“You really want to be a landlord? You don’t want to fix leaky toilets at 2 a.m.!”
If you decide to invest in rental properties, this is one of the first comments you’ll hear from the haters.
Mind you, these haters who are so scared of the imaginary leaky toilet are not landlords. I’ll go a step further and would wager that none of them have ever even seen a leaky toilet before.
Instead, they probably heard a story one time and decided that being a landlord was too hard.
The sad part is that they have shut themselves out from one of the best asset classes (and my personal favorite) for achieving financial freedom.
The other comment you’ll regularly hear?
“I can’t be a landlord. I’m not handy.”
Guess what?
I’m not very handy either. And, I have 11 rental units in two different states.
The truth is that you do not need to be handy to be a landlord.
In reality, you don’t need to be handy to be a landlord.
And, you definitely don’t need to fear the 2 a.m. leaky toilet.
Oh, this is not to say that things aren’t going to break and need attention at the most inconvenient time.
Every landlord has those stories. I’ve certainly had my fair share.
One example seems on point.
A few years ago, my family and I were living in one of our rental apartments.
One evening before leaving for vacation the next day, we were sitting around when my sister-in-law pointed at the ceiling and exclaimed, “What is that!?”
Well, “that” was a huge, previously undiscovered, water spot in my ceiling.
Turns out the toilet in the unit upstairs was leaking. (See, on point.)
The water gradually spread into the wood floors of the upstairs unit and the ceiling of my unit. It also dripped all the way down the plumbing stack to the lower level carpet in the bedroom where my two little kids slept.
What did I do about this catastrophe?
I called my handyman and got on a plane the next morning.
By the time we returned, the wood floors, ceiling, and carpet had all been repaired and there was no sign of damage.
When you have a good handyman on your real estate team, you don’t have to worry about things like this.
One of the biggest myths of being a landlord is that you need to be handy.
Have you noticed that we’ve been talking about investing in real estate for a couple of months now and I haven’t once mentioned leaky toilets or the need to be handy?
That’s because there are so many other parts of being a landlord that are more important than your skills with a hammer.
To name just a few more important skills: running the numbers on potential deals, selecting good tenants, keeping good records, dealing with tenant complaints, and paying the bills on-time.
Plus, for most of us lawyers and professionals who want to own rental properties, we have other time commitments. Even if we have the skills or enjoy doing repairs ourselves, it still makes sense to hire a professional.
That’s why every good rental property investor has a good handyman on his team.
Before we talk about what to look for in a handyman, let’s take a look back at the other key members of your real estate team.
Your Spouse is the Most Important Person on Your RE Team
The most important person on your real estate team is your spouse. Make sure you each understand the financial, time, and emotional commitments involved.
Owning rental properties should not be a solo adventure. The entire experience is better when you have someone to share it with.
Isn’t that true for most things in life?
If you’re considering your first rental property, don’t fool yourself into thinking you’ll be earning passive income.
Before you buy a rental property, I encourage you to talk to your spouse first. Make sure you both are on the same page.
No, you do not have to have an equal division of labor.
Yes, you each have to commit to the good and the bad that comes along with owning rental properties.
If you both can make that commitment, you have the best shot at owning your properties for a long time and reaching that ultimate goal: financial freedom.
Build Out Your RE Team Starting with a Five-Star Broker
Once you and your spouse are on the same page, it’s time to start building out the rest of your real estate team.
Start building your real estate team by finding a great broker. Your broker is like a five-star hotel concierge who can make your entire experience so much better.
During your search for a great rental property, a good broker will:
- Educate you about the market you’re investing in.
- Send you properties that match your goals.
- Tour properties with you to help identify any red flags.
- Negotiate on your behalf to ensure you get the best possible price.
- Connect you with other key members of your team.
- Steer you away from making poor choices.
But, you don’t just want a good broker. You want to work with the best brokers as a rental property investor.
The best brokers will do all of things for you during the acquisition process. But, that’s just the beginning.
The best brokers are in it for the long run and will help you navigate challenges as they pop up. That might mean helping with marketing and showing your property.
More importantly, that means continuing to give you advice and tutelage as you learn to be a landlord.
How to Evaluate a Great Mortgage Broker for your RE Team
With a five-star real estate broker on your team, it’s time to find a great mortgage broker.
A great mortgage broker is like a tour guide who is the local expert and knows the ins-and-outs of the neighborhood. She has an intimate knowledge of the local food scene based on years of experience.
She’ll show you the hidden gems and recommend what to order at each restaurant based on your personal preferences. She can educate you as to what’s in certain dishes and why you may like to try them.
