Magic number for leaving w-2 job

Multi-Family and Apartment Investing
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Magic number for leaving w-2 job

Arta Montero
Member since 2019 · 182 posts · 45 votes

For those of you that have left W-2 job wondering at what point you felt comfortable doing that, was there a certain magic number you had to have, did you have a plan in place before leaving, did you ever look back, what did you end up doing, and how did you manage getting health insurance. I am in engineering/project management and like my job, but sometimes wonder when can I be independent regardless.

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Joshua D.
Investor · Columbus, MT · Member since 2013 · 1k+ posts · 1k+ votes
5y

@Arta Montero

You have to create your own benchmarks and adjust them as you go. We started out thinking we would be done with w-2 when we had 7 properties. We now have 11 and we are just getting to the point of leaving the w-2 for good. (I've been part time for 2 years)

Set a goal and adjust.

Make sure to enjoy the journey as you go!

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  • Danny RandazzoPro Member
    Apartment Syndicator · Charleston, SC · Member since 2016 · 973 posts · 728 votes
    5y

    @Arta Montero I set a goal to have real estate investments generate enough monthly cash flow to replace my w2 income. I go into a lot more detail on my podcast. I’m happy to share the link if you want to listen and hear my experience to help you, message me for the link.

    4Reply
  • Greg Dickerson
    Developer · Charlottesville, VA · Member since 2018 · 4k+ posts · 4k+ votes
    5y
    Originally posted by @Arta Montero:

    For those of you that have left W-2 job wondering at what point you felt comfortable doing that, was there a certain magic number you had to have, did you have a plan in place before leaving, did you ever look back, what did you end up doing, and how did you manage getting health insurance. I am in engineering/project management and like my job, but sometimes wonder when can I be independent regardless.

     That was 1997 for me. I quit my corporate job to start my own business so I just replaced my income initially but then exponentially scaled from there.

    0Reply
  • Justin Goodin
    Investor · Indianapolis, IN · Member since 2018 · 1k+ posts · 756 votes
    5y

    @Arta Montero I think that really all depends on you and your goals. But I would guess everyone who is successful in real estate and gets to a point where they earn enough passive income to be financially free- No, I would assume they never 'look back.' :)

    0Reply
  • Joshua D.
    Investor · Columbus, MT · Member since 2013 · 1k+ posts · 1k+ votes
    5y

    @Arta Montero

    You have to create your own benchmarks and adjust them as you go. We started out thinking we would be done with w-2 when we had 7 properties. We now have 11 and we are just getting to the point of leaving the w-2 for good. (I've been part time for 2 years)

    Set a goal and adjust.

    Make sure to enjoy the journey as you go!

    7Reply
  • Arta Montero
    OP
    Member since 2019 · 182 posts · 45 votes
    5y

    @Greg Dickerson wondering how were you able to replace income initially?

    0Reply
  • Arta Montero
    OP
    Member since 2019 · 182 posts · 45 votes
    5y

    @Joshua D. Wondering if your 11 units are paid off or were purchased at a really good price. Otherwise I can’t imagine even if I purchased 11 units now I could barely make any cash flow and not anywhere close to replace my income . We just purchased a fourplex in McAllen, Texas and thought was one of cheapest place but barely breaking even.

    Wondering if you do anything on the side besides the passive income from the houses

    0Reply
  • Mark Lewis
    Investor · Member since 2018 · 32 posts · 14 votes
    5y

    @Arta Montero I have a single family rental in McAllen TX. I used to analyze the Quads in Edinburg for $350k and tell my friend that invested in Maine and he would never return my emails haha. It wasn’t until I looked in other markets where you see the Cash on Cash return go up. The fourplexes there look nice but at those prices the numbers didn’t make enough sense for me. It would hopefully be an equity play over some years. I now invest in Western New York and love my returns. 

    1Reply
  • Steve Vaughan
    Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    5y

    I had the goal of time freedom much more than my wife, so we got our basic living expenses down to $300/mo by moving into a trailer park in 2002. If you want something bad enough...

    For health insurance, my wife continues to work.  She likes it. The trailer park living days are over but I do review a few here and there for potential purchase.

