18 month plan to quit my job. What do you think?

48 Replies

I am quitting my job in 18 months.

To cover a comfortable lifestyle I need an additional 30k in yearly rental income. I have a good amount of money saved up to buy homes with cash and then refi them but very little extra time at the moment, however after I quit my day job in ~18 months I'll have lots of time, but no ability to get financing.

Up until now, I've been planning to buy houses at ~70 LTV and rent them out for a pretty good cash flow. Going this route I would only need a small number to meet my goal but it would mean a lot of dead equity. I am also very familiar with route as I've done this multiple times before.

An obvious alternative is to use the BRRR method. The benefit being that I get a much better return and very little of my money would be tied up in the properties. The downside is it would require a lot more time to find and buy and renovate these houses and cashflow per property would be smaller so I'd need maybe 3 times as many. I also have little to no experience using this method...

Should I save the capitol and go the BRRR route and probably not meet the income needed 18 months from now? Or should I play it safe for now and take the BRRR after I can do this full time?

I'd really appreciate hearing how you would handle this situation.

@Aaron Z. can you provide more detail on your situation? Money saved? How many properties you have and their current cash flow? Current salary and any living expenses like house payments or rent? Also what is your goal with retiring? In other words are you in a profession that is physically or mentally hard on your body? Are you looking to pursue some other passions in life or spend more time with your family? Sorry for all the questions, but I think when giving life-advice it is important to understand more about a person than what we know so far.

@Joe Splitrock

Hey Joe, that is a lot of info you're requesting! Here's what I'm comfortable providing:

Money saved for RE use: more than 100k less than 1M.
Cashflow at retirement with no additional deals: 65k/yr
Salary: >100k
Living expenses estimated immediately after retirement = 90k, but could make do with less. I currently rent due to job that requires frequent moves. Will buy at some point but not immediately upon retirement. We are flexible on housing in the short term as a cost saving measure. Our eventual home be worth north of 500k, but I plan to do much of the work building that to save money - I'm an engineer and I love working with my hands and mastering new skills.

Retirement goal: absolute time freedom. Be my own boss. Do RE investing full time for a few years. No having to move around for my job.
My job is very mentally stressful, but not very physically stressing.

I hope that's enough for you to work with. Although I am nowhere near wealthy, my 11 year old 4Runner (purchased with 100k miles on it) and I do like to practice stealth wealth so it is hard for me to provide exact details on what you are asking for.

Originally posted by @Aaron Z. :

Joe Splitrock

Hey Joe, that is a lot of info you're requesting! Here's what I'm comfortable providing:

Money saved for RE use: more than 100k less than 1M.
Cashflow at retirement with no additional deals: 65k/yr
Salary: >100k
Living expenses estimated immediately after retirement = 90k, but could make do with less. I currently rent due to job that requires frequent moves. Will buy at some point but not immediately upon retirement. We are flexible on housing in the short term as a cost saving measure. Our eventual home be worth north of 500k, but I plan to do much of the work building that to save money - I'm an engineer and I love working with my hands and mastering new skills.

Retirement goal: absolute time freedom. Be my own boss. Do RE investing full time for a few years. No having to move around for my job.
My job is very mentally stressful, but not very physically stressing.

I hope that's enough for you to work with. Although I am nowhere near wealthy, my 11 year old 4Runner (purchased with 100k miles on it) and I do like to practice stealth wealth so it is hard for me to provide exact details on what you are asking for.

Haha, I knew I was asking a lot and I totally respect your privacy. It is much more important for you to reflect on the answers. There are really two questions here. "Can I retire" and "do I want to retire". That is why I asked how demanding your job is and what your life goals are. I would never tell you what is right for you, but by asking the right questions, you can answer that. 

The truth is you could retire today if you adjusted your life style, which you already know. Your financial goals are actually very similar to mine. I am looking to get to around $100K income from my rentals to quit my day job. I am adding new properties at 75% LTV and I am not using the BRRR strategy. I like having a cash flow cushion and knowing that I can sell any property at any time and walk away with cash. Plenty of people on BP would say that is a horrible strategy, but it works for me. It protects me from a market crash. I have a good job and like my job, so I am not in a rush to quit. RE is my future plan, but today I am enjoying the benefits. I have steady income, great credit score and I can easily write loans for more properties. I just save up a deposit, buy a property and start saving again.

