Advice for new investors with a full time job

Advice for new investors with a full time job

Chris WiserPro Member
Houston, TX · Member since 2017 · 11 posts · 0 votes

My current end goal is to create a passive, sustainable stream of income that will allow my family and I to travel and with a good deal of flexibility and not require too much time investment per week (would 20-30 hours/wk be an unrealistic expectation once my business is up and running?).

I currently have a full time job that I enjoy but will not allow that to be an excuse not to invest.

Here is what I have done so far in terms of REI:

  • Joined BP of course and currently engaged in analysis paralysis when it comes to active investing.
  • I participate in several syndications and so far those are going well but I am not at a point where I can generate enough income to replace my current salary. Even though the returns so far have been great, this also ties my money up for x years.
  • I am a member of a mentorship program that will help me to invest in SF/duplex/fourplex properties, just not sure how this strategy stacks up against trying to jump right into MF.

I would like get advice from other folks who have started their investing careers with a job and were able to generate enough to pay their expenses through their investments while still working full time. I'm curious as to how long it took folks to accomplish this and what investment paths they used (wholesaling, SF BRRR, notes, MF syndications, turnkey, etc). Also, what were the first steps you took to begin your investing career.

Thanks for your time.

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Rental Property Investor · Houston, TX · Member since 2015 · 75 posts · 66 votes
7y

Chris,

I tell new investors to NOT leave their well paying corporate jobs.  If I were to do my career all over I'd get 10 fannie/freddie loans for me and my wife.  2-4plexes with a few SF thrown in for appreciation.  Fast forward 5-7 years, I could pay off 10 of the plexes and enjoy 10-15k/month net profit.  

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  • Rental Property Investor · Houston, TX · Member since 2015 · 75 posts · 66 votes
    7y

    Chris,

    I tell new investors to NOT leave their well paying corporate jobs.  If I were to do my career all over I'd get 10 fannie/freddie loans for me and my wife.  2-4plexes with a few SF thrown in for appreciation.  Fast forward 5-7 years, I could pay off 10 of the plexes and enjoy 10-15k/month net profit.  

  • Chris WiserPro Member
    OP
    Houston, TX · Member since 2017 · 11 posts · 0 votes
    7y

    @Jason Bible Thanks for the insight, I’m leaning toward that path as it sounds like you can scale faster with the duplexes/fourplexes and they still qualify for conventional financing.  Would you continue to add to your portfolio after those 20 or focus on paying some down first?

  • Real Estate Broker/Owner & Property Manager · Sugar Land, TX · Member since 2013 · 660 posts · 459 votes
    7y

    @Chris Wiser I have been IT guy all my life for almost 23 years now. Last 13 years or so I been involved in Real estate. In 2006, I wanted to build my rental portfolio and started with it. I bought one in 2006 and later with babies and job changes, i only got my 2nd one in 2010. Later that, I got derailed and ended up investing in retail business and got burnt. I finally got back on track in 2017. Currently have 5 rentals, 2 OF and hope to add 3 more this year. I did 4 Flips last year and built my brokerage business. I jumped on to new builds this year partnering with CE. We have plans to scale and go to STR and Commercial as well. I was able to accomplish with the mix of cash and OPM.

    It's doable but just need 3P's, Passion, Persistence and Perseverance.  

  • Chris WiserPro Member
    OP
    Houston, TX · Member since 2017 · 11 posts · 0 votes
    7y

    Thanks for sharing some details around your journey, @Vijaianand Thirunageswaram . Sounds like you kicked into high gear in 2017 with a lot of activity, congrats on taking massive action. Do you prefer SFH rentals/duplexes/triplexes, etc in Houston?

  • Investor · Houston, TX · Member since 2013 · 471 posts · 267 votes
    7y

    @Chris Wiser my business partner and I started investing in 2015. We began with 5 houses then got a 14 unit apartment complex, then a 6 unit, and fast forward today we are at 78 doors with 52 more under contract. I don't know anyone that has 5 houses+ that hasn't added more. It's hard to get started as you will get just a little cash flow from each house. As you buy more and more properties though they will start funding more homes. 0-5 is harder then 10-20 because you don't have momentum yet. Keep grinding a little at a time. If you find that you enjoy real estate with time you will quit your job and move full time into the business.