She’ll also steer you away from the tourist traps and prevent you from going to the wrong places to ensure you have the best experience possible.
Recommendations? Education? Preventing mistakes?
Love all those things.
And, this is exactly what a good mortgage broker will do for you.
A good mortgage broker will:
- Recommend the best loan for your goals.
- Stop you from borrowing more than you really can afford.
- Help get your loan approved.
- Explain the numbers.
- Not let you refinance until the time is right.
Take your time finding a good mortgage broker. It’s important to work with someone who does more than just promise the best rates and terms.
With your spouse, a five-star real estate broker, and a great mortgage broker on your team, it’s now time to fill out the rest of the key positions.
Be Sure to Have an Experienced Accountant on your RE Team
I invest in real estate for the massive tax benefits.
In fact, the massive tax benefits are one of the four main reasons why I invest in real estate. The other three reasons are cash flow, appreciation, and debt pay-down.
I’ve previously written about how I earn rental income and legally pay close to nothing in income tax on my rentals each year.
How is that possible? Am I some type of tax wizard?
Of course not.
But, I do have a tax wizard on my real estate team.
OK, more accurately, I have a Certified Public Accountant (CPA) on my real estate team.
Your accountant is so integral to your financial success that he is the next person you need to have on your real estate team.
The federal government has long encouraged investment in real estate. People need places to live, work, and socialize. The government long ago decided to reward investors who take on the risk of providing these opportunities.
These incentives come largely in the form of tax benefits.
The challenge for real estate investors is to actually take advantage of all these tax incentives.
That’s where your accountant comes in.
Because I work with an accountant, I don’t have to be a tax expert. I just have to know enough to have intelligent conversations and make decisions when the time comes.
My accountant makes sure I get all the tax benefits for owning rental properties.
What to look for in a good handyman.
Here are some of the things I look for:
1. A handyman who responds to my messages promptly.
The last thing you want is a handyman who is flakey. When something needs fixing, you need someone who answers your call or messages you back right away.
Most repairs are not urgent, meaning your handyman does not need to drop everything right away to tend to the issue.
But, it’s important that you let your tenant know that you’re on it and someone will be around in short order to address the problem.
2. A handyman who Is not too big for a small job.
It’s much easier to find a handyman to do a full kitchen renovation than to replace just the kitchen sink. Obviously, the bigger the job, the more money to be earned.
As a landlord, you need someone who can handle the small jobs. These come up more frequently than the bigger projects and are often necessary to keep tenants happy.
We recently had a tenant message us that the kitchen sink was leaking. My handyman got over there the same day and fixed the leak for $80.
This is the type of guy you need on your team.
3. A handyman who makes a good impression with the tenants.
Your handyman will inevitably have to interact with your tenants. You want someone who makes a good impression. That means someone who is professional, courteous, and respectful of the tenant’s space.
It is also very helpful if your handyman can explain to the tenant what the repair involves and what to do if there are still any issues.
4. A handyman who does not run up the bill.
Handymen tend to charge by the hour because they don’t usually know the extent of the repair until they begin working.
While there’s nothing wrong with charging by the hour, you can imagine how someone untrustworthy might take advantage of this billing arrangement.
With more experience as a landlord, you will start to have the same type of repairs come up regularly. Based on that experience, you’ll know when a handyman is running up the bill on you.
5. A handyman who comes recommended from other landlords.
Like anything else in life, a good recommendation goes a long way. It is always a good idea to work with someone who people you trust can vouch for.
The trust factor works both ways, too. If your handyman knows that you are reputable and come recommended, he is more likely to take your calls and go into business with you.
6. A handyman who has worked on rental properties.
When we first started shopping for a rental property, our real estate broker taught us about “condo quality” vs. “rental quality.”
Condo quality is nicer, more expensive, and tends to be for people buying a home for themselves.
Rental quality is more affordable and comes with the expectation that things will break and need to be replaced.
When it comes to a handyman, you want some who understands the difference. It makes no sense to overpay for quality that you just don’t need in a rental unit.
This has nothing to do with the skill of the handyman, just the wherewithal to make “rental quality” repairs in rental units.
How many would-be rental property investors have been scared off by the imaginary leaky toilet?
If you have been reluctant to become a landlord because of the hypothetical leaky toilet, hopefully this post has given you something to think about.
Being a successful landlord has nothing to do with being handy.
Don’t let your fears about potential repairs stop you from exploring this powerful asset class.
If you’re a landlord, what is your best “leaky toilet” story?
Was it enough to give up on being a landlord?
Let us know in the comments below.