Join Early Retirement Today
Reply
 
Thread Tools Display Modes
Best use of time from strictly financial perspective
Old 05-23-2011, 06:01 AM   #1
Recycles dryer sheets
 
Join Date: Jun 2008
Posts: 217
Best use of time from strictly financial perspective

I have been a real estate investor for just over two years. This question centers around “opportunity cost.” I ALSO own and work in a lawn care business, own and run a small web design business, as well as own and manage several single family and multi-family apartment buildings. (43 units)

When I’m actually earning income in the lawn care business, my gross hourly rate is $60-$70 per hour before expenses. (and expenses are pretty high in that business – fuel, equipment, insurance, etc.). In my web design it’s hard to say. I don’t make ANYTHING “running” it on a per hour basis, but when I’m doing a paid task, it’s $50-$100 per hour with VERY low overhead.

Now, in my rental RE business, because I’m not trained in carpentry, handyman stuff, etc., I tend to be fairly inefficient in those areas so I hire out. In addition, my cracker jack painter gets $20 per hour (and he’s good, and he’s FAST). My two handymen get $16 per hour. I have a “higher end” carpentry team that gets $25-$30 per man-hour. I want to make an intelligent decision on where to spend my time.
hotwired is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 05-23-2011, 06:06 AM   #2
Recycles dryer sheets
 
Join Date: Jun 2008
Posts: 217
whoops .. forgot the last paragraph ....

Where I’m “stuck” is this: When I “avoid” paying my handyman $16 per hour, I’m “making” $16 per hour by “saving” $16 per hour. (A penny saved is a penny earned) It’s very black and white. (let’s forget for now the fact that it will take me 1.5 hours to do whatever they do in an hour!). When I’m working in my lawn care business, earning $65 per man-hour … am I REALLY making $65 that for comparison purposes? Or do I want to find out my “after expense” hourly rate? I know the answer is simple but I’m just STUCK! I usually bring my lawn care business income down to "zero" becuase I sub much of it out, and pay ourselves a salary, but I know my "time value" in that company is worth more than the "before tax zero" bottom line...Thanks to any of you wonderful numbers people out there who can bump me in the right direction.
hotwired is offline   Reply With Quote
Old 05-23-2011, 06:13 AM   #3
Full time employment: Posting here.
 
Join Date: Jun 2007
Posts: 567
Spend your time developing your business(es). You may "save" $16 an hour if you do your own carpentry but might have better spent that hour (and a half) doing sales development for the lawn care company or shopping for that next multi-unit.

Focusing on cost cutting isn't going to bring in new money.
Webzter is offline   Reply With Quote
Old 05-23-2011, 07:56 AM   #4
Thinks s/he gets paid by the post
 
Join Date: Dec 2010
Location: USA
Posts: 1,050
Which one do you enjoy more?

Depending on where you live, lawn care might not be year round where as web design and landlording is year round. Can any one earn enough to cover your living expenses and allow savings for retirement?

If you sub everything out, what can you make?

If you did all the work I would guess web design assuming you can get 1000 or more billable hours.

I've recently increased my rental units and feel the income is very nice, but know it's a part time job/business for me while maintaining a full time job. What type of cashflow do you have with 43 units? Depending on the cashflow, I think I could retire on that alone.
Aiming_4_55 is offline   Reply With Quote
Old 05-23-2011, 08:51 AM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
ziggy29's Avatar
 
Join Date: Oct 2005
Location: North Oregon Coast
Posts: 16,483
Quote:
Originally Posted by hotwired View Post
whoops .. forgot the last paragraph ....

Where I’m “stuck” is this: When I “avoid” paying my handyman $16 per hour, I’m “making” $16 per hour by “saving” $16 per hour. (A penny saved is a penny earned) It’s very black and white. (let’s forget for now the fact that it will take me 1.5 hours to do whatever they do in an hour!).
I guess what I'd say, then, is that you are valuing your time at $10.67 per hour since you would be working for 1.5 hours to save $16. I guess from a "strictly financial perspective" (as you wrote in the subject), this can be a trade-off worth making but frankly, unless I enjoyed the DIY handyman work, if I could afford it I think I'd value my time a little more than this, bite the bullet and "pay the man." And from a strictly financial perspective, if you could be using your time in ways that would net you more than $10.67 per hour, again it would make financial sense to do the "more value added" work and pay someone else to do the things that provide a lower return.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
ziggy29 is offline   Reply With Quote
Old 05-23-2011, 09:16 AM   #6
Full time employment: Posting here.
Patrick's Avatar
 
Join Date: Mar 2005
Location: Northern, Florida
Posts: 925
Quote:
Originally Posted by hotwired View Post
whoops .. forgot the last paragraph ....

When I’m working in my lawn care business, earning $65 per man-hour … am I REALLY making $65 that for comparison purposes? Or do I want to find out my “after expense” hourly rate? I know the answer is simple but I’m just STUCK! I usually bring my lawn care business income down to "zero" becuase I sub much of it out, and pay ourselves a salary, but I know my "time value" in that company is worth more than the "before tax zero" bottom line...Thanks to any of you wonderful numbers people out there who can bump me in the right direction.
Yes, find your "after expenses" hourly rate. Take the cost of the equipment and divide it by the number of hours it will last. Figure out how much per hour it costs for fuel and oil, insurance, etc. Add up all the hourly numbers and subtract them from your $65 to get your real hourly rate. I suspect it's quite a bit more than $16/hour. Also, if you work more hours per week, your hourly rate should go up because the fixed expenses remain the same and are divided by more hours.

Try to max out your number of web design jobs as that seems to be the area where you make the most money per hour.

After that, I would take a look at spending as many hours as possible in the lawn care business (assuming you net more than you pay the handyman) during the peak lawncare months, then use the "spare" time from decreased lawncare responsibilities during the slow months to do the "handyman" tasks myself. Also, when you do the handyman tasks a few times you will become much more efficient at them and will get them done in less time, increasing your "hourly rate" for those jobs.
__________________
Retired in 2006 at age 49.

"Who among us is smart enough to learn from the mistakes of others?" - Voltaire
Patrick is offline   Reply With Quote
Reply

Tags
opportunity cost, time management


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Please keep Everything in perspective novaman Health and Early Retirement 17 10-30-2008 11:11 PM
Some perspective BOBOT FIRE and Money 19 09-19-2008 03:18 PM
Some perspective newporttony FIRE and Money 199 07-08-2008 07:25 AM
Soros Wants Energy Funds Regulated More Strictly haha FIRE and Money 1 06-04-2008 05:51 AM

» Quick Links

 
All times are GMT -6. The time now is 01:03 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.