How to become Real estate Professional alongwith W2 job?

Question

Folks,

I am about to acquire my 4th property in San Diego in this market now(1 SF, 1Condo,2 Townhome). I work full time at a local Chip( hint people think i work at Stadium) company as an Telecom engineer for last 20 years and still love the work i do and hopefully they don't fire me. I love San Diego and also like doing Real Estate in San Diego. i am planning to figure out how to become a real estate professional along with keeping my W2 job as long as the Stadium Company does not fire me. i want to have a backup as my spouse also have a W2 and so if i get laid off i can be then consider full time real estate professional and then focus completely on my RE journey. What should i pursue for next year or so to become a real estate professional any suggestion other then getting real estate license? Any other interesting profile in real estate i can pursue for next year or so to be considered as real estate professional other then becoming an agent?

Any guidance is appreciated?

Regards,

namal

Russell Brazil · Answer

The reality is youll need to quit your job. It is functionally not possible to have a full time W2 job and be able to put in the qualifying hours to be a real estate professional.

Drew Sygit · Answer

@Namal Burman you have less than a 1% chance of convincing the IRS you meet all the qualifications to be considered a real estate professional WITH a W-2 job.

Without a W-2 job, all you have to do is meet these requirements:

https://www.irs.gov/publications/p925

Namal Burman · Answer

Ok thats interesting. Thanks again for providing feedback. So if i leave my W2 in next 2 years other then working as a Real Estate agent any interesting career i can try to develop in next 2 years that would make me an real estate professional.?

Russell Brazil · Answer

You need to not only meet 750 minimum hours, you have to spend more than 50% of your time in real estate. So if you are employed full time, thats 2,000 hours per year. So you need to put in 2001 hours in real estate. The IRS says it is essentially physically impossible to do so.

Tens of thousands of people have tried to defend themselves in tax court for their REPS who have had full time jobs. 3 have successfully defended themselves. 3, thats it.

Namal Burman · Answer

Thanks.But what if I am a super engineer I really don't have to be put 40hrs at my work. If I have 4 properties of my own really I have to convince IRS that I have to put 750 hrs to be considered as RE professional why not something less as every year I spend enough hrs to find tenants/screen them/coordinate with my handyman/cleaners/ HOA to manage all my properties..I am tending to believe that if I show some minimum criteria for hrs in my RE work IRS would be nice to me :)

Adam Bartomeo · Answer

My understanding is that you need to be involved in real estate more than 50% of your time and at least 750 hrs per year. If you are working 40 hrs a week = 2,080. You will have to work 2,081 per year or 40+/week at real estate while working your 40 hr W2 = 80+ hrs/wk.

My work hours average around 75 hrs/wk while being a single dad and having a girlfriend. There aren't many people that can keep up with me but it is possible... not probable but possible... You first need to understand if you are willing to work 80+ hrs/wk and then you can figure out what RE job is right.

Abel Curiel · Answer

Hello Namal!

Have you thought about getting into property management? If you already manage your 4 properties, you can build on those systems you already have in place and offer your services to other landlords and investors. You can even advertise your services right here on BP - Nicole has more info.

I'm sure the BP community will have some great suggestions for you.

Wishing you the best on your journey!

Abel

How to become Real estate Professional alongwith W2 job?

How to become Real estate Professional alongwith W2 job?

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