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The Contractor’s Advantage with Investment Real Estate

January 15, 2019 by Nathan Dishington 3 Comments

building your wall

If you are a contractor or in the building trades and you don’t own investment property, you’re an idiot. Working inside and out of buildings every day as your primary job, regardless of your particular trade gives you a distinct advantage over the average real estate investor and if you are not leveraging this advantage then you are missing out. Your ability to work with your hands and consistently add value is just one of the many keys that will help you unlock a properties hidden potential. Your talent, combined with the magic of a low interest rate mortgage, creates a special brew for financial success.
As a contractor who owns real estate I love the entire process, from the hunting of the deal to the ultimate completition of a rehab where a building’s hidden potential has been revealed. I especially love buying properties that have been passed over multiple times by average investors. There is a special pride knowing that there is a shine hidden underneath the years of dirt and neglect. Just yesterday while remodeling a recent purchase we pulled back moldy carpets to reveal beautiful original maple flooring. Not only does this translate into immediate savings on the the bottom line but, also added value to the property as hardwood floors will help move the rent higher once completed.
You too can enjoy the same benefits if you will commit to take the leap. It starts with a decision and followed by action. But, first it’s important to know how and why the deck is stacked in your favor and who wouldn’t want to play a game when you have that advantage?
Here are the 5 reasons why contractors and tradespeople have an advantage with investment real estate.

You understand how buildings work. At least you understand part of them and that gives you an advantage. If you are a general contractor then you have the upper hand on everyone because your trade involves all aspects of building and you deal with all the trades that work on a building. However, even if you are a specialty contractor such as an electrician or painter, you still have at least one key skill that will add quality value to your investment without the capital expense the average investor has to incur. This knowledge sets you ahead of the pack and will help you to identify the good deals from the dogs because in this game success is attained in not only the deals you do but especially in the deals you pass on and your trade knowledge will be critical in helping you know which is which.

Adding value with labor Every single hour that you put into your property adds value and is ultimately an investment in growing your second stream of passive income. Regardless of your trade or expertise, your ability to jump right in to a property and add value through repairs and improvements is unmatched and the fact that you can make these improvements at your cost will pay huge dividends. Just as a mechanic doesn’t need to take his car to a garage to be repaired the same will apply for you and your property. For example, if the average investor has to bring someone in to complete $5000 worth of plumbing repairs and also wait 4 weeks but, you can jump right in and do it with only the cost of materials then that gives you the upper hand. Multiply that advantage over a lifetime and that translates into real dollars.
Beyond your own specialty trade you will most likely have some other accompanying skills that will bring value to your project. Most contractors that I work with are adept craftsmen who can do much more than just their own trade and will jump into tasks outside their focus, which will ultimately save time and money. Not having to call a specialist every time you need 1 or 2 things done will not only keep money in your pocket but will also keep the project moving forward as you won’t have to wait for problems to be addressed.

Familiar with the chaos Owning investment property is similar to remodeling in that it’s messy and chaotic. If you are in the trades, you have most likely built up an immunity to many of the sights, sounds and smells that come along with it. Many first time investors will set foot into a property and their senses are immediately overwhelmed by the experience. Most older investment properties have a familiar aroma made up of pet, cigarette and mildew smells that repel potential investors. Neglected properties or ones that are overly cluttered or damaged are visually unappealing and can turn the stomach of the average Joe. However experienced tradespeople or investors can see the value hidden behind a properties outward flaws. Understanding this aspect is key because many people miss out on deals because they only see the problems. For me, these are the only ones I buy. The properties that have been passed over because they are tired, broken down and smell bad. I know that once we do our magic, they will shine better than before and bring years of returns to the portfolio.

You have direct access to other trades. This fact cannot be overstated. The existing relationships you have within your current business is a huge advantage. Every day you work with or rub shoulders with a multitude of tradespeople. You have the opportunity to talk with them, ask advice, ask for referrals and also see first hand how they work. Do they perform quality work? Are they reasonably priced or are they on the top end of the cost scale? (You don’t want to pay retail btw) Most tradesmen that I know aren’t very personable and keep to themselves for the most part, but once you crack through their tough guy exterior you will probably find someone like yourself that wants to share their experience and help you out. Have you ever noticed how men come alive when a stranger asks them for directions, especially when they know exactly where they need to go? They come alive! Soliciting help from your fellow trades will evoke similar feelings as they assist you in finding resources and solutions as you make your way through the rehab phase of your investment property.

Maximizing lags in your schedule. Very few tradespeople work a consistent 8 hrs a day, 40 hrs a week. I know there are always exceptions to the rule but, for the most part, schedules vary for many reasons. Weather or unforeseen job delays leave hours or days available for other activities and these inevitable lag times can be opportunities for you to jump on your property and be productive. Most guys that I know do not see these lags as opportunities, but rather will choose distractions and time suck activities that don’t add any value to their life and especially their wealth. Try shifting your mindset to thinking of your time spent on your property as an investment for your family’s future. This will be a positive step towards motivating you towards building up your second stream of income.
Hopefully this article will help you to take action towards acquiring your first investment property and immediately start adding value. I often refer to real estate as bricks in a wall. it starts with that first brick laid on the foundation. Most people look at a building and say there’s no way I could build that and they feel the same way about building a real estate portfolio but the process is the same. With a solid plan and solid foundation and one brick at a time, soon enough your wall will be done.

Filed Under: Investment property Tagged With: investment real estate, value add investment real estate

Reader Interactions

Comments

  1. Andrew Mercurio says

    January 16, 2019 at 2:53 am

    Great Article
    Very motivating
    It is sometimes hard to see past the horror stories of being a property owner or landlord which keeps a lot of us from taking that first initial leap or laying that first brick
    Every opportunity has potential risks
    Like you said, Put together a solid plan and make it happen

    Reply
  2. Isaac Low says

    January 16, 2019 at 4:10 pm

    Love the article Nate! I 100% agree! Not to mention that most tradespeople I know are not super knowledgable regarding other investments and retirement plans and don’t have the time or experience to be constantly re-evaluating their portfolios in the stock market. With real estate, however, the right purchase can create a great long term investment that can provide for retirement and long term appraisal to pay off for the rest of their life. Great article.

    Reply
  3. Isaac Low says

    January 16, 2019 at 4:52 pm

    Great article Nate, I agree! Also, not to mention that most tradesmen I know do not have the background or experience to manage conventional investments or retirement funds, so real estate can become a great way to build long term wealth and retirement resources – something tangible that will continue to appraise over time. The advantage the tradesman has is enormous.

    Reply

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