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Do you love your job?
My guess is – if you are reading this – you probably don’t.
In fact, according to Forbes – nearly 2/3 of Americans are not happy at work. I know I’ve been there – I once worked for a large national bank and … hated it. I loved the bank, loved my co-workers, but hated the job itself. The pressure to sell, the pressure to please, and the pressure to perform.
Ugh. I don’t like pressure.
So, I quit my job and went full time into real estate investing. It wasn’t always easy, but it was much better than working at the bank.
So today I wanted to share some thoughts on how YOU can quit your miserable (or not so miserable) job, this year, and embark on a career in real estate investing.
It won’t be easy. This isn’t a get-rich-quick path. This will take commitment, persistence, and maybe even a little bit of luck.
However, before you put in your two-weeks notice, let’s get a few things straight.
How to Invest in Real Estate While Working a Full-Time Job
Many investors think that they need to quit their job to get started in real estate. Not true! Many investors successfully build large portfolios over the years while enjoying the stability of their full-time job. If that’s something you are interested in, then this investor’s story of how he built a real estate business while keeping his 9-5 might be helpful.
Should You Really Quit Your Job and Become Self Employed… Or Are There Better Options?
This might seem to be a strange question to include in a post about quitting your job, but I believe it is fundamentally important to think this one through all the way. You see – there are a lot of other options if you don’t love your job. Going into full time real estate investing should not be the only solution to a bad job.
Because real estate investing, for income, IS a job.
That jerk you don’t like at work and you wanna get away from? Yep – he’s going to be in your real estate investing job too, in some form. That pressure you felt at your job to perform? Yep – it’s going to be there as well. The grass is not necessarily greener on the other side.
There is one essential truth that I harp on all the time (if you listen to the Podcasts, you’ve heard me say it):
Find what you love to do in life more than anything else – and do that for a career. If that means teaching high school math – teach high school math. If that means traveling the world, then find a job that travels the world. And if that means investing in real estate for a career – then invest in real estate for a career.
So what do you like to do more than anything else?
Now let me clarify something important here: I’m not suggesting that you should only invest in real estate if you love investing in real estate. I’m saying – only invest in real estate as a career if you love investing in real estate.
Do you see the subtle difference?
For example – if the idea of talking with troubled homeowners, sending out massive amounts of direct mail, and networking often with established real estate investors sounds like something you’d hate to do: then don’t suddenly become a wholesaler because it will get you out of your current job. That’s just jumping out of the frying pan into the fire. It makes no sense.
I believe everyone can, and should, include real estate investing as part of their strategy for retirement and wealth building. However, that doesn’t always include doing it full time and making an income from it.
I’m a perfect example of this. I’ve quit my job twice before (Before the crash I quit to flip house – then during the collapse of the market, I took the “bank job” that I hated.) Now, I invest in real estate AND work a full time job (here at BiggerPockets, helping to maintain and grow the community – and co-hosting an awesome Podcast.) It’s not that I don’t like full time real estate, and I could live entirely off the cash flow on my investments. However – I love internet technology, writing, and BiggerPockets even more than dealing with tenants, motivated sellers, and construction projects. So I flip houses still (usually just one at a time) and have dozens of rentals, but I slowed down my day-to-day pursuit of getting more and more projects and instead focus on buying fewer, but more profitable, properties.
And I love it.
Investing for income and investing for the future are two very different animals. (Click to Tweet This!)
When you invest for income by doing activities such as wholesaling, flipping, or living off cash flow – you are largely unable to “reinvest” your profits back into your deals. Thus, in a way, you aren’t really even investing – you are running a self-employed business. There is nothing wrong with running a self-employed business (and that, in itself, can be an investment) but understand that when you stop working, the income stops as well.
When you invest for the future (largely with buy-and-hold investing) you are re-investing your profits back into your business and thinking for the long term. When investing for the future, you cannot simply rely on the money you make from your investments to help sustain you and pay your bills. You must have another source of income.
So here’s what I’m saying: don’t think that a career in real estate investing is the only choice you have. Do what you love for a career, and invest in real estate for your future.
If the two are one and the same, and you love the idea of using real estate investing as job, then you are ready for the rest of this article.
Let’s move on.
