“You want to leave your job and do what??!!”
This was the initial comment family and friends said to us when we shared that we wanted to quit our jobs to become real estate investors full time.
Here is the next question we often got as a follow up to the first question:
“What will you do about health insurance???”
Love that question. It is certainly a valid question, but not a question that should be the sole reason we should or should not quit our jobs!
Hi, Everyone! Liz back this week to share some key actions to consider before you and/or your spouse quits your jobs. My husband, Matt, and I have some experience with this topic since (between the two of us) we left our jobs three different times over the past 9 years.
Back in 2005, only after having one year under our belts of real estate investing (which included selling our first buy and hold deal and doing a 1031 exchange into a multi-unit) did my husband decide to quit his safe and secure sales job and become a full time real estate investor.
Then in 2008, I decided to leave my consulting job and join my husband full time in our real estate business we started together. We worked together full time for two years and it did NOT work. I ended up going back to my consulting job from 2010 until I left again in 2013 to give birth to our son and simultaneously got involved once again with growing our real estate business.
It is going much better the second time around. Thus, I wanted to share some suggestions and tips to consider before you and/or your spouse quits your jobs. Here they are in no particular order…
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8 Considerations to Contemplate Before Leaving Your Job to Invest in Real Estate
1. Have a Well-Defined Personal Budget
Even though we all “know” to have a personal budget, many people still do not actually have one!
Before you quit your job or your spouse quits his or her job, having a very clear idea of what your income and expenses will be (and currently are) is crucial to your success. We had a general idea of our expenses back when my husband quit his job, but we could have done a better job with budgeting. One of the tools we now use that is incredibly helpful for managing expenses is a free app called Mint.
In addition to understanding where you are spending your money, it is very important to have a handle on your income. It might seem obvious, but when I decided to leave my job back in 2008 and join Matt full time, we did not do a great job at outlining all the places we would earn income. We had savings, and we always said if worse comes to worse, we will tap into the savings to live on.
Because we didn’t have clear income projections, we ended up tapping that savings very quickly. This was a mistake in hindsight. We should have been clearer and more focused on how we were going to earn income in the short term as we built wealth in the longterm.
2. Practice “Delayed Gratification”
It is imperative that you practice “delayed gratification” if you want to become a real estate entrepreneur.
The terrific Brandon Turner here at BiggerPockets wrote a phenomenal blog recently about living below your means, and I can’t agree with this more. Delaying gratification goes hand in hand with living below your means.
When we bought our primary residence in 2005, Matt still had his day job. So we could have “afforded” more of a mortgage and home. However, we both wanted financial independence more than a bigger home at the time, so we bought a home that we could afford even if Matt decided to quit his job and we only had my income. This choice has made all the difference. Our longterm dreams of financial independence out weighted our short term interest of a larger home.
3. Gain a Support Network & Supportive Partner/Spouse
Acquiring a support network and supportive partner are necessary as you embark full time in real estate investing.
Before my husband and I began investing together, we shared the same interests and values. We both wanted financial independence and abundance in our lives, and we agreed to do whatever it took to get us there.
In addition to a supportive partner, it is very helpful to find a support network as well. This can be a local real estate investing club, the BiggerPockets community, an entrepreneurial MeetUp group, etc. As the old saying goes, you become who you surround with. Surround yourself with people who are going to support and encourage you vs. thinking you are crazy to leave your job.
4. Become Clear of Your Strengths and Weaknesses
Before embarking on your own, it will help to get very honest with yourself and assess your strengths and weaknesses. You want to do this for many aspects — your personality, your leadership ability, your skills, your experiences, your knowledge, etc.
You want to evaluate yourself in each and every area that will help or hinder your real estate investing venture. There are some insightful surveys and assessments out there in the market to help identify some of these areas. You can also ask those colleagues, friends and family who are close to you (and that you respect) to give you some of this feedback as well.
Once you know your strengths and weaknesses, you can identify the types of people who you will need as you begin to build a team and form partnerships.
5. Find a Mentor
I really wish we had done a better job with this one! I wish we found a mentor and learned as much as we could from them.
But we didn’t. When we began, we learned many lessons the hard way — by making the mistakes ourselves.
