What’s Your Hourly Rate?

Hello! My name is Jay and I’m the chief mechanic here at JB’s Auto.

Recently I found myself tearing apart the engine on my truck. I was replacing the intake manifold. Don’t know what that is? Good – try to keep it that way, you’ll be better off.

You see, I dabble in all forms of hands on work. I’m getting better about keeping my hands out of rehabbing houses. I’m subcontracting most of that work now. But I have a mechanical mind that likes to build stuff – to assemble and disassemble. So it leads me astray sometimes.

When you combine the fact that I drive an old “beater” with my mechanical mind, I can find myself wondering into the tall grass – taking on projects that I shouldn’t.

I was recently at a training event and we got on the subject of what your time is worth. One guy proudly said he installed the toilets in his rehabs to save the $50 the plumber would charge. I don’t install my toilets (anymore), but I know exactly where that guy’s coming from.

My manifold was to be a $1200 job at the car repair shop. That was a quote for parts and about 5 hours of labor. When you add the labor cost and the mark-up on parts, I’m paying someone at the car shop well over $100/hour – probably more like $120-140 an hour. Granted it’s money well spent if you need it – that’s what you pay for a pro with pro tools and the overhead of a service shop. And those guys work hard for their money.

I want to get paid $140 an hour. Quick math tells me that’s $280K a year. Not shabby. Would you settle for $280K a year?

Unfortunately the math isn’t that simple. On the done side of the job now, I can tell you I didn’t make $140 an hour. First I needed a couple of specialized tools that I didn’t have – nothing much but that was about $30. And that’s given that I already have a lot of tools. Then there was time spent fetching parts. Then there was time spent watching a YouTube video of someone else doing the job. Then there was the fact that I’m not slow but not as fast as a real mechanic. What did I end up making an hour? I don’t know – not sure I want to really crank all that math lest I discover I could have made more money stocking the shelves at Walmart.

But here’s the point. What do you want to make this year? Let’s suppose it’s $100K – that may be a little or a lot – adjust your number accordingly. That’s $50/hour if I’m working full-time. That’s $80/hour if I’m only working 25 hours a week.

Now examine your day. Are you doing only $50/hour work? If you’re cleaning out your rentals or posting bandit signs or renewing your Craigslist ads, that’s $10 or $20/hour work. If you’re talking to motivated sellers – that could be $1000/hour work. The trick, of course, is to maximize the $1000/hour items and minimize the $10/hour items.

I’ve been thinking about this a lot lately. I’m at the point where I need to expand my efforts – it’s time to employ some techniques to take the low paying work off my plate. In real estate that usually means an assistant – in person or virtually. As usual, I can see this is running long and I don’t want you nodding off. But this assistant theme will be back as I grapple with making it happen.

Incidentally, I enjoy working with my hands, which is what makes the whole truck project a little easier to stomach. Of course if I had to do that every day I’d want to choke someone at Ford with a metric wrench.