I would like to start investing in rental properties full-time but am not sure how I would be able to pay my bills if I quit my job. I am curious how some of you made the jump to full-time RE investing, and wanted to see if anyone had some tips.
I thought this thread may be helpful for people who have lost their jobs and have always wanted to go full-time into real estate investing. Look forward to all your comments.
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
17y
My advice...don't quit your job until you have enough money saved that you won't stress over not having an income for several months (or years)...
I'm a full-time RE investor, and couldn't imagine the stress of just starting out and not having several years worth of savings...especially with a family who depends on you...
Real Estate Investor · Elkhorn, WI · Member since 2008 · 453 posts · 104 votes
17y
If you currently have a job, I would recommend strarting your rental property business while working your job. Then, as your portfolio increases, you can quit your job when you have enough income to support your lifestyle.
Real Estate Investor · Dallas, OR · Member since 2009 · 74 posts · 1 vote
17y
I think most folks on this forum would tell you that RE investing is not a get rich quick endeavor. It takes awhile to build up the network and properties to create a full time income.
It's also important to have lots of reserve cash for unexpected repairs and vacancies. On top of all that, the banks look at you much more favorably if you can show consistant income from some other source.
Atlanta, GA · Member since 2008 · 105 posts · 14 votes
17y
I took the full time plunge over 5 years ago. Almost starved to death my first 9 months, then things turned around.
Hindsight being 20/20, I would say go full time when your part time income is greater than the income from your current job for at least 3 consecutive months.
I don't regret for a moment being in this business full time, and I make a very good living doing it. However in the current economy, I would play it slow and safe until the numbers force you to go full time.
Flipper/Rehabber · Los Angeles, CA · Member since 2009 · 1k+ posts · 732 votes
17y
I would also recommend staying at your job as well..until you have something consistent going. If you quit, especially in this economy ..another job might not be too easy to come by.
Real Estate Investor · North Carolina · Member since 2008 · 1k+ posts · 483 votes
17y
One conservative approach might be to get a loan and buy a fixer-upper. Follow all the advice on this site about buying at a discount, avoiding expensive structural damage, buying in a neighborhood others would want to live in, and so on.
Spend a year or less investing your sweat equity to make the place great and then rent the place out. Live cheaply until you can find another fixer-upper.
But here's another strategy. If you think, as I do, that real estate still has plenty of downside, and that deflation is approaching, then you might move into the cheapest place you can and save every penny you can. In the scenario I have just described, cash is even kinglier and the bargains will be aplenty.
Real Estate Consultant · Seattle, WA · Member since 2008 · 134 posts · 10 votes
17y
I made leap of faith 3 years ago and haven't looked back. At first, there was some times when I questioned my decision (lean times), but looking back on it - it was the best thing I ever did. The lessons learned since becoming a full-time RE investor is invaluable.
Like some others pointed out, you should probably remain employed until you have established a portfolio. Why? Your going to need income from your job to finance projects.
Then again, its all predicated, depended upon your comfort level.
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
17y
My advice...don't quit your job until you have enough money saved that you won't stress over not having an income for several months (or years)...
I'm a full-time RE investor, and couldn't imagine the stress of just starting out and not having several years worth of savings...especially with a family who depends on you...
Real Estate Investor · Mission Viejo, Cape Coral, CA · Member since 2008 · 218 posts · 24 votes
17y
Do not quit your job!! Until your passive income more than covers your monthly expenses. If you just squeak by, it will slow your progress and goals of buying more properties. Banks, do not like lending to "investors", you will become a "stated income borrower and that to will slow your buying down. The biggest motivator is getting up every day and going to work. Write down your goals, work to to accomplish them ASAP. The reward will be twice as sweet when you reach your goals, and than quit your job.
Real Estate Investor · Member since 2008 · 34 posts · 3 votes
17y
Lets just say that you have no other choice but to make it full time. No, you shouldn't totally rely on it but if it was your only choice (we all know we have other choices) how would you structure to power thru it? Say you need to cash flow 3k or 5k a month. In the beginning off of labor (quickly) then actual rental cash flow. Now thinking, you have no other choice but to figure this out. How would you do this? You already have a dozen under your belt, but now you have to plan it out for the remainder. You have the skill to complete every single possible scenario of the properties improvements. You now have 7 days a week to knock out these properties. It's now a JOB and not a hobby. How would you make the best of it? No criticizing here, just think it's the only thing with no other options. How would you structure this plan on paper to actually work? What is your plan of action? Now you are buying cheap and paying yourself for man hours and trying to complete as many in a year as possible. It's tricky, not a smooth ride, tons of what ifs, but knowing some you can have ready in a month and some will take three. You have a part-time awesome helper (12.00 an hour) and another part-time (8.00) that can basically clean up, caulk, mud, tape, prime and paint (this guy spends 90% of his time on another house unless you need him as a third person). Now this is a job and you have to buy cheap and still in the end make the same cash flow and allow the same average % rule. I'm typing in a rush so please power thru it.
p.s. - Mike, (if you reply) please don't criticize my questions just think "how could I make this work". I value "all" opinions. I'd like to see it attacked from every angle.
