I was fired this week! What could you do with $275K?
Flipper/Rehabber · Mount Juliet, TN · Member since 2014 · 107 posts · 36 votes
I lost my job this week! My wife, father-in-law, sister, and closest friends tell me this could be an answer to prayer and that I would have never fully pursued my passion for real-estate if this hadn't happened. I've been slowly and conservatively investing in real-estate the entire time I've worked for a corporation. We own a paid for single family home worth $275k that rents for $1595/month. I also have about $150K equity in my personal residence.
How much monthly income could you produce if you had $275K + your time and sweat to offer? How would you do it? I'm eager to hear your thoughts and ideas! If it matters, my preference is rental/cash-flow properties. However, I want to keep an open mind!
Also - Have any of you transitioned into full-time real-estate after losing your "real job"? I'd love to hear those stories!
Thanks!
- Jason
Hey Jason,
I was lucky enough to be laid off from my job in 2010. Turned out to be the best thing that ever happened to me. At this point I make nearly monthly what I made yearly then. I too had been doing some buy and hold investing while I worked there starting in 2006.. and I felt a layoff coming on long before it actually happened and started saving all my pennies. It took about a year or year and a half longer for me to get laid off than I anticipated. I survived two or three rounds of layoffs before the one that got me. That gave me some additional time to save cash. Now it was time to figure out what to do with myself.
After a lot of studying and a number of dry runs I picked up a property at trustees sale, and had a friend committed to buying it almost immediately, before I had even finished evicting the current occupants. As soon as they were out, we closed and I made something like $20k (and I had actually given my buddy a great deal). Not life changing but enough to let me know that there was something there. It was proof of concept. I did a bunch more deals over the next couple of years, moving up to two or three at a time, but at that point I was doing most of the work myself.. which assured the profitability of each deal but put a pretty low cap on the number of deals I could handle at a time. It was clear it was time to start stepping away from the hammer and nails part of the business.
Hiring out all the labor greatly increased the number of deals I could handle, and I pushed it up to 6-7 at a time. Comparing the 7-8% net return I was getting on rental properties VS the 25%+ annualized returns I was seeing from the flips convinced me it was finally time to bring the money home and roll it into the business. I had been reluctant to put all my eggs in one basket, but the returns were just so much higher doing the flips that I just couldn't watch my capital languish like that anymore. I also finally had real confidence that I knew what I was doing. Divesting myself of all my rentals gave me the capacity to do about 11-12 deals at a time, and I started feeling like I was really making money.
I don't know if this will last forever (it certainly isn't getting any easier), but I'm in a much better financial position to weather whatever comes now than I would have been had I just grabbed another menial job and relied on the small amount of passive income that my rentals were providing. If I do want to go back to rentals, I have a heck of a lot more cash to buy them now (and I probably will again at some point when I don't want to be quite so active and / or want to diversify).
Hey Jason,
I was lucky enough to be laid off from my job in 2010. Turned out to be the best thing that ever happened to me. At this point I make nearly monthly what I made yearly then. I too had been doing some buy and hold investing while I worked there starting in 2006.. and I felt a layoff coming on long before it actually happened and started saving all my pennies. It took about a year or year and a half longer for me to get laid off than I anticipated. I survived two or three rounds of layoffs before the one that got me. That gave me some additional time to save cash. Now it was time to figure out what to do with myself.
After a lot of studying and a number of dry runs I picked up a property at trustees sale, and had a friend committed to buying it almost immediately, before I had even finished evicting the current occupants. As soon as they were out, we closed and I made something like $20k (and I had actually given my buddy a great deal). Not life changing but enough to let me know that there was something there. It was proof of concept. I did a bunch more deals over the next couple of years, moving up to two or three at a time, but at that point I was doing most of the work myself.. which assured the profitability of each deal but put a pretty low cap on the number of deals I could handle at a time. It was clear it was time to start stepping away from the hammer and nails part of the business.
