Overestimating Your Time & Underestimating Your Value

Brian (00:57)
No, no, not at all. So we’re not fix and flippers, but fix and flip is like the most kind of typical example of where your time gets overestimated. And the way that it looks is like, think, you you buy a property, it’s going to take three to six months to renovate and it ends up taking nine or 12 and you have to carry all those costs throughout the nine or 12 months, not just like the renovation costs, but like your holding costs, the interest on whatever you’re paying.

for the loan and everything else, like utilities and insurance, everything. So yeah, typical super simple example of like a way that real estate can like vastly underestimate the time that it takes.

Jessilyn (01:40)
Yes, I do remember because we obviously invest in sweated properties as we’ve discussed before. But two of those that we bought were not turnkey. And so we had to have the basements renovated. And some of those took longer than we had anticipated. so of course, like you said, we had to hold it for two months longer for the holding costs, not to mention the investment costs because it is more money to get the changes needed that we needed. But yeah, there was definitely…

more room for error that I think we should have estimated in than we did originally.

Brian (02:13)
Yeah, the first one was definitely the roughest because we were a little bit naive back then and trusted contractors to actually do what they were supposed to be doing. And although the quality of the work ended up being good, the timing of it was not as good. And we didn’t know to be on top of the contractor as well back then. So I think if I remember correctly, that one took five months and it should have took three. So we got lucky in that sense. I’ve heard horror stories where it should have taken three months and it ticked.

takes 12. We were not that bad, but still, you know, that’s an extra two months of interest. That’s an extra two months of utilities. That’s an extra two months where you don’t have rent collected. All these, all that, that two months adds up into like a lot of cost in, a very short period of time.

Jessilyn (03:02)
It does. And there’s of course, insurance and property tax. Those don’t stop just because you don’t have a renter in there. But like you said, we don’t focus on fix and flips, but we do focus on buy and holds and renters. And so the time trap in there, where would you say that really takes your time that people may not really be aware of if they don’t currently buy and hold?

Brian (03:25)
When it comes to the renters, you know, there’s the usual of like not really controlling your time. Renters are going to text you or message you or email you whatever communication you have, like at any time they want. And you might have to deal with it or you might have to be smart enough to like somehow manage that in some way. filling a property, that’s probably the biggest time sink for me and for probably property managers as well.

And that’s why they charge, right? Like that they charge, you know, your, flat fee, but then they charge on top of their flat fee, very often a filling fee, like to fill that rental because it takes a heck of a lot of time. in our market right now, Sherwood park, we, it, it’s very, very, very little rental in available here. So when we put something out for rent, a lot of people apply to it and you have to.

respond and manage and book and like do all these different things to get these people to view your suite so that you can actually have a renter. People think it’s going to be easy. It takes a tremendous amount of time just to fill like an hour or two hour slot for, for viewing.

Jessilyn (04:37)
Right. And then of course, when you do have your candidates narrowed down, you have to go through the background checks and that’s not necessarily just a security check, right? That could be checking records, whatever we go through. I know some people go through their social media just to make sure like they are who they say they are and they’re not like big partiers if that’s not what you’re looking for. So the time does add up.

Brian (05:02)
does, yeah. Luckily with the online systems nowadays, the actual checks take quite, like they’re quite quick. Yeah, but scheduling, man. That’s where it comes down to. Scheduling, scheduling, scheduling. Like trying to fit all those tenants in so that you’re not like using up all your weeknights, your weekends, and trying to get them into a tight period. You and I are very big on calendar. So like, I think we spend,

Jessilyn (05:09)
Yeah, that’s what I thought.

Brian (05:31)
probably more time in our calendar scheduling and making sure our schedule is proper than your average person. And then when it comes to like booking all of the viewings, that just goes to a whole nother level of scheduling. Yeah. So honestly, people underestimate the amount of time it’s going to take to even just get someone in there to view the property, nevermind have them as a renter and all the things that are going to come along with that.

