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!
Real Estate Broker · Bakersfield, CA · Member since 2018 · 269 posts · 597 votes
7y
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 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!
Flipper/Rehabber · Mount Juliet, TN · Member since 2014 · 107 posts · 36 votes
7y
Thank you Reid! That is something I've never heard much about but would love to learn. There is a real-estate-investors network in Nashville that I'm considering joining to connect with and learn from others doing things like you've suggested.
Originally posted by @Account Closed:
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.
I went through that transformation back in the day. I'm still in beta and am redoing this exercise now as a retiree.
A couple of techniques I used back then: Tony Robbins sold the cassette tapes Unlimited Power that helped me identify and prioritize my short, medium, and long term goals. Og Mandino's book The Greatest Secret in the World kept me motivated by keeping me focused on those goals with its daily and weekly exercises that last a year to complete.
I also learned the technique of taking a blank sheet of paper every day and writing down my most pressing problem at the top ("find more sellers," "find more buyers," whatever) and then coming up with 20 possible solutions. It doesn't matter how silly these ideas are at the time; what matters is you get them down on paper quickly (just before bedtime is a great time to do this exercise). Date the sheets of paper and keep them in a three-ring binder. Most of the ideas will be worthless, but every few months or so, you will look back and find the one that became your million dollar idea. Highlight this idea with a yellow magic marker. All it takes to be successful is just one million dollar idea in your career.
If you end up having to go back to a W-2, as I did, don't think of yourself as a failure. Entrepreneurs never fail; they only have temporary setbacks. I learned my new craft of technical writing on my W-2 employers' dime (which is not something you want to volunteer during a job interview or while you are working there). Then I struck out on my own again, but working through a temporary help agency on a W-2. I didn't get a paycheck if the agency didn't have a contract for me to work on (which is a great way to learn how to live on a lumpy income stream), but the agency took care of my marketing and revenue collection (for a fee) so I could focus on being the best technical writer I could . Once my investment capital reached a point where it could support me (on a 4% safe withdrawal rate), I downshifted and worked fewer hours. I had thought about retiring completely at that point, but when the Financial Crisis of 2008 hit, I'm glad I had kept working in some part-time capacity. You never know what is coming around the bend.
Rental Property Investor · West Caldwell, NJ · Member since 2019 · 104 posts · 65 votes
7y
@Arlan Potter where can you buy a house for $50k and rent for $800? I often hear this and wonder?? Assuming out of my state, however I would want to be close to manage my deals.
Investor/Accountant/Builder · Meno, OK · Member since 2014 · 1k+ posts · 918 votes
7y
@Steve O. Maybe not exactly but the principal is what I was getting at. He was way less than 1% per month on his rent to value. He needs to get better deals. Or stay out of the rental business. There has to be abetter return somewhere.
Real Estate Broker · Houston, TX · Member since 2017 · 64 posts · 27 votes
7y
@Jeff Cagle add the one technique of holding the property with one tenant for a year or two - 1031 exchange the money tax free into more properties - this will accelerate the growing of your net worth by retaining the taxes your paying
Investor · Houston, TX · Member since 2017 · 1k+ posts · 871 votes
7y
Some great posts in this thread.
Reminds of some old joke -- how do you make $1 million in the ___ industry? Start with $2 million.
So that's you. You are starting with $2 million. Take $1 million and stash it someplace, because in the process of learning this, you are going to get separated from some cash. Just use sound risk management principles to keep that from getting away from you.
Specialist · Nashville & Indianapolis · Member since 2018 · 10 posts · 9 votes
7y
I got fired from my job at Whole Foods Market 6 years ago. Within 1 year I owned a very successful food delivery business and my band was signed to a record deal. I was flying high for 2 years. Eventually, UberEats put us out of business and our drummer got a great job offer in his home state, so neither worked out. However, those were the best times of my life so far. Now, I'm learning about real estate.
I'm saying all that to say that your family is correct. It's a blessing in disguise. Go with it, broski.
Lender · Pensacola, FL · Member since 2017 · 658 posts · 626 votes
7y
FYI -- If you think you might need a Plan B or Plan C as a fallback, consider the new collar job opportunity. Perhaps real estate companies will need more IT talent in the future.