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.
Photo by Jere Keys, www.jerekeys.com