DYI, Hire team of contractors, or Offsource to Property Management company? (Part 1)

Hello everyone,

   Thank you for visiting my website.  Welcome to my blog on starting, enhancing, and maintaining your investment property portfolio.  I will first post the Question or Problem Statement, then walk you through my analysis and options.  I will then propose my recommendation, if it is applicable, and conclude the blog.

So, now let us start:

Question/Problem Statement:  Should I fix/manage the property by myself, hire a team of contractors, or outsource to a property management company?

Analysis and Options:  The true unbiased answer to this question is “It depends”.  You basically have three main end decision choices:

• DYI — Do It Yourself.  Repair, deal with tenants yourself, and manage the property by yourself.  Hiring people to fix the problems are limited.  You are very involved in the day-to-day operations of the property.
• Hire a Team of Contractors — Hiring contractors to perform most of your work. You are still managing the property yourself, but you are mainly coordinating effort.  Your level of involvement is more relegated to management of the property rather than the day-to-day operations.
• Hire a Property Management Company — This is the hands-off approach for managing your property. Your involvement is limited to major issues (such as repairs needed that cost more than a pre-fixed dollar threshold.

So, how do we get to deciding on the end choice?  It depends on a number of factors (such as availability of time, proximity to property, amount of effort, condition of property, skill sets, finances, etc.).  My questions below will help you decide which option works best for you.  There can be a number of other factors, so I have consolidated into this summary of main points:

Of course, there are a continuum of options available but let us focus on these discrete main groupings of choices and end decisions. Some of these may not be politically correct however, these are direct and practical factors and questions I pose to my friends (and anyone) who are thinking of investing into rental income properties.

If you are a handyman, plumber, or skilled with tools and can make the necessary fixes, then this will save you a lot of money. Hiring a contractor (e.g. handyman, plumber, painter) can easily cost you at least $50-$100 for each minor incident. By fixing yourself, this can really add up in savings quickly. Your cashflow will be much stronger by putting some sweat equity into your property.  Knowing what to do allows you to keep your options open.  However, if you do not have the skills to make the repairs yourself, then you will need to hire contractors to do the work or hire a property management team.

I also included “Willingness” in this factor because if you do not have the willingness to get your hands dirty, then the options are limited to hiring help or outsourcing to a property management company.  If you do not have the skill sets but are willing to do the work, you can always learn. Training videos, tips, and community forums are readily available on the internet.  (E.g. I fixed my garage opener at a cost of $15 rather than paying $125 for a service repair — all thanks to people who posts on YouTube.com)  However, be cautious on taking on something more than you can chew. 🙂

Issues will always come up at the wrong time.  Do you have a job that allows you to work from home?  Will you be able to deal with issues while you are working?  Does your job allow you to take or make personal phone calls?  And when you are not working, are you able to take care of the property?  Are you able to make time during working hours to go to the property if it requires your presence?

If you answer “Yes” to all the questions above, then you are definitely a candidate of DYI.  This does not preclude you from hiring a team or a property management company.  However, if you answer “No” to one or more of the questions, then you will need to hire a team or property management company to handle the property.

Issues will come up and they will come up at the wrong time — Murphy wants poke her head in at the most inconvenient time:  at the very important meeting with your client, when you driving to work Most of the time, issues can be handled within a day or two.  Those issues can be addressed after work or over the weekend. Issues that are not time-sensitive may still require a few phone calls (or text): You receive the call from your tenants or you return the call of the tenants; you contact the contractor; you notify the tenant on what will happen; you receive the call from your contractor after completion; and lastly, you confirm with the tenant on the repair.  Any of these can happen during working hours and a call can take up a few minutes depending on the complexity of the issue.

There will be times, when issues must be addressed immediately (or very soon) and when that happens, the answers you gave to the above questions will be very apparent.  Your availability will factor into the other consideration:  Ability to handle pressure/stress. (More about this next time.)

Even if you live very near to the property regardless of working hours, if you are unable to deal with time-sensitive issues at your property, then you may need to hire help.  For example, if the water heater pilot goes out, you need to light it up again at any time of the day or night.

This concludes the first part (of three) of this particular topic.  In my next two posts, I will explore the remaining factors and conclusion.  As you can see already, there are a number of questions to consider for each factor. Some of you may think it is overkill, but I want to make sure that you are aware of all the considerations when you make a decision.  This is how I operate as a realtor — I point out factors (both negative and positive) so you can make the informed decision that is best for you.  With my academics from UCI undergraduate and UCLA MBA programs, coupled with real life experience in managing and investing in real estate properties, I can help you find properties, increase its value, and grow your investment portfolio.

Thank you for reading!
Matthew

www.MWUproperties.com

612-888-4MWU

612-888-4698

About My Services: I am a Realtor and real estate owner/investor based in Orange County, CA. I manage my properties, having lived alongside tenants for a number of years. I help my clients purchase properties, sell their properties at the highest market value, and increase their real estate portfolio — and I can do the same for you. You can read about my background and approach here.