We have all heard of DIY do it yourself but slowly DIY can turn into DEY..... Do EVERYTHING yourself. Jake and Gino the Multi-family Investors call this the Ima mentality or ima do it myself.
This article will be talking about how we slowly take on more and more and resist handing off the lower $/hr tasks as we scale. I write this as someone who has spent many nights the last few weeks tiling his own bathroom and drywalling this week.
When I was buying my first house I met this inspector. He was telling me he used to build houses and he even designed several of them himself. In my head "you were a developer why are you here"? I asked "so why aren't you still building homes". His reply: "I felt like I had to do everything in my business - I managed my guys, ordered the supplies, and did even the payroll myself". Hearing him say that really stuck with me and scared me.
That stuck with me for some reason maybe because I always grew up with this mentality of if you can do it than you SHOULD do it. Whether it's about saving money or just a pride thing. You can get away with everything for awhile: doing the accounting, doing all of the work yourself, doing your job, trying to educate yourself etc... At a point things the hats you are wearing start to thin out because you're tired from doing everything and you start to weaken in those roles.
Some peaks and valleys I have hit:
Running my landscaping company out of college - it was a new company but I was working from 5am - 10pm everyday and extremely tired. For many reasons I decided to give it up. Part of which was having time to educate myself. I took a corporate job and everyday I spent 5-8 hrs listening to real estate podcasts and reading books when I had free time and hit my goal of being full time in real estate (this took 2.5 years not overnight)! My partner ended up going into sales and killing it. We make calls and drive around now, not moving thousand of pounds of dirt everyday much better!
Feeling like I needed to learn and do everything on my properties - I had a dryer break so I went on YouTube spent a few hours learning to fix it. I went to Home Depot bought supplies. Spent 2 hours trying to fix it . I eventually couldn't figure it out and had to call someone to fix it which he did in 20 minutes and charged me $250. I wasted so much of my time on a task I do not want to be good at.
It was a huge learning experience and after that I call people when I need mechanical things fixed or even if it's something I know I haven't fixed before.
Be clear with what you want to be! I want to be a successful real estate investor, not a dryer mechanic or an accountant (which is why I pay an accountant).
I did a few large projects this year my kitchen and bathroom and have learned quickly what I do not want to do again. I found myself pulling late nights tiling my kitchen and bathroom with my Fiancé ourselves. I could have done the easy work of putting the mason board down and just called someone to do the tile (which took me days). But I had done tiling before and knew enough to get myself into trouble.
Business is a lot of learning what you shouldn't be doing and delegating that out or as my boss Jesse would say "delegate and elevate". It is a scary thing because your first thing you think is "I don't have the money to delegate". But when you do delegate it out you use that time more effectively and usually end up making more money at your job or on an investment.
What 15-20$ / hr tasks are you doing that you could delegate in your business?
What do you hate doing in your business that you feel you have to do?
What is something you would like to do more like reading or network but you don't have the time because tasks you should probably not be doing get in the way?
What are you going to do to elevate your business?
Disclaimer: I am not a lawyer or city official. Know your cities laws for rentals and Fair Housing Laws. Every county is different so know your own laws!
So you are renting your own property out! You probably have some questions:
Where do I find tenants?
How do I screen tenants?
Do I pay to screen them?
How far in advance should I list my rental?
All these questions and more will be answered! It is important to avoid certain pitfalls when renting your property out and this will cover those as well. I list my rental myself, professionally lease for landlords, and the company I work for as well on their 50 unit buildings.
First things first you should have a rental license (at least in Philadelphia) if you are renting your property out. Check your local requirements!
The Process - The company I work for and I list our rentals 2 months in advance. If the property is going to be vacant in June list it in April and start getting tours in. Between screening and showings it usually takes 2 months to get a good tenant in.
Where to list:
When I list my own rental I list on Facebook Marketplace, Zillow (still free in Pennsylvania), and Craigslist. Zillow started charging however not for PA. Zillow also will out put your property on to Hotpads and Trulia.
Advertising Your Property: So I'm sure most people do not set out to discriminate but I have seen a lot of Facebook rental postings say : "looking for a young professional to move in". There should be no mention of what type of person you are looking for. It should be solely off the application. I will get back to this later.
In Philadelphia all of these categories are illegal to discriminate against:
(The Following was taken from The City of Philadelphia Website: )
In Philadelphia, it is illegal for landlords to discriminate against tenants because of their:
So You Have Leads Now What?
You have 50 leads in your inbox now what? What I would do is call down the list and set a 1 hour slot for everyone to come, but give them a specific time do not call it an open house. When people have an appointment for 3pm they are more likely to show up.
Me: Hi Jim I have a tour slot left to see the rental this Thursday at 3pm?
Jim: I can't make that is there any other time?
Me: No sorry I'm booked up the rest of the week.
Jim: Ok I'll make it work.
People are flakey so keeping your tours to one hr a week will save you a ton of time. What it also does is when a ton (10) people show up to a property at once it creates a sense of urgency and people want what people want so it rents quicker.
When touring people avoid this!
People will ask you what are the demographics of the area? Or are there a lot of families around here? Are there a lot of young people in this area? Is this a safe area? You cannot answer these questions. Just say I legally cannot speak to the demographics or safety but you are free to look up the crime statistics!
Also do not steer people! Steering is pushing people to other areas based on race, religion, or other characteristics. Ie: I have a rental in this part of town you might like better because you're older and it's quieter there.
Congrats the open house "appointments" went well you have people who want to apply! So what's your application process?
Here is mine - I have a paper application that everyone over the age of 18 will fill out and put your job and salary info. I will need paystubs as well. In addition to that I will send a link for the credit and background check through TransUnion SmartMove it will be $40.00 per application over 18.
One of my colleagues uses this criteria to screen and I use it now as well:
- Gross income must be 3.0x monthly rent or more. Income verified.
- Reliable rental history w/ current and previous landlord contact information provided, if applicable
- 580+ credit score
- No collections, foreclosure or bankruptcy in the past 3 years.
- No history of violent crimes, felonies or any crime relating to minors.
It is so important to have a set screening criteria before you start the process. If you lower your standards throughout the process you have to go back and notify everyone. This could open you up to discrimination issues if you told someone one set of criteria and someone else something different. Be clear and no your standards!
Now you found somebody you like! I require one months rent as a security deposit, and first months rent upfront (this is negotiable). I will not take the unit off the market until the security deposit is received.
For everything of how to operate as a landlord ie: collection rent, book keeping, leases and other docs check out: The Automated Landlord Article
Pets: If you choose to rent to people with pets you will have a pool of people that can't go to other places and this will give you an advantage. Plus you can charge a $25-50 pet rent and a 300-500$ non refundable pet fee. Check with your insurance company on what pets they allow and breeds when it comes to dogs.
I do not allow pets but someone has a helping dog that's a Pitbull mix and my insurance company doesn't allow Pitbulls. I'm not an insurance agent and this is not a plug but State Farm has no breed restrictions. I do not use them but if I were in this scenario I would go there.
Philadelphia and Surrounding Areas Listen Up!
If you are renting to a family with children and your home was built prior to 1978 you need to know this... The following was taken from the City Of Philadelphia Website:
Philadelphia Lead Paint Disclosure and Certification Law
Matt Tallent is a Realtor with The How Group. His passions include rental property investing and helping others achieve their real estate goals.
Real Estate Investing
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