Real Estate Investing Basics

Quit Your Day Job and Find Financial Freedom: Here’s How to Become a Real Estate Investor (Full-Time!)

Expertise: Landlording & Rental Properties, Personal Development, Real Estate News & Commentary, Business Management, Flipping Houses, Mortgages & Creative Financing, Real Estate Deal Analysis & Advice, Real Estate Wholesaling, Personal Finance, Real Estate Marketing, AskBP, Real Estate Investing Basics
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Real estate has some tremendous superpowers—not the least of which is its ability to help you find financial freedom and leave your terrible day job. Do you want to travel the world? Dedicate more time to volunteer efforts? Focus on raising your kids? A thriving real estate business can be the key.

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But there’s a catch: You have to really love real estate. Just because you’re ditching the nine to five doesn’t mean real estate investors don’t work. They just have more freedom to arrange their lives in the way that best suits them.

Should You Quit Your Job to Pursue Real Estate?

Before we dive into the nitty-gritty of financial freedom through real estate, let’s discuss whether quitting your job is truly the best solution for you.

Ideally, you should find what you love to do in life more than anything else and do that for a career. If that means teaching high school math, teach high school math. If that means traveling the world, then find a job that travels the world.

And if that means investing in real estate for a career… then invest in real estate for a career. Because full-time real estate investors still work. They:

  • Talk with troubled homeowners
  • Send out massive amounts of direct mail
  • Network with established real estate investors.

Does that sound like something you’d hate? Everyone can, and should, include real estate investing as part of their strategy for retirement and wealth building. But full-time real estate is a full-time commitment.

Ready to dive into real estate investing as a full-time career? Here’s your path to financial freedom.

Educate Yourself

If you’re unfamiliar with real estate investing, brush up on your basics. Do this before you even consider dipping a toe in the full-time waters.

Start by deciding which strategy will be your focus.

Wholesaling

This process is where you locate amazing deals, put them under contract, and sell that contract to an investor or house flipper—and make a sizable profit doing so. By doing so, you’ll master the most valuable skill for a real estate investor to possess: how to buy right.

Wholesaling works. However, while wholesaling might be fairly "simple"—it's not easy or quick. It takes hard work, skill, motivation, and certain personality traits (like the ability to negotiate). Consistently finding deals that are worth pursuing can be a time-consuming job.

House Flipping

This can be an exciting and profitable way to earn income. You've probably seen flipping TV shows where investors turn a dump into a mansion in three weeks and profit hundreds of thousands of dollars. While this is possible, don't enter real estate expecting this to happen to you. Make sure you understand both construction and the market before starting a fix and flip business.

Flipping houses is a lot of fun, and fantastic profits can be made. However, there are some important considerations to make before jumping in head first:

  • How will you fund your flipping business if you don’t have a job?
  • How will you make your monthly payments if you don’t have a job?
  • Is your location conducive to flipping?

Buy and Hold Cash Flow Investing

Buy and hold cash flow investing produces a stable of cash-flowing properties. That can add up quickly to provide significant income. This can be a great option for long-term investing, but keep in mind that you’ll need significant monetary reserves when things go wrong.

Educating yourself goes way beyond simply picking your favorite real estate strategy.

  • Sign up for BiggerPockets. If you are reading this blog post but haven’t signed up for a free account, stop what you are doing right now and sign up. Trust me.
  • Read the Ultimate Beginner’s Guide to Real Estate Investing. This is a quick, free online training manual that we put together to help you build a solid foundation for your future in real estate. Internalize it. Make it make sense. And if you don’t understand something, go ask about it on the BiggerPockets Forums.
  • Fully fill out your BiggerPockets profile. Include a nice picture of your face. Detail your history, your goals, and your wants/desires on your profile. People look at these things! Make it count.
  • Introduce yourself to the community in the New Member Introduction Forum.
  • Ask questions and offer ideas. If you aren’t an active member of the Forums, you are simply missing out on one of the most powerful tools on the planet for becoming a real estate investor. Ask questions, get answers. Answer questions, get smarter. Build your online brand. People will start to follow you and help you out. They will give you honest feedback on your ideas, your plans, your goals, your timelines, and more.

