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How to Leverage Your Cash For Time to Build Your Real Estate Business

by Tom Sylvester on February 3, 2014 · 21 comments

  
How to leverage your money for time and grow your business as a result

What’s in your wallet?

While most people would answer that they’ve got money in there (hopefully that is true), I want you offer another item in your wallet that people spend every day without realizing it… and that is their time.

If you have followed this blog, listened to the podcast or participated in the forums, you have undoubtedly come across one of the age old questions that people just cannot agree on:

Should you spend time (doing things yourself) or should you spend money (and pay someone else to do them for you)?

The answer depends on you and a multitude of factors, of which we will explore below.

Money

If we look at the most successful people, it is clear that they would rather spend their money instead of (or in addition to) their time. As real estate investors, we should understand why this makes sense; what they are doing, is using leverage.

You see, we each have 24 hours available to us each day.  So if Mark Zuckerberg decided that he was going to do everything needed to run Facebook, at most, he could invest 24 hours each day into it.  Even if Mark worked 24 hours a day, Facebook would not even be close to what it is today, which is a multi-billion dollar company.

But let’s look at what Zuckerberg and just about every other successful business owner does instead.  They spend money, and as a result, they leverage other people’s time.

So by paying his 3,500+ employees, assuming they work 8 hours a day, Mark now gets 28,000 hours worth of work done each day, compared to his own 24. That’s pretty remarkable.  I love leverage.

Time

I know what you are thinking, “but Tom, I don’t have money to hire someone.”  That is understandable, and there are many people in this situation (or think that they are).  For these people, they can choose to spend (invest) time into building their business (and if you are investing in real estate, yes, it is a business).

Just understand that it is much easier to leverage money than time, and your goal as you expand should be to shift from spending time to instead spending money.

What Do You Have More Of?

Many people turn to real estate investing because they want to make money and build wealth.  The common saying “it takes money to make money” is correct, but not all encompassing.  You could adjust it and have an equally accurate saying of “it takes time to make money.”  In fact, most people start out with the later saying.

So as you look in your “wallet”, which of your resources is more scarce: time or money?

When many people get started in real estate investing, they often don’t have a lot of extra money, but they might have some extra time.  This time can be “found” by evaluating what is important and potentially replacing some activities with others.

For example, if you watch two hours of TV a day, you can swap that out with educating yourself or by learning how to rehab a property. This was how I got started.  I cut out many activities that did not lead to my goals and replaced them.

I started reading books, listening to podcast and analyzing deals.  I even had to partner on my first deal because I did not have enough money to close it myself, but I did have the knowledge from the time that I spent.

Initially, I did everything myself.  I…

  • created my analysis strategy
  • searched out and evaluated potential deals
  • created our business paperwork
  • cleaned the apartment between tenants
  • painted and handled any repairs myself (and with my partner)
  • advertised the units
  • drove 45 minutes to show the units to potential tenants them to potential tenants
  • screened the tenants
  • met the tenants to sign the leases
  • checked the post office box for rent and deposited rent into the bank account
  • signed the leases and managed the books

As we started to make money from our real estate investments, I realized that I did not have very much free time left in my wallet, but that space was being replaced with money.

So I started to look at what things I could spend money on so that I could start to get time back.

I started with paying someone to handle the business book, then paying an assistant to handle many of the administrative tasks.  Over time the scale shifted and I spent more money to have things done for me and in turn, I had a lot more free time.  My wallet now contains more money than it did in the past, and it still has some time to spare.

Lessons From The Wise

When we are young, we generally have less money and more time (or so we think).  Because we view money as a scarcity, we often make the decision to trade time for money in the form of work.  As time goes on, some people realize that time is growing more scarce, while others continue to trade their time for money.

One of the greatest lessons I learned was from my grandparents, and it has been echoed by many other people much older/wiser than me, is this: time is your scarcest resource.

