Is it helpful to be handy?
Rental Property Investor · Goshen, OH · Member since 2017 · 58 posts · 22 votes
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.
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.
It's a HUGE DEAL.
@Ezra Harris LOL it IS awesome to be able to "Pivot!" (in the voice of Ross Geller lulz) when we need to.
As far as flips versus buy and holds, I'm a huge fan of diversification especially in the current economic climate. I think that if you can do both, even if it is one rental for some steady income and then buying & flipping if that is your bag is best. I am not a property manager so have to rely on others. I run my own company as COO & simply can't be running around like a good property manager should.
It really depends on the property, budget,the property manager and where I'm at at the time. What is my best business that fulfills me may not be yours. That's another thing that is awesome about real estate investing - you create what works for you and I just love that so much.
@Jennifer Gligoric
A mix is aways nice! “Quick” money and long term money!
But as a handy person you can easily do both. :)
@Isaac S.
Great words of advice and thank you for your thoughts!
37 units is still allot. :)
At what number do you want to achieve and when do you consider executive?
Hey Ezra,
Thanks for the appreciation and for the great post.
Executive, to me, is when you are only doing negotiating of purchase and sell transactions, financial due diligence, improvement/repair budgeting and planning, neighborhood or city counsel meetings(politics), other networking efforts to find deals and financing, doing coordination with accountant and basically managing all the employees that do the bookkeeping, leasing, maintenance while possibly directly helping out in whatever discipline needs it at the time.
As for my plan, I am already "weaning" myself off of DIY, slowly....I have great plumbers, so, I no longer do any plumbing, except very minor stuff that takes less than 5 min to fix. I have a painter/helper that has been doing all patch and paint and slowly teaching him some basic electric, tile, carpentry, etc. I have cabinet/granite installers, and have been reconnecting with my previous wood flooring guy.
So, I still fill in the gaps on a lot of jobs, that may not be big enough for my contractors to be attracted to, or may be just more time efficient to take care of myself.
The rents in Los Angeles have really had a steep ascent in the last few years, and are catching up to SF and NY, therefore, our NOI has grown to a point that it is actually affordable to hire out...and probably more profitable for me to step back from DIY, and use my biz degree and experience to REFI/cash-out and grow our portfolio.
For me, the magic number is a minimum 150-200 units. Depending on the specific markets and income, I think that many units justifies a full time bookkeeper, part or full time leasing agent(could possibly be the bookkeeper does both), full time maintenance guy who also doubles as point person for contractors, and then the same lawyer and accountant that we already use that invoice as needed. And lastly, myself, supervising remotely from some tropical beach with great wifi and delicious fruit cocktails with little bamboo umbrellas :)
@Isaac S.
That’s a great magic number!
I like how you are bringing in people to take care of certain things. It’s a good way to help both you and the people you hire to figure out what you want.
Executive investing would be fun!
Once you get your team built and start buying deals, 150 might become small :).
Or maybe you can just keep upgrading your properties as well.
Looking forward to your post as a executive!
🙂