Two Strategies Real Estate Entrepreneurs Can Use to Begin Investing Full-Time

38

So you want to become a full-time real estate entrepreneur, eh? You imagine yourself doing nothing but wholesaling or flipping houses or living off the passive income of a rental or apartment building portfolio. You’re living the dream.

But you have a problem.

You have a job.

Don’t despair! In this article I’ll give you a blueprint for successfully making the transition from your 9-to-5 job to full-time real estate entrepreneur.

There are two schools of thought on this, which I will describe in some detail and then make my recommendation.

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.

Click Here For Your Free eBook!

School of Thought # 1: Burn the Boats

In 1519 Hernán Cortés landed on the shores of Mexico with only 600 men and 11 ships. Conquering an entire empire with only 600 men can only be undertaken by a leader with a death wish, for this was certain suicide. His men, despite being tempted by promises of vast riches and fame, were paralyzed with fear.

Here’s what Cortés did: after his men landed on shore, he ordered his men to burn the boats. The men now had two options: to die or to fight. And fight they did: Cortés and his men became the first to successfully conquer Mexico in 600 years.

Applying this story to entrepreneurship, this school of thought postulates that we should give ourselves no Plan B to fall back on if things get bad. This gives us no other choice but to fight and to succeed. There is no other option.

Related: How to Quit Your Job & Invest in Real Estate Full Time: Steps 1, 2, & 3!

This is the high risk/reward option, and it’s often the quickest way to find success. The downside is that there is no Plan B.

School of Thought # 2: Build Your Business on the Side

The second school of thought is a bit less drastic. It says that we should build our businesses on the side until the income allows us to quit our day jobs.

The key with this option is discipline. Your day job can be a HUGE distraction if you choose this route. It’s important to NOT have a job that consumes all of your waking hours and energy. An ideal job is one that is limited to 9 to 5 with little or no work spilling into the off-hours, allowing you the ability to pursue your business venture.

Because you have a full-time job, this option will take longer to deliver results.

The main advantage is that you have something covering your monthly expenses until your new business can replace that income.

My Recommendation

I REALLY like option # 1.

There is nothing like going all in and focusing all of your time and energy on making your new venture successful. Not readily having a job to fall back on provides added incentive to not make failure an option.

But you have to be realistic: you need to be able to cover your monthly living expenses. Follow these two steps to make it happen – one way or another.

Step # 1: Reduce your Living Expenses

If you’ve ever played the Cashflow 101 game then you know that if you’re living on a janitor’s salary, it’s easier to get out of the rat race than if you’re a high-paid attorney.

The key to setting yourself up for success is to reduce your living expenses as much as you can BEFORE jumping in full-time to pursue your venture.

I know of people who have downsized their house or even moved in with their parents for a while. Do whatever is necessary.

Step # 2: Create a Long-Enough Runway

You’re going to need a source of cash to get you through the next months until your venture starts producing the income you require.

Related: 4 “Real Estate” Side Income Streams to Sustain You As You Pursue Investing Full Time

My advice is that you should have more cash than you think you might need. Inevitably, getting a business off the ground will take longer than you think. Be conservative in your time projections.

Don’t run out of money.

Conclusion

I’ve seen people implement a successful transition from 9-to-5 by using either school of thought. But ALL of them implemented Steps 1 and 2: you absolutely need a way to cover your living expenses.

If you don’t have enough savings, then you will need another source of income (like a job). If you do, that’s fine; just do your best to minimize the hours and energy this job will require of you.

If you have a good business plan that you know will work, then you must commit to it wholeheartedly. Either burn the boats or build your business on the side. Be disciplined and focused, and make it your top priority. And finally, make sure to figure out a way to cover your living expenses to give your business enough time to succeed.

If you follow these steps then you too can achieve your goal of working full-time for yourself.

If you successfully crossed the chasm to full-time entrepreneur, share how you did it!

Leave a comment below, and let’s discuss!

About Author

Michael Blank

Michael Blank’s passion is being an entrepreneur and helping others become (better) entrepreneurs. His focus is buying apartment buildings by raising money from private individuals. He’s been investing in residential and multifamily real estate since 2005. He is the creator of the Syndicated Deal Analyzer and the eBook "The Secret to Raising Money to Buy Your First Apartment Building".