My advice is to do what you feel comfortable with. Maybe that is not the answer you wanted, but my guess is deep down you know what is best.  Either way, you are on a great path so good luck.

@Joe Splitrock

Glad to see there is at least 1 other person that follows a similar investing plan...I understand how the high capitol requirement turns off some people but if you are saving 50k a year then it makes a whole lot of sense.

Yes I can retire and yes I want to retire. Will I feel regret for not saving my capitol for use after I retire? Maybe, but I'm leaning towards no if using the capitol now means I retire significantly sooner.

Thank you and good luck to you sir as well!

@Aaron Z. Is there any way that you could try a BRRR and retain your day job? Since it would be your first time doing it (if I'm reading your post correctly) there's risk there. If it doesn't go well and you end up losing money you could impact your seed capital that you need to use to generate retirement cash-flow. Maybe I'm just being overly conservative but if you can manage to get one under your belt while keeping a $100K+ job it would certainly help to cushion the blow if you stub your toe. Conversely, if it goes well you'll have a good return from the BRRR and more capital saved. Now the viability of doing the a BRRR and your job successfully is something only you can answer (no idea about time requirements, travel, etc.)

@Andrew Johnson

Good point. I'm actually scheduled to close on a duplex BRRR in 2 weeks and I'm definitely watching it closely to see how it goes.
My estimates are:
40k purchase
35-40k reno
85k pulled out with the refi
1400-1600 rent
I've partnered with a close friend where he has the time and I have the capitol. I'm also using a GC that I'm familiar with and trust.

There is no staying with my current job though...I'm done in 18 months...I could work another W2 job if needed, but for less pay and less stress. I'm just ready for a change.

Thanks for helping me think this through.

@Aaron Z. BRRR is a ton of work, depending on the amount of capital you have to work with, I would probably look into the largest multi family that you can afford and try to zero in on one in the next 18 months while you still have your job. It will take quite a few of what you describe above to complete your goal, and that's assuming each one is a deal.

This route you can focus on finding one deal...

@Zach Quick
Hi Zach, thanks for the feedback.
I think you are referring to me solely following the BRRR route? That is not my intention.

By buying a small number of additional houses with the capitol I have now, I can meet my goal income in pretty short order which is fairly low risk since I've followed this process before. This thread is a way to get feedback on whether there is merit in spending more time on the BRRR method now, which is not an area I am experienced in.

I'm just investigating the BRRR on this duplex as a side project.

Please let me know if I misunderstood what you were saying.

@Aaron Z. How many times do you think you need to do this with small houses in order to get an extra $2500 a month in true CF? Compare that to one larger purchase was my point...but I'm also a fan of multifamily over SFR's.

@Zach Quick
Sorry for the misunderstanding. 3 times and 150-180k of capitol tied up to do it. Based on my past 10 years of experience in this niche.

It'd be great to make a single larger purchase and cashflow the same, but there are not a lot of multi-families that sellers want to sell at a price that makes sense in the local area that I operate in...or at least I don't know of any.
For me that's new territory so there'd be a learning curve that would slow the process and add some risk. But I like the idea...and I'll look a little harder to find a deal like that.

Any recommendations on how to find a good deal on a multifamily that will cashflow a true $2500/mo that will require less than $150k in capitol? That truly is outside my area of knowledge - but for the right deal I'd even invest out of state...

You should stay at your job and keep doing this as a side gig...

People always want to jump into entrepreneurship And it's really not a good idea or even needed.

When we mean entrepreneurship... I mean not dip your toes in but going all in. Like Gary V sleep 4 hours, Grant Cardone x10 stop being a *****, Burn the boats all in. A lot of motivational gurus will tell you to dream big, commit and go all it - buy that fancy car now so you set that bar high and force yourself to achieve it. They don't know your situation and often times these gurus are outliers and often they themselves did not follow the same advice. Don't buy into survivorship bias. For every entrepreneur who goes all-in and even does it as a side gig only the minority succeeds. To focus only on those successes is a logical fallacy. Despite a superior product and optimal skill set so many things can still go wrong.

