I've been a landlord since 2008, but only about six months ago did I decide I wanted to get more serious about real estate investing. I'm an engineer by day, which is why every time I hear an investor or a guru say they were an engineer in a past life, it catches my attention. I don't intend to quit my job, but I have become curious why so many have. The head of one of the local REIAs in Dallas/Fort Worth, a local multi-family investing expert, and the head of a turnkey investment company based in CA but focusing on Dallas are three examples that come to mind.
Here are my possible explanations:
1. There is no particular abundance of former engineers and I am just noticing them more because I am biased.
2. Engineers are good with numbers and analysis and these skills transfer well to REI.
3. Engineering offers good entry-level opportunities out of college but in the long term is a lousy career path (many of the successful investors I've met quit their day job after about 15 years working in the corporate world).
Has anyone else noticed the trend or have ideas why?
It's a combination of things. Making more cheddar than the average mouse is part of it. Actually having studied a degree that requires math is another. (But we use math for practical purposes, not navel gazing stuff like the mathematicians or the physicists.) We know our way around excel pretty well too, which ain't a bad skill to have in REI. Engineering is about figuring out how things work and finding solutions to problems. Real estate is just another problem for us to figure out.
On the flip side we tend to be more introverted and small-c conservative than sales and marketing types, so we struggle with those parts of the business.
I think you also get to a point in engineering where you have to decide whether to stay on a technical path or go over to the pointy-haired dark-side of management. The big money is usually along the management track -- for the select few that make it to the CxO level or who strike out to start their own business. Those of its who aren't interested in that rat race might start to look into other pursuits.
All that said I doubt that many engineers actually end up investing in real estate even if a disproportionate number of investors are engineers. I think more get active in the stock market or take up hobbies like restoring cars.
If I remembered correctly, a survey indicated that 50% of Fortune 500 company CEOs have an Engineering Degree. I was shocked when I read it.
Initially, my dream was to open my own engineering consulting firm and a minimum have 10 employees. If I could make $30/employee/hour, that'd be $300/hour. If I paid someone $100/hour to manage these employees, I would still make $200/hour for doing nothing. That's about $400k/year. However, the income would go to zero the moment I kicked the can. Not the way I want to go out.
I wanted the revenue to continually keep on coming for my family even after I'm gone. Other than building a brand name like McDonald, In & Out Burger, Walmart, etc....what else is possible? Real estate was the answer. I also had a dream of being able to be there at for all the beloved people in my life at any given time. Real estate would allow me to do that.
Most engineers are analytical by nature. I don't know why others choose REI, but I chose it for different reasons. I'm glad I chose this path. When people who make $200k-$300k/year are jealous of you, you know you have a good life. May I say FREEDOM?
Happy New Year!
I have a question for the REI engineers here. My background in school was in RE Finance and I briefly looked into sticking around another year and completing a progressive master's degree in construction management. But I decided to just go into work right out of school.
So, are there certain resources you all find useful that those of us without a background in engineering could self-educate on?
Good thread. I made a lot of money in the 90s and early 2000s by traveling the world and doing equipment installations as an electrical engineer. Little did I know that would pretty much ruin my career since all I did was trouble-shoot things. Didn't learn s/w or ever design anything. All I do now is trouble-shoot in a lab. So damn boring. I'm hoping REI lets me retire at the end of 2016. I will never miss engineering.
most of us would never consider ourselfs as "ex" engineers, just engineers focusing on RE to some degree or another.
I do think as left brain, numbers people, we tend to have more longevity in RE than emotional, less logical thinkers who tend to suffer more severely from the boom and bust cycles.
I share Steve's sentiment. I'm not an ex-engineer (Electrical and software engineer here), but one who is turning his interests and focus towards energy efficient retrofit of existing building stock and {eventually} construction of sustainable, energy efficient new buildings,
I am full time investor now but I worked as a SW/Electrical engineer in the aerospace industry for a long time, All together 18 plus years. I knew many engineers that had rentals but that was the only type of REI they did.
