Buy and Hold, DIY a Pre-req?

Question

If one is starting out in real estate do you need to be the handy man type (I am far from that) or can you learn the basics of DIY as you acquire properties?

Account Closed · Answer

Thanks for all of the discussion. I find myself getting frustrated going to Home Depot for one thing because I don't have anything on hand (haven't had much to fix). Then on top of that it ends up being slightly the wrong screw, tool, etc. and having to run back and forth to Home Depot. But definitely am willing to learn and want to buy local so I can tend to smaller matters that do not make economical sense to outsource.

Mark Gallagher · Answer

Account Closed

Consider getting a home warranty if you're going to manage yourself. For the first year it will set your mind at ease knowing you basically have any repairs covered and know exactly what number to call. Might let you sleep easy. If you go that route, be sure to read the fine print.

Otherwise, consider getting an excellent property manager to handle the property for you.

Anthony Gayden · Answer

In a word, NO.

I am not a handyman, I am not a plumber, I am not a roofer, electrician, etc. I am an investor. I use property management on all the properties I own because I am not good at those things and don't want to be doing those things.

Steve Vaughan · Answer

Certainly don't need to be some kind of great GC or anything.  I learned by doing it wrong and learning. Hiring guys that moonlight and would teach me while they worked on my places.  This was before you could youtube or google anything at will!  I also went in wanting to be a more hands-on owner.  Sounds like you would like to be more passive.  Passivity is gonna cost you!

Even if you find a quality PM, you are going to experience high repair costs. $100 breaker flips and faucet drips. Stopped by a property to look in the community yard at one of my apt buildings and saw a bunch of branches drooping down, not letting the sprinklers to cover the yard.  I got out, cut em up and hauled em in 15 minutes.  A PM would have had to schedule it out a week or 2. Oh and would've charged or billed about $200.

I get most of my deals from frustrated owners getting robbed by PM co's.  Just be aware @Anthony Gayden .  It will cost you a lot more than 8-10% or rents.

Nathan Duncan · Answer

Like everyone else has said it isn't necessary to get started, but every little bit of knowledge helps. As I was doing my house YouTube and the internet became my best friend and I learned a ton. The advantage I see is that you can buy distressed properties at a discount over a turn key one and remodel to your specs over somebody else's, but then again different strokes for different folks. It just boils down to if you want to do the work or pay to have it done. I prefer to be hands on as much as I can.

Anthony Gayden · Answer

@Josh Lewer I admit that I am a more passive investor, and I personally see nothing wrong with that. Others are more critical of my method because it means less cash flow and slower growth. Personally when I got into real estate investing, it was never my goal to become a handyman/property manager/real estate agent. I was looking for a place to put my money with much higher returns than the stock market and where I could have a lot more control.

Don't get me wrong, I love real estate and I love doing deals, but I hate a lot of the hands on stuff, and for a long time never even considered investing in real estate for that reason alone.

Account Closed · Answer

Thanks. @Seth Sherman @Anthony Gayden @nate howard. A lot of the podcasts I listen to talk about breaking down walls, leveling out the house, etc. In contrast,  I would like to just go basic with 20% down and really no significant repairs to get it rent ready. Also, I would factor all of the future maintenance with a PM or contractor in the cost model.

Account Closed · Answer

anyone can learn the basics of DIY as one acquires properties, however knowing how things are done and what is required to do these things prevents being taken advantage of by contractors.

if you just want to learn how to fix things,  the internet can teach you to do practically anything.

Steve Vaughan · Answer

@Anthony Gayden.  I understand. Self-managing is definitely not for everyone.  I too have looked to the heavens and asked "who does this?!"    I just wanted to point out an example or two where little things can cost a lot.  Just posted on another one.  PM called a plumber to clear a clogged sink trap (for me, 3 minutes and a $3 Zip-it) and it's turned into a $735 wall-entering, big gobbly-guck.    The 8-10% of rents being your only cost is a myth is all I'm saying.  Budget for it and you'll be fine!

Anthony Gayden · Answer

@Steve Vaughan The truth is that I bought one of my properties from a frustrated small time landlord who was sick of managing their properties and not very good at it either. A couple of weeks ago, the guy I bought my property from, who also is the owner of the building next to mine, knocked on my door and asked me to buy his property, telling me that he was sick of all the hassle. He tells me that multiple tenants are literally 2-3 months behind on rent. Speaking to one of his tenants, I found out that they call him because something is broken and he will take weeks to come and fix something, then he will do a cheap fix that ends up breaking again or making the problem worse. Later he admitted to me that he doesn't have any security deposits from any of his tenants and doesn't do background, income, or credit checks.

What I see a lot of is people who are absolutely terrible at being property managers trying to do the job to save a little money. I already know that my strength is not in managing property and that I would be the frustrated lazy landlord just like the guy I talked with that day. I agreed to buy his property and will turn it around. I will use the same management company I use for my other building.

Remember that just because you are using a management company does not mean that you are in a 100% passive investment. My job is to manage the management company.

Buy and Hold, DIY a Pre-req?

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