While the flexibility and cash flow are attractive, there are many things to consider before jumping in with both feet.
You’ve seen the headlines.
“Quit Your 9-5 Job and Become a Full-Time Investor!”
“How to Make Passive Income in Your Sleep With Real Estate”
“Retire Now With Your Real Estate Rentals”
Most of these articles breeze through bullet points on how to achieve financial freedom through real estate, retire early, and live life on your own terms.
There are even forums with full-time employees asking perfect strangers for their advice on how to finally quit their day jobs and start flipping houses. It all seems so simple, with so much opportunity. And there are a lot of opportunities.
But running a business of any kind is not for the faint of heart. Committing full-time to a business brings serious risk, and you need a cushion to land on if things don’t turn out the way you had hoped.
While the flexibility and cash flow enjoyed by full-time real estate investors are attractive, there are many things to consider before jumping in with both feet. But if you’re serious about going full time (and before anyone quits their day job!), let’s address some necessary questions.
Could You Do Both?
In other words, is it possible to pursue a real estate investment career while maintaining your day job?
If you have already been juggling both for a while and know you’re ready to go full time, move on to the next questions below.
If not, and until your investment business is consistently bringing in more than your paycheck, I’d highly recommend flipping and/or managing real estate on the side while you still have the security of your job.
Are You in Debt?
First, get honest about your big-picture financial situation. If you’re debt-free, do you have enough capital to cushion market downturns or make unexpected repairs? How many months of leeway do you have until your savings account runs out?
The answer to these questions will be different for everyone. It depends on not just your day-to-day needs but your appetite for risk. Some investors are OK with skirting in and out of the danger zone, but for others, it feels impossible to live with a cloud of worry looming over their heads.
How Much Do You Really Know About Real Estate?
In addition to your financial situation, you want to get really real about your level of real estate knowledge.
If you’re considering the move to full time, it’s probable that you already have some investments under your belt — but do you want to continue your education, join networking groups, and aspire to stay ahead of the trends? Are you knowledgeable enough about this industry to teach it to someone?
If you’re ready to make the move, these thoughts will energize you, not overwhelm you.
What’s Your Business Plan?
Real estate investors will inevitably face some hurdles: From landing loans and aligning with target markets to hiring management and closing deals, it’s all part of doing business. Do you know if you have the right set of skills to succeed? Have you mapped out a business plan and done your due diligence?
Writing down your business plan is an effective way to discern if your strategy is well-thought-out. Start with a summary of market data and overall goals, then move into analysis and strategy that details what your plan is and how you intend to carry it out. Having a living document like this allows you to revisit your goals often and stay aligned with your vision.
The Bottom Line
If you are deciding whether or not full-time real estate investing is the move you want to make, these are all fundamental questions — ones that require patience, honesty, and time to answer — to help you arrive at a sound decision. And if you’re on the trajectory toward full-time real estate investing, set yourself up for success with a strong foundation, clear strategy, and contingency plan.
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