Learn about your local market, too. Are jobs growing? Incomes? What does the population look like? Network with local investors and real estate agents—and make sure to visit homes for sale in your area before you start bidding. Knowing what your market offers in different price ranges is essential knowledge for all real estate investors, regardless of your strategy.

Create a Customized Business Plan

A business plan works like a blueprint created by an architect.

Keep in mind: This plan is doomed to be flawed, despite your best preparation and education. Expect to change your plan as your understanding of the local market—and your abilities and interests—change.

Here’s what your business plan needs to address:

  1. What is the purpose and the model for my business?
  2. How will I raise capital for operations and for acquisitions?
  3. What is a good deal? What objective deal criteria will I stick to?
  4. Who is my target end-user? What do they really want? Where do they live?
  5. How will I find prospective deals? How will I convert them to purchases?

Too many beginners look for answers before they even ask the right questions. Phrasing the major cornerstones of a business plan as questions means that naturally, you will try to answer them. And when you lack good answers, go back to your educational resources or local professionals.

Think About Your Finances, Too

If you’re ditching your job for real estate, you’ll need a plan for that, too. Quitting your job is a big deal—with big financial consequences. Entering the world of self-employment is a risky venture. Most startup companies fail, largely because they run out of money.

If you are looking to quit your job you are going to need to make some sacrifices—starting with your living expenses.

  • Do you really need cable TV?
  • How about that car payment?
  • Gym membership?
  • Starbucks?

If you are serious about making real estate investing a full-time gig, it’s time to cut your expenses. Decide right now what is essential and what is luxury. You can always add the luxury stuff back in later.

In addition to cutting your expenses, you’ll also need cash. Having a large financial cushion is imperative. The amount you’ll need is largely dependent on your personal situation, but try to have at least six months of savings before quitting your job.

One additional point to make here: a great sacrifice to make is your home itself. Buying a small multifamily property, living in one unit, and renting the other unit out (a strategy called house hacking) is a great way to live cheap—or free—and learn the real estate investing business.

Build Your Team and Network

Identifying and recruiting excellent team members is key to financial freedom through real estate. Here is a list of my most important members, why they’re important, and how I plan to recruit the right people for this role.

Money sources

Without money sources, the rest of your team members won’t matter. You can’t fix a fix and flip unless you can buy a fix and flip.

Build banking relationships with lenders who offer a home equity line of credit (HELOC), and work with private lenders to fund the balance of your capital needs. Unfortunately, finding a private lender is not easy or fast. It can take "slow dances" with potential lenders before one or more will commit their money.

You also want someone you trust, with long-term goals that align with yours. Long-term partnerships are essential to real estate investing.

General Contractor/Project Manager

Unless you're skilled in construction, you'll need a contractor or project manager who can analyze repair costs, avoid large problems, and manage a rehab project from start to finish.

Here are some qualities to look for in a partner:

  • Competency: Your contractor must be skilled in the world of construction. They should know costs and best practices for all of the trades you will be hiring—from plumbers to electricians. They also need to have all of the proper licenses and liability insurance.
  • Honesty: Can you trust them? Do you pick up on dishonesty, even in small things?
  • Organizational skills: Can this person handle many moving parts without dropping the ball? Maybe they’re old school with a planner and paper or totally digital. Whatever the case, look for a strong system.
  • Low overhead: You’re not paying for big trucks, extra office space, or fancy staff to feed your contractor’s ego. You want lean, cut-to-the-bone overhead.
  • Fun to be around: You’ll be talking to this person a lot. Will you have fun? Or will you dread having to talk with him?

Broker and Expert Listing Agent

You won’t make money without buying and selling your inventory. So, you need to know everything possible about how to move houses as fast as possible and for top price.

