The Three Most Expensive Words In Real Estate--Do It Yourself

I'll be glad to get to that point. But I do have to admit, I really enjoy doing all the things that I'm able to. It was especially fun doing it as a family over the years, and the kids learned the value of hard work and the pride of accomplishing a small (big to them) task. One year I homeschooled. The kids were in 1st, 2nd, 4th, & 5th grade. That fall, they actually scraped & painted the whole outside of a 1-story house while Jon & I worked on the bigger stuff. You should have seen them working together and having fun. I was so proud of them.
Now (I'm gonna cry) they're almost gone. Only 1 left at home. I'm going to encourage them now to invest and the properties we own now, and acquire in the future, will be theirs. Our youngest daughter's got her mother's brain. She'll probably be the most interested.

Anyway, as we get older, I'll be glad to hire out most of the work, but I wouldn't trade those years for anything. It was great.

I'm not contradicting you, cbr, it just made me think of that.

Thanks,

Rina

I spend 80% of my day doing work related task. I would think that outsourcing was the way to go and even if it did cut into my monthly profits the real question is.... WHAT IS MY ROI (Return on Investment) meaning the investment in outsourcing.
As you said, the deal of a lifetime could have passed you by, so apparently the return is unimaginable when you think of the benefits.

Thanks,

I totally agree with hiring a managment company for the rentals. I see it as this...I would rather have 80% of something instead of 0%. Meaning if I am spending all my time being a plumber, I might miss a good deal...0%!

Plus who wants that headache...

D

In general, I am strongly opposed to using property management companies.
I can do it better than they can. I care about it more than they do.

The quality of property management companies is horrendous.

The substitution of money for time works as long as you have the money and can actually replace the time with more money.

My reason for hiring pros is that they do it bettr than I could (ie I am a trrible plumber). However, I am a better property manager than any of the companies I have ever hired. (Not to mention that even when I did hire a property manager, I then had to manage THEM.)

There are exceptions to what I wrote.. and they mostly revolve around large, multi unit properties.

This analogy is flawed. The property manager does NOT unclog the toilet. They call the plumber to unclog the toilet and then CHARGE you for calling him. 10% of gross (typicaly) is what they get for doing it. For me, that turned out to be 40% of NET. For 40%, I can pick up my own phone.

I think that the debate on whether to use property management companies or not is based solely on the owners attitude toward that. Like most anything it is a matter of personal selection and to some it may be a great business decision allowing them to free up time that could put to better use somewhere else.

For others that are opposed to it, it may be like Mark said, maybe they feel the companies business practices lack what they are looking for and they prefer the personal touch. This may work for this Owner.

Not to say that either approach is either wrong nor right, but to each his own. There ate many factors that must be weighed when making a decision to do this and I am sure all of us know ourselves well enough to know whats best for use. But lets leave the door open to objectivity and given time and opportunity....who knows.

Property Management, like Mark stated, CAN be flawed. Just as there are bad real estate deals and great real estate deals, there are bad property managers and really great property managers. When you buy a piece of real estate do you buy the first one you see? I hope not. You should look at between 50-100 homes just to buy ONE. Property management companies are the same way. It took me over a year of interviewing property management companies to find ONE I thought was worth it. The next point I will make is very important. Understanding it could mean the difference between great wealth and trading your time for money your whole life. Imagine you want to grow your portfolio to over 1000 units like I do. Say for instance right now you field all the phone calls from your properties and you own 10 properties and you get 10 misc calls per month from your tenants. Now what if you did have 1000 units now you have 100 calls per month or 3 per day. What if right now you write out all the bills and bookeeping every month for your properties and you spend 5 hours per month with only 10 properties, now if you have 1000 properties that would equal 50 hours! What if you have to show houses and you average a 5% vacancy which is low. 5% of 1000 is 50 homes vacant at once! That would take over 3 weeks straight working 40 hours per week just to get filled...and then next month hits! Think long term and where you are going...unless you don't plan on growing that is. What if you get hurt and are in the hospital for a week? Do you have a plan if that happens? What if you are killed in an accident? What happens now? Create a system that works even when you are not there. Don't be the magic. If you plan on growing big and you want the banks and investors to take you seriously--put property management in place and manage the managers--when the time is right. It isn't needed until you have over 30 units in my opinion.