You are not going to give your business what it NEEDS when you are worried about putting food on the table and paying rent. This frenzied survival causes two things:

First you are less creative in this survival mode. Outsource yourself as much as possible first. Hire the help first or you will be drowning in manuchia. You will not be leveraging you time or your skills. This will require you to create lean and efficient systems which is what building a business is all about at its core. As Robert Kiyosaki differentiates in his book "Cashflow Quadrant" an entrepreneur builds a system that they can be removed and scaled where as an entrepreneur who does not build a system is just a glorified self-employee.

The second when you are in this survival mode you are taking unneeded risks and making mistakes such as forcing the wrong deal or giving up excessive equity for taking on VC capitol.

As a side note a big part of business is negotiation and in negotiation the biggest component is the ability to walk-away. Not having a job and supplemental income source or cash buffer torpedoes your pillar to negotiate. You are effectively the Emperor with no clothes and everyone you deal with and your customers knows it. Just as ask any women... they can smell desperation in a potential suitor.

You should only quit your job once you can scale. And YOU should be the last part of the business that can't scale because you have a job and business needs more of you to scale.

You have to be the bottleneck. Don't dilute yourself in to thinking you are the bottleneck because you just want to quit your job because it is a badge of honor when it comes to running a business or quitting your job.

A lot of entrepreneurs just want to quit their job because they just want to tell all their friends and family they the told the Man to F off, they don't want a boss, and they have escaped the 9-5 rat race. It's cool to be like I'm all-in, I don't have a JOB.

That is an ego thing and we need to be conscious when our ego is leading and not logic.

I spent a decade working my way up through junior level jobs, being a first level supervisor, and managing professional and learned a lot of how a mature business works and inter personal. I wish I would have had this mindset earlier but I realized recently that working for someone else is a privilege to try things out (FSU) on someone else's dine. You don't want to be trying some new marketing scheme or leadership technique the first time when you get your one shot to swing the bat. It is not the time to be "finding your management style" when you step up to the batters box with your own capital at risk.

Here a joke... when at your day job rub off the labels of the letters on the keyboard to use work as a time to master no look typing.

In conclusion ask yourself why am I wanting to leave? Is it because of ego or nessicary? And have I acquired both the skills, proof of concept, and starting capital to create this "runway" for my business to thrive.

@Lane Kawaoka "I spent a decade working my way up through junior level jobs, being a first level supervisor, and managing professional and learned a lot of how a mature business works and inter personal. I wish I would have had this mindset earlier but I realized recently that working for someone else is a privilege to try things out (FSU) on someone else's dine. You don't want to be trying some new marketing scheme or leadership technique the first time when you get your one shot to swing the bat. It is not the time to be "finding your management style" when you step up to the batters box with your own capital at risk."

You've worked very hard.  Thank you for your response.  I'm sure you read every response above but just to add some amplifying information:

I"m currently at 65k passive income at retirement in 18 months without any further actions taken. I'm looking to add a few more homes and complete the plan with about 95k totally passive income in 18 months.  My expenses in retirement are flexible, but my calculations put "comfortable" at 85k in a moderate cost of living area.  My bare bones post-retirement living needs are much lower at about 70k. Additionally, I have and continue to develop VERY marketable skills and as such I can always get a job if needed.  I always have several backup plans and I make it a point to avoid burning bridges so that I always have lots of employment options.  Nothing has ever been given to me aside from my drive and my discipline and being born in the 20th century in a country full of opportunities. 

Don't worry about me - I started this thread trying to turn the next 18 months into an optimization problem for BP to solve but honestly I'm just asking for input picking the best route forward from a list full of really great options moving forward...

@Aaron Z. I agree with Lane wholeheartedly. 

One other reason to keep your job and that is not mentioned, is to secure traditional Fannie/Freddie financing. Make a point to talk to some lenders -- They will tell you firsthand how difficult it is to secure a loan without sustained proof of income.  

@Louis A. I mentioned and am including the inability to easily obtain financing without W2 income right from the start of my post.

@Lane Kawaoka Louis A. So what would be your exit strategy for me in this case? Please be specific. What is wrong with quitting my current job and starting another layer if this isn't the life for me? Why is it critical that I keep adding to a large pool of money instead of putting it to work now and living off it? Do you both suggest that I work for 10 more years? 20? Each year saving 50+ thousand to be deployed in yet another property?