38 Comments

  1. Brooks Rembert

    Michael, great article as always. Unfortunately for me, I’m seven years away from being eligible for a military retirement and can’t justify just walking away. I’m therefore building it on the side. We just closed on our second rental and have a goal to do a flip and purchase a buy and hold this year.

    If all goes to plan, we’ll have 10 rentals at the time I retire in 2022.

  2. Daniel Morgan

    Great post, Im in the process eliminating a lot of my extra expenses in my home as we speak, kinda hard with 4 boys lol. but Im very determined to get my business off the ground by any means.

    Thanx for great info keep em coming!

    • Michael Blank

      That’s interesting. Things happen for a reason … I had a conversation with a restaurant owner who had a full time job who didn’t get the promotion he was working towards for the last two years. He took that as a sign to get full time into restaurants and just purchased another.

  3. Micki M.

    Burning the boats is a great example. I’m on the cusp right now of doing step 1 or 2. I really want to do step 1 but it’s hard to let go. One thing that helped me was to figure out what the number was (amount of savings) that would cover me for 6 months and give me more confidence to take Step 1. Often when you’re freaking out about finances, putting real numbers into a spreadsheet shows you how possible your goals really are.

  4. You can’t get traditional loans while unemployed in option #1. Go with option #2 and change your mindset to consider the job as an income stream for your real estate business. There is always enough time in the day if you want something bad enough.

  5. Jeff S.

    Thanks Michael, appreciate the ideas. I was entrepreneurel until I was 38 when the economy took away everything I had and plunged me into debt. I then took a class on being an entrepreneur and she said have multiple streams of income, as in a job or some other source. So that is what I did and split things up, part job, part investor. 20 years of hard work driving a city bus has made me pretty bulletproof with savings, a pension and rentals with equity. I can now afford to be an entrepreneur when back then I just didn’t have the financial staying power to weather the storm.

  6. Patrick Baker

    Love the post and have heard of this ‘burning the boats’ strategy as a great motivator, though it takes balls. 🙂

    This post is timely for my family as we’re doing step 1 (reducing expenses via downsizing) and searching for freedom to raise our family a bit closer than we have been. We’re putting in offers for our new primary at half the square footage, less than half the price and half the taxes.

    While driving together as a family last Saturday looking at potential rentals, we were hit upside the head with a 2-by-4.

    After naps in their carseats, my 2 year old and my 1 year old woke up happy only minutes away from home. The next minute our 1 year old (just turned 1 in December) started having a seizure. Yes a seizure. The first time ever. Completely out of the blue. We sped to the emergency room, and long story short, after a helicopter ride, tons of scans an tests, and 4 days in the hospital we’re just now getting our boy back to “normal” thankfully with no brain damage or anything too serious. He had a febrile seizure which is likely to happen again up until he “outgrows” it around age 5-8.

    My wife and I have been in analysis paralysis for a bit now, but this experience has really made us stop and reflect, mainly around the question of “Why”. Why spend all this time away from family in corporate jobs if there is another way? Pumping money into 401k’s and climbing the corporate ladder quickly loses its flare when hovering over your unconscious 1yr old in the ICU. The trade is just not worth it to us anymore.

    I’m sure others have jumped into real estate for family reasons as well. My wife and I would love to meet others who have been able to pull this off or who can suggest a model for helping us transition as soon as possible.

    Thanks, BP!

    • Michael Blank

      Patrick … I’m sorry you had to go through that. I think for me I tend to take my family and health for granted sometimes and it takes constant reminder to be grateful for what we have every single day. And answering the question “why” is incredibly important. The reason “to make lots of money” will be considerably less motivating than “to be able to spend more time with my children before they’re out of the house”. Thanks for sharing …

    • Tiara Freeman

      Thanks for the article,

      I am striving to get my hands on cashflow properties.Having two girls both active in cheer and soccer it will be extremely hard to scale back in expenses,but I have been making small improvements such as teaching myself more about investments and being an active user of biggerpockets blog. Life brings so many unexpected things and I just want to be free and have passive income so I will not be frustrated by having to work a 9-5 and be away from my family. This article and the comments have motivated me to keep going no matter what life may bring. Everything I read on bigger pockets I share with my husband who works a ton of hours on his job.