    Reduce your expenses or raise your passive income.  How bad do you want freedom? 

    2Reply
  • Arta Montero
    OP
    Member since 2019 · 182 posts · 45 votes
    5y

    @Mark Lewis interesting. Taxes are really high there and rents are definitely about 70/month under marker but we purchased with one year lease. We purchased 2004 fourplex for $225, but still hard to make any cash flow. Hopefully will appreciate

    1Reply
  • Scott Mac
    Austin, TX · Member since 2019 · 5k+ posts · 5k+ votes
    5y

    Hi Arta,

    Some things to think about.

    If you like your W2 job, why not just keep it and drink more coffee and do your investment thing too. 

    If you think you will work less, or have less balls to juggle by being self employed, you may be mistaken.

    Your lifestyle may improve (or may degrade) depending on how you how much you like or dislike doing the self employed things you must do.

    You might make more (bonuses) working W2 at 70+ hours than you will investing (in some positions, for some employers), others exploit their workers terribly, and treat them bad. So that's something to consider also.

    It depends on what self employed means to you. Do you intend to run wide open every waking hour 7 days straight (I and some I know have done this), or do you intend to sit by the pool with a Mohito and just do business when you have to (to keep things from falling apart)? (Lifestyle), or something in between....

    I'm not real W2 oriented. Hamster wheel of treats doled out by others doesn't excite me very much. 

    Plus I like my lifestyle. 

    The Eagle and the Oyster story seems to sum it up: https://www.youtube.com/watch?v=4STZZnO71OM

    Just my 2 cents

    2Reply
  • Joshua D.
    Investor · Columbus, MT · Member since 2013 · 1k+ posts · 1k+ votes
    5y

    @Arta Montero

    Bout half are paid for...

    but honestly 2 of our “mortgaged” ones actually make more than the free ones...

    It’s all about buying right.  And for us buying right was between 4-7 years ago... but we still getting good deals done these days. It turned out to be super forgiving though because everything went up in the last 5 years, kinda makes me look smarter than I actually am.

    1Reply
  • Joshua D.
    Investor · Columbus, MT · Member since 2013 · 1k+ posts · 1k+ votes
    5y

    @Steve Vaughan  Thanks for sharing that story. That helps a ton on my decision to quit here soon.  

    I have been so worried about not having enough but I also want time freedom to do more investing. I love the thought that if ya want it bad enough you can always just reduce expenses. It’s a variable we have control over. 

    I don’t have a wife who works full time so this could be a bit more challenging, but many others have done it, so we gonna make a run for it in 2021! 

    Thanks for your advise over the years. 

    1Reply
  • Mike ReynoldsPro Member
    construction · Nacogdoches, TX · Member since 2011 · 2k+ posts · 1k+ votes
    5y

    @Joshua D. Good advice so far. As for insurance, look into an HSA policy. It can save you money. It does for me. 

    0Reply
  • Amy A.
    Portland, ME · Member since 2012 · 616 posts · 550 votes
    5y

    My husband stopped working for a paycheck 7 years ago.  Everybody thought we were crazy. 

    We had 32 units cash flowing enough to cover the family's basic living expenses, a year's worth of living expenses in the bank, and a line of credit on a property so we could keep flipping houses without hard money. For insurance, we joined a sort of Christian co-op that doesn't pay for preventative care, but did pay for emergencies, like when my son broke his hand. 

    It has worked out well for us. 

    3Reply
  • Arta Montero
    OP
    Member since 2019 · 182 posts · 45 votes
    5y

    @Greg Dickerson wondering if you started the business before you quit or did you figure it all out after you quit. Also, wondering what did you focus on for your business if you don’t mind sharing?

    0Reply
  • Arta Montero
    OP
    Member since 2019 · 182 posts · 45 votes
    5y

    @Justin G. I find it hard to find anything that cash flows unless people are basing on total net worth.

    0Reply
  • Arta Montero
    OP
    Member since 2019 · 182 posts · 45 votes
    5y

    @Steve Vaughan wow, amazing you could reduce living expenses to $300/month. Wondering if you still at that expense rate or was it just temporary?