I do realize that this analysis is unfair to you since you don't have exact numbers and I'm not willing to provide those, so you probably feel you are being necessarily safe. But can you put down exact numbers that would make you feel safe given my projected expenses in retirement? I'm really trying to understand where my plan is so weak.

@Aaron Z. Thanks for clarifying -- I re-read your post and have a better appreciation for your dilemma. If I understand correctly, you are already generating $65K of passive income and would like to get to $100K. It will take ~ 3 separate purchases in your market @ $150K invested to generate $30K of passive income. Given your 18 month deadline, this seems to be the safest and most probable route to reach your goal. Also, it seems that your playbook has been acquiring with 70% LTV financing -- Why deviate from what has worked for you?

I understand the benefits of the Brrrr method, but as others mentioned it will require time that will likely extend beyond your time-frame. BTW, I would hardly call an investment "dead equity" that yields 20% Return on Invested Capital. It sounds like you've worked hard, managed a successful career and have reaped the benefits by accumulating some capital.  Kudos to you! Nothing wrong with putting that hard-earned capital to work.



BTW, fwiw -- I went through a transition 2 years ago @ age 38 from a highly stressful role that required +60 hour work weeks and constant international travel. I was certain that I would not enter the rat-race again and would pursue my RE endeavors. With all of my properties being out of state, there wasn't a whole lot to occupy my time with. After 6 months or so with batteries recharged, I had the desire to get back in the game again -- And I did, but with a much more manageable role/position. No regrets so far.

I know its a difficult decision to wrestle with. Best of luck with whatever you decide. Cheers!

Originally posted by @Aaron Z. :

Zach Quick
Sorry for the misunderstanding. 3 times and 150-180k of capitol tied up to do it. Based on my past 10 years of experience in this niche.

It'd be great to make a single larger purchase and cashflow the same, but there are not a lot of multi-families that sellers want to sell at a price that makes sense in the local area that I operate in...or at least I don't know of any.
For me that's new territory so there'd be a learning curve that would slow the process and add some risk. But I like the idea...and I'll look a little harder to find a deal like that.

Any recommendations on how to find a good deal on a multifamily that will cashflow a true $2500/mo that will require less than $150k in capitol? That truly is outside my area of knowledge - but for the right deal I'd even invest out of state...

To make sure I'm clear on your numbers, as I'm in a very similar situation.  When you say cash flowing $2,500 / month (or $30,000 / year) with about $150,000 of invested capital, that to me would be a 20% Cash on Cash return. 

Great if you can get it but that's a pretty high % to aspire to in my experience.  I've been able to get over 15% thus far but, of course, numbers could change.  We're due a recession.  We have a new more business friendly administration but there will be turmoil as they try to take things to the place they want to get them to so I would expect much chaos along the way.

All that aside, when you say $2,500 / month and, as you mentioned, you're looking at adding 3 properties so call it $833 / month / property, you're quoting a true cash flow number that takes into account all PITI, management cost, recurring capital expenses, vacancies, correct?

I'm in a similar boat to Aaron in that I'm trying to figure out how to bridge that last income gap for retirement. I've been doing BRRRR before it was even a thing and, as Aaron pointed out, it's great for minimizing capital requirements. I think BRRRR is awesome for starting out and lets you acquire a lot of properties quickly. At some point, though, you will reach a point where it's just not as attractive. You will reach a point where the time and effort required to be in a deal with low or no money down is just not worth the effort and time. You've accumulated a capital cushion and you've got too much to deploy. (There are obviously exceptions to this statement, some people never get tired of the thrill of the deal and chase them forever.) I think a lot of investors start looking at value adds in larger properties or just simply look for higher quality (less equity) deals, and recognize they'll be making less return on their money. Some simply start deleveraging. You just hit a point where BRRRs don't move the financial needle like they used to.

@Aaron Z. , it seems like you are almost doing it in reverse.  That is, going the easier route first and then ramping up to do BRRRs.   I'd question whether you're going to want to maintain that energy level for long enough.  You've been doing this long enough that you know landlording isn't all sunshine and roses, and if you've got financial independence, what is your motivation for continuing on?

