If you have rental property investments, why do you try to manage and fix them yourself? You have a property manager don’t you? Why are you micro managing your properties when you could do less and make more?
Do You Want An Investment Or A Second Job?
Is it worth it to spend your time managing and repairing yourself? You bought these rentals as an investment and you’re turning them into another job, if you do it yourself.
You have a job. In fact, you have a career. Professionally, isn’t that the most important thing you have going? Aren’t the rentals supposed to supplement your income by being a passive investment? If you’re working on them isn’t that defeating the purpose?
No Sleeping In Class
You’re actually caught up in what’s called comparative advantage and opportunity cost by economists. Don’t let your eyes glaze over. This is good stuff and it’ll explain why it’s to your advantage to let your property manager manage the day to day issues with your rental investments. It’s also to your advantage to let them perform maintenance tasks.
Because you have a career in your specific field you have an advantage at; overcoming engineering problems, providing medical care, designing buildings, repairing or installing plumbing. You are the expert in your chosen field of endeavor. You have a comparative advantage in your chosen field. If you didn’t have a proficiency in your career field you wouldn’t be paid to do it. Could you perform maintenance tasks on your rental properties? Yes you could, if that’s what you chose to do. But, there’s an opportunity cost in spending your time on that.
Opportunity Costs, Comparative Advantage, And Bread
You could make your own bread. There’s no doubt you could learn to grow and harvest wheat. You could grind it into flour, and you could make all of the other ingredients necessary to make bread. After baking it, you would have bread that was excellent, but you don’t. You buy bread.
You buy bread because you have other things to do that are more meaningful or productive. If you spend time, and money, making bread you lose the opportunity to be productive in your specialty. This is opportunity cost.
You let a baker, a specialist in their field, make bread. They have an comparative advantage in producing bread. They have the knowledge, machinery, manpower, and access to raw ingredients to make a lot of good bread, really fast, and at a much lower opportunity cost than you have.
It makes sense that you don’t bake bread to feed your family. You go to the grocery, pick out a loaf, and pay for it with the money you produced in your career field using your comparative advantage. You’re trading with the baker similarly to how nations trade.
What’s To Lose?
In the same way, there’s a definite opportunity cost to managing and maintaining your rental properties yourself. Time spent working on your rentals is isn’t available for your career, or for deciding and acting on how to increase your wealth. Maintaining your rentals is not where your comparative advantage lies.
Cost and Reward
Your property manager’s comparative advantage does lie in managing and maintaining properties. They have people that know how to obtain the highest market rents, infrastructure that expedites property management, and reduces costs. They also have maintenance people that are trained to deal with problems that inevitably occur with any structure, correctly, and in a timely manner. Last, and not least, they have accounting systems in place that eliminate the need for you to be a bookkeeper.
Yes, it costs to have a property manager. Does is cost as much as the opportunity cost from doing it yourself? As long as the cost of trading with your property manager is less than your opportunity cost, the expense is justified.
In addition to monetary costs there are personal costs involved with maintaining your properties. There’s a cost to your family time. You also lose time for personal pursuits that interest you.
In the endgame, you can’t do everything. You can’t be available to fulfill all requirements. You have to prioritize. While many demands of you are out of your control, your investment properties aren’t one of them. If you have a property manager, let them do their job, earn their keep, and you will be free to specialize in what you do best, make more money, and enjoy more of life. Do less – make more.
To learn more about how Jacob Grant can improve your Passive ROI by being on your side, call 208-795-8218 or schedule a call Schedule call