Full Time Employee and Landlord?!

22 Replies

Hello,

I am interested to hear from the landlords that have 40hr/week jobs. Specifically ones you can't break free from during the day. My goal is to replace my income with rental cash flow before I CONSIDER leaving my job. If I figure right I'll need 20+- properties.

How many properties do you manage?

How much time do you spend managing them?

At what point would you think about leaving your job or hiring a Property Manager?

Those who have done this, please, chime in.

Thanks!

Taylor

My husband is active duty military and I am a financial Analyst for the county. Neither one of us can "skip" work to take care of our houses. I actually do all the work as my husband is in and out.

How many properties do you manage?

I manage 8 properties, 4 are my parents and 4 are my own.

How much time do you spend managing them?

I spend 1-2 hours a month unless I am placing a tenant

At what point would you think about leaving your job or hiring a Property Manager?

I am hoping to leave my job when I make $4,000 a month from the cash flow. My income has always been to acquire to enough properties that my husband can retire from the navy at 44 and not go back. So far we are on track.

You might enjoy my website/blog. It is all about self managing. Since we all work and are long distance it is based on efficiency and property types.

Elizabeth C.
Wow. 1-2 hours a month. When your busy how bad is it?

@Taylor Reichert   I know this post is a couple of months old, but it interested me so I couldn't help but to chime in :). I'll answer in the same manner as @Elizabeth C. 

How many properties do you manage?

We currently self-manage 2 (both 4plexes).

How much time do you spend managing them?

Same as Elizabeth, about 2 hours a month, unless placing a tenant. If placing a tenant, it increases exponentially: a month when I have to place a tenant probably took 6 or so hours total between background checks, showings, phone calls, and ad placements.

At what point would you think about leaving your job or hiring a Property Manager?

Our plan is once we have a total of 8 properties cash flowing 550-600/month, we will hire a property manager and quit our jobs. 

We currently estimate we'll be able to "retire" from our full time jobs and focus solely on investments in approximately a year. 

What did you conclude after posting this question?

How many properties do you manage?

**We have 6 units.

How much time do you spend managing them?

**It varies month-to-month. There are some months I barely do anything. Then there are months when the sky is falling.

At what point would you think about leaving your job or hiring a Property Manager?

**I honestly don't know yet, but I would think when I'm ready to hand off the job to someone else. No set timeline. Some need/want a PM right off the bat, so always factor that cost into your budget even if you don't have a PM.

Finally, I'd add that you could need less properties to happily support yourself if you just purchase a few and aggressively pay them off/down. If my three were paid free and clear, I'd be making roughly $50K per year after paying taxes, insurance, and repairs etc. And that estimate is not including the extra cash I get for additional rent due to pets or due to a Section 8 voucher that pays more than I know the place would get with standard market. That's a pretty good start in my opinion....halfway to six figures a year.

Nicole A., New Page LLC | [email protected] | 305‑537‑6252

@Taylor Reichert  I was working 60+ hours a week with a day job, had alot of autonomy.  I hit 25 properties and cut the cord and went full time investing last year.  Keep the w2 income until you have a proven plan, a supportive significant other and have the huevos.


Frank

When I had a day job I would wake up everyday with both guns blazing.  Giving 200% at your day job work will build stamina.  

While I work from home and can monitor stuff during "business hours" during pauses in my main job I can't really break away without taking time off.  I actually have to work more productively than if I had an office job.


How many properties do you manage?

I currently manage four and I am looking to get one or two more by the end of the year.

How much time do you spend managing them?

Like the others I spend 1-2 hours a month doing accounting and minor tenant communication once they are in place.  If something goes wrong (water heater a couple weeks ago) it might take me 3-4 hours to fix.  The big time commitment is in getting a house ready when you first get it and also some make ready between tenants.

At what point would you think about leaving your job or hiring a Property Manager?

Well it will probably be late 2016 maybe mid 2017.  Fairly definite end date because my company's contract with the client is being transferred to another company it just depends on what is negotiated for the transfer time.

40hr a week Job. 

How many properties do you manage?

I currently manage 13 units. 5 houses / 8 apartments

How much time do you spend managing them?

