Wanting to take the plunge in Miami, Florida.
Homestead, FL · Member since 2014 · 8 posts · 1 vote
Wanting to take the plunge in Miami, Florida.
Most Popular Reply
Rental Property Investor · Cincinnati, OH · Member since 2013 · 292 posts · 280 votes
12yHi Darla;
Enough of this talk of quitting your job. Not yet.
Your government job provides a steady, dependable paycheck that lenders will love. Combine that with excellent credit and little debt, and the combination is unstoppable.
I "get" that you are "over it." But I would urge you to get your "RE Machine" up and running before you pull the pin.
You haven't mentioned specifically what it is about your job that makes it almost "undoable" anymore. I am curious what assignment you are currently working but for purposes of this conversation, lets assume that you are working patrol...
So why would I say that you should continue to work awhile longer?
Here is why. I would argue that a police officer, working patrol, has the opportunity to meet and engage more people than any other profession/line of work in existence.
With regard to "the good people out there", and making real estate contacts, police officers ALWAYS get the benefit of the doubt and people WANT to help you. It's like some weird cosmic force. True, the bad people hate you. But the good people like you. I mean, REALLY like you.
You find a distressed owner (while on patrol) and through your conversation with him, find out that his loser 40 year old kids moved into his home five years ago, his life is miserable and now he "just wants out." You check title on the house and find that he is the owner and other than the original mortgage, there are not other liens on the house. You re-contact the owner (off duty, in a non-official capacity or have a partner do this for you) and you buy the house.
It needs Stucco/cabinetry/drywall/paint/flooring etc.
You are on patrol and you see a painter walking across the Burger King parking lot. He sees the police car and smiles and waves. You smile and wave back and then drive over to him. You start a friendly conversation, complimenting him on the cleanliness of his truck and contents and also truthfully state that you have very much respect for people who work in the trades, especially modern day craftsmen who take pride in their work. One thing leads to another and before you know it you are telling him about your project. A mutual respect is formed and you make an appointment with him to bid your project. Before you know it, you have a painter. And then a flooring guy. And then a stucco guy. and on and on and on.
Whether you know it or not, after 16 years in LE, you have a tremendous advantage with regard to "reading people." Your 16 years of training and experience in LE will directly positively impact your ability to work in real estate. Here on BP, you will hear again and again that real estate is a people business. Well, LE is also a people business. The ability to obtain voluntary compliance is a skill. The ability to negotiate, to compromise, to LISTEN are all skills. The ability to know exactly when to stop negotiating and draw a hard line is also a skill. Should you enter the "buy and hold" game, these skills will be very valuable with regard to tenant selection/retention/elimination.
In conclusion, I would love for one of the BP financial planners to chime in with regard to the true value of your defined benefit pension and the increase in that pension's value for each added year that you continue to work. Please don't dismiss this important segment of your long term financial plan.
take care,
DL
18 Replies
- Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes12y
Darla you need to perform an analysis of breakeven pre-tax cash flow you will need to be comfortable.
In other words to what annual income after investment expenses pre-tax would you need to live comfortably like you do now with a job??
Is it 30k,40k,50k,60k a year?? Get that number and also look at your budget and find ways to cut that number down with things not needed. Then look at what investments you can get qualified for and put out a road map to eventually retiring from your job and living off your investments full time and watch them grow larger and larger each year.
Even if you make great income you might not be able to retire right away today. You can get started though and work toward that accomplishment.
- West Plains, MO · Member since 2014 · 10 posts · 8 votes12y
Darla,
I haven't invested in a property yet, but (IMHO) you're not a damn fool. Life is short, and if you don't like what you're doing, it can be mighty hard as well. I Don't have any specific advice to give as far as investing. I used to live in Big Pine Key and have aspirations to buy rental property in south Florida at some point. I have a feeling you can get some great input from people on this website who are currently invested in your neck of the woods. Good luck!
- South Florida, FL · Member since 2014 · 21 posts · 5 votes12yDarla, Congrats on wanting to break away from the day job. I think what you really need to look at is a plan of action. Will you be wholesaling, flipping, buy and holding? I'm here in south florida and I know the market is force for investors, especially cash investors. And not to mention it's not impossible to still work your full time job and invest on the side until you can make it steady enough to quit your day job! Let me know if you have any questions, I'm a realtor here in south florida too! Good luck to you!!!
