This is what has happened in the past seven days. A man owns a couple of properties and one has been vacant for the past 12 months. He calls me often for my advice and my connection to different trade people. He self manages his properties. He and wife have full time jobs. He is a great example of pinching pennies and blowing dollars. He won’t hire me to manage his properties because he doesn’t want to spend the money. This one is easy math. I told him that he had lost over $14,000 in potential income while he was deciding on what to do with his vacant house. It needs some repairs and he didn’t want to spend the money. This doesn’t take a genius to figure out he needs a professional to assist him.
A potential buyer wants another investment property. He also wants to self manage, again to save money. He asked me about where to purchase and what kind of home ect. He lives in Sugar Land one of the best Real Estate markets in the country. I suggested he purchase a single story home in Sugar Land because of the great schools, great location and city’s zoning and planning structure. While he believes what I am saying he still wants to search other areas. So we looked at other areas and he found a house that he liked outside the city limits with a good school district. The house is almost 3,000 square feet with all bedrooms up. I will gladly sell anyone what they think they want. This house with all bedrooms up will eliminate potential renters. The steps will be hard on some people. In our market master bedroom down is a preference. The resale of the home may not be as quick because of all bedrooms up. The house is big and when it comes time to replace flooring, carpet and paint there will always be a lot of square feet to deal with. The cost will be high. The property is 25 miles away so it will not always be convenient to see or maintain. For investment it important to look at a property differently. Many people look at the house from the stand point of living there. For investment you need to see it differently.
The next investor that I will mention, I have known for years. He has four rental properties a lake house and a very nice private residence. He also does his own management and maintenance. Over the years I have mentioned to him that I know some good repair people that work at reasonable rates and most important, they do the work quickly. He has thanked me for my input but continues to do it his way. Recently he called to ask the name of the repair man. After using the repair man on what turned out to be a major job he is now using him all of the time. He has figured out that his time may be better spent with his family. He has realized that the contractor can do the job faster and cheaper than he could do by himself.
These three examples are not difficult to understand. Each person wants to save some money, as we all do. As we age we start to see things a little differently and as capable as we might think we are at doing things we realize that we can accomplish a lot more with proper management skills.
Until next time , Matt