Time vs. Money

To sum it up, here are a few key points for you to consider when you look at which one you want to spend.

  • Time is more scarce than money.  If you lose money, you can get it back.  If you lose time, it is lost forever.
  • With that said, it might make sense to spend time to get started.  As you begin making more money, evaluate to see if it make sense to spend more money and get your time back.

Action Item:

Regardless of how much money you have, identify one thing in your business that you are doing that you could pay someone else to do to free up 1 hour a week of your time.  Leave a comment below of what that item is to hold yourself accountable in front on the entire BiggerPockets community.

Tom’s 1 Action:

I write several blogs a week between various websites.  It takes me several hours extra after I finish the actual writing of the blog to edit it, insert images and links and create cover photos/schedule the blog.  So this week I will be documenting all of those post writing steps and outsourcing them to an assistant.

What 1 action are you taking this week?
Photo Credit: NoHoDamon

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{ 21 comments… read them below or add one }

Kevin Yeats February 3, 2014 at 3:19 pm

“A man’s wealth is measured by those things he leaves undone.” – Thomas Jefferson

Interpretation: those ‘things’ are not undone but rather left for someone else to do. You could pay me or someone to clean your rental property or take care of the lawn or paint the inside between tenants or prepare a meal for you (this list is endless). If I can do the assigned task better than you than it would be a fair trade.

You could also pay me to read a book for you (educating) or exercise for you (improving health) or spend time with you friends and family (relationship building) but it does you (the buyer) no good (especially the exercise part). When someone delegates all that he/she can except for the things that he/she does for a profession, then he/she is as wealthy as can be.

Think about it.

Reply

Tom Sylvester February 3, 2014 at 3:35 pm

Kevin – Fantastic quote and response! I had not read that quote before but it captures it perfectly.

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iris February 3, 2014 at 7:53 pm

Since I’m pursuing wholesaling real estate, I could pay someone to find vacant homes and track down the owners for me. I’m not sure how much this service would cost, I could even treat it as a trade off, if I make a deal, they get paid as well. Thing is, I’ve never done a deal before, so who would actually be willing to wait as long as it takes me to pay them?

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Tom Sylvester February 4, 2014 at 4:27 am

Iris – What I generally recommend is that you map out all of the steps in a process. So for wholesaling (which I don’t recommend for those starting out, but here are some of the steps – http://www.biggerpockets.com/renewsblog/2013/10/07/real-estate-investing-skip-wholesaling/) write down each step that you need to do. Then pick one step, document the process and find someone to outsource it to. That could be a family member, someone from an ad on Craigslist or someone on elance/odesk. I would recommend paying them by the job, as most people won’t want to get paid by the deal unless you have a track record and give them a higher percentage.

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Angela C February 6, 2014 at 10:35 am

Hi Tom,

I’m in my 20s, single, and I definitely am in the boat with much more time than money right now. You said you don’t recommend wholesaling for someone starting out. What do you recommend for someone starting out then?

-AC

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Martin Cortez February 4, 2014 at 9:10 am

Iris – What you are referring to is having someone “Bird Dog” for you, and you would be surprised to find individuals who have an abundance of time and don’t mind finding properties for you if you will pay them $500 per deal. Of course, you only pay them after you close.

Also, if you can find a trusted family member or friend to answer the calls from your marketing efforts, you can free up your time to look for more wholesale deals. This has worked well for me and I pay $400 only after I close on the deal.

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Leonardo February 3, 2014 at 11:54 pm

You went just right to the fact of the matter, Tom… “If you lose money, you can get it back. If you lose time, it is lost forever.” That’s classic!

Just a week ago, with no money in my wallet and no interest in real estate, I accidentally landed on itunes and listened to my first podcast ever of Bigger Pockets. One hour later, I knew I was hooked. There, Josh and Brandon talked about “Rich Dad Por Dad” which I didn’t know existed. I went right away and bought it, read it and read it again. In the book I read of “The Richest Man In Babylon” and “As A Man Thinketh”. As soon as was done with it, I was reding them both online. Oh, man… What a ride!

