When to Flip full-time
Hi BP community,
I just had a sudden question in mind that I needed some opinion on. I'm a recent graduate and considering to flip full-time, but from what I've been advised is to find employment and flip on the side.
So my question is: when will I know that I can quit my day job and focus on flipping full-time? Other than the fact that my profits are greater than my income salary fro work. What other factors should I consider?
Most Popular Reply
Alan, I went with dons advice... Go for it before you have a wife kids, a mother in law to take care of lol...quit my job and jumped into it full time...I was broke for a long time but now seem to be doing better than most people my age... Not that I need to compete... Just letting you know it's possible after a few years of budgeting, discipline and 80 hour plus work weeks... To me it was worth it. .. I still live on less than 1000 a month.. The rest goes into the business...there's a post on here where I admitted to living in someones closet for a year... Most thought I was an idiot or a bum... Or possibly both.. Lol... I could care less....it saved me a ton of money that I used to get a loan and flip a house where I made 45k... Not bad for a bum. :)
Wanted to add that I did rent out and pay for the closet space... So im not a complete bum... And it was a walk in closet! :)
Alan - you don't provide enough information to answer this question.
1. Do you have any cash/safety?
2. Do you have RE experience?
You might want to find a career in the real estate field. Working as an agent, lender or for a company already flipping properties.
If I was just starting out in life with no financial burdens, I would jump into what ever I thought I could do and was interested in. What a great time in life.
As for me now that I have been out in the world for over 35 years trying to find out what I want to be, I hope to be a full time flipper in the next year.
Don
There are two things to consider.
The first is the opportunity cost. By working full time, what are you giving up in terms of your investment proceeds. Are you only able to flip 3 homes a year instead of 6, 8, or 10? Are you only able to buy homes at a discount of 20% instead of 35 or 40%? Are your holding times 6 months instead of 4? Etc, etc, etc. Quantify the "expense" of your job. Then look at the value of your job. Generally there's a salary... how much would it cost to replace health insurance? How much is the unemployment/disability safety net worth to you? Do they offer 401k matching? Your benefit package from a good job often goes far beyond just the salary, so make sure you look at the whole picture. Then compare the two numbers.
The second is a quality of life issue. If you "LOVE" doing real estate and having dirty finger nails and "HATE" sitting at a desk, maybe it's worth it to you to accept a lower compensation to be a flipper full time. Or you may find that the intellectual stimulation of a certain job may be more enjoyable than managing subcontractors all day, in that case it might make flipping full time less attractive. You have to decide.
Life isn't just about dollars and cents. Look at which one is going to leave you happier and more fulfilled, go from there.
I like Nathan's reply. Sounds like a good way to plan it out which is needed.
But I do want to add that as far as when do you think you're ready to go fulltime? By following Nathan's plan and calculations AND (imo) when you get to the point where your job is getting in your way.
I left my job in June 2003 when I realized that my wholesaling business was suffering big time because I couldn't follow up on leads that I KNEW would make me money. I had buyers starving for vacant lots (what I was primarily wholesaling at the time) and vacant lot leads that my competition knew nothing about. Thus I turned in my 2 week notice to my boss who himself had just started working for our company. Funny setting up a meeting to meet with him only to shake his hand introducing myself and quitting at the same time. He thought it was pretty funny too - lol.
You can quit your full time job anytime you want or never even start one for that matter. It boils down to your comfort level. I am a relatively new investor and work the 9-5 as well. I could quit my day job right now and probably become a pretty successful RE investor over the next 1-2 years. I also think I can keep my day job and become a successful RE investor over the next 2-3 years. So instead of scraping by and living below my means for a year, I'm choosing to deal with the hassle of essentially working 2 jobs.
I choose to do this as I would like to maintain my current life-style. It's all about your personal preference. For me, working for the man just so happens to pay a hell of a lot better than RE currently does. But I'll tell you this, coming into work every day becomes a lot easier with the end in sight. If I thought I'd be stuck in this office for the next 40 years, I'd probably have my nose up my bosses *** like everybody else I work with.
If you are strictly doing flipping, this can be a very tough thing to determine. You may be able to flip a few houses without a full-time job to support them, but what are you going to do when you buy that house with a few extra problems that you didn't budget for? What if that house is also having a hard time selling because a couple others on the block went into forecloseure after you purchased it? You need to make sure you have enough money socked away in savings to pay for these things or have some other source of income until you can afford these types of setbacks on your own.
It would just depend on your comfort level with all the variables (both tangible and intangible).
I like my day job quite a bit and am not really looking to quit, but have asked myself the same questions you are asking yourself. Below are the basic criteria I would need:
1) enough money to comfortabley live for about 8 to 12 months doing nothing at all.
2) enough money IN ADDITION to number 1 and access to enough credit to persue enough and sufficiently large deals to generate at least what I NEED and enough more to conduct more deals and acquire rentals along the way.
3) I would need to have completed about 3, maybe 4 deals successfuly and with sufficient profit to prove to myself it is possible and that I can do it.