Jessilyn (05:56)
Right. So you selected your renter. You’ve got obviously your move in inspection, you move out inspection from the previous one that takes time, but you’ve got your renter. Now, what do you I mean, I know because obviously I’m in the business, but you got the lease to prepare. You’ve got maintenance that’s going to come up. These are all time consuming activities that if you’re not aware of, can really eat at your day and impact what you’ve got going on in your life.

Brian (06:25)
Yeah, and it follows the general rule of like when it rains, pours. like depending on how many properties you have, you’ll have like nothing for three months and you’ll think, hey, this is great. It’s super easy to manage a property. And then all your properties fall apart in the same month. So people underestimate their time when it comes to that too, just how much of a buffer do you actually need in your schedule to manage all the unknowns that are going to come along in your property? Right.

We tell the story about like, you know, a friend of ours having a goal to have 25 properties and he was a little bit inexperienced at the time and I said, you know, at some point you are going to have three furnaces go in the same month across those 25 properties. he kind of laughed and said, ha ha ha, like, yeah, right. And it’s like, no, no, like statistically it’s going to happen. Right. And he wasn’t building in all the buffer he needed. I mean, I was taking the worst case scenario in his properties, but

Imagine all the little things that are going to happen outside of those three furnaces going on. Like, you know, sinks happening, little leaks happening, appliances. like all kinds of little things about the property that are going to go wrong. And if you have 25 of them, you’re going to have that consistently in your, in your time budget. And if you don’t scale for that, like scale your budget for that in time, you’re going to, you’re going to have a bad time.

Jessilyn (07:33)
appliance.

Right. And so, I mean, you talk about maintenance in there. It’s one thing for a furnace or three to go, but there’s other maintenance involved, right? And there’s the, like you said, an appliance goes, the sink leaks. Those are, I guess, situational. They happen when they happen. But there’s things you can plan for that are maintenance, like needing to replace the shingles, replace the windows, whatever that might be. But that’s all part of being a real estate investor and owner.

Brian (08:23)
Yeah, yeah. And a lot of people who get into the game initially, they try to do it themselves. And I remember I did that in our first couple condos. And after the fifth trip to Home Depot, where I’m looking for some little nuance in the valve that I need to connect to the toilet, and I can’t find the right valve, I was like, screw this.

A plumber at a hundred and whatever dollars an hour is like way more worth the value than me spending days trying to like fix this problem that a plumber can more or less just walk in and like fix it in half an hour to two hours. People need to realize that like their time is worth something and that they shouldn’t be doing the maintenance unless you are a plumber, of course, and you own real estate, then go ahead and do it yourself. But if you don’t have those skills,

hired out because like your time and your effort is not worth it compared to the cost of just building it into your real estate portfolio and making sure your real estate portfolio can manage those costs for those plumbers, for those whoever people that you need to come in and manage your properties.

Jessilyn (09:35)
Yeah, I remember very well in our first few years of owning real estate and you wanting to do it all for the maintenance. And I’m like, okay, I’m not going to stop you as you’re watching YouTube videos on how to fix things. And I’m going, really? That’s what you want to put your time in. again, sometimes we have to learn our lessons a hard way. And then you came home one day and you’re like,

Brian (09:43)
Lain flours.

Jessilyn (10:04)
I’m gonna redo the floor in one of our condos. I’m like, you’re gonna what? How much time is that gonna take you? And I’m pretty sure you’re like, well, me and a buddy, we’re gonna get together, we’re gonna buy it all, and we’ll get it done in a day to max. I’m like, okay, I’m gonna let you dream that dream, and then four or five days later, you’re gonna realize it takes way longer because it’s not your skill set. And so you had to cut and sometimes recut and know, relay and then go back and fix things. Whereas if you just hired it out,

Brian (10:17)
It took four. Yeah! Four days.

Jessilyn (10:33)
that person probably would have for sure had done in a day or two, but that’s their skill set. They’re used to it. But for a first timer, it never goes as planned because you don’t know the things you don’t know until you’re in the midst of it. And it took a few years, but eventually you did get to a space where you’re like, you know, I’m just hiring this out.

