A question about real estate

[Deleted106527]

Hello everyone!

To people that are already „in the game“, this question might sound a bit silly, but it‘s something that‘s kinda been holding me back from getting into real estate too deeply.

To put it simply: How does one take care of their properties without losing too much cash?

So I will soon come into possession of a high 4-figure sum of money and I was thinking that‘d be the perfect opportunity to get my feet wet with real estate (maybe even House Hacking?).

But the number one thing I always seem to worry about and not find a proper answer to (maybe I‘m not so proficient at googling??) is taking care of damages, things that need to be fixed in the apartments/houses (not talking about repairing stuff before people move in, but while they are living there).

For example, in the case of House hacking: Let‘s say your tenants water does not work anymore (or even something simpler like a hole in a drywall); Do you learn to fix it yourself? Do you hire a professional to do it (which would probably not be cheap)?

Maybe I‘m overthinking/overanalysing this, but the number one thing all the people I know that own properties tell me is: „Repairing everything in these houses is so expensive nowadays I barely make a profit“.

Is it really just about finding a good property with good tenants in order to minimise damages? Maybe I‘m overestimating how often something needs to fixed?

I would love to hear from someone with a bit of experience in real estate.



Thanks in advance!



P.

 

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[Hong_Kong]

Hello everyone!

To people that are already „in the game“, this question might sound a bit silly, but it‘s something that‘s kinda been holding me back from getting into real estate too deeply.

To put it simply: How does one take care of their properties without losing too much cash?

So I will soon come into possession of a high 4-figure sum of money and I was thinking that‘d be the perfect opportunity to get my feet wet with real estate (maybe even House Hacking?).

But the number one thing I always seem to worry about and not find a proper answer to (maybe I‘m not so proficient at googling??) is taking care of damages, things that need to be fixed in the apartments/houses (not talking about repairing stuff before people move in, but while they are living there).

For example, in the case of House hacking: Let‘s say your tenants water does not work anymore (or even something simpler like a hole in a drywall); Do you learn to fix it yourself? Do you hire a professional to do it (which would probably not be cheap)?

Maybe I‘m overthinking/overanalysing this, but the number one thing all the people I know that own properties tell me is: „Repairing everything in these houses is so expensive nowadays I barely make a profit“.

Is it really just about finding a good property with good tenants in order to minimise damages? Maybe I‘m overestimating how often something needs to fixed?

I would love to hear from someone with a bit of experience in real estate.



Thanks in advance!



P.

My tactic is to build a network of professionals in advance. Handymen, tradespeople, general labour, plumbers, electricians, lawyers, mortgage brokers etc. Work with these professionals, and tell them your goals in real estate and that you want consistent reliable trustworthy people that you can give repeat business to (and more business as you get more doors).

The first thing on each property will be the installation of a WiFi smartlock. That way I can program disposable codes for professionals that show up, so after I give notice to the tenant I don't have to be there.

I will create a website for listing the properties, accepting payments, and submitting repair requests. When I get a new repair request through the system, I can delegate to the corresponding trades-person. Ie: report of a leak, text the plumber. For smaller sounding repairs send general labour or handyman style service.

I think when purchasing appliances its smart to look for warranty (although if you buy used you can save cash).

You can do repairs yourself, but it depends on how much you value your time. Also you can write of repairs for taxes, but you can't write off your own time for repairs.

The numbers should work with outsourcing repairs.

As you get more property you can start inhousing repairs and maintenence. With the ultimate goal of getting a large mutlifamily building where the number support a resident maintenance person.

 

[BD64]

You set aside a portion of your gross rents as reserves, your property pays for its own upkeep.

 

[Deleted106527]

You set aside a portion of your gross rents as reserves, your property pays for its own upkeep.

Guess I actually did overthink it

 

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[Deleted106527]

My tactic is to build a network of professionals in advance. Handymen, tradespeople, general labour, plumbers, electricians, lawyers, mortgage brokers etc. Work with these professionals, and tell them your goals in real estate and that you want consistent reliable trustworthy people that you can give repeat business to (and more business as you get more doors).