4) Not necessary, but ideally I would already have 3 or 4 rental propeties with good cash flow just to add some (relative) stability. Of course, my long term goal would be to add to that number.
Based on what *I* am comfortable with, it would probably take *me* about 5 to 10 years of working realestate very hard as a second job before I accomplished enough to justify quitting my day job. But, like I said, I enjoy my day job and it a career, not a J.O.B.
I am always curious about how others do it (whether in real estate, business or anything of substantial success). I am always interested in successful people's stories. I have yet to hear one story that did not have some sort of stroke of luck that the teller was fortunate enough to capitize on. I think we are all blessed with multiple strokes of luck throughout our lives. But how, and if you capitalize on that grace shapes the unique outcome of your story. Being open minded and flexible is the key.
Great response Nathan.
I am not sure it is really luck Brian. I work full-time in REI and it is just a lot of hard work. Most days it is not that much fun. Most days a job is not much fun either. This is a job also. You have to be ready to work every day of the week and give up the party lifestyle a lot of your friends will have right out of school.
I am not saying its all luck. And I am a strong believer that luck presents itself to those who work hard more so than to those that don't. I enjoy my job most days. Yeah, I work hard, and given my druthers, I'd probably rather go mountain biking for "fun", but I could certainly think of worse ways to earn a living and have done many types of work in the past that I did just for the money - not because I enjoyed it - and it sucked.
I have enjoyed my involvement in RE so far. I am not doing it just for the money either. Now, I don't work as hard in RE as a full time RE investor, but when I couple it with my full time job and my part time studies toward my master's degree (one to two classes a semester), it is a lot of work. And to me, it is "fun". I guess part of "fun" for me is the satisfaction I get from doing certain things a certain way. Some define it as partying with friends. That can be fun in moderation, too.
The fact that you do RE all day and still participate in this online forum indicate to me that you might enjoy what you are doing more than you are leading on, too.
I'm not interested in any kind of hard just or the sake of hard work and a buck. I thing you SHOULD enjoy your job, career whatever you do, if you can.
Call it luck, chance, circumstance, whatever you want, but most people have unique experiences in life and more people fail to capitalize on those unique opportunities than succeed. That goes for hard working people and lazy people. Maybe it has to do with creativity of a sort.
Good thread. I've noticed some people think its easier than it really is. You have got to be a self motivator, a go-getter, and be able to work from home. Many people can't do this.
Like Jeffrey said above, many of your friends will most likely still be in that party life style out of college. While having a good time is great, you'll need to save every bit for the long haul as a full time RE investor.
Thank you guys for all the great responses!
I agree with most of you about balancing a job and real estate investing. I do feel that by having a job it also provides a sense of security that I can maintain my current living expenses.
I'm currently living with my parents and I want to work a job in the meantime so I'm not a huge burden to them. At the same time, a part of my wants to just flip full-time considering how 1 or 2 flips can provide more than what I can earn from a job, especially when the salary isn't very high for inexperience/fresh-out of college individual like myself.
Currently, I'm about to finish up my three 45-hour real estate courses to qualify for the salespersons license exam. After I get my license, I'm really hoping to get started with my first flip deal!
Alan,
Factor in your lifestyle and expenses. Honestly, I am full time and have been for a long time. To make a living does not take a ton of time, I could flip a house or two a month and hold down a full time job. If you are looking to make a killing, you will need to spend a lot more hours digging up deals. :mrgreen:
Alan, I went with dons advice... Go for it before you have a wife kids, a mother in law to take care of lol...quit my job and jumped into it full time...I was broke for a long time but now seem to be doing better than most people my age... Not that I need to compete... Just letting you know it's possible after a few years of budgeting, discipline and 80 hour plus work weeks... To me it was worth it. .. I still live on less than 1000 a month.. The rest goes into the business...there's a post on here where I admitted to living in someones closet for a year... Most thought I was an idiot or a bum... Or possibly both.. Lol... I could care less....it saved me a ton of money that I used to get a loan and flip a house where I made 45k... Not bad for a bum. :)
Wanted to add that I did rent out and pay for the closet space... So im not a complete bum... And it was a walk in closet! :)
Alan
Flipping takes cash, so once you have the cash then you can go full time. The cash can be your own or someone else's but you will need it. I would find the cash first, then start thinking about going full time.
justin brings up a good point..don't just jump in blind :)
read up on BP...get your money and your farm area down..be prepared...and then be sure you're willing to sacrifice all your tim--and yes, even live in a closet for a while to save money if you had to..if you want it that bad, you just may succeed...good luck :)
Thats it, Im coming to a town near you Bryan haha.
Wow are you for real? How long did you live there for?
Bryan & Justin are both correct, DO NOT jump in blind. I did that and luckily the market covered my *** because if I jumped in now I would be singing a very different song. Read all the books you can, take advantage of all the free advice you can, and dont be afraid to ask for help. Dont forget you also need to have a team ready, agents, financing/banker, savings, back up plan, back up plan #2, etc.
Adrian I believe I posted on this before but I did it for about a year and a half...don't want to get this post off topic but feel free to pm me if you have any questions