Real Estate Investor · OH · Member since 2008 · 4k+ posts · 1k+ votes
17y
Russianbound,
The obvious problem with your scenario is that you need a lot of cash and/or credit to make it work. He would need money to live on; money to pay the $12/hr worker; money to pay the $8/hr worker; money to buy the deals (no bank is going to loan you money without income); and money to rehab the deals. Where is all that money going to come from if he has no job?
Real Estate Investor · Member since 2008 · 34 posts · 3 votes
17y
He does have a job 10 days a month. Every third day, 7a to 7a (a very low salary, great pension for later). The two workers can work alone on these days. However, repairs, payroll, materials & his own labor is included in the improvement (rehab) costs. To make this work, multiple properties and production need to be consistent. A new line of credit is in the making, just like it was on the first dozen. It's much more difficult to obtain but possible. It's all local. I'm just trying to make this stronger and smoother to see if/how production can increase. Add another part-time employee for a third house? The workers left alone can only do so much without equipment. No tool trailer, no climbing on the roof, no nail gun, nor tile saw. You can't pay them to hold up a wall all day so basically the texture, prime & paint stage, and/or tearing out bad areas or old nasty carpet to bare wood. Properties are purchased with cash then paid back with refi/rehab funds for the next to be purchased. It just rotates and purchase money can be out on two at a time if one is rapidly refied. The whole idea is getting there quicker. Less production equals less labor funds needed with the replacement rental profit. I know this can't be done in a short period of time, but when you're replacing the income you had on much larger projects (that were sold, when they were selling) than you are trying to think what can he do to get there quicker.
I am just an investor in training and I have no desire to live off of real estate investing profits. However, I will say that you should be mindful of future personal expenses. Whether that be child expenses such as 529 plans, contributions to a SEP IRA for retirement, or health insurance (HSA/HDP).
Lincoln, NE · Member since 2008 · 249 posts · 46 votes
17y
I'm working on re-setting some goals and was doing numbers to see how many properties do I need to be able to make the jump to full time.... and one question came up....On average how much true cash flow do you get per house/appartment? And I know it varies...but just an average...??
Real Estate Investor · OH · Member since 2008 · 4k+ posts · 1k+ votes
17y
I get $100 per unit per month in cash flow and I EARN another $100 per unit per month doing the management and maintenance.
That's ridiculous! They are two completely different business. You can start out in the rental business just as easily as you can anything else. Furthermore, the days of all the guru gimmicks are over. We are back to the days of traditional real estate without all the gimmicks.
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
17y
I don't disagree that having creative investing strategies under your belt is a good thing but you don't need to learn them first before doing rentals or vice versa for that matter. Secondly, if the creative strategies were so beneficial that you built up cash reserevs, why go traditional and just use that cash to get even more creative in bigger deals with more zero's behind them?
Your statements sound very "guru like" which is most likley the reason fro getting such a harsh, but in this case, accurate post from MikeOH.
ANYON can start out in rentals, but EVERYONE should get some knowledge and education on the matter FIRST. That can be from a mentor or right here on BP for free! :lol:
Real Estate Coach · Atlanta, GA · Member since 2009 · 30 posts · 7 votes
17y
Harsh comment? Not at all. These times call for creative dealmaking. This market is a subject-to, lease/option market. Sure you can still do traditional deals, we still do them all the time.
If you can do creative transactions, you'll be able to do way more deals right now. There's more sellers out there and there's more buyers who need owner financing, or terms in order to get into a house.
So yes, if you have the cash or credit, and you want to buy-fix-flip or get into rentals, then do it. You're covered.
If you don't have much money or credit, which most of my students don't then creative dealmaking is where they need to start.
Real Estate Investor · Hoboken, NJ · Member since 2008 · 230 posts · 6 votes
17y
Can those of you who have made the jump to full time investing tell us how long it was from when you first started until you were able to make the jump?