Some real estate investors choose to become licensed real estate agents—and there's nothing wrong with that. But if that's not an avenue you're ready to pursue (yet), partnering with an investor-friendly agent is key. Here's what your agent should do:

  • Consult with you while negotiating properties you’re buying
  • Providing estimates of after repair value (ARV), including lists of the best comps
  • Consulting on design, layout, paint colors, finishes, and other rehab choices
  • Staging the house for showing
  • Taking professional-quality pictures for marketing
  • Marketing the property through all the traditional channels, like signs, MLS, online websites such as Zillow, and networking
  • Being your eyes, ears, and advisor during negotiations with buyers
  • Handling details required to get a deal to closing

That is a pretty powerful combination, don’t you think? Having an expert team member willing to provide these benefits will give you confidence.

Attorney

Team members fill expertise gaps—and the business of real estate transactions can be a minefield of legal problems. Trusted legal counsel is a necessity.

In addition to looking for the basics, like being a straight talker, choose your attorney based upon expertise and experience in the following areas:

  • Real estate contract litigation: No one wants to litigate, but attorneys should be able to draw up contracts based upon knowledge of how litigation will proceed. This expertise allows you to preempt problems by including specific language in contracts.
  • Real estate transactions and title insurance: Look for someone intimately familiar with real estate closings. It’s even better if they have a team of paralegals on staff who can help manage minor issues.
  • Basic entity structuring, estate planning, and asset protection: An attorney can help create a basic legal entity to perform your buy-sell business.

Accountant

Before setting up your legal entity with your lawyer, talk to an accountant about the best option for your business. That may be an LLC, S Corporation, or C Corporation—but the right answer depends on your state and business strategy.

You may also want to consider a bookkeeper, eventually. Smaller investors can often get by using a program like QuickBooks to further organize accounting activities.

Decide What a Good Deal Is (For You)

To help guide your business, create a detailed profile of a good deal. First, you’ll want to understand the basics of deal analysis. Here’s what you should know for each deal:

  • Sales costs, such as commissions, closing costs, and home warranty
  • Desired profit
  • Holding costs, such as taxes, insurance, utilities, and maintenance
  • Rehab costs, including labor, materials, and permits
  • Acquisitions costs, such as attorney or title fees, closing costs, and inspections

For example, a fix and flip or BRRRR investor would subtract these costs from the property's ARV to find their max purchase price.

Ready to start analyzing deals? Check out BiggerPockets’ fix and flip calculator.

Be careful with deal analysis: Numbers can be deceiving. In other words, everything that glitters is not gold—or everything that meets your formula is not always a good deal.

You need criteria beyond numbers. You must check the assumptions behind said numbers.

First of all, be careful with the rehab costs. This is why your contractor is so key, and it’s why pre-purchase inspections are always money well-spent.

Second, be careful with the assumptions behind your ARV. Consider making a “desirability checklist” of qualitative criteria about the house and location. If the house checks three or more boxes, consider passing. Overcoming that many negative factors can be difficult.

Problems to include on your list include:

  • Unsafe neighborhoods
  • Neighborhoods with mostly tenants and not owners
  • Properties too far from jobs, shopping, and amenities (10-plus miles)
  • Steep lots
  • Busy roads
  • Obnoxious outdoor smells or obnoxious next-door neighbors
  • Large power lines nearby
  • Extra-small house size
  • Two-bedroom houses, if they’re hard to sell in your market
  • Weird layout (e.g., walk through bedroom to another bedroom)
  • In-ground pool, if you’re buying in cooler areas

Create a Marketing Plan to Find Good Deals

All of this hard work is for naught if you can't find good deals. You want to create systems that bring you opportunities to buy deals—or leads—so you aren't constantly chasing them down. Consider including the following elements in your marketing plan.

MLS Leads

A real estate license provides access to the multiple listing service (MLS). If you're unlicensed, your agent can help you set this up. Use daily filters to send listed properties straight to your email inbox.

For instance, your MLS filter might look like this:

  • Within your target location
  • Status of new listing, change in price, or back on the market
  • List price below 70% of your top retail price
  • Square footage above 1,200 sq. ft.

