When to go full time REI

Question

I started investing in student rentals 3 years ago to escape the 9-5 at the age of 33.  My strategy was to invest in below market value properties that cashed flowed strong ($3500/month cashflow currently).  I would dream of the day I would give my boss the 2 week notice and my cashflow was double my W-2 pay or I had a net worth close to 1 million USD.

Unfortunately I was laid off on 8/29/18 and didn't quite make my goal.  Also at the very same time I was in the middle of refinancing all my properties (5 houses with total 30 bedrooms) a week before being let go from my employer(Good timing).  I was able to pull out $125k of equity, but now that my loan officer knows I don't have W-2 employment I can not acquire anymore portfolio commercial loans.

My biggest question I have got is if I should find future employment for another 2-5 years, or just let time add onto my net worth?  I have put a spreadsheet together that details my numbers.  With zero rental vacancies and living frugally, I will have a 1 million net worth at the end of 2026 (this takes in account that my real estate appreciate 3% each year and I have my cash reserves in a high interest savings of 1.9%).   If I found a $60k per year job, I could get to a net worth of 1 million 3 years early in 2023.

This is speculation on my end so who knows where things could go but I do have good cash reserves in case the road gets rocky.  Let me know if now is the time to go full time DIY landlord or get employment.  I was hoping to work another couple years, but actually I find it so much easier to manage my properties or go find new deals without a job.  Any feedback is appreciated.

Nathan Gesner · Answer

Nobody can answer this but you.

You are financially capable of going full-time with REI. If your numbers are correct, the only decision is whether you want to take a W-2 job to accelerate your plan.

Personally, I would take the W-2 job to accelerate the plan. Why? Because I think real estate is peaking and expect it to slow or correct in the near future which may put a hiccup in your plan anyway. If that happens and your plan is slowed, you'll be in a safer position with the W-2 job.

Max T. · Answer

My plan was always to retire when my passive income reached at least half of my W2 salary.

Real estate has done well for me, BUT

I have continued to increase my W2 salary each year.

So I'm actually going backwards with regards to my retirement goal.

And that is OK... I never needed to retire. I like teaching and the money is solid. Lenders seem to like me still. The summers off are nice for rehabs and tenant turnovers. Plus cheap health insurance for the whole family.

So I'll just keep plugging along.

Account Closed · Answer

This is a great youtube video on the subject:  in YouTube search type "Quit Your Job For Real Estate?"

Phil in it says, "it's great to have a job."  I agree, it's all about time management.  I have acquired 3 more rentals since starting this post and it is all about time management and becoming creative.  Though if I do keep on acquiring more rentals I'm going to have to find more creative ways or work myself into an early grave lol.

Account Closed · Answer

I have considered getting a full time real estate position.  Even when I was on layoff I took the national home inspectors exam, passed, and got certified as a housing inspector in Wisconsin.  I haven't done any home inspections for real estate transactions, but it kind of builds character as a landlord when your tenants know you're a certified home inspector (things get taken care of).

Full time property management may be more to my liking, but I do like watching over my own properties rather than others.  So maybe I just need to buy more and that'll keep me busy.

I don't think I could be a real estate agent or broker, the sales end is just not to my liking.  I also want a return on my investment for my bachelor's degree in construction management, and staying in that field justifies that.  The construction industry is tireless most times.  lots of travel and relocation, getting burned on projects, office politics, ect.  I think I will last another 5 years until I have just have had enough lol.

Account Closed · Answer

Well I did get a new job as a Project Manager for an Electrical Contractor in the Twin Cities on January, 7 2019, and that layoff was a wake up call.  I was super bored, and now being back in the work force I find purpose, something to wake up and do.  I have had to re-think this leaving the 9-5 for full time REI, I mean I could be remodeling rentals all day long, but that's trading one job for another.

So for now slow and steady as she goes, and we'll see what happens in the next 5 years.

Isaac Braun · Answer

Have you considered trying to find a W-2 or 1099 job in real estate?  Maybe an agent or working as a building engineer for a large multifamily group.

When to go full time REI

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