I have interacted with a number of investors over the years who are good at what they do, but are under a tremendous strain from the amount of time and energy spent on their business. Whether you are buying and holding, flipping, wholesaling, etc., this business has lots of moving parts that can easily overwhelm your schedule if you are not careful. Over time, it is critical that investors learn to identify areas within their business that can be delegated or contracted – not only to maximize productivity, but to avoid getting burned out.
You Must Understand the Value of Your Time!
Most real estate investors get into this business because they are entrepreneurs who want to break out of the monotony of the 9 to 5, as was the case with me 6 years ago. I left a very good corporate job because I was drawn to the idea of setting my own schedule and being my own boss. The thought of working hard to build my own business and earn an income that wasn’t dictated to me by somebody in middle management was liberating. However, soon after starting my business I found myself working 10 and 12 hour days. I enjoyed what I was doing, but I quickly realized that the workload was not something I would be able to sustain long term. I also began to realize that in trying to handle every aspect of the business myself, I was limiting the number of transactions I could realistically handle.
It didn’t take long before I had identified elements of the business that I needed to give up. I began hiring various individuals and professionals to help with specific tasks associated with my business. In doing so, not only was I able to free up time with my family, I was able to manage the business at a higher level which in turn enabled the business to grow.
The question I have learned to ask myself is: What is my time worth? If my time is worth more than 10 dollars an hour, then why would I waste 3 hours of my day performing a task that I could pay somebody else 10 dollars an hour to do?
Case and point: I have a good friend who began flipping houses 2 years ago. He is a very skilled carpenter and has done an excellent job rehabbing and selling houses. However, he chooses to do much of the rehab work himself in an effort to save money and increase margins. In doing so, he has limited himself to the number of houses he is able to rehab and sell in a given year. For somebody who has the talent and know-how to buy, rehab and sell real estate, it is highly unlikely that making trips back and forth to Home Depot is a proper use of time. As I’ve told my friend in the past, 5 houses a year is nice, but he could easily double or triple this if he began to understand what his time was really worth.
For those investors whose volume has reached a plateau or whose business has become more of a burden than a joy, take the time to analyze the work you are doing. Are there certain tasks that can be delegated or contracted to somebody else? Whether it’s a matter of growing your business or simply attaining the quality of life you envisioned when you started your business, begin to identify areas in your business that need to be relinquished. In understanding this one important principle, you’ll set yourself up for success both financially and personally.
Photo: Alan Cleaver