Different Paths to Making Full Time Income
So how can people make a full time income from real estate?
There are a number of different paths, and far more than we can fully cover here (so If you have any additional suggestion, be sure to leave them below in the comments.) I’ve done a few of them, and friends of mine (and colleagues here on BiggerPockets) have done others. Below are just a few of the ways you can earn a living with real estate investing. For a much more thorough list, check out The Top 100 Ways To Make Money In Real Estate.
1.) Real Estate Related Careers
One of the first suggestions I give people when they want to quit their job and make real estate their income source is actually not to invest – but to find a real estate related career. The reason is fairly obvious: you get to learn the business while making an income doing it. Additionally, you are able to meet investors along the way who will become terrific sources for help in the future. A few of the more common real estate related jobs include being a:
- Real estate agent
- Property manager
- Escrow officer
- Title company employee
- Home Remodeling Contractor
- Office Admin for a real estate investing company
- Marketing professional for investors
- Mortgage Broker (commercial or residential)
- Banker (commercial or residential)
- Investment company project manager
- Intern for a Real estate investor
- Live-in resident manager of an apartment complex
- and a lot more
Any of these positions could be used to make monthly income while digging in and learning the business. However, I’ll make two special notes about this:
- If you plan on choosing one of these jobs – make sure it’s something you’d enjoy. This goes back to my philosophies I outlined earlier. Don’t jump out of a job you hate into another job you’ll hate.
- Don’t simply work these jobs. If all you do is work – and don’t continue to learn, grow, and network with those in the real estate investing industry, you won’t be any closer to your goals. Continue to read the BiggerPockets Blog and engage on the forums every day (the new BiggerPockets App makes this much easier! Be sure to download it for your iOS device today for free!)
2.) Real Estate Wholesaling
Wholesaling is the process of finding an incredible deal on a property, putting that property under legal contract, and then selling your contract to another buyer – usually an investor. This method of making money with real estate is by-far the most popular for new investors because of the illusion of easy, quick money. The gurus haven’t helped with this either, and not a day goes by that I don’t see some cheesy ad on the internet for “Discover the Secret For Making Millions In Your Sleep Through Real Estate Wholesaling.”
Seriously, gurus – stop.
Wholesaling works. However, while wholesaling might be fairly “simple” – it’s not easy or quick. It takes hard work, skill, motivation, and certain personality traits (like the ability to negotiate.) Consistently finding deals that are worth pursuing can be a time-consuming job.
However – for those who can apply the right tools, the right mindset, the right money (yep, it takes money!) and the right marketing- wholesaling can be a terrific way to make great monthly income.
To learn more about wholesaling, check out How to Start Wholesaling: Getting Past The Education and Into the Field.
3.) House Flipping
One of the most popular methods used to quit your job (and the method I used,) flipping properties (or “fix and flipping”) involves buying houses for super cheap, fixing them up, and selling them to a retail buyer.
Yes- I’m sure you’ve seen it on the television shows. Flipping houses is a lot of fun, and fantastic profits can be made. However, there are some important considerations to make before jumping in head first:
- How will you fund your flipping business if you don’t have a job?
- How will you make your monthly payments if you don’t have a job?
- Is your location conducive to flipping?
If you want to learn how to flip houses for income, there are hundreds (probably thousands) of amazing blog articles and forum discussions around BiggerPockets on how to do it so definitely jump in and start reading. If you are interested in reading the best book ever written (in my opinion) on flipping- definitely check out The Book on Flipping Houses by J Scott and published by BiggerPockets Publishing. I believe this book has everything you need to get a solid grasp on the business of flipping houses.
Furthermore – I believe successful flipping depends on successful math. To help with this, we recently created the “Fix and Flip Analysis & Reporting Tool” – a step by step calculator that will help you analyze ALL the facts and figures that go into a real estate flip. You can even print out or save PDF reports to hand to investors, partners, lenders, and more. Before flipping any house – definitely be sure to jump in and run your numbers through this tool to be confident in the potential success of your flip.
4.) Buy and Hold Cash Flow Investing
Essentially, buy and hold cash flow investing involved collecting enough cash flow positive income properties so that you can live off the income.
