How to Start Real Estate Investing with a Day Job

28 Replies

Hi, my name is Kai. I recently read Brandon's book "The Book on Rental Property Investing" and got really interested in real estate investing. But here is my situation. I work in the finance industry, and my day job is very demanding. I have to work 12-13 hours a day. I do have the weekends to myself, which right now I mainly spend on unwinding and relaxing. In Brandon's book, it seems that rental property investing can be a very time-consuming process. You will need to spend time on finding deals, analyzing deals, carrying out due diligence, and all other stuff. I have imagined doing this at night and on weekends, and it just felt overwhelming to me.

Apart from that, I live in northern California Bay Area, where the property values are extremely high, and the rent-to-price ratios are low. It seems like most of the time I will just be building up equity instead of receiving cash flow if I invest in California. Most likely I have to invest in another state like Idaho/Michigan to find attractive deals. This "long-distance" adds another layer of difficulty to me starting on real estate investing.

Does anybody have similar experience before or are in a similar situation now? If so, could you give me some advice on how to start out despite these difficulties? Thank you!

You could look for deals in the evening or weekends to get started. Also, if you want to invest in real estate but keep your W-2, you could also look into passive investing in multifamily deals. You make money on your investment each month, without putting any hours in. 

Kai.......welcome to BP.

Second...no disrespect my man, but thousands of people have been in your shoes in the SF Bay Area with demanding jobs that have found the time and energy to invest out of state successfully.

You can do it.

@Kai Zhou Welcome to BP! You can make real estate investing as time-consuming as you want. It's fine if you have a good W-2 job that you don't plan on leaving - there are still ways to invest in real estate. @Marlen Weber brought up a good idea for some passive income. Also, what about a house-hack? You're going to need a place to live regardless, so you might as well make it into an investment.  

Best of luck!

@Kai Zhou

Congrats on seeing the value of real estate investing.  When I started I worked 10 hour days.  Just like people who go to school at night time to acquire there bachelors or masters  degree, if you want something you will make the time.  That’s how I finished my masters.  Then I went into real estate.  Like anything all good things require effort and education.

If you have the funds you could invest as a private lender many people go that route that have limited time. This way you can learn along the way. This could be small deals or syndication apartment deals.

You could invest in turnkey properties. Properties are updated and a property manager takes care of the daily issues. Do your homework on turnkey providers. There are some bad ones.

Partner with an experienced investor to learn the ropes to speed up your learning curve.

There are many choices that can limit your time involved.

Hi @Kai Zhou !

I think that if you want to invest in real estate but you don't have much time for the management of your portfolio, you can consider passive investments. I prefer the crowdfunding model and invest with RealtyBundles. Must say that I am pretty satisfied with the investment returns I have. 

If you are interested, you can read this article: https://realtybundles.com/blog/how-does-realtybundles-provide-a-hassle-free-service
I hope it will help you!

@Kai Zhou My advice is to get clear on your desire or your goal or your vision. If you start with a strong enough desire, a "difficulty" becomes just another reason why to keep going. If you start with a weak desire, a "difficulty" will be the reason why you stop or never get started.

The only limits we find are those we put on ourselves and those we allow others to put on ourselves. Take each one of those "difficulties" and realize they all come fear. Conquer that fear. Fear. Less. Become fearless. How do you do that? 

  • Find someone who's conquered that difficulty. See how they did it. Replicate it.
  • Dig deep on that difficulty. 
  • Is it lack of time? - We have 24 hours a day, I promise you have time if you look hard enough.
  • Lack of knowledge on out of state investing? - Read "Long Distance Real Estate Investing" by David Greene.
  • Lack of confidence? - Take action daily no matter how small towards your goals. Confidence is built not given.

We all have different scenarios and reasons we tell ourselves why we can't. There are some people with less and some with more advantages. Rather than compare to anyone on here or in your life however, go out and be uncommon among the uncommon. Be your own hero in your own story.

You've got this.

Best way to get started in investing is by keeping your day job otherwise you wouldn't qualify for a loan. I would recommend starting your investment journey by purchasing in your area and maybe trying a house hack with a 2-unit property. Find a great agent in your area who is also an investor and have them help find you a great deal that works for you. Would not recommend going OOS with your first deal, if you don't have time to invest locally you will have even less time trying to find trustworthy, competent people OOS, managing them and having to fly out to see property or when something goes wrong.

@Kai Zhou perhaps it would be better to be a capital investor and find a boots on the ground partner? You can also consider investing in syndications with experience ppl who eat, sleep, breathe apartment investing and have been for years. If you have capital but work crazy hours, that is the direction I would consider.

If you're determined there is no time for unwinding and relaxing. I come home from the day job and head right to the site until 10:30 or so. Saturday and Sunday I spend all day and part of the evening. I can keep up this pace for 3 months or so before I burn out. I'm not bragging. I have goals.

