August 2

How to value your time as a buy-to-let landlord

Removing the emotion from your property investment

In my last blog, I looked at the difference between being a buy-to-let landlord and a property investor. This post looks at something most buy-to-let landlords don’t appreciate: the value of their time. Only once you understand how valuable your time is. You can take the logical decision whether to become a full-time DIY buy-to-let landlord. Or outsource the property management side of property investment.

Not all time is of equal value

An hour is an hour is an hour, right? Wrong! Not all time has equal value. If you’ve ever been asked the question “if you could have an hour to spend with anyone from your past, who would it be?” you’ll understand what I mean. But that doesn’t mean we can’t put a meaningful value on the majority of our time.

Why your time is important

For most property investors, the idea is to create an income that will allow them to free their time and do what they want to do. Whether deliberately invested in property as a buy-to-let opportunity, fallen into property investment accidentally (perhaps you’ve inherited a property), or decided on a let-to-rent strategy, you’ll say no to becoming a buy-to-let landlord.
Let’s take the example of decorating a room. If this will take you a day and a half to do and you earn £30 an hour in your normal job, it works out at a comparative cost of £360. A professional painter might charge, let’s say, £200 to do the job, or charge £30 an hour but only take eight hours (a total of £240). Either way, the result is the same: you’re better off outsourcing the work and keeping your time as your own.
You’ll be surprised how many buy-to-let landlords haven’t done this basic calculation and think they are saving money by doing all the property management tasks themselves.

Work with other things that are as valuable or have more values

If you’re spending all your time on property management, you won’t have any left for doing things that are also as valuable or have more values. Take researching property investment opportunities as an example. You might spend a day or two, or even longer, examine and analyse a property investment. You might decide not to go ahead, or after all the due diligence work you might decide to make the investment.
On the one hand, the time you’ve spent has saved you from making a poor investment; on the other, those couple of days of research might produce a property investment that pays thousands in rental income for dozens of years − that’s a hidden return from unpaid time. If you are wrapped up in property management. you might not have the time to make these good property investment decisions.

How much is your time worth?

An easy way to figure out what your time is really worth is to divide your gross salary by 2,080 (40 hours per week, 52 weeks in the year). For example, if your salary is £35,000, then an hour of your time is worth £16.82.
The buy-to-let landlord who makes a net of expenses rental income of £500 per month. But spends just seven hours per week on property management, is making the equivalent to £16.48 per hour before tax.
By outsourcing property management and becoming a pure property investor who spends an hour every month talking to their property management company that does all the work for them, might be paying, say, £200 for those services.  Effectively, the property investor is making £200 per hour. Now that is real value for money.

The real value of time

For most property investors, the value realised by outsourcing the property management side of their property investment business is not measured my monetary value. Those few hours give you extra time with your children and grandchildren, other family members and friends. It gives you the time to relax, unwind, and do the things that really matter to you.
So, don’t regret never making time for that special person or thing. Know the real value of your time, and you’ll always increase its value. Call the team on +44 1522 503 717 today.
Cheers,
Karen Nicholson


Tags

buy-to-let landlord, property investment


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