Investor · Clatskanie, OR · Member since 2014 · 212 posts · 233 votes
7y
Our first 10 properties my wife and I did ourselves. We at least doubled up on each one. I believe this was the biggest part of our growth. here is a big hint. We now hire most of the work out. I fired 10 guys for every one I kept. so far all of the investors that I know who hire contractors, give up huge chunks of profit and they are way behind us. I mean ALL of them!
Now with that being said, if you can somehow make profits while paying contractor prices then go for it because anything is better than a W-2 job right?
But, if you are looking to come up FAST, you better learn fast on how to remodel homes. This also eliminates a lot of risk by increasing your margin (ie Cash flow).
Also, I can spot a scam in less than a minute in most cases, just by what they say. You just know. I can't even explain it.
Have you been quoted 10K for a new roof. Same roof cost me less than 3K and I hire it out. Learn how to do the work and you will learn how to hire workers and what to look for later on in the game.
I have heard many say your time can be spent more wisely. I say, buy some knee pads and get them dirty.
Your best education is not buying a pack of CD's from some famous person that sounds cool, it is buying a trashed house and making it look great. You will learn everything you need to know from doing that. All the numbers will become crystal clear.
Lately I have entertained the idea that being handy might not be the best quality of a investor.
Obviously this depends on your investing goals..
But➡️
Here is the question.. how can a “handy” or “gifted” builder grow without getting in his or her own way?
Building a portfolio of great investments without loosing the joy of working with your hands and being a part of the day to day.
Being handy is handy. It helps you gauge whether the tradesmen you hire are doing a good job or missing details or overcharging or goofing off. I can plumb to code and wire electrical to code. Sometimes I do one or the other because it's faster for me to do it than wait for a contractor show up. Then I know it's done to code and we can sheet rock or whatever. Delays are not good for real estate. Time is not your friend.
Do you think having these skills will hinder you from scaling hirer than a certain number of properties.
Or do you feel that once you reach that “number” it will be easy to transition from doing it yourself to hiring it out?
Heheheh,
I've been at this for 25 years. I have a lot of properties and I keep buying them. Most I simply cash flow for $500 to $750 a month and the tenant buyer does all of the work. However, I just did one as a flip because I wanted to swing a hammer and I made $60,000 on the deal. If you enjoy what you are doing it isn't work. I'm doing another flip and on this one I'm just hiring a crew. It gets too hot (109 degrees today) in Phoenix in August to get too involved. Even with the crew I'll clear about $90,000 to $100,000. It's all in how you buy them and then getting good contractors.
Investor · Pacific City, OR · Member since 2016 · 174 posts · 123 votes
7y
As mentioned above, it's good to know how to do things. The only way it would hinder growth is if you did everything yourself. Starting off, it might be the best path to do everything to get experience and keep costs down. As you start to grow, you can start hiring things out and supervise. Recognize where you add the most value.
Lately I have entertained the idea that being handy might not be the best quality of a investor.
Obviously this depends on your investing goals..
But➡️
Here is the question.. how can a “handy” or “gifted” builder grow without getting in his or her own way?
Building a portfolio of great investments without loosing the joy of working with your hands and being a part of the day to day.
Being handy can decrease the safety reserve required for a novice just starting out...If you have a problem and you know that you and youtube can fix it competently for the cost of materials, you can trade your time for money and spend your weekend digging up that sewer line, patching that roof, replacing that window, or running some pex-- but hey at least your are working for yourself and you can get started with less cash.
Looks like you have found a balance that works for you and still allows you to bring home the $$$.
Thanks.
It's my passion, also it's my day "job". Most people don't have the luxury of focusing on investing like I do and have to keep another boss happy somewhere.
Investor · Clatskanie, OR · Member since 2014 · 212 posts · 233 votes
7y
Our first 10 properties my wife and I did ourselves. We at least doubled up on each one. I believe this was the biggest part of our growth. here is a big hint. We now hire most of the work out. I fired 10 guys for every one I kept. so far all of the investors that I know who hire contractors, give up huge chunks of profit and they are way behind us. I mean ALL of them!
Now with that being said, if you can somehow make profits while paying contractor prices then go for it because anything is better than a W-2 job right?
But, if you are looking to come up FAST, you better learn fast on how to remodel homes. This also eliminates a lot of risk by increasing your margin (ie Cash flow).
Also, I can spot a scam in less than a minute in most cases, just by what they say. You just know. I can't even explain it.
Have you been quoted 10K for a new roof. Same roof cost me less than 3K and I hire it out. Learn how to do the work and you will learn how to hire workers and what to look for later on in the game.
I have heard many say your time can be spent more wisely. I say, buy some knee pads and get them dirty.
Your best education is not buying a pack of CD's from some famous person that sounds cool, it is buying a trashed house and making it look great. You will learn everything you need to know from doing that. All the numbers will become crystal clear.
Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
7y
Its very help full to be handy , You can swing a hammer or write checks . I pick my battles , and weigh my options , If I can save $1000 a day by doing the work in house we do it . If its not cost effective to do the job we sub it out .
Specialist · Easton, PA · Member since 2018 · 1k+ posts · 2k+ votes
7y
@Ezra Harris
If I wasn’t able to do 98% of the work on my rentals myself (I buy needing interior remodels), I wouldn’t be in this game. It also gives me a great sense of pride knowing I did it myself, not to mention knowing every inch of each house. Hopefully one day I’ll be able to hire some stuff out, the nights and weekends get a bit old. But for now, I want it done right, so I’ll do it. And I can’t afford to hire @Matthew Paul unfortunately.
1. Starting out, you can do more things yourself and gain sweat equity in the property. Labor can be half or more the cost on some jobs, so getting a 50% discount is a huge advantage. You may also be able to get things done faster because you don't wait to come up on a contractors list.