- Homestead, FL · Member since 2014 · 8 posts · 1 vote12y
Thanks for the replies so far. Some additional info, my partner makes enough to cover both our expenses in the meantime and also wants to invest.
- Investor · Hampton Bays, NY · Member since 2009 · 907 posts · 258 votes12y
@Darla Powell I would suggest that before you quit and take 401k money and roll it over consider venturing into the market while employed. this will present many more opportunities. While I use a Self Directed IRA to buy income producing real-estate I do it by necessity. there are many tax advantages I miss out on doing it this way.
Investments that look fantastic on paper have a way of not looking so good when you actually acquire them . Its not that the grass looks greener, it probably is, but the effort to keep it green is sometimes underestimated.
So much for waxing philosophical .
to be clear make an investment while you are still working, take a loan from your 401 k if necessary but don't quit your day job until you have some experience.
- Investor · Cincinnati, OH · Member since 2010 · 1k+ posts · 928 votes12y
Darla -- to be clear, you can't use your retirement money to "make a living", as the earnings must remain in the account (unless you take an early withdrawal, triggering taxes and the 10% penalty). You also cannot invest in active RE businesses (flipping, wholesaling, property management) with your retirement money, or you will incur a very steep trust tax within your account. (Of course, people do it anyway and gamble that the IRS won't catch up to them or rule against them.) Best to use your retirement money for passive RE: rental property, private lending, and purchasing notes.
By all means, get a HELOC in place on your primary residence prior to leaving your employment. This could stake you for a flipping business. Many people that build a lot of long term wealth in RE engage in a combination of flipping/building and rental property ownership, mixing quick/fast and slow/steady.
- FL · Member since 2009 · 2k+ posts · 357 votes12y
To make the @ work, do the following:
Hold down the shift key and type @?
Look below this Window, and you will see a list of names of people that have posted in this thread.
Click on the name of the person that you want notified via an email, that you responded to them.
If you are a Colleague with anyone that has NOT posted in the thread, and you want them to see your post, hold down the shift key, type the @ and the first 4 letters of their First or Last Name.
Then look below this Window and click on that person's name.
Raymond
- Homestead, FL · Member since 2014 · 8 posts · 1 vote12y
The Heloc angle is intriguing but I have to admit I sleep well at night knowing my house is paid off and not sure I would want any liens on it. Aside from my retirement I also have about 100k cash to invest. Could I just use that successfully to get started? I am torn between getting some rentals or flipping. My forte is revamping ugly homes ( cosmetically). I've done two of my own personal projects and get requests all the time from people to help design their own houses. That's been my passion but does passion pay ?
- Specialist · Rockland, MA · Member since 2010 · 7k+ posts · 2k+ votes12y
Welcome. 35 yrs LE here. Time to build the foundation below consider starting part time getting success then deciding when you have passive to make up for the missing income.
If you have excellent credit you can get a business line of credit. A loan on you home is good. Find out if you can borrow on your retirement no penalty and paying yourself back.
Check out the Start Here page http://www.biggerpockets.com/starthere
Check out BiggerPockets Ultimate Beginner's Guide - A fantastic free book that walks through many of the key topics of real estate investing.
Check out the free BiggerPockets Podcast - A weekly podcast with interviews and a ton of great advice. And you get the benefit of having 60 past ones to catch up on.
Two Great reads, I bought both J. Scott The Book on Flipping Houses,The Book on Estimating ReHab Costshttp://www.biggerpockets.com/flippingbook
Locate and attend 3 different local REIA club meetings great place to meet people gather resources and info. Here you will meet wholesalers who provide deals and all the cash buyers (rehabbers) you will need.
You might consider Niche or Specialized Housing like student housing. Rents can be 2-4 times more. Remember you don't have to own a property to control it.
Good luck
Paul
- Homestead, FL · Member since 2014 · 8 posts · 1 vote12y
Thanks. Any discount codes on those? They're pricey.
- Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes12y
I don't think you are a damn fool at all. Most of the most successful people in the world got that way by taking risk. It's kind of the only way to do it (unless you are just born into money and don't have to worry about running out).
