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Renting your house is a great way to enter the world of real estate investing, but most first-timers (understandably) have a lot of questions. Fortunately, the experts at BiggerPockets have put together a complimentary guide on ‘How to Rent Your House’. All the skills, tools, and confidence you need to successfully rent your house are just a mouse-click away.
Do You Like Your Job?
I used to be a personal banker in a large national bank and I absolutely despised it. Each day was worse than the previous one, so I spent all my free time devising a way to get out of that job. It took me almost a year, but after I quit I never took another job again. I fell head-over-heels in love with real estate investing and haven’t looked back since. I manage property, flip houses, and have a number of properties that cash flow enough to pay my bills.
On the other hand, my friend Kyle is a pilot for a large commercial airline, and has been for more than twenty years. He loves his job and would never dream of quitting. He still invests in real estate, but in a different way than I do.
A third friend of mine, Mike, flips houses for a living. He has huge success with it, but doesn’t keep any of his properties. He drives a nice car, lives in a large house, and has very little in savings.
Which of the three of us is a “real” real estate investor?
The answer depends on how you define “real estate investor.” I believe a real estate investor is an individual who is building up lasting wealth using real estate as the tool to get there. Based on that definition, in the three examples above, I would rule my friend Mike out of the real estate investor club.
The point I am trying to make is this:
- It is possible to have a career in real estate investing without investing in real estate
- It is possible to invest in real estate without having a career in it.
You’ve probably heard the age-old high school guidance counselor question, “If you suddenly had one-million dollars and didn’t have to work anymore, what would you do?” The answer, it’s said, is what career field you should be in.
Would you invest in real estate?
I know I would. But if your dream path would be to open up a shelter for abused animals or to move to Aruba and train tourists to surf, you probably should not be a full time real estate investor.
Notice that I didn’t say “don’t invest in real estate.”
However, you don’t need to make real estate your career in order to build wealth in real estate. Keep your day job if you love it, find a better job, or start your own business. It is important to understand the difference between real estate as a career and real estate as an investment.
Using Real Estate as a Career
Many so-called “real estate investors” are not actually investors. They buy and sell property, but the day that they stop their daily activity they stop earning income. This sounds a bit similar to another form of income generating activity known as a JOB.
There is nothing wrong with buying and selling property. I, myself, do it. However, I recognize that I am not better than someone with a job, I just happen to be self-employed. I am in the same category as someone who opens up a dry-cleaning business, a hot dog stand, or a start-up technology company.
As I mentioned earlier, I love real estate and I have chosen to make it my career because even if I didn’t have to work, I would still do it.
If you truly want to make real estate your career, great! There are numerous ways to do it, but the most common are:
- Wholesaling deals
- Flipping houses
- Buy-and-Hold while living off cashflow.
However, if you simply use real estate as a tool to make a buck, and then spend that buck, you are not building wealth. If you want to flip houses for a living, but live off the entirety of your profits, you are simply another self-employed business owner. It is imperative that you use real estate as an investment as well.
Using Real Estate as an Investment
If you love your job, you don’t need to quit to invest in real estate. You can achieve the same or better results as a full-time real estate investor by investing on the side.
By keeping your day job, you have several advantages over a full-time investors. First, you do not need to live off any of the cashflow you make. By reinvesting all the profits from your investments, you can fully realize the incredible benefit of exponential growth. Additionally, you have a much easier ability to get long-term bank financing, which can also help increase and stabilize your wealth building.
Investing in real estate while keeping your day job can be done in many ways, such as:
- Partnering in a larger piece of property
- Buy-and-hold property with property management
- Serving as a private or hard money lender
Real Estate as Both a Career AND Investment
Real estate investing can be a highly profitable career, investment, or both. However, the choice is yours as to which path you take. Don’t simply decide to quit your job and become a full time investor because you read about other investors who do it that way.
Life is too short to be stuck in a job you hate. Choose a career that makes you excited to wake up in the morning, energized through the day, and content when you fall asleep at night. If that desire leads you to full time real estate investing, I embrace you with open arms! Just make sure you are not simply building a career, but building a future.
Comment below and tell me – do you use real estate as a career, investment, or both?
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