Working 60 hours but trying to start REI: How?
Hi everyone! I'm new to REI, and to BP, and although I've read a lot of books on REI (including Brandon Turner's: The Book on Rental Property Investing) I'm wondering how you successful investors our there are able to find the time to hunt for properties, do property management, get deals under contract, and deal with all of the stuff that generally goes along with REI while working a full time job?
I currently work 60 hours per week and 6 days per week (I have an excellent 1%er career). However, my ultimate goal is to step away from doing that and have passive income in order to do the other things in life I love to do (travel, spend time with friends/family, etc). Where do you find the time? Is it possible to work a 60 hour job and also invest in real estate successfully? Is this reasonable? What strategies have you implemented? What about finding off market deals? Isn't that difficult if you're working so much?
I'm also wondering what strategies are working right now in the AZ valley? Is it too overheated now or are there still great deals to be found? What are your thoughts?
Thank you all in advance for the great tips!
All the best,
Aaron Lietz
@Aaron David Lietz following ...
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your a prime candidate to invest in top shelf syndications.. keep making your dough.. invest with professionals.
most require accredited investors which is I think 200k a year income for last 2 or 3 years or net worth of 1 mil excluding personal residence.. you can invest usually as little as 50k blocks..
If you decide to look at those experience is important..
The other thing you may want to look at is being the bank.. this is far more passive than owning the asset and many who have been landords over the decades will tire of landlording and move to notes.. Hook up with a great local HML in your area they are there.. and make 8 to 12% and have true passive income.. let the pros do the heavy lifting.. you keep earning the big bucks.
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@shiloh
@Shiloh Lundahlundefined
Shiloh is investing in your market and allows beginner investors to invest along side him.. you may want to reach out.
".....The other thing you may want to look at is being the bank.. this is far more passive than owning the asset and many who have been landords over the decades will tire of landlording and move to notes.. Hook up with a great local HML in your area they are there.. and make 8 to 12% and have true passive income.. let the pros do the heavy lifting.. you keep earning the big bucks...."
In my younger days I was in the same position, working long hours devoting ALL my spare time to rehabbing disgusting places, land-lording & always looking for deals. It was exhausting & then I met a fellow investor who lived very well & I asked her HOW!! She had done exactly what Jay mentioned. She gave up on the REI drama & just held high % investor notes & never looked back. So 30 years ago we did the same, but still hold some rentals to keep us humble.
@Aaron Lietz I was in your same position during 2011, making high income from my job and used it to fund the real estate, however those were different times. If I was in the same position today, I'd just do what @Jay Hinrichs suggests and get into crowdfunding or syndications. They are likely going to generate a much better return. Otherwise go buy some turnkey properties in the south or midwest. I think working 60 hours a week and then trying to be a pro real estate guy in the valley would be insane right now. Nothing pencils out on MLS anymore.
Thanks for the mention @Jay Hinrichs. @Aaron Lietz your returns will generally be correlated with the activity you put into the deal. The more active, the higher the return, the more passive, the less the return.
If you have a high income producing job, your best bet may be to continue with your job and work on spending less and saving as much as you can and then investing with what others have mentioned in syndications or become a lender. It may beat getting $200 a month in cash flow for a lot of work up front.
However, if you really want to move into the investor quadrant, like Jay mentioned, I work with people who want to learn how to invest and they earn money on their money in the process. The real key to making it work if you have a job that takes up a lot of time is to build systems that take care of the work for you and requires less of your individual attention. I have a child and family therapist practice and I live in 2 states. If I didn’t have the system that I have in place, I wouldn’t be able to have scaled my real estate business the way I have. So learning systems and how to put them in place may help you get into the game while at the same time still being able to do your job.
There's been a lot of great discussion on the first part of your question, so I'll jump in on the second half: is the Phoenix market too overheated or are there still deals to be had?
The Phoenix market is hot, and the entry barrier is much higher than it was ten - or even five - years ago. That doesn't mean that you can't still find profitable deals! Appreciation is still reliable and continues to go up. This is fueled by some serious job growth all across the valley, so it's not necessarily a risky "bubble" as in days past. The trick is to manage your expectations. No, you probably won't find a lot of magic deals under $100k. Yes, you will be competing with a LOT of other investors. These challenges are real. They are not, however, insurmountable. Plenty of people are still making good money in the Phoenix real estate market!
For you especially, it will be critical to have a good team. A Realtor who knows the area and can scout off-market deals, a dependable contractor, a property manager who doesn't need baby sitting ... etc. I have referrals in all these areas and am happy to help however I can!
@Aaron Lietz If you make a lot of money at your 60 hour a week job, you can start off by passive investing. Check out some posts by Holly Williams, who was able to quit her full-time job via passive investing.
Most people who work full-time jobs get up an hour earlier, go to bed an hour later, plus work on weekends (or weekend for you). If you do that, you have 14 hours + however long you work on your day off to focus on real estate. You will also need to put together a team since you likely won't be able to tour properties, grab lunch with brokers, etc. Partnering up would be a great next step.
Thank you all for the insights! Right now I'm actually working 7 days but that will change sooner than later. I've thought about investing with Cardone Capital but I don't know much about. I guess I just like the idea of following in Brandon Turner's model and having monthly positive cash flow. I would really like to make a plan to where, in 5 years or less, I no longer have to work the J-O-B. It would be nice to find someone who is already in the place I want to be and then just follow in their lead but I feel like that might be tough since if that person finds good deals (off market etc) why would they share them with me! LOL.