  7. Jean Bolger

    Your message on figuring out how to reduce your living expenses (“do whatever is necessary”) is spot on. I have a number of friends who bought their first house around the same time as me who couldn’t fathom buying a duplex (as I was doing) because they didn’t want to deal with living with renters downstairs. Most of them still have almost twenty years left on their mortgage. Not me! And now I don’t have to live with renters downstairs, either. It was totally worth a few years of hassle.

    • Michael Blank

      The problem in our culture is that we’re programmed to spend whatever money we make. As our income rises so does the size of our house. I was guilty of the same thing until we down sized 7 years ago. A much more prudent approach is to try to maintain your lifestyle, even as your income goes up. Kind of like you did with the duplex, good for you …!

  8. Alan Mackenthun

    Seems to me that if you’re working on reducing your expenses and building up a cash reserve, it would be wise to start building your business at the same time. The grass is always greener on the other side of the fence, but if you’re building your business while you still have some income, you can be sure you’re just not wearing rose colored glasses. My wife and I have been investing in residential rentals since 2008 and have done well. I quit my regular job last year. Now we’re looking at commercial real estate investments. There’s a lot to learn and you have to know if you can handle the bad with the good. People often think they’ll start with wholesaling and flips, but neither is an easy game and the risks are huge. Give yourself time to try out different niches and understand the metric of different types of investments. We started with townhomes in a distressed association. It took a lot of my own work, but we got it turned around. We bought a house downtown and intended to fix it up and rent it out. Working a regular job it took over a year and then it was hard to find a renter I’d want. Finally found one, but she left early have having trouble with crime. Sold that on a contract for deed and came out ok only due to all the rehab work I did myself. We found that newer townhouses are our deal. We don’t have to worry about the exterior maintenance that renter’s invariably ignore or the snow if the place is empty in the winter and they rent out really easily. Fortunately or unfortunately, over the last few years prices have risen and we can’t find the deals we had been getting. The flip side is we’ve booked a lot of equity by appreciation.

    Long story – sorry. The takeaway is we’ve now got a lot of experience, knowledge, and decent cash flow from the existing business and we are in a position to confidently pursue RE full time if and when we choose.

  9. Julia Rowling

    I’m about to leap into full-time investing myself – though I must qualify that by saying that my husband has a W2 job and we live SUPER-frugally so that I will be able to have this luxury. But in my case, as I’m relocating back to an unfamiliar part of the US after many years living abroad, it’s more that I’m postponing (hopefully forever!) a job search in order to dedicate myself to learning the Greenville, SC market, get a team together and find my niche there.

    From my personal experience, I can verify that it is much easier to escape the rat race when your material needs are at a minimum. Let’s not forget the old maxim, “A penny saved is a penny earned.”

    • Michael Blank

      Julia – you bring up a good point. If you’re married, then you have the opportunity to “partner” with your spouse: one has a full time job and can support the family, and the other has time to pursue the real estate business full time until both of you can jump in.

    • Michael Williams

      Hi Julia

      Quote: “I’m about to leap into full-time investing myself – though I must qualify that by saying that my husband has a W2 job and we live SUPER-frugally so that I will be able to have this luxury. But in my case, as I’m relocating back to an unfamiliar part of the US after many years living abroad, it’s more that I’m postponing (hopefully forever!) a job search in order to dedicate myself to learning the Greenville, SC market, get a team together and find my niche there”.

      From my personal experience, I can verify that it is much easier to escape the rat race when your material needs are at a minimum. Let’s not forget the old maxim, “A penny saved is a penny earned.”
      ———————————————————————————————————————————————–
      I belive in keeping that penny moving to outpace inflation and taxes. One of the first things I learned that helped me grasp the concept of becoming wealthy is to think like the wealthy. I have also learned to embrass change and to look at setbacks as learning experiences. I advise you to commit to your dream of becoming a successful real estate investor, everything else is just excuses.

      I also implore you to only take advise from someone with the level of success that you seek to acheive. So this creates a delimma because I have just given you advise. Hopefully one of the successful real estate members here on BP will vouch for or expound on my advise. Becoming a wealthy RE Investor is not easy but i believe is well worth the sacrifices. See you at the top.