Brian (10:53)
Yeah, you said it. Like you don’t know what you don’t know. When you’re inexperienced and you’re just starting out, like you can’t see the value of like those hundreds of dollars that you’re paying the other person. When you think, it’s not that hard. Like I can do it myself. Now I hire out everything and I have a trusted set of contractors where I pretty well don’t even have to show up to my properties. I can just manage the tenant and manage the…

the contractor and get them to show up at the same time and the problem gets solved. But like it’s funny, you say you saw that back in the time, but now that I’m actually spending more money, but less time, sometimes you hear the expense budget and you’re like, my God, our properties take that much to maintain, but it’s like built into the portfolio now, right? And that’s the key. So yes, it looks expensive and yes, you know, it might.

It might, you might have a better performing real estate portfolio if you did it yourself, but like, why would your real estate portfolio not perform without it? Right? Like it, do you have to do that in order to make your real estate portfolio perform? If you have to do that, then you maybe are not doing real estate quite properly.

Jessilyn (12:09)
Right. You need to value your time. And I know we speak on this a lot just based on all the different things we have going on and we really will evaluate like, okay, if I’m going to take something new on, what’s it going to cost me? Like from a time perspective, not necessarily just like a monetary expectation and to figure out, okay, what does that look like and is it worth it? But I still remember a story one of our mentors shared with us not too long ago.

Last fall was where he had a property here in Edmonton. He’s not here. He lives in BC and he flew in to paint his property and it took him all weekend. And in his words, he probably used more explicit than I did. It was a crappy job and he had to hire someone to come and repaint it anyways. But you think of the cost of his time to do that. The flight, obviously, I mean, even if it was only a few hundred bucks.

and few hundred bucks for paint, but then you had to pay someone to do it anyways. But we think we can do it all and then we do it and then we look and go, wow, that is a crappy job. I am not good at painting or I’m not good at laying floor, whatever it is. And it’s like, really? I could have saved myself X amount of money that I spent already and just put it towards a contractor who knows what they’re doing. It’s their time. You get to be at home with your family or doing out.

what you do best with your time, which might be meeting other investors, it might be working at your contract, however you make money, make the money and then pay someone to do the jobs that you’re not good at or don’t want to do.

Brian (13:47)
Yeah, it is a mental muscle you have to build. Because I mean, we’ve been there. And the funny thing is that I know millionaires and very rich people who will still go and do the paint themselves. Right? But they’re absolutely not accounting for the mental cost. They’re not accounting for their mental health. They’re not accounting for the time with their family and their friends. Like all this stuff.

is just secondary to like saving that hundred dollars or the other or that thousand dollars and often it’s not worth it. it’s again build it into your portfolio so that you know you don’t have to deal with it. Right. Yeah. That’s the key is is like make sure the real estate can handle those things because eventually you’re going to not want to do it. Same thing with property management. Same thing with maintenance. You’re eventually not going to want to do those things. Make sure the real estate portfolio can handle it.

Jessilyn (14:43)
Yeah, I think that lends well into like lost opportunity costs like so there’s the cost of actually doing it versus not but then there’s a cost of the lost opportunity so if you’re You really good at going in and finding investors so you can buy more properties or whatever it is that Makes you money as an independent and you’re good at it Go do that because the two days for example, it might take you to lay a floor or paint a whole

a condo could be two days you’re out bringing in 20, 30, $50,000 from investors versus the two or three grand is going to cost you to have that place fixed, whatever it is you need remodeled.

Brian (15:28)
Yeah, yeah. So it’s just not worth it. a, but I mean, people, people have to learn those lessons. Like, you, you experienced burnout. I experienced burnout. we both experienced like mental health, health problems of different sorts. And it’s because we just push ourselves too far and we’re not not ready, either not ready for it. Haven’t built that mental muscle or we’re, or we’re not, primarily in our, in, from our experience, we just didn’t value our time properly. Yeah. And.

