Progression

9 Replies

Goal is to transfer from W2 job to full time real estate. I'm writing down some steps that I believe will help me progress me towards my goal. Currently I hold a salaried position and have one rental property purchased six months ago. Any thoughts on this would be great!

1. Get job that creates income to provide for living expenses and fund investments. [x]

2. Purchase rental first rental property. [x]

3. Use income to purchase additional properties. [ ]

This step currently in process, have made a few offers but nothing has come to fruition.

4. Get RE license. [ ]

I believe that this will help showing myself properties, create flexibility around my job, and allow me to capitalize quickly on opportunities in the market. Earning commission and learning the in's and out's of real estate transactions would be an added bonus.

5. Use full time job and RE license to fund and find investments while searching for ways to make active income in RE. [  ]

My initial thoughts on ways that I could make active income in RE is agent for investors, property management, flipping homes, start own RE brokerage.Running my own business specializing in one of these aspects of RE would be ideal.

6. Transition fully to RE and quit my W2 job. [  ]

At this step I would have to very confident in my career choice and have a way to replace my income completely from my job.I would then use my active income to fund living expenses and personal investments.

7. Grow my business and RE investment portfolio. [  ]

8. Sell / get rid of RE business and live off income that is produced from my investment properties. [  ]

I believe that the hardest part will be transitioning from my W2 job to full time real estate.  Any thoughts on this would be great.What do you feel is the best way to make active income in RE? (flipping, PM, investors agent, or mixture of them all)

I'm currently going through a somewhat similar progression, so I can relate to your goals. I started w/ multi-family passive investing last summer while working a W-2 job. In mid-Feb. this year, I unexpectedly lost my job, coincidentally right after I finished reading Robert Kiyosaki's "Cash Flow Quadrant". Being a bit fed up w/ work and Corporate America, I wasn't really that keen on getting another J-O-B, and started considering the prospect of going into REI full-time.

Fortunately I had a friend making a good living doing what I aspired to do, and he suggested I might want to consider talking to his mentor. I'm well aware of the sentiment here against paying for any professional help, but my mentor jump-started my investing career and has already added value well beyond his fee. It's not easy obtaining long-term financing for SFR's w/ no verifiable income source, so my passive investments continue to be in apartments, and I'm now invested in 7 deals (4 of which have been funded but not yet closed). In my first few months, I've done one wholesale deal, am just finishing my first rehab, am buying an estate house and flipping it almost immediately w/ seller financing, have entered a partnership w/ my mentor to flip another house, and have originated a few private lending transactions.

Although my cash flow has been negative so far, I have a lot of equity in the pipeline, and my first flip is looking like a home run profit-wise.   Based on results obtained in my first quarter, I don't expect it will be too hard to make a multiple of my former six figure salary, and gain a lot of tax benefits as well.

I'm also currently studying for my RE license, more to serve investment needs of myself and fellow investors than out of any desire to become a retail agent....but I'll certainly help out friends, family, and referrals w/ those needs when such opportunities present themselves.

I made a hard transition from full-time worker to full-time real estate investor.    Early on, it was a test of faith, but having my back against the wall has been a great motivator.     Deals don't just fall out of the sky, but they're out there if you work hard, smart, and fast to find them and lock 'em up.    I'm working more nights (networking) and weekends (training/deal scouting) than ever before, but have more control of my schedule and am much happier.

I expect my MF portfolio to put me at your step 8 within 5 years or less, but I'm having enough fun doing this that I suspect I'll want to keep on going for much longer than I need to. Please don't interpret my experience as a recommendation to quit your job and dive head-first into REI, as I was fortunate to have liquidity that allowed me to invest w/o needing a paycheck anytime soon, and I have a great support system of mentors, fellow investors, and team to help accelerate my progression. No way would I have gotten where I am w/o the help of a great team!

Joe, you seem to be a thoughtful person and have a real workable plan. In Chris's case he was just lucky and  I am glad things appear to be working well for him. It would be nice if were all so lucky. It can also depend on the area you live in and the market and opportunity it offers. Obviously if you live in an area where the real estate market has been is and will be expected to continue strong your chances will be much better of developing your plan step by step as you envision now. I would suggest if you can hold on to your present job and build up your cash reserves to the highest point possible for you before you make the transition, that will prove to serve you well. You always want to work with some sort of safety net around your finances. Real estate investing is not a given that you will experience success with it but it does offer a great potential if you take careful steps toward developing and building a good portfolio of cash flow and equity. Like the song says, " you have to know when to hold them and when to fold them". 

Originally posted by @Gilbert Dominguez :

In Chris's case he was just lucky and  I am glad things appear to be working well for him. It would be nice if were all so lucky. It can also depend on the area you live in and the market and opportunity it offers. 

The harder I work, the luckier I get!     :)    I'm not encouraging anyone to quit their jobs, and I disclosed that I had some advantages working for me, but I'd like to think that my results are a reflection of my efforts, not just getting lucky.

