Hate Your Job? How To Transition to Full Time Real Estate Investing

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(Note from Brandon: Don’t read this if you love your job and don’t want to leave. This is the longest post I’ve written in some time – over 1800 words. However, if you are looking to leave your old job behind and become a full time real estate investor, please proceed.)

Last week here on BiggerPockets I spent some time showing you that you don’t have to quit your job in order to invest in real estate (click here to read that post). If you’ll recall, my major point was that it is possible to invest in real estate without needing to devote a full time career to it. I emphasized that investing and careers are separate things, and you need to look at them that way. Today, however, I want to look at the other side of that coin.

What if you don’t like your job?

Real estate can be a terrific way to earn income. My guess is that if you are here on BiggerPockets, you are probably interested in real estate more than you are your current job. In fact, many of you are probably reading this while on the clock at your desk job (shame, shame!). Transitioning from receiving a full-time income from a job to receiving a full-time income from real estate is the biggest question new investors have, and rightly so – because it’s not easy.

I want to discuss four different ways you can use real estate as a career that pays your bills, funds your adventures, and builds wealth for your future.

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1.) Real Estate Related Careers

One of the easiest ways to transition to making money in real estate is to get an actual job in a real estate related career. Yes, this is still a job, but for many it is a good way to learn the business while still making a decent income. This is an especially important step if you want to get into real estate investing and you have absolutely no money to do so.

Examples of real estate related careers would be:

  • Real Estate Agent
  • Mortgage Broker
  • Appraiser
  • Working for a real estate investor (construction, office work, interning, etc)
  • Live-in manager at an apartment complex

Working in the real estate field is an excellent way to gain tons of free knowledge and actually get paid to learn. You also will meet hundreds of potential investors, clients, and mentors in the course of your day. For example, as a real estate agent or mortgage broker, you will learn who the big players are in real estate investing in your town, who the best hard money lenders are, and also learn the lingo that these people use.

If you are struggling with a job you hate, but don’t feel you are quite ready to make the jump into full-time real estate investing, I highly encourage you to make the transition first to simply working in a real estate related career. You may find it, at minimum, a far better alternative to the job you currently hold.

2.) Wholesaling

Want to make money in real estate, learn the business and make important connections without any money and never owning a piece of property?

Wholesaling might be for you.

Wholesaling is the process by which you find deals and sell them to other investors who take the project to fruition. You can locate amazing deals, put them under contract, and sell that contract to an investor or house flipper and make a sizable profit doing so.

I am the first to admit that I am not the most experienced wholesaler on BiggerPockets, because I skipped that step and jumped straight into flipping. However, if I were to write a letter to myself five years ago, I would encourage myself to start this way. I made many mistakes when I first began investing that not only cost me thousands of dollars but slowed my growth for the first several years.

By wholesaling, you learn one of the most important skills any real estate investor needs to know – how to buy right. Best of all – you don’t have to spend any money to learn this skill. You simply need to begin finding deals and finding investors.

There are plenty of resources on BiggerPockets that can teach you the ins and out of wholesaling, and I recommend that you study these in depth. Then, track down who the big players are in your town. Who is actually buying most of the REOs in your town? Sit down and talk with them. Find out what they are looking for, and what they would be willing to pay.

As a wholesaler, you can build valuable relationships with other investors, agents, buyers, and sellers. However, you must be sure to maintain a stellar reputation among these people. It can take years to build a good reputation ,but just one event to destroy it.

By simply guarding your reputation and offering a great product, you can make a full-time income in real estate and learn the business. The foundation you gain from wholesaling will propel you far above most other investors who are just starting out.

3.) House Flipping

As I mentioned last week, house flipping is generally not investing – in the “passive income” way that you ultimately probably want to get to. However, flipping houses can be an exciting and profitable way to earn income to live off of. This is how I started in real estate, and continue to flip homes in addition to building up my real estate portfolio.

You’ve probably seen the flipping television shows where investors turn a dump into a mansion in three weeks and profit hundreds of thousands of dollars. While this is possible, don’t enter real estate expecting this to happen to you. Most of the individuals you see on TV were investing in a market where anything sold quickly and prices were not based on value but on emotion. Today, you will be competing with many more homes, including bank repossessions that are priced to sell.

I don’t want to necessarily discourage you from flipping, but I want you to be prepared.

Before flipping, you need to take an honest look at your current skill set:

  • Will you be doing the repairs yourself or hiring them out?
  • If you need to hire them out, do you know how much jobs are going to cost to get done?
  • How are your skills on managing people?
  • Can you keep contractors in-line and on budget, or fire one if the need arises?
  • How good are your math and bookkeeping skills?

Secondly, you need to have a very clear understanding of the market:

  • How much are homes selling for?
  • How long are homes sitting on the market for?
  • What type/size of homes are selling fastest?
  • What neighborhoods are the best for quick sales?