Before linking up with BiggerPockets, this is the method I primarily used (infused with small amounts of wholesaling and flipping) to survive. It is definitely the most passive (depending on how you set it up and how much cash flow you obtain) but it is also the most difficult to build quickly. Unless you have a large war chest of cash at your disposal, or are ready to be extremely creative, this is probably not the best method to use to quit your job in the next six months. However – can you use this to quit your job in the next six years?
To simplify this method, I break it down by unit. Personally, I want to see a minimum of $100 per month, per unit in cash flow (after following the 50% Rule). So the question becomes – how many units do I need, that fit this requirement, in order to quit my job? If I need $2000 per month to survive – I need 20 units. Be careful though – there are always ups and downs in real estate, with unforeseen expenses that could occur at any time, so I would make sure if you are following this strategy that you have significant cash reserves.
The biggest downside to living off your cash flow is losing your ability to re-invest that cash flow into future deals. Yes, you can survive, but unless you have a LOT more cash flow than expenses – you can’t use the power of exponential growth to build wealth.
This was the motivating factor behind me stepping away from this method of investing – because I wanted to build my business even stronger by recycling the cash flow. Today, I put nearly all my cash flow back into by business (either paying off debt or saving for future purchases.) So far, it’s working out pretty well for me.
5.) Lease Options, Subject To, Mobile Homes, and More
There are a lot more strategies you can use to invest, but I don’t have the time to go into each and every one. So let me just sum them up with a few links that you can use to check out more information about them:
Lease Options – Rent To Own Homes: How to Profit from a Lease Purchase
Subject To – Real Estate Investing Subject To
Mobile Homes – 5 Ways to Make Money Investing in Mobile Homes
Ten Steps to Being Able to Quit Your Job in 2013
Alright, let’s get to the juicy stuff!
This section is going to outline ten steps you can take to quit your job in 2013. Not every step is going to perfectly align with your position in life, but by and large, these steps are the most important for quitting your job and jumping into a career in real estate investing. Be sure to leave your feedback below in the comments and let me know what you think – or if you can add anything to my list!
1.) Start with an Honest Evaluation
The first step in leaving your day job for the world of real estate investing is to take a deep and honest evaluation of your current position in life. We talked a bit about this above, when I asked you to really consider if full time real estate investing was the best choice. Additionally, you’ll also want to look at:
- Where are you at? (physically, mentally, financially, emotionally)
- What do you bring to the table?
- What are you lacking?
- What do you love, and what do you hate? Ask family and friends as well. Are you just looking for a get-rich-quick way to sit on a beach? Are you really ready to commit to this? If you are – and if you truly ready – then proceed.
2.) Education is the Key
You will never know the answers to the questions you don’t know to ask. -Jeff Brown
Think about that. Go ahead – read it again.
So how do you learn what the right questions to ask are? Simple – you need education.
No, not the pie-in-the-sky gurus who are selling a dream. You need stories, you need advice, you need information – but you don’t need a mountain of debt to get it. If you are considering paying tens of thousands for training through some guru – I’m not going to lie: it might be good info. But starting any business by racking up tens of thousands in credit card debt (as many advocate doing) is just plain stupid. It’s not an investment in your education … it’s a risky bet with the odds not in your favor.
You already know what I’m going to say, so I probably don’t need to say it. But – I can’t resist:
Dig into the BiggerPockets community. Everything you could ever hope to learn about real estate investing is right here, and it doesn’t cost a thing.
I know some people say “yeah – but I want it all nicely packaged in a system so I can simply “set it and forget it” and not have to work
If that’s the kind of thinking you have … I hate to break it to you but you’ll never make it in the business world anyways. So cut your losses and go get a job.
However, if you are willing to invest the time into reading and interacting with others who are actively growing their own real estate investing business- you are on the right track. Here are a few easy ways you can do that starting today:
- Sign Up For BiggerPockets. If you are just reading this blog post – but haven’t signed up for a free account – stop what you are doing right now and sign up. Trust me.
- Read the Ultimate Beginner’s Guide to Real Estate Investing here. This is a quick, free online training manual that we put together to help you build a solid foundation for your future in real estate. If you’ve already read it – go read it again. Internalize it – make it make sense. And if you don’t understand something – go ask about it on the forums.