Originally posted by @Aaron Lietz:Thank you all for the insights! Right now I'm actually working 7 days but that will change sooner than later. I've thought about investing with Cardone Capital but I don't know much about. I guess I just like the idea of following in Brandon Turner's model and having monthly positive cash flow. I would really like to make a plan to where, in 5 years or less, I no longer have to work the J-O-B. It would be nice to find someone who is already in the place I want to be and then just follow in their lead but I feel like that might be tough since if that person finds good deals (off market etc) why would they share them with me! LOL.
Since you are a numbers kind of guy, it's important to know what those numbers are. The following spreadsheet gives you an idea of what can be accomplished to reach your stated goal in your time period. I would guess you have an accompanying tax problem, as in paying too much in taxes. This method addresses that issue as well.
Average Turnkey Cash Flow Per Door In Phoenix Metro Area No Bank Needed
"...It would be nice to find someone who is already in the place I want to be and then just follow in their lead but I feel like that might be tough since if that person finds good deals (off market etc) why would they share them with me! LOL...."
I could list a number of fantastic lucrative but unaffordable deals I lost (when I started) just trying to convince someone to partner with me. In fact one of my 1st partners is a millionaire today because of the fact she saw potential in a number of deals we could do by working together. When I met her she was a single mother living above her parents garage & she became REI savvy very fast.
So you may be surprised how many established investors will be prepared to take on a partner to secure a lucrative deal they can't handle alone.
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Need to decide if you want to be active or passive. And how bad you want it. There are other investors with 60 hour jobs, spouses, kids, and decent sized portfolios.
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Originally posted by @Aaron Lietz:Thank you all for the insights! Right now I'm actually working 7 days but that will change sooner than later. I've thought about investing with Cardone Capital but I don't know much about. I guess I just like the idea of following in Brandon Turner's model and having monthly positive cash flow. I would really like to make a plan to where, in 5 years or less, I no longer have to work the J-O-B. It would be nice to find someone who is already in the place I want to be and then just follow in their lead but I feel like that might be tough since if that person finds good deals (off market etc) why would they share them with me! LOL.
NOt sure what your monthly cash flow needs would be to leave your J O B but lets say its a modest 10k a month which is pretty average these days for west coast... and lets say Brandons deals average 200 a month positive cash flow which can be generous on the high side this with max leverage of course... which is whats preached.. so that's going to take at least 50 homes or doors.. and lets say those doors average 100k per door that's 5 million.. and lets say you can buy those with 20% down and have 10% for reserves that's 1.5 million in cash.
lets say you want to try the BRRRR that's talked about on this site.. well that's good but you have seasoning so for each BRRRR figure 6 months to do them.. lets say you have 200k in cash that's 4 houses a year.. so its takes at least 10 years.. lets say the economy goes up down rates go up almost certainly now cash flow is compressed...
Etc etc.. while this retiring on rentals works in theory it works better in some areas.. and for someone to do it on their own its a long road.. not a 5 years to retirement road.. maybe if you were working at it full time brought in investors etc.. or if your starting with say 1mil liquid just buy an apartment that will get you 5 to 7k a month positive.. etc etc.
Just sprinkling some reality dust on the thought that retiring on rentals in a few short years what it actually takes to get that done.
keep in mind most of the folks that talk about this on this site including Brandon started in the deep trough of the GFC that ship sailed..
we are in a very new market.. you can try to do it out of state in low value asset land but that takes on another level or risk.
Thank you again for the insights! My plan originally was to work toward leveling up to apartment ownership (many units) but since I'm currently in somewhat of the education phase I'm also gathering information and seeing what avenues will potentially be best to accomplish the goal of say $10k/mo passive income. It would be great to have that done in 5-8 years.
Which investors here are currently at or above this goal? Any insights there in the current markets?
@Aaron Lietz I can't really provide a solution but am in the same boat as you. I work 50 hours a week at my day job, run a business on the side and sometimes struggle to find time to hunt for properties, analyze deals, really learn my market, and connect with others. I also have a well paying job, but many days it feels like it's sucking the life out me LOL! The age old problem, either you have time and no money, or money and no time. I guess that's why we work together. Anyways, great suggestions on on some more passive investing I may look more in to.
@Aaron Lietz - I'd ask another question. Do you like your current job? If not, maybe stop working so much and start spending more time on the business endeavor that you'd like to enter into. If you do like your job, then I'd look into syndication or note investing as you realistically don't have that much time to dedicate to doing anything active.
I have made the conscious decision to focus less on upward mobility at my company so that I can dedicate my time and energies to building cash flow so that I can live the life that I want. Personally I like my job, which is more than a lot of people can say, but I realize that I'm going to have to work until I'm 65 or move out of the country if I don't have cash flow. The stock market, 401(k)s, IRAs, and stock options only go so far.
Good luck!
Originally posted by @Aaron Lietz:Thank you again for the insights! My plan originally was to work toward leveling up to apartment ownership (many units) but since I'm currently in somewhat of the education phase I'm also gathering information and seeing what avenues will potentially be best to accomplish the goal of say $10k/mo passive income. It would be great to have that done in 5-8 years.
Which investors here are currently at or above this goal? Any insights there in the current markets?
Passive doesn't exist, you either manage the properties, the property managers or your employees. All varying degrees of active. Also no one can really provide you insight as you haven't shared your goals. All you've said is I work a lot and make a lot of money. Do you have 500K to start investing? With concrete assumptions the forums can provide suggestions. Otherwise people are going to give you the generic advise you've received thus far.