Referral Campaigns

Send letters to local professionals telling them that you’re buying properties in any condition for cash. But don’t expect an immediate rush of results: You’re building relationships. Over the long run, 25-50% of your deals will come from these sources. Potential sources could include:

  • Attorneys handling probates, divorces, foreclosures, and bankruptcies
  • Property managers
  • Commercial real estate brokers, who can send you their small stuff
  • Residential real estate agents, who can send their ugly properties
  • CPAs
  • Financial advisors

Internet Marketing

Focused online activity can generate leads from potential sellers. Specific projects might include:

  • Create a website with video and content.
  • Create a good BiggerPockets profile, including target markets. Make 10-plus Forum posts per week.
  • Create a Trulia and Zillow profile and answer 10-plus questions per week on their Q&A forums.
  • Create a LinkedIn profile and share an interesting tip or news update per week.

Build Your Ant Farm

Recruit your family, friends, and local contacts to be “ants” and bring morsels—or leads—back to you. Ask them to be on the lookout for vacant or rundown houses during their daily routines. If they see one, the instructions are simple: Text me the address, and I’ll do the rest.

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Questions? Comments? 

Join the discussion below.

Brandon Turner is an active real estate investor, entrepreneur, writer, and co-host of the BiggerPockets Podcast. He is a nationally recognized leader in the real estate education space and has tau...
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    Michael
    Replied about 8 years ago
    Great article! Appeal to Buyers Using Tips and Tricks from House-Flippers. Here are some tips: 1. Perform basic cleaning and repairs. The first step in making a house appeal to a prospective buyer is to remove any junk that’s cluttering up the place. Then it’s time to give the house a thorough cleaning and repair anything that’s broken including light fixtures, fans, holes, cracks and anything that’s been damaged by a pet. 2. Focus on curb appeal. The outside of the home is the first things buyers see, so make sure the front door is new or painted with an bright color and has attractive hardware. Other things you can do include: upgrading the landscaping with inexpensive plants, adding light fixtures, building a simple deck and installing a new mailbox.
    Toni Pullen
    Replied over 7 years ago
    To read as much as possible and possibly attend some investors clubs meetings in my city, since I cannot afford to pay the $12,000 to $40,000 that some of these companies are charging to teach people wholesaling and other areas of real estate investing.
    Toni Pullen
    Replied over 7 years ago
    To read as much as possible and possibly attend some investors clubs meetings in my city, since I cannot afford to pay the $12,000 to $40,000 that some of these companies are charging to teach people wholesaling and other areas of real estate investing.
    Jason
    Replied about 7 years ago
    Hi Brandon, great summary of some options. Personally, I’m going for option #4, living off cashflow. I’ve invested a lot in my career to get where I am, so going into something new and starting at the bottom doesn’t seem like the best option and would probably slow me down I’m currently in the middle of my next step, purchasing more rental units. One question about your numbers, though. You say that in order to get 5k/month, you’d have to get 50 doors. Is $100 / door a general rule on how to calculate for repair costs or is it just an example? For instance, my units cashflow about $300 / month. Without counting reserves, 10 of them will flow 3k / month. Out of that, we need to set aside funds for repairs, so should I then only count on $100 / month? Thanks!
    Brandon Turner
    Replied about 7 years ago
    Hey Jason, thanks for the comment. The $100 per unit, per month is what I shoot for in any investment (though I try to get more.) However, that’s the bare minimum I generally will ever do, which is why I mentioned it. IF you can get $300 – awesome, but I know you realize there will be other expenses. I usually use the 50% rule to calculate how much cash flow I’ll actually make. In fact, I just made a YouTube video on that – here: http://youtu.be/KQmChuIW_sY Hope that helps!
    tyler
    Replied almost 3 years ago
    im 19 and just started a job in electrician going through a program to become an electrician but i also want to get into real estate investing. i just don’t know where to start and how would i get the money to start. how do i find out if the home is a good buy or not, how much can i sell it for, and how do i find out if the market is going up or down.
    tyler
    Replied almost 3 years ago
    im 19 and just started a job in electrician going through a program to become an electrician but i also want to get into real estate investing. i just don’t know where to start and how would i get the money to start. how do i find out if the home is a good buy or not, how much can i sell it for, and how do i find out if the market is going up or down.
