{"id":177538,"date":"2024-09-16T13:52:40","date_gmt":"2024-09-16T19:52:40","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=177538"},"modified":"2025-03-13T13:46:36","modified_gmt":"2025-03-13T19:46:36","slug":"calculating-return-on-time-can-transform-your-investments","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/calculating-return-on-time-can-transform-your-investments","title":{"rendered":"Calculating Return on Time Could Transform Your Entire Portfolio. Here&#8217;s How."},"content":{"rendered":"\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">When you start investing in real estate, <\/span><span data-preserver-spaces=\"true\">you\u2019re often driven<\/span><span data-preserver-spaces=\"true\"> by the promise of financial windfalls and impressive returns. Initially, the hustle and bustle of acquiring and managing properties can be thrilling. But as your portfolio grows, you might find yourself stuck in a never-ending cycle of dealmaking, problem-solving, and even property management\u2014feeling like you&#8217;ve just created another job <\/span><span data-preserver-spaces=\"true\">for yourself<\/span><span data-preserver-spaces=\"true\">, leading to burnout and frustration.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">If you\u2019ve ever felt overwhelmed by the demands of your investment activities, you\u2019re not alone. This is a common issue among investors who haven\u2019t yet found a balance between their time and investments.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Embrace ROT Calculations<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">The solution to a more manageable, rewarding investment experience lies in understanding how you want to spend your time and quantifying that value. In my coaching experience, integrating return on time (ROT) calculations into your investment strategy is a powerful tool. It allows you to evaluate how effectively you&#8217;re using your time, assess your investment strategy, optimize your operations, and scale your efforts over time. By regularly tracking your ROT as your portfolio grows, you can determine whether your investments are working for you\u2014or if you\u2019re working for them.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">How to Align Your Investing with Your Desired ROT<\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Step 1: Building capital to invest<\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Most new real estate investors don\u2019t start with <\/span><span data-preserver-spaces=\"true\">a large sum of<\/span><span data-preserver-spaces=\"true\"> money, so they trade time for capital. <\/span><span data-preserver-spaces=\"true\">This<\/span><span data-preserver-spaces=\"true\"> might involve:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong><span data-preserver-spaces=\"true\">Working a Traditional Job:<\/span><\/strong><span data-preserver-spaces=\"true\"> Raises, commissions, and bonuses can provide capital to invest in real estate.<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">Starting a Side Hustle: <\/span><\/strong><span data-preserver-spaces=\"true\">Generating extra income through a <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/money-520\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">side business<\/span><\/a><span data-preserver-spaces=\"true\"> can help kick-start your investment activities.<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">Engaging in Real Estate Activities:<\/span><\/strong><span data-preserver-spaces=\"true\"> Strategies like <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/wholesaling-strategy\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">wholesaling<\/span><\/a><span data-preserver-spaces=\"true\">, <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/guides\/how-to-flip-houses\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">flipping<\/span><\/a><span data-preserver-spaces=\"true\">, or small syndications are common entry points for investors building their net worth.<\/span><\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Step 2: Decide how to spend your time as an investor&nbsp;<\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Once you&#8217;ve accumulated enough capital, the next challenge is deciding how <\/span><span data-preserver-spaces=\"true\">to best allocate your time<\/span><span data-preserver-spaces=\"true\">. Do you want to stay actively involved in every aspect of your investments, or are you ready to shift toward more passive strategies?&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Here are four ways you can spend your time investing in real estate:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong><span data-preserver-spaces=\"true\">Ongoing Active Investments:<\/span><\/strong><span data-preserver-spaces=\"true\"> This category involves continuous engagement, such as fix-and-flips, wholesaling, <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/real-estate-investing\/house-hacking-strategy\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">house hacking<\/span><\/a><span data-preserver-spaces=\"true\">, self-managing any asset (like short-term\/mid-term\/long-term rentals, hotels, RV parks), and residential assisted living centers\/homes. These investments require ongoing time and attention due to active management but can offer higher returns if you are willing to make that trade.