I want to quit my job and want to BRRR houses. Bad idea?

33 Replies

You will hit a roadblock during the lending process if you quit now.  Every institutional lender will check your global cash flow based on the taxes you've filed for the last two years. They will look at your sources of income and verify you have income from something similar currently.  So if you don't have two years of rental income, you can't use that to qualify for institutional loans.  That's why you definitely want to get rental income on this year's taxes, but it may not be in your best interest to quit your job until you no longer require it for qualification to get money from a bank.

Slow down tiger! It's impossible to BRRR if you don't have any income to show the bank! Why would they lend money to an unemployed newbie? Keep the day job and don't jump off the pier till your ship comes in!

Originally posted by @Justin Reyes :

I make about $85k a year and have $30k saved up. I want to quit so bad. I live in Milwaukee, WI and see a lot of deals out there.

Don’t let your hate for your job drive you into a bad deal. Get educated. Buy David Greene’s brrrr book. It’s phenomenal. If you got any questions on a deal or wanna vent just PM. I’ll do the best I can for ya.  

I would say use your job as a challenge. If time is your limitation and not money or knowledge, learn how to grow a team. Use your stable income to hire a VA and teach them how to search for deals. Use your stable income to get your passive lead generation going so on your limited free time you can just do the fun stuff. Use your stable income to find a partner who maybe has time and not the money to do the marketing and leg work that you can't. You will be much better off in the long run. And by the time you can actually quit you have a well oiled machine up and running.

@Robert J. Wow thanks so much! That was extremely great advice! I’m only 30 years and had a very rough lifestyle growing up but that made me very strong and wanted to make sure I learn as much as I can. i think I want to quit my job because all the people that’s been working at my job for 20s plus are all NOT HAPPY. I’m scared to turn into them but Robert thank you for the advice. I’m not going to quit and going to make sure my next move is my best move.

"...i think I want to quit my job because all the people that’s been working at my job for 20s plus are all NOT HAPPY...."

When I was your age & already had a few rentals I just kept working/putting in time, for the above mentioned financing requirements. My colleagues couldn't understand why I refused to work o/time (& we were commissioning a large project so it was unlimited). Instead I slowly plugged away at acquiring properties, rehabbing in all my spare time then walked away in my early 40's when Passive Eclipsed W-2.

My motto was stay single, focused & frugal .... 2 of them stuck :)

Do both till you get your first 2 flips under your belt. Then def quit your job and work twice as hard at the flipping game and build wealth for you and your family. 

Best of luck in all your endeavors.  

Hating your job is a not a good reason to get into REI; as soon as you have a better job, you have lost your motivation. Everyone I know who has been successful has a passion for REI, which allowed the to power through when things got rough.

You are getting very good advise here @Justin Reyes . Builing passive income takes time, on average about 7 years before your passive income eclipses your active income. Dennis is spot on about lending and you need a strong income to keep your DTI (debt to income) in check while you grow your portfolio.

Plus what you will discover is that sitting at home collecting money is not very fulfilling, believe it or not. I have tried, then I got licensed and discovered a passion for teaching, coaching and helping people with real estate. 

Brrrr-ing properties is a part time job which requires a full time job W2. Nights and weekends are perfectly sufficient time to find and manage a deal, your #1 grwoth restriction will be your cash and income. So here is what I recommend: find a job you like and that excites you. Very important, find a job that teaches you something! The education you get is more valuable then the hourly wage. Build your portfolio on the side.

@Marcus Auerbach thanks a lot Marcus and I agree I am receiving a whole lot of great advice! I’m so thankful for that. Honestly I know that I won’t ever find a better paying job than the one I have now because I don’t have any degrees or anything like that, but I’m so fascinated with real estate and think that’s my only option when it comes to leveling up from my job. I currently have my real estate license and my Dwelling Contractor license too. Thanks again Marcus for your advice, I’m not going to quit and just trying to juggle both until real estate surpasses my W2.

well once you BRRR and pull out max debt you might make 200 a house net.. so you only need to do this 40 times or so to equal your current pay.. figure one every 6months on average and you can see why the BRRRR while cool Is not something that is over night take you 20 years or so.

@Justin Reyes I think it has already been said...DON'T quit your job! lol...     However... 

What exactly do you do for a living? What career capital do you have? Is there a way to pivot your career to something that might be more fulfilling? 

I am in the midst of literally walking into work one day and saying, "f* this, I'm not putting up with this any longer--I don't like who I am becoming, and this isn't the right fit for me," and I put in a three-week notice. I'm not saying it was the worst decision I've ever made, but it was emotionally-driven and short-sighted. If I didn't have the most amazing partner, I'd be in a lot of trouble right now. 

I too have recently discovered investment real estate and am excited because I feel like it fits me, my goals, etc... maybe this is true for you too? DEFINITELY pursue it... maybe it is exactly what you need, but I recommend doing it more intentionally! 

In the meantime I highly recommend you pick up a book titled So Good They Can't Ignore You by Cal Newport. It gives incredible life advice on the right way to pivot your career, and allows you to understand how to properly do so... such that you keep moving up in the world. 