- Fully fill out your BiggerPockets profile. Include a nice picture of your face. Detail your history, your goals, and your wants/desires on your profile. People look at these things! Make it count.
- Introduce Yourself to the Community in the New Member Introduction Forum.
- Ask Questions and Offer Ideas – I don’t care if you’ve been on the site for five years … if you aren’t an active member of the forums you are simply missing out on one of the most powerful tools for becoming a real estate investor on the planet. Ask questions, get answers. Answer questions, get smarter. Build your online brand. People will start to follow you and help you out. They will give you honest feedback on your ideas, your plans, your goals, your timelines, and more. There are so many intelligent, seasoned investors on BiggerPockets just looking for someone who is willing to commit and will help them every step of the way. Be that person. Start today.
- Comment on Blog Posts – I might be a little biased on this one, but when you read an epic blog post or something that teaches you something new – leave a comment below it (hint hint!) and let the author know you appreciated it. Ask a question – you are almost guaranteed an answer! How cool is that?
Furthermore – start to read. Even if you don’t like to read, or don’t like to read non-fiction, get over it! Check out the list of the BiggerPockets The Best Real Estate Books Ever and pick one that looks the most interesting and read it.
Alright, I’ve harped on this one long enough- but it really is super important. So educate yourself as well as possible, as quickly as possible. Learn the right questions to ask so you can learn the answers to those questions.
3.) Find and Define Your New Income Source
Unless you plan on living purely on government assistance after you quit your job – you are going to need some method to make you money. Because you’ve been immersed in education from the previous step, you now have a better understanding of what kind of investing you want to get into. I’ve already outlined most of the popular methods earlier, so hopefully one of them stood out to you as the path you want to take.
Now it’s important to go back and get even more educated – in more detail on the specific subject you want to pursue. This is the only time, if ever, you should be talking about finding a mentor or taking a seminar. But still, stay away from the expensive stuff.
If you want to start flipping houses – it’s important to read everything you can on house flipping. Meet with several house flippers and see how they do it. Perhaps offer to work part time for them (for pay or without.)
Dig in deep.
4.) Define Your Objective
The next step in quitting your job is to define what your objective is. How can you get from point A to point B without knowing exactly where point B is?
In other words: what is your ultimate goal here?
Yes, I know you want to quit your job. But what does that mean? How much money do you need to be making each month in order to quit your job. Does your spouse bring in enough income to pay the necessary bills or will you need to fully support the whole family?
Get out a piece of paper and let’s get specific.
How much income, each month, will you need to bring in each month in order to survive? How much in order to thrive? Write this down also.
5.) Make a Detailed Plan
Next, you need to expand on that objective. How are you going to get there?
Writing out a plan doesn’t need to be super long and boring. I’m not a huge fan of detailed, lengthy, business plans unless I need one to show a banker. Instead, I’m talking about creating an outline for yourself to follow.
Detail exactly what it will take to get from where you are now, to where you want to be.
Let’s look at an example.
(Don’t worry if you don’t understand everything I’m about to say. This is an example for a wholesaler. Unless you are a wholesaler … then you better keep educating yourself until you understand everything I’m about to say!)
Wholesaling Case Study:
Let’s say you want to quit your job by December 2013. That’s 5 months away. You know that you will need to be making $2000 per month in income to do so. You also know you need to save up some reserves in case something happens – let’s say $12,000 in reserves.
So your objective is: $12,000 in reserves and $2000 per month in income by December 31st 2013.
Your Plan: At $3000 per wholesale deal average (net, after paying marketing costs) you need to close at least one wholesale deal per month between now and December, giving you $12,000 in capital (after paying a few thousand in taxes.) Then, you will need to close at least one deal per month to continue this lifestyle, plus an additional one per month to continue funding your marketing/business expenses for a total of two wholesale deals per month.
After doing research, you believe that you can get a direct mail response rate of 3% on the letters that you send out, and you believe that for every 60 people you speak with, you will close one deal.
This means, if you send out 2000 letters to a targeted list, you should get 60 phone calls which should result in one deal closed. Since you need two deals per month, starting January 1st 2014, you are going to need to send out $4,000 mailers each month.
Now you have a plan.
