Real Estate Investing Full Time & How to Divide Cash Flow

3 Replies

I'm new to personal investing and hoping, like many of you, to make it my full time career at some point in the future. I recently finished the site favorite, Rich Dad Poor Dad, and was left with a fairly mundane question. Kiyosaki says a couple times in the book that essentially as soon as your free cash flow from investments equals your monthly expenses, you're virtually free to quit your job and go full time, as your investments can sustain your lifestyle. However, that seems to exclude reinvesting in your business, which I know Kiyosaki is in favor of.

So my question, for those of you that have made this transition, is did you target your monthly expenses as your transition point? If so, how did you continue to grow if your free cash flow was going to personal expenses? If neither of those, what was your target cash flow situation that made you feel comfortable going full time (i.e. 50% goes to personal, 50% goes to reinvesting)?

You're right, you wouldn't want to quit your job as soon as your passive income covers your expenses BUT that is when how you think about your job will change. You will go to work every day and instead of thinking about how you don't like your job and you wish you were doing something else, you will think about how that pay check will all be gravy and helping you get ahead to reach your next goal. The first goal it to get started, then to reach the point when you're covering your expenses, when you get to that point and pretty much only then, you need to decide how much cushion you want and how you're going to make money after you quit that job. Maybe you'll check out a new field and make a lot less money and it wont matter anymore. Maybe you'll start flipping properties and you'll need big cash reserves to do that with...it will really be up to you at that point. Buy and hold real estate is a boring business though. It doesn't create uddles of cash but it does create slow and stead cash flow. 

Elizabeth,

Thank you for the perspective, I figured that was the case, but I'd never thought completely through it. Hoping to get started shortly! 

I would personally wait until it's double your income from your job before I would quit.

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