    0Reply
  • Steve Vaughan
    Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    5y
    Originally posted by @Arta Montero:

    @Steve Vaughan wow, amazing you could reduce living expenses to $300/month. Wondering if you still at that expense rate or was it just temporary?

     No, it was temporary. 5 years we lived frugally while we acquired our portfolio. 

    Lot rent was $240 and included w/s/g.  Power is super cheap here, no nat gas  Paid $14k cash for the doublewide 3/2, 1000sqft.  Wasnt so bad really, but was 3 miles out. 

    0Reply
  • Arta Montero
    OP
    Member since 2019 · 182 posts · 45 votes
    5y

    @Scott Mac agree, at this point lifestyle is a big deal for me too

    1Reply
  • Arta Montero
    OP
    Member since 2019 · 182 posts · 45 votes
    5y

    @Joshua D. That’s really good. Wondering where do you buy?

    0Reply
  • Arta Montero
    OP
    Member since 2019 · 182 posts · 45 votes
    5y

    @Amy A. Wow, that’s really good. 32 units seem a lot though.

    0Reply
  • Lane Kawaoka
    Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes
    5y

    I left my engineering job when I could no longer live two lives 😁

    1Reply
  • Joseph Ryan
    Mcallen, TX · Member since 2019 · 55 posts · 41 votes
    5y

    @Arta Montero @Mark Lewis I'm from and McAllen and recently purchased my first 4 plex 1.5 months ago in Pharr, Tx. Yes, the numbers are tight but are ok for me since I am self-managing and know the area really well. I got mine around the 1.08% rule but I was analyzing every quad that came on the market for months and was putting in offers. There are lots of big apartment complexes being built down here in the McAllen, Pharr, and Edinburg area of South Texas. 

    I plan to keep my healthcare job b/c I love what I do. REI is another way to build wealth and diversify my portfolio ;)

    0Reply
  • Bryan MitchellPro Member
    Rental Property Investor · Columbus, GA · Member since 2016 · 623 posts · 337 votes
    5y

    Folks, First and foremost I love my government service job. However, we can only serve 28 years. Plus, when opportunities such as special assignments and special schools are no longer available to you because you’re too close to that 28 years, you know it’s time to go. When you get to this point, you still have a great  appreciation for what you do, but now you’re looking for the exit. So now you’re going to be less inclined to do the 70 hour work weeks in your executive position. Instead, you work 40 to 50 hours (or try your best) and you spend another 20 hours preparing for your second career. Listen a year ago before I got to this point, I was working my 50+ hours a week and then coming home to work on a special masters program in strategy. This was for increasing my professional capability, but mostly to increase my promotion potential. Moral of the story, you should have a great passion for your 9-to-5 or for your primary vocation. However, at some point the decision to exit, becomes more and more painfully evident to the point where you know it’s time to go even though you put your heart and your soul into that thing for over 20 years. You gave and your organization returned in kind. So walk out the door with your head high, your mind open, your heart full, and your thirst for success just as great as it was 20 years ago.

    0Reply
  • Carl Hebert
    Rental Property Investor · Auburn, ME · Member since 2015 · 236 posts · 140 votes
    5y

    @Arta Montero I agree with @Joshua D. set a goal and adjust it as time goes. I bought my first multi in 2012 but didn't really get started with investing till 2015. Since then I have expanded to 20 units in 7 properties. 6 in Maine with 1 in Florida. The 6 in Maine are all cash flowing properties and I use the money to either improve the properties or buy new ones. The Florida one is the reward for the last 5 years lol, we live in one side and the tenant in the other unit helps pay for our winter home's mortgage. My job is managing these properties and my wife still has her 9-5. Having a spouse on board is a bonus! 

    I set a goal back in 2015 to hit 500k in gross income, have not hit that goal yet, but still shooting for it. Will she quit her 9-5 when we hit that goal? Maybe, maybe not it will depend on when we get there. 

    2020 was the first year that I actually took a large payout from the business. I bought a 1965 Chrysler convertible to drive around in while in Florida. I paid off some bills related to the move to Florida from Maine. It felt good! 

    Set a goal - work towards it - enjoy the smaller rewards along the way!

    Carl 

    5Reply
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