Hiring out all the labor greatly increased the number of deals I could handle, and I pushed it up to 6-7 at a time. Comparing the 7-8% net return I was getting on rental properties VS the 25%+ annualized returns I was seeing from the flips convinced me it was finally time to bring the money home and roll it into the business. I had been reluctant to put all my eggs in one basket, but the returns were just so much higher doing the flips that I just couldn't watch my capital languish like that anymore. I also finally had real confidence that I knew what I was doing. Divesting myself of all my rentals gave me the capacity to do about 11-12 deals at a time, and I started feeling like I was really making money.
I don't know if this will last forever (it certainly isn't getting any easier), but I'm in a much better financial position to weather whatever comes now than I would have been had I just grabbed another menial job and relied on the small amount of passive income that my rentals were providing. If I do want to go back to rentals, I have a heck of a lot more cash to buy them now (and I probably will again at some point when I don't want to be quite so active and / or want to diversify).
I would do 2 things , first find out the licensing to become a contractor . Second I would look to do a flip .
Becoming a general contractor , you line up subs and do work for homeowners and maybe flippers . ( you are using their money , getting deposits , lots of other discussions about that ) At the same time you now have subs and when a deal comes by you are already connected for your flip .
I would do 2 things , first find out the licensing to become a contractor . Second I would look to do a flip .
Becoming a general contractor , you line up subs and do work for homeowners and maybe flippers . ( you are using their money , getting deposits , lots of other discussions about that ) At the same time you now have subs and when a deal comes by you are already connected for your flip .
First suggestion, is to take the cash you have...and take one full "conservative" year's worth of expenses out. Set it aside to be used exclusively for those "bills".
Take the rest, and invest it in flips.
Reinvest the profit from those flips into more flips.
Once your "seed" money is large enough, continue to flip it...but spend ONLY the profit from those flips on cash flow properties.
Repeat....
I would sell the $275K house that rents for a measly 1595 and buy 5 $50K houses that rent for $800/month
With $4000/month rental income you are on the way.
Don't count on surviving long without a w2. I would suggest you do nothing until you find another job. You will need it to qualify for financing and 275K is not enough to generate the income fast enough to survive. You will not make it in investing without leverage.
Once you are reemployed sell the rental, rent is too low to qualify as a investment.....negative cash flow is a bad way to start.
Agreed. Rent is too low to make a good investment for renting . Actually I’d find another job and keep trying to funnel extra money into side projects in real estate . Your not ready to be sipping pina coladas on a remote beach yet lol don’t get in over your head
@Jason Krawitz I will first say that you are looking at it from the right perspective, opportunity.
I can't speak to the success yet of what I am doing, but I quickly transitioned from multi-family (4) units to (64) units under contract.
It is a different niche, but Mobile home parks can be as good as spoken about. The learning curve is a bit different and I by no means have it all covered.
You could make a huge impact with the $425k you are talking about utilizing. You could acquire a turn-key park that is already stabilized or a turn-around park that will require more work and money to stabilize.
No matter what you do, put it to work for you in the most efficient way possible.
All the best!
@Jason Krawitz Sorry to hear that you lost your job. At least it was somewhat expected and it sounds like you have a decent financial footing.
My advice would also be to set aside savings for expenses for a year or two. Don’t “bet the farm” on your first deals as there is always risk of loss with real estate investing. Put some short-term and long-term goals in place.
Also consider where we are in the market cycle. I don’t anticipate another major recession anytime soon but interest rates are likely going up which does have an impact on values.
Partner with an experienced full-time real estate investor when starting out. Not only do you get to learn from their experiences, but you limit your economic risk by having a co-investing partner.
Hope this helps. Good luck!
@Jason Krawitz
I agree with the posts recommending a W-2 job as a way to keep food on the table and the wolves away from the door, along with making it easier to qualify for a real estate loan when you need one. Of course, if you feel strongly about real estate and know you will succeed, then don't waste your efforts on a W-2 job.
