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.
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.
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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.
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.
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