@Kai Zhou there is a lot of confusion in this industry about the difference between running a real estate business and being a passive investor in real estate. Most of the discussions on Bigger Pockets, for example, focus on earning entrepreneurial profits by running a real estate business (although many people don't realize that's what they're actually talking about). However, there are plenty of passive ways to invest in real estate as well. The difference is that you don't get entrepreneurial profits; you just get a reasonable return on your capital investment. Where a lot of investors in your shoes go astray is that they want the passive investment, but expect the returns that go along with the entrepreneurial endeavors. 

Many of my clients are high earners from out of state that are in a situation similar to what you're describing. They are looking for a place to invest their capital to get solid returns. They purchase small multifamily properties with tenants already in place, and use a property manager. They're looking for the benefits of real estate investing, but not all the work of running a real estate business. They understand they're not going to get double digit (or even high single digit) cash on cash returns, but most of them get great total returns over time. These clients are truly just investing their capital to get a return on investment.

I have other clients that match the general makeup of Bigger Pockets more closely. They're looking to spend a lot of their time screening deals, working with contractors, crunching number, making offers, sometimes managing their own properties, etc. in order to achieve much higher returns. What they're really getting paid for is their efforts and the additional risk involved with rehab projects. These are the people executing BRRRR deals and similar strategies. They're running a real estate business, and getting paid accordingly.

Both strategies have their place. You just have to decide which is best for you and go with it. You can always change later on, if change jobs and suddenly have more free time. Just don't be duped by people promising out sized returns on passive investments. There is no free lunch in real estate investing.

@Kai Zhou I'm in your exact shoes, my friend. I did not spend nights and weekends looking for deals, I spent nights and weekends researching markets that make sense for my goals and then researching teams I can leverage to look for deals, manage the properties, find me lenders and assist me with business plans to optimize ROI. To me, this boils down to finding a person or business that offers a turnkey solution.

You can work with companies that offer completely rehabbed properties upfront which minimizes how much you need to learn and how much time you need to devote but at reduced equity and cash flow.

You can work with companies that offer a turnkey solution of purchase, selling, property management, rehab management, and has strong long-term relationships with service providers like insurance, lenders, and contractors. The properties are typically not fully rehabbed, so it is your responsibility to understand the REI buying process and create a business plan that encompasses more than just buy - hold. This will take more time, but you capture more equity and cash flow and therefore can scale much faster.

As others have talked about, syndication is relatively hands-off, but you do need to spend your nights and weekends vetting the companies you will give money to. Often you need to be an accredited investor and pony up at least $50K to get involved, but you typically get respectable returns. There are several markets and opportunities to get better returns with similar risk investing in single-family homes with only $18-$25K to get started and no need to be accredited.

From what I've seen, there is a direct correlation between your involvement and ROI while having a demanding W2 job. They both go up or they both go down.

@Kai Zhou hey man, I work a full time job too. Often similar hours but I try to get most of my stuff done on days off or some simple tasks like a phone call during my work days. In your market, I would look into investing at a distance. You might wanna consider buying turnkey or finding a partner, but not being close to your properties might even be a good thing because it forces you to build a team and delegate time consuming tasks. Check out David Greene’s book on Long Distance Investing

@Kai Zhou I understand what you are going through. I also just recently started to put both feet into real estate investing and it is hard when you have a lot of other things going on. You have to look at the bigger picture, look at what you are working towards and you will find the time and energy to get through it. 

Hey Kai - I am certainly in the same boat at you. I work in tech which is certainly a grind. I usually find myself on the computer by 7 am working close to 12+ hours and then getting in additional hours over the weekend. The concept of 'finding time' to dedicate to REI is something I am still adjusting to.


One way to assist here is to simply find a business partner who will be willing to take on 50% of the work. We spun up an LLC to purchase properties under and within our operating agreement/business organization documentation we highlight who will own what part of the process. By dividing and conquering, we are able to gain efficiencies through each part of the REI process and essentially reduce the total amount of work each individual needs to own. Not to mention, we each have unique core competencies that thankfully complement one another.

Regarding location, I am in Los Angeles and my partner is in NYC, which is similar in price point to the Bay. We decided that out-of-state investing was best for us and landed on the Lehigh Valley market. During our market analysis, we made sure to outline what an acceptable outcome would be for us when acquiring any given property. We fully expect to see cash-flow from day 1, but it will be minimal. For us, it is the experience and momentum of locking down a deal that is most important.

The advice I would give to you is to make sure you understand what your unique goals are and then work your way backwards to find the right markets and properties. Once you know your end goal, it is a matter of knowledge, hustle and time before you hit those goals. 

Hope this helps! 


