As an investor who holds a full-time job, I feel compelled to share the reason I have been successful over the last 10 years.
It all boils down to one word: “Sacrifice.”
I believe that one word holds the key to success for investors who work full-time and chose to be active real estate investors.
Let’s define Sacrifice as the simple act of giving up something for the sake of doing something else. For example, I give up eating desserts, which I love, because I want to lose some weight. I stop doing something I like to do because I have a more important goal of losing weight. With that context, let’s look at all the things a Real Estate Investor working full-time will have to sacrifice, at least on occasion, in order to be successful long term.
Having a full-time job does not give you a lot of flexibility to learn, research, and build a portfolio of rental homes. You will undoubtedly have to sacrifice a lot of time to your new business venture. You will need to wake up early, stay up late, leverage your weekends, and even give up your lunch break on many occasions to be successful in this business.
One reality in life is we are all given the same amount of time in the day. However, people choose to leverage their time in many different ways. I suggest investors with full time jobs go in with their eyes wide open, as they are going to sacrifice a lot of time to this business.
Get ready for it, get comfortable, and make sure you are getting a great return for your sacrifice!
Contrary to popular belief, it does take some money to make this business work. Even if you are a buy-and-hold investor like me, you will need some cash for repairs, maintenance and unexpected surprises. Never run your business so tight that one surprise causes you to miss mortgage payments.
In addition to normal working capital, many of you will be shrinking your savings or investment portfolios by placing sizable down payments. I have seen this simple act cause investors or people close to the investor to freak out as their liquidity dries up. The simple fact is that real estate is not as liquid as cash or stocks, so if you need that security, don’t make the sacrifice and stay out of real estate.
You need to be comfortable with sacrificing money for down payments and working capital to grow/maintain your portfolio.
Toys and Extras:
One of the great truths I have learned about real estate investing is that as you start out and build your portfolio, you will need to sacrifice extras in life at the beginning. You simply don’t have an option to turn extra cash into anything other than more real estate. Don’t ever stop the momentum of building your portfolio.
After 10 years, I still turn 100% of my available cash into more real estate. This is especially true given the depressed prices in the current market.
You need to get 100% from your significant other before you start. You might be willing to sacrifice, but are they willing to sacrifice to the same level? You can’t sacrifice alone, as you could be shocked to learn your sacrifice has been turned into some other expense, commitment or activity.
Sacrifice can be fun if you are prepared and see the short term cost as the price of doing business in the beginning.