    Jake Calle from Tampa, FL
    Replied over 2 years ago
    Hi, I am a radio producer currently working at my family’s radio station. I want to get into Real Estate investing with my wife. Any suggestions on where to start?
    Danielle
    Replied over 2 years ago
    I am in my first step. I became a real estate agent 2 months ago to get me on my path. I just figured out that I need 12 units to make the minimum cash flow. Living on commission alone is hard, so I don’t know how I will be able to afford to obtain the amount of units to make the math work out. The idea of getting a lender is scary. What should my next step be?
    Mapande Sospeter
    Replied 2 months ago
    This is very informative and helpful. Thank you so much Brandon. I am still learning more while setting up the wheel.
    Michael Greene
    Replied about 2 months ago
    Hello Brandon: I really appreciate all of the wonderful content that you've provided over the years. I also appreciated what you said about the tragic death of George Floyd. You have no idea what kind of impact you made. Can you provide a youtube video on how to become a full time real estate investor?
    Eric Jorgensen
    Replied about 2 months ago
    Was removed from my full time job on 5/26. Bought my 1st Fix & Flip nvestment property 6/1. Will be done by 6/30. My former boss did me the biggest favor. After 25+ years of indecision and reading/educating finally I moved to taking action.
    Deborah Wayland Rental Property Investor from Upstate South Carolina
    Replied about 2 months ago
    @ Eric, Jorgensen, I am in the same boat. Thankful I was laid off from the rat race. I so much want to make real estate investing work. How did you get financing without a job. That is where I am stuck. I have great credit and some money, but no job.
    Dave Mays Investor from Madison, Wisconsin
    Replied about 2 months ago
    Great to hear. Just curious, what are you doing for health insurance and other benefits I assume you had with your full time job
    Dave Mays Investor from Madison, Wisconsin
    Replied about 2 months ago
    I have been a real estate Broker for 25 years and own a hand full of rentals. Wife had a great job with great benefits but lost her job due to the pandemic wreaking havoc on the economy. I could use her help in my business, but we need health insurance and other benefits. What are all you doing to get health insurance when you leave full time, salaried job with benefits? Asking because it's more relevant today than ever. Thanks BP community
    Amy M Pederson
    Replied 5 days ago
    For those asking about insurance and not having a 9-5 job. I was able to get full medical, vision and dental through Cigna. Just go to their website. I was informed by one of the associates that it doesn't need to be open enrollment to apply.
    Emmanuel Lopez Investor from Elizabeth, New Jersey
    Replied about 2 months ago
    Couldn’t agree more with Randall. I was on the same boat. Have my own business but my wife was still at Jets only for insurance. I had a game plan and presented to her. Simply telling her if you quit your job and we work this company together I’m sure within time we will grow our company and be able to afford health insurance plus more. 4 years later she’s been with me and never looked back. Having her around will definitely let you have someone of confidence and great value on your corner and neither will regret it.
    Randall W. Appraiser from Clovis, CA
    Replied about 2 months ago
    Just get a high-deductible private pay plan. Preferably one with an HSA. It can really suck if you have any significant health concerns, but most years it works just fine. I've been self-employed for 20-years and raised 6 kids with no benefits.
    Raquel Rigby from Spanish Fork, Utah
    Replied about 2 months ago
    I always love your content! Thank you for sharing this helps so much as an outline to help get started! Thank you, thank you!
    Timias Woods Rental Property Investor from Los Angeles, CA
    Replied about 2 months ago
    Brandon, thanks for the tips. I would like to get to the point where I can be a full time real estate investor. Thanks for laying out a solid game plan.
    Gabriel Pais Rental Property Investor from High Point, NC
    Replied about 2 months ago
    Thank you for sharing this Brandon, very detailed & thoughtful article, now time to take action!
    Dan Ji Investor from Fairfax VA
    Replied about 1 month ago
    Brandon, thanks for sharing! Great article help us to set a goal and create action plans.
    Ryan Howell Rental Property Investor from Hendersonville, NC
    Replied 21 days ago
    Great article...I wouldn't be where I am without having stuck it out for a few years in the W2, but now I did realize I wanted to do real estate full time. Engineer to agent in 4 years using the BRRRR strategy to get me financially stable to make the switch!