  • Chris WiserPro Member
    OP
    Houston, TX · Member since 2017 · 11 posts · 0 votes
    7y

    Thanks for sharing @Kevin Wood, any thoughts on starting out with single family vs starting out with 2-4 unit (duplexes, etc) to generate more cash flow?  Or is the main thing just to get the ball rolling with either/or and the doors will come through momentum, as you mentioned?

  • Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
    7y
    Originally posted by @Chris Wiser:

    My current end goal is to create a passive, sustainable stream of income that will allow my family and I to travel and with a good deal of flexibility and not require too much time investment per week (would 20-30 hours/wk be an unrealistic expectation once my business is up and running?).

    I currently have a full time job that I enjoy but will not allow that to be an excuse not to invest.

    Here is what I have done so far in terms of REI:

    • Joined BP of course and currently engaged in analysis paralysis when it comes to active investing.
    • I participate in several syndications and so far those are going well but I am not at a point where I can generate enough income to replace my current salary. Even though the returns so far have been great, this also ties my money up for x years.
    • I am a member of a mentorship program that will help me to invest in SF/duplex/fourplex properties, just not sure how this strategy stacks up against trying to jump right into MF.

    I would like get advice from other folks who have started their investing careers with a job and were able to generate enough to pay their expenses through their investments while still working full time. I'm curious as to how long it took folks to accomplish this and what investment paths they used (wholesaling, SF BRRR, notes, MF syndications, turnkey, etc). Also, what were the first steps you took to begin your investing career.

    Thanks for your time.

     You've got to invest a ridiculous amount of capital in rental properties to replace your day job. It's not a feasible expectation to think that someone making like low 6 figures or less can invest in rental for a couple years than live off of it. Pie in the sky. Those of us in this space full time have active revenue generating businesses beyond the rental income. Me for instance in addition to my rental income I make revenue from sales, property management, title, insurance, media, coaching, flipping and other stuff. So moral of the story is you've got to either keep working and parking that money smart for decades or start yourself a business around your rental investments.

  • Chris WiserPro Member
    OP
    Houston, TX · Member since 2017 · 11 posts · 0 votes
    7y

    Thanks @James Wise, what you wrote makes a ton of sense and echoes what we hear from people's stories on the Podcasts in terms of realistic expectations. I'm thinking that I will certainly need to leverage partners/other people's money to scale faster or and/or build a business around my investing activities. Think I need to continue asking questions to wrap my head around what one of those models need to look like. I like to begin something having a clear expectation of what I want the outcome to be, and I don't feel like I have that at the moment, but maybe I'm looking at this from the wrong perspective? Maybe I just need to jump in then worry about scaling as I go?

  • Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
    7y
    Originally posted by @Chris Wiser:

    Thanks @James Wise, what you wrote makes a ton of sense and echoes what we hear from people's stories on the Podcasts in terms of realistic expectations. I'm thinking that I will certainly need to leverage partners/other people's money to scale faster or and/or build a business around my investing activities. Think I need to continue asking questions to wrap my head around what one of those models need to look like. I like to begin something having a clear expectation of what I want the outcome to be, and I don't feel like I have that at the moment, but maybe I'm looking at this from the wrong perspective? Maybe I just need to jump in then worry about scaling as I go?

     Yea man no need to go from 0-60. Get yourself a house, keep your job & see where things take you.

  • Investor · Houston, TX · Member since 2013 · 471 posts · 267 votes
    7y

    @Chris Wiser I tell everyone to start with single family homes. That is what I did in Houston and I'm at 7-8M in property in 4 years. You can hear me about a year in on the BP podcast. You are going to make mistakes (I still do everyday) and it's better to make mistakes on a 100k asset than a 500k asset. Your first house will teach you a lot of lessons, but it won't make you rich or poor. If you are trying to BRRRR then a 2-4 plex can be better as you can live in part of it and still get great financing.

  • Investor · Houston, TX · Member since 2017 · 1k+ posts · 871 votes
    7y

    Bankers do like that steady W-2.  They get that.  

    Hard to effectively implement the BRRRR strategy without that last R (or the last two -- refi & repeat).

    Dude I went back to work.  I'll admit it.  And here is why -- I'm just not that smart that I can excel at 20 critical skills/tasks on a daily basis.  When things I go wrong, it is generally because I hosed it up.  When things go right, it is because I hired a professional to do it the right away, and I got the heck out the way.

