I quit my career as a pilot in 2005 and went into real estate full time. I had closed a duplex that was cash flowing $300 a month (if nothing broke) and I had a life savings of $10,000. That’s what I started my real estate business with… and I DON’T recommend it!
I was 28 years old at the time with no wife and no kids and no real debt to speak of. I was lucky. Most people are older and much more mature in life when they make the decision to begin investing in real estate.
Just imagine buying your first few real estate deals, sitting back while rent checks come spilling out of your mailbox each month. You’re powerless to stop all this cash flow from showing up on your doorstep each month! What a great problem to have!
Ever heard anything like that before? Was it followed by a sales pitch on some guaranteed way to get rich in real estate? “Just run to the back of the room and sign up now!”
Yeah, I went to that seminar too. I did run to the back of the room and sign up. Then I quit my job. 20 years later I am still not sure if that was the right move or not. Here are a few points to consider before you quit any job and go into real estate full time, and 3 tips to consider when looking for a job while building a real estate portfolio.
- Quitting the job early allowed (forced) me to focus on building the portfolio… so I didn’t starve to death in the process. Focus is good but it can be expensive.
- I had to live on every penny of cash flow produced by the few properties I had in the beginning. This meant I was not usually doing any preventative maintenance or upgrading the units in any way because I needed that money to live on.
- My monthly income was based on cash flow. Cash flow was based on nothing expensive breaking that month. This made life hard until I had a few hundred units (economy of scale).
In retrospect I probably should have stayed at my job a little bit longer and just spent more of my free time working on the business than feeling like I had to be “all in” or “all out”. I had time to do both, I was just impatient in my youth and wanted to run headlong into all new ventures. Passionate but stupid.
If you are looking to build a real estate business, and ultimately quit your job to go full time into real estate (multifamily), then I suggest that you consider the job you are in today and decide if you need to make a change. If you are unemployed and looking for a job while you build a real estate portfolio, the next few suggestions are for you too.
- Flexibility over freedom.
Most people think that they need a lot of freedom to build a real estate business. This is not true. You only need flexibility in the job, not total freedom from it. The main issue here is having the time to meet realtors and sellers during normal business hours. If a job lets you work from home or offers a flexible work schedule this will allow you to meet sellers and realtors at normal business time. Deal flow = Cash Flow.
- Will you build relationships?
The second thing you should consider is who you will be exposed to. Will this job help you to meet and build relationships with people who will be of value to you in the long term? Will you be valuable to those people in the long term? Success starts with good relationships with good people over a long time.
- Resume or Skills?
Will this job teach you anything about real estate that will be of use to you in the future? This could be property management or asset management or any type of job that gives you a skill that you could use while building your own portfolio. Learn while you earn.
- Relocation?
Will this job allow you to relocate to a hot real estate market? This is something you should consider the most if you are starting out in a small town. Small towns may be great to live in, but the real estate (especially commercial) can be slow to increase in value and there may not be enough assets for sale to keep you busy. Small town real estate is usually owned by a few key investors, and it can be hard to get them to sell. Go to a big city. It has been my experience that it is much easier to get business done in large metro areas rather than small ones. More brokers/realtors, more deals.
Obviously, there are many more things to consider (such as pay) that I have not covered here. These are the few topics that I find most missed when discussing the work/real estate investor lifestyle.
My overall conclusion (besides the fact that you should not quit a job with only a duplex) is that you should likely stay at a job a bit longer than you might expect but that you can also build a real estate business at the same time.
The job of a real estate investor will not take up as much time as you might expect. It can be done while working and providing for a family. It just takes a little strategy and some time.
For more information like this check out my blog at www.realestateraw.com and join my Facebook group Real Estate Raw for Multifamily Investors.
Best of luck!
Bill Ham
