Investing in Rental Properties While Working a Full-Time Job in Investment Banking

[Liam Wholey]

Hey everyone - wanted to pass along a quick post as I haven’t seen a ton of input out there on this topic. I currently work in New York City doing investment banking. I started a bit over a year ago now, so I am still relatively new to the city, but have been interested in rental property investing for quite some time. I have saved up a decent amount of capital in an account to dedicate to rental property investing but have not yet put anything to work as I’m still relatively green on the industry and want to make sure I’m in a good place knowledge wise and capital wise before doing so. Long winded way of getting back to my question – I work about 70-80 hours a week in the city, so managing a property would be almost impossible (especially to do it the right way). In the same breath, the tri-state area is far from investor friendly (at least from my POV). This led me to think about turnkey and looking at deals in other markets. I’ve spent some time on RentToRetirement looking at properties in the Midwest, but I don’t want to dive into anything that’ll put me in a position from growing my portfolio down the road. Does anyone have experience with this situation (or really working a full time job and investing away anywhere?) How did you go about your process? How did you allocate time to make sure you were doing it the right way? Is the goal to slowly move out of corporate and more to rental properties full time? Would appreciate any insights here or general feedback as a whole!

[JD Martin]

Well, the first thing to always remember is that real estate investing is not as passive as you might think. At a minimum you're managing the manager or paying close attention to the REIT. On the other end you're actively involved in everything, and then most people fall somewhere in between. Since you already work a lot of hours you need to keep in mind how much energy & time you think you will have to make sure your investment is being managed properly, because if you're not actively managing a property someone else has to be.

The second thing is that you're almost going to end up investing somewhere far enough away that you will need to either have a great PM or a great team on the ground to solve problems. 

The third thing I will mention is that prices are still relatively high in most areas, and interest rates are still kind of stuck. If you hold long enough those things don't matter all that much, so you need to go in with the "all in" mindset as you won't likely be able to change your mind easily if you don't find it to your liking. 

With all of that said, and the fact that you already work in investment banking, it seems to me that (assuming you're good at your job) you already have a built-in advantage in whatever investments you already work in, compared to most of the rest of the population. IE if you are selling notes, you should know that market better than your customers, which should put you in a good position to invest in something you already know. 

I think RE is a great long-term wealth vehicle but I also think you should do what you know, especially when you are starting out. Money made early will have the impressive advantage of time for compounding purposes.