When do you know when you are able to leave your job, to concentrate on real estate? Im not a get rich quick guy. I wanna know what type of stable business do I need? Because I don’t start to go back to work if my business performance decreases.
Hi @Shepard Solomon ,
Welcome to the BP community. I am currently a REI working full-time in Finance. I would not recommend quitting your day job until you reach a passive income that is at least what you were earning.
With that said, you should take a look at your personal budget and then create a target number to reach.
I currently spend about $1,500/month in living expenses
I make about $2,300/month in expendable income (after taxes & deductions)
This allows me to live comfortably, I would not leave my job until I hit that number.
$2,300 is 23 units bringing in $100/month per unit. This gives me a realistic target to reach.
Best of luck!
When you feel that you have the process of buying, financing, rehabbing and renting down to a science, and you can replicate it infinitely, is when you should consider that this has become your main career.
Shepard, That is a journey that only you can answer.
I wouldn't quit your job until you have at least one years expenses in the bank. This will allow a comfort level and give you and opportunity to make decisions based on numbers and smart business vs from scarcity. There is nothing worse than having to make a decision because you need the money.
Its different for everyone. When your RE business is producing enough passive money to offset your job income, and your job starts costing you money because you could be making more with your time by dedicating it to your RE business.
I made enough to quit my job a while back, but every time I consider it I think about the pay I will have to give up.
Instead, I found a job I just like, and I think that's the best strategy. If you like real estate, work in it full time.
@Shepard Solomon Your W2 is your meal ticket. It's the primary reason you're able to obtain loans to build out your portfolio.
At the very least, think about what is needed in Net Profit to completely replace your income. Build in vacancy % and be conservative with your Cap EX %.
Also think about what success means to you. For example, someone may have 100 units but works 80/hrs week to manage them. Sure he replaced his W2, but he only worked 40/hrs week with his W2 and was able to buy a few rentals while doing so. Question is, what do you want your life to be like?
Best of luck!
I was a school teacher for 4 years and have already quit. I am a stay at home dad and manage/run our rental properties as my job. I also do a little bit of contract work from home for social media advertisements and working with our local EDA, but I don't have to leave home to do those things.
My wife didn't like the idea of strangers raising our kids. She is an RN and makes a lot more money than myself. Last year I was a substitute teacher on days she was off. This year, our rental business has taken off so it's honestly not worth my time to go to work as a teacher.
When my next house is rented by Feb 1 I will be grossing $2,700/month on 5 houses that are all 100% paid off free and clear. I have already replaced my measly teacher salary and we get free child care.
We live 100% off of my wife's salary and invest all of our rental money back into the business. Our next goal is to replace both her current salary and my old salary. We think we can do this in 4 maybe 5 years if we stay frugal and stick to the plan. At that point she could drop down to part time or completely quit while I'm sure the rental business will be time consuming for me.
I will never quit being involved in REI as it is something I truly love and enjoy. I imagine at some point I will pay someone else to manage the properties, but only when it is costing to much of my time to manage them.
Don’t forget to also figure out your benefits cost (if you get those through work) and add that to your salary.
I’d then add 20 percent above your target salary as a buffer. And after all that I’d have about 6-12 months of living expenses in the bank.
If you’ve got all that I’d quit. But remember it’s a lot easier to get financing if you have a job
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