<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">One-Off Active Investments:<\/span><\/strong><span data-preserver-spaces=\"true\"> This category has an initial engagement upfront but can eventually be turned over to property management for a longer hold. Options include the <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/guides\/brrrr-method\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">BRRRR<\/span><\/a><span data-preserver-spaces=\"true\"> (buy, rehab, rent, refinance, repeat) strategy on nearly any asset class or joint-venture partnership. While these can be lucrative, they demand an upfront time involvement before they can move over to a management team for the duration of the hold.<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">Semi-Passive Investments:<\/span><\/strong><span data-preserver-spaces=\"true\"> With the right team and systems, nearly any asset can be transitioned into a relatively hands-off semi-passive investment. However, if you purchased the asset directly or are in a JV partnership, you retain the day-to-day operational power, which can be good when things are running smoothly, but it can also be challenging when you have sudden or ongoing issues. All in all, these options require periodic oversight but tend to be less demanding than active strategies.<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">Passive Investments:<\/span><\/strong> <span data-preserver-spaces=\"true\">A true passive investment is where you are investing your capital and a professional team is managing the entire investment. These types of investments require minimal ongoing effort and include options like raw land, performing note funds, private real estate syndications, and crowdfunding platforms. These investments allow you to enjoy your time, attention, and steady returns with limited active involvement.<\/span><\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Early in your investment career, you may need to be more active than you envision in the long term\u2014and that&#8217;s OK. If you&#8217;re unsure how active you want to be now or in the future, consider this <\/span><span data-preserver-spaces=\"true\">important<\/span><span data-preserver-spaces=\"true\"> question: Do you <\/span><em><span data-preserver-spaces=\"true\">love <\/span><\/em><span data-preserver-spaces=\"true\">real estate?<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">If real estate is your passion\u2014if you live, breathe, and dream it\u2014<\/span><span data-preserver-spaces=\"true\">then<\/span><span data-preserver-spaces=\"true\"> staying actively involved might be the right path for you. However, for most investors, the goal is to eventually shift away from constant hands-on involvement and explore more passive options that require less day-to-day management while still generating solid returns. By doing so, you can achieve a better work-life balance and focus on other aspects of life that matter to you.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Step 3: Track your time and calculate your ROT<\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Once you\u2019ve chosen your investment path, keep detailed records of the time spent on each deal (you\u2019ll need these records if you want to claim real estate professional status for tax purposes anyway). Documenting your time will help you understand your ROT and make informed decisions about <\/span><span data-preserver-spaces=\"true\">how to optimize<\/span><span data-preserver-spaces=\"true\"> your holdings as you move through your investment career.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Here are examples I pulled from my investing career over the years.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Fix and flipping <\/span><span data-preserver-spaces=\"true\">ROT<\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Many fix-and-flippers who do the manual labor themselves spend 120 to 240+ hours over six months. By outsourcing cosmetic flips on C- and B-class properties, I reduced my time commitment to about 45 hours per project and earned $25,000+ per flip.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">In this case, my ROT was:<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><em><span data-preserver-spaces=\"true\">ROT = $25,000 \/ 45 hours = $555 per hour<\/span><\/em><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Fix-and-flip projects are excellent for building capital, but great projects may come sporadically, making it hard to rely on them for consistent income.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Buy-and-hold rentals ROT<\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">I transitioned to buy-and-hold rentals, which required just five to 10 hours per month for acquisition, management, and maintenance<\/span><span data-preserver-spaces=\"true\">, thanks to property management systems<\/span><span data-preserver-spaces=\"true\">.<\/span><span data-preserver-spaces=\"true\"> A property that netted me $4,000 annually for three years, followed by a $40,000 profit on sale, resulted in:<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><em><span data-preserver-spaces=\"true\">ROT = ((4,000\u00d73) + $40,000) \/ 160 hours = $325 per hour<\/span><\/em><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Although the ROT was lower than flipping, the reduced time involvement allowed me to scale my portfolio\u2014at one point 40 SFRs\u2014-and maintain balance across my day job, family life, and investments.