During June, I decided to do something I’d been thinking about for a long time: I wrote everything down.
Not everything as in "brushed teeth: three minutes," but I made a spreadsheet with different columns on it and tried to allocate my business time, by quarter-hour, just to get an idea of where my time goes. I feel like I work constantly and am not rich yet, so part of the goal was to provide a numerical approximation of the words "time" and "rich." I also constantly say that part of the reason I feel like my real estate business is growing slowly is because I’m a writer, so I wanted to see how much time I was spending on what career.
Finally, I wanted to get a sense of how much time an actual deal takes me. Once I capture a client, how hard do I work on the project? What’s the return?
The results were fascinating to me — and will perhaps even be interesting to you, whether you work a nine-to-five job and feel like "five" is constantly getting redefined as "seven," or whether you work a looser real estate life where you can work any hours that you want but are constantly jumping to answer "just one more e-mail."
First, I work about 65 hours a week. This might be a slightly unfair comparison to a commuter life, because I’m counting transportation as "work" even though it might also offer other benefits — for example, I say I was "working" the 10 hours I walked last month in the course of showing properties, but that’s probably also "fitness." I spent 30 hours on my beach house. A toy? An investment property? In my mind it’s somewhere in between, but I say I was "working."
Second, when I am in the zone — and I’m going to define that as working on a real estate deal that closes and ends in a paycheck — I make in the range of $140 to $200 an hour. To come up with the $200, I used my rentals because they’ve closed and are easy to measure. My sale listing is harder, but since the time I spend on it averages out to about an hour a day and I have an expectation of six months on market, that would put me right about $140 an hour if it closes when I think it will.
Now, before everyone on the Internet reads this and freaks out about how much money real estate brokers make, let me point out that a lot of time is spent working when one is not in the zone. A lot is spent running from one end of the court to the other, trying hard to take a swipe at a ball that is in somebody else’s hands. And unlike, say, a lawyer in a firm, I have to take a chunk of marketing expenses straight out of my own billables. And, of course, there’s the GIANT risk that some of the "billable" time never gets paid at all.
A very active client who does not close is a commitment of an hour a day, every day — I am averaging this out, but there was no day in June when I did not work. (Saturdays were extremely light, about an hour a day of e-mail, and before you start to feel really sorry for me remember this is a career where I don’t have to start work until 10 a.m. if I don’t want to.)
Now, of course there are questions of time allocation here. Is time I spend promoting my book advancing my writing career, or is it time spent prospecting for real estate clients? In general, I spend about a quarter of my time "publishing" — researching real estate stories, or writing them, or editing somebody else’s, or being interviewed for some piece on the state of the market, or even — you know the "B" word is coming — blogging. Because I came from journalism, some of that stuff I get paid for, though it sure ain’t in the range of $140 to $200 an hour.
In the past, when I was strictly a writer and had periods where I freelanced, my rule of thumb was that each year I would make 1,000 times my hourly rate. So if I was charging $50 an hour, my expectation was that I would make $50,000 for the year. The reasoning behind this was that I (or in fact any experienced freelancer) could bill 1,000 hours for year, spending somewhere in the neighborhood of 2,000 hours to obtain that amount of work and support it — which is 3,000 hours a year, which averages out to a "standard" white-collar, 60-hour week.
In real estate, though, there’s more support time for each hour of "billable" time — at least for a newbie. So my challenge is to figure out how much support time for billable time there is, and of course to improve that ratio. But at least I now have a point of reference to start from.
Alison Rogers is a licensed salesperson and author of "Diary of a Real Estate Rookie."
What’s your opinion? Leave your comments below or send a letter to the editor. To contact the writer, click the byline at the top of the story.