I’ve been in real estate since 2010 and in that short amount of time I’ve quickly come to dread trips to the Big Box stores. These places are time suckers and if you’re not careful – you may actually be losing money every time you step foot into one.
If I had an app that recorded the amount of time I spent at Home Depot during my first year flipping houses I’d honestly be scared to look at it. If that app translated those hours into money, I’d be borderline furious.
In his recent blog, Glenn Schworm talked about time and how an investor’s inability to properly manage it could literally kill their business. Glenn’s 100% right and unfortunately for us, time is an elusive beast. It’s too easy to fool yourself into thinking you’re making the best use of time when in reality the things we do in our business everyday may actually be costing us money.
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How Much is Your Time Worth?
I did some questionable “back of the napkin math” last year and came up with a figure – $110 an hour is what my business is paying me. Since figuring out this number I’ve been playing a little game with myself. For every mundane task I do in my business I imagine a ninja coming up behind me and progressively robbing me of my money.
- Spending 30 minutes walking the aisles of Home Depot picking out mosaic tile ~$55 gone
- One hour fighting traffic to and from Home Depot and 30 minutes loading and unloading materials ~ $165 gone
- 15 minutes waiting in line to check out because Big Box store only has 2 cashiers working during the busiest time of the day ~ $28 gone
Like I said, the amount of money you lose at the end of the day is scary to look at.
But it doesn’t have to be this way and, if you want any crack at financial freedom via real estate and flipping houses, it must not be this way. The key is to slowly replace mundane, everyday tasks that eat up your time and money with systems that will grow your business and continue to work for you.
The most successful flippers will incrementally replace themselves from aspects of their business with the right person who is properly trained to follow a detailed and documented system. It is this process of replacement that you as a flipper and business owner should focus on.
But I have no money to hire someone, Glenn!
And my reply to you is, that’s ok! The key is to just get started on creating simple systems for every task in your business. Don’t be like me and find yourself knee-deep in four simultaneous rehabs before you sit down and write out your first system. To backtrack and figure out exactly what my business processes were at that point was incredibly painful and I only wish I had started sooner.
But I digress, this post has found it’s way into a slightly bigger topic and all I wanted to originally do was talk about Home Depot…
So, how did I solve the Home Depot time suck and how did I fend off that pesky money stealing ninja?
The answer is simple: I delegated and designated it out. In February of this year I spent an entire week creating SKU lists of all the regular materials I buy at Home Depot. I took it a step further and created “SKU bundles” that reflected the different price points that I was flipping at. Now, when I have a home that will sell at $200k after rehab, for example, I already know exactly what finishes will go in it. I simply update the quantities in my SKU list and fax it down to Home Depot for my contractor to pick it up.
It’s not a perfect system and still needs updating every once in a while to account for product availability and price changes, but for the most part, I’ve completely eliminated Home Depot from my schedule. In return, I’m able to spend my time finding more deals, talking to potential investors and lenders, and doing the things I enjoy in life – all while my business and the systems I’ve created for it continue to work for me.
How about you? What tasks in your real estate business do you dread doing and how can you find ways to systematize them? How much money are you losing every day by focusing on the wrong things and what are you going to do about it today?
Photo: Jack Keene