Making the transition out of 8 to 5 job

5 Replies

To you old salts, gender neutral :),

As an investor with 25+ years experience and a portfolio of single-family detached houses that have been rented and managed through those years while holding down an 8 to 5 office job, I am inquiring from those of you who have transitioned out of the 8 to 5 rat race into full-time living off your investments how you did it. Would welcome your ideas?

Was it a combination of X number of properties with X amount of cash flow? Cash flow from rentals plus buy and sell, or buy, rehab and flip? X number of properties with selling some and taking back the paper?

basically, steve, it is a matter of what you can live on verses what you are bringing in. in the job world, you are not going to work a minimum wage job and try to live in a mansion. the same goes for the RE world. if you are bringing in the necessary amount of money from your RE investments that it would take for you to live as you do now, then go for it. if not, stay at your day job. 

@Steve Drake

There are many factors that play into going full time.  First is making sure you are financially free to go full time.  Will you be able to pay your bills and yourself with your investments?  There is no magic # to go by, it is all based on what your financial situation is and what type of lifestyle are you accustom to.  Many people enjoy their 8-5 and do not want to leave.  

Another option is to supplement your income as a investor with a job that coincides.  For example become a realtor.  This will allow you to create income from helping clients.  Being a realtor allows you freedom to work when you want versus when your scheduled to.  

If you like your job - keep at least part time or projects. REI may do not give your brain high level of professional satisfaction and happiness

Thank you Mark, Ryan and Jane,

While your advice was helpful, it was somewhat vague on the specifics I was looking for. Thank you though, I appreciate it! I think the strategy is to be in acquisition mode (buying more properties) up until your cash flow equals or exceeds what your total expenses are per year to live, travel if desired, etc., i.e, keep acquiring property that produces cash flow until you reach X number of properties, or X amount of net worth. Then start the liquidation process to increase cash flow even more by carrying back the paper, and/or selling off some to get the others free and clear.  With X number of properties free and clear, or X number of properties that I'm carrying the paper, cash flow increases. At the same time perhaps as I'm selling one, I'm replacing it with another buy, thus keeping X number of free and clear properties as "inventory", and buying and flipping others to supplement the cash flow I'm receiving from the properties "kept" in inventory.

Don't know if anyone's got specific experience with this plan or can offer suggestions here?

Regards,

Steve

I think your the only one who knows the answer to your question. For example, if you make 150k a year at your job do you want 100k in net cash flow from your properties to supplement the w-2 job your giving up? Or do you only need a portion of this because your going to live a little more frugal? Or maybe you need more. For me personally, the goal is 300-400k in annual gross rents which should yield about 50% net. That is approximately 50-60 doors in my target market.

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