What Is Your Time Worth?

In January 2013 I attended a seminar taught by, Robyn Thompson titled "How to Run Your Business Like a Business". Robyn Thompson is well known in the real estate investing circles, especially for her expertise in flipping homes.  I was starting my 9th year as a full-time real estate investor.  At the time I was managing my rental portfolio myself and was rehabbing or building 1-3 homes at one time.  Between managing maintenance and filling vacancies on the rentals, overseeing construction and design of homes to sell, accounting for the two entities, and miscellaneous office work, my plate was full.  I had purposely only purchased properties in one zip code so I could be more efficient. In addition in 2013, I was the general contractor for building my personal home and my wife was pregnant with our fourth child due in July.  This must have been the year the balding of my head began.   

During the first break of the seminar, I went up to Ms. Thompson and explained how I can only handle 1-3 projects at a time. I asked her how do I grow my business? Her response was "You need to hire an assistant".  I felt a sudden nervous feeling inside and I thought, how do I afford to pay an employee? how do I keep them busy? What if I have to fire them?

Since being self-employed I had realized I like control. Maybe it is my personality or my engineering background. I wanted things done a certain way and I got easily frustrated with mistakes.  

Later in the seminar, Robyn gave us some advice that changed my business forever. She said, "stop doing minimum wage activities". She also made a great point about hiring someone.  She said, "even if they do the job 80% as well as you would have done, that still frees up your time to do something else". 

The following week after the seminar one afternoon, I was driving from a project to my office and I got a call from my painter.  He said, the water had been cut off at the house and they needed it turned on. I was about to drive to my office, get a water key, drive to that property, turn on the water, and come back to my office.  Then I thought, "minimum wage activity". My plumber was down the street at another home so I called him and asked if he would drive up the street to turn on the water for the painters.  Just like that a 30-second phone call saved me about 30 minutes so I could be more productive at my office that afternoon.

In the spring of 2013, I hired an office manager to handle administrative work, property management tasks, and bookkeeping. I also hired a general contractor for my construction projects.  This freed up my time to acquire more deals, secure additional financing, and handle more projects.  From 2012 to 2013 my business increased by over 40%.  From 2013 to 2014 my business increased by 96%.  Paying an office manager and a general contractor was a fraction of the cost compared to my production increase. I was officially free of my "control" mentality. This was the best big decision I had made to date for my business.  

In early 2017, my office manager informed me she was leaving to pursue her own bookkeeping business.  I again was faced with a decision where I asked myself, "what is my time worth?" Do I hire and train another full-time office manager? Or do I hire a professional property management company and hire a part-time office manager?  I hired a property management company for my rentals and that turned out to be the second-best decision of my business career.  It turns out on several rentals I was not charging market rent so when vacancies occurred, the property manager was able to raise the rents effectively offsetting the management fee.  I also did not have to deal with maintenance, leasing, collecting rent, and other time-consuming tasks associated with property management. This also opened up my investing in other areas outside of the one zip code. All along I thought staying in one zip code was helpful for my time. Hiring a property manager was a paradigm shift to that thinking.    

Now that I have transitioned to hard money lending I am able to continue to delegate the so-called "minimum wage activities" to others which in turn has increased my business growth and given me more time to be at home with my family. This freedom has been special during these times in 2020.  

Think over your past day and try to recall any tasks you could have had someone else do for you so you could have accomplished more.  If you want to take your business to the next level, ask yourself, how much is your time worth?