So here are my observations:
So that being said in my opinion engineers can be dogmatic. I was a complete anomaly over my last 7 years, as I worked both engineering and flipping.
I feel folks questioned the validity of what I was doing, evident in the typical questions I would get in the course of conversations. Such as:
As an engineer I made around $65/hour, as a flipper I make on average $200/hour. I don't think my peers liked to hear that, nor do they tend to believe it. Throughout the countless conversations I had with folks not a single person ever asked me how I did it. Many times I told of how I bought a home for 4k and sold it for 32k, simply by cleaning it out. Again nobody ever ask me how I did it. One of many great stories, not that they are all winners. Like everyone else I have lost money too.
So my point is engineers are so tech oriented they feel a career change is moving from software design to firmware design. I had the same mindset and am glad I don't anymore.
Engineers can make great investors but many don't think outside the box when it comes to making money. Maybe that's why they picked such a safe industry to begin with.
Just my opinion.
It's all about problem solving, that's an engineer's life blood. Math is just a problem solving tool. I left my engineering job 5 years ago after many years doing engineering software to do hard money lending, love it. I'm sitting here on a Sunday, like every Sunday, waiting anxiously for Monday to arrive so I can tackle problems, it's great! I was never hoping for Monday to come working as an engineer. Plus, I can do hml when I'm a 100, engineers start getting (sometimes nasty) pressure to leave around 50 because they make too much.
After buying my first home this year, I realized how much overlap there is between engineering and real estate.
I had some experience selling mortgages before I became an electrical engineer. Back then I saw the world as a salesperson and thought it was a numbers game. I was trying to create a good sales pitch and give it to as many people as I could.
Now I'm trying to build a system. I'm learning about all the individual components and looking for ways to be more efficient.
Engineering has helped me zoom out when looking for opportunities. I can see the big picture better now. Working as an engineer has taught me how to do all the things other engineers are talking about here: manage a project, work a schedule, make an economic analysis, solicit bids, work with a contractor, estimate costs, etc.
I am an operating engineer and definitely believe it's the problem solving that draws us to REI. Real estate is a game with many angles that need to be analyzed to determine the best path for your investment.
I've been a landlord since 2008, but only about six months ago did I decide I wanted to get more serious about real estate investing. I'm an engineer by day, which is why every time I hear an investor or a guru say they were an engineer in a past life, it catches my attention. I don't intend to quit my job, but I have become curious why so many have. The head of one of the local REIAs in Dallas/Fort Worth, a local multi-family investing expert, and the head of a turnkey investment company based in CA but focusing on Dallas are three examples that come to mind.
Here are my possible explanations:
1. There is no particular abundance of former engineers and I am just noticing them more because I am biased.
2. Engineers are good with numbers and analysis and these skills transfer well to REI.
3. Engineering offers good entry-level opportunities out of college but in the long term is a lousy career path (many of the successful investors I've met quit their day job after about 15 years working in the corporate world).
Has anyone else noticed the trend or have ideas why?
Engineers make great JV partners actually. They are usually organized, very detailed, and learn the rehab process quickly. Our company loves to partner with professions like this because they seem to be very trustworthy as well.
I agree with what everyone is saying, particularly @Justin B. and @Steve B.. We never grow weary of solving interesting problems, but the continuing education treadmill does get old after a decade or two...particularly the IT certification cash/time monster that you have to feed periodically to work in some sectors. Then there's also the problem of the more knowledgeable you become, the less qualified your supervisors are to give you direction. It really becomes a daily exercise in frustration after a while.
I think another thing that might draw us disproportionately is that once you do a little research and learn how money is made in real estate, you realize very quickly that the curriculum to learn real estate is nowhere near as complex as the curriculum to become an engineer. @Ali Boone has a post on here about doing rental analysis on a napkin. You can be 18 years old and use that formula to make money for the rest of your life. There's nothing you can fit on a napkin that will do that for an engineer. How many of us have spent years learning a technology or system that is no longer in use? Rental analysis is never going to change. I certainly wish this was something I knew when I got started.
