If you have a family, friends, hobbies and a life – then you probably know it gets even more complicated…;
Take ME for example. I’ve got several things on my plate every day:
- I have a full-time job (I work in commercial real estate banking) that usually consumes anywhere from 40 – 60 hours every week.
- I have a wife and daughter – both of whom require (and fully deserve) some pretty substantial slices of my time each day.
- Every week, I put significant time and effort into publishing content for this blog (and a few others).
- I’m an active member of my church, neighborhood and a couple of local economic groups where I try to participate in several extracurricular activities each year.
- I have a handful of other hobbies and fun activities that I thoroughly enjoy spending my time on (and without these things, I’d probably lose my sanity).
Some days, it is totally feasible for me to keep all of these things working together in perfect harmony. Other times, it can be a major challenge to keep it all straight. When one or more of these segments of my life picks up and gets busy – life can get overwhelming very quickly.
Most successful real estate investors are quite familiar with this juggling act…; but how are YOU supposed to take care of all your pre-existing obligations AND carve out the time you need to run a profitable real estate investing business?
How My Time Is Spent
To start with – I thought it might be helpful to show an illustration of how my time generally gets divided every week:
First off – I should clarify that my schedule doesn’t necessarily look exactly like this every week, month & year.
Depending on what projects are hot on the burner, some weeks may require that I devote substantially more time to “Rental Properties” (if I’m trying to buy a new property), or to my “Land Business” (if I’ve got a big transaction in the works), or to my “Full-Time Job” (when I get slammed with a massive load of projects to work on)…; but all in all, if I average out all of my various working activities over the course of an entire year, this is probably the most accurate representation of how my time is spent.
And to be clear, this is my “working life” we’re talking about here – so it excludes things like being a parent, husband, and other adult duties like cleaning the house, yard work, shopping, fixing stuff, etc.
My weekends (and some week nights after 7 pm) are still my most productive times of the week in terms of making progress with my various business endeavors. This time is essential to my ability to “get ahead” so to speak.
How My Money Is Made
Now let’s take a look at my different streams of income, and which of them are responsible for my total take home pay each year:
Again, my global income doesn’t look exactly like this every year – but at the time of this writing, this is how the last few years have been broken out on average.
As you compare these two pie charts together, one thing might stick out to you – the activities that put the most money into my pocket aren’t necessarily what I spend the majority of my time on. For instance…;
My Full-Time Job
As far as jobs go, I’ve got a pretty good one. I am required to be present at the office for at least 40 hours per week (sometimes more, depending on my workload). My job pays me a set dollar amount, twice every month in the form of a salary. It also provides me and my family with health insurance, which helps contribute to what some people perceive as “security” (aka – a steady, predictable pay check that we can count on – regardless of what else is happening in life). Of course, this “security” is really more of an illusion (because I could lose my job at any time, for any reason) – but I must admit, it’s probably the most dependable source of income I have at this point in my life.
With this source of income, it doesn’t matter how busy I am, how productive I’m being, or how much stress it contributes to my daily life. I am earning the same amount of money with every pay check, regardless of how much time it consumes relative to the other slices of my weekly time budget. For obvious reasons, this kind of “fixed income” can both work to my benefit or to my detriment.
My Land Business
The land business is a funny thing (at least, mine is). Depending on the year, I could have a few “grand slam” deals that generate more profit than the annual income from my job even though it only consumed a small fraction of the time. I could also have a year with a lot of “fluff” activity and some less-than-stellar results. It’s also not uncommon to have a few properties that take longer-than-expected to sell (which simply delays the collection of my income).
My land business provides very little in the feeling of “security”. However, it does generate some huge influxes of cash – which plays a pivotal role in building my inevitable financial freedom. The only problem is, it’s not always easy to predict when these huge influxes will occur. The level of stability is also affected by how many monthly payments I’ve got coming in from the various properties I’ve sold with Seller Financing (and these monthly payments have the potential to add a lot of stability to a land investing business).