As with the others, it rarely takes more than a couple hours a month to manage the properties. But sometimes the sky falls and you find yourself working every day after work & on the weekends getting things done. SFR's take much less time to manage and rent a lot quicker than multi's. Getting houses ready is the biggest hurdle while working full time.

At what point would you think about leaving your job or hiring a Property Manager?

I'm at that point right now, though we shall see how I feel after a couple months once things are stabilized.

@Account Closed  

This is exactly what I was hoping to confirm. That rental could help me provide for my family yet still be around them. I understand that at times it can be an overload of tasks. My concern is that I would be creating another full time job, working double time all the time, and essentially defeating my purpose.

Thanks everyone who took the time to share their experience,

Taylor Reichert

@Taylor Reichert  Put in the double time now with your day job and real estate.   In the morning before working, during work, at night, saturday and sunday be working on your real estate goals and knowledge.  The double time today will pay off 10X.  What's the old Chinese saying... the best tree planted was the one 20 years ago, the second best is the one planted today... 

@Taylor Reichert  Also once your out of the rat race, self managing your properties isn't that difficult.  There is work to be done but it is not really a job.  I guess it depends on the lifestyle you want and how much you might want to pay a PM.  I manage my units and you have busy days and slow days.  What's nice is you determine what you want to do.  You can be as busy or lazy as you want.  Managing my units keeps my head in the game, keeps me grounded and it's entertaining. 

A good gauge may be to quit when the income from your passive RE investments equals 75% of your w-2 income.  I wish RE was a tick off the list type of vehicle such as you seek.  I quit my job 12 years ago to do RE full-time.  I self-manage 33 rentals.  I am a professional value-stretcher and do every little thing myself in my business.  Not recommended.  I wish I began putting systems and repair people in place a long time ago. I have hired help in the past, but can't find affordable reliable jack of all trade guys I need.  A plumber will not change a light fixture or fix a door.  @Account Closed   kudos for having a tall goal! Don't get analysis paralysis. Realize we miss 100% of the shots we don't take!

@Steve Vaughan

"I have hired help in the past, but can't find affordable reliable jack of all trade guys I need. A plumber will not change a light fixture or fix a door. @Rebecca Olson , how do you turn a unit with only 6 hrs of tenant screening and showings? Who does the painting, cleaning, maintenance of the property? The time required, like everyone posted so far, varies."

My husband is my jack of all trades, so his construction company does all of those things. I suppose that was an oversight on my part when talking about the time I spend filling a vacancy since I'm fairly hands-off in that department. My bad. Last time it took him about a day to clean, touch-up paint, and clear up the move-out checklist discrepancies. So, I suppose in a month that I have to fill a vacancy, I could conservatively say it takes about 16 hours (two 8-hour days).

Thanks for the correction!

This is a great question.  Both my wife and i work 40 hour a week jobs.  Since we moved to Texas we've spent the past 3 years purchasing several SF home in the Dallas/Fort Worth area.  We still have one SF in Minneapolis (which we'll sell soon- anyone interested in buying?) and one in Orlando, FL.

How many properties do you manage?

We (really me) manage 6 SF homes.  Next month the new total will be 7 SF homes.

How much time do you spend managing them?

If everything goes well then about 2 hours a month sounds right.That time is for making sure rent is paid, follow ups with tenants if not paid on time and paying the PITI and HOA if applicable. But 25% of the time the situation changes.The most time consuming event is when a tenant moves out (clean up the unit/repairs/etc) and finding a new tenant.The second most consuming event (for me) are the repairs. I can do some minor repairs but most of the time I hire a professional for things I cannot do or don't the time to do (due to a full time job). It can be more time consuming for big ticket items such as replacing and HVAC where I shop around.The last item that takes up my time is finding new properties to purchase but that happens once or twice a year.

At what point would you think about leaving your job or hiring a Property Manager?

I don’t’ know yet. I like one post that I read that suggested when the profit equates 75% of your W2. I am thinking once we have 15 properties at a minimum one of us will retire for sure.

I hope what I am sharing helps you.

Regards,

John d.

@Frank Romine   

Absolutely! I'm glad you shared. I like to hear from those that are doing it.

Do you guys think one could continue to push growth in their business if they quit their job at 75% of W-2? That would mean giving up almost 60% current income leaving you with 25% less income than when you started out. What do you think? It seems hard with my game plan which is: save, purchase, compound savings, purchase, compound savings, purchase rinse and repeat.  

