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Five Reasons Why I Keep My Full Time Job while Investing in Real Estate

by Michael Zuber on January 24, 2012 · 12 comments

  
work vs. investing full time

I have been asked many great questions by the readers of BiggerPockets, but one caught me off guard and caused me to sit back and think about what we are doing: “Why I are you still working and why haven’t you jumped into investing full time?”

I found the question to be very thought provoking, as I have focused on being a full time employee and a part time real estate investor for so long that it feels like part of my DNA.  Part of my target market is other investors who choose to hold a full-time job and want to be passive investors in real estate.  I feel a kinship with them, as I know how hard it is too get started, stay motivated, and continually build a passive income portfolio.

After a lot of thought, I came up with 5 reasons why I am still an employee and not a full-time real estate investor.

The first reason is the most obvious to me.  I love my job, its challenges, and my ability to make a positive impact on a large number of clients, prospects, and colleagues.   My job does require a lot of travel, entails a bunch of stress, and many late nights, but I find the reward of a job well done to be very satisfying.

If I hated my job I guarantee you I wouldn’t be doing it, and I would be focused 100% of the time on real estate investing.

The second reason is that I don’t want a full-time job in real estate.  A lot of the people that I speak with who made the transition from a 9-5 technology job to real estate investing full-time, do so by picking up another source of income.  They could choose to become real estate agents, brokers, appraisers, loan originators, or property managers.

I appreciate these choices but I have zero desire to have one of those jobs.  I would rather have my current job than the headaches of starting a second career framed around one of these jobs.  I want freedom of choice and I don’t see the flexibility long-term by picking up a second career.

The third reason is that we want to continue buying as much distressed real estate as we can.  The income we get from our jobs and our passive income allows us to buy a property every month or so and we don’t want to turn off the flow of deals.

If we stopped working we would become 100% dependent on our passive investors, and I don’t want our growth limited by relying only on passive investors.

By leveraging income from our jobs, our existing rentals, and our passive investors, we can grow at our measured and controlled pace.  I want to make sure we close every deal we find, and I don’t want to have any regrets when it comes time to stop buying.  The last words I want to utter are “I wish I bought more distressed real estate”.

The fourth reason for not jumping in full-time is that I hate to sell real estate that is producing positive cash flow.  Our model keys on extracting most if not all our initial capital after we repair and lease a property.   By doing so we secure returns north of 40% consistently and thus recycle our capital into the next deal.

Another factor of the current market is that only forced sellers are listing properties.  I don’t want one of our repaired and leased properties to compete with the current market of junkie properties.  Someday I will sell, but it will be in a seller’s market and not a buyer’s market.

The final factor of our motivation to keep our full-time jobs is that our income from our employers shows that we have alternative sources of capital to repay our private investors, as we take on more distressed assets.  Said simply, we can pay for repairs out of our income, thus reducing any perceived risk our passive investors might feel.  We don’t run a business that requires the next investor’s funds to repair the next purchase.  That is why our model leverages our cash to buy and repair a property before we look to secure a passive investor and recycle our capital.

I am sure sometime in the future we will make the leap from employees to full-time investors, but until then we will continue sharing our story and focus on growing our portfolio our way.

Good Investing

Photo by Jere Keys, www.jerekeys.com

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{ 12 comments… read them below or add one }

Steve January 24, 2012 at 9:47 am

Good points Mike. My question for you: if you would have quit your job in 2008 to focus on real estate full time do you think your net worth would be greater or lower then it is now?

Not that it really matters too much, just curious what you think on that side of the equation.

Reply

Mike Z January 24, 2012 at 10:37 am

Hi Steve

You always have great Question. First if I quit in 2008 I am sure I could have made a living but I would have had to change my model at least a litlle. For example I would have likely had to sell 2 or 3 deals a year. I also suspect I would have had to look for Passive Investors more aggressively to continue the pipeline of deals.

I think my networth and cash flow would be close but I could be wrong as I could see scenarios where I would be light years a head (Now I am depressed (Just Kidding))

Keep setting the So Cal market on fire with your Flips and Rentals!!!

Reply

Steve January 24, 2012 at 3:16 pm

My question was maybe a bit unfair… I asked about a year favoring an investor. If I would have asked if you quit in 2005, the answer would have probably have been worse off? Or at leas you would imagine some dooms day scenarios.

Your strategy is great. I sometimes envy you for having a property manager to do (most of) your dirty work.

Reply

Mike Z January 24, 2012 at 3:18 pm

Steve,

No worries. I appreciate the question as it is pretty thought provoking.

In all fairness I am jealous of what you have done and are doing in So Cal.

Keep it up

Greg January 24, 2012 at 10:12 am

Sounds great. That is what my wife and I are on the verge of doing: becoming real estate investors while I continue to work my day job. I feel this takes the pressure off making too much money in real estate, but instead being able to thoroughly vet potential tenants, warm up slowly to do’s and don’t’s, and eventually become very profitable investors.

Reply

Mike Z January 24, 2012 at 10:39 am

Greg

SOunds like a plan. Real Estate is hard enough without the added stress of having to put food on the table and pay bills.

Start positive momentum now and it will build on itself going forward

Good Investing

Reply

Sharon Vornholt January 25, 2012 at 7:58 am

Mike – I think you have nailed down the really big thing here, and that is “what is your ideal life?” For you, it is to keep a job that you love and do real estate part time. I think that is a question that each individual has to answer for themselves.

A mom with small children might want nothing more than to stay home with the kids for a few years. Leaving that 9 to 5 corporate job behind at this time in her life while being able to replace some or all of her income with real estate might be her “ideal life”.

In the end, each individual has to find the answer to that question and that will be the right choice for them.

Reply

Al Williamson January 26, 2012 at 3:12 pm

Mike, thanks for doing some good thinking for me. You did my homework – thanks.

Reply

Mike Z January 26, 2012 at 7:24 pm

Al,

You are welcome

Good Investing

Reply

cwilson71 February 8, 2012 at 1:03 pm

I don’t know why I didn’t see this earlier as I think I may have asked you this very question as one of my first posts here on bigger pockets. So, thanks so much for your post! I was thinking about why you were still working before reading this and I was thinking it probably had more to do with tax advantages more than anything but I see that you also love your technology career.

I am also in tech but have reached the point of burnout after 18 or so years as a systems and network engineer. I now find myself thinking, “If I leave now, I won’t be able to get financing to start investing.” and I can see it being sort of a vicious cycle for people in my situation.

Anyway, I am babbling. Hopefully I get off the fence and get out to Denver and meet you next month.

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Jason Homes February 16, 2012 at 10:08 pm

Interesting points. I can’t help but admire your passion for your work and real estate.

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Jason Lavis January 2, 2013 at 5:20 am

I admire your dedication. I think also, after the early learning curve of any industry, sticking to one method of employment can get stale. By having different jobs, there are more challenges, and more new experiences to keep busy with. Maybe this is a step up from being a serial achiever… A concurrent serial achiever

Reply

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