  10. Troy Harbin

    Is that smoke? Is something burning? Why it’s the boats! For me and only me there is no going back. Is my runway long enough? Not sure, But just like a baby bird that leaves the nest it either has to fly or crash into the ground. Half way to takeoff will keep you posted, thanks for the affirmation, thought I was crazy. Maybe I am but havta know that if i give everything I have i can make it!!!

  11. Bernadette Fields on

    I burned the boat. I hated my job and just got my Master’s in Health Care Administration in Nov. 2014. I’m ready to learn and earn but I do not know exactly how to start. Is there anyone interested in teaching me? I want to learn and earn. I’m in the Houston area is there anyone that can help me.

    Thanks
    Bernadette

  12. Having done this with two other businesses, you absolutely have to burn the boats. Having experienced that in my first business, I would encourage you to refinance and get loans before leaving your day job though. As long as you keep paying your payments, you won’t have any problem. You will have a very hard time convincing a bank that you’ll be able to do that if you’ve already quit your job though. Banks don’t relate at all to high risk/high reward. If you have enough credit on credit cards, you can sometimes work those to your advantage. The key is to rotate your balances to the lower rates and take advantage of good transfer deals when they come up. Most of those have an upfront cost, though, so read through everything thoroughly before taking advantage of that and look for longer term deals where you rob Peter to pay Paul as long as possible with your choices. It is absolutely a “burn the boats” strategy, but I can tell you that it worked for me in another business I ran for about 8 years. It took 2 full years to really get ahead for me.

  13. Michael Williams

    This post reminds me of something that Will Smith said, which was ” I don’t have a Plan “B” because it distracts you from Plan “A”.

    I have burned all of the boats but i kept 1 life boat with a small hole. I transfered to Atlanta from Memphis taking a 60% paycut and time worked reduction on my job to give me the opportunity to dedicate full-time hours to real estate. My living expense has been all but eliminated by living with a relative…..sometime. So no mortgage- plus I have a wife and 7 year old daughter. My daughter stays with her mother in Memphis and my new wife moved back to mIssissippi with her grandmother while I build the business. Yes, I know what all of the men are thinking…I have 90% of the battle won with a wife like mine; you are correct, I have a winner.

    Anyway..I have already learned more about real estate and met more great business minded people in the last 4 months than I have in my last 35 years all because plan “B” is not an option. I am also making deals here in Atlanta and Memphis because I was able to focus, use advice from BiggerPockets members and implement Law of Success mastermind principles. Sacrifices well worth the wealth I am creating.

    Burning those boats was the best thing I have ever done in my life.

  14. Mark Lenox

    Mr. Blank,

    Good article; thank you. My situation fits School of Thought 1, but in a different way. I was that highly paid executive but lost my job over two years ago. Rather than relocate to continue my career, I decided to thumb my nose at the corporate world and start flipping houses instead.

    Some words of wisdom I have is simply to echo what you said about living expenses. Fortunately for me, I was already completely debt free other than my home mortgage. Most people would be amazed at how much lower their monthly expenses would be if the don’t buy anything on credit. Go ahead and buy everything on a credit CARD to earn whatever points or miles you like, but be sure to pay that thing off every month. Think of it this way: if your interest rate is 20%, you are reducing your expenses up to 20% by living debt free.

    Thanks for the good read!

    Mark

  15. Kevin Edwards

    Great article, Michael.

    I WANT to do number one, but would definitely have to get the reserves built up. Adopting two kids this year has drained the resources, but it would be my preferred method. I need that kind of pressure to keep me moving forward. Thanks for posting!

  16. Great article Michael! I love number one BURN THE BOATS! I’m a novice re investor looking to make his first wholesale deal so this article is definitely encouraging! thank you

  17. I’m not working in my field of studies and want to make REI my business and have the luxury of having somewhat minimal expenses and a size-able Emergency fund and my wife has a job. just need to come up with a good business plan to get the blessing of my partner and move forward

Leave A Reply

Pair a profile with your post!

Create a Free Account

Or,


Log In Here

css.php