Is there a way you can leverage your previous Corporate America experience with something related to real estate? In the career counseling world, leveraging your experience when you change careers is known as creating a functional resume rather than using a chronological resume.
For example, the inspector hired by my realtor to inspect my as-is fixer-upper house had been a builder prior to the 2008 meltdown. His skill was he could look at such a home and figure out whether it was better to restore it or tear it down and start over (with my house, he concluded it was 50-50 either way). His analysis helped my realtor determine her marketing strategy.
In my case, my "core knowledge" was the electronics industry. I had worked as an engineer, then marketed computer chips to engineers, and finally became a technical writer documenting how engineers and consumers use these products. With my change from line to staff, my stress level was reduced and I had more energy after hours to study investing (stocks). As the Internet became commonplace, I was able to work mostly from home (telecommuting) rather than traveling on site, which meant my hours became flexible. The client didn't care whether I did my work in the morning, afternoon, or evening as long as I met my deadline. Not having to commute every day created a couple more hours of free time (and less stress) to focus on developing my investing know-how.
I lost my job this week! My wife, father-in-law, sister, and closest friends tell me this could be an answer to prayer and that I would have never fully pursued my passion for real-estate if this hadn't happened. I've been slowly and conservatively investing in real-estate the entire time I've worked for a corporation. We own a paid for single family home worth $275k that rents for $1595/month. I also have about $150K equity in my personal residence.
How much monthly income could you produce if you had $275K + your time and sweat to offer? How would you do it? I'm eager to hear your thoughts and ideas! If it matters, my preference is rental/cash-flow properties. However, I want to keep an open mind!
Also - Have any of you transitioned into full-time real-estate after losing your "real job"? I'd love to hear those stories!
Thanks!
- Jason
Congratulations! You are now free to roam about the country. I worked for a Fortune 200 company in high tech, high end computing, sales before realizing that it was simply golden handcuffs. The freedom I have now is awesome.
Cash flow is the way to go. I get $25,000 down and average between $500 to $1,000 a door in Phoenix and Mesa buying with Subject To, Wraps and Land Contracts and selling to Tenant Buyers. The Tenant Buyers do all maintenance and repairs, so I have no toilets or troubles. This would work in TN too. It kind of looks like the spreadsheet at the link
Average Cash Flow Per Door In Phoenix Metro AreaI lost my job this week! My wife, father-in-law, sister, and closest friends tell me this could be an answer to prayer and that I would have never fully pursued my passion for real-estate if this hadn't happened. I've been slowly and conservatively investing in real-estate the entire time I've worked for a corporation. We own a paid for single family home worth $275k that rents for $1595/month. I also have about $150K equity in my personal residence.
How much monthly income could you produce if you had $275K + your time and sweat to offer? How would you do it? I'm eager to hear your thoughts and ideas! If it matters, my preference is rental/cash-flow properties. However, I want to keep an open mind!
Also - Have any of you transitioned into full-time real-estate after losing your "real job"? I'd love to hear those stories!
Thanks!
- Jason
Congrats brother!!!
WHOO HOO welcome to the, "No turning back now" club!
Do or die mn!
Just draft the plan and follow it. You are a shark among the clownfish!
If I were you, I'd learn about unimproved vacant land investing. It's like fixing and flipping, but without all the headaches of dealing with contractors, etc. Realistically, you could do quite well with that war chest of cash and the right network of land investors. However, I wouldn't invest in it alone. I would sync up with an experienced land investor that has done many vacant land deals and do some joint ventures. Then, I'd suggest you venture out on your own once you feel comfortable and knowledgeable.
Thank you all for your responses! Over the past 4 years, those of you on this forum have been incredibly helpful! Thank you!
Hey Jason,
I was lucky enough to be laid off from my job in 2010. Turned out to be the best thing that ever happened to me. At this point I make nearly monthly what I made yearly then. I too had been doing some buy and hold investing while I worked there starting in 2006.. and I felt a layoff coming on long before it actually happened and started saving all my pennies. It took about a year or year and a half longer for me to get laid off than I anticipated. I survived two or three rounds of layoffs before the one that got me. That gave me some additional time to save cash. Now it was time to figure out what to do with myself.
