Author Topic: Time commitment for landlording post- and pre-FIRE?  (Read 1314 times)

AnAmericanAbroad

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Time commitment for landlording post- and pre-FIRE?
« on: April 10, 2016, 12:52:18 AM »
When my wife and I move back to the States I'm interested in buying rental properties on the path to FIRE, but I'm concerned/wondering about the time commitment involved. We're maybe 8 years away from FIRE-ing at this point. I saw the following quote from arebelspy in another thread:
I haven't been on the same continent as my real estate holdings in the last seven months, yet they continue to send me cash flows every month.

Sometimes I deal with issues (yesterday got a text from a tenant the oven wasn't working--handyman was going over to trim trees anyways, checked and needs a new control panel--better to replace than repair, at this point, ordered a new one on Home Depot's website, should be delivered and installed in a few days.  Total time: 2 minutes texting, 5 minutes ordering online), but I could turn it over to my property manager if I didn't want to (it just pays something on the order of $500/hour to DIY at this point, since everything's set up already), and at some point I will (and have, for about half my properties).

There's drawbacks, of course, but there's also many benefits (such as a much more stable than a "SWR" via less sequence of returns risk/rent volatility).

I feel like a lot of people think they don't want RE in ER, because of the "work" it will take, but I spend more time tax loss harvesting and rebalancing than I do on my managed real estate.  Setting it up properly is key, of course.

Arebelspy is on a different continent from his properties and they're still cash flowing for him, which is a great sign and hopefully to be expected. He mentions not using a property manager and how that could lessen his time commitment, but even with PM you still have some time commitment. Frugalvagabond (iamlindoro?) discusses that here: http://frugalvagabond.com/2016/01/27/why-im-firing-my-property-manager/

My envisioned FIRE life hopefully involves hiking the AT at some point, where I effectively wouldn't have internet for 6 months, or at least not reliably. So how does landlording work out in a situation like that? Is it possible to go 100% hands off, or would you have someone trusted make decisions for you while you're unavailable? I could possibly see having a family member take over while I was away, but I'm not 100% sure I'd be comfortable with that.

And on the way to FIRE, how much time commitment does landlording involve, after the properties are acquired and processes in place? Paula at affordanything said 5 hours for her properties in Feb, but she manages her own properties: http://affordanything.com/2016/03/15/rental-property-investment-report/

Given that we will be repatriating to a high COL area with low rental returns, if we go the real estate route we'll likely be investing in out of state properties and using a PM.

Thanks everyone for the insights.

iamlindoro

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Re: Time commitment for landlording post- and pre-FIRE?
« Reply #1 on: April 10, 2016, 08:51:52 AM »
Yours is a fair question.  Arebelspy is surely our best authority on the forum on how well it works out post-FIRE, and I'm betting he'll have some good insight for you.

My experience pre-FIRE is that by far the most time I spend is in the actual acquisition of the properties, and in the immediate aftermath of that when prepping for and placing the first tenants.  The actual buying of a property is a few dozen small investments of your time (filling out loan applications, digging up and submitting documents, arranging for an inspection, reading the inspection report, negotiating concessions, etc.).  If units are empty or there's a tenant that needs to be moved out, there may be some rehab necessary too.  Truthfully, I think I have a tendency to micromanage rehabs a little too much.  During a rehab I probably text or email anyone I'm actively working with every couple of days to make sure they're on track.  My completely honest assessment of how much I spend on a property during purchase and rehab is about 4-5 hours a month, though I could probably reduce that if I set my mind to it.  On properties that are already up and running, the time commitment goes way, way down.  I haven't answered one call or email (aside from checking my monthly statements when those come in) on my fully occupied properties in at least a few months.

If it helps to set your mind at ease, even in the case you cited where I fired my PM, there wasn't too much time involved.  I sent one email to my PM 30 days before I wanted to terminate our contract (CCing the new PM), then one more on the day of to remind them that my new PM would be by that day to pick up keys, rent rolls, leases, etc.  There were a few annoying maintenance issues that the old PM had allowed to go unaddressed that I had to approve over the following few weeks, but nothing too terrible.

I guess this is all a long way of saying that it's possible to spend very little time once things are set up and you trust your team. It's also possible to spend a fair amount of time if you make a poor decision on a team member (as I did). My complaining on my blog aside, it didn't eat up too much of my time. I just spent more money than I would otherwise have had to, and consider it part of my learning curve. By the time we RE, every property will have been running for at least a year or so-- that should give us the time we need to shake out any kinks.

