Going it alone

One of the theories in the first economics book Dan: Specialisation and Division of Labour 🙂

Adam Smith - The Wealth of Nations

I agree in principle, however, a lot of small landlords are on low profit margins to begin with, and simply can't spare the money for all but the most specialised of jobs.

I'm currently between tenants in one of my properties while I prepare it for new tenants. I had a tradesmen in yesterday to quote for one job, but while he was there, and he saw me doing painting and filling myself, and told me in no uncertain terms that I really ought to pay someone - him - of course, to do it for me, and pointed out exactly where he thought I was going wrong.

While I don't deny that he did give me some valuable advice, after he had left, I looked around in more detail at some of the bad finishings he pointed out - the worst of it? Lumps of plaster splashed on adjoining walls and just left to dry there - left by PROFESSIONAL plasterers! In addition, flooring damaged beyond repair in the same room, caused by... yes, those same professional plasterers!

My lesson? I should have been MORE hands on, not less, and insisted on being there to supervise and clean up after those plasterers.

At the end of the day, every landlord has a different budget, different priorities and business model, but if you're a small landlord like me, and you're depending on your rental income, you can't just leave it to others and trust them to leave the property as you would.

Reply to the comment left by "Mandy Thomson" at "11/03/2016 - 10:27":

Hi Mandy

I'm absolutely useless at DIY, as are a lot of people. My thoughts on this are if you can't do it or don't have time then don't get into property unless you can afford to pay professionals, preferably ones that come highly recommended. If you have the time and the skills then great.

Horses for courses!

I've met Dan several times over the last year or so as he is local to me. He partners with investors who are cash rich time poor. I've met a few of his JV partners too and it is clear that his business model works well for all concerned. They buy properties BMV, add value and either rent or sell. The returns are good.

Many years ago I would have loved to have found somebody like Dan because I too was cash time, time poor and completely incapable of refurbishing a property to a decent standard myself to the point where I could have added substantial value. Instead I purchased a lot of new builds and paid a premium for doing so. Thankfully I did so during a period in time when properties rose quickly in value.

I did buy some with my brother who is the opposite of me, i.e. he is a skilled builder and that worked well. However, there was a limit on how many deals we could do together simply due to his time constraints.
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Reply to the comment left by "Mark Alexander" at "11/03/2016 - 12:45":

Hi Mark

You said: "I’m absolutely useless at DIY, as are a lot of people. My thoughts on this are if you can’t do it or don’t have time then don’t get into property unless you can afford to pay professionals, preferably ones that come highly recommended. If you have the time and the skills then great."

I've educated myself since becoming a landlord and become accredited, and I certainly believe in giving my tenants a HIGHER spec property than I would live in myself, because they pay more in rent than they would be paying for a mortgage and maintenance costs, and at the end of the day, they don't normally earn a stake in the capital.

Yes, I agree with you about getting the professionals where more specialised work is concerned (and what's specialised for one person may be easy for the next), but I still think it's critical for SMALLER landlords to take a more hands on approach - if it's only to supervise, because you can't always TRUST these professionals - indeed a builder I know told me that some tradesmen rip off landlords in particular, especially ones that don't watch them!

Rental property is generally more expensive to maintain than owner occupied, so where costs can be kept down, they must - that £1000 spent on a professional decorator today may well be needed for several critical maintenance jobs tomorrow (would your tenant prefer perfect finished walls or working electricity?).

The maintenance budget for any property, particularly rental property, is potentially infinite - I've spent literally thousands over 5 years on one property alone!

Large portfolio landlords are in a position to get more competitive prices with repeat orders, even contracts and retainers and in the worse case scenario, if one or two tenants are dissatisfied with the maintenance provided and serve notice, the impact on the business and income is much lesser than with a small landlord - one or two tenants may be all he has.

Reply to the comment left by "Mandy Thomson" at "11/03/2016 - 13:43":

I agree with all of those points Mandy but it is still a case of horses for courses.

One of my strategies in life has been to outsource the processes that I'm less capable of doing and/or when I can outsource at a lower cost per hour than I can earn by doing something else.

I have a pool of trades people who have earned my trust over the year and I pay them anything from £80 to £200 a day. I earn considerably more than that so it pays me to employ their services. Needless to say though, there is a difference between delegation and dumping work. Delegation involves supervision so it is impossible to completely outsource effectively if you want to avoid getting ripped off.
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Hi Mandy - Thankyou kindly for your comments & adding a different spin.... What's important is that you as a landlord are comfortable with how your investment is performing in terms of return Vs the amount of time you want/need/choose to give it..... For me my own portfolio was growing fast & since working with investors even faster....... The right thing to do by tenants & our investors is to leverage the skill set & expertease of professionals. I want to be able to deliver the maximum commercial benefit for the property(s) we own soley & jointly. This requires close focus and attention. Having professionals who are contactable, trust worthy & skilled means, I'm able to focus on the house for the short & long term commercial benefits. Equally all of our tenants are not relying on me to check my phone or be in the country if they have an issue......... I remember it only to well just a few years ago with the poly filler, sanding it down, then re filling..... As Mark has said, time is a key driver.....

If you've not tried it before, my advise would be to give it ago & see how it feels........

Reply to the comment left by "Mandy Thomson" at "11/03/2016 - 10:27":

Yes, I agree. I just learnt a lesson, fortunately not too expensive. I needed a new shower fitting so as the workman was somebody I have used numerous times and I trusted him, I asked him to fit 'a £50 one from B&Q'. He spent £95. Ok I know the difference wasn't a huge amount but it was almost double the budget. If I had been able to spare half an hour I could have gone and got the cheaper one myself. Sometimes, paying other people to do simple jobs, just isn't worthwhile.

Also, 'Trust' is a big part of it, I have only the workman's word that the shower actually cost £95 as I was invoiced for supply and labour charges as one total amount. I take this man's word as I don't think he'd try to rip me off, but some might not be honest.

Thanks, Dan. JV is an area I know little about but shall definitely be looking into in the near future - however, right now my priority is getting new tenants in then I have another couple of urgent projects that I must attend to.

Last year, I was involved with Croydon Property Forum, formed for the purpose of taking a judicial review against Croydon Council's landlord licensing scheme. I mention this here because I was amazed at the many different types of landlord I encountered - hundreds of them - and the diversity.

We had one lady who was letting to an elderly tenant for a rent that was about half the market rate who could hardly afford repairs; another man who had to give up work to care for his father who had cancer, and was relying on the rent from his small portfolio; then we had mid sized landlords with small property companies, through to enormous corporate landlords such as Dr Anwar Ansari of AA Homes and Housing.

Clearly, the well meaning lady housing the elderly tenant was headed for trouble even without LL, and she wasn't being fair to herself nor her tenant, but my point is that a strategy that's not only sensible, but even necessary for one landlord, may be completely unworkable for another.

Reply to the comment left by "Mandy Thomson" at "11/03/2016 - 18:57":

I completely agree. One of the good things about this business is the flexibility to try different things and that includes DIY if you want. For me it's not only about money. Owning and managing property is interesting in its own right and what is a pain for one person is a pleasure for another. I prefer to supervise everything and everyone. Even the most professional sometimes make mistakes and in the end it's my responsibility and that's part of the pleasure.

Great comments - what I love about property is now 2 property, landlords, areas, investors, JVs etc etc are the same. I absolutely Love taking an property untouched for 40+ years, and converting it and refurbishing it. I always achieve a better result project managing it instead of being 'on the tools' #greatbuilders