Leaving Your W2 Job to Pursue RE Full Time
Member since 2019 · 11 posts · 10 votes
Hey Guys. Long time lurker, first time poster. This is defiantly going to vary from person to person, but when did you all feel it was the right time to pursue real estate investing full time, and leave your salaried job income behind? Just looking for some insight on how others have approached it.
Hi @Account Closed, I recently left full time W2 employment to focus on real estate full time so with that for context, here are some thoughts to share:
1) Recognize that any issues that you might have with 9-5 employment are likely down to you. You will need to do some soul searching to understand how you can recognize what you need to focus on in order to succeed in your next role
2) You should plan to invest a lot of time up front on understanding your "Why?" and only when you understand this should you map it to a strategy that is in line with your unique skills and motivations
3) You will need discipline and an execution plan - being your own boss is great but you also need to figure out how to be your own best employee
4) Define a plan and set interim milestones - being an entrepreneur can be a lonely profession and success is not a straight line so plan for getting yourself some small wins and maintain a long term perspective to help get you past short term challenges.
5) Understand what constraints leaving full time employment will eliminate e.g. more time to focus on real estate, and what constraints it will introduce e.g. less income and ability to get credit
6) Understand that you will need a team to succeed so make sure that the people in your life on whom you depend on for support are fully behind you
Here is an article that I wrote that might be of additional help - https://www.biggerpockets.com/member-blogs/11782/88425-want-success-here-are-ten-things-you-must-give-up
Good luck, going on your own has got enormous upside potential but it is not pain free.
I haven't done it...yet, but my goal is to do it within 5 years. To accomplish this I must first:
1) Realize a yearly net income = 150% of my current take home W-2 pay. This will help ensure we are covering the costs of any lost benefits, mainly health insurance.
2) Live for an entire year on just the rental income and bank the W-2 income. Prove the concept is viable.
3) Establish an emergency fund of 12 months. This will happen via #2 banking the W-2 income.
To that end, my action plan includes continuing in growth mode for the time-being. We are moving into commercial properties which will generate a larger $ amount of income, even if they do not generate quite as awesome of an ROI. For example, I normally buy houses that meet the 2% rule. The 2% Rule says monthly rent is minimum 2% the "all in" costs (purchase + closing + rehab + holding). Those little guys do well, cash-flowing $150 - $200 each. But it takes a ton of those to replace the income of an IT Software engineer sooo...
We're getting into office/warehouse space and mini-storage. While those do not fit the 2% rule in our market, the overall yearly cash flow is around $10,000-$15,000 / yearly per property, and the amount of day-to-day management is considerably less intensive (I think). It won't take more than 5-6 of those added to our current portfolio of SFH's and plexes to do the trick.
The other major thing we've done is paid off all personal debt. Own everything free and clear: personal house, cars, etc. Also, we do no live lavishly and take expensive vacations all the time. We're pretty simple folks, but we do have a good time now and then, and I do enjoy my craft beer, bourbon, and the great outdoors.
Lower every day expenses = you can survive on less income without sacrificing life style, even if the rental market takes a down turn.
I hope that helps.
@Account Closed For me, I realized it when my W2 performance was slacking because my focus was only on real estate. I did not want to do my W2 a disservice and I was at the point where I needed even more time to pursue my passion for real estate. I knew deep down that if I fully committed I could get to where I wanted to go much faster. That and I had the full support of my wife!
BP resources typically suggest you work backwards. How much cash flow would you need each month (after reserves) to feel comfortable? How many units to you need to reach that monthly cash flow?
@Account Closed, I would recommend working out a plan before pursuing real estate investing full time. Know which market you want to dive into, how much time you are willing to invest in your switch while you are at your salaried job, etc. Good luck on your journey.
I plan to keep my W2 job. Its like having a pair of golden handcuffs. I'm just hoping to make 20 years so that I can draw retirement and medical benefits.
Hey Guys. Long time lurker, first time poster. This is defiantly going to vary from person to person, but when did you all feel it was the right time to pursue real estate investing full time, and leave your salaried job income behind? Just looking for some insight on how others have approached it.
This all depends on your knowledge of the business, level of experince, income requirements, financial resources and your tolerance for risk. I stepped out in 1997 at the age of 29 when my kids were 2 and 4 and have never looked back. For me it was natural as I was born an entrepreneur. I did work a lot of jobs prior and educated myself. Best decision I ever made.
Thanks everyone for the advice! My fiancé and I both have W2 jobs and are moving into a recently acquired single family, from our owner occupied triplex. I was just presented an opportunity to acquire some larger scale multifamily with the cash out refinance money we have on hand from the triplex. Chicagoland area. A lot to think about in terms of future goals to transition full time. Thanks again, all. I would not be where I am at today without BP forums and podcasts.
@Account Closed - If you're savvy, there are some mighty affordable cash cows in the Chicago market! For being the 3rd largest MSA, real estate prices are relatively moderate. If played correctly, every unit is one step closer to being able to walk away from that W2 job. If you project being able to replace your current income within the next year, maybe it's time to jump ship?
@Account Closed, I've finally decided to leave my W2 job! I will be putting in my notice this Friday. Let me tell you my story:
My construction business is now taking my full attention away from my 9-5 job. I work remotely as a Sales Rep for Enterprise clients. I've decided to leave the W2 because I feel I am established in the industry and have enough momentum to push my real estate career further. Another KEY fact: My wife and I invest together! She is on the same page, sees my work ethic, and we have made the choice TOGETHER. She is also retaining her 9-5 as a stable stream of income.
My tips:
I understand I may have missed a lot here. The story sounds much easier than its been building to this point.
Thank you for listening to my story.
Hi @Account Closed, I recently left full time W2 employment to focus on real estate full time so with that for context, here are some thoughts to share:
1) Recognize that any issues that you might have with 9-5 employment are likely down to you. You will need to do some soul searching to understand how you can recognize what you need to focus on in order to succeed in your next role
2) You should plan to invest a lot of time up front on understanding your "Why?" and only when you understand this should you map it to a strategy that is in line with your unique skills and motivations
3) You will need discipline and an execution plan - being your own boss is great but you also need to figure out how to be your own best employee
4) Define a plan and set interim milestones - being an entrepreneur can be a lonely profession and success is not a straight line so plan for getting yourself some small wins and maintain a long term perspective to help get you past short term challenges.
5) Understand what constraints leaving full time employment will eliminate e.g. more time to focus on real estate, and what constraints it will introduce e.g. less income and ability to get credit
6) Understand that you will need a team to succeed so make sure that the people in your life on whom you depend on for support are fully behind you
Here is an article that I wrote that might be of additional help - https://www.biggerpockets.com/member-blogs/11782/88425-want-success-here-are-ten-things-you-must-give-up
Good luck, going on your own has got enormous upside potential but it is not pain free.