Justin

@Kai Zhou - it's been hit on here already, but if you are accredited I would seriously consider investing passively in syndcations.  I have personally invested in 35+ syndicated deals and would be happy to discuss further if you like.  Just shoot me a DM.  

I wish you luck!

@Kai Zhou it sounds like your goal isn’t necessarily for Financial Independence, but diversification. I’d recommend researching RE crowdfunding (ie, Fundrise or similar) or Turn Key. Your returns will be lower, but so too will be the time you spend.

I have one “long distance” rental in the portfolio. if you don’t have a trustworthy, reliable “boots on the ground” person in that market, you may be taken advantage of, and no deal is better than a bad deal in my opinion.

Turn key or crowdfunding will also allow you to get started, and avoid FOMO (fear of missing out).

Good luck and thanks for posting

@Kai Zhou Many people invest out of state pretty passively. I've seen around 200 investors make passive moves in OKC alone in the past year. Just spend a some weekends reviewing providers. You can also talk to some people that vet providers to know where to start. 

@Kai Zhou   I also work and have a demanding job.  Look at long term rentals and buy ones that are solid and will attract good tenants.  Find a place with lower vacancy rates and where people will want to stay for a while, so you have less turnover and vacancies.  You could have a property manager take care of them (make sure you get a good one and know all of the costs as it will cut into your profit).  Avoid places that need a lot of work or cheap ones where you will have less desirable tenants who will do more damage to your place and cost you more when you turnover the place. 

@Kai Zhou  

First of, congrats on having the bug of Real Estate bite you! I have a feeling you know the answer to all your questions, but you only doubting a little of your potential. Like you have read on Brandon Turners book on Rental Property investing, at the beginning it will be hard because like he said or maybe someone else did but he took the quote, "its like a moving a locomotive, at the beginning it is hard to get it going, but once you have enough momentum the rest is history." Keeping you day job right now is crucial in order to get finance for a property, so keeping your job, reading on David Greene's Long Distance book, and using your weekends to plug in numbers for properties like you said in Idaho/Michigan, seems like a great lead measure. Once you get enough of that, I am sure you will find yourself signing on your first deal. 

You got this, best of luck Kai.

Originally posted by @Kai Zhou :

Hi, my name is Kai. I recently read Brandon's book “The Book on Rental Property Investing" and got really interested in real estate investing. But here is my situation. I work in the finance industry, and my day job is very demanding. I have to work 12-13 hours a day. I do have the weekends to myself, which right now I mainly spend on unwinding and relaxing. In Brandon's book, it seems that rental property investing can be a very time-consuming process. You will need to spend time on finding deals, analyzing deals, carrying out due diligence, and all other stuff. I have imagined doing this at night and on weekends, and it just felt overwhelming to me. 

Apart from that, I live in northern California Bay Area, where the property values are extremely high, and the rent-to-price ratios are low. It seems like most of the time I will just be building up equity instead of receiving cash flow if I invest in California. Most likely I have to invest in another state like Idaho/Michigan to find attractive deals. This "long-distance" adds another layer of difficulty to me starting on real estate investing. 

Does anybody have similar experience before or are in a similar situation now? If so, could you give me some advice on how to start out despite these difficulties? Thank you!

 Maybe investors go with Turnkeys when they work a 9-5. The idea is that a Turnkey Provider would own the property first (not be a listing agent) then they would renovate it all in-house, place a tenant, and then manage it after the sale. Again, this should be in-house and not with a third-party. The idea behind Turnkeys is that it is all done for you prior to closing and the property should be passively cash-flowing from day 1. 

@Kai Zhou

Welcome to BP! A good place to start if your day job is too demanding is a turnkey property. @Zach Lemaster over at Rent to Retirement helped me and many other investors with a passive investment. They specialize in high quality rentals where the market maximizes cash flow and appreciation.

Zach got me into a quality rental with tenants in place. Now I'm focusing on more active investing but would highly recommend their services. 

Hey Kai,

Thought I'd comment on time management and offer my services to help you find deals.

I also work a day job from 7:30am - 5:00 sometimes 6pm Mon-Fri. I'm also a real estate agent and I'm closing in on $1.5 million in home sales. In addition, I self manage a small portfolio of 6 rental units. Needless to say, my time is thin. Whatever you decide to do make sure you can follow through with your commitments. I have made the mistake of over-committing and it's the worst feeling to not follow through with something, especially when others are involved. 

Like I said, I am a rental property owner and real estate agent in Southeast Michigan. If you're serious about looking in other market, take a weekend to fly out here and we can discuss this market in detail and how you can invest here. My brother and I self manage all our properties and are open to taking on other investor's properties for a management fee. If you're interested let me know and we can discuss next steps.   

Whatever you decide to do I wish the best of luck to you!