I’m starting to understand the business/money side of investing in rental properties. One thing, however, unnerves me. I understand that landlords are responsible for many kinds of repairs. Unfortunately, I have no around-the-house skills to speak of. I can change a light bulb, but I’ve never worked with plumbing, or with electrical wiring, etc. Heck, I’ve never even put in a carpet.
I have plenty of relatives whom I could hire (or who might even do it for free), but they have jobs and might be unavailable for days at a time.
How much a problem would this be for me?
Assuming you are going to be a responsible landlord, you need to make repairs in a timely fashion. This means within hours of a broken furnace on a winter day to days/weeks on something like a rubbing closet door.
In my experience, it pays to have a wide range of repair skills. First, to save money on repairs that you can tackle yourself, and second, to understand what NEEDS to be done and rough costs on those repairs you farm out.
If you have the desire to learn, start tackling jobs around your own house. I’m a big believer in getting a book or researching the job on the internet to get an understanding of how to do the job and as a guide during the job. You’ll never develop skills by simply hiring someone to do the job.
Without some reasonable skills and the motiviation to learn, be prepared to be fleeced by the contractor.
Derek- I can completely undestand where you’re coming from. Like you, I’m not a naturally handy person, and never was really interested in learning UNTIL I started buying real estate. It DEFINETELY helps to have some skills like jmd mentioned. The way that I’m learning is that my biz partner used to be in construction so he’s teaching me a lot about the homebuilding/homerepair processes.
You don’t need to be an expert in all areas, heck, nobody is! You DO need to know what people to call when something does break however. So if you’ve got family members in the trades, maybe you could ask them to start working with you on repair jobs to start learning the basics.
I have a lot of relatives in trades. Electricians, plumbers, etc. Most of them are previous generation though – uncles.
Unlike them, I have spent my entire life in office jobs. I’m certainly opening to learning, as I love money, but as of right now I don’t even know what tool does what.
Much more important than being handy is being able to supervise the handyman you hire.
My handyman skills are minimal. Like you I am good with screwing in light bulbs. Now I can also hang pictures, re-frame pictures, and polish and clean.
But I got real good at supervising, critiqueing, hiring and firing of handymen. There are lots of people with innate skills that you can hire. Just don’t turn them loose on a job. Be there.
I don’t do maintenance. I set up my rentals for passive income. That means no work for me including maintenance. I am pretty handy but I have a W-2 job so I can’t do all the repairs myself. What I do is when I buy the houses, I make the house perfect. That means that I put new appliances, A/C new carpet and paint etc. If doors or windows need to be replaced that is done when I buy the house. I also buy a home warranty when I buy the house ($300) they will fix most everything else. There is a $45 co-pay. When I make out the lease in the blank that says tenant is responsible for the first $___ of repairs I put in $300. Most people put $25 or $50 in that blank on the lease. I have had a few potential tenants balk at that. I explain that everything in the house is new and new stuff don’t break unless they broke it. I then say “If you break it you should fix it right?” They always say yes. If they say no I don’t want them in my house anyway. I then tell them about the home warranty and that all they should have to pay is the $45 co-pay for things that they break.
My issue is that I am not interested in buying single family houses, but rather multi-unit apartment buildings. The building I buy will probably be fairly old, because I am in a major city and new 4-unit buildings are listed as high as $2.7 million, which I can’t afford.
I am sorry. If you read Gerber’s book the E-Myth you should look to work on your business not in your business. When you buy multifamily you are not buying real estate as much as you are buying a business. The maintenance is on the expense side. Buy a property that has enough income to afford you maintenance help. You find what you are looking for. If you are looking for a project you will find a project. If you are looking for a business you will find a business. Make the criteria in your search include the ability to have maintenance.
It’s kinda like the story of when the girl takes her car to the mechanic. Since she probably doesn’t know much about cars, the mechanic can pull one over on her and charge her extra than he would charge a guy. If you know nothing and show it, you will have to hope you find honest repair people who don’t take advantage of you. There are much cheaper people out there to install things than the prices you see at Lowe’s or HD. Do you really want to pay someone to change a 38 cent light switch? If you have an interest in doing things like this, you’ll pick up things along the way. I fix as much as I can on our properties, but I have my limits. I call for help when I realize I don’t have time or the knowledge to fix something.