When should I quit my day job ?

Question

I have a corporate job with health benefits and and decent pay into 6 figures.  I have been building a rental portfolio of mostly single family homes which is now debt free.  I am just wondering when did others cut the cord.  I am only 2 1/2 years from collecting a pension of about 36 to 40 % of job income.  The rental income is higher than the corporate job income.

Account Closed · Answer

@Mark Papale You've made it this far, suck it up for another 2 years and get that nice check every month.

Chris Mason · Answer

In your scenario, last week. Also, grats!

Bill R. · Answer

It all comes down to what you value.  If you quit today (or after your pension kicks in) and have nothing more productive or valuable to do with your time, you're simply giving up free money your employer was willing to pay you.

Unless your intent is to become a full-time active real estate investor, it's more of a question of when do you want to stop accumulating wealth and start living off the wealth you've accumulated to date.

I think a lot of people who have commented look at this and think they might be making $50K a year and once they can make $50K a year from rentals, they want to quit their job and go real estate full time.  But once they quit working, $50K a year in W2 income goes out the door as well as benefits (health, matching 401K, etc).  Now they're living off the $50K a year that their rentals are producing instead of being able to reinvest that into their portfolio to keep building it.

Ten years from now instead of making $100K in rental income, maybe they're only making $65,000 because they lost $50K a year that could have gone into reinvesting.

Now, if you have a good reason to punt away $50K a year then it might be the best move for you.  Or if by quitting the day job you can quickly replace that $50K W2 income with more income from new investments (becoming an active real estate investor), great.

Not that I'm trying to talk you out of it.  Hey, if the amount of income from rentals and your pension together afford you the lifestyle you want, with plenty of cushion to spare, and you can't wait to get out of the rat race, go for it.

Just don't try to think of it as a magic number that once you hit X% of your salary in rentals that it's smarter to do one thing over the other.  It's all based on a completely subjective value of how you want to spend your time.

Mark Papale · Answer

Well put @Bill R.  I get it does seem to come down to do I want to live off the wealth I have created or keep building.  At this point I think I can do both.  Of course less going back in as I live off some of the income.  Of course I can always look at that I could be  working.   In retrospect I missed a lot of opportunities because I was sitting in a cubicle and not on the street hustling but that is water under the bridge.

Franklin Romine · Answer

I cut the cord when my rental income was about 2 times my gross salary at the day job.  This was a few years ago when I was 31 years old.

Franklin

Larry Turowski · Answer

@Mark Papale Could you?  Yes--assuming you are living within your job income.  Should you?  That is subjective.  What are your goals?

David Zheng · Answer

this is such an open ended question. It's like asking BP who you should marry. Everyone has different opinions on when to quit and not. Some will quit when they have the bare minimum to survive covered. My rental cashflow is 4x over my salary as a big bank consultant, but I don't think I'm going to leave for a while still. This is a question for yourself and your family. What are your long term goals? Do you find yourself wishing you had more time in a week or still living paycheck to paycheck?

Rolanda Eldridge · Answer

@Mark Papale...It's a Personal choice, but It took 6 deals before I quit my Corp job..No looking back, but it was work...Sounds like you are SET!!!

Mark Papale · Answer

I have cash reserves so if I I needed I can fallback.  I do not need to stay the remaining 2 1/2 years to start collecting I am now able to "retire" as opposed to quitting.

So really it comes down to when to cut the cord.

Thanks for feedback.

When should I quit my day job ?

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