Thanks all. Love this community!

@Taylor Reichert  My experience when working for an employer was that the majority of the population is working in fear.  Seeing the fear in the people around me gave me more incentive to wake up running everyday.  Most of there fear was directly tied to there personal expenses and the income from the employer not keeping up.  It didn't matter if they were making 40K a year or 200K.  The person with 40K income had 5K in credit card debt and the person with 200K had 25K in cc debt.

If your income went down 25%... did you expenses go down 25%?  As an employee banks look at your monthly income and expenses.  As a business banks review the previous year income and expenses.... and also monthly but your tax returns are what really reconcile the accuracy you had been telling them throughout the year.

Frank

@Taylor Reichert   I currently manage 13 houses and am available to a property manager who manages a few apartments for me.  property management varies, perhaps 6 hours a month, but I also do a lot of repairs and upgrades myself.  That adds up to about 30 hours a month or more.  Summers are more busy than winter as I set my houses to come empty in summer as its easier to rent.  Sounder very smart until I had 4 open up within 30 days of each other and all needed rehabs.

I will not be quitting my day job for investing any time soon.  it costs $2500 per month for health insurance for me and my wife.  Even using the 50% rule 26 units do not equal the income from my day job.  At my current rate in 14 years every unit will be paid off in less than 14 years.  At that time I plan to do real estate as a hobby.  I try to maintain or upgrade properties constantly.  I average $1500 to $4500 per month in handyman repairs or upgrades.  Hopefully those will drop someday.  My biggest time users are fixing up newly acquired properties, or rehabbing units when I get turnover.

@Frank Romine  

Health insurance is another major reason it will be difficult to leave the full time job. It will only be when it doesn't make sense to work that I quit.

Taylor

Hi Taylor, my response from your comments below:

"Do you guys think one could continue to push growth in their business if they quit their job at 75% of W-2? That would mean giving up almost 60% current income leaving you with 25% less income than when you started out. What do you think? It seems hard with my game plan which is: save, purchase, compound savings, purchase, compound savings, purchase rinse and repeat"

I know what you mean about not quitting a job to keep money coming in (to feel financially secure).  I've divided our strategy in stages.  Stage 1 is clearly defined: buy 10 homes for rentals.  The profit from those will (sort of) come close to one of our salaries.  So at that point my wife or myself can stop working at the W2 job (or go part time). So total income won't change much (rental=passive income which is taxed lower than W2 income).  Another idea is both my wife and I go part time to work.  I am very careful in buying properties that are cash flow positive to reach stage 1- that is key.

Stage 2 is not defined yet.  And that's ok.  I'll be happy to reach stage 1 and can worry about the next stage in a few years.  I think maybe start buying multifamily units and/or flipping properties.  Our point is to not just quite our jobs but work in jobs that we enjoy.  We still want to make money with our free time just not feel insecure with our jobs (such as layoffs or work for bad business leaders).

I read another post that mentioned health care cost.  But my perspective is different (and my family is in great health).  Because of the Affordable Care Act I see this as an opportunity to leave our W2 jobs.  Texas is having more health insurance providers participating this coming year so more competition helps our position for the future.  But everyone's position is different and I respect that.

The first and second home purchase was our toughest and slowest.  But the situation gets better as your portfolio increases.  We'll end the year with 7 properties.  Three more to go.  Maybe we'll buy three homes in 2015.  So I can let you know then what stage 2 is :)

Stay focus, be patient and you'll reach your financial goal! 

PS: You may have to take a vacation day here and there to grow your real estate (I remember that was one of your questions).

John d.

Originally posted by @Frank R.:

@Taylor Reichert  Put in the double time now with your day job and real estate.   In the morning before working, during work, at night, saturday and sunday be working on your real estate goals and knowledge.  The double time today will pay off 10X.  What's the old Chinese saying... the best tree planted was the one 20 years ago, the second best is the one planted today... 

 I agree.  Steve gave out the figure of 75% of your W-2 income, which is safe.  Personally, I don't plan to stop until it's about 200%.  Yes, I'm a workaholic.  Your percentage depends on how much you're willing to sacrifice and competing interests (wife, children) that are important.  And how much you're willing to outsource, which chips away at your profitability. 

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