Like that right now, depending on who you follow, right? There’s a guy named Dan Martell and his calculation is that if you can outsource it for a quarter of the value of your time, then outsource it. we’ve done real estate for a long time right now. My dollars per hour on real estate is about $500 an hour. So every hour I spend on real estate, we will earn about $500 in the portfolio. So.

If I can rent, not rent, but if I can hire something out for $125 an hour, I need to hire it out for $125 an hour. Agreed. And most contractors, most plumbers, most people are around that mark. So there’s absolutely no reason for me to be doing any type of maintenance on my property. And I would challenge all the investors out there that if you really looked at your portfolio, you should be able to sit in the same bucket that I’m in.

very very closely and you should be able to hire things out and again if you can’t let’s review your portfolio because like why can your portfolio not handle the maintenance and why can it not handle the the costs that should be in a real estate portfolio

Jessilyn (17:11)
Yeah, and I don’t want to just touch briefly on the mental aspect of that. And I say that because when we look at things like, say for example, if I had to go paint a condo, I would be so angry. I don’t enjoy it whatsoever. Just like I didn’t enjoy managing tenants, as we’ve openly discussed before. And if I have to do it, there’s an extra layer on top of

just doing the work and the cost monetarily, financially. There’s the cost mentally because now I am irritated or annoyed that I’ve got to spend two days, for example, if that’s what it is to paint something or lay flooring, which I hate. And then afterwards, I’m that’s going to impact how I feel, how I how I’m dealing with my family, my kids, my husband, anyone around me. And then going into the work. Imagine I spent the whole weekend painting and then I had to go to work.

Wow, you know what mean? Like, and I don’t think we think of those extended costs to our family, our colleagues, our co-workers, our friends, because of how we’re portrayed, because we chose to save $2,000, for example, instead of having painters come in. And I did it, which of I have not done this, because I knew upfront, don’t get me to paint, it’ll be ugly. But it was like, I knew the mental cost of how angry I would be having to do something.

I don’t enjoy, like at all. But a lot of us don’t. just like, we get her done, we get it out, and then we deal with our spouses who may not be in a good space for a day or two while they’re getting over that. What they value, they lost their time. They had a whole weekend that they lost that they could have been with the kids and they could have been playing games or they could have, whatever it is they were going to do. Instead they were painting or renovating.

And so that there’s a cost with that, anger and that negativity that arises in your mental state when you do something that you don’t love.

Brian (19:13)
I think we live in a society where some of that is expected and it’s also expected that you kind of just suppress it. But I think if you got really honest with yourself, you’ll find that there is a cost to it. And the suppression that you’re doing on that cost is really not helping you and you’re just ignoring it. You really got to get honest with yourself about making sure that you have time for you.

And it’s not a selfish thing. Having time for you is putting on the oxygen mask first so that you can take care of everything else.

Jessilyn (19:47)
Yeah, I love that you said, on with yourself. know we’ve talked about this on another episode previously, but that is something we both had to do. And I absolutely did because I could do everything. And the old Jess would say yes to everything. there were…

There was no one telling me I couldn’t do it because I knew I was smart enough to learn the skill set. But back then I wasn’t smart enough to understand that I didn’t want to learn the skill set. And that was the difference. before I’d fight it, be like, no, I got this. I’ll show you I can do it. Now it’s like, no, I don’t want to do it. Let’s find someone else. Right? was for me, it was a bit of attitude and is definitely a mental shift, but it’s like just standing in that.

I know what I want and what I don’t want and owning that being like, OK, this is not for me and I’m OK with it. I’m OK to hire it out and go do me time, whatever that looks like. Right. Whereas before I felt like, no, I should be doing this and I should be taking care of that and I should reduce my costs. then get rid of that should word and be like, well, what do I enjoy? What makes me happy? What makes my family happy? Right. And in the end, overall health wise,

is better for the whole.

Brian (21:11)
Yeah. Yeah. And like, like you said, should if you have a lot of shoulds in your real estate portfolio, maybe real estate is not right for you. Right. You really need to like, you have to want to do the real estate. All of it. so like, if if you know, if laying floor and properties and fixing and flipping is, like your happy place.