I think if I were in your shoes and wanted to go off-grid for a few months, I would either have my dad be my backup contact, or allow the PM to make the decisions, making clear that I didn't want cosmetic items addressed until I returned.
« Last Edit: April 10, 2016, 11:11:36 AM by iamlindoro »

PadAdventure

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Re: Time commitment for landlording post- and pre-FIRE?
« Reply #2 on: April 10, 2016, 04:33:37 PM »
When my wife and I move back to the States I'm interested in buying rental properties on the path to FIRE, but I'm concerned/wondering about the time commitment involved. We're maybe 8 years away from FIRE-ing at this point. I saw the following quote from arebelspy in another thread:
I haven't been on the same continent as my real estate holdings in the last seven months, yet they continue to send me cash flows every month.

Sometimes I deal with issues (yesterday got a text from a tenant the oven wasn't working--handyman was going over to trim trees anyways, checked and needs a new control panel--better to replace than repair, at this point, ordered a new one on Home Depot's website, should be delivered and installed in a few days.  Total time: 2 minutes texting, 5 minutes ordering online), but I could turn it over to my property manager if I didn't want to (it just pays something on the order of $500/hour to DIY at this point, since everything's set up already), and at some point I will (and have, for about half my properties).

There's drawbacks, of course, but there's also many benefits (such as a much more stable than a "SWR" via less sequence of returns risk/rent volatility).

I feel like a lot of people think they don't want RE in ER, because of the "work" it will take, but I spend more time tax loss harvesting and rebalancing than I do on my managed real estate.  Setting it up properly is key, of course.

Arebelspy is on a different continent from his properties and they're still cash flowing for him, which is a great sign and hopefully to be expected. He mentions not using a property manager and how that could lessen his time commitment, but even with PM you still have some time commitment. Frugalvagabond (iamlindoro?) discusses that here: http://frugalvagabond.com/2016/01/27/why-im-firing-my-property-manager/

My envisioned FIRE life hopefully involves hiking the AT at some point, where I effectively wouldn't have internet for 6 months, or at least not reliably. So how does landlording work out in a situation like that? Is it possible to go 100% hands off, or would you have someone trusted make decisions for you while you're unavailable? I could possibly see having a family member take over while I was away, but I'm not 100% sure I'd be comfortable with that.

And on the way to FIRE, how much time commitment does landlording involve, after the properties are acquired and processes in place? Paula at affordanything said 5 hours for her properties in Feb, but she manages her own properties: http://affordanything.com/2016/03/15/rental-property-investment-report/

Given that we will be repatriating to a high COL area with low rental returns, if we go the real estate route we'll likely be investing in out of state properties and using a PM.

Thanks everyone for the insights.

hire good property management, and have someone who can issue payments for you.  Iíve done it.  It takes a little bit of creativity, but it can be done.

AnAmericanAbroad

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Re: Time commitment for landlording post- and pre-FIRE?
« Reply #3 on: April 10, 2016, 06:16:36 PM »
Thanks both, good to keep in mind. iamlindoro, I'd probably have my dad as a backup as well, exactly what I was thinking.

I'll run it by DW and see what she thinks! Then it would be on to actually finding those properties out of state...

clarkfan1979

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Re: Time commitment for landlording post- and pre-FIRE?
« Reply #4 on: April 14, 2016, 05:01:57 PM »
I live in Hawaii and have one rental in Colorado and a second in Florida. I pretty much manage them myself. I have a little help from my sister in Florida with applications and the lease. She is a realtor and uses her companies forms, but I don't pay her a commission unless it goes on the rental MLS. I will give her a $100 gift card to a restaurant. I also buy the $100 gift cards at Costco for $80, but that's another conversation.

Both houses were my primary house. They needed minor rehab (flooring and painting) and I did most of the work myself. After living in each house for about 4 years, I converted them into rentals. Because I lived in each house for 4 years and basically fixed everything, I do not get many calls for repairs. However, I do get some.

I probably average 10 hours/year for each house if the tenants re-new their lease. It's more like 20 hours/year if I have to find new tenants.

If you pay a property manager, they do not actually do the repairs. They call someone to do the repairs. If I need to replace an appliance, it will take me about 1 hour to research the best product and order it. You typically get free delivery and installation from Home Depot or a similar store.