    I figured I was going to flip a project, things were going to go right the first time, and I'd earn some nice coin.  Then I would wisely budget enough away to live on AND enough to do the next project (seriously).  That's a great plan, but you better have a LOT of reserves to start with, and you better not have a loss or even a break-even project.  Because as soon as you strike out on a project, then you are out of living expenses -- and sooner or later that is going to happen, probably sooner.  So looking back, this was one of the stupidest plans I've ever hatched, hindsight being what it is. 

    But dammit I was 'taking massive action'... thinking positive, yada yada.  Turns out you need to take intelligent action, not ignoring the laws of gravity, and you have to do it consistently. 

    So I'm not particular proud of it but I am owning it.  2019 is about building out a process, and a team, and reducing my own financial footprint in the process.  Manage time better, and manage what money you do have better.  Do that first, then expand.  I think if you are time poor and continue to have bad habits with your own money (this was also true at times), then why would anybody think investing in RE or anything else is going to fix that?  It is delusional.  So in 2019, I am getting my head right, my wallet right and my processes sorted.  And do the extent that I can, I am firing myself.

    To team of folks, talented good folks, to whom that I can outsource all these tasks, right down to answering the phone.  I continue to do the things I enjoy, but only as long as I am good at them, and I'm not causing myself harm in the process.  

    If I have to go shlep goods & services sitting in some cubicle somewhere, I'll do it, just so I can pay the freight for hiring some competent help.  So when I do bail out of the cubicle again, I've got (a) a really small financial footprint and (b) sufficient income to sustain operations, as well as my humble standard of living.

    Went to some training event once in Houston, and there was this dude that liked to tell people to 'hire a bunch of 10s'.  Stop going to Home Depot, don't try to list your own house, and some obvious ones like that, thinking you are going to save a couple bucks on fees or remuneration.  Trying to remember who that was, @Jason Bible you remember?

    Note:  I didn't quit.  Still making offers. 

  • Chris WiserPro Member
    OP
    Houston, TX · Member since 2017 · 11 posts · 0 votes
    7y

    Thanks, @Kevin Wood, I will be sure to listen to your podcast, would enjoy hearing more about your journey. That makes sense as SF seems to be the most familiar to folks. That's awesome that you have been able to scale so quickly. Do you only invest in the Houston market?

    @Mark Sewell, thanks for sharing some of your story, sounds like quite a ride. Love what you said about "firing myself." My first investment was a disaster because we tried to do all of the work ourselves, with a full time job AND hardly any experience. We were so tired of analyzing deals and not pulling the trigger on something, we decided to be aggressive. We overpaid and under projected on rehab timelines of course and lost all of our capital. So what you said about getting the right team in place to avoid messing things up and making sure that you are taking smart actions vs just a lot of action hits home.

  • Member since 2018 · 72 posts · 46 votes
    7y

    Everyone, @Chris Wiser

    This has been one of the most enlightening posts I've read.  Thank you for sharing!

  • Investor · Houston, TX · Member since 2017 · 1k+ posts · 871 votes
    7y

    @Chris Wiser exactly that, I hear you -- you are so amped up to get started and find that deal, that you really start talking yourself into marginal deals after turning over stone after stone. Especially in a hot market, deals are hard to get. You have to network long and hard, well in advance, in order for those deals to come to you and not blasted out to the REI-sphere on some random buyers list.

    So pretty soon you start getting desperate.  That fat ugly girl sitting at the end of the bar starts looking pretty good, after you've had enough drinks.  

    And I'll hand it to my hard-money wingman, he did try to talk me out of it.  But I was a drunk sailor by that point and I just had to get my hands on that ugly project.

    But -- and this is a big one -- I started it and I saw it through.  Everybody got paid.  It sucked, but I finished.  And so that is worth something.

  • Real Estate Broker · Bay Area · Member since 2018 · 1k+ posts · 3k+ votes
    7y

    Hi Chris,

    You said

    "My current end goal is to create a passive, sustainable stream of income that will allow my family and I to travel and with a good deal of flexibility and not require too much time investment per week"

    You want @Jason Bible game plan if he were to do it all over.  10-15 houses paid off collecting 10-15k a month net.  That's what you need to get the lifestyle you want. More units don't mean better.  I am all for fewer units higher net and more time.  

