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Author: n8larson Big gold star, 5000 posts Old School Fool Ticker Guide Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 4864  
Subject: Re: Buying first rental property Date: 11/14/2012 7:34 PM
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I plan to do all the maintenance myself, which should help my profit picture.
Do you make nothing in your regular profession? Or do you earn less than the local handyman rates? If you can have your maintenance done for less than you are worth doing what you are paid for, save your money and book better profits by paying the cheaper outsourced maintenance.

Common fallacy! This is not how it works!

What you make at your day job only matters if you either (1) have to take time off from your job to do rental property maintenance (RPM, for now), or (2) your day job is scalable and you do as much of it as you want, with every hour translating to additional money at the same rate. Unless you meet either of these conditions, it's very incorrect to think that an hour spent on anything outside work should be valued the same as an hour spent at your day job. The "value of time" with respect to outsourcing RPM is a different one for most people than what they earn.

To the extent that you can do your RPM work on your own time, either during actual evenings and weekends (or if an emergency arises that requires RPM during work hours, by making up lost work time on evenings and weekends), it's the value of THAT time that you'd compare to what you pay a handyman. As an average, the range of $10-15 an hour covers what most people's time is ACTUALLY worth, based on how they behave. If you can find a handyman that does good work for less than that, it makes more sense to pay them. If they charge more than that (say, 4 to 5 times that, as is my experience) it makes sense to do the work yourself, assuming the quality of work is equal.

As you said in the OP, some kinds of work are easy, and some best left to the pros. Basic plumbing and electrical repairs and upgrades are, in my experience, where the HUGEST savings are in doing it yourself if you can do them reasonably well.

Point: Unless you spend the time that you're NOT handymanning actually doing something that pays you more (after taxes) than you pay the handyman, you'll "book more profits" by paying yourself, tax free, to do that work instead of paying someone else.

-n8 (son of a handyman)
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