I'm all for going big or going home, but also on the flip side of that...you don't want to go absurdly crazy either. Can you not start RE on the side while you keep your full-time job? Start small while you are still making a paycheck, keep growing it, and then finally you'll know when it's time to drop the police gig. I did it that way and even then it was still stressful, so I can't imagine having dropped my steady paycheck sooner.
- Homestead, FL · Member since 2014 · 8 posts · 1 vote12y
I suppose that would be the most prudent approach and if I could stand my job it would be easier. I am just a the point to where I loathe going to work. It's a serious struggle. This is what I am considering when I plan as well. My happiness and mental well being. It's a lot to consider.
- 12yBrandon TurnerPro MemberInvestor · Maui, HI · Member since 2009 · 13k+ posts · 3k+ votes
Hey @Darla Powell Thanks for introducing yourself! It's great to have you here! I suggest that you take the leap but take calculated risk!
Also, don't miss The BiggerPockets Podcast - they are great for learning how others are finding success.
Oh - and be sure to set up some Keyword Alerts- especially for "Homestead" so you'll be notified when people mention it here in the forums.
Thanks again for introducing yourself!
- Homestead, FL · Member since 2014 · 8 posts · 1 vote12y
I downloaded the Bigger Pockets book. Pretty. Good stuff. I have been listening to the podcast already for a few months.
What is your take on the Home buying franchises such as We Buy Houses etc.? Good for a novice or stay away?
- Rental Property Investor · Cincinnati, OH · Member since 2013 · 292 posts · 280 votes12y
Hi Darla;
Enough of this talk of quitting your job. Not yet.
Your government job provides a steady, dependable paycheck that lenders will love. Combine that with excellent credit and little debt, and the combination is unstoppable.
I "get" that you are "over it." But I would urge you to get your "RE Machine" up and running before you pull the pin.
You haven't mentioned specifically what it is about your job that makes it almost "undoable" anymore. I am curious what assignment you are currently working but for purposes of this conversation, lets assume that you are working patrol...
So why would I say that you should continue to work awhile longer?
Here is why. I would argue that a police officer, working patrol, has the opportunity to meet and engage more people than any other profession/line of work in existence.
With regard to "the good people out there", and making real estate contacts, police officers ALWAYS get the benefit of the doubt and people WANT to help you. It's like some weird cosmic force. True, the bad people hate you. But the good people like you. I mean, REALLY like you.
You find a distressed owner (while on patrol) and through your conversation with him, find out that his loser 40 year old kids moved into his home five years ago, his life is miserable and now he "just wants out." You check title on the house and find that he is the owner and other than the original mortgage, there are not other liens on the house. You re-contact the owner (off duty, in a non-official capacity or have a partner do this for you) and you buy the house.
It needs Stucco/cabinetry/drywall/paint/flooring etc.
You are on patrol and you see a painter walking across the Burger King parking lot. He sees the police car and smiles and waves. You smile and wave back and then drive over to him. You start a friendly conversation, complimenting him on the cleanliness of his truck and contents and also truthfully state that you have very much respect for people who work in the trades, especially modern day craftsmen who take pride in their work. One thing leads to another and before you know it you are telling him about your project. A mutual respect is formed and you make an appointment with him to bid your project. Before you know it, you have a painter. And then a flooring guy. And then a stucco guy. and on and on and on.
Whether you know it or not, after 16 years in LE, you have a tremendous advantage with regard to "reading people." Your 16 years of training and experience in LE will directly positively impact your ability to work in real estate. Here on BP, you will hear again and again that real estate is a people business. Well, LE is also a people business. The ability to obtain voluntary compliance is a skill. The ability to negotiate, to compromise, to LISTEN are all skills. The ability to know exactly when to stop negotiating and draw a hard line is also a skill. Should you enter the "buy and hold" game, these skills will be very valuable with regard to tenant selection/retention/elimination.
In conclusion, I would love for one of the BP financial planners to chime in with regard to the true value of your defined benefit pension and the increase in that pension's value for each added year that you continue to work. Please don't dismiss this important segment of your long term financial plan.
take care,
DL - Homestead, FL · Member since 2014 · 8 posts · 1 vote12y
Thanks for the input. That makes a lot of sense. Maybe I can hang in a bit longer.
Join the conversationCreate a free account to reply, vote on answers and follow this thread.