From CPA to full-time real estate investor?

Question

Hi BP community,

Really wanted to get some feedback from anyone that has made the jump from full-time job to full-time real estate investor (before having the passive income) or anyone that just may have something to say about this.

Some background - I spent the last 4 years working in the field of real estate taxation as a CPA. During that time, my wife and I have built up a decent nest egg of savings (roughly 70k including retirement plans) and I decided to leave that career to take some time to think about what I want to do next. I was often pushing 70+ hours a week during tax seasons and have burnt myself out a bit. My wife works and her salary alone is enough to support both our expenses. We currently rent @ $2,250/mo and do not own any real estate yet. Also, my wife and I do not have any debt other than minor credit card debt. Our overall goal, like many on BP, is to achieve financial freedom and retire (i.e. not working traditional 9-5 jobs) in the next 5-10 years.

We both want to get into real estate investing and after much thinking, debating, and late night discussions there are a few decisions we could use some advice on.

1. Buying a personal residence in San Diego and creating granny flat to rent out vs. continue renting and buying real estate out of state (if we go this route, we are after immediate cash flow).

2. Depending on what we decide to do in #1, then should I find another job or just go into REI full-time? Will need the job to purchase the personal residence in #1.

I do not mind working again but would like to do something less demanding on my time so that I can focus more on REI.

Any advice is appreciated.

Thanks!

Ron Trinh · Answer

@Nick Foster - Appreciate your two cents Nick! And yes, we gladly pay the Sunshine Tax having traveled to many other areas of the globe. If I go the personal residence route, then I would likely go back into practice and continue saving. This seems like the "safe" bet and I am very comfortable with taking a larger risk than that currently.

With the clients I used to work on, I saw a lot of developers start out with partners, etc. when getting into it full-time. Although it is true the wealthy almost always have real-estate as well.

@Michael Oliveira - A break-even deal in SD would be awesome. If we go the personal residence route, we would also be looking for something that breaks even (although living there). I have a close friend who is having success with a single family residence where a granny flat is being AirBnB'ed in the backyard. Maybe you can do that too? I just love the endless possibilities REI gives us.

And that's great! I hope your consulting business goes well! Given the situation I am in, I am also seriously considering finding a partner I can put in the work for (work for free) to learn the ropes. I think I can add some value when it comes to taxes/accounting or just straight sweat equity (fairly handy as well).

Michael Oliveira · Answer

Congrats on your savings accomplishment thus far! I'm currently deciding on what to do as my entry point into REI as well. I've received a lot of advice on partnering with someone with some experience on the early deals. I'd like to buy-and-hold here in SD to build equity long-term. I'm on the hunt for value add properties that I can at least break even on when rented here locally.

I like @Nick Foster's suggestion to start your own tax practice. It gives you the experience of building a business in an area that you're familiar with and do well in (however, you did mention that you've left that career for the time being). You can apply lessons learned from that experience to build out an REI business as you acquire more properties using the money generated from the tax practice while the salary from your wife covers general living expenses.

Personally, I'm working my W-2 job and building an engineering consultancy as another income stream in which the proceeds can fund my REI. I'd love to scale that up such that I can make more money with less time invested.

Just my two cents as well....! Hope it helps some.

Nick Foster · Answer

@Ron Trinh, congrats on building your nest egg. The challenge you face IMO is you reside in an expensive market. Given your situation you may want to save up more $, purchase a residence for you and your wife, get another job (or start your own tax practice), save money again, then invest locally to learn the ropes of being a landlord.

Those that are full-time REI are typically already wealthy. Most wealthy REI are high-income earners, such as attorneys or business owners. They work and then invest with their excess cash.

Just my two cents.