Right. ahead and do that. But I would challenge everybody out there that most people, that’s not their happy place. Like for the large majority of the population, fixing and flipping is not a happy place. It’s stressful. There’s a lot of time constraints. There’s a lot of money involved. It is not a place that most people would want to be. Same thing with tenants. Same thing even with just buying a property. Like we know lots of people who are buying their first property.

and they are stressed, like super, super stressed and there is nothing going wrong. Everything is going well, but it’s, it’s an unknown, right? So if you’re in that boat of like, you have a lot of shoulds, there’s different ways to do real estate for you.

Jessilyn (22:15)
Great. I love this phrase. Stop “should”ing all over yourself. And now it doesn’t mean that real estate is not for you. You just maybe need to find a partner. Right. Find a partner.

Brian (22:18)
Stop shooting all over yourself.

Real estate yourself is not free

Jessilyn (22:26)
like I did. You explained it very well because I loved looking on MLS. I loved looking at houses, going to the properties. That was not stressful for me whatsoever. did not love managing tenants, but yet you have learned how to master it, right? So we’ve partnered on that journey and we’ve realized what works for us. We do what and we do well. What doesn’t, we’re okay to let our partner do. So same thing to our audience. If you know you want to be in real estate because

It’s the best investment ever fine partners that can complement what you don’t like and It’s a win-win for everyone around and that comes not just with real estate But the skill set of it, right and I know we talked about the the skill set like you we talked we talked about repairs and maintenance because that’s an obvious but like if your skill set isn’t say Negotiating then maybe you find a partner who’s really good at finding the deals and maybe you become the money partner or maybe you’re handy and we

We need handy people to be partners to help fix the properties at a better expense or who can understand the expense of that, right? There’s always a give take in it and there’s always a win-win. You just got to make sure that you’re owning what you can and can’t do and you’re willing to let go of what you’re not good at and trusting that your partner will be.

Brian (23:47)
Yeah. And own it before you step into it because otherwise you’re going to go in blind and you’re, you’re going to be, you’re going to be in for a roll of pain after you buy the property. And we know lots of people who went into it with a big starry eyes and then they got into the actual real estate and it was everything they didn’t want. So you really have to, like I, like I said earlier, be honest with yourself before you even.

put a offer down before you even start looking at properties, be honest with like yourself on is real estate right for me? Yeah. We’re doing it yourself right for me. Like, like we’ve talked about, there’s partners, there’s funds out there that you can invest into that are where you can invest, invest directly into real estate, all kinds of things other than doing it yourself.

Jessilyn (24:35)
100%. And I know we covered a lot today, but if you were to pull out the top takeaway of what we discussed today, what would it be?

Brian (24:44)
Measure your time and value your time and actually measure and value it in a real number. Put a real number to it so that you actually know like, am I worth $80 an hour, $100 an hour, $200 an hour? So that you can separate out the, you know, what you should be doing and what you should not be doing.

Jessilyn (25:07)
Yeah, and so I agree, valuing your time is key and it’s critical. And if you value your time and say, let’s use 100, because it’s an easy number. If you value your time at 100 bucks an hour and you know you could hire a painter for 30, don’t devalue yourself based on that. Just like my value is $100 an hour and it’s going to take me X amount of time whereas I could hire a painter, just outsource. It’ll save you a lot of stress. It’ll save you money in the long run.

Brian (25:32)
Yeah, and when you value your time, be honest, don’t do not, like, don’t don’t undervalue yourself purposely. And, the large majority of people out there, including ourselves, tend to like, put ourselves at a lower value than we really are. And, and that will that will just hamper your efforts going forward, because now you think you’re worth less than you actually are. And you won’t hire out the proper people and you won’t make those the proper actions.

So like really value yourself is what it comes down to.

Jessilyn (26:06)
You got it. Thanks for listening to the Life by Design podcast with Jessalyn and Brian. Please don’t forget to like and subscribe and tune in to all of our episodes. Also go to discoverlifebydesign.ca and take our quiz to see what kind of real estate investor are you. Until next time, have a great one.