Enhanced Transcribe:
Hi it’s Dr Ro here, I was just downstairs and I thought I would finish some filming. Couldn’t resist this.
I’ve just been talking to one of the builders and he said to me, what’s your view on DIY landlords?
I said actually that’s a question that came in recently that is on DIY landlords, so I’m going to tackle this. And it’s not a long one. If you’re watching this and you’re either getting into buy-to-let and you’re thinking what do I need to be aware of? Or if you’re currently a landlord right now and you don’t know if you’re a DIY landlord, let me talk to you about DIY landlords.
A DIY landlord is somebody that wants to do everything themselves.
I’ll give you a checklist and we’ll put it on the left-hand side. So how do I know if I’m a DIY landlord. Number one you don’t really need to take any guidance or help from anyone else. In fact if you’re watching this right now and you’re a DIY landlord you’re probably going to press the pause button or skip to another video, “I don’t want to hear this bald-headed guy telling me if I’m a DIY landlord or not.”
So DIY landlords’ number one, they don’t take advice or guidance from anyone. “I can do it myself, oh yeah, oh yeah, I can do it myself. I don’t need help from anybody else.” It’s this kind of person. “What’s up Dr Ro, yeah I don’t need your support or guidance, no I don’t need anybody telling me what to do. I’m going to do this myself; I can look after everything; I’m going to run the property. Clean the toilets, clean the roof, sweep up everywhere, stick a broom up my backside. I’m just going to sweep and do everything, I don’t need anybody.”
DIY landlords, don’t take guidance, don’t take advice from other people. Generally don’t have a coach or mentor, probably haven’t watched videos like this and even if they did they probably would go, “this is BS, I can do it myself.”
A good book to read on this subject would be a book called ‘The E-myth Revisited’ by
Michael Gerber. I read that book 15 to 20 years now, probably close to 20 years. Fantastic read. It’s all about the mindset of somebody starting up, launching and developing a business at the beginning and trying to take on absolutely everything. And cannot grow the business because they’re wrapping their arms around the business and they just can’t grow. They are trying to be the market person, the technical person, the accounts person, the PR person. Trying to do everything. Doesn’t work, no, no. no.
So that is number one, that’s my first tip, warning about DIY landlords.
The second thing is this, DIY landlords typically want to run the projects. So if the project is bring renovated and they want to be involved with that, they’ll go there and take over everything. So the problem with that is if you’re in a job and you’re not fully finically independent yet and you’ve got 3 or 4 of these going on in the space of a year, all the stuff as a landlord you’re getting busier and busier. From your kids, your family, your partner, your husband or wife. And you’re saying, I’m doing this for us hunny. But actually what are you doing? You are on site checking everything, running everything, the project itself.
Yes first project, second project we did that. I would say it’s certainly useful to do because it gets you familiar with the process of how a property is renovated, and how you get it ready for being let out as a buy to let landlord.
But to keep doing it, you’re basically building yourself a job here. And now I’ve been down this road and I can tell you it is very time consuming. Your phone is never off, but this is going to keep ringing. So you’ll be like this, “yeah okay hunny, I’ll be with you in a minute, hold on let me check something, that skirting boards needs to be…and I think the tenants are going to really like the room layout. Yeah hold on just one second.”
And before you know it they’ll be no hunny, hunny being he or she, or whoever it is.
So DIY landlords, and this is the challenge, you’re only going to do it your way. And what the landlord’s association said a couple of years ago in the UK was about 75% of landlords in the UK classify as amateur landlords. That’s a small number. Well smaller than professionals, large number of amateurs.
When I was in Australia for example recently, I can’t remember the exact figure but I think only 1% of all landlords had owned more than six properties. I think 1% owned more than five properties, so it’s a tint percentage that owned one or two properties.
But even then, they are managing the properties themselves. They are looking to do everything. And I met people that were stressed, dealing with day to day stuff that they shouldn’t be doing.
So a DIY landlord will say, “I don’t want to pay a 10% management fee to a letting agent. I’m going to do it myself and it’s £700 a month rent and I’m going to save £70.”
My feeling is this, by the time you’ve spent 3 or 4 phone calls, gone to the house, dealt with some issues, the time you could have spent there could have been well worth the £70 to get somebody to do it for you. And remember if you’re really a professional investor, your objective isn’t to run every single property but actually go out and find new deals. Raise more money, start to develop the business as opposed to just managing the business.
Hopefully this makes sense.
