Categories Property Management

You want to grow your RE investing business? Stop DIYing 

The article I wrote, ” Four Reasons DIY is Dead: An Argument for Outsourcing Everything” was a controversial piece that explained why doing the work yourself in your real-estate business is a bad idea.

I agree with the article, but wanted to expand and clarify it.

Knowing how to DIY is extremely valuable, but doing it is extremely low-value.

Save money on repairs

How confident can you feel if you have never worked on a home before? My friend asked me if I could help him with a Flip that he was working on. It turned out the baseboard had been installed incorrectly and needed to be replaced. He was very worried about it because he didn’t know what baseboard was. It sounded costly to him, but he didn’t know any better.

Baseboard is the trim strip that connects the wall and floor. It is super cheap and easy to replace or install. You can imagine what could have happened if my friend did not have me to act as a sounding-board.

It’s the old stereotype that someone who doesn’t know anything about cars is told to get muffler or blinker bearings. You are left to blindly trust your contractor if you do not know any better. This is not something I would recommend.

When you are doing renovations, you can make better and faster decisions if you know how the house is built, what materials are available at the hardware store and how difficult it is to finish certain tasks. These tools also help reduce stress, one of the most expensive aspects of real estate.

My friends who want to know more about building houses, but don’t yet have a project, may ask, “Alex, how can I learn? I have no house to build and I cannot quit my job to go into construction.” What would you recommend?” I’m so glad you asked, because I have a perfect solution to this problem.

Volunteer for Habitat for Humanity

will be happy to welcome you, even if it’s a knucklehead that’s never touched a hammer.

Second is a great way to learn about home building, how much things cost and to work with experienced builders. They won’t allow you to mess up anything too badly.

Third is that you can meet many people and develop some long-term friendships. Most of the volunteers at Habitat for Humanity are full-time contractors and builders.

Fourth There is absolutely no risk associated with this. You can’t do anything that will cost money. This is a rare opportunity to gain a lot of money.

The fifth is that you can give back to your community. This is a common reason that people use to motivate their real estate businesses. If you’re only in it to make money, it isn’t as generous as it might seem.

Manage Your Rental… for a Bit

Currently, I have a property management company for my entire portfolio. However, when I first started out I managed my own rentals. This is an excellent experience for single-family owners. Understanding tenant onboarding and listening to their complaints and feedback, as well as dealing with many different personalities, will benefit your business over time.

You’ll be able to have a more positive relationship with a property manager even if you hand over the reins to them. This is because you will have a deeper understanding of their responsibilities and what they are asking from you. In the future, you will be able hire better Property Managers because you know what’s involved.

The biggest mistake new investors make when they buy is to think that any property, anywhere in the world, will run smoothly if you just hire a property manager. I think this is the height of arrogance. Before you expect a property manager to do his or her job, you should know exactly what it is you want. Property management can be a challenging job, particularly for properties in the C- and D-class. A manager will have a different relationship with you if they are familiar with the process.

Then, Turn Over Management Responsibilities

When is it the right time to hand over your property to a manager? I suggest you do it sooner rather than late. My portfolio was only two units after about two and a half years of managing myself. It will depend on your personal circumstances and how much you enjoy being so involved in the business.

Some people enjoy fixing toilets and managing renters. Don’t rush to outsource if this is the case. Priority No. 1 is to enjoy your business. Priority No. 1 is, in my opinion, enjoying your business. It is better to have someone else handle it if it causes you stress. Most people want to be free from real estate, not just save some money. The best deal you can make is to give up 10% of your gross profit in exchange for a 90% reduction in stress. The real freedom comes from learning to manage managers.

The solution to every problem is scale

The original article stated that DIY was the least efficient method of running a business. Michael Gerber’s book The E-Myth is based on this premise.

It is different to work for and within the business. One of these skill sets is scalable and the other one is not. You should spend time on improving the skills that you want to scale, while outsourcing the skills you don’t want to scale.

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