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Spending Your Most Valuable Asset Wisely

I was at the gas station a couple of weeks ago, and this sign caught my eye: “Work 500 Hours, Get $500.” You may be thinking exactly what I thought. “That’s one dollar per hour! Why would anyone get excited about working for one dollar per hour?”

I’m big on time. I HATE wasting it. I hate being late. I hate it when people waste my time. Yes, I’m definitely impatient. Time is the most valuable asset we have. We spend a lot of our energy thinking about it, talking about it, reciting sayings and expressions about it, marveling about how quickly it passes and trying to squeeze more out of it. As I reflect on this past year, and what my biggest learning experience has been, it’s realizing what my time is worth. This has been an incredibly valuable insight, as it allows me to think more circumspectly about how I spend it. For example, does it make sense to hire someone to do something instead of attempting to do it myself? The more time I spend doing what I’m good at, what I enjoy doing, and what enriches my relationships with my family, friends, and community, the richer my time is, the happier I am, and the more valuable my time becomes.

The first question I ask when chatting with someone who is considering actively investing in single-family/small multifamily properties vs. investing passively with us is, “What’s your time worth?” Many of you are highly paid professionals, doctors, attorneys, entrepreneurs, executives, and engineers. You’ve spent years, if not decades, growing in your profession and have clearly achieved a high level of competence and compensation (if you meet the income requirements to be an accredited investor, then at a bare minimum, your time is worth $100 per hour). Moving into a role as a property manager/handyman may not be the best use of your likely limited free time, and even if you could eke out an extra few point of returns, would it be worth it? Only you can answer that question.

One of the reasons I love working for PassiveInvesting.com is how critically the leadership thinks about the time we have and how we allocate it. As you may imagine, as we grow in size, we have ever-increasing options for what to invest in, whether to vertically integrate and which opportunities to pursue. We evaluate those options based on what’s the best use of our collective time, i.e., what, with a high degree of likelihood, will continue to generate excellent returns for our investors with minimum downside risk. Our group collectively has spent many decades growing in our area of expertise, or what Warren Buffett calls his circle of competence.

“If we have a strength, it is in recognizing when we are operating well within our circle of competence and when we are approaching the perimeter.” — Warren Buffett

Competence is costly. It takes time to develop, and the road to it is paved with failures, frustrations, and losses. Once you achieve a baseline level of competence in a certain field, it becomes significantly easier to grow in that field. If you’re a skilled software engineer, you’ll be able to learn a new programming language with relative ease compared to, say, me. If you’re a practicing physician, learning a new procedure or technique will take you considerably less time than a pre-med student. As experienced operators of large real estate businesses, it’s significantly easier and more efficient for us to add new asset classes to our circle of competence than someone just starting out.

As we embark upon a new year, I’d like to encourage you to think critically about your time and talents. What’s your time worth? What is your circle of competence? How can you make it more valuable? From a monetary perspective, absolutely, but beyond that. How can you maximize time with your family? Your colleagues? Your friends. Yourself?

Gary Keller wrote a tremendous little book years ago called ‘The One Thing’. It’s a simple but powerful concept. I highly recommend that you read it if you haven’t already.

There’s a powerful question in Keller’s book that has helped me think critically about how to best spend my time.

What is the one thing I can do, such that by doing it, everything else will be easier or unnecessary?

What is one thing you can do this year, this month, this week, right now? It takes some energy and intention, but I guarantee you, it’s worth your time.

Happy New Year. May the year 2022 be your most valuable year yet.