Clearly – 4,000 letters per month isn’t cheap (see- I told you wholesaling wasn’t cheap!) so you will need to come up with a plan on how you will get started if you don’t have the initial investment to get the ball rolling. Perhaps you’ll have to start with one deal not acquired by direct mail and instead use driving for dollars to get there. Whatever your plan is … write it down and do it!
6.) Cut Your Expenses
Quitting your job is a big deal – with big financial consequences. As they say – desperate times call for desperate measures. Entering the world of self-employment is a risky venture and most start up companies fail – largely because they run out of money.
If you are looking to quit your job you are going to need to make some sacrifices – starting with your living expenses.
- Do you really need cable TV?
- How about that car payment?
- Gym membership?
- Starbucks? (Leave me alone!)
If you are serious about making real estate investing a full time gig – it’s time to cut your expenses. Decide right now what is essential, and what is luxury. You can always add the luxury stuff back in later.
One additional point to make here: a great sacrifice to make is your home itself. Buying a small multifamily property, living in one unit, and renting the other unit out is a great way to live cheap (or free) and learn the real estate investing business. For more information on this strategy, check out New Investor Strategy: How to Buy Your First Multi-Family Investment Property & Live Rent Free
7.) Save Up a Cushion Before
As I mentioned earlier – most businesses fail from lack of capital, so having a large financial cushion is imperative. The amount you’ll need is largely dependent on your personal situation, but I would recommend at least six months of savings before quitting your job.
This goes back to your plan – how will you save this money? Is it going to take a second job? Selling some crap? Wholesaling a deal?
Whatever it is – make it happen.
8.) Hustle Your Tail Off
If you plan to quit your job, don’t think life gets easier. One of my favorite quotes says “an entrepreneur is someone who works 80 hours a week to avoid working 40.”
As a business owner – you’ll need to hustle. You’ll need to get outside your comfort zone and stretch your skills and abilities. Talk to people you wouldn’t normally talk to, learn to sell even if you hate it, and start stretching yourself!
Get used to late nights, early mornings, and limited family time while you are building this business. This doesn’t (and shouldn’t) last forever. However, in the early stages, it might be required.
9.) Networking is Your Life Blood
As a self employed business owner – you will become largely dependent on meeting other people to help you in your business. You cannot do it alone.
Start getting outside your comfort zone and begin networking.
This is more than just handing out business cards. This is about meeting those who are influential in your market. It’s about attracting private money to your business. It’s about late night drinks with colleagues, birthday cards to your vendors, and thank you phone calls to those who help you out.
Your local real estate investment club is probably the number one best way to start networking. Seek out local investment clubs that aren’t purely about up-selling new investors to buy the latest and greatest new product from a guru. Look for a club that has lots of seasoned investors and get to know the members there. (Tip: leave your cell phone in the car so you won’t be tempted to play with your phone when you have no one to talk to!)
Finally, find ways to help others. When you and your company develop a reputation for being helpful – people will want to be helpful back. And remember, as Warren Buffet says,
“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”
10.) Two Weeks Notice!
At this point – you have a fully funded financial cushion, your business has been rocking along for several months with success, you’ve hustled and learned everything you can, and you have a detailed plan for going forward.
Finally, it’s time to hand in your two-weeks notice (or whatever is proper for your current industry) and head out on the road to full self-employment.
It’s important that, although you are leaving your work (hopefully for the last time) that you do not burn any bridges. Continue to work hard for your employer until the day you leave, because you never know when those people will be a private lender, buyer, or referral for your new business (remember what Buffett said about reputation!)
You’ve finally done it – you’ve transitioned from working a job you didn’t like to making a great income in the world of real estate investing. However, your journey is not over here. Now it’s time to really focus in and run your business like a business, continue to stay educated, and follow your plan! It’s easy to want to chase the next shiny thing – but stick to your plan and only venture into new areas when you feel comfortable with your current model (and income.)
This post is clearly long enough, so I’ll wrap it up now and turn it over to you.
If you would – can you please leave a comment below and let me know your thoughts.
- What have you learned?
- What can you add to help others?
- What are your plans going forward?
Finally – if this post was helpful – please click the cute little “share” buttons below and share this on your Facebook or Twitter feed. There are a lot of people out there who hate their jobs … and this post might just help some of them find a way out.