After a lot of studying and a number of dry runs I picked up a property at trustees sale, and had a friend committed to buying it almost immediately, before I had even finished evicting the current occupants. As soon as they were out, we closed and I made something like $20k (and I had actually given my buddy a great deal). Not life changing but enough to let me know that there was something there. It was proof of concept. I did a bunch more deals over the next couple of years, moving up to two or three at a time, but at that point I was doing most of the work myself.. which assured the profitability of each deal but put a pretty low cap on the number of deals I could handle at a time. It was clear it was time to start stepping away from the hammer and nails part of the business.
Hiring out all the labor greatly increased the number of deals I could handle, and I pushed it up to 6-7 at a time. Comparing the 7-8% net return I was getting on rental properties VS the 25%+ annualized returns I was seeing from the flips convinced me it was finally time to bring the money home and roll it into the business. I had been reluctant to put all my eggs in one basket, but the returns were just so much higher doing the flips that I just couldn't watch my capital languish like that anymore. I also finally had real confidence that I knew what I was doing. Divesting myself of all my rentals gave me the capacity to do about 11-12 deals at a time, and I started feeling like I was really making money.
I don't know if this will last forever (it certainly isn't getting any easier), but I'm in a much better financial position to weather whatever comes now than I would have been had I just grabbed another menial job and relied on the small amount of passive income that my rentals were providing. If I do want to go back to rentals, I have a heck of a lot more cash to buy them now (and I probably will again at some point when I don't want to be quite so active and / or want to diversify).
I would do 2 things , first find out the licensing to become a contractor . Second I would look to do a flip .
Becoming a general contractor , you line up subs and do work for homeowners and maybe flippers . ( you are using their money , getting deposits , lots of other discussions about that ) At the same time you now have subs and when a deal comes by you are already connected for your flip .
I would do 2 things , first find out the licensing to become a contractor . Second I would look to do a flip .
Becoming a general contractor , you line up subs and do work for homeowners and maybe flippers . ( you are using their money , getting deposits , lots of other discussions about that ) At the same time you now have subs and when a deal comes by you are already connected for your flip .
First suggestion, is to take the cash you have...and take one full "conservative" year's worth of expenses out. Set it aside to be used exclusively for those "bills".
Take the rest, and invest it in flips.
Reinvest the profit from those flips into more flips.
Once your "seed" money is large enough, continue to flip it...but spend ONLY the profit from those flips on cash flow properties.
Repeat....
I would sell the $275K house that rents for a measly 1595 and buy 5 $50K houses that rent for $800/month
With $4000/month rental income you are on the way.
Don't count on surviving long without a w2. I would suggest you do nothing until you find another job. You will need it to qualify for financing and 275K is not enough to generate the income fast enough to survive. You will not make it in investing without leverage.
Once you are reemployed sell the rental, rent is too low to qualify as a investment.....negative cash flow is a bad way to start.
Agreed. Rent is too low to make a good investment for renting . Actually I’d find another job and keep trying to funnel extra money into side projects in real estate . Your not ready to be sipping pina coladas on a remote beach yet lol don’t get in over your head
@Jason Krawitz I will first say that you are looking at it from the right perspective, opportunity.
I can't speak to the success yet of what I am doing, but I quickly transitioned from multi-family (4) units to (64) units under contract.
It is a different niche, but Mobile home parks can be as good as spoken about. The learning curve is a bit different and I by no means have it all covered.
You could make a huge impact with the $425k you are talking about utilizing. You could acquire a turn-key park that is already stabilized or a turn-around park that will require more work and money to stabilize.
No matter what you do, put it to work for you in the most efficient way possible.
All the best!
I would do 2 things , first find out the licensing to become a contractor . Second I would look to do a flip .