2. By knowing how to do things, when you hire them done later you can ensure proper repairs are being done and the right price. So many investors get gouged for work being done simply because they have no understanding of whether the work is necessary or if there is a better option.
There is not risk in being handy, but there can be risk in doing everything yourself. As the saying goes, an owner needs to work on the business instead of in the business. This means your time should be spent scaling your business and operating it, rather than doing everything yourself. Doing it all yourself limits your size and you end up with a full time job, which is not the point of real estate investing. Although hiring everything done appears to cut into profit that is only because you are not placing value on your time. I would rather get $6000 profit from three properties where I do no work myself, than $18,000 profit from one property where I did everything myself.
@Mike M. What parts of AZ are you buying with that cash flow?
I cash flow throughout Phoenix, Peoria, Glendale, Sun City & Mesa. I love the Scottsdale area but it's better for equity growth. I haven't had time to look into Chandler and Gilbert so I can't really say what I'd find, yet. However, since I buy "off market" using Subject To and Wraps, it's easier to cash flow than if you have to use banks and traditional financing. I'm typically looking for "light fixers" and I sell on lease option with a hefty option fee which is cash to me and the optionee takes care of the repairs and maintenance. I still get the tax write offs since I still own the property. It's a little more advanced real estate investing, that like any investing, can be learned. It's the model I use for the Turnkeys I provide. I expect it would be harder to do this model in San Diego, So Cal, Seattle or Denver where prices are considerably higher but it should be easy to do throughout the midsection and South of the country.
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
7y
I understand the reason for the question. Now. As a natural DEY technician, I spent years doing everything and started to burn out. But I didn't start handy. I became that way through necessity (being broke) and to learn.
I have found that carpenter/builder-type GCs are surprised at how little their niche is needed to run a stabilized rental. Good thing since I can't build a deck or tape and texture for nothin'. GCs also tend to rip out perfectly good, say, cabinets and countertops where a 'hack' like me will resurface them for pennies on the dollar weeks faster.
Like @Mike M mentions, the savings are in plumbing and electrical. I'll add painting and flooring. I can brush and roll a few rooms faster and better with my 2 boys than any crew I've seen. We can install laminate, swap a faucet or toilet, wire plugs and change out an old 230v a/c to a 115 circuit in no time. No lead time! Waiting days or weeks for a pro is what kills us. Pick your battles like @Matthew Paul says.
Stick to your highest and best use and renovate to the home and neighborhood. GCs tend to over-improve. Good discussion!
Lately I have entertained the idea that being handy might not be the best quality of a investor.
Obviously this depends on your investing goals..
But➡️
Here is the question.. how can a “handy” or “gifted” builder grow without getting in his or her own way?
Building a portfolio of great investments without loosing the joy of working with your hands and being a part of the day to day.
Oh man do I have thoughts here. When I first bought a building I didn't know sh*t about sh*t. Literally didn't know what a lease looked like. I hired a dude to refinish some floors and paint. I thought maybe the old paint had to be scraped off before you put new paint on. Seriously.
Each time I hired someone to put in flooring or new doors or ceilling fans I'd watch, and listen, and ask questions, and help. Basically be a giant pain in the butt. BUT... I think its a *GREAT* thing if you know all of that stuff. It helped SO much later on when I'd need to hire people. I could speak their language. I knew how much work something really would take. etc. So if you have that experience already, it's going to help a great deal.
If you're asking "But I like to get my hands dirty and actually DO the work". Well sorry brother. If you want to scale, you'll have to give that up. I might like to paint, so I'll paint a unit for a make ready, but how do you paint 100 units that need to be ready in 2 days?
Use your "handy" skills as a way to help grow and supervise. not to do the work yourself.
Rental Property Investor · Goshen, OH · Member since 2017 · 58 posts · 22 votes
7y
@Matthew Paul
Do you plan on traveling the country/world one day? If so.. how do you plan on transitioning from managing your properties all alone to being able to manage from the no reception zones when you travel?
Do you think you can find a management company that can do everything as good as you?
Rental Property Investor · Goshen, OH · Member since 2017 · 58 posts · 22 votes
7y
@Matt M.
Yes! That’s great! It sounds like you know what you need to do to be successful!
Often times I think people don’t buy properties because they can’t or won’t do most of the work themselves. Many rich people in the past and present started out with nothing. Coming from other countries even. No or little education shouldn’t stop anyone from picking up a hammer and not putting it down till they learn to pass the hammer on to the hireling.
If you could pick one task to hirer our that you currently do.. what task would that be?
Rental Property Investor · Goshen, OH · Member since 2017 · 58 posts · 22 votes
7y
@Steve Vaughan
Steve, you sounds like the type of guy everyone would love to shadow!
Getting things down fast and “cheap”. Is possibly the best place to start. I know ceos who want to buy houses but can’t because they make to much at their day job and they can’t justify buying a rental.
Looking at it from the perspective of a builder even a ceo can double his money but they never get started because they don’t know how to replace a faucet and complain that it’s to expensive to hire it out. A ceo shouldn’t have to change a faucet but not knowing how is what keeps them from getting started.
Do you always plan on doing the work yourself?
Or do you have a plan you could share with us that allows you to hand off the handy things to “handy men”, allowing you to be “free”?
Belfast, Northern Ireland · Member since 2018 · 128 posts · 56 votes
7y
@Ezra Harris
I know a family friend who enjoys working with his hands, he has his real estate business/portfolio building work done by a contractor but when he feels the need to engage in an enjoyable rehab he would take 1 of his deals and get involved in the construction team or in some cases he would take a chunk of time and do all of the rehab himself on a smaller single family deal.