02 Nov Should I Do the Repair and Renovation Work Myself on my Investment Property?
The best CEOs don’t ask themselves, “How can I do this?” The best CEOs ask, “Who can do this?”
What is your time worth? Do you believe your time is worth $15 per hour? $25 per hour? $75 per hour? $125? $200? More?
Just because you can do repair work does not mean you should do it. I can clean my own home, yet I pay someone else $25 an hour to do it. That person is better at it than me, and my time is better spent on activities that produce much more than $25 per hour. Plus cleaning drains my physical and mental energy since I don’t enjoy it as much as some other things.
In my younger days, I did all the interior painting in my investment properties. I felt for some reason that painters were too expensive. I felt that painting required low skill, and therefore I believed that I would save money by doing it myself. While I was saving money in terms of not paying someone to paint, I cost myself time with my family, time for physical fitness, time for other income generating activities, and time for thinking about how to grow my business. Today, my wife Amira and I pay a skilled painter $18 per hour to handle our investment properties. He loves painting and does a great job. If he deems it necessary, he will start early, stay late, and also work on the weekends to get the job done in time for a new tenant to move in.
I know a real estate investor who is great at remodeling. He has the tools and the skills to handle carpentry, painting, landscaping, and plumbing work. Yet his back chronically hurts, and he has family who seek his time. This investor wanted to fix a house and flip it, yet he spent well over a year doing all the work himself. He felt frustrated because it took much longer than he anticipated; his wife and kids really wanted more time with him; and he was in a lot of physical pain at times. Then there were the carrying costs of insurance, property taxes, and utilities. If he had hired a contractor, he could have finished the project and sold the house in a matter of a few months versus taking over a year. Instead of paying all the carrying costs, that money could have gone toward a contractor. Just because you can do the work yourself doesn’t mean you should always do the work yourself.
We use leverage in so many areas of our lives without even thinking about it. When you dine at a restaurant, they prepare the table, cook the food, and clean up afterwards for you. You buy tomatoes at the grocery store when you could have grown them in your yard. You have the postal service send a package for you instead of you having to drive it to the recipient yourself.
By paying $25 an hour for a house cleaner or $18 an hour for a painter, what I am doing is buying back my time. There are only so many hours in a day. When I spend my time coaching a real estate professional, or when I spend my time searching for the next real estate acquisition, or when I spend my time consulting a real estate client, I am operating out of my strengths and providing tremendous value. In exchange for that value, I earn far more than the the $18 or $25 per hour that I pay to someone else to operate out of their strengths. I am able to feel fulfilled and support my family financially while giving the opportunity to others to support their respective families.
By strategically using leverage in my business and in my personal life, I am able to spend more time with family and dear friends. That time is priceless. I find that I get more satisfaction out of life by stripping things off my to-do list, not adding things on. I even have a “not to-do list” that is full of things that I choose not to do, and therefore I pay someone else to do those things. My life is so much simpler and enjoyable.
You are the CEO of your own business. You make the decisions on who to hire and who to fire. You pick your contractors, your accountant, your attorney, your Realtor, your insurance agent, and so on. Imagine that you have a Board of Directors holding you accountable as the CEO. (In reality, you should have someone holding you accountable in your business.) So if the CEO spends more time each day on $15 per hour activities and less time on $200 per hour activities, what would the Board ultimately do? They probably would fire the CEO for failing to focus on what maximizes the growth of the business.
The best CEOs don’t ask themselves, “How can I do this?” The best CEOs ask, “Who can do this?”
Your business grows to the extent that you do. You cannot build a big business without leverage in at least certain areas.
Tai DeSa is a graduate of The Wharton School of the University of Pennsylvania. He became a full-time real estate investor in 2004 after serving in the U.S. Navy. Tai has made colossal mistakes in investing (and learned some things along the way). He has helped hundreds of homeowners avoid foreclosure through successful short sales. Check out Tai’s books on Amazon.com. Tai may be available for coaching and speaking engagements on a variety of real estate topics. Send an email to tai@investandtransform.com.
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