The important thing I’ve recognized about my land business is that it’s not the end game. It’s a means to and end, and does a fantastic job of generating the large influxes of cash that I need to pursue the end game.
And what is the end game? Well…; my end game is to build a large portfolio of hands-free rental properties – a separate real estate business that continually throws off a sustainable income for the rest of my life. Without the cash generated from my land business, it would be very difficult to make this kind of rental property business a reality.
My Rental Properties
At the time of this writing, my rental property business is still a relatively small (but growing) operation. In a typical month, it generates approximately the same amount of income that I generate in one full week at my day job.
It’s not enough to live off of (yet) – but the real beauty of this income is that I only have to spend a couple of minutes each month running this business (as opposed to 40 hours each week in my day job).
It’s as easy as:
- Checking the monthly income report from my Property Manager.
- Verifying that the money has been deposited to my bank account.
- Making sure there are no looming problems that need to be handled.
The only reason I have it this easy is because I have a great property manager handling all of my rental properties. A good property management company is an essential component of a good rental property business. Why? Because with a good property manager in place, my rental properties are quite literally a hands-free operation that runs itself without my ongoing involvement (and this is very important).
This kind of “hands-free” income isn’t easy to create (especially in the beginning), but if you take the time to seek out the right rental properties and buy them the right way, you can experience this amazing phenomenon for yourself. If you ever do, you’ll see what I mean – it’s a beautiful thing!
For a project that once started as a massive time investment with absolutely no guarantee of any tangible revenue (i.e. – pretty much how every business starts out), this little business has evolved from nothing into a small-but-steady stream of monthly income. It took a lot of time and intentional effort to map out and implement the game plan, but here I stand less than 24 months into it – and the plan seems to be working.
The End Goal
As of today, if I had to show you how I envisioned my life panning out over the next 20 – 30 years, this is probably the best representation of how I’d like to see my global income when all is said and done:
As you can see – the full-time job is pretty much gone (since I’ll effectively be retired at this point).
It’s important to note that I have no aspirations of “full-time investing” – ever. Why? Because that would literally be nothing more than replacing one job with another.
In the future, I’d like the majority of my income to come from my rental property portfolio. Why? Because this stream of income will keep coming in the door without requiring any substantial work from me. It also has the benefit of some significant tax shelters that aren’t available from a job, a land business, a blog, or any other source of income (that includes flipping, wholesaling, rehabbing, and almost any other real estate business you can think of). These other streams of income (full-time job, land business, blog, misc projects, etc) can & certainly will provide some substantial income, but it’s only for the purpose of feeding the long-term growth of my rental property portfolio. They shouldn’t be the actual end game (according to my plan, anyway).
Of course, it’s impossible to know precisely how the future will pan out. There are an endless number of variables that could come into play and completely change the trajectory of where my life is headed. However – I do believe it’s important to at least have an idea of what direction I’d like life to go…; so with this in mind, this third pie chart (above) is probably the best projection I can show you.
How Is Your Time Spent?
Now that you know how I spend my time, how I make my money and what my end goal is – let’s talk about YOU.
What would your pie charts look like if you laid them out just like mine? Where do you spend the bulk of your time? Which of your activities generate the majority of your income? Are you satisfied with your current situation or do you need to make some changes? If changes are needed – what’s your game plan?
Sometimes it can be illuminating to see these things side-by-side (and I have to be honest – it was actually pretty revealing for me as I created these three pie charts for this blog post). Just take a minute and think about your daily activities…; what are you doing with your daily life? Are you moving towards the destination you want to reach?
Of course, you won’t be able to answer these questions until you truly know what you’re trying to accomplish – so if you find it difficult to map out the same charts I’ve shown above, take a few minutes (or hours, if necessary) to organize your goals, figure out where you want to go and what kinds of activities will bring you towards that destination.
If you’re lucky, you might just figure out some things that need to change…; and the sooner you can do that, the better.