It's also possible that there's some affinity bias going on in terms of what you see. Like when you buy a car and then start to notice all the other ones on the road that are the same make/model. It's possible there's a similar thread on here started by a doctor who has noticed lots of other doctors in the industry.
Engineering income growth is very linear. Most would not advance over a low six figure or high five figure income unlike Doctors and lawyers can. RE is a great opportunity. My goal was to have cash flow equal to my day job engineering income, that was the only way to double my income and still keep working as an Engineer. We are equally intelligent as people from other lucrative professions but do not quite get compensated well although we like working as Engineers. Being good with numbers and having good project management skills, this is a very good fit for most engineers.
Thanks for the mention and I LOVE your "You can be 18 years old and use that formula to make money for the rest of your life. There's nothing you can fit on a napkin that will do that for an engineer."!!
Argument against: It may just be that the D/FW area has a reasonable concentration of companies that still hire engineers. Off the top of my head, you still have places like TI and Raytheon. American and Southwest probably have some engineers kicking around, too... oil-and-gas is more of a Houston thing but there's a little of it in Dallas as well. In the recent past, you had Nortel (RIP), and on the WABAC machine, Tandy.
Arguments for: I agree with many that have been brought up in this thread - liking to solve puzzles and follow procedures, bigger salary means more money to spend on RE investing, having to go into management to make the really big bucks, having to relearn everything frequently, a bias against older engineers.
I think another thing that affects software people, more than than ee/mech-e/civil/chemical, is outhousing and H1B. Lots of PHBs think that outhoused software development is better than having direct-hire employees; you can write vague specs, claim the developers didn't meet the spec, stiff them on the payment, and still get a product anyway. Also, you only have to pay for them when you need them; when you're done, you just kick them to the curb. When they want to start a new software project, they think it only takes 30 seconds for the next outhousing firm to come up to speed, so they don't worry about it. H1B is more complicated, but once they've convinced the Feds that absolutely nobody in the United States knows how to write a C# program, then for three years, they can pay somebody two-thirds of the money; he takes that deal and shows up every day because he will be *deported* in 30 days if he quits!
You can only see that pattern so many times as a software person before you decide to do something different. In other words, I think the 15-year timeframe you noticed might be how long it takes for engineers to notice that while *engineering* is fun, a whole lot of companies have no idea how to *manage* engineering very well.
Another piece of the puzzle is that a lot of engineering for consumer products doesn't happen in the US anymore. In 1980, TV sets, stereos, VCRs, and PCs were still designed and built in the US. Through the 80s and 90s, the manufacturing went to Mexico, but the engineering stayed in the US, and then both manufacturing and engineering went to China. The people from the early part of this process are probably long retired, but there are probably still some guys in the US that had to do something different when their job was shipped to People's Shining Electronics Factory #37.
Oops, I ranted again. *adjusts onion on belt* :)
Thanks to everyone for all the great replies. For me, I am getting near the aforementioned 15-year mark in my career, and while I do enjoy my job and want to continue in it for many years to come, I've realized there is no real upside in either position or salary. At the same time, I make more than I currently need, so even after contributions to my 401(k), I am accumulating some cash in my bank account that is hardly earning any interest. If I put it to work now, it could eventually lead to enough money to change my lifestyle, and possibly provide a cushion to fall back on if my company decides to cut me loose before retirement age.
I became an accidental landlord over eight years ago, but only recently has the rental market improved to a point where converting my former home to a rental is finally starting to look like a good idea, and it occurred to me that I already am a real estate investor. I just need to learn how to be successful at it. I've had a fairly easy time wrapping my head around all the fundamentals of REI, and many of the concepts are so simple I can't believe they never occurred to me all these years when I was losing money every month with my rental. All the number crunching and analysis with spreadsheets....I have plenty of practice with that already with my day job. So I do believe I am cut out for this, although I am still weighing my options on the next step (i.e. becoming an intentional landlord).