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Passive investments<\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">My passive investments typically require one to five hours per quarter. For a $50,000 investment that doubles my equity (earning $50,000 profit) over five years, and with 15 to 20 hours of total involvement, my ROT is:<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><em><span data-preserver-spaces=\"true\">ROT = $50,000 \/ 15 hours = $3,333.33 per hour<\/span><\/em><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">While it does take capital to invest in passive deals, many investors look to eventually transition their more active holdings into this model since it offers the advantage of rapid scaling, <\/span><span data-preserver-spaces=\"true\">true<\/span><span data-preserver-spaces=\"true\"> diversification, the<\/span> <span data-preserver-spaces=\"true\">potential to leave your day job, and flexibility to focus on meaningful activities and personal growth.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Final Thoughts<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">While maximizing your ROT to thousands of dollars per hour might be the ultimate goal, remember that building up to that level is a journey. <\/span><span data-preserver-spaces=\"true\">Whether through fix-and-flip, buy-and-hold, or passive investments, with the right strategies, teams, and systems in place<\/span><span data-preserver-spaces=\"true\">, you can increase your ROT over time<\/span><span data-preserver-spaces=\"true\">.<\/span><span data-preserver-spaces=\"true\">&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">For the average investor, calculating ROT helps<\/span><span data-preserver-spaces=\"true\"> align investment activities with passions, time commitments, and financial goals.<\/span><span data-preserver-spaces=\"true\"> By optimizing your ROT, you can create a real estate investment business that works for you\u2014allowing you to focus on what matters most.<\/span><\/p>\n\n\n\n<div id=\"hero-block_2dac7440da38cb582e0c5be3e27bf6ce\" class=\"first:mt-0 hero-block py-4    has-background has-slate-300-background-color has-text-color has-slate-800-color\">\n    <div\n        class=\"gap-10 lg:gap-20 flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 lg:w-2\/3 \">\n            <main class=\"py-4\">\n                \n\n<p class=\"has-theme-slate-color has-text-color has-large-font-size wp-block-paragraph\"><strong>Protect your wealth legacy with an ironclad generational wealth plan<\/strong><\/p>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-theme-slate-color has-text-color wp-block-paragraph\" style=\"font-size:16px\">Taxes, insurance, interest, fees, bills\u2026how can you acquire wealth, let alone pass it down, when there are major pitfalls at every turn? In <em>Money for Tomorrow<\/em>, Whitney will help you build an ironclad wealth plan so you can safeguard your hard-earned wealth and pass it on for generations to come.&nbsp;&nbsp;<\/p>\n\n\n\n<div id=button-custom-event-block_232350d368c3bfb8870c01faa4e65422 class='button-custom-event'>\n      <a\n    href=\"https:\/\/store.biggerpockets.com\/products\/money-for-tomorrow\"\n        x-on:click=\"window.analytics.track('Blog Block | Publishing: WWC', {\n      referrer: 'https:\/\/www.biggerpockets.com\/blog\/calculating-return-on-time-can-transform-your-investments',\n    });\"\n    class=\" btn-shape inline-block no-underline has-background has-theme-gold-background-color has-text-color has-white-color\" target=\"_blank\">Get Your Copy<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n                <div class=\"lg:w-1\/3 first:mt-0 relative h-full lg:flex lg:items-center\">\n            <img decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  rounded-md hidden lg:block\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2024\/01\/Untitled-design-62.png\" alt=\"\" title=\"\">\n        <\/div>\n            <\/div>\n<\/div>\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n","protected":false},"excerpt":{"rendered":"<p>When you start investing in real estate, you\u2019re often driven by the promise of financial windfalls and impressive returns. Initially, the hustle and bustle of acquiring and managing properties can [&hellip;]<\/p>\n","protected":false},"author":214306,"featured_media":177542,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[4241],"tags":[],"class_list":["post-177538","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate-business-management"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/177538","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/214306"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=177538"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/177538\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/177542"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=177538"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=177538"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=177538"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}