As Ken Corsini wrote several days ago, you need to begin with the end in mind. This is especially true with a house flip. You need to know what the home needs to look like and be priced at in order to sell (and be conservative!) Then, working backwards you can determine what price you can pay for the home. Be sure that you allow significant room for unforeseen costs and risks.

If you want to learn more about flipping homes, you can find hundreds of books on the subjects as well as hundreds of forum threads here at BiggerPockets.

4.) Living Off Cashflow

The final way to use real estate to pay your bills is collecting cashflowing properties and living off that cashflow. When you invest correctly (using standards such as the 50% rule), your properties should all produce cashflow. If you add enough of these properties together, the cashflow can add up quickly to provide significant income for yourself.

I believe in receiving – at minimum – $100.00 per unit per month in cashflow. This is after all expenses are paid including reserves for vacancies, repairs, and other unforeseen circumstances. A four-plex, therefore, should produce at least $400.00 per month in passive income.

How much money do you need each month to live? If you need $5,000.00 per month, this equates to owning fifty units. This could be several small apartment buildings, fifty single-family homes, or one large apartment complex.

I especially love apartment buildings because, if purchased correctly, they can produce a liveable income. Keep in mind, however, that these property types are much more management intensive and can require a significant down payment in order to purchase. However, if you have some money set aside and really want to get out of your day job asap, buying a large property can get you there.

If you plan on using the cashflow from your properties to live off, keep in mind:

  • You must have significant monetary reserves for when things go wrong.
  • Realize that spending your cashflow profits, rather than reinvesting them in your business, will slow your overall growth.

Why Settle For Just One?

You’ve no doubt heard the phrase “multiple streams of income,” which refers to a person having numerous different methods of receiving income. Most full-time real estate investors, myself included, do not simply use one of these methods but mix-and-match them. Perhaps you can take a job as a real estate agent, while building up relationships with other investors and flipping one home a year. Or maybe you can use the several cashflowing properties you already own to support you while you get your real estate license and make more income that way.

There are many different ways to make a full-time income from real estate. If you hate your job, don’t settle with day-to-day misery. Build your knowledge, build connections, and begin to build your future.

No one is going to offer you a job as a real estate investor, so stop waiting around for it.

You need to take it.

Your Next Step

Finally, I’m going to wrap up this lengthy post with a question.

If you want to start a job in real estate, what is you next actionable step?

In David Allen’s groundbreaking book on productivity, he challenges readers to not simply stare and be overcome by the “big picture” goal, but simply determine what the next step is that you can physically do to take you one step closer to your end goal.

  • Is it picking up the phone and making a phone call?
  • Reading a book?
  • Calling the newspaper and placing an ad?
  • Reaching out to a BiggerPockets blogger?
  • Commenting on this blog post below? 😉

He calls this the “next actionable step.” By focusing on one step at a time, a large goal (like making a full-time income from real estate) becomes much more manageable.

So I ask again, what is your next actionable step?

(yes, please actually tell me your next actionable step below in the comments! )

Image courtesy of FreeDigitalPhotos.net

About Author

Brandon Turner

Brandon Turner (G+ | Twitter) spends a lot of time on BiggerPockets.com. Like... seriously... a lot. Oh, and he is also an active real estate investor, entrepreneur, traveler, third-person speaker, husband, and author of "The Book on Investing in Real Estate with No (and Low) Money Down", and "The Book on Rental Property Investing" which you should probably read if you want to do more deals.

33 Comments

  1. I enjoyed your description of wholesaling and how to use it as a way to break into real estate investing. I seem to have a knack for finding deals, but don’t have cash flow right now to act on them myself.

    I’ll be sniffing around for people to pair of for deals, and since I’m a freelance writer, will look into writing articles about this niche for seasoned investors as a way for them to find potential deals.

  2. One of my action step today is to reply to your wonderful post Brandon!! I am a newbie and looking to do my first deal. What I got from reading your blog is that I need to focus on a niche and since I’m just starting out it would be best to whole sale. My challenge was picking a niche and sticking with it. When attending different seminars it’s so easy to get caught up in the hype and I realize that I have 10 courses and none have worked because I have yet to work them.

    I took a day off from my 9 to 5 to attend a real estate seminar of Friday and I’m pledging to myself I will work this system and complete my first deal by 08/31/12.

    Again, Thank you for posting as this was a great read for me.

    • Hey Toya, thanks and welcome to the world of real estate investing! I agree- pick a niche and stick with it until you master it. Then move onward and upward. Good luck!

  3. Jason Grote

    Great post Brandon… my next actionable step is “to ramp up my direct mail marketing”

    This is an encouraging look at how anyone can enter into the exciting field of real estate investing… My wife and I were running businesses that we were sick of when we began to wade into the pool of RE investing… After 4 years, we were able to go full time!

    • Brandon Turner

      This is very true, that’s why I totally believe investors need to be on solid financial ground in their own life to last through those storms – because problems are innevitable!
      That said, a lot of the risks people take are unnecessary, if they would just spend more time learning, following strict standards, and seeking advice.
      Thanks for reading!