    Don't quit your job.  You need income to save so you can buy more and invest. 

  • Rental Property Investor · Houston, TX · Member since 2015 · 75 posts · 66 votes
    7y
    Originally posted by @Chris Wiser:

    @Jason Bible Thanks for the insight, I’m leaning toward that path as it sounds like you can scale faster with the duplexes/fourplexes and they still qualify for conventional financing.  Would you continue to add to your portfolio after those 20 or focus on paying some down first?

    Depends on what the capital markets want.  You can buy with 30 year non-QM, and in some cases, non-recourse money.  The investor, financing, market for SF is just so insane with options.  I am a big fan of fixed rate and term, no balloons.  If you can get it, and cash flow, buy as much as you want to manage. 

    Thats the key part, how hard do you want to work?  I am at the point in my career that I only want to do fun stuff and 10-30 deals a year.  FIRE is no joke when you hit your number.

    OF is always an option. We are picking up 4 beach houses with an OF 20yr am at 7.5% interest. I am paying 100K over market, but I've got the financing and they are bringing in 1800/week on short term rentals. UPB is like 270Kish. It is a hard deal to say no to.

    This "game" is a marathon not a sprint.  

  • Rental Property Investor · Houston, TX · Member since 2015 · 75 posts · 66 votes
    7y
    Originally posted by @Frank Wong:

    Don't quit your job.  You need income to save so you can buy more and invest. 

    AMEN,

    you can quit your job when you have double your income in net profit per month and $10k in reserves per asset.  

  • Chris WiserPro Member
    OP
    Houston, TX · Member since 2017 · 11 posts · 0 votes
    7y

    Thanks for weighing in @Frank Wong, that is a good perspective and for me it ties into the work smarter mentality; more units doesn't always you're in a better position. I'm also fortunate to have a great job that I enjoy, and hope to continue working and invest at the same time.

    @Jason Bible, more great insights, thank you. Big fan of the FIRE movement as well, reading up on people's stories (a certain mustached fellow) is actually what got me excited again about REI.

    What are your thoughts on property management companies vs self-managed? Or is that something to think about down the road (will still budget for a PM in each deal either way)? Seems like even though that would reduce returns it would help with the passive piece.

  • Rental Property Investor · Houston, TX · Member since 2015 · 75 posts · 66 votes
    7y
    Originally posted by @Chris Wiser:

    What are your thoughts on property management companies vs self-managed? Or is that something to think about down the road (will still budget for a PM in each deal either way)? Seems like even though that would reduce returns it would help with the passive piece.

    I am a huge fan of Jerry Tah at Propertycare.  If I didnt have Jerry in Houston I'd self manage.

  • Rental Property Investor · Turlock, CA · Member since 2018 · 226 posts · 147 votes
    7y

    @Chris Wiser, this is a great thread you have going here! I highly recommend checking out Michael Zuber's book One rental At a time. Also follow his channel called the same thing. I am re-reading his book at the moment. Took him and his wife 15 years to build enough income to quit their jobs. The book is about their journey. Granted, each person has to determine how much they can live on. If you are Mr. MM then you can live off of 25K a year. This could be two properties paid off making 1500 a month in rent. 

    Regarding quitting your job, sounds like you enjoy what you do so I would hang out. In my case I will be quitting at months end but I held in there long enough to purchase our first property in Dec which was a 4 plex. Currently working on first flip as well. I am however going to go full time into my handyman business to pay the bills and try some type of RE method to build cash like a flip or maybe wholesale. 

     My goal is 5K/month in net cash flow which would make me FI. Then move that to 10K per month. I am probably going to have to look out of state to make this happen. Currently doing some research in TX. 

    Good luck!

  • Chris WiserPro Member
    OP
    Houston, TX · Member since 2017 · 11 posts · 0 votes
    7y

    @Jason Bible, thanks I will add Jerry to the network list.  Seems like the good PMs can be hard to find.

    @Kevin Moules, thanks, appreciative of all of the good insight! I will definitely add Zuber's book to my reading list, enjoy reading about people's path to success. Wanted to say congrats on taking the first step of your journey btw! Texas seems like a good place to invest based on the limited knowledge I have so far - have invested in 3 MF syndications that closed and the returns were good. Lots of folks still moving here, too, it seems.

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