Investor · nowhere, TX · Member since 2012 · 242 posts · 84 votes
I've noticed that a lot of investors keep their day jobs after they seem to be very successful. I've met people who have been flipping houses for over ten years and still have a day job. I'm too polite to ask them in person why they still have a day job. I don't mean this to sound negative or rude, but why do they do that? Are they not making enough to quit or is it some other reason.
Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
12y
The stability and bankability of a good W-2 is often a great compliment to real estate investments. It helps when getting loans, and the paycheck still rolls in, even when a tenant breaks a lease and trashes your rental in November.
This is more of a buy and hold example: Say you have 20 homes that cash flow on average $250 per month. Should be 5k a month. Maybe it's a living, but how often can you buy more properties? How does the bank like loaning to you? How are things when you have 3 make readies/vacancies at the same time? However, if you also make $6k a month from your day job, you have more stability, options, cushion, risk management, and cash flow.
My W-2 super charges my investing. I plan to keep if for a while.
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
12y
First I would say that flipping houses - whether you mean wholesaling or fix and flipping - is a job. So the question is "why do these people work two jobs". The usual reason people do that is that neither of the jobs pays them the amount of money they want. So they work two jobs to have enough.
Or, maybe flipping houses is just a hobby. Lots of people engage in activites that consume quite a bit of time and money because it gives them satisfaction they don't get from the job that pays the bills. For some folks, that might be flipping houses.
Wholesaler · Holiday, FL · Member since 2013 · 571 posts · 221 votes
12y
For "nine-to-five" people the leap is sometimes too great for them. I think it is easier for someone who is otherwise self-employed than it is for a "nine-to-fiver" type of person. There is a physiological comfort they find in "having a real job". I am sympathetic to that - there's no fault in it. It is the reason that people tend to 'cheat' first before cleanly breaking off an existing relationship and Then moving on.
Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
12y
The stability and bankability of a good W-2 is often a great compliment to real estate investments. It helps when getting loans, and the paycheck still rolls in, even when a tenant breaks a lease and trashes your rental in November.
This is more of a buy and hold example: Say you have 20 homes that cash flow on average $250 per month. Should be 5k a month. Maybe it's a living, but how often can you buy more properties? How does the bank like loaning to you? How are things when you have 3 make readies/vacancies at the same time? However, if you also make $6k a month from your day job, you have more stability, options, cushion, risk management, and cash flow.
My W-2 super charges my investing. I plan to keep if for a while.
Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes
12y
I am in with @Jon Klaus , the day job keeps the motor running on investment properties, without it I would have to live on what is currently investment money, and real estate nets me less per month than my day job. I also believe I would find it hard to get new loans based only on my investment money. Plus my day job has its own rewards just as it has its own headaches.
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
12y
A rule of thumb is that you need 20 to 25 times your desired annual spending in investments to live off those investments. If you can manage a true cash on cash return of 10%, you would still need 10 times your desired salary. For real estate investment (i.e., income producing assets, not a job like fix and flipping where you have to turn the crank to produce income) a 10% cash on cash return is pretty good. So, if you want $100K, you need about a million bucks invested. With 20% down payments that's probably five million bucks worth of properties.
Wholesaler · East, TX · Member since 2012 · 88 posts · 61 votes
12y
for me it is because the day job is very lucrative. I can make 5-10k in one month just by doing what I need to do. Sometimes more. It is hard finding a balance between the two, though.
Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
12y
Health insurance , for starters , cash flow from work is nice for loans , working keeps me in contact with lots of people and puts me in different places . All of my deals were found while out working .And If I didnt work I would get bored
Specialist · Westlake Village, CA · Member since 2010 · 1k+ posts · 781 votes
12y
Great question,
Looking back, when I quit my full time job in 2001, it was premature and caused a lot of stress to make ends meet. Thankfully, things worked out. I advise those who ask me, plan their transition from part time to full time investor very carefully and not to rush.
Our goal is to use the income to retire at "will" once my husband reaches retirement age in the military. As this is 16 years out, we are currently developing our portfolio. My husband husband is currently living his childhood dream.
Our goal at this point is just to allow us to have options. Not everyone hates their job, some people like real estate because it gives them options.
Whenever I work my full time job allows us to have even more money to invest in real estate faster.
Real Estate Investor · Desoto, TX · Member since 2013 · 560 posts · 528 votes
12y
"seem to be very successful" can be very misleading. Not to mention success looks different for each person. I would imagine investors keep their day jobs for several reasons. Here are a few that come to mind:
1) Investing alone doesn't support the lifestyle
2) They invest for retirement, hobby, etc. but their day job gives them more fulfillment
3) The day job funds the investing
4) The money on the day job is just too much to give up for the amount of work and headache required to earn it
5) The day job is a trade or it nurtures a skill that supports the investing
6) The day job offers fringe benefits that investing alone can't offer or support
7) The day job has a pension plan that gets significantly better if you stick around a few more years.
I've noticed that a lot of investors keep their day jobs after they seem to be very successful. I've met people who have been flipping houses for over ten years and still have a day job.
There are a lot of good reasons to keep a non real estate related job for a few years after starting in real estate investment. But if they are still working full time for someone else after ten years then I can think of only two reasons:
1. They are in a job which is unsupervised so that they can conduct their real estate investment business unimpeded during 'paid working hours'.
2. They are not that successful and real estate investment is more of a hobby
I've noticed that a lot of investors keep their day jobs after they seem to be very successful. I've met people who have been flipping houses for over ten years and still have a day job. I'm too polite to ask them in person why they still have a day job. I don't mean this to sound negative or rude, but why do they do that? Are they not making enough to quit or is it some other reason.
I think you are confusing investing with creating a business. Flipping houses is not investing. At best it is a business you actively work and at worst it is gambling. Yes, I know a lot of people make a lot of money flipping houses. That does not make them investors any more than the guy working the counter at the dry cleaners he owns.
For a real investor, there would never be a consideration to quit their 'day' job and work in their real estate. If they do that, they transition from investor, or building towards being an investor, to small business owner and being their own boss/employee.
The advantage of being an investor, a real investor, is you are able to establish multiple streams of independent income and the investment income requires oversight and monitoring but no active day to day work IN the business. You literally make money in your sleep, when you are awake, playing with the kids/grandkids and even responding to a post on a forum. :)
Here is a good rule of thumb to use... Assume you don't have a day job, could you take a 1 month vacation where you were totally cutoff from making any kind of decision about your real estate and it not be a problem?
If the answer is yes, then congratulations, you are an investor. If you aren't already, you should start to diversify.
If the answer is no, then congratulations, because while you are a small business owner and not an investor, you are still ahead of most of the rest of the population. If you haven't already, you should really start investing some of your profits for retirement.
I'm sure many here will take extreme exception with my comments but I can assure you well over 90% of the people here are not investors, they are small business owners and work in their small business each and every day.
Oh, and as for a day job, I still have mine even though my investments have done very well over the last 30+ years.