Obviously for major jobs you tend to hire a handy man or a contractor. But my question is do you have someone that you can call that day to get it fixed that is pretty much working for you? Or do you have a company that will be able to repair it the next day? How many contractors do you have? The main question is who does you repairs and in what time frame are most repairs done.
Adam
I tend to buy homes that are between 0-5 years old, therefore, don’t need anything except minor cosmetics (usually). I’ll do stuff like painting, switching out light fixtures, general cleaning, and the like myself. Depending on the shape of the carpet, I will either handle it myself or get a friend to do it cheaply (he installs it for a living). Aside from that I haven’t needed anyone else. However, this last job really bogged me down, since I was under pressure at my full time JOB, so I may hire out a handyman in the future even for the small stuff.
Well if you have lots of properties to work on and are pretty busy then hire people to do all your work maybe just one company. But if its your only property or one of only a few then do the work yourself untill the point you can. The parts you can’t do hire someone. simple.
I agree with real estate talk. I have a project coming up the first week of 2007 that needs alot of work done to it. I got two contractors to take a look at the project with me and had them both bid on what I needed done. The only things I am going to do are pull carpet, clean the yard up, paint and clean when it is all done. My contractor is going to do all the drywall work, knocking out a few walls, building a few others, stuff like that. Each rehab project I do I will have contractors do most of the work and eventually ALL the work. If we end up with rental properties down the road I will then use one handyman or maintenance man for that. Hope this helped.
serio,
are you referring to a busted pipe in the middle of the night in a rental property you own?
or do you want info on buying a rehab and scheduling people to complete needed rehab fixes?
two entirely different things.
the latter being a challenge because if you are relying on others to complete your work - good luck - that stuff eats your profits up quick, especially if you don’t buy below 30% market.
for rentals - it probably will take you some time before you can find someone very reliable to do a midnight repair for you.
you’ll want to be able to do many repairs yourself probably because of the lack of income production from just one or two properties.
if you do them yourself - make sure your business that owns the property (i.e. LLC) generates an expense report to you or your property management company - seperate entity.
you want to be sure to pay yourself for the work you do to your property.
if you buy and rehab to sell - then have LLC buy it and then make the repairs with a seperate entity - thus creating an expense for the LLC. LLC pays other entity for repairs, thus decreasing the dollar amount/profits taxed on LLC. this can come in handy for dealership issues if you’re buying and selling real estate.
check all this with your CPA. i’m not recommending anything, just throwing out options. think creatively (and always do things legally).
Tom,
I was talking about a busted pipe in the middle of the night.
If you’re set-up with an LLC and generate an expense report and “pay” yourself for repairs, how does it affect your personal income taxes? I’m thinking with a single-member LLC.
Thanks.
serio,
for rentals - it probably will take you some time before you can find someone very reliable to do a midnight repair for you.
land,
the more you spend on operating expenses (thus lowering your profit), the less you’ll pay in taxes. LLC is a pass through entity - (if you select no special taxation)…as a pass-through, you pay taxes at whatever your personal tax bracket is - say 25%…on ALL PROFITS in the LLC.
if you pay yourself or your other company, like a C-Corp - you can retain earnings or if you just pay yourself…you stand a good chance of paying less in taxes, via self employment taxes (i think they’re 15%)…that’s a 10% difference.
but, if LLC is paying you personally for repairs - IRS may see a member of LLC (you) being paid a salary as an employee of LLC - then you would have to pay other taxes such as Medicare and Social Security…I THINK.
I AM NOT A CPA. REPEAT I AM NOT A CPA. i know that employees get paid their salaries from companies and companies pay FICA…for every dollar the employee pays in these taxes, the employer matches it. that can get quite costly…and with LLC, you’re already paying taxes on this money - the main advantage of LLC is the pass-through taxation…
you must consult your CPA in order to thoroughly understand the benefits of any business plan you initiate.
I strongly believe in hiring your own maintenace staff. (Since I have been burned by many contractors)
Since I don’t own enough property to keep my staff busy all the time, I provide other rental owners in my area my services. (Property management and maintenance)
I also believe in multiple streams of income. So now I have several businesses bringing in income. Real estate is the best place for mulitple streams of income. Think of all the services you need in a year for your rental, then think about if you could make money off other people who need the same services.
If you are going to do this just be fair, honest, and reliable.
I use my property manager, he takes care of all maintenance issues and sends me a statement once a month. Any large or issues that are going to cost more than a certain amount he calls me.
That is all depending to what kind of property you’re dealing with. If you a multi-unit rentals, your property manager should be your main person who deals with any situation . He calls you when it requires some serious judgement (i.e. major cost/repairs). A busted pipe is something that have to be dealt with immediately. Asking some reference from some other managers will give you an idea who are reputable repair person in your area.
If you are dealing with a property you’re about to buy, that is a different scenario. Three issues you have to make a serious decision if you really want to buy a fixer-upper property. If there are some problems with roofing, foundations and electrical/mechanical systems, know your figures if you could still have sufficient profits after having any major work done in these types of repairs.