time management is the focus of this guide for passive real estate investors. First, it highlights the main idea behind the topic. However, It also outlines the risks and questions worth reviewing. As a result, you can approach the discussion with a clearer framework.
What to know about time management
I was at the gas station a couple of weeks ago, and this sign caught my eye. “Work 500 Hours, Get $500.” In addition, 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. For example, We spend a lot of our energy thinking about it, talking about it, reciting sayings. Also, 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. As a result, 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?
What this means for investors
Meanwhile, The more time I spend doing what I’m good at, what I enjoy doing. Also, 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. In addition, 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.
However, You’ve spent years, if not decades, growing in your profession. Also, have clearly achieved a high level of competence. Also, 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. In addition, 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. In addition, 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. In addition, 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.
Questions to ask before acting
“If we have a strength, it is in recognizing. At that point, we are operating well within our circle of competence and. At that point, we are approaching the perimeter.” — Warren Buffett
Competence is costly. For example, 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. In addition, relative ease compared to, say, me. If you’re a practicing physician, learning a new procedure or technique will take you considerably less. In addition, time than a pre-med student. As experienced operators of large real estate businesses, it’s significantly easier. Also, 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. However, beyond that. How can you maximize time with your family? Your colleagues? Your friends. Yourself?
Risks and tradeoffs to review
Gary Keller wrote a tremendous little book years ago called ‘The One Thing’. As a result, 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? Meanwhile, It takes some energy and intention. However, I guarantee you, it’s worth your time.
Happy New Year. May the year 2022 be your most valuable year yet.
Key takeaways for time management
- Start with the goal and timeline that fit your wider financial plan.
- Next, review the assumptions, risks, fees, and possible outcomes.
- Finally, compare the opportunity with other ways to use your capital.
Put time management in context
Core ideas for time management
Every investment decision depends on the investor, the deal, and the market. Therefore, use the ideas above as a starting point for deeper due diligence. Review source documents, ask direct questions, and seek qualified advice when needed. For more guidance, explore our passive real estate investing education.
A clear review of time management
time management deserves a clear and practical review. These short checks can support a more informed decision.
- Start with a clear goal.
- Next, define the time horizon.
- Review each key assumption.
- Compare the likely outcomes.
- Test a less favorable case.
- Ask who controls each decision.
- Confirm the fees and incentives.
- Study the market and the deal.
- Check the supporting documents.
- Look for clear communication.
- Compare other choices.
- Keep the full plan in view.
- Write down the main risks.
- Review the source of returns.
- Check the exit assumptions.
- Understand the tax questions.
- Consider the need for liquidity.
- Match the choice to your goals.
- Ask direct follow-up questions.
- Confirm the reporting process.
- Review the operating plan.
- Check the team’s experience.
- Compare the best and worst cases.
- Keep expectations realistic.
- Use qualified advice when needed.
- Document the final decision.
- Review the decision over time.
- Watch for changing conditions.
- Stay focused on the long term.
- Finally, act with a clear reason.
A practical review of Spending Your Most Valuable Asset Wisely
First, define the goal for this decision. Next, write down the result you expect. Then, identify the facts that support that result. Finally, note any facts that could change your view.
For example, compare the likely return with the main risks. In addition, check the timeline and the amount of control you will have. However, do not rely on one attractive number. Instead, review the assumptions behind every estimate.
Before you act, ask who will manage the work. Also, confirm how that team will report progress. If conditions change, decide how the plan can adapt. As a result, you can judge the opportunity with more confidence.
Moreover, compare this choice with realistic alternatives. For instance, consider liquidity, taxes, fees, and timing. Likewise, review the downside as closely as the upside. Therefore, your final decision can reflect both your goals and your limits.
In short, use a clear process. First, gather the facts. Next, test the plan. Then, ask direct questions. Finally, choose only when the answers support your strategy.