One week, one podcast, one website and three books later I’m decided to change my life forever and get off my “comfortable” couch where I would enjoy my “well deserved” 2-3 hour TV/DVD “nap”. Nothing wrong with enjoying your favorite TV shows and movies… unless you have a fat wallet in your pocket. And even so, it won’t be fat forever if action isn’t taken and that wallet isn’t put to work for you so that it can get fatter and stronger every day.

Thanks everyone involved in Bigger Pockets. You guys are life changing!

PS. I’ll let you guys know as soon as my wallet gives the first signs of muscle development and the method employed.

Reply

Tom Sylvester February 4, 2014 at 4:35 am

Leonardo – That is awesome, and congratulations on taking the first step. I remember the day that I found BiggerPockets. There is so much fantastic and free information on the site. Here are a few starting points:

The Ultimate Beginner’s Guide to Real Estate Investing – http://www.biggerpockets.com/real-estate-investing

Get Started in Real Estate Investing with $100 – http://www.biggerpockets.com/blogs/4317/blog_posts/30055-getting-started-in-real-estate-with-100

Outside of that, keep reading the blogs and listening to the podcasts. There is so much great information available on the site.

Another great book is called “The 4 Hour Workweek”. Maybe you can borrow Josh’s copy. He has been on page 27 for about 3 years.

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Kevin Yeats February 4, 2014 at 7:49 am

Here is another great quote.

“Poor people have big televisions. Rich have big libraries.”

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Martin Cortez February 4, 2014 at 9:18 am

Kevin – Poor people have big libraries too – only theirs are of movies on DVD and video games.

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Paul Zajic February 4, 2014 at 12:01 pm

This is an amazing post! I can see myself in this so much its not even funny!

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Tom Sylvester February 4, 2014 at 4:04 pm

Glad it resonated with you Paul. What is your 1 action step?

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Michael Woodward February 4, 2014 at 4:18 pm

EXCELLENT article Tom! So true! Thanks for your insight!

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Tom Sylvester February 4, 2014 at 7:13 pm

Thanks Michael.

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Rand¥ bachor February 6, 2014 at 12:08 pm

My one action is subcontracting my repairs. I have done all the work my self .

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Tom Sylvester February 9, 2014 at 4:31 am

Great Randy. That was one of the best things that I have done to get my time back and reduce stress.

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Leonardo February 6, 2014 at 12:45 pm

Thanks, Tom, for pointing me in the directions of those links and book. Again, great posting this one that you’ve written and I’m looking forward to reading more of your work.

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Tom Sylvester February 11, 2014 at 3:56 am

Thanks Leonardo!

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Tom Sylvester February 11, 2014 at 3:57 am

Just to keep myself honest, I not only completed my action, but I wrote a blog about it to prove it. Also, I included the step by step process that I used to outsource this, which may be helpful to others. http://entreprenewlyweds.com/outsourced-blog-editing/

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Joseph C February 11, 2014 at 10:43 pm

This article struck a cord with me as I read thru it. Even prior to reading this article, I have been starting to focus on outsourcing tasks and freeing up more of my time. My motivation for this is truly selfish. I want to be able to spend more time with my family than I have been as of late. I have already began outsourcing several tasks successfully. The next task I need to outsource is my direct mail campain. So ok BP, I will start exploring ways to outsource those mailers this next week.

Thank you Tom for writing this article.

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Tom Sylvester February 12, 2014 at 4:57 am

Joseph – I’m glad it benefited you. And I understand being “selfish”. Everything that I do in terms of real estate and business is to allow more time and freedom to spend with my family. I always knew that is what I wanted, but it became very apparent when my daughter was born 2 years ago.

Congrats on getting starting and good luck with future outsourcing.

Reply

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