sometimes help with renovations. We say we will do what we can, paint, clean, install new blinds, clean up the yard, order new appliances, change locks etc. We give ourselves 30 days and then we let the pros come in and finish. It saves us a lot of money, and doesn’t drag out to months and months. It’s a good combination for us. Still, having renters in the units paying rent is our top priority and you have to balance the cost vs the earnings. We are no longer actively investing, so it gives us time to spend some time at our units and see upcoming issues that we wouldn’t necessarily understand if we weren’t there for a few days. The neighbors always like to come give us their 2cents worth and that can be valuable information as well. It keeps us well connected to our investments. Our property manager is so worth while in many ways. With her, we make a great team!
    Alexander Felice Guy with Great Hair from Las Vegas, NV
    Replied 26 days ago
    YES! I love this story. I should have expanded on this more in the article. It's not about getting someone else to do all the work, it's about building a TEAM where everyone does what they are best at. thanks for this comment Terry.
    Christopher Smith Investor from brentwood, california
    Replied about 1 month ago
    Be really good at selecting, communicating and directing your managers, and then let them do the managing part.
    Domenic Fragomeni
    Replied about 1 month ago
    I go back and forth so hard on this... I am trying to convince myself to stop DIY’ing and I believe you are absolutely correct, but I manage 40 properties and have saved myself hundreds of thousands of dollars doing repairs and management myself. I wish I could outsource it all, but I’ve just seen and know too much.. ie having a plumber tell you he needs to replace a water heater and charge you $1,000 when in actuality you have a leaking valve that is a $15 part that takes 5 minutes labor. Double edged sword for me
    Alexander Felice Guy with Great Hair from Las Vegas, NV
    Replied 26 days ago
    Domeninc, I do have that problem often. Where someone I hire will do the lazy and often very expensive repair rather than the efficient repair. I'm not a stranger to that struggle. I just think at scale, the small problems fall to the wayside. It's that old saying "step over a dollar to pick up a penny" Why don't you try starting by letting someone else manage only a portion of your portfolio, say 10 units? I guess it depends on your goal too, maybe you are you trying to get to 200?
    Rebecca Hopkins
    Replied about 1 month ago
    If you have the knowledge of plumbing, etc., use it! If you have the extended circle of associates that will get you that piece of information, use that! If you’re clueless, or just don’t want to handle these issues, own that, too. Be upfront with yourself, your tenants, your tradesmen and property managers, and we’ll all have a happy new year!
    David Asmus
    Replied about 1 month ago
    Alex, I agree, we should be leveraging our rehabs to others. As investors our time is better spent finding new and better deals. That said, DIY is a great way for someone who has more time than money, and the skills to do the work to create equity in a property. Example, I had a house that need new shingles. The contractor estimate was $ 4800, doing it myself cost me $1500 for materials plus my time. At the time, my time wasn't as valuable as it is today. DIY can be a very viable way for someone to get started and build equity. We just need to be aware of how valuable our time is, and what our opportunity costs are.
    Alexander Felice Guy with Great Hair from Las Vegas, NV
    Replied 26 days ago
    agree 100% my original article was much more harsh than this one. Here I tried to balance the value of a new investor trying to do SOME DIY to get the value of experience and maximize total dollars at the beginning. thank you David
    Jessica Hughes
    Replied about 1 month ago
    I do a lot of work on my rehabs, but only because I used to be a commercial carpenter, know what I am doing, and legitimately enjoy it. And even being an ex-pro I still hire the majority of the world out because one person can only do so much and that house is losing money every minute theres not a tenant in it, so whatever gets it done wins. And if you legit have no idea what you're doing, you will do it wrong. No matter how many YouTube videos you watched
    Alexander Felice Guy with Great Hair from Las Vegas, NV
    Replied 26 days ago
    If you enjoy it Jessica, then no amount of money should take you from it. My advice is the opposite, if you don't genuinely enjoy it, then no amount of money (saved) should entice you to do it ;)
    Richard A. Investor from Fayetteville, NC
    Replied about 1 month ago
    Great article and ideas. The key take away for me was volunteering at Habitat for Humanity (or similar). Great opportunity to learn, network, and give back.
    Alexander Felice Guy with Great Hair from Las Vegas, NV
    Replied 26 days ago
    yeah I love that advice. It's helped me and it can be useful to a lot of people and isn't common to hear (I don't think)