The first thing on each property will be the installation of a WiFi smartlock. That way I can program disposable codes for professionals that show up, so after I give notice to the tenant I don't have to be there.

I will create a website for listing the properties, accepting payments, and submitting repair requests. When I get a new repair request through the system, I can delegate to the corresponding trades-person. Ie: report of a leak, text the plumber. For smaller sounding repairs send general labour or handyman style service.

I think when purchasing appliances its smart to look for warranty (although if you buy used you can save cash).

You can do repairs yourself, but it depends on how much you value your time. Also you can write of repairs for taxes, but you can't write off your own time for repairs.

The numbers should work with outsourcing repairs.

As you get more property you can start inhousing repairs and maintenence. With the ultimate goal of getting a large mutlifamily building where the number support a resident maintenance person.

For what I'm starting with, this is probably overkill.
But it definitely sounds like a good strategy, especially if you know what you're doing!

 

[JordanK]

You will make mistakes in the beginning. You'll overspend on stuff, hire unreliable help, bad tenants. It's all part of the learning curve.

If you do end up house hacking you'll start to learn a lot of general maintenance skills from YouTube. You'll also hire tradespeople and annoy them by watching everything that they do. Eventually you'll realize that some things can be sorted by you and some things are best left to the specialists. At the next level you'll realize that your time is best allocated elsewhere and you'll outsource everything even if it costs you a little bit more.

5 - 100% perfectly managed (maximum cash flow etc) properties by yourselves

or

100 - 80% perfectly managed properties by others

Which earns you more money?

Levels to the game...

 

[Deleted106527]

You will make mistakes in the beginning. You'll overspend on stuff, hire unreliable help, bad tenants. It's all part of the learning curve.

If you do end up house hacking you'll start to learn a lot of general maintenance skills from YouTube. You'll also hire tradespeople and annoy them by watching everything that they do. Eventually you'll realize that some things can be sorted by you and some things are best left to the specialists. At the next level you'll realize that your time is best allocated elsewhere and you'll outsource everything even if it costs you a little bit more.

5 - 100% perfectly managed (maximum cash flow etc) properties by yourselves

or

100 - 80% perfectly managed properties by others

Which earns you more money?

Levels to the game...

Thanks for the advice!
Looking forward to the journey ahead of me

 

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[Guest-5ty5s4]

You will make mistakes in the beginning. You'll overspend on stuff, hire unreliable help, bad tenants. It's all part of the learning curve.

If you do end up house hacking you'll start to learn a lot of general maintenance skills from YouTube. You'll also hire tradespeople and annoy them by watching everything that they do. Eventually you'll realize that some things can be sorted by you and some things are best left to the specialists. At the next level you'll realize that your time is best allocated elsewhere and you'll outsource everything even if it costs you a little bit more.

5 - 100% perfectly managed (maximum cash flow etc) properties by yourselves

or

100 - 80% perfectly managed properties by others

Which earns you more money?

Levels to the game...

This is like what @Kak said on his radio show.

Would you rather control 100% of a $1 million company, or 10% of a $100 million company?

Something to that effect. Make up your own numbers.

What got you here, won’t get you there. You have to think of that next level

 

[socaldude]

I guess the best return for your time and effort is to do it yourself? Buy some tools and watch some YouTube videos or take a handyman course.

 

[Nomadic]

It'll be a learning curve when you get started with one or two properties, as others have said way better than I can.

After more than that though, might make sense to hire a local pm company or one that operates remotely (Lincoln, Mynd, etc.). You'll pay on average around 7-10% of gross rent in fees.

Another thing to keep in mind in regards to benefits of a pm company is that they have full leasing teams dedicated to getting residents in your vacant properties. This is important if you are in a place that may not be overflowing with tenants & applications. This alone could keep you from having to go months without receiving rents to cover your costs

 

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[Mathuin]

Would you rather control 100% of a $1 million company, or 10% of a $100 million company?

Something to that effect. Make up your own numbers.

What got you here, won’t get you there. You have to think of that next level

100% of a $100 million company... Felix Dennis style