  4. I am just getting into investing and reading your article, living off cash flow seems to be the best option. I do see a lot of deals I myself can’t afford, but finding a deal for someone else who invests seems to be something I can do. I’m thinking of advertising for these people in local papers and doing that and continuing to save my money until I can get my first deal.

  5. Today’s action steps:
    -Review note prospects using my
    “10bii financial calculator” app.
    -Look up the David Allen productivity book
    -Learn/Set up Invoices in QuickBooks so my tenants can pay online
    -Review Self-Directed IRA account
    -Input sold “offered-on”properties into my tracking spreadsheet/follow up with Others

    (partial list, but you get the idea)

  6. A follow-up — right after posting my reply I spent a few minutes sniffing around for some leads and immediately found a realtor looking for a ghostwriter for his website. We’ve talked and may end up working together if we can reach an agreement on scope and fees. Sometimes just taking the first step is the most important thing.

  7. This post is an encouraging look at how anyone can enter into the exciting field of real estate investing… If anybody wants to move in real estate investing business then must read this post very useful one. Great Job..Keep it up

  8. Great article and very inspiring. I am just getting started in real estate and plan on wholesaling in the beginning. Not because I don’t have the cash but because I need to build a more solid foundation before flipping/cash flow strategy. Unfortunately I live in New York (Long Island) where housing prices are still high so need to understand how REI will work in my area. Today’s action steps:

    1. Figure out how to locate value buys in my area or areas outside my immediate location.
    2. Plan the buildout of my website http://www.wholesaleproperty.net.
    3. Contact local REIA to get membership details.

  9. I have owned personal properties as rentals for a while now, but I now thinking of moving full time with wholesaling with the primary source being probate. I also have my property management license and I would like to pick up more work in this area. So my income mix would be:

    my personal rental properties
    wholesale cash flow
    working as a property manager/agent for other investors.

    I would love to get this all going soon and put in my two weeks. We’ll see, I have a ways to go, but I am shooting for Jan 1 2013.

    Great post by the way!

  10. Brandon, I know there is a ton of information floating around about wholesaling but can you recommend an all-inclusive program that will take you from start to finish and especially how to locate properties outside your immediate area? Thanks!

  11. RAMP UP THE MARKETING. Seems like every time there is some sort of challenge or plateau, the solution is to RAMP UP THE MARKETING!! I know that is what I’m dealing with right now. For me it is “Systematizing Lead Management” and “Marketing”. Time to take it up to the next notch. Great article.

  12. Love this article.

    My wife and I are just moving into REI and this article was great. Informative, easy to understand, and a nice breakdown of each of the categories.

    I’ve bookmarked the site and look forward to reading more!

    C

    • Brandon Turner

      Thanks Christian,

      Good luck as you enter real estate. It can be a really rewarding experience. Make sure to dig into BiggerPockets.com – you’ll find lots of good stuff! Click on my name above to check out my personal blog as well!

  13. Great article! Appeal to Buyers Using Tips and Tricks from House-Flippers. Here are some tips:
    1. Perform basic cleaning and repairs. The first step in making a house appeal to a prospective buyer is to remove any junk that’s cluttering up the place. Then it’s time to give the house a thorough cleaning and repair anything that’s broken including light fixtures, fans, holes, cracks and anything that’s been damaged by a pet.

    2. Focus on curb appeal. The outside of the home is the first things buyers see, so make sure the front door is new or painted with an bright color and has attractive hardware. Other things you can do include: upgrading the landscaping with inexpensive plants, adding light fixtures, building a simple deck and installing a new mailbox.

  14. To read as much as possible and possibly attend some investors clubs meetings in my city, since I cannot afford to pay the $12,000 to $40,000 that some of these companies are charging to teach people wholesaling and other areas of real estate investing.

  15. Hi Brandon, great summary of some options. Personally, I’m going for option #4, living off cashflow. I’ve invested a lot in my career to get where I am, so going into something new and starting at the bottom doesn’t seem like the best option and would probably slow me down

    I’m currently in the middle of my next step, purchasing more rental units.

    One question about your numbers, though. You say that in order to get 5k/month, you’d have to get 50 doors. Is $100 / door a general rule on how to calculate for repair costs or is it just an example?

    For instance, my units cashflow about $300 / month. Without counting reserves, 10 of them will flow 3k / month. Out of that, we need to set aside funds for repairs, so should I then only count on $100 / month?

    Thanks!

    • Brandon Turner

      Hey Jason, thanks for the comment. The $100 per unit, per month is what I shoot for in any investment (though I try to get more.) However, that’s the bare minimum I generally will ever do, which is why I mentioned it. IF you can get $300 – awesome, but I know you realize there will be other expenses. I usually use the 50% rule to calculate how much cash flow I’ll actually make. In fact, I just made a YouTube video on that – here: http://youtu.be/KQmChuIW_sY

      Hope that helps!

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