Becoming a general contractor , you line up subs and do work for homeowners and maybe flippers . ( you are using their money , getting deposits , lots of other discussions about that ) At the same time you now have subs and when a deal comes by you are already connected for your flip .
First suggestion, is to take the cash you have...and take one full "conservative" year's worth of expenses out. Set it aside to be used exclusively for those "bills".
Take the rest, and invest it in flips.
Reinvest the profit from those flips into more flips.
Once your "seed" money is large enough, continue to flip it...but spend ONLY the profit from those flips on cash flow properties.
Repeat....
You're correct when you say your focus should be on finding future deals. The problem is your methods are time heavy, and results light. Stop driving around knocking on doors trying to get lucky. Analyze Markets for their ability to produce a number of profitable properties. Focus in on areas where these properties are in a group.
@Jason Krawitz Sorry to hear that you lost your job. At least it was somewhat expected and it sounds like you have a decent financial footing.
My advice would also be to set aside savings for expenses for a year or two. Don’t “bet the farm” on your first deals as there is always risk of loss with real estate investing. Put some short-term and long-term goals in place.
Also consider where we are in the market cycle. I don’t anticipate another major recession anytime soon but interest rates are likely going up which does have an impact on values.
Partner with an experienced full-time real estate investor when starting out. Not only do you get to learn from their experiences, but you limit your economic risk by having a co-investing partner.
Hope this helps. Good luck!
@Jason Krawitz
I agree with the posts recommending a W-2 job as a way to keep food on the table and the wolves away from the door, along with making it easier to qualify for a real estate loan when you need one. Of course, if you feel strongly about real estate and know you will succeed, then don't waste your efforts on a W-2 job.
Is there a way you can leverage your previous Corporate America experience with something related to real estate? In the career counseling world, leveraging your experience when you change careers is known as creating a functional resume rather than using a chronological resume.
For example, the inspector hired by my realtor to inspect my as-is fixer-upper house had been a builder prior to the 2008 meltdown. His skill was he could look at such a home and figure out whether it was better to restore it or tear it down and start over (with my house, he concluded it was 50-50 either way). His analysis helped my realtor determine her marketing strategy.
In my case, my "core knowledge" was the electronics industry. I had worked as an engineer, then marketed computer chips to engineers, and finally became a technical writer documenting how engineers and consumers use these products. With my change from line to staff, my stress level was reduced and I had more energy after hours to study investing (stocks). As the Internet became commonplace, I was able to work mostly from home (telecommuting) rather than traveling on site, which meant my hours became flexible. The client didn't care whether I did my work in the morning, afternoon, or evening as long as I met my deadline. Not having to commute every day created a couple more hours of free time (and less stress) to focus on developing my investing know-how.
I lost my job this week! My wife, father-in-law, sister, and closest friends tell me this could be an answer to prayer and that I would have never fully pursued my passion for real-estate if this hadn't happened. I've been slowly and conservatively investing in real-estate the entire time I've worked for a corporation. We own a paid for single family home worth $275k that rents for $1595/month. I also have about $150K equity in my personal residence.
How much monthly income could you produce if you had $275K + your time and sweat to offer? How would you do it? I'm eager to hear your thoughts and ideas! If it matters, my preference is rental/cash-flow properties. However, I want to keep an open mind!
Also - Have any of you transitioned into full-time real-estate after losing your "real job"? I'd love to hear those stories!
Thanks!
- Jason
Congratulations! You are now free to roam about the country. I worked for a Fortune 200 company in high tech, high end computing, sales before realizing that it was simply golden handcuffs. The freedom I have now is awesome.
Cash flow is the way to go. I get $25,000 down and average between $500 to $1,000 a door in Phoenix and Mesa buying with Subject To, Wraps and Land Contracts and selling to Tenant Buyers. The Tenant Buyers do all maintenance and repairs, so I have no toilets or troubles. This would work in TN too. It kind of looks like the spreadsheet at the link
Average Cash Flow Per Door In Phoenix Metro Area