 I  HIGHLY recommend these life-motivating BiggerPocket Podcasts as well... 

#330 (with Cal Newport--give you some insight if you think his book is worth your time) 

#307 (achieving goals) 

#304 / # 315 / #343 / and #222 (with a man who replied to your own post!)

Best wishes on your journey and feel free to message me anytime--Matthew 




Justin, have you thought about where your income would come from, were you to quit your job?

You would need at least 30 rentals with a take-home cashflow of $200/month to replace your job (assuming you take home about $70k).

Think about how long it would take to acquire 30 rentals using the BRRRR strategy, especially with the seasoning that many loans require. If you only have enough capital to do one BRRRR at a time, it would take probably 15 years.

$30k saved up is helpful, and could be enough to get going, but it is not very much. Especially since you should have 6 months liquidity.

My advice is don't despise your $85k job. I only make $65k, and by living frugally I have enough money to buy one turnkey rental per year. With your job, you could buy two a year! Your cashflow would snowball and it would only take 10 years to get 30 rentals and reach $70k take-home cashflow a year. By year 15, you would have twice that!

This is all based strictly on $2400/yr take-home cashflow and not doing any 1031 exchances or refinances.

In addition, you could do a couple BRRRR deals a year to reach your goal a couple years sooner.

That's my two cents.

Originally posted by @Kevin Grove :
Justin, have you thought about where your income would come from, were you to quit your job?

You would need at least 30 rentals with a take-home cashflow of $200/month to replace your job (assuming you take home about $70k).

Think about how long it would take to acquire 30 rentals using the BRRRR strategy, especially with the seasoning that many loans require. If you only have enough capital to do one BRRRR at a time, it would take probably 15 years.

$30k saved up is helpful, and could be enough to get going, but it is not very much. Especially since you should have 6 months liquidity.

My advice is don't despise your $85k job. I only make $65k, and by living frugally I have enough money to buy one turnkey rental per year. With your job, you could buy two a year! Your cashflow would snowball and it would only take 10 years to get 30 rentals and reach $70k take-home cashflow a year. By year 15, you would have twice that!

This is all based strictly on $2400/yr take-home cashflow and not doing any 1031 exchances or refinances.

In addition, you could do a couple BRRRR deals a year to reach your goal a couple years sooner.

That's my two cents.

Devil is in the details. everyone is so hyped on this BRRRR book but how many can really execute it at a velocity that is meaningful.

I get it for the bigger deals and well cashed up investor.. but to me starter investors with limited capital this is a very slow process.. not to mention with no experience in rehabbing EXTREMELY risky especially remote rehab.. its all great in theory.. but what happens when the contractor steals 10k from you or does work that needs to be done over etc.. most are not capitalized well enough to take on those risks or if they do they don't realize the down side.

I share Justin's passion. And excited to BRRR my first property. Though, not going to quit my job for a while. :) However, I am in need of deals. I wish I was in Milwaukee where it sounds like the deals are all over. But, here in Minneapolis, there are not deals - or I am not in tune with what to look for (more likely the case). Thinking about driving for dollars. Or going to country records office for potential pre-foreclosures. Any ideas?

 

@Justin Reyes

Well.... Is there any way to make sure you get the skills and experiences OUTSIDE of your current work situation?

The income situation would be the most concerning... 35k is not a lot to go on for a lot of the best deals, where you have to have cash to buy the place and get through the rehab.

And then, financing on the back end may be challenging if you have no income.  Can you get the hours into it while working --- maybe get 2-3 projects under your belt while going this route then you'd be in a better position to evaluate that decision....

@Justin Reyes

I have a similar story. I was making about $80K a year and recently quit my job in April to really dive into my business. I spent this time networking, marketing to sellers, educating myself and setting up my company on a solid foundation. During this time I put a duplex under contract. I didn’t close on this deal, the inspection revealed that all the wire was previously stripped from the property ( it had been sitting vacant for a while). Then the day before closing the property management company backed out because the house was over run with mold in the attic, cabinets, etc. ( which I don’t understand why this wasn’t caught by the inspector) **Note- Everyone who claims to be a professional, is not!!** Make sure to get referrals from other investors or references.

I also figured out during this time that real estate really is what I want to do. I was able to fully immerse myself in the businesses during my break from the corporate world.

I took a 3 month hiatus and now I am back working, making more income than before, but I also have a steady flow of leads, and a team to help me run my business. My W-2 is my funding source for my business and I’ve created a five year plan that will allow me to leave the corporate world for good and never have to go back.

So, my advice would be if you’re going to quit, quit with a purpose and a plan. Secondly, know that everything isn’t going to go as planned, be prepared for that and don’t let it stop you. Real estate isn’t for the weak, inconsistent, or lazy. So, understand you may be quitting your corporate job but running a real estate business is a 24-hr job. Especially, when getting started.

Feel free to reach out if you have any questions.

All the Best!!

Canesha

@Jay Schultz

There are deals in MPLS, just have to work harder to find them- just closed on my 4th BRRR of the year- you have to have a experienced team and understand how extensive/$estimate cost to rehab/make money