Sorry for bumping an old post but to add to the thread:
We are sick of sitting at our desk
We don't want to sit at our desk forever...
Lastly, it's easy for us as we can take phone calls and manage people..... from our desk
Another engineer here working for financial freedom!
Retired software engineer of 37 years myself. Don't think that working well with numbers would be a motivational factor, nor the ability to to conjure up spreadsheets.
It is a swap from having **** managers tell you what and how to do whatever, AND there's a lot more face-face people work.
IMO, REI is a direct path to stop spending your day benefiting Corp Am and start living your own dreams, soon enough that you can enjoy them.
We went to Italy in 2006 and we're STILL talking about it. Money well spent. :grin:
I'm a lady engineer and I have also been fixing and renting houses for quite a while now. It's appealing mainly because if I am smart I can make money and put in very little effort (unlike my day job). I can also write off power tools and my candy-apple red 'lady-truck'. Engineers like 'optimizing' things in general and real estate investing is just a complex equation with lots of variables. In contrast to the stock market; which has way more unknowns than knowns and is basically run by computers so not very satisfying.
Houses are also interesting systems that in some ways are like living, breathing, things. Engineers enjoy learning how all the systems of a house work .... this makes it easy to buy houses since you can quickly see what problems are easy to fix and what are not. As an engineer I can fix (or believe I can fix, eventually) almost everything in a house which means I'm pocketing extra cash not calling the repair guy. My neighbor won't pay me for popping over to fix a washing machine. I took the tests at city hall so I can pull permits myself. I learned how to do basic financial analysis and compare investments over a number of years so financial decisions are pretty easy.
mostly it just doesn't seem like 'work', rather an interesting hobby. Some engineers have a hard time relaxing... probably due to surviving engineering school.
Does it? I enjoy engineering.
Engineering brings a lot of initial capital that you can use as a stepping stone into REI.
Thanks to everyone for all the great replies. For me, I am getting near the aforementioned 15-year mark in my career, and while I do enjoy my job and want to continue in it for many years to come, I've realized there is no real upside in either position or salary. At the same time, I make more than I currently need, so even after contributions to my 401(k), I am accumulating some cash in my bank account that is hardly earning any interest. If I put it to work now, it could eventually lead to enough money to change my lifestyle, and possibly provide a cushion to fall back on if my company decides to cut me loose before retirement age.
I became an accidental landlord over eight years ago, but only recently has the rental market improved to a point where converting my former home to a rental is finally starting to look like a good idea, and it occurred to me that I already am a real estate investor. I just need to learn how to be successful at it. I've had a fairly easy time wrapping my head around all the fundamentals of REI, and many of the concepts are so simple I can't believe they never occurred to me all these years when I was losing money every month with my rental. All the number crunching and analysis with spreadsheets....I have plenty of practice with that already with my day job. So I do believe I am cut out for this, although I am still weighing my options on the next step (i.e. becoming an intentional landlord).
Enjoyed the few years on the JOB (drive control automation) but office politics became unbearable as did getting up at 5am & the 1 hour drive.
As other colleagues spent our excellent paychecks, expense accounts & bonuses on new homes, new vehicles & vacations I bought run down rehabs. The Engineering knowledge has paid off tremendously, especially that summer minor I took in Commercial Electrical design, allowing me to complete many service upgrades for our own buildings.
Once our passive income reached a sustainable level the wife asked me 'why are you still going into work' ??? So I 'retired' (1998) & we haven't stopped buying, rehabbing & selling. We have not had a mortgage or debt since.
The largest savings we realized was being allowed to personally design, build & install a complete fire sprinkler system within the bowels of our 60's era 7unit apartment building, that was no longer grandfathered in for fire safety.
I agree. REI is nothing more than numbers with $$$ in front. The better you are with them, the better you will be at REI.