@Louis A. You understand correctly.  I don't really have a desire to deviate from my past method but I wanted to throw it out there for BP members to scrutinize, to see if I was looking at this the wrong way or if I was missing something.  I think my return on invested capitol is pretty good overall.

Regarding your second point, thank for sharing -- I can see how re-employment could be appealing and even welcome after a nice break and I'd be okay with that after giving "retirement" a chance to make sure I wasn't shorting myself.  All of my properties are located where my family plans to move to upon retirement and they are within a relatively small area so that I could easily manage them myself if I wanted to stay busier and add some non-passive income.

@Steve S. Yes, my experience has been between 15 & 25% on my capitol invested, 20% Cash on Cash return. If I go too high then my cashflow starts getting squeezed on each property and if I go too low I start to feel like I'm sinking too much capitol in the property for just a minimal cashflow increase.  And the $2,500/mo is after all expenses and I'm being fairly conservative based on my past experience.  I know it's hard to fathom but I've seen houses here on BP where people have blown away the 2% rule...although this is typically on a cheaper house. What I've found is a way to get 1-1.3% on newer homes, relatively more expensive homes.  I'm sure at some point I'll detail my process here on BP but I'm just not ready to yet. 

@John Chapman That's a great point.  Weighing the merits of an "easy" but lower return on cash invested or a much higher return on cash invested but with a much more complex and time consuming is something that I've spent a lot of time overthinking recently.  I like how you phrase it that I chose the easy way first...I guess most people don't/can't go that way due to the capitol requirements but it always just made sense to me.  And I don't know if I'll have any desire to continue RE investing after FI but I'm not one to sit still for very long and I love the feeling of executing and finishing a well planned project especially one where I can spend some time working with my mind and my hands...I get zero chance to work with my hands currently. Best of luck bridging that final gap.

Originally posted by @Aaron Z. :

I am quitting my job in 18 months.

To cover a comfortable lifestyle I need an additional 30k in yearly rental income. I have a good amount of money saved up to buy homes with cash and then refi them but very little extra time at the moment, however after I quit my day job in ~18 months I'll have lots of time, but no ability to get financing.

Up until now, I've been planning to buy houses at ~70 LTV and rent them out for a pretty good cash flow. Going this route I would only need a small number to meet my goal but it would mean a lot of dead equity. I am also very familiar with route as I've done this multiple times before.

An obvious alternative is to use the BRRR method. The benefit being that I get a much better return and very little of my money would be tied up in the properties. The downside is it would require a lot more time to find and buy and renovate these houses and cashflow per property would be smaller so I'd need maybe 3 times as many. I also have little to no experience using this method...

Should I save the capitol and go the BRRR route and probably not meet the income needed 18 months from now? Or should I play it safe for now and take the BRRR after I can do this full time?

I'd really appreciate hearing how you would handle this situation.

 You should build your real estate business first (while working your job) There will come a point where your real estate business is taking up more time and producing more income then your job. At that point you will need to make the decision to continue into building the real estate business or stop the growth. Setting up goals to quit the job prior to the point where you need to make that decision is never a good idea. 

In short: Focus on growing the business 1st and everything else will fall into place. 

@Aaron Z. I think one overlooked point in this thread is that when using the BRRR technique you can use porfolio lending. Which is commercial lending by definition and it's not near as dependent on your own personal income but more so how much the property cash flows and your experience as an investor. I've spent the last 5 years getting into conventional loans of eight or so properties. It was a huge undertaking and a constant flow of information. I've currently been qualified for two portfolio loans and it's not even comparable. Now, I'm not saying you don't need income but the requirements should be less.

Also, as long as your rents have been on your taxes for two years I believe it counts as 100% income. I'm headed in a very similar direction as you with the BRRR, I'm so glad I got all of the conventional lending out of the way though.. I'm in the same position as you with the full time job and would love to stop working but I'm gonna try and hang on as long as I can. I do like my current job. Anyways, good luck brother.

@Aaron Z. - If all you need is another 30K in income to retire, have you considered your hand at flipping? Even if you make modest $15K profit by flipping one property, all you need is to flip two properties and you are good.

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