Chris, I did not mean that your results are not a product of all your hard work. I think most people will and do work very hard at real estate investing. I should not have stated it in the particular way that implied it was only luck that you are succeeding. My point was to make it clear that making the transition into full time real estate investing has its challenges and possible pitfalls. 

It takes allot of courage and I wish everyone wishing to make the transition into full time real estate investing would meet with success but we know that is not really going to happen for allot of people who will be working very hard for it.

Originally posted by @Chris Soignier :

I'm currently going through a somewhat similar progression, so I can relate to your goals. I started w/ multi-family passive investing last summer while working a W-2 job. In mid-Feb. this year, I unexpectedly lost my job, coincidentally right after I finished reading Robert Kiyosaki's "Cash Flow Quadrant". Being a bit fed up w/ work and Corporate America, I wasn't really that keen on getting another J-O-B, and started considering the prospect of going into REI full-time.

Fortunately I had a friend making a good living doing what I aspired to do, and he suggested I might want to consider talking to his mentor. I'm well aware of the sentiment here against paying for any professional help, but my mentor jump-started my investing career and has already added value well beyond his fee. It's not easy obtaining long-term financing for SFR's w/ no verifiable income source, so my passive investments continue to be in apartments, and I'm now invested in 7 deals (4 of which have been funded but not yet closed). In my first few months, I've done one wholesale deal, am just finishing my first rehab, am buying an estate house and flipping it almost immediately w/ seller financing, have entered a partnership w/ my mentor to flip another house, and have originated a few private lending transactions.

Although my cash flow has been negative so far, I have a lot of equity in the pipeline, and my first flip is looking like a home run profit-wise.   Based on results obtained in my first quarter, I don't expect it will be too hard to make a multiple of my former six figure salary, and gain a lot of tax benefits as well.

I'm also currently studying for my RE license, more to serve investment needs of myself and fellow investors than out of any desire to become a retail agent....but I'll certainly help out friends, family, and referrals w/ those needs when such opportunities present themselves.

I made a hard transition from full-time worker to full-time real estate investor.    Early on, it was a test of faith, but having my back against the wall has been a great motivator.     Deals don't just fall out of the sky, but they're out there if you work hard, smart, and fast to find them and lock 'em up.    I'm working more nights (networking) and weekends (training/deal scouting) than ever before, but have more control of my schedule and am much happier.

I expect my MF portfolio to put me at your step 8 within 5 years or less, but I'm having enough fun doing this that I suspect I'll want to keep on going for much longer than I need to. Please don't interpret my experience as a recommendation to quit your job and dive head-first into REI, as I was fortunate to have liquidity that allowed me to invest w/o needing a paycheck anytime soon, and I have a great support system of mentors, fellow investors, and team to help accelerate my progression. No way would I have gotten where I am w/o the help of a great team!

I researched "cash flow quadrant" and switching quadrants is something that I would like to do as well.  I feel that when switching it is like taking a couple steps backward in order to move forward past the point of where a job would take you.  Congrats and good luck to you in your transition.

Originally posted by @Gilbert Dominguez :

Joe, you seem to be a thoughtful person and have a real workable plan. In Chris's case he was just lucky and  I am glad things appear to be working well for him. It would be nice if were all so lucky. It can also depend on the area you live in and the market and opportunity it offers. Obviously if you live in an area where the real estate market has been is and will be expected to continue strong your chances will be much better of developing your plan step by step as you envision now. I would suggest if you can hold on to your present job and build up your cash reserves to the highest point possible for you before you make the transition, that will prove to serve you well. You always want to work with some sort of safety net around your finances. Real estate investing is not a given that you will experience success with it but it does offer a great potential if you take careful steps toward developing and building a good portfolio of cash flow and equity. Like the song says, " you have to know when to hold them and when to fold them". 

 Thanks for the advice.  I plan to keep my job until I see a logical way out.  I like my job I just feel that I would like being my own boss better.  I feel the advantages of keeping a W2 is it being recession proof and knowing that you are getting a paycheck every two weeks.  I also feel like jumping into RE wouldn't be a huge risk because there are always companies who would hire you back if RE didn't work out (given you are successful in your previous role).

The transition to RE full time would likely be more work and more hours but also more rewarding.  The key is finding opportunities in the market and exploiting them to the fullest extent.

Listen to the most recent podcast. There are benefits to a W2. Bank loans are easier. I'm have almost a dozen properties and I'm keeping my W2 job until I can't manage my properties because it is too much.
Originally posted by @Robert Fitzpatrick :
Listen to the most recent podcast. There are benefits to a W2. Bank loans are easier. I'm have almost a dozen properties and I'm keeping my W2 job until I can't manage my properties because it is too much.

 My thought process is that once I transition to full time RE, I won't need bank loans.  Right now having a W2 is a huge plus though.

I agree that the sooner you can become independent of banks the better off you will be. While you have W2 income make the most of it. I have 10 properties with FNMA loans at 4%. That's cheap money. Maximize the low interest money. Once you have exhausted that source find private money. Private lenders are easier to work with but at a higher interest rate. Also I like portfolio lending institutions. Slightly higher but easier to work with then most banks.

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