Over the years, we’ve had the best insights into our lives when we’ve thoroughly questioned ourselves.
Often, this type of reflection would come up when we had mentors we respect push us to make uncomfortable decisions that we’d been avoiding.
I remember one of our best mentors, Bill Glazer, challenged us to think differently about our lives and it really helped us gain clarity around what was important and what wasn’t.
Another one of our mentors and now good friend, Rob Minton, once told us to either hire our first assistant or to never come back to his mastermind meeting. We had to seriously question ourselves at that moment and it was life-changing for us. In this month’s newsletter, Nick shares more of that particular story.
Today, we believe that if we ask good enough questions about our lives, our investing, our money-making, and our businesses, we can literally schedule our success.
Let’s break this up into three steps…
Are you just going through the daily motions of life? Are you questioning what you’re spending your time on?
What are your personal critical financial efficiency questions? Do you have any?
For example, something you may want to ask yourself is this…
Where can you spend the least amount of work and get the maximum amount of gains?
One of the primary reasons we like real estate is that while the vast majority of the population thinks owning income property is a pain in the ass, we believe that when you break it down, it’s the most valuable use of your time.
One year, a particular property was causing Nick some stress. I can’t recall the specifics, but it was the normal mix of unexpected vacancies and unexpected urgent maintenance. Everything just seemed to happen all at once for him on this property.
We both went through the normal process of complaining about the property. But then he broke it down like this…
He said he realized that if he added up all the cash flow, all the equity gains, and all the appreciation on this property for just the last year and then divided it by the amount of time he spent on the phone dealing with all the issues, this property was the most valuable use of his time, by far!
And of course, he was 100% right.
If we take 5% appreciation on a $350,000 property, it equals $17,500. And the cash flow on that particular property was about $700 per month. The equity build-up was approximately $6,000. That’s a total of $31,900 in gross revenues for that particular property that year.
Nick concluded that he handled all the issues in less than two hours in total phone time and approximately seven hours of total visits to the property that year.
So, if you take his nine hours and figure out an hourly rate for his efforts ($31,9000 divided by 9 hours) it works out to $3,544/hour.
Not bad. Of course, this is a gross number, not a net after-tax number, but you get the idea. These numbers are from a few years ago now, but even today, the numbers are still a no-brainer to us.
The trouble with real estate is that you never get advanced warning of any vacancies or issues, so anytime something comes up it always feels like an unexpected stressor in life.
But with the right perspective, we can easily conclude that the hourly rate for time spent dealing with real estate has a massive return. It definitely qualifies as something we can spend a little time on and achieve a maximum return.
Here’s another question we ask ourselves regularly:
What few activities drive 80% or more of our results? Financially or otherwise.
What few activities give us the most family memories? How can we do more of those?
What few activities give us the most relaxation? Where can we schedule more of that?
What few activities make us the happiest? Can we schedule those more often?
These things can be super simple. For example, years ago I noticed that on all of the summer long weekends my kids and their friends would love a good firework show.
They loved the pool, the BBQ, and the desserts, but the fireworks always stole the show.
So, it didn’t matter if we were at a friend’s cottage, or at home in Oakville, I would always double down (even when money was tight) on the most fireworks we could possibly afford.
One year, we discovered that you could get semi-pro fireworks at a place in Oakville that does shows for Maples Leafs Sports and Entertainment. I immediately bought the biggest and baddest ones they had.
When we set off those fireworks that summer, the kids and their friends talked about it for days afterwards. At a friend’s cottage, we had a set that went up 200 feet high and 200 feet wide. They made such a boom across the lake that cottagers on the other side began screaming with joy. To this day, we all talk about that firework show, and we continue to go big on fireworks.
(Quick aside: one year, we almost went too big, and Nick almost started a fire on his neighbour’s roof, but it ended well, no fire and no injuries).
Here’s another question that has served us well.
What work can you do today that will earn you revenue tomorrow?
We’re often so focused on making money now that we rarely think about making money in the future.
Another mentor, Dan S. Kennedy, often talks about making “now income” and “future income.”
That idea has always stuck. What can we do today that will earn you income tomorrow? Perhaps it’s investing time in learning a new skill or working on content for your website or creating that book that you’ve talked about for years.
We like to end each day by having worked on something that produces “now income” and at least one item that will produce “future income.”
