Do you value learning the basics about plumbing and electrical work as a must before starting investing in real estate?If yes, what would be the best sources?

I would. It will be investors like yourself who lose majorly during this next market turn. People like me will be buying your devalued, half finished properties in just a few short years. Let me explain.

I started PMing when I was 16, construction (not for my family) when I was 18ish, and by the time I was 27, I purchased and flipped a multi family. I now make about $30k/year/unit on my properties (I don't really do residential anymore). This was only because I learned the necessary skills. Let's rewind and see why, and then draw some parallels to modern day markets. BTW, I started my development company in 2016, after a further decade of investing. So I am telling you this from straight experience in my units, not from some fancy desk, while investing my 401k from my 'day job'.

In 2007, I purchased my first multi, after basically working in real estate since I was a kid. I figured something was up with the markets because my mother is head of accounts at a huge RE institutional investment org, and she was telling me to be careful, things are moving, stay away from predatory lending no matter what (we used a lot of ARMs to finance our projects at the time).

So I sat down, and started cancelling contracts, as I had people lined up to come gut my units, as I was still in school (went back to school to get out of real estate) and had a full time job at the time. THANKFULLY, I had a methed-out tenant in my unit below where I was living, who refused to leave, after I gave him notice. In the 6 months it took to get him TFO of there, and in that time, the entire world's economy collapsed in 2008. Things got much worse from there for agents, contractors, and any service companies in between in my small town. I watched 1/2 of my colleagues pack up and move shop.

I was financially just fine, with a job and student loans to live on, and we resumed remodeling, but switched our strategy up immediately. These are things we did, to not go bankrupt, and instead make some money. Not as much as we would have initially, but still some. Meanwhile people were all going out of business and packing up for greener pastures (when there wasn't any). Good for us, lots of less competition. Anyway:

  • Increased the turnover of our remodel from 6 months to 2 years, as I would be doing all the work myself. This ended up not mattering, as we needed 2 years to avoid capital gains already.
  • Cancelled contracts with my plumber and electrician.
  • Hired a laborer for $15/hr (this was excellent pay in 2008) to help me hold and move stuff, as well as do basic cleanups after our job.
  • focused on remodeling other units than my own, and switched up my renting strategy from LTR to STR. This only made a little more money, as times were tough then, and we went back to LTR after things got better. Only in 2015-2016 did we switch to full-time STR. In a year or so, we plan on doing LTR again, if the market will turn again.
  • 1/2 completing each technical jobs. This is a dirty little secret in the remodeling world, depending on your philosophy of life I guess... Do you have any plumbing or electrician friends? Learn the absolute basics, which should take you 5 minutes, and 'wire' the home home, or 'plumb' the home yourself, and then let a pro, with a license, make any necessary connections. With plumbing, if you can't drill a hole in wood and push a PEX line through it, you just shouldn't be investing in RE, and perhaps stick with stocks or something more hands off. This kind of plumbing is as basic as it gets. Example: I recently installed an attic fan. Sure I can do this in about 1 hour by myself, but I operate commercially now, so it is against the law to do it myself. So I mount the fan, run wire to my panel, secure the wire to studs, and get everything ready. When my electrician comes in, it takes him a few minutes to complete the job. So something which could have taken $150 to complete costed me $35 (half an hour, mostly drive time). Same with plumbing, and HVAC.
  • As investor, you will almost never buy materials for your projects. That is a huge mistake. An electrical shop (not a distributor) will markup materials 35%-68%, which is straight from the horse's mouth. I hired an electrician in an area with which I was not familiar with the trades people in. So we were strangers to each other, but they had agreed to let me complete about 75% of the works before the crew came in. So I got my bill and was like "WTF!" I had not only wired it myself, but I sourced the giant spool of service wire, used their account to pay, and then hauled it myself, which weighed about 1 ton. I excavated and buried the line myself, and they hooked it all up. So when I got my bill it was obvious that they marked up the material to over 60% for this "stranger". So I called the owner up, and had a polite chat with him, and he knocked off about $2 G's from my bill. He told me that is the main source of income for his jobs.

TL:DR In short, REI is a major driver of the US economy, and employs a lot of diverse industries and people. So if you are an investor, be prepared for all of these extra costs when you don't know or can't do anything yourself. In the end, your investment will be lackluster, and since the market is seemingly starting to turn in many major markets, you may lose it all very soon. When you invest in stocks, do you do the research yourself and know everything you can about the company you are investing in? This due diligence could be "paralleled' with 'knowing' how to do stuff on your own in REI, but 'doing' stuff on your own is where the real money is at.

/r/realestateinvesting Thread