If you are one of those folks who want to starting a business, you are part of a much larger crowd. It is estimated that at least half of the adult population has considered going down the path to entrepreneurship at one time or another. There are also a whole lot of folks in that group that have given some serious thought to choosing real estate investing as their business. If you are here on BiggerPockets that probably includes you.
Why Real Estate Investing?
I think this can be summed up in one sentence.
“People understand real estate”
We all have to live somewhere, and the vast majority of us will end up in a single family home at some point. Because of this, the “house business” is one that most people feel like they can do.
There is another reason too…
Many people are already in related careers. For those folks that are working in the mortgage industry, construction trades, appraisals, or any number of other similar careers, that transition to real estate investing just seems to come naturally.
The Top 5 Reasons for Wanting To Start a Business
If you ask budding entrepreneurs why they want to start their own business, here are the top 5 reasons that come up consistently.
- They are looking for a better work / life balance
- They want to be their own boss
- They dream of turning a hobby into a business
- They just need some extra cash so they need a “side hustle” to achieve that goal
- They think their life will suddenly become easier, and they will have more time and freedom.
Getting a Dose of Reality
Any entrepreneur knows that building a business brings no greater joy when things are working. They also know that almost all of them have spent a lot of sleepless nights worrying about that same business. So what is the reality of owning your own business?
1. Finding Better Work / Life Balance
There is no doubt that you will have more flexibility as an entrepreneur. Does this translate into having more time for yourself and your family? Probably not in most cases, especially if this is a full time business and you are the “bread winner” of the family. You will be able to slip out to see your child’s school program during the middle of the day in most cases. But you will also be burning the midnight oil instead of watching TV with the family more often than not especially in the early years.
If you are able to put systems and procedures into place early on, you will be much more successful at finding that work balance you crave. My advice is to “outsource early and outsource as much as you can”.
2. You Want to Be Your Own Boss
I have to tell you that this sounds a whole lot sexier than it actually is. It’s true; you don’t have a boss to report to. There is no one in the corporate office standing over your shoulder. What you have in reality is a whole lot of bosses (if you are lucky). They are called customers and clients. You will need to work very hard to find them, keep them happy and meet all of their needs.
3. You Dream of Turning a Hobby into a Business
Hobbies are fun. They are something we like to “escape into” for pleasure. But the reality of turning a hobby into something that can be a profitable business is a whole lot different.
If you love crafts, making cakes or fishing, those hobbies could all be made into businesses. But the reality of making a profitable, scalable business out of those niches might prove to be very difficult. Once you factor in hiring, managing employees, marketing, finances and mundane tasks like taking out the trash (all of which you will likely be doing in the beginning) the “fun” in this venture is no-where to be seen.
4. Creating Your “Side Hustle” for Extra Cash
This is actually a great way to test your business idea and find out if you will like being a business owner. Creating a side business is a great way for real estate investors to begin just so long as you are clear on the challenges you will face. This is in fact how most of us started.
It can be pretty tough once you have put in a full day (and week) at your regular job, to add 15-20 additional hours for your business to your already packed schedule. It’s important that your family be onboard with this idea. What little free time you used to have, will be gone at least for a while.
There are also a lot of real estate investors that love their “day job” and have no intention of quitting. They just want to create an extra income stream and have found ways to make that happen. Most of these savvy investors have created systems and procedures, are outsourcing a great deal of the work and have property managers to help out.
5. Your Life Will Suddenly Become Easier; You Will Have More Freedom and Time
This is the one that is probably hardest to achieve. People have this vision of “lounging on the beach” with a laptop, or being able to travel for extended periods of time. I’m sure you have all seen those ads.
The reality of this situation is that it just isn’t going to happen anytime soon. Don’t get me wrong; I love being in business for myself. But the truth is that you will work harder in those early years and possibly for many years than you ever worked in your 9 to 5 job.
But if you play your cards right, you can really create the freedom and the lifestyle you want that you could never have working for someone else. The important lesson here is to go into this with your eyes wide open. Be aware of the realities and the challenges you will surely face, and then just go for it. Go ahead and create your perfect life.
Photo: Esparta PalmaSo You Want to Start A Business? by Sharon Vornholt