Blue Collar or White Collar Landlord, Advice or Discussion

[Don Coumbs]

I'm a hands-on blue collar type landlord thinking about changing my business model to scale up my number of rentals. I would appreciate thoughtful input about how you decide on rental scaling and business modeling.

About the tree, On November 17 we had a major windstorm in Eastern Washington State.  This is one of my rentals. Another of my properties had a less dramatic tree blown over and a third had a wind damaged roof.  I tried to hire a tree service for this place, but they were all way too busy.  You may have seen in the news that arborists and linemen from all over the country were brought into our area.  Anyway, I wound up renting a boom and taking it down myself.  In a nutshell, my out of pocket for all three properties was less than $500 and a busy few days.  That is good because I had just raised my deductibles on my insurance to $5,000 to save premiums.

So that is the upside of being a blue collar landlord as I see it.  Low overhead.  But as I add properties, there is a limit to how much I can do.  The downside is I was recently outbid on a triplex in this neighborhood.  As I evaluate new deals, I am looking for better and better returns because I am thinking about the limits of my labor and the cost of hiring things out. The guys who outbid me for the triplex (nice guys, who may be biggerpockets members) appear to be white collar landlords with full time jobs who don't do much hands on and don't have the cash flow requirements I do.  If you don't take down your own trees or roof your own houses, your business can scale much easier. And although your overhead will be higher, you are free to do something else most of the time...

So, that is how my thoughts are going.  I wonder if anyone else is mulling or has mulled the same kind of thing.

[Darren Budahn]

I have the same discussion with myself all the time. I have a hard time paying someone to do something I know that I could do myself. However, if you really want to scale up your business, I think you will eventually want to work more "on" your business instead of "in" your business. Your costs will certainly go up in the short term but unless you want to be a full time handyman and landlord I would lean towards outsourcing some of the tasks that could free you up to find more deals.