The key is to find a mentor who is running the kind of real estate investing business you want to run. Once you find these folks through networking, take them out to lunch to pick their brain and look for opportunities to help them right away. As the old saying goes, “Success leaves clues.”
Many of the folks here on BiggerPockets want to help and share their experiences to help new investors. However, if you are looking for an ongoing mentor, you might want to think about what you can do to help them — possibly give them some of your time to help them achieve their goals. Chances are that you have something to offer them, and in return you have the priceless opportunity to learn and soak up everything you can from them!
6. Complete a One-Page Business Plan
Before quitting your job, this is probably one of the most powerful actions you can take.
There is a great book out there by Jim Horan that is absolutely fantastic called the One Page Business Plan. It is simple and straight-forward, which is important when you are starting out.
When we both made real estate our full time focus, we sat down and developed this one-page business plan and in the process gained clarity of our vision, mission, strategy and goals. We developed a “focus” for our investing.
Regardless of which business plan template you use, the key is to have one. If you don’t know where you are going, how will you know when you get there? The power of focus is everything when you begin. If you are not focused on a well-defined real estate investing strategy, you can get easily lured into every new, shiny, “exciting” way to make money in real estate. Create the plan, stick to the plan, and be flexible with the plan.
7. Have Access to Enough Capital
Most folks who decide to move from part time to full time real estate investing often do not set themselves up with enough access to capital.
I can remember on first multi-family we purchased very clearly. We did not have enough capital to make the improvements that we wanted to make. We had enough to just get by. We had to make the necessary improvements “out of cash flow,” meaning that we did the work once we had enough rental income set aside to afford it.
This is ok for some longterm improvements, but we lost a few tenants while we were holding out to make more fundamental improvements like plumbing and roof repairs.
Now, we are much more careful in each budget and plan BEFORE acquiring a property to ensure we have plenty of capital for everything in the budget and even some contingencies. Many new full time real estate investors either get stuck or plateau, because they don’t have access to enough capital. This is where utilizing the financial analysis templates/tools out there to crunch numbers on deals helps tremendously.
Don’t let a lack of capital stop you in either making your investment better or getting into more investments. Find the money and get the capital, and all the deals you want will be at your fingertips.
8. Self Awareness, Faith and Gratitude
I left this one to the end because quite honestly this is probably the most important one listed in this blog. If you are going to become a real estate entrepreneur it helps tremendously to have self awareness, faith and gratitude. Let me explain…
- Self Awareness: Both my husband and I have always been self-aware people; however, we became increasingly self-aware by taking a ton of personal development courses. Here are a few courses that helped us become better people and real estate investors: Landmark Education, Millionaire Mind Intensive, MDI’s Legacy Discovery Weekend and Women’s Discovery Weekend.
These transformational weekends allowed us to work on ourselves. We uncovered the good, bad and ugly. We continue to grow and expand ourselves. However, to be a successful real estate entrepreneur, you must be able to look at yourself in the mirror and be humble and confident enough to make changes along the way.
- Faith: I am not necessarily talking about faith in the religious sense. However, it is helpful to have faith, whether it is faith in yourself, your dreams, in some higher being, God, nature, the universe or whatever has meaning to you. When we stepped out on our own, we could have been stopped by FEAR (which is really just false evidence appearing real); however, our faith in something bigger allowed us to move past our fears and take actions that most people are too scared to take.
- Gratitude: Since leaving our jobs, various tough situations have materialized along the way. Our real estate investing path has not been all sunshine and roses! We have had it all happen to us — deals falling through, getting sued, losing an investment we thought was a home run, making poor investment decisions, and having large amounts of money stolen from us.
For all those setbacks, we have had big wins, too. We have been grateful for it all, the ups and the downs. We have learned, grown, and became stronger and smarter real estate entrepreneurs along the way.
It is absolutely critical to learn and grow from every experience once you take the leap to make your dreams a reality. A great friend told me today, “For every loss, there is a gain — only if we have the eyes to see it and the ears to hear it.”
I hope these suggestions are helpful to those who have either recently quit their job to become a real estate investor or those who are considering it in the future.
What suggestions did I forget to add to the list? What crucial lessons have you learned on the path towards financial freedom through real estate investment?
Please comment below!