It’s another reason why we like real estate so much. It automatically creates “future income” for us by managing it “now.”
Where else can you apply this?
The next question that has helped propel us forward is this…
Which very specific data can we measure to ensure we’re going to earn income or grow our family wealth?
Is it a certain equity growth per month ratio? Is it a certain savings amount? Is it hours we spend on our career and in our job? Is it a certain activity that we do each week?
Very few people are good at extrapolating their activities into future results. You really have to break it down.
It’s why most Canadians don’t realize the impact one good income property can have on their lives.
Here’s an exercise for you…
If you own one, two, or ten properties right now, take the gross value of them and apply an appreciation rate and map out the value of that portfolio 10, 15, 20, and 25 years from now.
Let’s say you own two income properties that are each worth $750,000 today, for a total of $1,500,000.
If we use a 5% appreciation rate, after ten years, they’re worth $2,443,342.
After 15 years, they’re worth $3,118,392. After 20 years, they more than double to $3,979,947.
And after 25, they’re worth $5,079,532. At 5% a year, the portfolio more than triples in value over 25 years.
Here are a couple more questions that we like to revisit often:
What are our single points of failure (with income, real estate, business, family) and how fast can we have backups in place?
Having a single point of failure in anything we do is one of our biggest concerns. We’re constantly trying to have backups in every important aspect of our lives.
Are there any trends in the marketplace that we can ride?
We realized the value of trends after university when sales jobs in the software industry were paying more than triple that of sales jobs in other industries. Just by being “on-trend,” we could earn a lot more money doing the exact same work (or less).
Many Canadians have never mapped out their money-making process. And for many, it’s simply:
Get up, go to work, repeat.
But we can be much better and more sophisticated than that.
Can we take some of the answers from the above questions and schedule them into our lives to ensure they get done?
See that picture of us with Dan S. Kennedy? Behind us was the state of our money-making system. It’s gotten much more advanced and evolved since then, but you should know it didn’t start like that.
It began with a very simple idea.
Buy properties, keep them, and build income and equity.
Work with investors, share value, and build income and equity.
Then over the years, we broke down each component.
For example, how would we work with investors? How would we attract investors to us? What strategies would we use? How would we measure weekly progress? What metrics would be important?
If you’ve never grabbed a blank piece of paper and mapped out your current money-making systems, do it today. It’s a worthwhile exercise. It will expose limitations and perhaps inspire new ideas.
At the very least, what it does for us, is expose weaknesses that we can begin addressing.
In our twenties, we didn’t have any “annual priorities” mapped out.
But by focusing on the above questions, we were able to identify some items that required our attention.
For example, early on it was buying the next property. So, we made sure that all the activities required to buy that property got priority in our calendars.
So much so that at one point I was looking for good rental properties during my lunch hour (which I extended to two hours), after dinner on weeknights, and on weekends.
I remember early on, printing out MapQuest maps (remember MapQuest) and laying them out on my kitchen floor to put them in proper order, stapling property listings to each map, and then going out with my stack of papers to drive by properties for hours to find a winner.
Some of my friends literally laughed at me during this time. But I had identified this activity as critical to my future and didn’t care.
Today, we have many priority items that need to get scheduled, and we break them out one year in advance. So, in November or early December each year, we list out all of the priority items that need to be handled over the next year, and we put them into our calendars first.
This also includes non-income but high-priority activities like family vacations, date nights with our wives, continuing education, etc.
Next, we’ll pick up the weekly metrics we can use to monitor our progress on the most important annual priorities. We’ll review those each week without fail. Literally, in the last ten years, we’ve only missed reviewing those items perhaps 2-3 times a year.
We also block off certain times each week for the most important “now income” and “future income” activities. This allows us to say no to a lot of unimportant tasks because we just don’t have time for them and it forces us to focus on what’s important.
Creating a weekly schedule that has the most important tasks clearly identified has created a rhythm in our lives. We know that by sticking to that schedule, at the end of the year we’ll have certain results, even if we don’t see much progress for a few weeks.
Instead of getting frustrated at the lack of progress in the short-term, we’ve come to realize that sticking to a plan long-term almost guarantees our results.
It’s almost like by using good questions, mapping out our life’s money-making systems, and then building a schedule around it, we can create success automatically.
We can be happier, ignore a lot of noise, and ultimately live life on our own terms!