I know this because I tried this at the beginning.
That’s the second thing. The third thing is a DIY landlord will generally as a rule want to try and do all the contracts themselves, all the legal paperwork themselves. And come up with ideas for what they want the contracts to be. It’s dangerous. There is so much legislation happening at the moment, selective license around the UK it has been for some time now. And if you don’t know these subtle things or you are not aware of it, you’re in major trouble.
Remember as a landlord taking over properties, if you’re not using a letting agent and you decide you’re going to do that yourself, you’ve got credit searches to do. Certainly got paperwork to do in terms of the legal contracts. You’ve got to make sure you’ve got the checks on the electricity, gas utilities. All of those things. There is a lot of responsibility and checks that have to take place.
If you’re doing that on every single property, especially if you do HMO’s, you’re a busy person.
So, what I’m trying to say is that the more you decide to take on and doing it yourself, you’re moving out of one job into another job. It might be you saying, well actually that’s what I want to do. I want to run my own letting agents. Well that’s different. There is one thing being a landlord that owns a property and manages it all himself trying to fit it all in, versus oh hold on a minute I’ve got to go to another one probably an hour from here. He has got so many properties; he has set up his own letting agents whereby he manages them, the properties, there is staff in there. But he also manages for other people as well, that’s a whole different model altogether. He is running a business.
Trying to do everything yourself, it is not going to work. So just be aware DIY landlords are going to be very much consumed in time and stressed. Remember if you’re at home relaxing like this, you’ve got your arm around your beautiful husband or wife or kids here, then the phone starts ringing. “Excuse me hunny, excuse me kids. Oh really, there is a leak in the toilet okay, yeah let me see if I can get bob the builder. Hold on a second, I’ll be back in second.” And off you go.
You call Bob the builder he is not available, you’re five, 10, 15 minutes away from the property, off you go.
It’s just not worth it.
So you’ve got to make a decision on what type of landlord you want to be. Do you want to be hands on or hands off? If you want to be hands on, how far hands on are you going to be with that?
So DIY landlords typically my experience is that it takes up a lot of their time.
And the fourth thing I want to say is this, I’ve taught a lot of people investing in property over the years. There are so many things to learn and please if you’re watching this thinking, I’m going to do this on my own. Get yourself educated, get yourself a mentor, pay for that. A mentor pays themselves about 10 times over, if you invest in a mentor I think for us it’s like £20-£25,000 for an education programme. A lot of the people are like, really? And actually what’s interesting is we pay for that very quickly back through investing in deals.
Please take the time to have somebody guide you on this because the other big factor here is, if you’re a landlord and you’re trying to do everything yourself you literally will get to a point and I’ve seen this with so many landlords over the years that have come through trainings that I’ve done for example. And they go yeah I’ve got four, five, six properties and a flat for the last five, seven, eight years. Back up a minute so you’ve been one, two, three, four, five, great. “Yeah but you don’t understand Dr Ro,” and they trail off. So I go okay so what happened? “I’m managing properties and it took a lot of time dealing with tenants etc, I guess I lost my motivation to buy more properties.”
Ah so there are two things here. There’s the psychology thinking crikey if I buy another five how am I going to be able to do this and take a civilised lifestyle? Secondly there’s the motivation element of do I want to do more properties because it seems like a lot of work.
A lot of people that I have met have been DIY landlords and have done alright with three, four, five properties. Meaning they’ve started and got some cash but what they haven’t done right is handled their personal lives. It’s taken up more time but the business has not grown. Whereas if you lease some of the properties and someone else is managing it for you, wow that’s five, six, seven, eight houses that I spent this week for the portfolio or whatever it is, I can do that somewhere else. I can do more properties; I can buy more properties and actually start to create a bite more wealth. And that is where the benefits start to come in.
From my perspective the properties I’ve got all around the country I don’t need to see them. I get phone calls through my PA if there’s something major, whats app messages. Its managed remotely because you’ve got a filter between you and the properties.
Hopefully this is making sense, so these are my tips about DIY landlords and things to be aware of. If you find yourself in that space you might want to check and look in the mirror and say based on what we are saying, maybe I need to change my strategy. Maybe I need to set back a little bit in order to let my businesses grow. And that’s all about working with the right people, getting the right mind and spirit to scale the business up to another level.
Dr Ro signing out. I better get back downstairs again, come and join me on another top tip with Dr Ro.
I shall see you on the next video.
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